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Comment by choxi | Hacker News Reader

I think maybe the fundamental hard thing about startups is that you can’t ignore the problem space or the solution space. It’s not like Bezos was passionate about selling cheap books for years before Amazon, he saw that this new Internet thing was going mainstream and building on top of this new tech was the premise of the business more than selling books cheaply and quickly was.

Most of the startup opportunities in the last couple decades were built off the back of several deeper tech breakthroughs like mass mobile phone adoption and virtualization. I think more founders have been successful just riding these tech waves than sticking to a problem space. Brian Chesky didn’t work in hotel management and Travis Kalanack didn’t work in transportation. They were just familiar with cutting edge consumer tech and applied it to problems they had no familiar with before they started.

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Note that choice of starter product is important. Amazon started with books - you know exactly what you're getting, they always fit, they're hard to damage, they have pretty high markups and low shipping costs. People were willing to risk buying books online, back when online e-commerce basically consisted of the USENET misc.forsale groups.

Tesla and many other EV companies started with low-volume expensive sports cars, with high margins so they could be basically hand-crafted. (Tesla actually bought the chassis/body/interior from Lotus) If they had started with the Model 3, they'd have gone bankrupt long before they sold any.

I think Bezos also mentioned that he started with books because no single physical shop could have all the books, but Amazon could. It is a product with so many variations that Amazon had a clear competitive advantage.

Amazon's competitive advantage was not paying any tax. Amazon's selection in technical books was quite poor for quite a while.

However, the tax discount drove ALL the small, local technical booksellers out of business. It might have happened anyway since local sellers had to pay retail rent and so Amazon had a structural advantage. However, Amazon also gained a straight 8% advantage for not having to pay tax.

> Amazon's competitive advantage was not paying any tax.

I'm assuming you are saying "not paying sales tax". Amazon was operating like every other mail order bookseller that did not operate stores at the time. Retailers have complained for a century about mail order catalogs not collecting local sales tax. This was not new, or novel.

> the tax discount drove ALL the small, local technical booksellers out of business

Demand aggregation is a real thing. Localized, there's not a lot of demand for any specific niche technical book, and that leads to sub-optimal inventory. Why carry something you'll only turn once a year? You'd be better off putting that floor-plan money into gum, mints or batteries at the cash register. Quick access to product is why I shifted to buying technical documentation online. The local electronics store or bookshop could order books and it would often take 4-6 weeks for the book to arrive. Even early Amazon did 3-4 days. Demand aggregation is how Amazon won.

I remember at the time there was a lot of talk about how Amazon didn't have the costs of high street stores etc and was 'just' a web site.

That was never true - sure they didn't have high street stores, but they invested big time in warehousing. That's why you could get a book from Amazon in days, whereas a traditional seller it would take weeks if it needed to be ordered.

They also invested in the wider distribution network.

Another now-classic example of solving this chicken and egg problem, I think: Facebook starting with just Harvard, then ivy league colleges, then colleges, then colleges and high schools, and only finally the general public. At each stage the arena was small enough it was realistic to take the whole segment over, and then that became the seed for the next phase.

And their second product was CDs/DVDs, which have a lot of the same properties. Then they opened Amazon Marketplace, allowing other stores to sell through their site, and used the data of what was popular there to expand into other products – they were consistently very deliberate about what to sell next.

Bezos built Amazon to solve the traveling salesman problem.

But that spawned the traveling delivery truck problem.

That was solved by making employees pee in bottles. Need a restroom? Think outside the box, pee inside the bottle.

Then to be shadowed by the traveling delivery drone problem.

I think this also points out the timing aspect. The big "breakthrough" companies (breakthrough in terms of capitalistic successes) happened since people were in the proverbial right place and time with the right idea.

It's a falacy. Most of the time, what defines the "right time" is our post event bias. Apple launched the iPhone in 2007(?), so from our 2022 perspective, "they were just the first to do it but in 2007 everything that was needed to build an iPhone was already there". The fact that Apple succeded in creating an easy to use, touch screen based, infinitely expandable via software general purpose computing device is 100% their merit. Many companies had tried before, but noone were able to get it right. After you see it done, this concepr of " right time" arises, not before it. It's the same with the age of discoveries. Boats capable of crossing thr ocean had existed for centuries, but only around 1500 it became "the right time".

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