It’s fun to look back in time to compare how people acted 20 years ago compared to today. Today we are doing just that with two old interviews of Warren Buffet and Jeff Bezos. It’s interesting to see how they talked about what they do long before they were famous.
Warren Buffett - The Consistent Value Investor
In Warren Buffet’s case, this 1985 interview is quite remarkable and a bit hilarious, in that he has not changed a bit. It’s interesting how consistent he is over time where his process of investing holds true to today, where his anecdotes remain the same, and even some of the jokes are still being recycled by him 30 years later.
As for Bezos - it’s clear he has had an image makeover (while Warren Buffett might still be in that same suit). What’s remarkable though is how clear his vision was for Amazon, where in 1997 you can even see the roadmap to launching Amazon Music some 15 years later.
How did you come up with the idea for amazon.com?
“well three years ago I was in New York City working for a quantitative hedge fund when I came across the startling statistic the web usage was growing at 2,300 percent a year. So I decided I would try and find a business plan that made sense in the context of that growth. And I picked books as the first best product of saw online, [after] making a list like 20 different products that you might be able to sell. Books were great as the first best because books are incredibly unusual in one respect that is that there are more items in the book category and there are items than any other category by far. Music is number two, they're about two hundred thousand active music CDs at any given time, but in the book space they're more than three million different books worldwide active and printed any given time across all languages [with] more than one and a half million in English alone. So when you have that many items [you can] literally build a store online that couldn't exist any other way. That's important right now because the web is still an infant technology. Basically right now if you can do things using more traditional method you probably should do them using the traditional method.
What kind of inventory do you keep?
We inventory the best-selling books at any given time. We're inventorying in our own warehouse only a couple of thousand titles and then we do almost in time inventory for another 400,000 titles or so; we get those from a network of electronic we order electronically from a network of wholesalers and distributors. We order those today they're on our loading dock the next morning. Then for another 1.1 million titles we get those directly from 20,000 different publishers and those can take a couple of weeks to get. And then there are a million out of print books in our catalog. We have a catalog of two and a half million books all together. Those million out of print books - some of them we can get some of them we can't - but we find them if we can and then we ship in to our customers. We do a kind of a search on those.
What's almost in time inventory?
Almost in time inventory is the phrase we use to describe a whole selection of books that we offer. It's basically the things that are you know below the 2,000th best-selling book up to the 400,000th bestselling book. Those are titles that we can get from a network of more than a dozen different wholesalers, so if a customer orders a book from us today we order that book from our wholesalers today and that book shows up on our loading dock the next morning and then we can ship it to the customer. (Note: a remarkable key of Amazon’s strategy. They leveraged their suppliers inventory, with actual negative working capital; i.e. sales created working capital where customers would pay Amazon before they had to pay their wholesalers).