As I was reading The Everything Store, a book that chronicles Jeff Bezos’ and Amazon’s rise to its current status as retail giant, I was struck by how similar Amazon and WalMart are, but how different their public reputations are.
Walmart is consistently one of the most hated companies in the US. Some people even call them evil. Amazon is consistently one of the most loved. But when you really peel away the layers, both companies are nearly identical. Walmart employs 20x more employees than Amazon and Amazon cloaks itself in startupy, technology marketing, but 0ther than that, they’re pretty much the same.
They both have used advanced technology and inventory management systems to outclass their rivals. They’ve both used extremely low margins for extended periods of time to put their rivals out of business. They’ve used the same bully tactics to punish rivals.
Both exploit their non executive/technology workers by working them to the bone and paying them low wages. Both put their rivals out of business, killing local and online commerce and eliminating choice in the market. And up until this year, Amazon didn’t even pay sales tax, giving it an unfair advantage over brick and mortar stores. (See Amazon infographic) Yet Amazon is rated as one of the most trusted and Walmart among the most hated.
This dichotomy plays itself out in nearly all tech startups. Although I’d contend that the majority of new startups are net job killers that make huge amounts of money for a small number of people, a bit of money for another larger group and give non monetary benefits to the rest, startups have been able to successfully wrap themselves in the all protecting shroud of being job creators and the engine of our economy. Almost nobody questions it.
The public thinks startups are the way out of slow job growth. So do politicians on both sides of the aisle. Startups are the job creators. They’re completely meritocratic. They’ve (or in this case, we’ve) been almost deified by the adoring public, press and politicians. This deification has brought with it an insidious self righteousness and self aggrandizement that’s reaching social darwinist proportions that we haven’t seen since the gilded age.
Too many founders and the general public have bought the narrative that founders are rugged individualists that succeed all on their own. That they deserve massive rewards because everyone else who hasn’t done it is lazy or stupid. And the most sacred of all, that startups create jobs. Startups and entrepreneurs have wrapped themselves in a narrative of technology and progress that allows people like Jeff Bezos to say things like “were not putting people out of business, the future is happening to them,” and say it with a straight face and a sense of self riotousness. If you want insight into this new phenomenon, look to Peter Theil, who’s best advice for prospective founders is to “find monopolies” where you can take the entire market.
So in our new world Walmart is hated and Amazon loved. It’s bizarre. From my point of view they’re pretty much the same. One just happens to be wrapped in better marketing. I wonder how much longer this tech inoculation will last?
I’d love to get a discussion going, so please leave comments or email me directly.
Ever since the beginning of the industrial revolution technology efficiency advancements has been accused of taking away jobs. (Look-up the Luddite movement.) However, delivering something people need at a lower cost frees up their money to buy other things they want or need – making them wealthier because they can get more or better stuff for the same money. The money still gets spent, but the jobs move to different needs. This is called “division of labor”. It’s basic economics. (I highly recommend Wealth of Nations by Adam Smith.)
In the USA Walmart and Amazon have been able to decimate small businesses partly because of efficiency, but mainly because of over-regulation. There are too many taxes and regulations in America, strangling the small businesses. Big business loves that. Amazon and Walmart have deep enough pockets to pay all the taxes and deal with the regulations.
And that is why America went from being a place with millions of small businesses, to a country where every town is a carbon copy of the last one, with the same Walmart, Applebees, Office Depot, Advanced Auto Parts and Taco Bell. The taxes and regulations limit our options, reduce choice, and give us a one-size fits all world.
The Internet is one place that has been (up until recently) immune from taxes and regulations, which is why the last 20 years have given us a viable and thriving startup culture that has created a lot of jobs in Silicon Valley and other places.
But soon enough they will tax and regulate that too, and then it will get harder and harder to start. up. a. new. business.
That’s why I left America to start my business in Hong Kong.
I know what the division of labor is and I’ve read wealth of nations. The problem is that when one company gets too big and becomes a defacto monopoly and takes away either the jobs or opportunities to earn money the rest, at some point you don’t have enough people to buy products and the market actually shrinks.
read the three posts about jaron lanier’s books: