Cold today – but still thinking strategy

Came down with a cold today, so after taking care of admin things in the morning (mostly moving money around into the right locations) – I ended up crashing.    The funny thing is that despite feeling like crap, my mind didn’t shut off, I kept on thinking about a conversation I had with the team yesterday about the quality of service that Amazon offers.

So, lesson here.  One, it seems my mind doesn’t like to turn off.  Two, I get cool thoughts even when I’m feeling under.  

So, here is the cool thought.

The team had mentioned that they had found that working with Amazon was a huge pain in the butt – it seems that when they were trying to sign us up – they were super strong – BUT the moment the deal was done and inked – the sales team has moved on – and the follow up team that came in behind was terrible.  So, first, this means that Amazon is a sales centric company – they want to sell/convert/close – BUT after the deal is done they drop the ball.   In my experience, I had the same thing with Yahoo some time ago – their presales – was great – but once you committed to buy – their customer care was horrible.   Stark contract to Google, where the sales is actually so so, BUT the after care support is great.   I remember 3 years ago thinking to myself that Google is going to do great things because they care about their customers – while Yahoo is going to go down the toilet because they breach their promise of good service after the sale is done.   Looking now, 3 years ahead – Yahoo is struggling, for sale, Google is thriving.  What is the lesson – LOOK AFTER YOUR CUSTOMERS – and the customers will look after you.

So, back to Amazon, first, Amazon is neglecting their ‘suppliers’ and does not treat their suppliers as customers – by treating their ‘suppliers’ badly, they  are eventually going to run out of suppliers because suppliers will deem Amazon just to hard to work with.   This would seem to be especially important, since Amazon is moving strongly into a virtual shopping mall, where they get paid based on ‘fractioning’ of the sales – they get paid on being a broker and a trust holder.   BUT, in this equation, Amazon really has two customers, the people that are buying and the people are that selling.    By providing horrible service to 1/2 of their customers, they will, unless corrected kill this part of their business. 

So, using the lesson here, and applying this forward to RedStores, the philosophy that I have set for RedStores becomes so much more right!   My philosophy is that OUR customers are suppliers and buyers – and they are equally important.   We will treat both as ‘kings’ – and when we say ‘happy customers’ – we will mean it to be – happy suppliers as well as happy buyers.   Because, for our business model, our customers are both segments.

 

So, another thought in my tiredness has occurred to me, and that is that Amazon had in some ways lost their focus.  This goes to the above.    I will explain more as I think there is a lesson for myself here and for the future.   One of the challenges I had faced in pearlsonly.com was that the infrastructure required for operations of a successful ecommerce site is quite intensive – more than 1/2 of my labor costs go to R&D and development.   Given this, I have been tempted, very tempted – to spin off various parts of the company as their own entities – with their own P&L.  For example, our order fulfillment software and product management software BEGS to be spun off as an web based app.  It would be so easy to take it, set it up as it own venture, give it own P&L, own management team – and say – go, make money whichever way you can.   Without knowing how Amazon is setup, I feel they have done that with their S3 platform, E3 cloud computing, etc.   Basically, they took internal services and decided to convert them into profit centers as to lower the burden on the internal structure.   

And so, I look at this, and I ask my self, does this make sense – do you really want to have a company that is ‘defocused’ – do you want your exec time looking at the performance of your subs, and saying, hey, S3, E3 division made $500MM this Q, meanwhile your core business (the broker business) that is the $5BBB is hurting.    So, in this context,  I would say this – sure, from overall P&L, it would be nice to shed some of these costs and make them into their own ventures.  BUT, when you do that, you distract your management team (at the EVEP level) – and you take their eyes (however slightly) of the core value of the business.  So, when looking from this point of view, I think its important to put the EVP energy into the ‘core’ business – forget small distractions, no matter what empires people want to build.    Keep focused on the core, and long term growth will be that much stronger.

 

So, my plan was to look at spinning off a software development company and perhaps build  SEO/PPC management unit – and create additional revenue streams.  BUT, after thinking through this – I think that would be a mistake – as it would distract the management team from focusing on the one core value – and that is ‘making customers happy’.      To this end, I have seen other people go this route, and they end up with a lot ‘companies’, without each one actually making it.

 

So, a very long discourse on with a simple conclusion – “Do what you are good at, focus on that.  Eliminate distractions.  Keep your Customer Happy.  Customers are defined as whomever you deal with.  Success will become inevitable”.