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Welcome to the Jason and Scot Show, your source for the latest news and trends

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in the e-commerce industry.

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Featuring hosts Jason Retail Geek Goldberg, Chief Commerce Strategy Officer

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of Publicis, and Scot Wingo, co-founder and CEO of ReFiBuy.

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Here are Jason and Scot.

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Welcome to the Jason and Scot Show. This is episode 354 being recorded on Friday, October 30th, 2026.

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I’m your host, Jason Retail Geek Goldberg, and as usual, I’m here with your co-host, Scot Wingo.

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Hey, Jason, and welcome back, Jason and Scot Show listeners.

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We have an action-packed episode for you today. We have so much going on in

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the worlds that we follow.

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We’ve got Instacart and DoorDash merging. We have Amazon Q3.

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We’ve got Google Q3. We’ve got, what’s other big news? We’ve got new MacBooks to talk about.

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Rest in peace, Patrick Stewart. I was disappointed. Yeah, that was sad. Yeah.

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Yeah, but we’ll get to see him in Doomsday. So that’ll be our last goodbye. Indeed, indeed.

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But most importantly, Jason, you and I love some gadgets. Did you order a new MacBook?

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No, and I have. You’re going to be able to touch the screen, dude.

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I have some gadget envy because I did not, and I feel like you did,

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and that does make it hard for me.

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But in the highly unlikely event that my wife is listening to this podcast,

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I want her to hear that I was being somewhat fiscally irresponsible.

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And if my laptop just magically looks more shiny, it’s because I recently washed it.

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Yeah, and I don’t think you were pulled into the iPhone Duo either.

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So you’ve been on really good behavior.

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I did not Duo, but I did get a new iPhone. which I feel like you did not.

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So I feel like, yeah. Yeah.

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Yeah, we’re trading. I’ve been patiently waiting on the computer piece for a while.

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I think you and I are a very similar sensibilities. And I think I just have

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a little bit newer laptop than you at the moment. So it would be slightly of

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a more nominal upgrade for me than it is for you. I think that’s the bottom line.

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Yeah, but I can’t wait until we’re together so I can touch my screen.

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Oh, yes, that will sting.

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You’re going to go crazy. You’re going to get tilted. Yeah, we have some similarities

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and some differences. I think the differences might be that it will sting me

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more than it would have stuck.

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Let’s talk about some light reading. Did you pick up the Anthropic S1 and give that a flip?

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Oh, oh, for sure. I actually had Anthropic read the Anthropic S1 for me.

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I think most people did. Yes, the vast majority of people did. Yeah, yeah.

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I feel like the world is so crazy now. Like I’m getting used to some numbers

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I didn’t think I would get used to.

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Yeah. As an entrepreneur, reading that was the most humbling experience of my life.

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It’s like, wow. And then even if I separate my own performance as an entrepreneur,

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and I think about you and I love to study different businesses and business models.

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And we’ve seen in our careers, you know, the rise of you were there in the early

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days of Blockbuster and all that jazz, which was like one era.

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Then we had the Googles and then Amazon and Meta.

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And then now this is It’s just like this whole other, just like the speed,

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the scale, the revenue per employees, like 300 million per employee.

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Everything you look at, it’s just like an incredible business.

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There are, it’s not perfect. There are a lot of things that can go off the rails

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and, you know, we don’t want to have the bubble discussion and all that.

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But if you just like look at it at this moment in time, wow,

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what a business day book.

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Yeah, yeah. I have a feeling we’re going to look back on this era and realize,

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what a special time this is. But even living through it, it kind of feels pretty challenging.

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Yeah, yeah. It’s wild times. Yeah.

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Let’s jump into this. Let’s do a quick travel update. Have you done any international

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travel? We were famously together at Retail Club. We recorded two days straight.

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I think we were both exhausted.

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Yeah yeah that was a long but fun gig yeah listeners and the audience has been

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asking for more content and we have been putting it out i’ve got a lot of favorable

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comments from folks we’re glad you guys are enjoying all the fresh content coming out,

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have you done any interesting gigs since then.

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I have i’ve traveled pretty much every week since then i think i’ve had one

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week at home but no, no, like public events, all, all client stuff.

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But again, pace of change in the world is so fast right now.

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Like, you know, I, I, one of the lucky parts of my job is I work with some pretty

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interesting clients that are all trying to figure out the same stuff you and

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I are trying to figure out. And it’s, you know, they all have different perspectives.

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So it’s, it’s a fun, fun learning.

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Yeah. Same on my side. A lot of really interesting, I feel like the theme for

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me is, and you’ve written about this.

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So for like the last two years, everyone’s been really into the GEO thing,

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AEO, GEO and all that jazz. And there’s a lot of people that say it’s all different

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and some say it’s the same. I’m not even going to get into that.

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And now everyone’s kind of like, okay, that really didn’t do much.

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I have an AI visibility slide now.

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And it moves all around and I feel like I have no control over it.

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And I’m like just putting out press releases as fast as I can.

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And that’s going to like, so that is stabilized. And maybe the bloom has come off that rose a bit.

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And now everyone’s like, but my products are really jacked up when I look at

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them in this surface and this surface. Why is that happening?

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So everyone, a lot of people are kind of coming around to this idea of like,

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you know, what I call a commerce optimization, which is a layer down.

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So I’ve been traveling. I just got back from New York and I was at this thing

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called the Conference Board where they have, this will sound familiar to you.

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It reminded me a lot of NRF. They have these different councils.

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They did a combined council around this topic, and I was one of the speakers

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at that. So that was a lot of fun. It was a very wide range.

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You get to experience a wide range. I’m usually in one kind of the band of mostly

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retailers, some brands.

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But there were kind of like some B2B companies that are feeling it,

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healthcare companies, insurance companies.

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And then there were a lot of CPG companies. So it was really interesting to

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kind of hear that everyone is feeling this. And it was a very interesting week

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for me because we also had all these earnings. The one we’re not going to spend

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a lot of time on is Reddit.

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And they’re just like cratering because they basically said,

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look, as things move from search engine to answer engine, we’re getting no traffic.

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And they basically said, we get nothing. Every time someone goes into AI mode

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on Google, we get nothing.

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That’s like a literal quote from the CEO. So it’s really interesting because

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people are really starting to feel it right now. Some of the things we’ve been

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talking about in theory.

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So, yeah, so it’s a really interesting time. No, no, no, for sure.

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And like on that, like that particular example, there’s kind of two interesting things.

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There’s a bunch of people that have been talking for a long time about this

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migration to zero click.

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And these are all people that tend not zero click from a commerce standpoint,

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but from a search standpoint that, you know, that like increasingly Google is

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stealing all the attention and keeping it all and not sending it out to the open web.

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Most of these people are kind of anti-Google.

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And like this, this Reddit story is red meat for them because it seems like,

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you know, the first like demonstrable sort of victim of this.

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And then the flip side is you, you mentioned all the hype, the annoying hype, I would argue about GEO.

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Side note, read my seminal article. GEO is, is probably bullshit,

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but you should do it anyway, is kind of my, my POV on that.

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But like for a long time, all the answers on GEO were you should lean into Reddit,

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which is apparently not alone going to work for you.

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Yeah. Those days may be over. I think Reddit will be just bot traffic of people

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just trying to slurp off the reviews. Yeah.

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Yeah. So I think they’re trying to pivot. They’re blocking the bots and going

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to log in only. And it’ll all be interesting to see how that all plays out.

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I have great empathy for these businesses that are getting disrupted.

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Yeah. And then I think it sets the table for ads.

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And we just came out with a podcast featuring a friend of yours and mine, Kiri Masters.

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And she is our presenting host of that new channel that we have.

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So it’s called Ad, A-D, Gentic, G-E-N-T-I-C.

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Check that out if you want to. It’s kind of, Kiri loves to do the shorter form

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kind of things. Because she’s smarter than you and I?

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Well, I don’t know what’s going on. I think maybe it’s a generational thing

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or maybe it’s a Jason problem.

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And it’s hard. So these are more snack size. If you like your 15 minute pods, Kiri is your gal.

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Otherwise you get, you’re stuck with, I think we’re going to do four hours on

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this one, Jason. You’re stuck with- I was going to ask you what you think the

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over-under is for this episode. Yeah.

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I’m thrilled that Kiri’s in the network. I feel like you are my agentic maximalist,

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in my network and Kiri is my advertising maximalist.

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So it’s kind of fun because I’m pretty convinced that you’re both a little too extreme. So it’s fun.

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That’s what makes it interesting is extreme, extreme perspectives help you think about it.

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At the risk of making this this episode even longer, I had a fun moment this

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week on LinkedIn because I I successfully I feel like I picked a fight with

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with you and our friend Andrew Lipson.

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And I I successfully painted both of you as loony extremists and me as the pragmatic,

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reasonable person in the middle, which is not anyone else’s perspective, but it’s fun.

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Yeah, you left a total trap for yourself, though, because you were talking about

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your prediction skills. And I was like, oh, boy. I was already ready.

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I was ready. I have data on this one, buddy.

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I have more. And mine agrees with yours. But yeah.

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Yeah. Okay. So one thing I have been dying to hear is your perspective on what

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is going on with DoorDash.

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So we’ve got food delivery and grocery delivery, getting married.

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So DoorDash is acquiring Instacart. What’s the Jason take on this?

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Yeah yeah so this is big news in in my world this week the sadly i i think we

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were so busy we didn’t record a prediction show this january is that your recollection as well.

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I remember we wanted to. Yes, I think we did not. I probably wrote one,

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but we didn’t lay it down.

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Yeah. And so I don’t think either was- You can retcon and say,

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this was your prediction.

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Yes, yes. I don’t think either was predicted it, but I did go back and I feel

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like I predicted Instacart getting acquired about six times on the show.

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You’ve always been of the stance. I can bear about that you’ve been of the stance.

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Yeah, and I’ve talked a lot about like, they’re going to end up being an infrastructure

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company and that they’re kind of the GSI commerce of grocery, right?

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Meaning they helped a bunch of people early on before they brought the capabilities

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in-house and they had to pivot once the biggest players all got good at e-commerce on their own.

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And I feel like that’s what we’re seeing with Instacart.

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There is a narrative that Instacart was shrinking and that the acquisition was

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a shotgun winning. Actually, that’s not true. Like Instacart is actually growing.

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The challenge is…

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Like the business is transforming, right? Like that, you know,

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they started out being able to serve these biggest, biggest retailers in the industry.

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They’ve all brought it in-house and Instacart had already started pivoting largely

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to ads and infrastructure to support them.

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And I think what’s happening now is DoorDash buying them is really,

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to me, it’s an infrastructure play.

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DoorDash is their future, not in helping deliver other people’s stuff.

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They see the future as delivering their stuff out of their fulfillment centers

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right these these dash marks and they’ve been,

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totally clear about that that they think from an efficiency standpoint all these orders

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the the speed of service is going up we have to deliver stuff faster it has

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to be more efficient a store designed for browsing and discovery is not a good

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place to pick a grocery order and so their belief is these are all going to

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get fulfilled out of dart stores this,

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model has kind of proven out at Amazon, you know, that have all those sub same

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day delivery stations that look a lot like Dashmarts.

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And so to me, this is about DoorDash buying the infrastructure to execute their Dashmart vision.

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Is what this comes down to. And it’s probably a smart play.

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Grocery is super bifurcated right now. All the traditional grocers are not doing

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well. They’re all flat or negative.

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And three people are winning grocery, Amazon, Walmart, and Costco.

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And so, and Costco is a little bit of a outlier.

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To me, this is DoorDash trying to become a third alternative to Amazon and Walmart.

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And we’ll see how it all plays out. But why it’s super interesting in my world

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is there are a number of grocers that were dependent, Instacart,

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for their infrastructure.

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They’re not just delivery, but that run their website and manage all of their digital marketing.

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And in essence, your infrastructure just got acquired by a competitor that doesn’t

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want to make you more successful that wants to replace you, right?

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And so that’s a big disruption for a lot of these regional grocers that are that are on it.

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Costco is very dependent on Instacart. Aldi is very dependent on Instacart.

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And so that’s a it’s a big moment when they found out about this this acquisition.

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And then Costco just add DoorDash to like have a little bit of separation.

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So Costco is not exclusively on DoorDash.

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They’ve had DoorDash has been their primary provider. They actually.

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Yes. I’m sorry. I’m saying that backwards.

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Instacart’s their primary provider. They added DoorDash and Uber Eats,

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by the way. So they still are slightly diversified. Yeah.

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All the, it moved like literally a couple of months ago to a hundred percent Instacart.

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And so superficially you go,

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ooh, that’s not a good moment. The one huge caveat in all these cases is.

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Aldi mainly sells stuff that only Aldi makes. And so, like, in a way,

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they’re insulated from this. If you’re mainly selling CPG, national branded

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products, like relying on Instacart

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as your infrastructure is probably not going to be a good place to be.

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Costco and Aldi, while they use a lot of Instacart, they sell a lot of Kirkland

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and Aldi products. So they’re somewhat protected from that.

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So it’s going to be interesting how all that plays out.

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And of course, as an advertising platform, this has even become,

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it was already important.

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It was probably the third most important grocery advertising platform,

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and now it’s going to be even more important.

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So if you’re a CPG trying to get visibility, like there’s a way in which,

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it you instacart used to be double counting right because you were selling to

00:15:19.600 –> 00:15:25.560
hyvee and to instacart and you know one order went to both right but now you know,

00:15:26.379 –> 00:15:30.349
this is potentially a third new customer for the cpgs it potentially,

00:15:31.400 –> 00:15:35.270
is a market expansion and what tends to happen is when this new distribution

00:15:35.270 –> 00:15:38.040
channel emergence that was in no one’s business plan at the beginning of the

00:15:38.040 –> 00:15:42.280
year it’s all incremental right like if they can get a order to fill all those dash marks.

00:15:43.819 –> 00:15:48.499
From this combined entity, that’s incremental sales that they didn’t forecast last year.

00:15:49.299 –> 00:15:53.710
Yeah. How much of this, so you think this was largely a reaction to,

00:15:54.000 –> 00:15:58.060
oh my gosh, we’re kind of out here and we’re small. We need to bulk up to kind of get into the game.

00:15:58.120 –> 00:16:00.980
Yeah, and I think they were dependent on a lot of grocers that weren’t going

00:16:00.980 –> 00:16:07.909
to succeed with or without them that were losing huge share of wallet to Amazon and Walmart.

00:16:08.600 –> 00:16:12.320
And they needed to muscle up to compete.

00:16:12.320 –> 00:16:17.170
And there’s a digital divide opening up in grocery and they desperately want

00:16:17.170 –> 00:16:19.630
to be on the winning side of that divide, not on the losing side.

00:16:19.630 –> 00:16:24.240
And so they are partnering up to give themselves the best chance.

00:16:25.769 –> 00:16:28.990
How much, I think it was interesting because almost at the same time,

00:16:28.990 –> 00:16:32.980
both DoorDash and Instacart came out with agentic commerce offerings.

00:16:33.290 –> 00:16:37.100
Instacart is really good. It’s kind of, it’s called Clementine and I don’t know

00:16:37.100 –> 00:16:39.860
if you’ve played with it or not. It’s A+, it’s a very good little,

00:16:40.210 –> 00:16:42.230
you know, on-site type agent.

00:16:42.880 –> 00:16:48.250
Yeah. It’s a little tricky because I feel like they’re taking a little bit of naming liberties.

00:16:48.610 –> 00:16:52.810
There’s more than one agentic thing in the ecosystem. technically clementine

00:16:52.810 –> 00:16:54.910
is the white labeled agent when you,

00:16:55.530 –> 00:16:59.959
when you use an eight if you’re a third party retailer that have them host their

00:16:59.959 –> 00:17:05.839
site and you want an agent and it it has some nuanced differences between the

00:17:05.839 –> 00:17:08.859
agent that runs on instacart.com for example but,

00:17:09.559 –> 00:17:14.030
but yes they call that that clementine sometimes inconsistently.

00:17:15.639 –> 00:17:20.879
So yeah so it’s all it’s interesting i was assuming you wouldn’t want to talk about these because,

00:17:22.139 –> 00:17:26.539
like one of the, one of the, the big quotable moments was like,

00:17:26.539 –> 00:17:30.999
someone asked them how, you know, if, if the, the third party agents and the,

00:17:31.539 –> 00:17:35.910
you know, potential competitive pressure from, from open AI and Anthropic and,

00:17:35.910 –> 00:17:38.850
and Google was, was one of the impetuses for this merger.

00:17:39.200 –> 00:17:43.800
And, and Tony essentially said like, agentic commonisters immaterial,

00:17:43.800 –> 00:17:46.790
we’ve like in aggregate gotten like 300 orders.

00:17:47.419 –> 00:17:50.339
Yeah, from music and stuff. Yeah. That makes sense.

00:17:50.969 –> 00:17:55.159
Yeah, which not shocking to me, but it’s another data point.

00:17:55.719 –> 00:17:57.829
I have a feeling this narrative will come up in a few hours.

00:17:59.169 –> 00:17:59.629
Yeah.

00:18:01.709 –> 00:18:04.689
A lot of people use that and they’re kind of like, boom, Agenda Commerce is

00:18:04.689 –> 00:18:09.109
nothing. Spike the ball. But again, it comes back to the definitional thing.

00:18:09.649 –> 00:18:13.379
I think if Agenda Commerce erodes Discovery and owns that layer,

00:18:14.089 –> 00:18:16.569
that’s pretty disruptive.

00:18:16.859 –> 00:18:21.179
Yeah. And of course it, it, it spoils the tension, but you and I, I think mostly agree.

00:18:21.609 –> 00:18:25.149
Like most of these arguments are about like how strict your definition is.

00:18:25.149 –> 00:18:29.059
Right. And he was very specifically, I think, responding to a muse question.

00:18:29.059 –> 00:18:34.329
Right. So it was like, is the meta agent coming and, and shopping?

00:18:34.649 –> 00:18:37.949
And, you know, he was like, that, that has not been very big.

00:18:37.949 –> 00:18:43.199
Like, I, and again, I, I think you and I both see the potential in those agents in the long run.

00:18:43.199 –> 00:18:46.099
I would not look at their small size now and conclude that they’re always going

00:18:46.099 –> 00:18:50.162
to be small i think there’s lots of paths for them to be very meaningful but

00:18:50.259 –> 00:18:52.709
like i i’m well aware that they’re,

00:18:53.299 –> 00:18:57.129
they’re minuscule at the moment and i would argue like not even good enough

00:18:57.129 –> 00:18:58.699
to be a minimum viable product yet,

00:18:59.379 –> 00:19:01.279
some yeah the.

00:19:02.929 –> 00:19:06.389
You’re more tolerant than i am i’m not really sure that they’re able to track

00:19:06.389 –> 00:19:11.479
it because frequently like i just ordered yes also as you you you correctly

00:19:11.479 –> 00:19:12.969
like would point out like they they,

00:19:13.999 –> 00:19:17.799
in the in the event that some of this is working well they wouldn’t actually

00:19:17.799 –> 00:19:21.800
know although they’re you know they’re they’re certainly paying traffic monitoring

00:19:21.800 –> 00:19:26.080
services that claim to identify the bot traffic i think you’ve had one on on retail jantic,

00:19:26.699 –> 00:19:30.639
yeah yeah yeah there’s like human instinct like and of course just,

00:19:31.359 –> 00:19:36.580
just human oh human and then like cloud flare certainly cloud flare yeah yeah

00:19:36.580 –> 00:19:39.699
there’s a design of these yeah so they they There’s all kinds of these things.

00:19:39.699 –> 00:19:41.919
I tend to tell you, but there’s, again, there’s so many kind of bots at the

00:19:41.919 –> 00:19:44.159
moment, and they can do some and not do some.

00:19:44.159 –> 00:19:49.019
I can tell you the big retailers have been like black hat teams and white hat

00:19:49.019 –> 00:19:53.069
teams with all these bots scraping each other for a long time before Ageantic

00:19:53.069 –> 00:19:58.159
and with Nick’s success. So it’s like not surprising that the way better bot

00:19:58.159 –> 00:19:59.149
versions are even harder.

00:20:01.329 –> 00:20:04.680
Cool. Well, let’s, anything else on that? Or you want to jump right on into the.

00:20:04.810 –> 00:20:09.510
No, no, no. I think, I think for those listeners that are at the gym,

00:20:09.510 –> 00:20:13.350
I think like to avoid anyone like losing consciousness, we should move on.

00:20:13.990 –> 00:20:18.029
All right. There you go. All right. So we have some exciting.

00:20:22.289 –> 00:20:28.479
Amazon news. Your margin is their opportunity.

00:20:30.029 –> 00:20:34.789
So setting the stage we had it’s interesting i think it was two quarters ago

00:20:34.789 –> 00:20:38.369
they all announced on the same day there was total chaos this time they spread

00:20:38.369 –> 00:20:44.499
out which is kind of nice but in doing so when you’re saying they you mean meta google amazon,

00:20:45.150 –> 00:20:49.059
yeah the big companies we kind of track okay well because i track walmart and

00:20:49.059 –> 00:20:50.199
they’re not till november,

00:20:50.909 –> 00:20:53.739
yeah yeah they’re they’re off cycle being a retailer,

00:20:54.570 –> 00:21:00.810
and so first of all we had meta and there’s lots of disclosures around muse and wall street is like

00:21:01.210 –> 00:21:04.070
i’ve never seen him so excited about things you and i are going to do a wall

00:21:04.070 –> 00:21:09.750
street call and i’m excited uh to hear what ron’s approach is on that because he’s pretty muse pilled

00:21:10.150 –> 00:21:13.729
i call it muse mania they’ve gotten muse mania over on wall street and they

00:21:13.729 –> 00:21:17.319
are you know they’re doing i sent you one of the bigger reports it was like

00:21:17.319 –> 00:21:20.649
56 pages and they did this really complex TAM analysis.

00:21:20.649 –> 00:21:24.549
They’re basically like, this thing could be $4 billion in 27.

00:21:24.869 –> 00:21:29.029
And then in that year, it could be 60 billion years. It’s like, whoa, whoa, whoa.

00:21:29.159 –> 00:21:31.979
I thought I was in a just a Comrades Maxwell. You guys are like,

00:21:32.619 –> 00:21:35.579
you’re past your skis. You’re into those.

00:21:36.309 –> 00:21:39.439
I don’t know where you are past the skis. It’s crazy. But I thought that was

00:21:39.439 –> 00:21:43.619
interesting. So there was like a euphoria from that. And I wouldn’t be surprised.

00:21:44.309 –> 00:21:46.829
Actually, on the meta side, they’re pretty excited about it too,

00:21:47.209 –> 00:21:50.109
and that’s all they talk about now. I wouldn’t be surprised if they rebranded

00:21:50.109 –> 00:21:52.309
the whole company to Muse, so that’ll be interesting to keep an eye on them.

00:21:53.239 –> 00:22:00.110
Then we had, so on Wednesday night, Google came out and they kind of didn’t

00:22:00.110 –> 00:22:02.830
do great. They missed some expectations.

00:22:03.229 –> 00:22:06.069
So they had, a lot of things are going to be mixed at this point.

00:22:07.049 –> 00:22:11.019
Their cloud compute just totally ripped. That’s GCP, Google Cloud Compute.

00:22:11.019 –> 00:22:12.929
Remind me, is 100% growth good?

00:22:13.560 –> 00:22:22.360
That is, yes. Now, they are a smaller base than AWS. You’ve got Azure, GCP, and then also AWS.

00:22:22.490 –> 00:22:27.500
AWS is the biggest one by far, but it’s slowing. And then the other guys are accelerating.

00:22:27.860 –> 00:22:31.660
Now, it’s a little unfair because Google, Amazon would call a little bit of

00:22:31.660 –> 00:22:35.360
foul on this because Google is putting in their, they’re selling hardware now

00:22:35.360 –> 00:22:37.622
called TPs, which is their GPU.

00:22:38.160 –> 00:22:42.520
And, but then Amazon is too. So it’s kind of starting to be more apples and apples.

00:22:43.420 –> 00:22:48.090
Poor old Microsoft doesn’t have their own GPU to sell, but they’re doing just

00:22:48.090 –> 00:22:49.240
fine. Don’t sleep over that.

00:22:49.799 –> 00:22:55.529
So that part of the business was good, but there was one comment on the Google

00:22:55.529 –> 00:22:58.469
call that just totally tilted the whole market.

00:22:58.609 –> 00:23:01.329
And it’s really interesting. It didn’t come until the Q&A, and I want to read

00:23:01.329 –> 00:23:03.059
this very exactly so I don’t mess anything up.

00:23:03.382 –> 00:23:06.390
One of our friends, Doug Anmuth, he is a Wall Street analyst,

00:23:06.390 –> 00:23:10.670
and he said, so when they reported in the prepared remarks, there was this disconnect,

00:23:10.670 –> 00:23:14.820
and no one on Wall Street could understand it. The disconnect is query growth

00:23:14.820 –> 00:23:15.920
was growing very quickly.

00:23:16.070 –> 00:23:20.030
And Sundar is like, we’ve never seen this much growth in the search volume.

00:23:20.440 –> 00:23:23.740
But at the same time, revenue from search started decelerating.

00:23:24.020 –> 00:23:27.960
And so you have one line going up. And normally those lines would be.

00:23:28.870 –> 00:23:32.110
Totally correlated. You know, if not, Google’s always been good about,

00:23:32.110 –> 00:23:35.240
well, search went up, but actually ad revenue went up higher because,

00:23:35.580 –> 00:23:38.240
you know, there’s so many people that want this great quality traffic.

00:23:38.560 –> 00:23:43.989
But then what happened is search volume went up and revenue went down and it slowed.

00:23:44.370 –> 00:23:47.350
And that is a very strange thing in the world of Google.

00:23:47.880 –> 00:23:51.220
So Phil Schindler, who is, you know, one of the business guys there,

00:23:51.690 –> 00:23:56.940
he answered and said the biggest, the biggest part Part of search discoloration

00:23:56.940 –> 00:24:00.780
revenue was some headwinds on financial exchange, some courtesy stuff.

00:24:01.710 –> 00:24:05.980
And then they talked about some things or some puts from a year ago with World

00:24:05.980 –> 00:24:09.590
Cup and then Europe. There’s all this international noise in the number.

00:24:09.920 –> 00:24:12.190
And it kind of felt like a little tap dancing.

00:24:12.769 –> 00:24:18.759
And then he kind of like, he then said, and the strong growth in AI mode queries,

00:24:19.219 –> 00:24:24.729
had an impact because of the lower monetization we were seeing in AI mode.

00:24:25.109 –> 00:24:28.999
So this is the big fear that everyone’s had is like if you have two customer

00:24:28.999 –> 00:24:34.779
experiences and consumers and one of them, traditional Google monetizes at this,

00:24:35.279 –> 00:24:38.539
you know, it’s been tuned for 20, 30 years and it’s just humming.

00:24:38.919 –> 00:24:43.959
And then you offer this other experience that doesn’t have as many ads and many

00:24:43.959 –> 00:24:49.189
people, because it is now an answer engine, would find potentially better and

00:24:49.189 –> 00:24:52.949
more compelling when they see that one, they go over there too fast.

00:24:52.949 –> 00:24:57.819
I think Google’s been good at controlling that. And I think maybe that is flooding over now.

00:24:58.219 –> 00:25:01.919
And Google is doing that because just since we’ve had our last podcast,

00:25:02.349 –> 00:25:06.499
an AI overview, when it says more, it typically now will dump you into AI mode.

00:25:06.649 –> 00:25:11.049
On core Google, frequently, it will put you into AI mode if you enter a longer

00:25:11.269 –> 00:25:16.730
search query string because they realize that old Google doesn’t give you an

00:25:16.730 –> 00:25:18.400
answer, AI mode Google does.

00:25:19.449 –> 00:25:23.970
And then what’s really interesting is the agentic shopping stuff that was kind

00:25:23.970 –> 00:25:29.339
of started in AI mode, it is now over on Core Google as well.

00:25:29.559 –> 00:25:35.319
So they’re merging in a way too, which makes it a little confusing,

00:25:35.319 –> 00:25:37.199
but there’s still kind of two separate interfaces.

00:25:37.202 –> 00:25:41.160
But Core Google, they’re sending a lot of traffic over there and it’s not monetizing

00:25:41.160 –> 00:25:45.060
as well, which has really got people freaked out.

00:25:45.880 –> 00:25:51.339
Yeah. Did you freak out? No, no. You know, I think people in my industry are going to freak out.

00:25:51.339 –> 00:25:55.209
Right. Because that’s already getting wildly misquoted.

00:25:55.209 –> 00:26:01.479
Right. Like so the most common quote now is like, well, why why did you miss your your guidance?

00:26:01.479 –> 00:26:06.240
And oh, exclusively because search volume is going up.

00:26:06.240 –> 00:26:09.620
But monetization is going down because agents are less monetizable.

00:26:09.620 –> 00:26:12.710
Like that’s how it’s getting quoted. And for your point, like he.

00:26:13.620 –> 00:26:18.580
He had, he listed like eight macroeconomic factors as most prevalent and then

00:26:18.580 –> 00:26:20.790
said this, right? So I think it’s on the mix.

00:26:21.160 –> 00:26:23.070
I do think it’s a real thing.

00:26:23.660 –> 00:26:27.480
I don’t personally get very worried about it because in the history of every

00:26:27.480 –> 00:26:31.750
advertising platform, you, you never start with the monetization.

00:26:31.750 –> 00:26:34.610
Like it’s always free and good at first.

00:26:34.910 –> 00:26:38.520
And then you add the monetization after everybody gets addicted to it.

00:26:38.520 –> 00:26:44.620
Right. So Google was 10 blue links and, you know, then ads slowly went on to it.

00:26:44.620 –> 00:26:49.039
Right. And Meta was a free way to, you know, hear from all the friends in your

00:26:49.039 –> 00:26:54.399
social graph. And now it’s it’s all paid. LinkedIn used to be organic content. Now it’s all paid.

00:26:55.110 –> 00:27:00.870
So like AI Overview is still at the, like, let’s get people addicted to this.

00:27:00.870 –> 00:27:03.030
It’s not as heavily monetized.

00:27:03.939 –> 00:27:08.179
I don’t think it’s going to be particularly challenging to monetize it.

00:27:08.529 –> 00:27:10.189
And I actually think in the long run.

00:27:11.179 –> 00:27:17.309
Google has an enormous advantage in, you know, a billion legacy users that they

00:27:17.309 –> 00:27:20.769
get to move over to these new things, whereas, you know, new people that invent

00:27:20.769 –> 00:27:25.109
stuff have to have to go out and recruit all those those users. Right.

00:27:25.709 –> 00:27:32.869
So so I I absolutely think the this shift in attention from search to to answer

00:27:32.869 –> 00:27:37.739
engines is a disruption in the market and it will disrupt advertising along

00:27:37.739 –> 00:27:38.609
with a lot of other things.

00:27:39.009 –> 00:27:43.999
But I don’t endemically look at the new thing and go, oh, it’s way less monetizable

00:27:44.329 –> 00:27:48.209
than the old thing. It’s just they haven’t executed the monetization to the

00:27:48.209 –> 00:27:50.229
same level, which I think is smart.

00:27:50.690 –> 00:27:53.840
Yeah, Wall Street’s kind of on a wall of worry because there’s just a lot of

00:27:53.840 –> 00:27:56.670
concern over this AI buildout. The numbers are getting staggering.

00:27:56.670 –> 00:27:59.390
No, and it’s- They’re looking for any crack in the dam. And this is all like

00:27:59.390 –> 00:28:00.400
a crack in the dam. They’re both ironic.

00:28:00.410 –> 00:28:03.860
Like, they look at, like, these numbers are so eye-watering and scary.

00:28:03.860 –> 00:28:07.020
And like, I mean, I, I, I think what did Google say? They’re,

00:28:07.480 –> 00:28:11.110
they’re forward looking CapEx was going to be like 250 billion.

00:28:11.110 –> 00:28:16.380
And then they’re always like, yeah, Amazon’s at 220. And I think Google’s worth of that. Yeah.

00:28:17.210 –> 00:28:21.260
And way more in subsequent years, the starter year.

00:28:21.470 –> 00:28:24.820
And so I think understandably investors are nervous, but it was kind of funny

00:28:24.820 –> 00:28:28.170
because they’re like, oh, this is the, the crack in Google. And so we’re going

00:28:28.170 –> 00:28:30.540
to, we’re going to panic and short Google.

00:28:31.089 –> 00:28:34.739
But then when we talk about Amazon, we’re going to talk about partly why like

00:28:34.739 –> 00:28:38.069
Amazon stock is getting negatively affected because Google did so well.

00:28:39.469 –> 00:28:43.279
Yeah, it’s very, very counterintuitive. Yeah. So what happened is let’s pivot

00:28:43.279 –> 00:28:45.869
into that. So, oh, one more thing on Google.

00:28:46.129 –> 00:28:48.379
In the, I wonder if you picked up on this.

00:28:48.739 –> 00:28:52.589
So someone asked Sudar if they plan on coming out with basically a Muse-like thing.

00:28:52.969 –> 00:28:55.769
And because if you look at a matrix that who has them, they’re basically kind

00:28:55.769 –> 00:28:58.679
of out alone without one. And yeah.

00:28:59.499 –> 00:29:04.089
Yeah, he said, I mean, they have a nice one, haven’t they? Isn’t that good? Yeah, it’s terrible.

00:29:04.549 –> 00:29:08.919
Yeah, it’s not good. You can’t find it as terrible. Yeah, we’ll agree to disagree.

00:29:08.919 –> 00:29:10.239
They’re all terrible, but okay.

00:29:10.729 –> 00:29:13.859
Okay, that one’s the worst. The most terrible list, okay.

00:29:14.999 –> 00:29:18.239
And it’s like pedantic. You know how on your iPhone, it’ll occasionally ask

00:29:18.239 –> 00:29:20.879
you, do you really want to allow a copy paste? And you’re like,

00:29:21.179 –> 00:29:25.529
geez, take that to like the eighth level. It asks you questions a thousand times.

00:29:26.150 –> 00:29:29.060
Do you really want to period it in that sense? Things like that.

00:29:29.340 –> 00:29:33.739
And so as a friend of Walmart, I also don’t like them naming things spark, but that’s a.

00:29:36.074 –> 00:29:39.489
He said, we’ve, we’ve done these agents and the enterprise, you did this very

00:29:39.489 –> 00:29:42.929
long answer into the tail end. And he kind of tailed off on the call.

00:29:43.369 –> 00:29:47.339
He’s got kind of a low voice anyway, which I understand. And he said,

00:29:47.509 –> 00:29:49.699
and we’re going to have a consumer one out by the end of the year.

00:29:50.179 –> 00:29:52.169
So, so they’re going to have something out by the end of the year.

00:29:52.439 –> 00:29:56.079
And you and I know that you can’t, and he specifically said earlier,

00:29:56.079 –> 00:29:59.229
it will, it will help people. We have, we want to have options.

00:29:59.229 –> 00:30:02.619
We have one that helps people sell and one that helps people shop.

00:30:02.929 –> 00:30:07.379
And so putting those two comments together, which I think is pretty logical,

00:30:07.689 –> 00:30:10.539
they’re going to come out with their own version of a Muse-like thing.

00:30:11.029 –> 00:30:14.779
And I’ve kind of come to the conclusion it needs to be in the next 28 days or

00:30:14.779 –> 00:30:18.719
so, because if you come out with anything after Thanksgiving and you miss the

00:30:18.719 –> 00:30:22.629
core of Cyber 5 or Turkey 5, I forget what you call it.

00:30:24.729 –> 00:30:29.379
Then you’re kind of toast. So I suspect we’ll have something from Google in

00:30:29.379 –> 00:30:31.949
the next 30 days, which will be exciting for me at least.

00:30:32.469 –> 00:30:36.749
Interesting yeah i guess since you hate them all you won’t even fear no i mean i,

00:30:37.409 –> 00:30:41.949
i i see the potential in them i i think like you and some other people are,

00:30:42.529 –> 00:30:47.399
slightly over exuberant about the current experiences right like i i’ve been

00:30:47.399 –> 00:30:50.669
doing this for a long time i i worked from in my first computer store when i

00:30:50.669 –> 00:30:52.959
was 14 years old and i distinctly remember,

00:30:53.619 –> 00:30:56.849
a guy walking in and me teaching him about this him this new thing called the

00:30:56.849 –> 00:31:00.639
computer and how you could store all your files in it and how much better it

00:31:00.639 –> 00:31:02.229
was than a filing cabinet, right?

00:31:02.229 –> 00:31:04.429
Because you could digitally store all your files.

00:31:04.659 –> 00:31:08.670
And he looked at me and he said, Jason, here’s my filing cabinet today.

00:31:08.970 –> 00:31:12.350
Like name a topic and watch how fast I can pull out the file.

00:31:13.049 –> 00:31:17.489
Can you do that faster on your VIC-20 computer? No.

00:31:18.769 –> 00:31:23.039
Right. And his point was like very, very well stated.

00:31:23.039 –> 00:31:27.939
Like it’s cool that you could do these new things, but like until they do them

00:31:27.939 –> 00:31:31.919
better than the old way, they’re not going to get mass adoption, right?

00:31:31.919 –> 00:31:37.309
And there are some things that Muse could probably do better today than the

00:31:37.309 –> 00:31:39.359
old way, but one of them is not shopping.

00:31:40.610 –> 00:31:45.040
Agree to disagree. All right. Yeah. I’m talking about discovery.

00:31:46.290 –> 00:31:51.529
Okay. So then what happened is Wall Street was like, okay, Google missed because

00:31:51.529 –> 00:31:54.679
of some AI mode thing. Amazon doesn’t have AI mode.

00:31:57.599 –> 00:32:01.309
But they really surprised Google. Spoiler alert. I would argue that Amazon does,

00:32:01.309 –> 00:32:02.759
but we’ll get to that. We’ll get to that.

00:32:07.299 –> 00:32:13.689
The but but aw we have aws at 34 i bet they’re going to totally crush it so

00:32:13.689 –> 00:32:17.259
what started to happen is in 24 hours the whisper numbers went from the wall

00:32:17.259 –> 00:32:22.259
street kind of thing since this of 34 36 kind of what amazon guided to

00:32:22.599 –> 00:32:26.079
to 40 everyone’s like oh they’re going to absolutely because both,

00:32:26.539 –> 00:32:32.180
both google and microsoft just blew away their compute number yep and then what

00:32:32.180 –> 00:32:34.059
happened was a couple of things.

00:32:35.020 –> 00:32:39.220
So first of all, it was the way Wall Street thinks about this is kind of like,

00:32:39.220 –> 00:32:43.170
did you meet the current guidance or not that you gave last time from the last

00:32:43.170 –> 00:32:45.660
quarter? So that’s a beat, meet or miss.

00:32:45.980 –> 00:32:49.500
And then what are you doing next month? But this introduces a new third dimension,

00:32:49.500 –> 00:32:52.520
which is, okay, you told us what you were going to do.

00:32:52.860 –> 00:32:56.360
We now have this new idea what you’re going to do, which is our expectation.

00:32:57.580 –> 00:33:01.200
The company’s expectations, Wall Street expectation. and then what’s that even

00:33:01.200 –> 00:33:03.800
like project it’s almost like two more things into the future,

00:33:04.280 –> 00:33:08.420
so this is this quarter is what you had called they met the guidance they give

00:33:08.420 –> 00:33:12.940
so they met amazon met their own expectations but they missed wall speed’s expectations

00:33:12.940 –> 00:33:17.520
because it kind of ran rampant thanks to their friends at google this sounds very similar to the

00:33:17.940 –> 00:33:20.120
budgeting process at publicist by the way but yeah.

00:33:22.190 –> 00:33:25.730
Yep everyone gets like super big and then like it gets cut and then you like

00:33:25.730 –> 00:33:27.750
a little bit more and then you’re somehow landing there

00:33:28.160 –> 00:33:33.060
yeah and by the way one other fun constraining factor of all this like amazon’s like oh and we’re gonna

00:33:33.450 –> 00:33:39.160
spend 220 billion dollars on more capacity and even with that spend we have

00:33:39.160 –> 00:33:43.010
sold 100 of our future capacity and it’s like

00:33:43.350 –> 00:33:49.239
well how how do you miss your forecast when the warehouse is empty right like yeah it was really yeah,

00:33:50.109 –> 00:33:52.499
Yeah. Some of it doesn’t pencil. We’re going to dig into that.

00:33:53.129 –> 00:33:56.329
And my favorite one, we’re going to have a lot of disagreements on this.

00:33:59.240 –> 00:34:03.810
And then you gave two disclosures that we’ll go into that everyone was like, head explode emoji.

00:34:04.170 –> 00:34:07.530
It was like, they already couldn’t process what was going on to your point.

00:34:08.070 –> 00:34:13.020
And then Amazon ads, as they dug into it, this is the real quizzical things. It totally whiffed.

00:34:13.570 –> 00:34:16.970
And no one really asked any questions about it, but we’re going to dig into

00:34:16.970 –> 00:34:19.459
it. So I thought that was really weird of like all the things.

00:34:20.425 –> 00:34:25.589
So, and then they dropped a lot of exciting new details about Alexa for shopping,

00:34:25.589 –> 00:34:27.289
which going forward, we’re going to call AFS.

00:34:27.489 –> 00:34:30.759
Just we say less words and Jason’s device doesn’t trigger on him,

00:34:31.009 –> 00:34:32.969
which is already done in the green room.

00:34:33.459 –> 00:34:36.179
Yeah, we accidentally purchased several products in the green room.

00:34:36.849 –> 00:34:39.979
Yeah, if you’re not aware, a lot of people still don’t realize this.

00:34:39.979 –> 00:34:42.769
Rufus is sadly went to the farm.

00:34:43.329 –> 00:34:46.929
And now we have AFS is what we’re talking about, the on-site agent previously

00:34:46.929 –> 00:34:51.309
known as Rupus. The long form is Alexa for shopping, but internally at Amazon,

00:34:51.309 –> 00:34:52.899
everyone calls it AFS in the industry.

00:34:54.070 –> 00:34:59.197
So before we dig into some of that, do you want to take us through the headline numbers? Yeah.

00:35:01.370 –> 00:35:06.729
So you already covered the financial numbers, right? Or did we want to cover just their…

00:35:07.419 –> 00:35:10.989
I’ll give a headline of them. Yeah. So the business grew 12%.

00:35:10.989 –> 00:35:14.409
Now, another thing to know is, and this is going to come up a lot,

00:35:14.739 –> 00:35:18.749
is they moved Prime Day, which is always a total PETA. Because last year,

00:35:18.749 –> 00:35:22.319
it was in Q3, and they moved it into Q2 this year. So that creates all kinds

00:35:22.319 –> 00:35:24.939
of comp problems. But just remember that it’s moved.

00:35:25.339 –> 00:35:30.649
So basically said, look, if Prime Day had been in Q3, that was 400 bips.

00:35:30.649 –> 00:35:35.119
So we would have, instead of growing at 12%, we would have grown at like 16%, 17%.

00:35:35.469 –> 00:35:37.499
So everything’s hunky-dory on the top one.

00:35:38.369 –> 00:35:43.269
That huge negative cash flow, but that’s just because they’re just buying CapEx as much as possible.

00:35:43.739 –> 00:35:48.439
There’s a lot of noise in the free cash flow numbers and things from that.

00:35:48.849 –> 00:35:52.399
A lot of that, some of us rented. There’s like all kinds of financial accounting

00:35:52.399 –> 00:35:55.669
mechanisms in there. They borrowed more money than they usually do, didn’t they?

00:35:56.849 –> 00:35:59.349
Yeah. A lot of these companies are because they can kind of,

00:35:59.669 –> 00:36:04.519
they’re chewed into free cash flow and they need more money to go buy things.

00:36:05.369 –> 00:36:10.189
There was a podcast sidebar. I don’t know if you saw this. A16Z has a really good podcast.

00:36:10.619 –> 00:36:15.519
And it was like two of my favorite folks, Ben Horowitz, who is the Horowitz

00:36:15.519 –> 00:36:16.599
of Andreessen Horowitz.

00:36:16.908 –> 00:36:20.170
He has a very good book in my world called The Hard Thing About Hard Things.

00:36:20.170 –> 00:36:23.440
And he asked Jassy some really good questions. I’ve never heard anyone ask him.

00:36:23.881 –> 00:36:27.819
They did an hour long, you would like this. It’s a very long format,

00:36:27.819 –> 00:36:30.399
sit down with Jassy that is exceptionally good.

00:36:30.839 –> 00:36:35.009
And his command of these numbers is like nothing I’ve ever seen before. It’s insane.

00:36:35.770 –> 00:36:38.530
Yeah. You should check it out. The guy’s- Oh yeah, I listened to the whole thing.

00:36:38.990 –> 00:36:43.880
He is on this, you know, he is on this tier of executive that is just amazing.

00:36:44.909 –> 00:36:48.419
Yeah, for sure. I would I would argue a lot of the Amazon execs have a great

00:36:48.419 –> 00:36:53.429
grasp of their business. But like if you think about what a big and wide spanning

00:36:53.429 –> 00:36:58.909
enterprise all of Amazon is, it’s it’s all the more impressive at the Andy Jassy level.

00:36:59.580 –> 00:37:03.750
Yeah. And you can say stuff. Yeah. Back when I started AWS at Amazon. Yeah.

00:37:04.710 –> 00:37:09.180
Yeah. That’s always cool. And I I believe fact check me, but I believe that

00:37:09.180 –> 00:37:10.230
business is going pretty well.

00:37:10.960 –> 00:37:13.850
It is. And in fact, this is one of the things that really set people back.

00:37:13.850 –> 00:37:16.900
He was going through the things and he was talking about the business overall.

00:37:16.900 –> 00:37:18.560
And then he kind of like pauses for a second.

00:37:18.820 –> 00:37:22.320
And he said, this is very uncharacteristic in Amazon world. He did this last

00:37:22.320 –> 00:37:24.450
time. I thought it was like a little giddy. He was talking about grocery.

00:37:24.450 –> 00:37:28.040
Remember I’d called that out. Yeah. This time he said, there’s never been a

00:37:28.040 –> 00:37:32.500
business that has one with $1 trillion of annual revenue.

00:37:33.560 –> 00:37:37.159
Amazon is on a path to have two of those. Basically, the stores,

00:37:37.379 –> 00:37:41.799
what they now call, he calls the stores, which is everything but AWS and AWS.

00:37:42.469 –> 00:37:47.610
And then that was pretty crazy. Then he said, speaking of guidance,

00:37:47.810 –> 00:37:54.330
I want you to understand that AWS going forward is going to grow north of 40%.

00:37:54.900 –> 00:37:58.950
And remember, they printed like into the 30s when everyone was kind of whisper of 40.

00:37:59.370 –> 00:38:04.570
So it was kind of like, everyone’s like, oh, that stank, Q3 was not as exciting

00:38:04.570 –> 00:38:07.240
as we thought it was. What’s going on? He said, oh, don’t worry about it.

00:38:07.752 –> 00:38:15.029
Not only am I going to guide you to AWS being north of 40% for 27, but it also will be in 28.

00:38:15.839 –> 00:38:21.619
On the A16Z podcast, he told them, yeah, we’re basically sold out of all of 27 and most of 28.

00:38:21.899 –> 00:38:26.819
We keep a little bit for customers that grow, but we’re basically sold out for the next two years.

00:38:27.199 –> 00:38:30.249
It’s crazy. Yeah. There was actually an interesting conversation on that podcast

00:38:30.249 –> 00:38:34.919
about the strategy of how much of your capacity to sell versus keep for yourself,

00:38:34.919 –> 00:38:39.449
right? Because like a lot of Amazon’s businesses. This is a Google problem, too.

00:38:39.789 –> 00:38:44.299
Google is starving off Gemini to feed other folks, to feed GCP.

00:38:44.319 –> 00:38:46.770
Yeah, this is the new world we live in. Yeah.

00:38:47.610 –> 00:38:51.140
Then he said we’re installing, he calls them AI accelerators,

00:38:51.140 –> 00:38:55.119
basically a GPU of some flavor, be it a, what’s their name called?

00:38:56.039 –> 00:39:02.030
I forget what the name of their one is, an NVIDIA or their own flavor about every 14 seconds.

00:39:02.530 –> 00:39:06.019
And when we install one, customers gobble it up. So pretty crazy.

00:39:06.639 –> 00:39:09.819
Yeah, yeah. And he likes his better than the NVIDIA one because he said the

00:39:09.819 –> 00:39:14.569
price per performance is better, right? Like the NVIDIA is the absolute performance

00:39:14.569 –> 00:39:19.099
king, but the price per performance, he feels like training. Just came to me. Yeah.

00:39:19.749 –> 00:39:23.049
Exactly. Thank you. It has the wrong name. And I always have to think,

00:39:23.049 –> 00:39:25.929
why? It’s got the wrong name. It’s not because it sounds like it should be for

00:39:25.929 –> 00:39:30.390
training inference for training. But yeah, yeah, yeah, that’d be sure we thought that.

00:39:30.670 –> 00:39:33.090
Yeah. Not too late. Maybe they’ll call it Rufus.

00:39:33.950 –> 00:39:38.310
And then you and I were fresh from grocery. Did you get a chance to look at

00:39:38.310 –> 00:39:41.560
some of the grocery numbers? Yeah, yeah, yeah. Both the retail and the grocery numbers.

00:39:41.850 –> 00:39:46.830
And caveat, like what Amazon calls retail is not what you and I might think

00:39:46.830 –> 00:39:48.130
of as the retail business, right?

00:39:48.130 –> 00:39:53.360
Because first of all, the P&L is, you know, it’s 60% marketplace.

00:39:53.360 –> 00:39:57.290
So they’re talking about, you know, all the merchant fees that they get on the marketplace.

00:39:57.695 –> 00:40:02.339
They definitely, you know, include online, offline ads, the ads in there.

00:40:02.639 –> 00:40:04.299
You called it everything but AWS.

00:40:04.679 –> 00:40:09.669
I would actually argue it’s small at the moment, but they hope it’s a big business

00:40:09.669 –> 00:40:14.239
someday. Leo would be the third business, right? Yeah. Like the satellite.

00:40:14.912 –> 00:40:19.409
It’s not in stores. But so stores is this complicated thing.

00:40:19.409 –> 00:40:24.850
And we could talk about the comps on stores, the number of units and all that stuff.

00:40:24.850 –> 00:40:32.360
But what I always try to do is model the gross merchandise value, right?

00:40:32.360 –> 00:40:36.520
Which is getting harder and harder to do, way smarter than people than me,

00:40:37.180 –> 00:40:37.930
you know, like our friends at

00:40:37.930 –> 00:40:42.260
Citibank and Morgan Stanley each have these really sophisticated models.

00:40:42.899 –> 00:40:46.899
And so I look at a range of all their models of GMV, right?

00:40:47.249 –> 00:40:53.089
And basically, depending on how, like what model you want to believe,

00:40:53.619 –> 00:40:59.809
the range of their retail growth was somewhere between 7% at the low end.

00:40:59.809 –> 00:41:01.709
And this is North American retail sales.

00:41:02.180 –> 00:41:04.570
And like 12% at the high end.

00:41:05.449 –> 00:41:12.679
And so that’s a pretty healthy number. All of retail is growing at like 3% or

00:41:12.679 –> 00:41:19.229
4%, but digital is growing at like 7% or 8%, right?

00:41:19.229 –> 00:41:23.639
So depending on where Amazon really falls, obviously the overwhelming majority

00:41:23.639 –> 00:41:27.849
of Amazon sales are digital, so you can kind of compare them against other people’s digital numbers.

00:41:28.653 –> 00:41:30.640
Whole Foods isn’t very significant in the number.

00:41:31.550 –> 00:41:36.540
So so you end up with, you know, Amazon is growing somewhere between like at

00:41:36.540 –> 00:41:42.580
the industry average and well above the industry average in terms of how much stuff they sell.

00:41:42.990 –> 00:41:46.750
But what’s super interesting is the mix is dramatically changing.

00:41:46.750 –> 00:41:51.090
Right. So they are selling many more items than they used to sell.

00:41:51.090 –> 00:41:54.050
And those items are less expensive than they used to be.

00:41:54.390 –> 00:41:59.430
And that is largely because of this huge unlock that we talked about on a previous

00:41:59.430 –> 00:42:03.409
podcast about everyday essentials and grocery, right? And so,

00:42:03.409 –> 00:42:06.079
you know, they’re selling a lot of lower cost items.

00:42:06.359 –> 00:42:10.409
They’re selling a lot of smaller carts because their speed of delivery is so

00:42:10.409 –> 00:42:14.309
fast for all these items that instead of people doing a weekly stock up and

00:42:14.309 –> 00:42:17.759
buying all their groceries together, they just buy everything they need ad hoc

00:42:17.759 –> 00:42:19.849
and it shows up at their house 30 minutes later.

00:42:20.129 –> 00:42:27.149
So the stock up order is like, to some extent, going away in favor of all these ad hoc orders.

00:42:27.149 –> 00:42:32.329
And so they’re like, I think they said that their everyday essentials grew three

00:42:32.329 –> 00:42:36.789
times faster than their traditional stuff. Like, you know, their best customers

00:42:36.789 –> 00:42:38.299
do buy both kinds of stuff.

00:42:39.110 –> 00:42:47.070
But so they’re growing very healthy and they’re primarily winning this grocery

00:42:47.070 –> 00:42:49.940
area, which is a total white space for them.

00:42:50.400 –> 00:42:56.990
And as we talked about earlier, like only really Amazon, Walmart and Costco

00:42:56.990 –> 00:43:00.190
are growing at grocery like at the expense of everyone else.

00:43:00.190 –> 00:43:04.690
Right. So this all this Amazon growth right now is coming right out of the Kroger’s

00:43:04.690 –> 00:43:05.970
and Albertsons of the world.

00:43:07.110 –> 00:43:10.487
And so so that that is pretty interesting.

00:43:10.500 –> 00:43:15.160
And then, you know, he he talked about, you know, and when you factor ads,

00:43:15.160 –> 00:43:19.539
which are an important part of the retail model, you know, that it’s a very,

00:43:20.159 –> 00:43:27.020
favorable unit economics, even with these these smaller order order values. Right.

00:43:27.880 –> 00:43:33.030
So that’s the big takeaway on retail. Now, if you compare them to U.S.

00:43:33.030 –> 00:43:40.010
Census, again, like low end of the GMB, they’re kind of tying the digital portion of U.S. Census data.

00:43:40.350 –> 00:43:43.389
Who they’re getting crushed by is Walmart, right?

00:43:43.389 –> 00:43:47.639
So if even the high end of their GMB growth is like 11 or 12 percent,

00:43:48.360 –> 00:43:52.460
Walmart is like 24 to 26 percent digital growth.

00:43:52.460 –> 00:43:56.900
Now, it’s a much smaller base, right? Like Amazon’s digital business is much

00:43:56.900 –> 00:44:00.750
bigger than Walmart’s, but Walmart’s is the second biggest in the U.S.

00:44:00.750 –> 00:44:02.850
And it’s growing quite a bit faster.

00:44:03.629 –> 00:44:06.949
Amazon, Andy threw some like very intentional shade at Walmart.

00:44:06.949 –> 00:44:08.659
He didn’t name Walmart, but he said.

00:44:09.319 –> 00:44:11.219
I was going to say, he knew you were going to say that, Jason.

00:44:11.439 –> 00:44:16.679
Yeah. He said our grocery business added twice as many incremental dollars as

00:44:16.679 –> 00:44:19.140
our next biggest competitor. Right.

00:44:20.540 –> 00:44:24.220
Yeah, which is him saying, because we sell so much more digitally.

00:44:25.720 –> 00:44:28.400
Our gross dollar volume was twice as big as Walmart’s.

00:44:29.000 –> 00:44:31.200
What’s the new Walmart’s CEO’s name?

00:44:31.799 –> 00:44:38.280
Well, David Gugina is the president of US, and John Furner is the CEO. Yeah, shots fired.

00:44:38.930 –> 00:44:40.800
Yeah. We’ll see if they’re earning. But again, both, I think,

00:44:40.800 –> 00:44:44.730
are true, right? Right. Like I think like it is true. Walmart is absolutely

00:44:44.730 –> 00:44:49.940
growing faster and taking digital share away from Amazon. Amazon is,

00:44:50.310 –> 00:44:53.370
you know, much bigger and is incrementally, you know, growing more dollars.

00:44:53.859 –> 00:44:57.399
And both feature at the same time. Math is crazy. Yes. So, yes,

00:44:57.399 –> 00:44:59.149
that’s what I keep trying to explain to my 11 year old.

00:45:02.499 –> 00:45:06.619
Don’t even get into prime numbers. They’re magical. Yeah. But so we’ve already

00:45:06.619 –> 00:45:10.259
spent way more time on retail than anyone on the earnings call did.

00:45:10.940 –> 00:45:14.190
Because to the extent that there was any interest in retail whatsoever,

00:45:14.190 –> 00:45:21.000
it was the topic of ads, which you already wrote a controversial LinkedIn post about.

00:45:21.760 –> 00:45:27.440
Yeah, I did that before the call and after the earnings. I was kind of like,

00:45:27.920 –> 00:45:30.810
what’s something missing in here? And then I saw the ad number in it.

00:45:31.310 –> 00:45:34.590
You and I talk about it so much that I’ve got this part almost memorized.

00:45:34.820 –> 00:45:39.189
And I was like, wait a minute, ads grew only, it ended up growing.

00:45:42.260 –> 00:45:48.899
It was like 6% below consensus. So everyone thought it was going to grow at 18%. They grew at 12%.

00:45:49.529 –> 00:45:55.539
Amazon ads hasn’t grown sub 22% since your son was in diapers.

00:45:56.129 –> 00:46:00.089
I mean, like it has been like growing like a weed. And I was kind of like,

00:46:00.089 –> 00:46:04.159
what’s going on? And then it ended up, they have answered part of that,

00:46:04.609 –> 00:46:08.419
but it still doesn’t, I need to go do some, there’s some complicated math to be done here.

00:46:08.659 –> 00:46:11.209
So on the call, they said, there’s kind of three things. Number one,

00:46:11.209 –> 00:46:13.939
there’s some NBA thing that I don’t understand 100%.

00:46:14.219 –> 00:46:16.789
And a lot of people tried to analyze this and they’re kind of like,

00:46:16.789 –> 00:46:21.379
we don’t get it because anyway, it’s super complicated.

00:46:22.299 –> 00:46:27.209
And then there was another thing. And then the big one was Prime Day and surely that shifted.

00:46:28.279 –> 00:46:31.289
But even if you, and then they actually qualified it on the call.

00:46:31.289 –> 00:46:34.819
I think he said it was 800 bibs. And if you actually do the math, there’s still a hole.

00:46:35.509 –> 00:46:40.319
And then it actually means last quarter was bad too. It’s just hidden by the movement of Prime.

00:46:40.709 –> 00:46:44.189
Day and then you’re kind of like why did they do that like is that why they

00:46:44.189 –> 00:46:49.439
did this it makes you yeah your conspiracy theory kind of light up a little bit of like something’s,

00:46:50.039 –> 00:46:53.139
i my spidey sense is something’s hiding in here and i think i can figure it

00:46:53.139 –> 00:46:58.429
out my my perspective is and then they also the third thing they said was oh

00:46:58.429 –> 00:47:01.209
and there’s sem changes we decided to you,

00:47:02.340 –> 00:47:07.349
know a year ago or something to really and they used to really word i kind of

00:47:07.349 –> 00:47:09.019
had to unpack this and some of the wall.

00:47:10.639 –> 00:47:13.569
So what happens is you do the call in public and then you have callbacks where

00:47:13.569 –> 00:47:15.139
you can ask some qualifying questions.

00:47:15.139 –> 00:47:19.059
Usually have the CFO and kind of say, what did Jassy mean by this?

00:47:19.059 –> 00:47:22.769
And I suspect they got some clarification on this one because on the call,

00:47:22.769 –> 00:47:24.849
it was super not clear what was going on here.

00:47:26.269 –> 00:47:31.269
And then, so what they said was, let me get this right.

00:47:32.089 –> 00:47:38.580
We decided in Q3 of 25 a year ago, we decided to change our search engine marketing

00:47:38.580 –> 00:47:43.719
program. We decided it’s a better experience for customers to send traffic to

00:47:43.719 –> 00:47:45.249
our search pages on Amazon.

00:47:46.589 –> 00:47:50.339
But he didn’t say like versus whatever. What he was saying was they cut their

00:47:50.339 –> 00:47:52.989
Google shopping bill and they don’t do much on Google.

00:47:53.119 –> 00:47:55.589
I think that’s what clarified down the road.

00:47:56.059 –> 00:47:59.389
They did do an experiment with cutting their Google ad spend,

00:47:59.389 –> 00:48:00.744
and then they turned it back on.

00:48:01.510 –> 00:48:03.600
Here’s what I’m pretty sure he’s talking about.

00:48:04.760 –> 00:48:08.810
They’re the largest Google ad advertiser. And two years ago,

00:48:08.810 –> 00:48:12.480
when they bought ads on Google, those ads went to product detail pages.

00:48:13.919 –> 00:48:17.689
So you did a search on Google. It found a product, and they sent you right to

00:48:17.689 –> 00:48:19.349
a product detail page on Amazon.

00:48:19.663 –> 00:48:22.840
A year ago, they said, oh, we’re not going to send you to product detail pages

00:48:22.840 –> 00:48:25.500
anymore. We’re going to send you to search result pages.

00:48:26.170 –> 00:48:30.820
So instead of going to a PDP that has one SKU on it with a buy box,

00:48:31.690 –> 00:48:37.247
you’re going to a search result page that has eight SKUs on it.

00:48:37.770 –> 00:48:41.610
And then you would click on one of those tiles and that would take you to a product detail page.

00:48:42.089 –> 00:48:44.689
And they’re saying they think that’s a better customer experience.

00:48:45.129 –> 00:48:48.091
We could debate about that. There’s pros and cons to it.

00:48:48.399 –> 00:48:51.979
I think it would depend a lot on what the search query was on Google that led to it.

00:48:53.200 –> 00:48:56.950
It’s more monetizable. You can only, you can’t, like, nobody wants to.

00:48:57.380 –> 00:49:01.970
Yes, you can put more ads on that search results page than you can on the product detail page.

00:49:02.420 –> 00:49:05.270
We’re basically arbitraging Google, which may not work well.

00:49:05.280 –> 00:49:09.410
Because even the Google disclosure, where’s all that going? Yeah,

00:49:09.410 –> 00:49:12.760
yeah. But the cynical portion of me would say, I don’t know if it’s a better

00:49:12.760 –> 00:49:15.840
customer experience or not, but that is absolutely not why you did it.

00:49:16.380 –> 00:49:21.010
Well, maybe this is hidden language for where Google traffic is disappearing on us.

00:49:21.692 –> 00:49:26.029
Well so yeah i don’t i you know i don’t there’s been no discussion of their

00:49:26.029 –> 00:49:29.389
organic traffic from google because it’s happening to reddit if it’s happening

00:49:29.389 –> 00:49:32.519
to everybody everyone i talk to it’s happening to and they’re freaked out it

00:49:32.519 –> 00:49:33.749
has to be happening to amazon,

00:49:34.540 –> 00:49:39.210
on the organic side i just don’t know how meaningful the organic side is right

00:49:39.210 –> 00:49:44.439
like i think again amazon uniquely amazon uniquely is buying 17 billion dollars

00:49:44.439 –> 00:49:47.419
worth of ads from google right so that that,

00:49:48.369 –> 00:49:52.559
those ads are not getting reduced because of AI, right?

00:49:52.559 –> 00:49:57.299
Like the AI, the answer engines and any zero click features on Google,

00:49:58.280 –> 00:50:02.640
you know, universal card, any of those things, those would like be affecting,

00:50:03.260 –> 00:50:09.240
the organic side, which I strongly suspect was already pretty immaterial to Amazon.

00:50:10.819 –> 00:50:15.409
When you’re buying $17 billion worth of ads, the sponsored search result is

00:50:15.409 –> 00:50:17.749
always going to show up above organic,

00:50:17.749 –> 00:50:21.089
and the customer is always going to click on that. So I don’t know.

00:50:21.409 –> 00:50:25.199
I think it’s going to come into play in just a minute, but big picture here,

00:50:25.669 –> 00:50:31.189
Amazon definitely missed their own guidance on ads.

00:50:31.299 –> 00:50:35.609
They missed Wall Street’s guidance on ads. And if you look at it through a certain

00:50:35.609 –> 00:50:38.849
lens, their ad sales slowed way down.

00:50:39.199 –> 00:50:44.710
One thing that I think Andy had used very awkward language on is.

00:50:47.190 –> 00:50:51.940
How Prime Day impacted the change, right? He said like eight and a half basis

00:50:51.940 –> 00:50:54.660
points, but that could mean two different things.

00:50:54.850 –> 00:50:58.560
You took the very simple definition of it and added eight and a half percent.

00:50:59.390 –> 00:51:05.010
Most likely, what most people assume it meant is the gap between Q2 and Q3.

00:51:05.010 –> 00:51:09.570
So while you’d have to add half of it to Q3, you’d have to take half of it out of Q2.

00:51:10.450 –> 00:51:14.260
And so that makes the mis-

00:51:15.220 –> 00:51:20.160
That makes the Amazon Prime Day much more prominent in the miss.

00:51:20.709 –> 00:51:24.039
What’s funny is a bunch of the analysts have came out like, you would think,

00:51:24.939 –> 00:51:28.819
this is simple math to do. Like we know Prime Day was in last year and not this year.

00:51:29.069 –> 00:51:33.129
You’d think all the guidances would have it right. Amazon never gives you enough to figure anything out.

00:51:33.369 –> 00:51:37.429
No, and the analysts all have already come out. A denominator, a numerator, both.

00:51:37.589 –> 00:51:42.759
Our models were wrong, right? Like our models adjusting for the shift in Prime Day were wrong.

00:51:42.759 –> 00:51:47.739
So they knew when they moved Prime Day that this was going to be a big quagmire,

00:51:47.739 –> 00:51:52.989
and it’s ended up being a bigger quagmire, I think, than anyone expected it to be.

00:51:53.329 –> 00:51:55.979
But so three reasons the ad number is lower.

00:51:56.709 –> 00:52:03.849
Constant currency is unfavorable. Prime Day got moved, and it made it easy to

00:52:03.849 –> 00:52:07.469
even misunderstand how to adjust that, and a bunch of people got it wrong.

00:52:08.329 –> 00:52:16.670
And I do think that they’re having more trouble monetizing their ads than they

00:52:16.670 –> 00:52:20.250
used to have, right? And I think this is the exact same problem as Google.

00:52:21.450 –> 00:52:27.969
They said it would be natural to ask if this is an impact from the outside agent traffic.

00:52:28.799 –> 00:52:33.750
And Andy, very similar to Tony, who said the outside agents are totally immaterial.

00:52:34.120 –> 00:52:37.260
Andy also said, no, it’s totally immaterial. And in his case,

00:52:37.260 –> 00:52:40.500
I have to believe him because he blocks all those agents.

00:52:41.200 –> 00:52:45.030
So, of course, they’re not. Yeah, well, then he says, and they all suck.

00:52:45.400 –> 00:52:48.430
Yeah. And it’s like, all right. So, of course, they’re not material.

00:52:48.570 –> 00:52:53.336
But there’s one agent they don’t block, which is Alexa for shopping, AFS, right?

00:52:53.559 –> 00:52:58.949
And in the same way that when you have AI mode in Google has way less ads in

00:52:58.949 –> 00:53:05.399
it than traditional Google search, AFS has way less ads in it than traditional

00:53:05.399 –> 00:53:08.319
A9 search, right? And so if-

00:53:09.130 –> 00:53:12.330
A bunch of the stats on their earnings call were about how many more people

00:53:12.330 –> 00:53:15.480
are using AFS and how popular AFS is becoming.

00:53:15.750 –> 00:53:21.180
And by the way, it’s not totally spoken, but Amazon does exactly the same thing as Google.

00:53:21.400 –> 00:53:26.590
When you type a search query into the search box, Amazon decides that query

00:53:26.590 –> 00:53:29.810
would have been better off as an AFS prompt and it automatically makes it one.

00:53:30.380 –> 00:53:34.140
And so some of the time you just get an AFS answer, even if you didn’t think

00:53:34.140 –> 00:53:38.650
you were using AFS, but for sure, people are using AFS on purpose more.

00:53:38.650 –> 00:53:42.539
And Andy would quickly point out they love it, right? And there’s a bunch of

00:53:42.539 –> 00:53:47.870
benefits to it. And it’s, you know, again, a huge growth on a small denominator,

00:53:47.870 –> 00:53:51.870
like, you know, they’re quoting, you know, huge percentage growth and how many people use it.

00:53:52.260 –> 00:53:54.980
Their bar is kind of low because they’re not saying they use it for every query

00:53:54.980 –> 00:53:56.660
they’re saying ever used it usually.

00:53:57.230 –> 00:54:00.830
So they use a bunch of this, you know, kind of loosey-goosey Amazon language,

00:54:01.110 –> 00:54:05.230
But no matter how you slice it, more people are using AFS, and Amazon has less

00:54:05.230 –> 00:54:10.540
ads in AFS by a large margin. They are getting eaten by Edge of Commerce.

00:54:10.850 –> 00:54:13.910
Yeah, so they are. It’s just their own. It’s the call.

00:54:14.530 –> 00:54:17.830
Yes, the call is coming from inside your house. And it’s outside the house.

00:54:18.450 –> 00:54:22.560
Yeah, I think it’s both. So I don’t think the outside has hurt Google or Amazon

00:54:22.560 –> 00:54:27.050
much yet. I’m not saying it won’t in the long run, but I don’t think we’ve seen that material impact.

00:54:27.400 –> 00:54:32.290
But I think they’re inside the house. things moving to AI mode is like, yes, a hundred percent.

00:54:32.290 –> 00:54:36.570
I think that’s, that is the, the big takeaway from this quarter for me

00:54:36.910 –> 00:54:41.870
is as these, these huge juggernauts move from their old experience to their

00:54:41.870 –> 00:54:46.550
new experience, either because it’s harder to monetize or more likely because

00:54:46.550 –> 00:54:50.790
they’re choosing not to monetize it this early in the adoption cycle.

00:54:51.520 –> 00:54:57.409
Their, their monetization is, is taking a haircut for now, right? Like,

00:54:58.210 –> 00:55:04.170
Why would they do that if they didn’t feel there was, it’s an illogical economic decision to make.

00:55:04.560 –> 00:55:12.110
Why are they doing it? No, why didn’t Facebook have ads like in the first year of existence?

00:55:12.110 –> 00:55:15.350
Or why didn’t Google have it? Like you need to get customers addicted to the

00:55:15.350 –> 00:55:21.910
experience and feeling the value. And then you slowly like slap in the ads.

00:55:23.310 –> 00:55:28.170
I would argue if Google was born with all the monetized pixels that it has today,

00:55:28.170 –> 00:55:29.480
no one would have ever used Google.

00:55:31.119 –> 00:55:36.359
They got everyone addicted to it, and then they slowly pivoted from 100% of

00:55:36.359 –> 00:55:39.089
the pixels being free to 100% of the pixels being monetized.

00:55:39.089 –> 00:55:42.639
And so did Amazon, right? Like product detail pages and search result pages.

00:55:43.439 –> 00:55:48.119
They used to be 100% organic, and they’re 100% paid pixels now.

00:55:48.399 –> 00:55:52.509
And so this is another new thing. Like, and, you know, I feel like the drug

00:55:52.509 –> 00:55:55.349
dealers figured it out. Like the first sample is free, right?

00:55:55.349 –> 00:55:57.909
So, so AFS is free right now.

00:55:58.309 –> 00:56:01.739
Once you get addicted to it, it’s highly unlikely to be free.

00:56:01.739 –> 00:56:06.009
Now people could argue is the only reason it’s not free because they’re trying

00:56:06.009 –> 00:56:09.469
to get you addicted and they’re going to put the exact same ads and the same

00:56:09.469 –> 00:56:12.869
quantity of ads they always did. And we’ll get back to the same equilibrium.

00:56:13.179 –> 00:56:19.129
Or is there an argument that it will, it’s somehow intrinsically harder to monetize

00:56:19.129 –> 00:56:23.119
the, the AFS answers than it is the A9 answers.

00:56:23.409 –> 00:56:29.069
And so, you know, are there some, some user experience challenges that Google

00:56:29.069 –> 00:56:31.589
and Amazon have to figure out? Right. And I think smart people could,

00:56:31.729 –> 00:56:36.319
could quibble about which one of those two scenarios is playing out.

00:56:36.940 –> 00:56:40.590
Yeah. Here’s kind of the hypocrisy that, that people talk to me about and it’s

00:56:40.590 –> 00:56:44.600
kind of two layers. And so take ads out of the equation. Yeah. The hypocrisy is.

00:56:45.269 –> 00:56:48.959
These agentic commerce things stink and you shouldn’t use them.

00:56:49.109 –> 00:56:50.719
But we’ve got one in it. It’s amazing.

00:56:51.009 –> 00:56:55.049
And yeah, it has less inventory than it went out. But it’s our inventory.

00:56:55.049 –> 00:56:57.109
And it’s amazing. Des mentioned that.

00:56:57.389 –> 00:57:00.409
And you can change your subscribe and save settings. Amazing.

00:57:00.759 –> 00:57:04.089
You can do all this other stuff. I do agree it’s very good.

00:57:04.519 –> 00:57:09.339
But I don’t think it’s as far off parity with the other ones as Amazon thinks

00:57:09.339 –> 00:57:12.889
it is. They think there’s like this gulf and they’re actually closer.

00:57:13.499 –> 00:57:18.859
And at the same time they’re like okay that’s one one thing that doesn’t totally

00:57:18.859 –> 00:57:21.579
jive for me and the other one is they’re like we’re gonna

00:57:21.989 –> 00:57:26.059
you know we’re gonna block all incoming bots but please open up for ours because

00:57:26.059 –> 00:57:28.839
we have this sell direct program and we’re just going to scrape the crap out

00:57:28.839 –> 00:57:32.589
of your site and pull your inventory on amazon and there’s this form you can

00:57:32.589 –> 00:57:35.989
kind of find to get out of it we hope you can find it but good luck.

00:57:36.970 –> 00:57:40.050
Yeah we really like your inventory and we’re going to send you free traffic.

00:57:40.660 –> 00:57:44.920
Yeah, I do. I do think that, I mean, there’s, there’s a lot to unpack there,

00:57:44.920 –> 00:57:48.690
but for sure they, they all want to win agents.

00:57:48.690 –> 00:57:52.100
They all want you to use their agent. Right. So Andy, like whether he believes

00:57:52.100 –> 00:57:55.320
it or not, he’s got a very vested interest in saying AFS is awesome.

00:57:55.320 –> 00:57:59.330
People love it. And they’re using it in huge quantities and no one ever wants to use Muse.

00:57:59.330 –> 00:58:04.070
Right. And, and, you know, not only is he, does he have a, a paid financial,

00:58:04.430 –> 00:58:08.520
you know, vested interest in saying that, like, I’m sure he hopes that’s true

00:58:08.520 –> 00:58:10.390
in his heart of hearts. Of course he does. Right.

00:58:11.310 –> 00:58:16.410
And there are things that are better about it. I don’t actually even care if

00:58:16.410 –> 00:58:20.600
it’s better or worse today. What I’m more interested in is like,

00:58:20.600 –> 00:58:22.270
what is the potential for it?

00:58:22.710 –> 00:58:27.920
Like in the future when it’s at scale. Right. And there are things that the

00:58:27.920 –> 00:58:31.210
Amazon provided agent is likely always going to be better at.

00:58:31.990 –> 00:58:35.380
But there are things it intrinsically has a huge disadvantage.

00:58:35.380 –> 00:58:38.280
The biggest disadvantage is that

00:58:38.280 –> 00:58:42.000
the Amazon agent doesn’t work for Scot Wingo. It works for Andy Jassy.

00:58:43.189 –> 00:58:48.870
Yeah. And so it’s always going to be optimized for favorable outcomes for Andy

00:58:48.870 –> 00:58:50.410
Jassy, not for Scot Wingo.

00:58:50.720 –> 00:58:55.490
And there’s a potential that Muse will work for Scot Wingo.

00:58:55.490 –> 00:58:59.130
It certainly wants Scot Wingo to win more than it wants Amazon to win, right?

00:59:00.030 –> 00:59:05.670
Yeah. And so we’ll see if in the long run, if Muse gets equally crapified because

00:59:05.670 –> 00:59:07.710
it wants Mark Zuckerberg to win, right?

00:59:07.710 –> 00:59:15.000
But there’s a chance for these third-party agents to have a way higher trust

00:59:15.000 –> 00:59:20.580
factor because they’re optimized for favorable consumer outputs.

00:59:20.580 –> 00:59:25.390
And no one believes that the retailer agents are optimized for the consumer’s

00:59:25.390 –> 00:59:28.600
benefit, right? Like they’re optimized for the retailer’s benefit. Of course they are.

00:59:29.040 –> 00:59:37.749
And so that’s a big potential advantage. It hasn’t all played out because these are all dubious MVPs.

00:59:37.909 –> 00:59:40.869
None of them could scale even if they wanted. Even if you’re right and I’m wrong

00:59:40.869 –> 00:59:44.770
and Muse is the greatest shopping experience of all times, Meta still doesn’t

00:59:44.770 –> 00:59:48.410
want a bunch of people using it because it’s so expensive to use right now that.

00:59:51.269 –> 00:59:54.499
If it really scaled, they would have to come up with a different financial model

00:59:54.499 –> 01:00:00.299
because there is no way to pay for it as a take rate, which is what they’re

01:00:00.539 –> 01:00:02.469
saying their economic model is now, right?

01:00:03.019 –> 01:00:08.819
There isn’t enough margin in the whole system to pay the inference cost on all of this stuff.

01:00:10.180 –> 01:00:16.970
So we are still… Amazon does it at 15%. Amazon’s take rates like 15%. People pay it every day?

01:00:18.319 –> 01:00:24.820
Yeah, yeah. But so can 15% go to 19% so that Muse can have 4% more? Yeah.

01:00:26.029 –> 01:00:29.439
Uh, well, I think Muse would be happy with five to 10.

01:00:30.490 –> 01:00:34.959
But, but yeah, so if they get five to 10, but that’s still, that’s five to 10

01:00:34.959 –> 01:00:39.229
plus Amazon, right? Because spoiler alert, Muse can’t deliver anything.

01:00:40.119 –> 01:00:44.439
You’re still, you still need someone that has physical goods in that delivery

01:00:44.439 –> 01:00:48.139
network. And for the vast majority of goods, like in our market,

01:00:48.139 –> 01:00:49.812
that’s going to be Amazon.

01:00:50.239 –> 01:00:52.809
Like you take all these data centers they’re building and you just attach a

01:00:52.809 –> 01:00:57.889
small fulfillment center. Boom. Yeah. GPUs and CPG, right? One facility.

01:00:58.289 –> 01:01:01.949
Yeah. Same cooling system. It’s gonna be amazing. Yeah. Yeah.

01:01:02.919 –> 01:01:08.000
The, so this is all early days. It all is going to have to flush out.

01:01:08.000 –> 01:01:11.010
Like it’s a huge mistake to look at any of it right now and say,

01:01:11.380 –> 01:01:14.090
this is as good as it’s going to be. And we should all judge the winners and

01:01:14.090 –> 01:01:16.100
losers based on what it looks like right now.

01:01:16.450 –> 01:01:21.170
Like, as I keep saying, we, the first, this baseball game has not even started.

01:01:21.170 –> 01:01:24.789
We are still in batting practice and it’s super interesting.

01:01:24.789 –> 01:01:31.660
It’s going to be a really exciting game. I’m grateful that we’re all here for it, but it is early days.

01:01:31.660 –> 01:01:36.780
And so I would be super careful about like drawing any long-term conclusions

01:01:36.780 –> 01:01:39.640
from who the winners and losers are, right? If you want to look at the market

01:01:39.640 –> 01:01:42.510
today, vertical agents are the winners.

01:01:42.910 –> 01:01:46.080
The retail agents are getting more adoption and they’re solving more real world

01:01:46.080 –> 01:01:50.290
problems and they’re more viable and more practical to say that that’s what

01:01:50.290 –> 01:01:54.790
the future is going to be, I think would be a huge, huge.

01:01:55.240 –> 01:01:59.880
What I’m saying is a year ago, I started thinking, how would we know if this

01:01:59.880 –> 01:02:01.140
was starting to tip over?

01:02:01.280 –> 01:02:04.040
And I thought, all right, it’s going to happen in discovery first.

01:02:04.040 –> 01:02:06.800
And it was going to start at the research phase and then it’ll get into finding

01:02:06.800 –> 01:02:08.770
it by. It’s going to be this natural progression.

01:02:09.330 –> 01:02:13.050
And just kind of like mobile did and all these things is kind of how it started.

01:02:13.050 –> 01:02:17.860
And then I thought, well, you’ll start to fill it in the ads because if views

01:02:17.860 –> 01:02:19.860
go down, then you’re going to start to feel it.

01:02:20.140 –> 01:02:23.250
And I feel like that’s happening in Google. It’s happening in Reddit.

01:02:24.379 –> 01:02:28.419
I think we have to see some more quarters. We didn’t finish this part.

01:02:29.049 –> 01:02:33.269
The Amazon ad business has been growing at 22. It did have a spike up in Q2

01:02:33.269 –> 01:02:35.109
because of the prime day comp.

01:02:35.219 –> 01:02:39.049
But if you take that out, going forward, everyone’s cut their growth,

01:02:39.049 –> 01:02:44.109
including Amazon, to like 17%. So it’s basically come down. Here’s the math I would think of.

01:02:44.789 –> 01:02:48.429
All this prime day stuff is super confusing. So here’s how to make it all go away.

01:02:48.739 –> 01:02:52.059
Add Q2 and Q3 together and compare Q2. Yeah, absolutely.

01:02:52.169 –> 01:02:57.839
Let’s compare Q3 last year to this year. And the answer is ads are slowing down.

01:02:57.839 –> 01:03:03.059
They were 22, Q2 and Q3 of last year grew 22% from the year before.

01:03:03.359 –> 01:03:06.240
And they grew 19% this year.

01:03:06.480 –> 01:03:09.970
And the guidance for Q4, which didn’t have frown day in either,

01:03:09.970 –> 01:03:14.370
is 17%, right? So no matter how you slice it, ads are slowing down.

01:03:14.770 –> 01:03:19.660
I strongly suspect, that’s still, by the way, a robust growing business.

01:03:19.660 –> 01:03:22.130
And it’s growing on a big number now. It’s shattering.

01:03:22.450 –> 01:03:26.040
I’m just saying like, yeah, but it, but I think it’s intrinsically slowing down.

01:03:26.040 –> 01:03:30.070
And I think the re I personally think the reason it’s slowing down at both Amazon

01:03:30.070 –> 01:03:36.980
and Google is because these new surfaces are starting to win consumer adoption and

01:03:37.350 –> 01:03:42.330
either on purpose or on accident, those new surfaces are not yet monetized to the same degree.

01:03:44.249 –> 01:03:47.929
What if it keeps ticking down? I guess you can just keep saying the same thing. Yeah.

01:03:48.679 –> 01:03:53.819
What would you say? In the long run, by the way, I think this has to advertising

01:03:53.819 –> 01:03:57.199
has to be an important component. And I hate that this is true. I wish it weren’t.

01:03:57.549 –> 01:04:02.880
But when I look at the monetization models and how all this gets paid for,

01:04:04.340 –> 01:04:09.379
I don’t think that billions of consumers are going to pay a big monthly subscription

01:04:09.379 –> 01:04:13.149
to have access to an agent working on their behalf. Rich people will.

01:04:13.719 –> 01:04:18.930
You and i will but like the vast majority of consumers won’t i would like it to have a

01:04:19.220 –> 01:04:23.440
subscribe to get out like a youtube pro kind of a thing i would like i wish

01:04:23.440 –> 01:04:27.050
amazon had that today i would love to pay amazon a higher prime feed not to

01:04:27.050 –> 01:04:30.420
see that the ads 100 and we may we may get that

01:04:30.780 –> 01:04:33.520
some version of that option at some point yeah but.

01:04:35.230 –> 01:04:40.940
Like it’s it’s like pay for use is not for almost nothing. Right.

01:04:41.750 –> 01:04:45.409
The, and then I don’t think it’s going to be take rate. Like,

01:04:45.409 –> 01:04:50.449
I think that could be part of the solution, but like, uh, people care too much

01:04:50.449 –> 01:04:54.759
about the cost of goods. Like, like there’s not just free, like there is a take writer.

01:04:55.119 –> 01:05:00.429
Amazon already has a 15%. Yeah. But again, so that’s fine. Like keep your FBA.

01:05:01.200 –> 01:05:05.520
If you take, no, well, so yes. So if someone puts Amazon out of business,

01:05:05.520 –> 01:05:08.830
but if you’re going to put Amazon out of business, you better have an alternative

01:05:08.830 –> 01:05:13.830
distribution strategy that you think a hundred billions of dollars sound eye-watering.

01:05:13.830 –> 01:05:18.500
Try catching up to Amazon’s distribution network is going to be an even more

01:05:18.500 –> 01:05:23.010
eye-watering number, right? So I just don’t, I think Amazon is going to keep

01:05:23.010 –> 01:05:25.790
getting their take rate or, you know, one way or the other.

01:05:26.519 –> 01:05:30.429
And so I don’t think there’s incremental take rate to just add on the top of

01:05:30.429 –> 01:05:35.959
all this. Like, yes, could someone add more value and take a piece of take rate out of someone else?

01:05:36.139 –> 01:05:37.409
So you’re saying they’ll take

01:05:37.409 –> 01:05:41.049
it out of Amazon, that it’s just as likely they’ll take it out of Visa.

01:05:41.269 –> 01:05:44.129
It’s just as likely they’ll obsolete the old payment methods and say,

01:05:44.129 –> 01:05:46.819
hey, the 3% that cut the cards are good.

01:05:47.659 –> 01:05:52.339
All those will play out. And I’m not saying that take rate won’t be part of the math.

01:05:53.019 –> 01:06:00.719
I suspect it will, but I don’t think that usage fees alone, subscriptions alone,

01:06:00.719 –> 01:06:03.179
or take rate alone are going to pay for this.

01:06:03.179 –> 01:06:08.529
And so I do think ads are inevitably going to be part of the business model

01:06:08.529 –> 01:06:13.849
going forward, as they have in almost every other broadly adopted consumer technology.

01:06:14.579 –> 01:06:18.589
Yeah, if you, unfortunately, we’re out of time. Well, if this is interesting

01:06:18.589 –> 01:06:22.859
to you and you want to see some of the math on this, we’re happy to share the analysis we’ve done.

01:06:23.159 –> 01:06:28.049
And then, you know, I think both Jason and I’ll be posting about this and there’ll

01:06:28.049 –> 01:06:30.609
be a Wall Street call. Sometimes they’ll let us invite folks to that.

01:06:30.609 –> 01:06:33.949
So let us know if you’re interested in this topic and we can go even deeper

01:06:33.949 –> 01:06:36.269
on it. If you can imagine such a thing.

01:06:37.079 –> 01:06:40.759
I, you know, I’m remit, like I feel like we wrote notes for like a four hour

01:06:40.759 –> 01:06:41.959
show that thank God we’re not going to do.

01:06:41.959 –> 01:06:46.120
But one thing I did mean to mention is since our last episode,

01:06:46.540 –> 01:06:50.020
I’ve taken a bunch of this data that we keep talking about on the show and I’ve

01:06:50.360 –> 01:06:53.530
made it all available in real time on my website.

01:06:53.530 –> 01:06:59.319
So at retailgeek.com, there’s now retail, there’s a data tab and you can go to that data tab.

01:06:59.659 –> 01:07:02.829
All the real-time retailer comps are on there. So right now you can see how

01:07:02.829 –> 01:07:07.909
Amazon performed against every other retailer on their, their North American comps.

01:07:08.160 –> 01:07:11.959
You can, many of them, it’s not a gap number, but many of them disclose their

01:07:11.959 –> 01:07:16.479
digital growth. So you can compare Amazon and Walmart’s digital growth in real

01:07:16.479 –> 01:07:17.809
retail time on the website.

01:07:18.499 –> 01:07:21.999
I did a lot of gaming geeks freak out on LinkedIn over when they find that they’re

01:07:21.999 –> 01:07:24.459
like, Oh my God, this is life changing. Yeah. Yeah.

01:07:25.539 –> 01:07:30.589
I have one for all the U S department of commerce data. And I have one for,

01:07:30.589 –> 01:07:34.789
so I have the comps, the U S department of commerce data, and I have the size

01:07:34.789 –> 01:07:37.959
of the U S all the big U S retailers on an annual basis.

01:07:37.959 –> 01:07:43.429
So plenty of data for anyone that wants to put their own hypothesis together on any of this.

01:07:44.480 –> 01:07:48.400
Awesome. You want to take us home? I will. Hopefully this has been interesting.

01:07:48.400 –> 01:07:52.568
Lots more to talk about on this one. So I’m sure you haven’t heard the last of us on it.

01:07:52.999 –> 01:07:56.039
But until next time, happy e-commercing.

01:07:57.659 –> 01:08:02.019
You’ve been listening to The Jason and Scot Show. For all the latest news and

01:08:02.019 –> 01:08:07.249
trends on e-commerce and shopper marketing, subscribe to us on iTunes or visit

01:08:07.249 –> 01:08:09.069
jasonandscot.com. out.