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Welcome to the Jason and Scott Show. This is episode 336 being recorded on Friday,

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February 6th. That’s a lot of sixes.

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I’m your host, Jason Retailgeek Goldberg.

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And as usual, I’m here with your co-host, Scot Wingo.

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

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Jason, my 2026 is off to an awesome start. I got to hang out with you for the

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first time in a long time at the National Retailer Federation. We had a great time.

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We did. That is how NRF in the beginning of the year are meant to be,

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is you and I getting to spend some time together.

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I didn’t realize how much I was missing the couple of years that you were too big and fancy for us.

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Yeah. And if you didn’t catch Jason’s keynote, which we put across all of our

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media empire, it was an audio here on the Jason Scott show.

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It’s on the YouTube and audio channel for Retail Gentic.

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It has been a very popular keynote. There was no one in the room,

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But man, people liked it in the replay.

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Yeah. But remember, Scott, we pretended in the recording like it was a full

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room. So don’t, don’t ruin the illusion.

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Yeah, I did this. I cut in, we spliced on the video, we spliced in some random

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shots of a Super Bowl stance just to kind of, you know, give you.

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Yeah. If you’re wondering why everyone’s holding a beer and a hot dog for my keynote.

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They’re wearing like 49ers jerseys and stuff. Exactly.

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Not 49ers, but okay. Yeah.

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Next. I was thinking it would be a previous year. It’s not the one that’s coming.

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Fair.

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The but in all seriousness it was a great keynote it was i haven’t seen you

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do your thing in a while and you’ve you’ve gotten better you’re always good but it was really good.

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Oh that’s super nice of you to say thank you it’s it’s always fun talking about

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these topics obviously like a lot of the those topics were developed in conversations

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with you and many of our other smart friends so i’m grateful for the network

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of smart people i have that helped me put it together the.

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Number one question we’ve been asked in the YouTube comments.

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Everyone would like to know if your son got a sunburner or not in your trip to Hawaii.

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That’s like the number one question out of the keynote. I thought it was going

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to be something kind of, you know, about ACP or UCP or one of these authentic

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commerce kind of things.

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But really, everyone is very concerned about your son’s skin health.

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The personal stories. And no, he did not.

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As you know, my wife is Lebanese, So we call my son a lebahonky.

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So he has more natural melatonin protection than I do. I’m the most likely person

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in our family to get a sunburn.

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Well, I know this will be in the comments for this episode. So did you get a sunburn?

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Yes. Okay, good.

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You went to all that trouble to use Agenda Commerce to find the perfect sunscreen

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and you didn’t put any on you.

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Well, yes, that, yes. I did use sunscreen, just not diligently enough.

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Yeah, I found a… There’s a little spot up top that sometimes gets sunburned.

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I’m not really used to putting sunscreen up there.

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Yes, I grew up.

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The balding hair area.

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Yes, yes, I’m, yes. We had more protection at one point than we do now.

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How about any other trip reports? I’m going to Shop Talk coming up in March,

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but sadly you won’t be there because you’ve got spring break where you’ll be

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getting yet another sunburn.

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Yes, yes, I’ll be updating all those pictures for next year’s keynote as if

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they would invite me back.

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Yeah, unfortunately I am missing

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Shop Talk again, which I’m super sad about. I do have FOMO for that.

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I’ve been on the road every week, but honestly, it’s all been like at the beginning

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of the year, every one of our clients like kicks off their year and very frequently

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they have all hands meetings or, you know, national sales meetings.

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And so I’m kind of going from event to event,

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which is a grind in some ways, but it’s awesome in some ways because they’re

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all now thinking about all the same things that you and I have been thinking

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about and talking about for a year.

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And they have a bunch of, you know, new smart people looking at the same problems

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from different angles. And so it’s been…

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It’s exciting to see how every brand is applying all of these potentially disruptive

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changes to their unique circumstances and coming up with different plans and

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different strategies and different ways to tell the story.

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I feel like we were total nerds talking about something that no one else cared

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about a year ago, and now that topic has suddenly become cool and the cool kids

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want to talk about it. So that’s fun.

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Yeah, I like to reframe it as we’re prediction geniuses, especially when we’re

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right. And if we’re wrong, we don’t really talk about it again. So there you go.

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Yes.

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That’s a little inside info on how you get to be a good predictor. Hi, everybody.

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Yes. Says the guy that claims he’s too busy to record the episode to see how

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well, how good his predictions were last year.

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That was you. You’re on a, you’re always on a flight. You’ve spent 11 days on

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a plane. Back to back. I did the math.

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Yeah. Yeah. That was impressive. Impressive, man.

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I’m also going to the Digital Shelf Summit. And so I guess we won’t see each

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other until retail club. So we’re both going to be at retail club and that’ll be fun.

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Yeah. But I actually think it’s only semi-private, but I think we’re doing a

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Citibank conference together. Are we not?

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Yeah. Yeah, we are. Yeah. Yeah.

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Oh, are you keeping that secret?

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No, I just don’t think the average person can just go to that one.

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Okay.

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You have to be a city client, but I don’t know. All you city clients,

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come on down. I think having a credit card is enough. I’m sure they’ll welcome you in.

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Or a dollar to invest. To be clear, none of our listeners are average people.

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They’re all above average, of course.

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Yeah, but I certainly am looking forward to Retail Club. That’s going to be

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a fun one this year. Although that’s quite a ways down the road. Yeah.

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And then the other big news I wanted to pick your brain on is Anthropic came

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out this week with some savage Superbowl ads that basically attack pretty much, uh,

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attack Chachubuti straight on that they’re going to have ads and Claude is not.

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And they, they’re, they’re probably the most clever creative I’ve seen where,

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you know, they, they perfectly capture the, the sycophantic nature of ChatGPT.

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And then they also inappropriately introduce ads and it creates these really good comedy moments.

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The acting on it is all great. The writing and acting and everything is really

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good. Have you seen those guys yet?

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I have. It’s pretty funny. I’m super looking forward to this Super Bowl.

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In my industry, obviously, the Super Bowl is always a big deal,

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but there are some years when the stuff going on in the Super Bowl overlaps

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with your and I’s interests more than others.

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And so there’s some years where it’s super exciting for the advertising industry,

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but it’s kind of a nothing burger for us.

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There’s some years when like a bunch of dot coms like show up in the Super Bowl

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ads for the first time or, you know, Timu showing up in the Super Bowl is a

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big deal for the first time.

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And I have a strong feeling this is going to be one of the years where it’s

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going to be well worth it for all of our listeners to be paying attention to the Super Bowl.

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I think there’s going to be a lot of relevant content.

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That is super exciting. And this first ad, A, I agree with you.

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It’s awesome. I think it’s super well done.

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There’s an interesting thing, conventional wisdom at these top platforms on

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this, like super expensive advertising platforms, it generally isn’t advisable to go negative.

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Like the general school of thought is you don’t call out competitors and you

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don’t focus on competitors’ disadvantages.

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And there’s a fair amount of history behind those kind of ads underperforming.

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And so it’s like, obviously, Anthropic is a first time advertiser.

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They put together like, what I think is a really awesome negative ad.

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And we’ve already seen evidence that it got, it’s already landed,

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it’s already gone under ChatGPT’s skin.

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So they’re living rent free inside Sam Altman’s head right now.

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So that’s going to be super interesting. But I’m also going to be interested

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to see all these other guys with these crazy evaluations, what they do at the Super Bowl.

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And, you know, what and if will we see from Amazon and what and if will we see from Microsoft?

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And, you know, it’s going to be fun to watch.

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How about have you gotten caught up in the Claude bot, Molten bot,

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Open bot crazy, where you can have a Mac mini that basically sits there and

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you text it and it does your job for you. You kick back on a beach.

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Yes. I feel like that’s a bigger deal for people that had harder jobs than me.

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Like technology has been able to do my job better than me for a long time.

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So it’s, it’s slightly less of a big deal, but yeah, I’m pretty,

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I mean, bigger picture, maybe we’ll talk about this, but like it’s all just

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evolving so fast. the pace of change.

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Like I remember when like we were all chat GBT all the time and it seemed like

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everyone else was behind.

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And then like, like Google moved up the, to everyone.

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And now like, you know, everyone in my circles is, is mostly talking about Anthropic this week.

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And so like, if anything, I feel like I’m behind in, I’m trying to dog food

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all these things, but there’s like so many tools evolving so fast,

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it’s hard to use them all simultaneously. So I feel like I need to take some

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more quality time with Anthropic.

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Are you, have you, have you been using the agents a lot? Are you?

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I have. This one’s pretty neat. It’s this one guy open sourced it and it has no rails.

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So it’s a little scary, but there’s ways to put it in kind of a contained environment.

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The breakthrough is you can text with it and it’s super multimodal.

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So you could have it call you. You could, you know,

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It basically is unbound because a guy, just a random dude, just open sourced

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it and put it out there to the world. So it doesn’t have any of the normal constraints.

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So it is kind of interesting to see what does that look like and what all can it do.

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And it’s kind of scary. There’s a lot of agentic shopping things.

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People are using it to book trips and do all kinds of complicated stuff.

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I’m going to eventually do a blog post on it. But yeah, it’s pretty.

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This is definitely the year of agentic generally, like these agents doing things.

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And this is where they’re having a lot of breakthroughs in the coding systems. it’s

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it’s you know you’re going to hear things like swarms of agents and

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it adds an element of parallelism to

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this where once you get to a task where

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you’re like well i could do this you know over

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80 different i know you do a lot of data manipulation

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well you could go and say well spin up an agent for every one of the last quarters

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of this data i want to look at and have them do it in parallel and then bring

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it back to data and fold it back together so they can do some really interesting

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things now and they’ve kind of cracked they’re getting close cracking the orchestration

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on the front and back end of that so it’s it’s,

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It’s going to be the next kind of leg up in effectiveness of these things.

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Yeah. I don’t know about you. Like, it feels like the theme in my life,

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like they keep improving and then they talk about all these cool use cases they do now.

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And it’s like the examples of the things that the robots are taking over from

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the human are all the fun things that I enjoy doing.

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And it still seems like the case that the robots aren’t perfect at doing all

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the stuff I really don’t want to do. So, like, I have a test suite for these

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do-it-for-me agents, and it’s canceling my Comcast account and switching my cell phone providers.

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You know what I mean? It’s those calls you dread. It’s like,

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but I will tell you, the one that they seem to have won is, like,

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providing tech support for my mother-in-law on Thanksgiving.

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Good.

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And so, those are cool. You are right.

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Versus you.

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Yeah. No, exactly. And oh, my God. And for my 10-year-old, like legitimately,

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there are all these, you know, parental permissions.

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How can my son, you know, do this with his friends in Fortnite if I don’t want

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to let him do this kind of thing that are way harder to figure out in the world than they should be?

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And, you know, typically are things that I could figure out,

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but take me 30 or 40 minutes of research to do that now I’m getting…

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Perfect guided responses from the bots instantly.

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So I do feel like there are these use cases where it’s getting much, much better, quicker.

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You hit one that’s a sore spot for me is I do have to do a bunch of data extraction

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and manipulation every month.

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And February 10th, we’re recording this on the 6th, the 10th,

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we get December data from the US Department of Commerce.

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So that’s a, i literally like block a day off because

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i’ll have all of 2025 data and there are all these interesting questions i have

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but there’s a lot of grunt work to get to where i want to be with that and i

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keep testing all of the latest bots and they’re they’re they’re they get closer

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and closer but they’re still not reliable so so.

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I know it’s a matter of time yeah i have the unlock for

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you and listeners um yeah hit me in in the

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anthropic ecosystem under the clod label they

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now have a excel and they just came out yesterday with

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a powerpoint add-on the excel add-on

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is so good i i got

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an email from anthropic and i was like oh no i i’ve used

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all my tokens or something they’re like congratulations you’re one

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of the top users of clod with excel we’d like to invite

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you to our customer something something feedback board

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so i’ve been just chewing that up because i i love modeling and stuff i hate

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the drudgery of you know like waterfalls cut copy pasting for hours and all

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that kind of stuff so you can just tell it i one shot at a whole new financial

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model for uh my new company and it,

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It was like when ChannelVisor was at a 50 million kind of run rate type model,

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it just like one shot at that.

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And there was no errors. There’s like a couple of formatting things that,

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you know, like percentages were not in percent.

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But it was just amazing. So I think you’ll find it to be, it will be the one to unlock for you.

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I agree. And I have played with that. And fun fact, everybody’s pretty excited

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about the Excel integration. And what’s interesting is, of course, Microsoft owns Excel.

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And has deep integration with Copilot, but the Anthropic integration with Excel

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is much better than the Copilot integration.

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Yeah, Copilot’s terrible in PowerPoint and Excel.

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Yeah, I would argue it’s making better progress in other places,

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but shockingly, not that strong in their suite.

00:14:44.170 –> 00:14:48.870
So I have a very complicated spreadsheet with a lot of this data in it that

00:14:48.870 –> 00:14:53.310
is all, because I built it improperly in the beginning, year-specific.

00:14:53.630 –> 00:14:57.790
So you know what I mean? It’s got a five-year history in all these tables,

00:14:57.810 –> 00:15:02.950
but when we roll over to a new year, there’s a bunch of work I have to do across

00:15:02.950 –> 00:15:05.350
40 different spreadsheets.

00:15:06.330 –> 00:15:10.490
That’s usually a day of my life that I dread. I’ve already done a test,

00:15:10.530 –> 00:15:11.990
and it already seems like Anthropic

00:15:11.990 –> 00:15:17.670
is going to easily adapt my whole workbook to the next year’s data.

00:15:18.230 –> 00:15:24.750
That’s a huge win. And what’s less awesome is like, I try to track the 50 public

00:15:24.750 –> 00:15:33.170
retailers and their quarterly earnings growth, and they don’t all report that uniformly.

00:15:33.170 –> 00:15:36.450
So there’s a lot of logic behind the scenes about how to report all that.

00:15:36.610 –> 00:15:41.850
And let me just say, like, the problem now is you assign any of these agents

00:15:41.850 –> 00:15:48.110
to go do that research for you, and it looks super credible, and it’s 85% correct.

00:15:48.110 –> 00:15:55.410
But there’s still 15% of mistakes that are harder to find, but significant.

00:15:55.810 –> 00:15:56.310
Yeah.

00:15:57.290 –> 00:15:58.450
Yeah, they’ll get there.

00:15:58.650 –> 00:16:01.570
Yeah, yeah, yeah. I’m sure they will. I make mistakes too, by the way,

00:16:01.690 –> 00:16:03.230
so it doesn’t have to be perfect.

00:16:03.850 –> 00:16:07.330
It just has to be better than me. I think Claude would, you could say start

00:16:07.330 –> 00:16:10.510
a new year and use the last year. I think it’ll one shot it for you.

00:16:10.710 –> 00:16:11.790
Yeah, I’m going to try for sure.

00:16:11.910 –> 00:16:14.270
That’s my prediction. Let us know. Next pod, you’ll let us know how it goes.

00:16:14.550 –> 00:16:14.790
Okay.

00:16:14.910 –> 00:16:18.070
And I can’t recommend it strong enough to everyone listening. It’s really good.

00:16:18.150 –> 00:16:22.630
I just got the PowerPoint one last night and I had to do this frequently asked

00:16:22.630 –> 00:16:28.350
question presentation for potential investors and it created 38 slides for me and it was perfect.

00:16:28.690 –> 00:16:32.870
That was great. I was like, oh my God. My life is so changed right now.

00:16:32.990 –> 00:16:36.590
This is classic Jason and Scott show material. We’re doing the Amazon earnings

00:16:36.590 –> 00:16:39.690
podcast and we’re 20 minutes in. We haven’t mentioned Amazon.

00:16:39.690 –> 00:16:43.090
We’re going to keep it short this time. We’re going to keep it under three hours.

00:16:43.490 –> 00:16:45.550
But that’s a good setup, Jason. Yeah.

00:16:46.090 –> 00:16:51.370
We’re here to talk about Amazon earnings, but I also think it’s important to

00:16:51.370 –> 00:16:55.390
take a step back and kind of look at what is going on and you kind of think

00:16:55.390 –> 00:16:57.550
about our perspective of are we in a bubble?

00:16:58.230 –> 00:17:02.530
Now, the main reason people are asking that is there’s all these deals of,

00:17:02.530 –> 00:17:05.870
you know, NVIDIA investing and then getting money back and all that.

00:17:05.990 –> 00:17:11.190
That’s the one that people focus on. That’s not really our wagon, our bailiwick. So,

00:17:12.170 –> 00:17:15.910
What we’re going to do is really look at these through the e-commerce and retail

00:17:15.910 –> 00:17:21.110
lens, first of all, but also try to frame this in what the companies are saying.

00:17:21.350 –> 00:17:24.290
We get all the earnings calls and all the Wall Street reports.

00:17:24.510 –> 00:17:30.530
So we’ve picked through all that and we found some tidbits that I think help paint the picture.

00:17:31.010 –> 00:17:33.410
And I like to go through this, long-time listeners will know,

00:17:33.490 –> 00:17:35.990
I like to go through it in kind of a chronological order.

00:17:36.250 –> 00:17:40.890
The setup is usually that Amazon is the last one to report, and that’s how it played out this time.

00:17:41.070 –> 00:17:44.790
So first we had Microsoft, and they came out January 27th.

00:17:45.370 –> 00:17:49.110
And the part that’s relevant to our discussion is the cloud computing,

00:17:49.270 –> 00:17:50.850
which at Microsoft is called Azure.

00:17:51.190 –> 00:17:57.470
That grew 66% year-over-year, which is pretty material acceleration, to $37.5 billion.

00:17:58.050 –> 00:18:00.730
Now Azure on its own they’ve only been breaking it

00:18:00.730 –> 00:18:04.290
out for a while for a long time they just called this all cloud they

00:18:04.290 –> 00:18:07.010
included Microsoft 365 so for the first

00:18:07.010 –> 00:18:10.370
time I think this is the third quarter maybe

00:18:10.370 –> 00:18:13.190
this is the fourth quarter I can’t remember when they started breaking out but it hasn’t

00:18:13.190 –> 00:18:15.850
been long but that’s but that’s pretty

00:18:15.850 –> 00:18:18.910
good but here’s the shocking thing it missed Wall Street’s

00:18:18.910 –> 00:18:21.750
whisper numbers we’re at that point now where we have

00:18:21.750 –> 00:18:24.850
you know the the low and high estimates

00:18:24.850 –> 00:18:27.690
and if you beat the high or sometimes you

00:18:27.690 –> 00:18:30.350
beat the midpoint everyone’s happy now you’ve got to beat the

00:18:30.350 –> 00:18:33.250
high and hit some kind of unspoken whisper number so that’s

00:18:33.250 –> 00:18:38.310
kind of where we are on expectations there the the thing to understand and we’ll

00:18:38.310 –> 00:18:42.410
recap this at the end but each one of these companies has started announcing

00:18:42.410 –> 00:18:46.190
a backlog because they’re trying to get wall street to understand hey the reason

00:18:46.190 –> 00:18:51.630
we’re doing this is we do not have enough capacity and this is what we’re is backlogged right now.

00:18:51.890 –> 00:18:56.630
We could recognize this revenue if we had enough servers.

00:18:57.410 –> 00:19:02.290
And Microsoft’s backlog is $625 billion. So that’s crazy.

00:19:02.630 –> 00:19:09.250
And that has grown 100% year over year. So December quarter of…

00:19:10.050 –> 00:19:13.670
And they have their quarters are off by one. So I won’t. Calendar December quarter

00:19:13.670 –> 00:19:17.110
was 298 last year. And then this year it’s 625.

00:19:17.390 –> 00:19:21.950
So yeah, more than 100% growth. A couple other things I thought were interesting in there.

00:19:22.110 –> 00:19:27.210
They have 250 customers that are north of a 1 trillion token a year pace.

00:19:27.410 –> 00:19:31.490
When you’re using AI, the kind of currency on AI as tokens.

00:19:31.870 –> 00:19:36.370
And that’s the one currency. The currency underneath that is basically power.

00:19:36.370 –> 00:19:38.090
So we’re at this point now where

00:19:38.090 –> 00:19:41.850
these build outs that were running into physical constraints with the.

00:19:43.420 –> 00:19:48.180
Power system, the ability to bring enough, get enough land and concrete and

00:19:48.180 –> 00:19:51.100
all the things. They added a one gigawatt of capacity.

00:19:52.000 –> 00:19:56.820
Satya Nadella said, agents are the new apps. And then they announced some CapEx

00:19:56.820 –> 00:19:57.640
that we’ll go into in a minute.

00:19:58.120 –> 00:20:02.460
Then the day, next day, and the stock was off pretty substantially at Microsoft.

00:20:02.460 –> 00:20:05.240
It was off as much as 10%. I think it’s bounced back a little bit.

00:20:05.440 –> 00:20:09.820
So Wall Street’s in this thing where last year they were patient.

00:20:09.920 –> 00:20:15.540
They said, okay, you guys are investing against this and we want to see return.

00:20:15.960 –> 00:20:19.360
And this year, everyone’s saying, hey, I know you’re nervous,

00:20:19.540 –> 00:20:23.240
but we’re going to triple down. How do you feel about that? Wall Street said, not good.

00:20:23.500 –> 00:20:28.220
So the stock market has had, on top of that, all these new anthropic tools have

00:20:28.220 –> 00:20:31.960
got Wall Street freaked out that software companies are going to go out of business.

00:20:32.200 –> 00:20:37.300
So it’s been a really rough, as we’re recording this, basically 10 trading days

00:20:37.300 –> 00:20:39.260
on Wall Street because of all

00:20:39.260 –> 00:20:44.400
the AI’s disruption, which was the theme of your NRF keynote, I will add.

00:20:45.280 –> 00:20:51.540
So then the next day, Meta announced the artist formerly known as Facebook and

00:20:51.540 –> 00:20:56.220
their fourth quarter advertising revenue just absolutely crushed it at 58 billion.

00:20:56.560 –> 00:20:58.080
That was a material acceleration.

00:20:58.540 –> 00:21:04.180
And the reason they had such a big acceleration is they’re using AI internally

00:21:04.180 –> 00:21:09.120
and a lot of other, they have this other thing that’s not really Gen AI, but it’s more of a.

00:21:10.200 –> 00:21:14.500
Some kind of machine learning algorithm it has a name you may know it may have

00:21:14.500 –> 00:21:15.720
Max in its name I can’t remember,

00:21:16.620 –> 00:21:22.360
But they specifically called out a couple reasons that their ad business is accelerating.

00:21:22.580 –> 00:21:26.600
They have this AI powered creative tool. So it will create the,

00:21:26.840 –> 00:21:29.960
you know, for small businesses that don’t have a fancy ad agency,

00:21:30.280 –> 00:21:34.460
like let’s say Publicis, you know, they have a little tool that will create their ads.

00:21:35.400 –> 00:21:39.820
That’s just the ads from that reached a $10 billion contribution on revenue.

00:21:39.820 –> 00:21:43.960
And then they also have a new way of measuring ads that are really unlocking

00:21:43.960 –> 00:21:45.420
things for advertisers.

00:21:46.100 –> 00:21:52.060
And that’s driven by AI that increased conversions 24%. So I think it’s when

00:21:52.060 –> 00:21:55.800
I when I parse the language there, I think they’re getting much better at targeting with AI.

00:21:56.000 –> 00:21:58.520
I think AI is able to do much better at targeting.

00:21:59.880 –> 00:22:02.840
And then they basically said, hey, here’s here’s what’s going on.

00:22:02.960 –> 00:22:06.680
We think the future we’re going to we’re going to really invest heavily in AI

00:22:06.680 –> 00:22:09.360
and we use all this money we make from ads to fund it.

00:22:09.820 –> 00:22:13.760
And AI is going to be the big growth driver after ads.

00:22:14.740 –> 00:22:19.140
Famously, so they bet on this open source system called Llama that they built,

00:22:19.380 –> 00:22:21.520
an open source model. And it kind of ran out of steam.

00:22:21.740 –> 00:22:24.860
So famously, Mark Zuckerberg opened up his wallet and has been hiring people

00:22:24.860 –> 00:22:30.560
for north of, you know, $100 million kind of salaries. And some rumored as high

00:22:30.560 –> 00:22:32.980
as a billion would call it spending the Zuck bucks.

00:22:33.240 –> 00:22:38.680
And he has put together kind of a Justice League of America type team of AI

00:22:38.680 –> 00:22:40.820
superstars. And they’re working on a new model.

00:22:41.040 –> 00:22:44.680
This week, it came out in an article in the information that that is codenamed Avocado.

00:22:45.360 –> 00:22:51.120
And the other rumor is that they’re very excited about its initial results from pre-training.

00:22:51.260 –> 00:22:54.400
So we could have Meta kind of come back into the game here.

00:22:55.100 –> 00:23:00.280
The thing that got me so excited is during the call, he basically said they’re

00:23:00.280 –> 00:23:02.540
going to come, they’re going to jump into a jump to commerce,

00:23:02.780 –> 00:23:06.740
which is really fascinating because you and I know they’ve gotten out of,

00:23:06.840 –> 00:23:09.120
they had all this commerce stuff and they’ve gotten totally out of it.

00:23:09.260 –> 00:23:12.740
So to see them kind of waking up and saying, wait a minute, we need to get back

00:23:12.740 –> 00:23:14.520
into this game is pretty intense.

00:23:15.230 –> 00:23:20.790
Let me just call out a specific quote. He said, this also has implications for commerce.

00:23:20.950 –> 00:23:24.530
Our ads today help businesses find just the right, very specific people who

00:23:24.530 –> 00:23:25.470
are interested in their products.

00:23:26.190 –> 00:23:29.410
New agentic shopping tools will allow people to find just the right,

00:23:29.570 –> 00:23:32.310
very specific set of products from the businesses in our catalog.

00:23:32.530 –> 00:23:36.930
We’re focused on making these experiences work across both our feeds and across business messaging.

00:23:37.090 –> 00:23:42.750
So they’re basically saying it’s going to be on Insta, Blue Facebook, and in WhatsApp as well.

00:23:43.650 –> 00:23:49.910
Then they proceeded to guide CapEx to 115 to 135, which depending on which part

00:23:49.910 –> 00:23:53.770
of that range you look is as high as a 90% year of your growth rate in capital expenditures.

00:23:54.370 –> 00:23:57.410
And Wall Street hated that. So they were off.

00:23:57.650 –> 00:24:00.910
So despite, you know, beat and raise, beat and raise, beat and raise,

00:24:01.170 –> 00:24:05.250
the fact that they’re spending so much on CapEx, Wall Street was like, no bueno.

00:24:06.610 –> 00:24:07.610
Anything to throw into that one?

00:24:07.930 –> 00:24:12.270
Yeah, well, I think we’re going to see that that’s the reoccurring theme of

00:24:12.270 –> 00:24:15.730
the quarter is great financial performance, but we’re going to have to spend

00:24:15.730 –> 00:24:17.130
like a drunken sailor next year.

00:24:17.370 –> 00:24:19.730
And in general, Wall Street’s not liking that.

00:24:20.810 –> 00:24:24.250
The meta stuff is super interesting.

00:24:24.910 –> 00:24:31.390
The meta broadly calls all of these AI-enabled functions in the advertising

00:24:31.390 –> 00:24:33.750
platform, they call them Advantage Plus, right?

00:24:33.750 –> 00:24:37.210
So there was an era where you would be a human and you’d say,

00:24:37.450 –> 00:24:41.330
I want to buy this audience on Meta to advertise my product to.

00:24:41.630 –> 00:24:45.810
And increasingly, they’ve said, oh, instead of you specifying the audience,

00:24:46.130 –> 00:24:49.970
you should let our Advantage Plus robot pick the audience for you.

00:24:50.170 –> 00:24:56.530
And at first, the robots didn’t perform very well compared to the best human media buyers.

00:24:56.530 –> 00:25:03.430
But increasingly, the robot is able to find a much better audience that’s much

00:25:03.430 –> 00:25:06.230
more economical, more efficient to bid on.

00:25:06.590 –> 00:25:12.450
And so they are making a bunch of progress by saying, hey, just turn your budget over to our black box.

00:25:12.590 –> 00:25:15.590
Trust that it’ll make a bunch of good decisions for you and get you good ad

00:25:15.590 –> 00:25:17.770
results. And it legitimately is.

00:25:17.930 –> 00:25:21.370
It’s scary because you don’t know exactly what it’s going to do.

00:25:22.110 –> 00:25:27.510
But it’s really helping their ads outperform and grow the ads business.

00:25:27.730 –> 00:25:30.630
And you hit one interesting thing. Everyone wants to imagine that all these

00:25:30.630 –> 00:25:35.970
ads on Meta are coming from huge CPGs and huge advertisers with Super Bowl ads.

00:25:36.110 –> 00:25:41.170
It actually mostly isn’t. It actually is mostly small businesses and direct-to-consumer

00:25:41.170 –> 00:25:47.430
businesses from China and folks that do have a lot less resources to be really

00:25:47.430 –> 00:25:50.330
sophisticated at managing these advertising campaigns.

00:25:50.330 –> 00:25:55.290
And so the fact that they have tools that are accessible and performant for

00:25:55.290 –> 00:25:58.310
these small businesses has really been an unlock for them.

00:25:58.450 –> 00:26:03.270
So that’s, I think, what’s going on at Meta. The commerce thing is interesting.

00:26:03.530 –> 00:26:06.070
I think there’s a little bit of room for semantics there. I think,

00:26:06.110 –> 00:26:09.810
you know, Meta has a product they call Advantage Plus Shopping,

00:26:09.970 –> 00:26:16.290
which, you know, is all of the buy something called the action focused ads.

00:26:16.290 –> 00:26:20.270
And so if Zuckerberg’s talking about that as agentic commerce,

00:26:20.410 –> 00:26:23.210
that’s something different than what I think you and I are interested in,

00:26:23.330 –> 00:26:28.150
which is like, does he actually get back into converting his product feed into

00:26:28.150 –> 00:26:32.670
transactions on his platform and who would be the seller of record and all these

00:26:32.670 –> 00:26:34.050
interesting questions that would come up there.

00:26:34.190 –> 00:26:36.890
So we’ll keep watching that. There was one other tidbit.

00:26:37.800 –> 00:26:41.880
He, at one point during, during the earnings call, they were talking about the,

00:26:41.880 –> 00:26:44.900
the hardware products and the AI glasses.

00:26:45.700 –> 00:26:51.440
And he said, like, very matter of factly, I can’t imagine a future when we’re

00:26:51.440 –> 00:26:54.920
not all wearing agents on our face.

00:26:55.340 –> 00:26:57.920
Like that. It just seems so obvious to me that we’re all, and,

00:26:58.040 –> 00:27:01.520
you know, we’re, we’re having a big dispute right now about where the glass

00:27:01.520 –> 00:27:05.460
is going to be for, for these agents. Is it, is it the vertical agents that

00:27:05.460 –> 00:27:07.860
run on, on traditional retailers websites?

00:27:07.980 –> 00:27:10.960
Is it the horizontal agents that have their own websites and apps?

00:27:11.060 –> 00:27:12.960
Is it the browsers? Is it the OS?

00:27:13.580 –> 00:27:18.000
And Mark is like, like I’m a hundred percent convinced we’re all going to be

00:27:18.000 –> 00:27:22.280
wearing an agent, which is to me totally viable and pretty interesting.

00:27:23.040 –> 00:27:26.960
Yeah. Yeah. We’ll see so far. I haven’t met an agent I want to wear on my face,

00:27:27.040 –> 00:27:29.840
but maybe at some point we’ll see. Yeah.

00:27:29.940 –> 00:27:32.860
Agreed. But I, it does seem like it’s coming one way or another.

00:27:32.860 –> 00:27:35.400
We’ll see what what Sir Ives comes up with.

00:27:35.740 –> 00:27:39.860
Yeah, the Ray-Ban things are good, but they feel like they’re a couple beats

00:27:39.860 –> 00:27:42.140
behind at this point. It’s everything’s going so fast.

00:27:43.720 –> 00:27:47.800
Then we had February 4th, which was Google, also known as Alphabet.

00:27:48.360 –> 00:27:52.800
So just a couple tidbits from this one. They said Gemini models now process

00:27:52.800 –> 00:27:57.800
over 10 billion tokens a minute through API, up from 7 billion the prior quarter.

00:27:57.940 –> 00:28:00.860
They love throwing around these crazy big numbers.

00:28:01.960 –> 00:28:05.980
Side note, isn’t it fun that the currency that was most important to us as 10-year-olds

00:28:05.980 –> 00:28:08.220
in the arcade is still the most important currency?

00:28:08.220 –> 00:28:11.300
It is. Yeah, we’ve been on this token thing for quite a while.

00:28:11.580 –> 00:28:11.760
Yeah.

00:28:12.420 –> 00:28:14.000
The Chuck E. Cheese ones were the best.

00:28:14.500 –> 00:28:14.820
Absolutely.

00:28:16.920 –> 00:28:21.480
Gemini 3 Pro has processed three times more tokens than the previous Gemini.

00:28:21.940 –> 00:28:25.860
They had 350 customers that processed more than 100 billion tokens.

00:28:26.060 –> 00:28:29.360
So everyone’s trying to find these kind of standout metrics.

00:28:29.640 –> 00:28:31.600
And they change them every time, which is annoying.

00:28:32.020 –> 00:28:36.840
For a long time, Google put out this one that was tokens in the quarter,

00:28:36.880 –> 00:28:39.980
I think it was. And then it slowed down a little bit. So now they’ve stopped using it.

00:28:41.220 –> 00:28:46.080
There was another one i don’t think i captured it here they did announce that

00:28:46.080 –> 00:28:51.780
gemini has crossed 750 million active users i forget if that was i think that

00:28:51.780 –> 00:28:53.540
was monthly i don’t think it was weekly,

00:28:54.300 –> 00:28:58.920
so just a lot of growth on on the consumer facing side they also spent a lot

00:28:58.920 –> 00:29:03.140
of time talking about you know there’s all these people that and i was in this

00:29:03.140 –> 00:29:07.020
camp i will i’ll admit i was wrong on this prediction that it just seemed intuitive

00:29:07.020 –> 00:29:10.920
to me they wouldn’t be able to figure out how to monetize an answer engine as well as a search engine.

00:29:13.140 –> 00:29:18.560
For the last year, they have actually gotten to the point where the monetization is better.

00:29:18.820 –> 00:29:21.520
So they’ve actually, it was a little worse and they were actually kind of clear

00:29:21.520 –> 00:29:23.880
on that. And now they say it’s materially better.

00:29:24.180 –> 00:29:28.400
They were almost like, it’s hard to get this across here, but they were almost

00:29:28.400 –> 00:29:30.760
like a little giddy about it. It seemed like they were getting excited.

00:29:30.880 –> 00:29:32.320
And I’ve always felt like there

00:29:32.320 –> 00:29:37.120
will be a moment in time where AI mode becomes, you know, the default.

00:29:37.460 –> 00:29:40.860
And I think this will happen to Rufus too. At some point, these companies are

00:29:40.860 –> 00:29:44.600
going to switch the old mode, which is the core search.

00:29:44.840 –> 00:29:47.600
And then you get a click on something to get the answer mode.

00:29:47.740 –> 00:29:50.500
That’s going to flip. And I think Google is going to be first.

00:29:50.760 –> 00:29:57.060
And it’ll be interesting because a big moment in time to kind of think about is holiday sales 2026.

00:29:57.900 –> 00:30:01.240
Will we see one of these big companies, either Amazon or Google,

00:30:01.360 –> 00:30:06.380
make a big move before holiday? to if because the logic is if the economics

00:30:06.380 –> 00:30:07.600
are actually getting better inside

00:30:07.600 –> 00:30:11.140
of that ai thing then why have the old thing you know right so it will.

00:30:11.140 –> 00:30:13.540
Yeah that’ll be the moment that.

00:30:13.540 –> 00:30:14.560
They’re really serious about it.

00:30:14.560 –> 00:30:18.740
Yeah i actually think it’s a pretty safe bet by holiday 2026 because it it when

00:30:18.740 –> 00:30:22.460
we first started talking about this ai overviews were showing up in three percent

00:30:22.460 –> 00:30:28.120
of google queries um and by some counts it’s it’s approaching 50 now so it’s

00:30:28.120 –> 00:30:29.220
like we talked about this,

00:30:29.320 –> 00:30:33.200
but essentially that, you know, they really constrained it when they didn’t,

00:30:33.240 –> 00:30:36.800
when they had the revenue to protect in their legacy business that they hadn’t

00:30:36.800 –> 00:30:39.180
figured out how to replace in the AI overviews.

00:30:39.240 –> 00:30:43.300
But now that it seems like they’re, at least for some kinds of queries,

00:30:43.500 –> 00:30:47.040
confident in how they’re going to monetize the queries, it seems like they’re

00:30:47.040 –> 00:30:48.800
turning that dial pretty darn fast.

00:30:49.620 –> 00:30:54.860
Yeah, it’s crazy. So they had all these amazing vanity stats and how awesome

00:30:54.860 –> 00:30:59.240
that’s going, also their cost to serve everything is going down because they have their own TPUs.

00:30:59.300 –> 00:31:02.920
They always like to kind of throw it in NVIDIA’s face that they’re not on their hardware.

00:31:03.500 –> 00:31:06.440
And then they said, here’s our CapEx guidance.

00:31:06.700 –> 00:31:10.480
We are going to double our year over your CapEx. And Wall Street took all that

00:31:10.480 –> 00:31:14.200
interesting, exciting news and basically sent the stock down,

00:31:15.190 –> 00:31:19.410
three to five percent yeah so i’m sure that was right it’s almost like investors.

00:31:19.410 –> 00:31:22.570
Like share buybacks better than they like capex investments.

00:31:22.570 –> 00:31:27.270
They do yes they are very short-term thinkers it turns out some of them so we’ll

00:31:27.270 –> 00:31:31.370
see and then there’s a couple they did talk a little bit about agentic commerce

00:31:31.370 –> 00:31:34.970
and i don’t know if you get into this but i get i get in conversations.

00:31:35.830 –> 00:31:40.370
The naysayers have a more nuanced attack on agentic commerce and so it used

00:31:40.370 –> 00:31:41.810
to be definitions And they’re still out there.

00:31:42.050 –> 00:31:45.310
And now I’m getting people that say, how serious is Facebook,

00:31:45.510 –> 00:31:48.050
Google, and all these people about this? Like, is this, are they going to just

00:31:48.050 –> 00:31:49.830
rug pull us on this or is this really serious?

00:31:50.030 –> 00:31:54.890
So, you know, so basically in the fourth quarter earnings transcript,

00:31:55.070 –> 00:31:56.130
here’s three little snippets.

00:31:56.130 –> 00:32:00.430
So the chief business officer said, as Sundar mentioned in his candid remarks,

00:32:00.630 –> 00:32:03.330
we’re building an era of agentic commerce and working with our partners to introduce

00:32:03.330 –> 00:32:06.910
the universal commerce protocol in our consumer products and across the entire web.

00:32:07.410 –> 00:32:12.630
What they mean there is they also did a they’re adding Gemini to Chrome and

00:32:12.630 –> 00:32:17.410
it will go buy things for you and check out through UCP. So UCP is actually kind of.

00:32:18.230 –> 00:32:23.070
You know, breaking out of the site experience and becoming untethered.

00:32:23.210 –> 00:32:26.770
So none of this is live. I’m having a little hard time imagining how well that’s

00:32:26.770 –> 00:32:27.770
going to work until I see it.

00:32:27.870 –> 00:32:34.710
But there, my overall overarching point here is Google is really serious about this stuff.

00:32:34.830 –> 00:32:39.770
This is not a 20% time thing from one developer. This is from the CEO down.

00:32:40.410 –> 00:32:43.610
We’ve received tremendous feedback from the industry. Soon people can use a

00:32:43.610 –> 00:32:49.010
new checkout experience to buy directly in AI mode in Gemini. for select merchants.

00:32:49.290 –> 00:32:54.150
So this is not launched yet, but they said soon. So I don’t think in fourth

00:32:54.150 –> 00:32:59.150
quarter earnings call on February 4th or whatever it was, you say this if you’re

00:32:59.150 –> 00:33:00.450
not going to have it out by the next one.

00:33:00.610 –> 00:33:04.690
So my prediction is, I also predict that on the Facebook thing.

00:33:04.810 –> 00:33:07.670
I think they’re going to do some kind of agentic thing between next earnings

00:33:07.670 –> 00:33:12.190
call and I think UCP will launch before then.

00:33:12.530 –> 00:33:16.370
I have trouble with UCP because I want to say UPC because I say it so many times.

00:33:17.830 –> 00:33:20.770
And then sundar said in our areas like he was

00:33:20.770 –> 00:33:23.470
responding to a question from our friend at morgan

00:33:23.470 –> 00:33:27.990
stanley uh brian noack so brian asked about agentic commerce and sundar said

00:33:27.990 –> 00:33:31.230
in areas like commerce i think we spent the year working with the ecosystem

00:33:31.230 –> 00:33:35.150
to develop the underlying protocol that’s going to be needed for this new agentic

00:33:35.150 –> 00:33:39.590
world the launch of universal commerce protocol at nrf in january with a bunch

00:33:39.590 –> 00:33:43.010
of partners founding partners i think has been super well received.

00:33:43.230 –> 00:33:48.710
I’m excited now that we have laid the foundation of operability in which agentic commerce can work.

00:33:49.400 –> 00:33:53.240
And then finally, another person. So this is Michael at Moffat Nathanson.

00:33:53.400 –> 00:33:56.940
I think I’ve met him before, but I haven’t seen him on the calls before,

00:33:57.040 –> 00:33:57.560
so that was interesting.

00:33:58.220 –> 00:34:01.720
He also asked about this. So Wall Street is really tuned in on this.

00:34:02.020 –> 00:34:06.280
So this is coming from the tippy top down. And he asked a question and Sundar

00:34:06.280 –> 00:34:11.020
answered, part of what’s been good in designing the Universal Protocol is it

00:34:11.020 –> 00:34:13.100
makes it much easier for users to complete their transactions.

00:34:13.100 –> 00:34:16.180
But at the same time, it allows merchants to showcase the range of their offerings.

00:34:16.360 –> 00:34:19.320
If they want to make promotions, et cetera, all that is built into

00:34:19.320 –> 00:34:23.100
the protocol so they do as a reminder they do have an ad unit in there it’s

00:34:23.100 –> 00:34:27.340
called the deal i think it’s called the deal ad digital commerce deal ad unit

00:34:27.340 –> 00:34:31.360
so you can kind of say if someone gets down to your product you can offer a

00:34:31.360 –> 00:34:36.740
real-time deal in there anything else stand out to you in the google announcement yeah.

00:34:36.740 –> 00:34:41.040
I mean just kind of echoing your point a in my mind google’s version of the

00:34:41.040 –> 00:34:46.960
protocol ucp is more ambitious than chad gbt’s like chad gbt is mostly targeted

00:34:46.960 –> 00:34:49.480
at ChatGPT specific use case,

00:34:49.640 –> 00:34:56.500
but the Google version to me is much more general and enables a lot of different use cases.

00:34:56.680 –> 00:35:00.260
And what I’m excited about is I feel like kind of the same phenomenon you guys

00:35:00.260 –> 00:35:04.240
had at Channel Advisor back in the day, like when eBay was trying to get people

00:35:04.240 –> 00:35:07.020
to become merchants, it was a tough sell.

00:35:07.120 –> 00:35:12.440
But after they became eBay merchants, it became super easy for Amazon to convince

00:35:12.440 –> 00:35:14.540
them to also be Amazon merchants.

00:35:14.920 –> 00:35:19.420
And adding that second and third and fourth marketplace became way easier.

00:35:19.680 –> 00:35:24.140
And in that same way, like as we sit here right now recording this podcast,

00:35:24.320 –> 00:35:28.720
there are hundreds of millions of products in ChedGPT’s feed.

00:35:28.920 –> 00:35:33.560
And so I expect that we’re going to see all those products instantly show up

00:35:33.560 –> 00:35:37.980
in Google’s much more ambitious feed very shortly here. And I think that’s going

00:35:37.980 –> 00:35:39.720
to be a pretty exciting moment.

00:35:41.590 –> 00:35:45.690
Okay. And with that backdrop, it brings us to…

00:35:46.450 –> 00:35:52.250
Yeah. So Amazon news, I think we’re only, what, about three hours into the podcast and we got to Amazon.

00:35:54.410 –> 00:35:57.210
Spoiler alert, as we’ve already heard from some of these other companies,

00:35:57.350 –> 00:36:02.570
Amazon had their earnings call last night and their stock is down 8% as of the

00:36:02.570 –> 00:36:05.110
moment we started recording here.

00:36:05.110 –> 00:36:09.350
And it’s a similar story, a lot of huge traction and success,

00:36:09.550 –> 00:36:14.250
but they also announced that they’re going to make some huge CapEx investments

00:36:14.250 –> 00:36:17.210
this year on the order of magnitude of $200 billion.

00:36:18.490 –> 00:36:24.710
And investors did not love that, right? So that was kind of like the takeaway.

00:36:24.950 –> 00:36:28.890
You’re a $2.6 trillion company. You’re going to invest $200 billion next year.

00:36:29.110 –> 00:36:31.690
And that made investors nervous.

00:36:32.050 –> 00:36:34.450
Scott, what were your big takeaways from the earnings call?

00:36:35.110 –> 00:36:36.310
From Amazon?

00:36:36.830 –> 00:36:36.990
Yeah.

00:36:37.910 –> 00:36:38.950
Yeah, the…

00:36:40.350 –> 00:36:41.630
I’ve got so many. Let’s talk about them.

00:36:42.350 –> 00:36:42.510
Yeah.

00:36:43.810 –> 00:36:44.370
I agree.

00:36:44.430 –> 00:36:48.290
I mean, were you surprised overall that the stock went down or were you?

00:36:48.890 –> 00:36:53.610
Well, I didn’t know what the CapEx was when I saw it. I was watching CNBC and

00:36:53.610 –> 00:36:58.210
my buddy Gene Munster came on and he was like, he was almost like babbling incoherently.

00:36:58.370 –> 00:37:01.490
He was so freaked out by the CapEx and I knew something bad had happened.

00:37:01.890 –> 00:37:05.790
I was like, uh-oh. And then like they had the little aftermarket stock thing

00:37:05.790 –> 00:37:09.310
up and it went reek and fell off a cliff immediately. And it was like,

00:37:09.590 –> 00:37:13.170
because the first headlines were like, beats revenue by this much,

00:37:13.350 –> 00:37:16.210
beats EPS, this part of the business is screaming.

00:37:16.550 –> 00:37:19.270
And then it was like CapEx to double.

00:37:19.630 –> 00:37:22.230
And then it was like, pulled the handbrake on the whole thing.

00:37:22.490 –> 00:37:25.890
Yeah, it is interesting, though. And I think we’ll talk about this more.

00:37:26.010 –> 00:37:30.150
But like, all of these businesses are so capacity constrained.

00:37:30.690 –> 00:37:34.130
You already mentioned it. Like, they all need more AI chips.

00:37:34.270 –> 00:37:37.870
They all need more power. They all need more cooling for all those chips.

00:37:38.330 –> 00:37:47.170
And those capacity bottlenecks are atoms, not bits, and they’re super expensive to buy more, right?

00:37:47.270 –> 00:37:56.810
And so it feels like the way to unlock more sales is going to be even higher levels of spending.

00:37:56.810 –> 00:38:02.210
I listened to a podcast last month that was completely serious and not ironic,

00:38:02.210 –> 00:38:07.090
talking about how the big unlock in our category is going to be when the data

00:38:07.090 –> 00:38:11.790
centers move up into space where the solar power is cheaper and the cooling is much easier.

00:38:12.410 –> 00:38:18.870
Speaking of space, Jassy was almost, the Amazon execs sound a lot like Warren

00:38:18.870 –> 00:38:22.870
Buffett in that they are very cautious about investing this type of money.

00:38:22.870 –> 00:38:27.790
And he was basically saying, we’ve never, we’ve been sitting on the sidelines

00:38:27.790 –> 00:38:30.490
on a lot of cash for a long time and we’re going to deploy it because we’ve

00:38:30.490 –> 00:38:34.610
never seen so many high return on investment opportunities in front of us.

00:38:34.850 –> 00:38:39.350
So, so this number, this $200 billion number, which is the biggest of them all.

00:38:40.240 –> 00:38:44.960
It includes all the AI stuff. So it’s more data center build out and chips and everything.

00:38:45.480 –> 00:38:49.300
It’s also fourth generation of Tranium, which is their chip.

00:38:49.540 –> 00:38:53.960
It’s also, they’re launching like thousands of low earth orbit.

00:38:54.100 –> 00:38:57.020
They call it Project Leo satellites to compete with Starlink.

00:38:57.280 –> 00:39:00.140
They also are coming out with some kind of a satellite phone thing.

00:39:00.340 –> 00:39:04.300
I’m a little less clear on that one. I thought it was more, I didn’t understand

00:39:04.300 –> 00:39:05.780
there was maybe a phone coming out.

00:39:05.960 –> 00:39:06.140
Yeah.

00:39:06.380 –> 00:39:09.400
And then on top of that, they’re building a bunch more fulfillment centers because

00:39:09.400 –> 00:39:12.340
as we’ll get into the retail part of the business is like

00:39:12.340 –> 00:39:15.260
hitting a capacity thing too so they’re getting

00:39:15.260 –> 00:39:17.860
and you know i know this is one

00:39:17.860 –> 00:39:21.140
of your favorite topics but they sound generally surprised about

00:39:21.140 –> 00:39:27.160
essentials so it’s a really it’s a really disconnected time because i’ve never

00:39:27.160 –> 00:39:32.120
jassy’s like a super kind of straight laced guy and he i’ve never heard him

00:39:32.120 –> 00:39:35.480
sound excited i wouldn’t know if the normal the way the normal person would

00:39:35.480 –> 00:39:38.520
would sound it wasn’t excited but he was excited for Jassy.

00:39:38.700 –> 00:39:41.280
It was like almost giddy that they found so much stuff to invest in.

00:39:41.640 –> 00:39:44.560
Also, Wall Street, it took a while for them to figure this out because this

00:39:44.560 –> 00:39:46.140
number was so big and surprised them.

00:39:46.400 –> 00:39:51.640
But basically, this makes their free cash flow go to zero or negative for the

00:39:51.640 –> 00:39:53.520
first time in a very long time.

00:39:53.660 –> 00:39:56.300
Maybe since like 2010 or something.

00:39:56.600 –> 00:39:59.860
No one’s been able to kind of put that number out.

00:39:59.940 –> 00:40:04.640
I think people are still looking back to figure out when free cash flow would have been low.

00:40:04.760 –> 00:40:09.260
But it’s not because the business is generating more than ever but they’re spending

00:40:09.260 –> 00:40:11.520
it immediately on the other hand for all this stuff it’s crazy.

00:40:11.520 –> 00:40:16.080
Yeah yeah so let’s let’s dive into some of the segments and i obviously vote

00:40:16.080 –> 00:40:22.700
we start with the the best and most important segment which is retail yeah uh you.

00:40:22.700 –> 00:40:23.400
Want to take it or should i.

00:40:23.400 –> 00:40:28.720
Yeah yeah i’ll i’ll do the retail one uh because there it’s it’s mostly good

00:40:28.720 –> 00:40:33.500
news like a they they generally beat expectations so i think like they were

00:40:33.500 –> 00:40:36.720
plus plus two percent on north american retail,

00:40:36.860 –> 00:40:39.920
they’re like plus 7% on international versus expectations.

00:40:40.240 –> 00:40:42.320
I care less about the expectations.

00:40:43.850 –> 00:40:52.730
General, their store segment grew like 11%. They don’t disclose like North American

00:40:52.730 –> 00:40:57.990
online and offline retail together, but we all build models based on what they do disclose.

00:40:58.390 –> 00:41:01.110
And I’m waiting for the much smarter people’s models to come out.

00:41:01.190 –> 00:41:06.450
But in my model, North American retail for the year grew 9.1%.

00:41:06.450 –> 00:41:11.590
So put that in perspective, that’s Amazon, the first or second largest retail

00:41:11.590 –> 00:41:14.550
in the United States growing by 9.1% last year.

00:41:14.850 –> 00:41:19.630
We’ll get government data on the rest of the industry next week, but the U.S.

00:41:19.790 –> 00:41:25.150
Is likely retail grew at 3.1%. So Amazon is the first or second biggest player

00:41:25.150 –> 00:41:28.510
out there, and they’re growing three times the industry average. So that.

00:41:29.210 –> 00:41:37.170
Is huge. Another super interesting thing is that almost exactly mirrors their growth in units.

00:41:37.330 –> 00:41:40.970
So it seems like most of their growth is coming from selling more stuff,

00:41:40.990 –> 00:41:44.870
which is not how most other retailers are growing right now.

00:41:44.970 –> 00:41:48.190
Most other retailers are growing by selling stuff more expensively.

00:41:48.330 –> 00:41:53.270
And so that to me is a big encouraging sign for Amazon.

00:41:53.610 –> 00:41:57.830
And you hit it like the likely star here.

00:41:58.070 –> 00:42:03.050
They talked very little about growth acceleration in general merchandise or

00:42:03.050 –> 00:42:05.930
electronics or any of their traditionally strong categories.

00:42:06.310 –> 00:42:11.770
The unlock here is what Amazon calls everyday essentials, which is closely related

00:42:11.770 –> 00:42:15.250
to grocery, which Amazon calls fresh and frozen.

00:42:15.830 –> 00:42:19.250
And essentially, you know, during the pandemic, they said, hey,

00:42:19.410 –> 00:42:22.730
you know, we used to ship stuff from anywhere in the US to any customer in the US.

00:42:22.930 –> 00:42:25.830
Now we’re going to go to a hub and spoke model with regional distribution.

00:42:26.230 –> 00:42:29.850
And so all the stuff that goes to the Wingo household is going to come from.

00:42:30.890 –> 00:42:34.130
His area of the country, and that’s going to be more efficient.

00:42:34.290 –> 00:42:39.170
And that pivot totally worked. And then last year, they said,

00:42:39.270 –> 00:42:40.190
you know what we’re going to do?

00:42:40.990 –> 00:42:44.510
Instead of trying to open more grocery stores, we’re going to put refrigerators

00:42:44.510 –> 00:42:48.530
in all those fulfillment centers that are now close to the Wingo’s household

00:42:48.530 –> 00:42:55.430
and deliver fresh and frozen same day from that local fulfillment center to Scott.

00:42:55.670 –> 00:43:01.230
And so today, there’s like 2,300 cities in the United States where they’re delivering

00:43:01.230 –> 00:43:08.530
fresh and frozen grocery same day. And that is all of the unlock at Amazon.

00:43:08.690 –> 00:43:15.070
In every one of those 2,300 markets, nine of the 10 fastest turning skews,

00:43:15.590 –> 00:43:21.410
are fresh and frozen. So wherever they offer this capacity, customers are eating it up.

00:43:21.610 –> 00:43:24.770
And to me, this is very reminiscent of history.

00:43:24.950 –> 00:43:27.990
Like there was this huge retailer that invented discount retailing.

00:43:28.130 –> 00:43:29.710
It was wildly successful called Walmart.

00:43:30.010 –> 00:43:33.350
And the founder retired. He got replaced by David Glass.

00:43:33.670 –> 00:43:38.170
And David came in and said, you know, the one category we’re not in that’s super important is grocery.

00:43:38.370 –> 00:43:42.570
We’re going to add grocery to all our stores. And everyone told them he was

00:43:42.570 –> 00:43:46.370
absolutely insane, that grocery was way harder than all the things that Walmart

00:43:46.370 –> 00:43:49.630
was doing and way lower margin, and then it was going to sink the company.

00:43:50.270 –> 00:43:54.450
And today, Walmart’s the largest grocer in the world, and grocery is like 60%

00:43:54.450 –> 00:43:57.970
of their business, and it essentially saved the company and helped it continue to grow.

00:43:58.330 –> 00:44:03.270
And that same thing I feel like is happening to Amazon this year,

00:44:03.310 –> 00:44:06.890
that they were a very successful general merchant that secretly wasn’t selling

00:44:06.890 –> 00:44:11.370
a lot of grocery other than non-perishables like white paper towels and whatnot.

00:44:11.730 –> 00:44:17.710
And this year, they’ve unlocked how to become one of the country and potentially

00:44:17.710 –> 00:44:19.930
the world’s largest grocers.

00:44:20.330 –> 00:44:23.210
And so, you know, even though they’re a very big retail business,

00:44:23.450 –> 00:44:26.930
they’re still growing three times faster than the industry average.

00:44:26.930 –> 00:44:28.970
And that’s a pretty big deal.

00:44:29.950 –> 00:44:35.550
Two quick questions. So the, if we kind of 11 or 12% is kind of where the Amazon

00:44:35.550 –> 00:44:38.370
online business is growing if we back into it. Yeah.

00:44:38.910 –> 00:44:41.550
And that, you know, I know it hasn’t come out and you’re excited,

00:44:41.770 –> 00:44:45.750
you’re giddy over February 10th or whatever it is, but do you think historically

00:44:45.750 –> 00:44:49.290
that’s pretty materially above what the rest of e-commerce is doing? Is that?

00:44:49.450 –> 00:44:54.570
Yeah, that’s what I’m saying. So, so discount the 11% is a slightly like more

00:44:54.570 –> 00:45:02.430
complicated number, In the US, call that 11%, 9.1%. It’s going to be somewhere between 9.1% and 9.5%.

00:45:02.430 –> 00:45:03.830
So you got to take a national.

00:45:04.110 –> 00:45:10.990
Yeah. So call the US growth rate 9.1%. The government is saying the rest of

00:45:10.990 –> 00:45:14.190
retail is going to be growing at 3.1%, including Amazon.

00:45:14.430 –> 00:45:21.510
So all of retail is growing at 3.1%. So Amazon’s growing 3x the total market in the US.

00:45:23.380 –> 00:45:27.560
And then explain, I think I know the answer to this, but I’m curious,

00:45:27.680 –> 00:45:30.800
like, why was the dude that took over for Sam, right?

00:45:30.940 –> 00:45:34.440
Like, why is grocery working for both these companies and everyone thought it wouldn’t?

00:45:34.740 –> 00:45:39.360
Yeah, because A, while it’s a lower margin, more difficult category because

00:45:39.360 –> 00:45:43.640
it has spoilage and all this extra complication associated with it,

00:45:43.920 –> 00:45:47.000
it’s 25% of the consumer’s discretionary wallet.

00:45:47.180 –> 00:45:52.300
So it’s the biggest category of spending and it’s the most frequent category

00:45:52.300 –> 00:45:55.440
of spending. So you might be in market for a new TV every three years,

00:45:55.600 –> 00:45:59.960
you might be in market for new clothes every year, but you’re in market for bananas every week.

00:46:00.060 –> 00:46:06.180
And so the way to get customer intimacy, the way to move up the importance in

00:46:06.180 –> 00:46:10.260
the customer’s life is to be the provider of all of those groceries.

00:46:10.600 –> 00:46:17.540
And once you have pole position for that, you can win a lot more share of that

00:46:17.540 –> 00:46:22.820
customer. And so today, there’s about 220 million households in the United States of America.

00:46:23.380 –> 00:46:29.800
190 million households visit Walmart once a week. And that would not be true were it not for grocery.

00:46:31.270 –> 00:46:34.670
So it’s an LTV play and a frequency thing.

00:46:34.870 –> 00:46:38.590
It kind of flips it like now you’re coming in every week for groceries,

00:46:38.590 –> 00:46:42.370
you’ll pick up a toy or something in the other part of the general merch. Exactly.

00:46:42.530 –> 00:46:48.730
So now the opportunity cost to buy clothes from that grocer as opposed to going

00:46:48.730 –> 00:46:50.450
to a mall is much lower, right?

00:46:50.610 –> 00:46:57.030
The friction to get your Instapot from Walmart is much lower than from Sur La Tabla or wherever.

00:46:57.690 –> 00:46:59.590
Doesn’t everyone have four Instapots by now?

00:46:59.590 –> 00:47:02.110
They do, but you need a new one every year. They keep getting better.

00:47:02.330 –> 00:47:04.430
You know what they have in the Instapot now is AI.

00:47:04.950 –> 00:47:05.630
And a microwave.

00:47:06.090 –> 00:47:06.370
Yeah.

00:47:07.150 –> 00:47:07.550
Yeah.

00:47:08.030 –> 00:47:11.250
I always worry about the device where it’s like, oh, it does two things.

00:47:11.390 –> 00:47:13.430
And if you push the wrong button, it’s going to explode.

00:47:14.110 –> 00:47:15.930
Yeah. Don’t do those two things simultaneously.

00:47:16.710 –> 00:47:23.530
Exactly. But yeah. So to me, it’s funny, we didn’t even really talk about it,

00:47:23.590 –> 00:47:26.770
but Amazon made an announcement earlier this year, we’re closing all of our

00:47:26.770 –> 00:47:28.950
physical grocery stores except for Whole Foods.

00:47:29.150 –> 00:47:34.770
So they actually have about 100 Amazon Fresh stores or 60 Amazon Fresh stores.

00:47:34.970 –> 00:47:40.430
And then they have these Amazon Go stores that we’ve been making fun of for quite a few years now.

00:47:40.810 –> 00:47:45.790
And they’re closing all of those. And so there was a narrative from some reporters

00:47:45.790 –> 00:47:49.310
that are like, oh, Amazon can’t win grocery, they’re getting out of it.

00:47:49.510 –> 00:47:53.850
And they’re actually closing those grocery stores because their hypothesis that

00:47:53.850 –> 00:47:59.090
they don’t need those stores to become America’s food provider,

00:47:59.270 –> 00:48:03.490
or at least compete to be America’s food provider, they’ve proven their hypothesis.

00:48:03.990 –> 00:48:10.410
So that to me is, if I’m a traditional grocer, if I’m Kroger, I’m very worried.

00:48:10.570 –> 00:48:14.470
I think the fact that Amazon said, oh, you know what? We don’t have to join Kroger.

00:48:14.590 –> 00:48:19.410
We can beat them with our preferred method is a very scary moment for Kroger.

00:48:21.430 –> 00:48:23.250
Anything else? Should I talk about Marketplace?

00:48:23.990 –> 00:48:25.710
Yeah. Yeah. Does Marketplace still matter?

00:48:26.210 –> 00:48:29.470
They do. In fact, it matters a lot.

00:48:30.770 –> 00:48:36.890
So Marketplaces came in at 62% of total units sold, which is an all-time high

00:48:36.890 –> 00:48:38.030
watermark. Very exciting.

00:48:38.230 –> 00:48:40.970
It’s only up one percentage point, but hey, we’re going to call it a win.

00:48:42.390 –> 00:48:46.690
So Flywheel Effect for the Marketplace, they launched in 2006,

00:48:46.950 –> 00:48:49.990
like 20 years ago. I think this may be, or was it seven?

00:48:50.610 –> 00:48:53.510
I think we knew about it in a six and they launched a seven. I can’t remember.

00:48:53.910 –> 00:49:01.390
It may be the 19th anniversary or the 20th anniversary of the marketplace. And it is still humming.

00:49:01.770 –> 00:49:06.450
The, that famous flywheel drawing is still working.

00:49:06.590 –> 00:49:11.470
The flywheel is still flying and just creeping up to, to another 1% there.

00:49:12.110 –> 00:49:15.310
And then that is good. Should I jump into AWS?

00:49:15.730 –> 00:49:16.110
Yeah, yeah, yeah.

00:49:17.320 –> 00:49:19.600
I wasn’t sure if you wanted to say anything more about essentials.

00:49:19.740 –> 00:49:23.060
I know you love essentials and groceries, but I want to give you another bite at that.

00:49:23.100 –> 00:49:27.700
Yeah, no, but again, like if Amazon wins all these essential visits,

00:49:27.980 –> 00:49:30.560
it’s an unlock for all the marketplace sellers, right?

00:49:30.620 –> 00:49:34.180
So we talked about like, what else do you bundle into that trip?

00:49:34.440 –> 00:49:35.980
It’s all the marketplace items that are.

00:49:35.980 –> 00:49:41.020
You know, much better margin. Interlocking flywheels, all flywheeling together.

00:49:41.620 –> 00:49:42.000
Exactly.

00:49:43.100 –> 00:49:48.120
Mega, meta flywheeling. All right, AWS. So this is the one everyone was watching.

00:49:48.400 –> 00:49:51.020
And this is the only profitable business at Amazon, right?

00:49:52.040 –> 00:49:55.600
Nope. They are all profitable, but people don’t really realize that there’s

00:49:55.600 –> 00:49:58.780
this many retailers still have it stuck in their head that Amazon wouldn’t be

00:49:58.780 –> 00:50:01.060
profitable if it wasn’t for that stupid cloud business.

00:50:01.300 –> 00:50:06.020
But that is fake news. So we’re actually going to talk about the most profitable

00:50:06.020 –> 00:50:10.480
spoiler alert part of Amazon, which has been AWS has been dethroned.

00:50:10.980 –> 00:50:15.380
But you’ll tell us about that. I’ll talk about AWS. So everyone was expecting

00:50:15.380 –> 00:50:19.140
an acceleration here, and it slowed down a little bit, and everyone was disappointed.

00:50:19.400 –> 00:50:24.220
So this was even before they revealed the $200 billion bombshell of CapEx.

00:50:24.700 –> 00:50:31.720
So AWS revenue growth came in at 17.5. It was good to be the scale they are.

00:50:31.820 –> 00:50:35.500
They’re much bigger scale than everyone else that we’ve mentioned so far.

00:50:35.500 –> 00:50:37.600
Their operating income is $10 billion.

00:50:37.740 –> 00:50:41.060
And remember, Microsoft’s total revenue is $30 billion.

00:50:41.280 –> 00:50:45.800
So their orders of magnitude higher than Azure and I believe Cloud.

00:50:45.960 –> 00:50:48.520
Which I think they pointed out a number of times in their notes.

00:50:49.480 –> 00:50:52.940
Yeah, Jassy actually said, I want to point out that it’s way harder to grow

00:50:52.940 –> 00:50:58.980
a $100 billion business, 17%, than a $20 billion business, 30%.

00:50:58.980 –> 00:51:01.740
Wow, your Andy Jassy impersonations are getting better.

00:51:02.080 –> 00:51:06.820
Yeah, thanks. I have to be less excited. I just want to point out to all the investors…

00:51:11.080 –> 00:51:14.180
The so the street wanted accelerating revenue

00:51:14.180 –> 00:51:17.200
and they didn’t do it and the important thing

00:51:17.200 –> 00:51:20.500
is to ask why and it’s not because they didn’t

00:51:20.500 –> 00:51:23.140
have a lot of demand it’s this capacity problem again and this is

00:51:23.140 –> 00:51:26.520
why they’re spending so much so it’s this kind of recurring story

00:51:26.520 –> 00:51:29.940
that is very common across all four

00:51:29.940 –> 00:51:32.840
companies we’re talking about here margin declined a

00:51:32.840 –> 00:51:35.600
bit here and management said it’s really

00:51:35.600 –> 00:51:38.880
based to accelerated they’re investing

00:51:38.880 –> 00:51:41.760
so much in hardware now that they’re hitting getting

00:51:41.760 –> 00:51:44.480
hit with this depreciation more quickly than they have

00:51:44.480 –> 00:51:48.660
before so it’s not cash based kind of stuff and then they did say stock-based

00:51:48.660 –> 00:51:54.480
compensation is up and that that means to me they’re it’s getting more expensive

00:51:54.480 –> 00:51:59.660
to find a really good ai and cloud computing people and they’re having to pay

00:51:59.660 –> 00:52:03.700
a lot more in stock comp than maybe they kind of thought they would and And for many years.

00:52:03.840 –> 00:52:06.960
That was probably like endemic advantage they had, right? Like was.

00:52:07.140 –> 00:52:07.220
Yeah.

00:52:07.680 –> 00:52:07.900
Yeah.

00:52:08.040 –> 00:52:11.100
Yeah. If you wanted, if you were into highly available systems,

00:52:11.120 –> 00:52:13.760
you went to Amazon, period. There wasn’t an alternative.

00:52:14.140 –> 00:52:16.820
And therefore, they could kind of pick and choose candidates.

00:52:17.040 –> 00:52:19.660
Now, it’s an arms race to pick these people up.

00:52:19.740 –> 00:52:22.660
And you got Zuck out there, you know, throwing Zuck bucks around like crazy.

00:52:23.600 –> 00:52:28.200
They basically said the demand far exceeds capacity. They can’t get enough power.

00:52:28.720 –> 00:52:34.720
They are. All the fabs are maxed out. So getting GPUs, regardless of whose they

00:52:34.720 –> 00:52:38.760
are, their own or NVIDIA’s, it all goes to this one company called TSMC.

00:52:38.860 –> 00:52:43.560
We don’t have time to talk about, but we’re extremely bottlenecked as a planet

00:52:43.560 –> 00:52:45.580
on the ability to build chips right now.

00:52:46.460 –> 00:52:49.900
And then they’re just building out everything as fast as they possibly can.

00:52:51.780 –> 00:52:55.840
So investors wanted them to give a little more guidance of how it would accelerate.

00:52:55.840 –> 00:52:57.480
And they were kind of neutral.

00:52:57.580 –> 00:53:02.340
Neutral, I think, I think they have a lot of uncertainty in their ability to build,

00:53:03.230 –> 00:53:07.090
Things are out of their control, like concrete, rebar, dirt,

00:53:07.470 –> 00:53:11.490
power, and silicon, which is also dirt, but another flavor.

00:53:12.130 –> 00:53:18.350
So that was kind of the AWS one was really kind of the you-know-what in the

00:53:18.350 –> 00:53:20.070
punch bowl on the earnings call.

00:53:20.330 –> 00:53:25.830
Which glossed over the one that you’re super excited about because it is your favorite category.

00:53:26.050 –> 00:53:30.090
Who do you love more, the ads business or grocery chasing? If you had to pick

00:53:30.090 –> 00:53:33.330
one and take it to a deserted island, which one would you take?

00:53:33.730 –> 00:53:37.610
Yeah, I would take the grocery business because without the grocery business,

00:53:37.730 –> 00:53:38.910
you wouldn’t have the ads business.

00:53:39.330 –> 00:53:43.450
But just one other thing I wanted to add on the AWS.

00:53:43.790 –> 00:53:47.550
The interesting thing to me is they talk a lot about this like donut or this

00:53:47.550 –> 00:53:52.150
barbell of demand that it’s super like the bleeding edge is creating tons of

00:53:52.150 –> 00:53:55.870
demand. And everybody needs more AI workloads and more tokens.

00:53:56.310 –> 00:54:01.890
But they also are seeing like unexpected increased demand for traditional cloud.

00:54:02.090 –> 00:54:07.510
So there is this carry-on effect where like when you move more workloads to

00:54:07.510 –> 00:54:13.130
AI, you need more of your data in the cloud, which means you need to buy more traditional stuff.

00:54:13.310 –> 00:54:16.310
So I would actually argue like it’s a nice time for AWS.

00:54:16.610 –> 00:54:19.850
They’re actually capacity constrained on both sides at the moment.

00:54:19.850 –> 00:54:26.990
But you transitioned us to ads and I have a love-hate relationship with this business at Amazon.

00:54:27.270 –> 00:54:30.430
It’s an amazing business. It grew 23% for the quarter.

00:54:30.770 –> 00:54:36.550
It’s up like 22% year over year. So growing much faster than AWS.

00:54:37.070 –> 00:54:41.250
It significantly exceeded Wall Street’s expectations for growth.

00:54:42.050 –> 00:54:47.410
For the quarter, it was like $15.7 billion a revenue.

00:54:47.910 –> 00:54:54.710
But if you do the math on the year, I think we’re up to about $68 billion a

00:54:54.710 –> 00:54:57.010
year. That’s not even a run rate. The run rate would be bigger.

00:54:57.210 –> 00:55:00.710
But the trailing 12 months, we’re at $68 billion.

00:55:01.810 –> 00:55:04.790
And we don’t know exactly how profitable that is.

00:55:04.790 –> 00:55:09.830
But if you conservatively guess that selling ad units, which have no cost of

00:55:09.830 –> 00:55:15.750
goods, is 75% gross margin business, which is conservative, then Amazon’s ad

00:55:15.750 –> 00:55:19.350
spun off $51 billion in earned income last year.

00:55:19.810 –> 00:55:23.570
AWS that we just talked about spun off $45 billion in earned income.

00:55:23.570 –> 00:55:30.330
So the most conservative estimate of AWS makes it meaningfully more profitable,

00:55:30.510 –> 00:55:34.710
or I’m sorry, the conservative estimate for ads makes it meaningfully more profitable

00:55:34.710 –> 00:55:37.550
than AWS, which is exciting.

00:55:37.910 –> 00:55:43.370
Now, I like to remind people, most of those ads are by third-party sellers.

00:55:43.590 –> 00:55:48.370
Like this is mostly still sponsored product listings from third-party sellers

00:55:48.370 –> 00:55:52.950
that are now, you know, competing with a billion other ASINs on Amazon, literally.

00:55:53.290 –> 00:55:56.670
And the only way they’re ever going to be found is if they buy an ad.

00:55:56.830 –> 00:56:03.310
And so that 61% marketplace business that you mentioned really is the unlock for these ads.

00:56:03.750 –> 00:56:07.910
And that’s an important point that I feel like a lot of Amazon’s competitors miss.

00:56:08.050 –> 00:56:12.270
Like I talk to a lot of traditional retailers that don’t have a marketplace

00:56:12.270 –> 00:56:15.190
and they’re like, oh my God, Amazon sold $68 billion worth of ads.

00:56:15.310 –> 00:56:17.830
We need to be selling more ads. We need our fair share.

00:56:18.370 –> 00:56:22.390
And I always have to point out, your fair share is much smaller than you think because.

00:56:23.640 –> 00:56:27.260
You don’t have this marketplace. You don’t have a billion items that are competing

00:56:27.260 –> 00:56:28.640
with each other for visibility.

00:56:29.020 –> 00:56:35.060
Like there’s a viable business for you, but it’s, it’s not directly proportional to Amazon’s.

00:56:35.160 –> 00:56:39.640
And so, you know, to my friends, uh, Curie Masters and, and Andrew Lipson out

00:56:39.640 –> 00:56:43.440
there, like you guys are living a collective hallucination by telling everyone

00:56:43.440 –> 00:56:47.040
that ads is a, the huge looker to business for every retailer.

00:56:47.200 –> 00:56:50.540
So I just want to get that, get that snippet in. Cause I know I’ll hear from them.

00:56:51.620 –> 00:56:53.360
Good job. Snippet delivered.

00:56:55.100 –> 00:56:58.000
So anything interesting or surprising to

00:56:58.000 –> 00:57:01.640
you i will say the ads business starting to get a little more complicated because

00:57:01.640 –> 00:57:05.640
amazon prime video is a meaningful platform and they have a bunch of exclusive

00:57:05.640 –> 00:57:10.720
licenses and popular products and so they now are ads no longer just talks about

00:57:10.720 –> 00:57:17.160
marketplace and and retail ads it’s now talking about ads on this broadcast network too one.

00:57:17.160 –> 00:57:21.080
Thing i wanted to ask you about amazon ads was kind of a dog not barking thing

00:57:21.080 –> 00:57:25.180
because in facebook and google and i didn’t cover this in my little google recap

00:57:25.180 –> 00:57:26.360
because i’m trying to keep this

00:57:26.360 –> 00:57:31.860
under three hours but sundar was going on and on about their p max d max.

00:57:31.860 –> 00:57:38.740
Or yeah which is their version of that their p max is their version of um advantage plus from meta yeah.

00:57:39.240 –> 00:57:41.700
I don’t like the brand p max we can talk about that later.

00:57:41.700 –> 00:57:43.220
Okay the.

00:57:43.220 –> 00:57:45.500
Whatever it’s called,

00:57:46.620 –> 00:57:50.400
And then here, Amazon didn’t mention it that I saw at all that they’re using AI.

00:57:50.640 –> 00:57:54.380
So is it not applicable here or they’re just like making so much money they

00:57:54.380 –> 00:57:55.760
don’t even try to optimize it yet?

00:57:56.260 –> 00:58:02.880
Could that be like a 30% bump to this puppy when they start applying AI to this?

00:58:03.080 –> 00:58:06.140
No. So they actually are applying a lot of AI to it.

00:58:07.200 –> 00:58:11.920
They’re not talking about it as much, but like for sure, I would actually argue

00:58:11.920 –> 00:58:21.180
Amazon is probably ahead of meta in terms of, AI creative generation for small advertisers.

00:58:21.560 –> 00:58:27.840
So they’ve automated all of these media buying and placement and bidding strategy tools.

00:58:28.120 –> 00:58:34.640
They have a pretty robust system. It’s almost like, though, that where Google

00:58:34.640 –> 00:58:37.500
and Meta grew up before there was AI bidding.

00:58:37.760 –> 00:58:39.980
And so they kind of have, you know, choose your own adventure.

00:58:40.120 –> 00:58:42.380
Do you want the human to do it or do you want the robot to do it.

00:58:42.720 –> 00:58:46.880
Amazon forces you more to have hands off the wheel more often.

00:58:47.080 –> 00:58:51.080
And so they maybe talk about it a little less. I would say it’s built in there.

00:58:51.200 –> 00:58:54.740
I would say, and this is controversial, the ad people probably want to chime

00:58:54.740 –> 00:59:00.880
in on this, but like a difference to me between Amazon and Google and certainly

00:59:00.880 –> 00:59:05.580
Meta is that Amazon is inherently more bottom of the funnel.

00:59:06.120 –> 00:59:09.500
So you are already looking for products when you go to Amazon,

00:59:09.840 –> 00:59:12.980
and so those ads are helping you pick one product over another,

00:59:13.200 –> 00:59:18.240
but less often are those ads creating incremental demand for a purchase that

00:59:18.240 –> 00:59:19.660
otherwise didn’t exist.

00:59:20.780 –> 00:59:25.540
And that’s important, and if you’re one of the brands competing for that sale, it’s super important.

00:59:26.500 –> 00:59:32.380
The meta ads, when you were just doom scrolling on Instagram and you suddenly

00:59:32.380 –> 00:59:35.320
discovered something you didn’t know existed that now you’re going to buy,

00:59:35.680 –> 00:59:38.500
that is a more valuable occurrence.

00:59:38.740 –> 00:59:44.520
And meta can charge more for that than Amazon can charge for the brand competition

00:59:44.520 –> 00:59:46.080
after the demand is already there.

00:59:46.080 –> 00:59:50.400
So to me, one of the interesting differences here is because Amazon at the moment

00:59:50.400 –> 00:59:59.000
only lives at the very bottom of the funnel is their ads are a little more tactical and less strategic.

00:59:59.620 –> 01:00:02.740
You know, Google and Meta, I would argue, have had a blend and they’ve leaned

01:00:02.740 –> 01:00:03.940
one way versus the other.

01:00:03.940 –> 01:00:09.020
And we have awful metrics in the advertising industry that make it hard to really

01:00:09.020 –> 01:00:12.920
understand the difference between just getting attribution for a sale that was

01:00:12.920 –> 01:00:16.320
going to happen anyway and truly incrementally creating a sale.

01:00:16.500 –> 01:00:23.560
But in my mind, these upper funnel platforms like Meta and for sure TikTok have

01:00:23.560 –> 01:00:28.400
more ability to create net new sales and therefore are potentially more valuable

01:00:28.400 –> 01:00:30.540
than the Amazon ad businesses at the moment.

01:00:32.220 –> 01:00:35.520
Interesting. okay the

01:00:35.520 –> 01:00:38.340
i have more questions but we’ll yeah we’ll go on and we can talk about it part

01:00:38.340 –> 01:00:44.620
two the behind the scenes podcast for guidance amazon and at this point the

01:00:44.620 –> 01:00:48.420
market didn’t care because that’s during the aws is when they said the capex

01:00:48.420 –> 01:00:49.660
is going to be 200 billion so

01:00:49.660 –> 01:00:53.940
everyone’s ears turned off during that this next port part but they said,

01:00:54.980 –> 01:00:58.640
That they’re guiding Q1 revenue above consensus.

01:00:59.100 –> 01:01:02.360
And then margins looked like they were a little bit below expectations,

01:01:02.720 –> 01:01:05.600
which kind of people added into the AWS concerns.

01:01:05.840 –> 01:01:10.160
And I think what’s going on there is it’s not a structural problem in the business.

01:01:10.160 –> 01:01:14.540
It’s the fact they just can’t get the capacity online as much as the demand is out there.

01:01:14.960 –> 01:01:16.920
So that was it.

01:01:17.600 –> 01:01:21.640
And then, oh, a couple other tidbits I pulled out.

01:01:21.640 –> 01:01:25.600
They got a question on tariffs and jassy basically yawned and said we don’t

01:01:25.600 –> 01:01:30.200
see any pricing pressure from that it’s been a non-issue for us they also were

01:01:30.200 –> 01:01:33.600
talking a lot about amazon hall having over a million items that’s their like

01:01:33.600 –> 01:01:35.240
timu competitor is that right exactly.

01:01:35.240 –> 01:01:39.360
Right yeah and it’s in like 23 countries now so they stopped talking about it

01:01:39.360 –> 01:01:43.740
because they launched it right before de minimis got turned off in the u.s which

01:01:43.740 –> 01:01:49.680
was unfortunate timing for them But it appears they’ve been leaning in and gaining traction. Yeah.

01:01:50.280 –> 01:01:55.260
And then they talked about, they got an explicit question about why are you

01:01:55.260 –> 01:01:59.020
blocking or why are you not listing on Google Shopping, which I thought was interesting.

01:01:59.300 –> 01:02:04.220
So they basically said on July 21st, they stopped and they blocked all the crawlers.

01:02:04.540 –> 01:02:10.180
And they basically said, you know, we view that we have the largest database of products.

01:02:10.180 –> 01:02:13.720
We have the most reviews and we have the deepest pricing data.

01:02:13.720 –> 01:02:18.380
And that’s a very important data to us and gives us an information asymmetry

01:02:18.380 –> 01:02:22.380
we want to control, which is a valid, this is kind of, you know,

01:02:22.640 –> 01:02:23.960
very clearly their strategy.

01:02:24.140 –> 01:02:26.480
They’re basically saying, we understand how this world works.

01:02:26.640 –> 01:02:33.220
Data is the most valuable thing and we do not want to give away our valuable

01:02:33.220 –> 01:02:34.640
thing, which is data for free.

01:02:34.640 –> 01:02:39.860
So we’re locking it behind this, you know, giant gate that no one’s going to come into.

01:02:41.220 –> 01:02:42.440
And then, you know,

01:02:43.410 –> 01:02:47.090
The other thing that’s interesting is ads, because to your point,

01:02:47.310 –> 01:02:51.690
they’re only constrained by the ad load and Amazon seems to see no end insight

01:02:51.690 –> 01:02:53.530
to the amount of ad load they’ll add on there,

01:02:53.710 –> 01:02:57.550
which is, I do think it’s, I do think they’re going to create this self-fulfilling

01:02:57.550 –> 01:03:01.370
prophecy by juicing the ad so much that it’s going to drive people away from

01:03:01.370 –> 01:03:02.790
the front end experience of Amazon.

01:03:02.790 –> 01:03:07.950
That’s one of the reasons I use Agentic Commerce is for me, outside of Rufus,

01:03:08.030 –> 01:03:10.690
now I will say Rufus has gotten me back to using it.

01:03:10.990 –> 01:03:15.950
The core, the traditional Amazon ad experiences or search experience has gotten

01:03:15.950 –> 01:03:18.930
so polluted with ads, I can’t find what I’m looking for.

01:03:19.050 –> 01:03:21.490
And it’s way, way too high in my mind.

01:03:21.710 –> 01:03:26.310
But because of that, the ad piece is growing about 23% in AWS,

01:03:26.490 –> 01:03:31.590
17.5. If AWS wasn’t constrained, I think it would catch up, but it has constraints

01:03:31.590 –> 01:03:33.730
with the physical world that ads do not.

01:03:35.030 –> 01:03:39.630
Then there were a couple more agentic commerce tidbits, and I promise we’re getting to the end here.

01:03:40.050 –> 01:03:44.770
So Michael Morton, also from Moffat and Nathanson, he seems to be the guy that’s

01:03:44.770 –> 01:03:47.570
asking this question to everybody, which I need to chat with Michael.

01:03:47.850 –> 01:03:49.590
I need to actually put that on my task list.

01:03:50.210 –> 01:03:53.650
I love that he’s asking these hard questions for people. I’m not sure he’ll

01:03:53.650 –> 01:03:55.150
get invited back, but we’ll see.

01:03:55.510 –> 01:03:59.650
He asked Jassy, what do you think about all this stuff going on with agents?

01:03:59.810 –> 01:04:03.710
Explain your strategy more clearly to us because everyone can’t, when Jassy speaks,

01:04:03.710 –> 01:04:06.570
everyone can’t tell is he saying they’re going to do this

01:04:06.570 –> 01:04:09.270
or not and then everyone’s left we all

01:04:09.270 –> 01:04:12.010
have a split opinion kind of like you and I had a

01:04:12.010 –> 01:04:15.610
split opinion a little bit on the meta piece so Jassy

01:04:15.610 –> 01:04:19.550
said I’m very optimistic about the consumer experience that’ll ultimately be

01:04:19.550 –> 01:04:23.630
what customers use for agente shopping and I think it’s good for customers I

01:04:23.630 –> 01:04:27.770
think it’s going to make it easier for them it’s a big piece of why we’ve invested

01:04:27.770 –> 01:04:31.610
as significantly we have in Rufus so So he took the question and pivoted to

01:04:31.610 –> 01:04:33.190
Rufus, which is a smart PR strategy.

01:04:33.350 –> 01:04:36.570
If you haven’t checked out Rufus recently, I really encourage you to do this.

01:04:36.710 –> 01:04:40.830
I actually think he’s right on this. I’ve gotten much, much better and it’s

01:04:40.830 –> 01:04:43.610
gotten much, much better and getting better every month.

01:04:43.950 –> 01:04:47.990
Then this was interesting. They, this is a new stat as far as I can tell.

01:04:48.250 –> 01:04:51.710
We have 300 million customers who used Rufus throughout 2025.

01:04:51.750 –> 01:04:54.250
I bet that was super back and loaded.

01:04:54.570 –> 01:05:00.090
And then customers who use Rufus are about 60% more likely to complete a purchase.

01:05:00.610 –> 01:05:05.050
Okay. So logically, if that was true, you’ll get rid of the search experience

01:05:05.050 –> 01:05:09.510
and do this, except there is a little fly in the ointment and it’s that ad business.

01:05:09.730 –> 01:05:14.410
So you, you know, I think Google is close to making the switch and I think Amazon

01:05:14.410 –> 01:05:16.210
has not figured out how to monetize

01:05:16.210 –> 01:05:19.110
Rufus and they’re not going to switch that until they do. So yeah.

01:05:19.880 –> 01:05:23.860
It is, it does, it is an interesting decision point, right?

01:05:23.960 –> 01:05:28.380
Because if this really improved conversions that much, you would,

01:05:28.480 –> 01:05:32.380
and you didn’t have that business, I think you would instantly get more,

01:05:32.620 –> 01:05:35.360
as many people in the Rufus as you can, could. Yeah. What do you think?

01:05:35.740 –> 01:05:39.560
Well, so I generally agree with you, although I feel like you tripped into the

01:05:39.560 –> 01:05:41.000
biggest fallacy in this whole thing.

01:05:41.120 –> 01:05:43.800
And this should be, we should do a whole podcast about this.

01:05:44.660 –> 01:05:47.620
Customers that use rufus are 60% more likely to

01:05:47.620 –> 01:05:50.740
complete a purchase that is true that doesn’t

01:05:50.740 –> 01:05:53.680
mean that it’s creating 60% more

01:05:53.680 –> 01:05:59.220
purchases uh causality yes correlation versus causation and we know for a fact

01:05:59.220 –> 01:06:03.600
we don’t have to wonder we know for a fact it’s correlation not causation because

01:06:03.600 –> 01:06:08.480
if it was correlation 38% of customers use rufus they’re 60% more likely to

01:06:08.480 –> 01:06:11.400
purchase they’d be growing a lot faster than 11%.

01:06:12.840 –> 01:06:17.740
It’s evident in their data that the customers that like Amazon the most and

01:06:17.740 –> 01:06:20.840
buy the most from Amazon are more likely to use Rufus.

01:06:21.040 –> 01:06:26.680
So that’s great. There’s nothing wrong with that. But just don’t confuse correlation and causation.

01:06:26.860 –> 01:06:30.460
So it’s a nice vanity stat for Andy to talk about.

01:06:30.660 –> 01:06:35.140
It does not mean they have some new unlock that’s dramatically creating tons

01:06:35.140 –> 01:06:39.040
of new purchases. So that’s the sort of first thing.

01:06:39.160 –> 01:06:43.820
But that question to me unlocked the most interesting conversation in this whole deal, which is…

01:06:44.960 –> 01:06:51.540
Andy, you guys aren’t on the third-party AI commerce experiences.

01:06:51.820 –> 01:06:53.160
Like all those hundreds of millions

01:06:53.160 –> 01:06:56.360
of Walmart products are for sale right now on ChatGBT. You’re not.

01:06:56.580 –> 01:06:59.920
Are you worried about that, right? And he had a two-part answer.

01:07:00.060 –> 01:07:03.020
He’s like, part one, we’ll probably eventually get there.

01:07:03.140 –> 01:07:06.460
We think the experiences are broken there and they need to get better.

01:07:06.460 –> 01:07:09.320
So we need to work with them to improve the data and the experiences.

01:07:09.320 –> 01:07:12.740
And we need to agree on the right value transfer between us and them,

01:07:12.960 –> 01:07:17.220
which is code for we need to make sure we get the right margins from that.

01:07:17.360 –> 01:07:21.200
But he kind of implied that’ll all get worked out eventually and we’ll find

01:07:21.200 –> 01:07:22.860
a way to have a presence on all those things.

01:07:22.900 –> 01:07:28.000
But he drew this distinction between what he calls horizontal LLMs,

01:07:28.200 –> 01:07:30.780
which are kind of general purpose LLMs that do a lot of different things,

01:07:30.960 –> 01:07:33.840
one of which could be shopping, and vertical LLMs.

01:07:33.960 –> 01:07:39.720
And he would call Rufus a vertical LLM. And he made a passionate plea for why

01:07:39.720 –> 01:07:41.800
vertical LLMs are better.

01:07:42.060 –> 01:07:46.360
And in the long run, he believes customers are going to pick vertical LLMs.

01:07:46.480 –> 01:07:49.580
So when you go shopping, you’re not going to want to go to a general robot.

01:07:49.700 –> 01:07:51.800
You’re going to want to go to a shopping specific robot.

01:07:52.000 –> 01:07:54.700
And he would argue Rufus is the best version of that.

01:07:55.620 –> 01:08:01.380
I don’t know what the answer is, but I’m way less convinced that I’m way less certain than Andy is.

01:08:01.560 –> 01:08:06.400
And I would argue Amazon’s biggest advantage, the unlock that has caused them

01:08:06.400 –> 01:08:09.140
to win the most in commerce is assortment.

01:08:09.420 –> 01:08:12.760
That people don’t want to go to a different store for every product.

01:08:12.960 –> 01:08:16.340
And Amazon has now taken a billion products and put them all under one roof.

01:08:16.500 –> 01:08:20.040
Like it’s the number one advantage that Amazon has. It’s the number one utility

01:08:20.040 –> 01:08:23.480
that customers choose Amazon for is that assortment.

01:08:23.780 –> 01:08:28.320
And the robots make that assortment irrelevant.

01:08:28.620 –> 01:08:32.020
Like the robots don’t care if they have to buy the items from three different

01:08:32.020 –> 01:08:33.380
vendors or one different vendor.

01:08:33.620 –> 01:08:37.120
And so I like whether Andy wants to admit it on an earnings call or not,

01:08:37.400 –> 01:08:40.580
these horizontal bots are a huge threat.

01:08:40.740 –> 01:08:43.820
Now, do they have less shopping data than Amazon has right now?

01:08:43.960 –> 01:08:47.840
Yes, they do. Do they have, you know, rougher commerce experiences? Yes, they do.

01:08:48.920 –> 01:08:51.600
But each side of this fence has different strengths and weaknesses.

01:08:51.960 –> 01:08:56.000
And I do think that’s going to be the fundamental battle of the next 18 months

01:08:56.000 –> 01:09:00.940
is, you know, are people going to be satisfied to shop from the microchip that

01:09:00.940 –> 01:09:02.380
John Ives installs in our brain?

01:09:02.380 –> 01:09:06.420
Or are we still going to go to Amazon and use Rufus 10.0 to do all our shopping?

01:09:06.640 –> 01:09:10.060
And the answer to that question is going to decide, you know,

01:09:10.120 –> 01:09:12.360
who the most valuable company is 10 years from now.

01:09:13.220 –> 01:09:17.500
Yep. Okay. So to summarize, here’s kind of the answer to the AI bubble. Are we in a bubble?

01:09:18.160 –> 01:09:21.780
So let me frame it this way. So we had these companies say to us,

01:09:21.920 –> 01:09:26.520
here’s the demand that we cannot satisfy right now, also known as a backlog.

01:09:26.740 –> 01:09:30.600
If we had the capacity, this is the revenue that would come from that capacity.

01:09:31.000 –> 01:09:36.180
Google, 240 billion. Azure, 368 billion. That’s the biggest one.

01:09:36.740 –> 01:09:38.500
AWS, 244 billion.

01:09:39.180 –> 01:09:44.840
Add that together, that’s $852 billion of revenue, like almost a trillion dollars

01:09:44.840 –> 01:09:46.600
of revenue, which is crazy.

01:09:47.240 –> 01:09:50.720
Then here’s the CapEx they want to spend on that. Now, this is a little apples

01:09:50.720 –> 01:09:53.300
and oranges because I’m going to throw Meta in here and Meta doesn’t really

01:09:53.300 –> 01:09:56.860
have a backlog because they’re just kind of dogfooding this to make their ads better.

01:09:57.180 –> 01:09:59.960
But they’re going to do 115 to 135.

01:10:00.680 –> 01:10:04.200
Microsoft, 160 billion. Google, 185 billion.

01:10:04.940 –> 01:10:10.000
AWS, the biggest, 200 billion. Now, they didn’t tell us what inside of there

01:10:10.000 –> 01:10:12.360
is Azure, fulfillment centers, and Leo.

01:10:12.560 –> 01:10:16.060
But you’ve got to imagine Azure is the lion’s share of it. But Leo is pretty

01:10:16.060 –> 01:10:17.360
expensive because you’re buying satellites.

01:10:17.620 –> 01:10:23.540
So maybe it’s 150, but let’s just call it 200 because what’s 50 billion between trends, right?

01:10:23.980 –> 01:10:28.340
And that gives us 700 to 750 billion in CapEx.

01:10:28.680 –> 01:10:33.020
So basically saying in CapEx, revenue is annualized.

01:10:33.500 –> 01:10:39.100
CapEx is seven years or 10. I think they’re now saying these chips last,

01:10:39.220 –> 01:10:42.200
they have an effective life of, I can’t remember if it’s normally five and they’re

01:10:42.200 –> 01:10:44.120
saying seven or seven to 10, whatever it is.

01:10:44.120 –> 01:10:46.800
So that is why they’re doing

01:10:46.800 –> 01:10:49.880
it and if this math is right and we trust that these

01:10:49.880 –> 01:10:52.920
three companies aren’t all lying with four companies i guess

01:10:52.920 –> 01:10:58.440
three on the demand side then this is kind of a no-brainer for so any any business

01:10:58.440 –> 01:11:02.100
person would make this trade-off every day if they had access to the capital

01:11:02.100 –> 01:11:05.060
and these guys do because they’re pulling it out of free cash flow they’re basically

01:11:05.060 –> 01:11:09.580
saying it is way smarter for us to invest this dollar here than anywhere else

01:11:09.580 –> 01:11:12.640
we see acquisitions share buybacks, interest rates.

01:11:13.380 –> 01:11:15.440
Startup investing, everything out there.

01:11:15.700 –> 01:11:20.520
This has got the highest IRR out there. So I think it’s a very clear signal

01:11:20.520 –> 01:11:28.480
if you really put this together that this is a, the craziest thing we’ve ever seen in my 30 years,

01:11:28.700 –> 01:11:31.080
you know, being in this world and understanding this stuff.

01:11:31.540 –> 01:11:36.580
And if we get, you know, 80% of this to come out, we could have five and $10

01:11:36.580 –> 01:11:39.320
trillion companies coming out of this because they’re basically adding a trillion

01:11:39.320 –> 01:11:43.200
dollars of revenue amongst these companies and this big step up function.

01:11:45.020 –> 01:11:48.100
That’s, I do not think it’s a bubble. That’s where I come out on it.

01:11:48.600 –> 01:11:52.460
Oh, interesting. Yeah. So, and you’re way more sophisticated investor than I

01:11:52.460 –> 01:11:54.780
am. And so I’ll defer to you on that.

01:11:54.920 –> 01:11:57.720
Like to me, I a hundred percent agree with you.

01:11:57.960 –> 01:12:00.660
The there’s, there’s a lot more gas in this car.

01:12:00.980 –> 01:12:05.400
It’s, I guess intuitively in my mind, it’s hard to call it like this.

01:12:05.680 –> 01:12:09.980
There’s so much hype in this space. It’s such the bleeding edge and it’s growing so fast.

01:12:10.100 –> 01:12:12.800
And it’s, everybody’s talking about so much, like, of course,

01:12:12.800 –> 01:12:17.600
it’s a bubble, like, like, is it the very front of the bubble or the very end of the bubble?

01:12:17.800 –> 01:12:21.640
Like, are we going to keep pouring gas in that bubble for five more years before a burst?

01:12:21.820 –> 01:12:25.420
And, you know, when when it does burst and normalizes, will it be bigger and

01:12:25.420 –> 01:12:26.400
smaller than it is today?

01:12:26.600 –> 01:12:30.000
I agree with you. I think there’s a lot more room in it.

01:12:30.100 –> 01:12:34.700
And I think like this is inherently a huge market and a huge opportunity,

01:12:34.700 –> 01:12:40.300
but it probably is simultaneously slightly overhyped and there’s probably you

01:12:40.300 –> 01:12:44.420
know slightly too much exuberism in it about the specific companies and where

01:12:44.420 –> 01:12:47.200
they are today is that could i be.

01:12:47.200 –> 01:12:51.280
Right okay yeah and it also so i’m less

01:12:51.280 –> 01:12:53.980
qualified you know i’m not gonna go into cnbc and talk about the

01:12:53.980 –> 01:12:57.360
bubble thing but this is this

01:12:57.360 –> 01:13:01.560
is why i think people that aren’t really pivoting

01:13:01.560 –> 01:13:05.120
towards this in our space because they don’t think the companies are serious

01:13:05.120 –> 01:13:09.320
or are you know these companies this is the most serious thing these companies

01:13:09.320 –> 01:13:13.060
ever done you know the amount of money they’re spending and their career you

01:13:13.060 –> 01:13:17.440
know they’re all betting their companies on ai and then for every one of them

01:13:17.440 –> 01:13:20.980
agentic is a big pillar of this so yeah and and by.

01:13:20.980 –> 01:13:25.980
The way that’s not just seven random people that’s seven highly accomplished

01:13:25.980 –> 01:13:29.100
people with pretty good track records that are darn good operators.

01:13:29.380 –> 01:13:32.580
Yeah, these are the best operators, you know, except Tim Cook.

01:13:32.860 –> 01:13:36.300
I put him up there and, you know, maybe the CEO of Exxon or something or something

01:13:36.300 –> 01:13:39.400
like that. And Elon, you know, these are the best operators on the planet.

01:13:39.620 –> 01:13:43.380
Like, you know, five of 10 saying this is where we’re betting money right now.

01:13:44.370 –> 01:13:48.850
Yeah. So look, we may have set the record for the longest podcast. I’m so sorry.

01:13:49.310 –> 01:13:53.490
Hopefully it’s been valuable. I’m just going to tease one other thing that we

01:13:53.490 –> 01:13:54.530
don’t have time to get into.

01:13:54.770 –> 01:13:58.310
But also last week, Walmart changed leadership.

01:13:58.590 –> 01:14:03.090
So Doug McMillan, the very successful CEO, stepped down.

01:14:03.310 –> 01:14:07.270
There was no surprise about who his successor would be. It’s this John Furner.

01:14:07.790 –> 01:14:14.890
But what has been super interesting is who backfills all of John Furner and everyone that moves up.

01:14:15.050 –> 01:14:18.150
So John Furner goes from president of the U.S. to CEO of Walmart,

01:14:18.330 –> 01:14:20.690
Inc., who becomes the new president of the U.S.

01:14:20.730 –> 01:14:24.690
And there were like three totally viable traditional Walmart candidates that

01:14:24.690 –> 01:14:27.010
everybody was betting on. I had a bet on one.

01:14:27.770 –> 01:14:33.350
My bet proved wrong. We were all wrong because the new CEO of Walmart U.S.

01:14:33.710 –> 01:14:38.470
Is David Gugina, who was formerly the chief e-commerce officer at Walmart.

01:14:38.710 –> 01:14:42.590
So to me, that is big news. The largest retailer in the United States,

01:14:42.750 –> 01:14:47.090
the CEO is now the former head of e-commerce.

01:14:47.310 –> 01:14:51.870
We’ve been talking about these digital guys getting in the C-suite for a long time.

01:14:52.130 –> 01:14:57.550
And now it’s the CEO chair at Walmart. So that to me is a huge deal.

01:14:57.690 –> 01:15:00.610
And a lot of his lieutenants are now moving up.

01:15:00.810 –> 01:15:05.790
So one of his lieutenants runs all of marketing at Walmart. So it’s an incredible new world.

01:15:06.050 –> 01:15:09.030
And in that world, Walmart just

01:15:09.030 –> 01:15:14.350
last week or two days ago passed the $1 trillion market cap valuation.

01:15:14.350 –> 01:15:20.110
So I think they’re the first traditional retailer to be valued at over a trillion

01:15:20.110 –> 01:15:21.530
dollars. And that to me is amazing.

01:15:22.750 –> 01:15:26.730
I’ll take the framing on the long episode. I think people love our Amazon earnings

01:15:26.730 –> 01:15:32.090
episodes and they’ve been dying for more content and we’re delivering it.

01:15:32.450 –> 01:15:33.370
We’re listening to our audience.

01:15:33.530 –> 01:15:36.890
To the 5,000 people that complained about our show frequency at NRF,

01:15:37.130 –> 01:15:38.570
be careful what you ask for.

01:15:39.070 –> 01:15:42.090
Yep, just listen to it in three chunks and it’s like having three episodes.

01:15:42.410 –> 01:15:47.290
And yeah, it’s less work for our audio team to split it into three. So do it yourself.

01:15:47.730 –> 01:15:48.570
There you go.

01:15:49.630 –> 01:15:50.110
Awesome.

01:15:50.290 –> 01:15:53.350
Scott, always fun talking to you. And as always, I hope, though,

01:15:53.610 –> 01:15:57.450
our listeners got some value out of it. And we are still accepting reviews.

01:15:57.610 –> 01:16:01.870
As old as we are, the reviews engine is still open. So you can still jump on

01:16:01.870 –> 01:16:04.770
iTunes and give us that five-star review. And we’re very grateful if you do.

01:16:05.330 –> 01:16:10.730
Yeah, and because it’s a six-hour episode, I think it’s worthy of six five-stars. So leave those 30 stars.

01:16:11.550 –> 01:16:15.570
Absolutely. And until next time, happy commercing.

01:16:16.030 –> 01:16:17.430
Happy agentic commercing.