Faisal Masud’s Post

Really enjoyed the read faisal masud and thank you for sharing your insights! I would offer a different lens on it - the 2 companies in your example, Google and Amazon, in my both experience and observation have very different strategic reasons behind their M&A efforts. Google has done it to be very offensive minded, to keep up with the 'moving eyeballs' to diversify into other screens/properties where people are spending time to drive new revenue streams, but also stay relevant. Amazon on the other hand has acquired to either a) accelerate their own internal roadmap/capabilities or b) put competitors out of business, so their M&A ROI shows up more in growth of their core items. I've met Jeff Blackburn a few brief times - that guy is sharp and not drunk with house money.

Another excellent analysis, faisal! It's also interesting to look at how Amazon uses each acquisition. Where Google arguably seems to do more integration of most of the organizations it acquires, Amazon appears varies based on whether the acquisition is content vs retail operations vs pure tech. MGM, IMDB, for example, seem like pure content plays to add fuel to Prime Video. Whole Foods, Zappos are to either learn something new about retail or fuel a retail expansion. Although under this argument, you would expect more people to jump on the bandwagon that Amazon should acquire a large retail chain (Kohl's is often mentioned) as an expansion tool for brick and mortar. Overall, this gives an impression of a lack of strategi plan at a higher level to achieve the needed integration to make these acquisitions successful over time.

looking forward to reading this after I got the trailer from the author :-)

Thank you, faisal masud, for a thorough assessment of capital allocation. You rightly highlighted Amazon’s negative CCC and its significance on cash flow and operations. Within the FMCG segment, negative CCC is the norm where inventory represents the largest component of working capital. For Amazon they have both inventory and high fixed cost investments. The latter requires the company to grow sales volume while reducing labor content with more tech investments. A negative CCC is a high-value weapon, but Amazon’s fixed cost structure and the continued need to invest in labor-saving tech make it vulnerable to any sharp or sustained demand slowdown.

Great read. Thanks for writing. One thing becoming interesting is the battle between these two in the advertising space. Amazon mainly selling promoted product ads when you search and Google selling a variety of shoppable ads across their properties and platforms. But while they go head to head with machine learning and programmatic ad insertion, the most interesting places to shop are populated with people hawking goods in native video environments. While Amazon has Twitch and Google has YouTube, neither own TikTok or the interface and UX of a platform growing because it puts humans at the core of the experience. If any M&A occurs in these areas, it should be for creator-driven software or analytics or tech that can amplify this behavior. Or more tech that can track addressable TV connected to search behavior. Interesting days ahead indeed. Can’t wait to read what you analyze next.

Fantastic write up.

Really interesting read Faisal. It seems a bigger chunk of Amazon's acquisitions have been companies that either sold physical products or had large physical footprint/infrastructure which can be really hard to incorporate and create synergies as opposed to Google going after more pure tech play companies.

YES. Foundational skill for all CEOs to build. “For an industry chock-full of smart and talented people, there is a tremendous amount of unintelligent capital allocation that takes place in the technology sector.” faisal masud

Excellent piece. I’d argue the ultimate ccc company is berkshire ;).