The biggest tech story of the week – in a way – was clearly Jeff Bezos’ purchase of The Washington Post.
The Amazon founder didn’t buy the prestigious newspaper through Amazon, but rather put down $US250 million of his cash for the deal.
The transaction has furrowed eyebrows, as a newspaper is clearly outside Amazon’s comfort zone. But it also makes sense to a lot of commentators, who say Bezos – hailed as the pioneer of the eBook retailer – is in a great position to transform the current news business model.
Some of the controversy over the decision comes from the fact Amazon is still posting yearly losses of several million dollars. But as MG Siegler over at TechCrunch points out, Wall Street loves the company because Bezos has a strategy of revealing more over a long period of time.
In other words, he’s artificially controlling the company’s growth for a reason.
The goal is actually to not make a huge profit too early, and Bezos manages it perfectly. You want to avoid showing your cards too early as you continue to lay the groundwork for an ever-larger business.
Occasionally, you’ll have to show those cards and win a hand to prove that you can. But the rest of the time you call and fold, as you await the monster to take the entire pot.
It’s easy to take a look at Amazon and question the financial market’s response – shares have risen nearly 30% in the past year despite those losses.
But as Siegler points out, it’s not as crazy as it seems. Amazon is set for growth, and growth is what investors want more than anything. And as he underlines, Amazon doesn’t pay distributors or publishers for three months after a book purchase – meaning solid cashflow.
Forget profit, the emphasis has been on free cash flow since 1997…
And so I repeat, Bezos is a genius. He’s flying under-the-radar until he can buy the radar. And probably the company that makes all the radars as well. With Amazon, it’s not “now or never”, it’s “next”.
Whether or not Bezos can save the news industry remains to be seen. But he’s certainly managing expectations well – and in the end, that may be the winning model he needs.
Can Marissa Mayer really save Yahoo?
It’s been a huge year for Yahoo! since Marissa Mayer came on board. The company has been picking up tech companies left and right, with the $US1 billion acquisition of Tumblr being the most notable.
Although Mayer was the target of much skepticism at the beginning of her journey, the mood has very much turned around. As this BusinessWeek story points out, since Mayer joined, the company’s shares are up 75%.
But that’s not the only improvement.
She’s cut away ribbons of red tape and instituted an internal online service called PB&J, for process, bureaucracy, and jams, that allows employees to complain about organizational snafus.
Under her watch, Yahoo has released new Yahoo Mail and Yahoo Weather apps that have impressed users and critics. The company reports that attrition, including employees who’ve landed better jobs elsewhere, fell by 59 percent in the second quarter.
Not to mention making staff who work from home come into the office.
But that may not be the best part of Mayer’s strategy. As this piece says, Mayer has been putting plenty of resources back into the company’s research department – it has a goal of 50 PhDs and there are already 30 on board.
“I’m not confused; I know we have a lot of work to do,” Mayer says…
“Up until now, things have gone really well. If you tell me that I’ve got to go back to last July and do it all over again, I’m not sure I could. I was optimistic, but a lot of the progress we have made has surpassed even my expectations.”
The last year has certainly gone well – the challenge will lie in repeating that success.
Facebook is bumping old posts
Facebook does a lot of weird stuff – this may be up there among the weirdest.
In a blog post last week, the company explained some of how its News Feed works, including the fact that on any visit to the site a user could see 1500 pieces of content.
So the site determines the most relevant content and puts it at the top of the News Feed. And a latest change means some older stories you’ve never seen before could be pulled up to the top.
As this post on The New York Times explains, the site wants to make everything as relevant as possible.
The overall goal is to get people to spend more time on the news feed and interact with more items — which, not coincidentally, exposes people to more ads.
According to the company, changing the feed to bump up important older posts that were missed increased likes, comments and shares by 5 percent to 8 percent among users in a test group.
Of course, this means you’re stuck with seeing old content sometimes. Facebook may have a challenge on its hands with this one.