Core competencies

Amazon is offering a new service that lets you send money to individuals. The idea is you'd use it to pay the babysitter, or in the case of my family, reimburse your daughter for your share family cell phone plan. I mentioned this to my dad, on the theory that it could save him the hassle of harassing my brother to write a check, harrassing my mom to write a check for her business phone's share, mailing it, and then waiting for me to get around to either walking .5 miles to the 7-11 with the ATM or catching the bank at work for one of the six non-consecutive hours it's open. We could use paypal, but my dad is bad at incorporating the time cost of money into his thinking*, so the fees are prohibitory. Amazon however, is free. He still didn't want to use it at first, because he wouldn't be my dad if he just accepted the clearly superior technical option. But it became clear that there was context I had that made me extremely comfortable with this, that was lost on him.

You see, my dad was thinking of Amazon as a store that sold him stuff. And that's technically correct, but being as good as Amazon at selling things requires being good at a lot of other hidden things. They had to develop ways to take your money, store your information securely, notify people you've given them money, send money back to you in event of a problem. From there, it was pretty easy to let 3rd parties sell you stuff on the website- you just need another option for sending the information when people click "buy". And from there, sending money from one party to another is trivial. You don't even have to add anything, just remove the part where you tell someone to mail something. Better still, Amazon doesn't need this service to be as profitable as Paypal does, because 1. amazon can amortize the cost of development over its other services, and 2. some of the money will be spent at Amazon.

I am used to thinking of Amazon this way because I've worked at multiple companies, including at least one Large Software Corporation You Have Definitely Heard Of, that used Amazon to host their web site. And this was a large company that could easily have done their own hosting if they wanted to, but didn't because Amazon was cheaper, even though Amazon was making a profit on the service. That's because Amazon's sales business had driven them to be so extremely excellent at hosting that it was no problem to toss in a couple more hard drives and put other people's websites on them. Yeah, you have to create an interface for them, but that's peanuts compared to the cost of developing the infrastructure. As it turns out, my dad had heard of this service when it suffered a major outage last year, but he hadn't put together what it meant.

I'm going to get some details read this wrong, because I read this years ago, but UPS's delivery business is really the tip of the iceburg. Their Business Solutions will help with anything vaguely related to shipping- vendor logistics, storage, accounting, import/export/customs compliance, invoicing, order management, etc. They'll even give you a loan. So you can "run a business" where you're focused entirely on making products and selling them, without worrying about anything else.

So in conclusion: Core competencies. Not as obvious as you would think.


* Me: "Dad, how much time does waiting six minutes for every web page to load cost you? And what is your time worth, per hour?".
My dad: "I'm not telling you because any reasonable number will be more than the cost of a new computer, and you're going to twist that to mean we should buy a new computer."
Me: "Or you could let me nuke your hard drive from orbit and do a clean install"
My dad: "no."