Some thoughts on Jeff Bezos and the Washington Post

Lots of ink has been spilled and bandwidth used to discuss the sale of the Washington Post to Amazon founder Jeff Bezos. I have just one thought to add to the discussion. For all the talk of Jeff Bezos as “innovator”, we can easily lose sight of his other real strength – leverage. The Amazon predictive analytics tools are truly innovative. But it has been Bezos’ ability to build upon his innovations that has set him apart.
Bezos built up a system to sell books online based on price arbitrage. He recognized that the large differential between publisher’s wholesale prices and bookstores retail provided an entrepreneurial opportunity. However, it was the fulfillment process that turned the opportunity into reality and made online sales possible.
Remember Tom Freidman’s 1999 prediction that Amazon would never generate profits because anyone could replicate their business model from a spare bedroom? Well, Freidman was right in the broad sense that the .com retailers were overhyped. But he was wrong about the ability to replicate the Amazon model. He saw it as simply price arbitrage. In reality it was customer service and logistics.
Bezos genius was to then leverage this infrastructure from selling books to selling anything. This set up the 21st Century battle to be the dominate online platform with eBay (who has come at a similar point from its more distributed model as befits its history).
What does this mean for the Washington Post? Look more for opportunities to leverage the Post’s journalistic assets rather than radical “innovation.” There are a couple of possible examples. The conventional route would be to expand into more in depth analysis – similar to the Economist’s special reports and more proprietary publications. (Interestingly, the Washington Post Company is not selling some of its other publication, such as Slate, which would have provided a natural linkage).
The other would be to tap into the recent interest in political intelligence for economic reasons. The establishment of Bloomberg Government is a possible model. One can envision a sister organization to the paper tapping into those journalistic assets.
As a recent BusinessWeek story notes, Bezos loves content. So look for innovation that actually is leverage of content in new ways. And that will be innovation indeed.

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