In this podcast, we look at how you could use Jobs-to-be-Done innovation methods to beat a fierce competitor like Amazon. Amazon is a true business behemoth. They dominate in their markets, and they have transformed industries with their power. So how would you beat Amazon?
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Key moments from today's topic on how you would beat Amazon with Jobs-to-be-Done:
00:00 Jay Haynes and Jared Ranere give a recap on amazon and its estimated growth in the next few years and how one business generates so much revenue.
05:11 Jay and Jared talk about why is amazon so successful in their endeavors using Jobs-to-be-Done tactics.
19:43 Jay talks about beating Amazon with speed and accuracy from your customer's perspective.
24:00 Jay talks about picking one underserved category to beat Amazon at. (Diapers Example)
Learn more about JTBD: https://www.thrv.com/jobs-to-be-done
Follow Jay Haynes on Twitter: https://twitter.com/jayhaynes
Follow Jared Ranere on Twitter: https://twitter.com/jaredran
👉 Download our JTBD Cheat Sheet for free here:
Learn more about JTBD: https://www.thrv.com/jobs-to-be-done
Follow Jay Haynes on Twitter: https://twitter.com/jayhaynes
Follow Jared Ranere on Twitter: https://twitter.com/jaredran
How Would You Beat Amazon
Jay Haynes 0:02
Welcome to our podcast, How Would You Beat? In each episode, we pick a company and talk about how you could use jobs-to-be-done innovation methods to beat that company's product. We'll discuss innovation theory and explain the methods so you can put the theory into practice at your company. I'm Jay Haynes, the founder and CEO of thrv, that's thrv without the vowels thrv.com. We help product marketing and sales teams use jobs-to-be-done innovation methods to build market and sell great products. I'm here with my colleague, Jared Ranere.
Today we're going to look at Amazon, how would you beat Amazon? Last week, we talked to Matt Bjornsen at Target, who we worked with and helped his team use jobs-to-be-done to do exactly that. To beat Amazon to very successfully defend off Amazon and their registry business. Matt talked about that a lot.
So today, I thought we'd follow up with that, and more broadly talk about beating Amazon as a company, not just in a specific area, but how would you approach this huge problem. And it is a huge company. So just some numbers on Amazon, its market cap today is almost $1.6 trillion. Just under Apple's I think at $2 trillion. So approaching it to be the biggest company in the world. It has $321 billion in revenue, and $20 billion in operating profit, that is just an enormous company. But what's even more remarkable, I think, is that just four years ago, in 2017, five years ago or so. So from 2017 to 2020. Over those four years, Amazon grew from $177 billion dollars in revenue to $386 billion in 2020, the 320 billion in revenue, I think, is the trailing 12 months. So it wouldn't include this year's holiday season. But that is extraordinary to already be $170 billion in revenue company, and then projected over the next four years, you're gonna grow 120% . That is just phenomenal growth. That's phenomenal growth for a startup. So how does this break down? How does Amazon generate so much revenue?
Jared Ranere 2:44
I think one of the most interesting things is they're not just a retailer, of course, they make $163 billion in their online stores. They have their physical stores, mostly through Whole Foods, which is doing $17 billion a year. Then they also make $22 billion in subscription services, and 40 billion on AWS, their web services, B2B platform. And then they have their third party reselling services. They're making $63 billion there. And then there's another category and this infographic I'm looking at, which includes co-branded credit cards. They're making 17 billion off of that. So just that is a huge company. It's really incredible how much revenue they're making from such a diverse set of business units, B2B, consumer retailing, their subscription services includes prime video and music, which makes them a media company. So it's just unbelievable how far they've spread what they do. How would you take on all of these at once? Or maybe a better question is, should you try to take on all of these business units at once?
Jay Haynes 4:02
Yeah, that's a great question. The short answer, of course, is no. You couldn't do it. You shouldn't take on all these at once. But that's an important question. So we should look at why Amazon is successful in the first place. So they are an online retailer, physical retailer. They sell their own products. Their branded Amazon products. They've got the subscription services, prime videos that are media companies. As you said, they're a tech hosting platform company with AWS. So it's really multiple, multiple different companies.
One thing that's interesting is why is Amazon successful in the first place? How did they emerge and evolve as this incredibly successful company? And this is where jobs to be done thinking and jobs theory can help even explain past historical successes, and that's one of the things I like about it when you're going to try to figure out like, how did Amazon seemingly come out of nowhere and beat Walmart, which of course was the biggest company in the world. One of them in terms of revenue and number of employees, just a massive scale of Walmart and this new company comes out of seemingly nowhere in the same business. And I think jobs theory even in that case, explaining why Amazon is successful is really helpful. And a lot of retailing is what we call, which your Rita McGrath has talked about this, she kind of pioneered this idea of consumption jobs. And the way to think about that is a consumption job relates to anything about purchasing, or using a product learning to use it, installing maintaining it, and purchasing a product is incredibly important. So if you've got a job to get done and you're looking for a product or service, to help with that, well, you need to purchase something. That's a good way to find a product and purchase it. And that is where Amazon started. And it was interesting, of course, they were an online bookseller. Books were a great category to buy online, because you didn't need to put them on your feet, or on your back or on your hands or anything to figure out whether or not the book was gonna be good. So it was a great category to start with. But they really did innovate that consumption experiencing of purchasing a product. So Jared, how would you compare purchasing a product before Amazon and after Amazon using jobs theory?
Jared Ranere 6:30
I mean, it's a classic story of disruption, right? So you used to have to go to the store, for you probably walk there, get in your car, travel to go purchase a product, you could browse the options available in that physical store. And it was pretty slow. Sometimes they didn't even have what you wanted in stock. And then you sort of browse the items to figure out the criteria of what you wanted. And you didn't have as many options, you didn't always find things that met the criteria, and then you'd go pay for it, you'd carry it home. And what I think is really fascinating about this is at the beginning,if you read quotes about Amazon being an online seller, people were talking about it like it was a different market from Walmart, right? Because you're going to purchase this product online, it's a completely different thing. It's got nothing to do with going to a store and buying things, purchasing things online. That’s this tiny niche thing that why would anybody want to do that people love to go to stores.
I read this article about the retail apocalypse a couple of years ago, when we were working with target. And there were people, owners of big box stores and executives from big box who are saying, people, like families love to spend four hours on a Saturday just wandering around like they did that for decades. But these millennials, I don't understand them. Why don't they want to walk around a store for hours looking for what they want. And just finding things. That's isn't a great way to spend a Saturday. And the truth is, nobody ever wanted to do that. That was a terrible way to spend a Saturday, you feel like you're in some time warp and you hated it. And it was just the only way to get good value for the products you wanted. And when you compare that to a few clicks online, and then the product just shows up in time for when you need it. That is obviously faster and more accurate way to get the job done. And that's what's interesting, right? You have to look at where customers are going to go, if they can get the job done better. They're not where they are today. The growth comes from how can you get the job done faster, more accurately, such that you're the solution people switch to not pile on to where everybody is already and try to compete head to head with all the existing players.
So I think that's what's so fascinating about Amazon is they got huge by pretending they were in a different market from the top. I mean, this was such a problem that Target contracted Amazon to make their ecommerce site because they were like, well, that's a different market will dabble in it. And they let Amazon own all the data. This is if you read the everything store, which is the Book about how Amazon got big from its founding to I think, like the mid 2000s or something like that. It talks about this deal that Target and Amazon did where Target was like, Oh, no big deal. You can build our website, that's a tiny category for us. Don't worry about it. And Amazon worked out the kinks and their own business, collected a bunch of customer data in doing so and then took it away. They said, okay, Target we're not going to provide you with this online e commerce platform anymore. So good luck. And that was a great way to get way ahead of Target and ecommerce. I'm ramping right now. But the point is that they got big through these jobs to be done tactics and now you have to think about how could you sneak up on Amazon again. Right, how could you target a job that's very specific, something like purchasing books or what you might do with those books, and then sneak up on them with a new technology that they didn't realize was a big player today because they're big, and they only want the big things.
Jay Haynes 10:15
Yeah. And I think that's a great point. I would just summarize that by saying that Amazon really did an extraordinary job of the consumption job of purchasing a product from end to end. And I remember one click, which, there was a lot of debate about whether or not that should have been patentable. But clearly, it was extremely customer focused, because when you purchase a product, as we always say, what's interesting about jobs-to-be-done in jobs theory, is you always want to get a job done faster and more accurately unless you're listening to music, or reading a book or consuming the arts. But for most part, any real functional job, and certainly any consumption job, you want to get it done as fast as accurately as possible. And one click was extraordinary. You just your information was there, you wanted to buy the product, click once and you're done.
What I find fascinating today is you still experience retailers, or people selling stuff online, where it's still not one click, they have you fill out enormous amounts of information. And a good example of this is I like to buy music software. And so there's a healthy ecosystem of music software, and you can't buy through Amazon. And so you have to go there, and they'll ask for your credit card information, including your shipping address, I'm downloading the software, there's no box. There's nothing. They absolutely do not need to know my address. If they want to verify my credit card, you can just type in your zip code, right? Or even the experience for what if you do have to type in your shipping? Why do I have to type in the city and state, all you need is the zip code. So just make it faster for me to give you my information.
Now, one thing has changed that is Apple Pay, Google Pay, of course, because jjust click on that it's already got the information it sends it. But it's amazing. The companies today in 2021, still don't think of this customer experience in terms of speed and accuracy. And that purchase job is incredibly important. So if you're out there trying to compete with Amazon, and you are competing and selling stuff to consumers, for example, in that market, make sure you're eliminating every single step, every single keystroke that a consumer has to do to purchase to get the job done. Now, one thing, and we don't talk about this too much in the podcast, but we should.
The other innovation for Amazon - I would say the adopted because other companies have been doing as well, is what's called negative working capital. And it's amazing that other retailers just didn't see the power of negative working capital. So what is that? Well, every company's working capital is basically the cash they're going to receive from their customers and the cash that they have to pay out to their vendors. So if you're a bookstore, like when Amazon launched, you went to an online bookstore, you got to buy a bunch of books and put them in inventory. And then you got to wait for someone to show up and pay you for that book. So there's a real cost of that inventory. So what Amazon did was essentially get people to pay them upfront and delay their payments to vendors. And that creates what's known as negative working capital, because people are paying you upfront and you get that cash before you even ship out the product.
Dell pioneered this direct to consumer. And this is why Dell basically wipes IBM off the face of the earth, in the PC market. Because when you entered your credit card and said I want a Dell, you know XYZ computer. They said great, we'll take your cash on the credit card, and then we'll go build the computer and we'll ship it to you. Meanwhile, IBM had stocked CompUSA with all their inventory of PCs, waiting for someone to walk in the door and buy those and that's a huge cost for CompUSA. And for IBM. And in a market where you might have faster computer chips coming out every 180 days, if you have that inventory sitting there, as soon as that new chip comes out, that inventory drops in price and value enormously.
This negative working capital model is incredibly powerful. And Amazon uses that to its advantages. For years people were like Amazon's not profitable and they they looked at the P&L side of the equation - and that's just your your profits and and losses- but you have to really dig into cash flow because and return on invested capital I want to get an all the financial stuff, but but basically what they were able to do is to continue to invest in their growth. And, and there's something known as the sustainable growth rate, anybody who's interested in finance can go check this out. But you can only grow at a certain rate given your working capital and your margins, right. And that is literally your sustainable growth rate. If you grow faster than that, you actually need to finance your growth with debt or equity. But if you have negative working capital, you can grow infinitely fast. Because the more you grow, the more cash you're generating with zero profits. That's a crazy phenomenon. Almost seems like completely counterintuitive. But it's nonetheless true. So that was a big part of Amazon success.
Jared Ranere 15:48
It's kind of like getting a letter of intent. Right? If somebody says, I'll pay you for it this now then go build it. And you're like, Okay, well, if I get 100 people to pay me before I actually build it, then I'll have a big stockpile of money. And there's nothing to stop me from getting 1000 people to do it, and then building it for them on demand.
Jay Haynes 16:11
And this is what magazines did, right? Of course, you'd subscribe to time or Newsweek and you'd keep paying for your annual subscription. And they haven't delivered the 11 other issues too, yet, but you've already paid for a subscription. I'm definitely making myself sound very old by the magazines I used to subscribe to. Back in the day.
Jared Ranere 16:30
Now they just send them to you for free, because they need the advertising.
Jay Haynes 16:33
So yeah, so Amazon was very, very successful with this. That was their key. That clearly, retailing was going to move online, it's way better, whether you're buying diapers your day buying toothpaste, or even food, to have it just shipped to you. And the other thing about their success, we always talked about speed and accuracy. But if you look at what Jeff Bezos said about Amazon, they are 100% focused on speed and accuracy all the time. He's even said they think of their customers as always being delightfully dissatisfied. I think that's how I phrase it something like that. And I really love that phrase. But it's crazy, they created prime, and they ship things overnight, and now it was like, it's unbelievable, you have to go to the store. And there's this new thing shows up tomorrow. And even with that, even with that speed, they're building drones, because like we want to get it to within an hour. Right? And then at some point, they will deliver to you within minutes, right?
Jared Ranere 17:35
Yeah, and this is something that we don't really talk about that much. But the product category choices they made based on what needs they could satisfy, were really clever. So for example, when they started with books, they couldn't get the products to you all that fast. And sometimes there were some significant delays. But as a category that need is relatively unimportant, right? Like, there's not too many occasions, unless maybe you're a college student, where you say, I need this book tomorrow, if I don't get it tomorrow, there's gonna be huge problems in my life. Whereas diapers, if you don't get those on time, you're going to have huge issues. And you're going to just go to the physical store instead, if it doesn't get to you fast enough. But they delayed their entry into that market, until they had a way to get the product to you faster, and more accurately. So where they couldn't be faster, more accurate, when that was important to the consumer. They didn't get involved, right, they figured out that framework and that infrastructure, so that as they moved in categories were shipping speed was incredibly important. They were good at it.
Jay Haynes 18:41
Yeah, I think that's right. And that's true even for AWS. So if we move out of the just online retailing, even AWS clearly what they recognize is just businesses, we're going to move online. So again, I think I'm revealing my age, but I remember, in the in the late 90s, early 2000s, when we were trying to start up a company and get online, you literally had to buy a bunch of servers, go to the colo facility, like screw them into the rack, wire up networking cables, and configure them all. It took days, if not hours, and you're constantly monitoring. Now you need, you need server performance. It's literally a line of code in AWS and you're, you're off and running. So speed and accuracy again, again, again, is always part of what they're thinking about.
So if you are going to beat Amazon, the first thing you should do is put your speed and accuracy hat on from your customers perspective. What you're doing if you're gonna compete with them has to be faster and more accurate. And now what's interesting is Target and Matt and we talked to last week, You can also use a retail store to be faster and accurate amongst some dimensions. So Target’s actually done very well, which is incredibly surprising. And of course, the registry business was an example of this, where registry is a very complicated thing. That is a very complicated job around a new baby or a wedding or whatever it is, and gift giving. And it's a two sided market. So just going to Amazon and saying, I'm gonna pick a gift. And I can do that quickly with one click, well, that's not the registry job that doesn't entail all the steps and all the needs in receiving and giving gifts. So that's a great example of where you can still innovate against Amazon, but you have to think about your customer, their job, and speed and accuracy.
Jared Ranere 20:53
In other words, shipping speeds, not the only speed that matters, right? There are other things that have to happen in that job that you potentially could be faster in, depending on the product category.
Jay Haynes 21:04
Yeah, that's right. And of course, we talked about this all the time, I can't remember what we talked about on the podcast. But a good example of this would be parents and parents need to get a baby to sleep through the night. Jared, you and I both have twins. So if you're a parent out there, and you have a baby, it's tough enough. You have twins, you definitely need to get your baby to sleep through the night life. So how do you hire Amazon to get that job done? Well, we love this example. Because if you type, get a baby to sleep, through the night, in Amazon, the result you get is a book called "Go the F to Sleep." And it's very funny. But it absolutely is not going to help you as a parent, get your baby to sleep at night in any way. And then what you'd have to do even if you got all the things you needed shipped to you very quickly by Amazon. You'd have to cobble them together, you have to figure out Well, what do I do to get my baby to sleep through the night? Do I use a swaddle, do I use a pacifier or not? Do I need diapers? Do I need toys?
Jared Ranere 22:08
A sound machine? Yeah, it's a crib. Where do I put the crib?
Jay Haynes 22:12
Yeah, it's still very slow. So that's a great example if Target innovated a registry. But there's still tons of opportunities to help customers get jobs done. Now, Amazon is building their own products. So that's an interesting thing, too. There's a lot of Amazon branded products. But the ones that I've seen, and obviously haven't done extensive research, but they tend to be very commodity-like products, like a trash can, or a cable. Right? Those things just by their nature are very hard to differentiate if you're buying an extension cord, or a USB cable. I mean, if it works, it works, it's fine. It's really hard to differentiate because those product categories are basically consumption, job related. They're not related to something functional, like getting baby sleep through the night. They're related to using some product. Or you might be trying to get a job done. But it's really related to just like the consumption or maintenance or installing or learning to use, or any of those consumption jobs. So it's really hard.
Jared Ranere 23:24
We've never done this. It would be interesting to look at extension cords.
What's the job? Could you differentiate? Maybe? I think the part of the issue there is the protocols situation, because you're connecting to a bunch of other equipment that you don't make. But yeah, the point is well taken, it's essentially a commodity.
Jay Haynes 23:40
Yeah, you could innovate the extension cord in the interface. And I'll give you an example, I forget the manufacturer who does this, but their products, an extension cord, you plug it or a power cord, you just plug it in, and then you have to kind of grab the cord and pull it out. They actually created a circle where you could put your finger and pull it out easier. So it kind of created a grip for you to unplug it. And then of course, Apple created the magsafe adapter, which they no longer have. But that was brilliant because my kids run by, they don't like to rip my laptop off the desk. So there's always it's always possible. But those are consumption jobs. So the broader point is, those are consumption jobs.
I think if you are going to beat Amazon, you'd want to pick a category that was highly functional, and underserved. Of course, you'd want to know that there were a lot of customers out there, who were underserved, and then focus on that type of innovation As well as the delivery. There are more and more companies now that are shipping direct to you. I believe even some very, very large consumer companies are now going direct. back when I was in business school, this whole disintermediation question was a big one because like, Could you direct? Where you're going to make your retailers really mad, and what would that happen. But you can see why. Ultimately, markets are going to go direct. Because if you're a company, you want to have a direct relationship with your customer. But you also want to make that consumption experience very, very good. And you want your customers to feel that differentiation. So if you were to start a company or product line, say in getting a baby to sleep tonight, having that product and service come directly to me, would be very, very valuable in a really good consistent way.
Jared Ranere 25:34
Yeah, I think the job steps can be really helpful here, too. If you think about the shipping part of purchasing a product, right, that's a job step that's toward the end, right? It's the get the product job step. And Amazon's been innovating very successfully on that part of the job. Now, there might be product categories, where a different part of the job is underserved, like for example, determine the right criteria for the product, find the products that meet the criteria, and clothing is a good example of this where it I find it like very hard to figure out what is the criteria of the clothing? What are the criteria of the clothing, that's going to work for me, that's going to make me look great, do all these things? And then how do I find those options in an a maze?
If you think about Zappos, right? One of the Amazon, retail outlets. It's overwhelming to find shoes on Zappos. There are a million options, I'd rather just go to a little boutique that is close by where they've curated it for me and the general style matches mine. And I have two options to choose from. And they both fit like that. That's what I want out of my clothing, because it's faster. And it's more accurate, because somebody else is doing the work of determining the criteria of the clothes and figuring out options that meet that criteria for me. And so that's an area where you can innovate against Amazon, make things faster and more accurately without going head to head on shipping, on how much inventory you can manage, on the vastness of options. Because satisfying the needs doesn't require those things that Amazon is good at.
Jay Haynes 27:16
Yeah, that's great. And, again, that example of where if you were competing with them, and you were going to go direct to the consumer, rather than through another retailer, certainly through Amazon, gives you that ability to potentially generate that negative working capital, that can generate a lot of growth. And that's really, an incredibly powerful business tool for companies. Because you're not running out of cash all the time. And I starved to cash and I worried about your growth rates, you can almost grow infinitely fast. But you brought up something too, which I think is interesting if we look at the Diapers.com example. So what happened to Diapers.com? And why and can we use jobs-to-be-done and jobs theory to kind of explain that, because that's an example of where a competitor, they tried to compete with Amazon, and they basically got taken out. So what happened with that?
Jared Ranere 28:15
Yeah, so Diapers.com or Quidsi, the parent company, there's a really great story, I encourage you to google it about how they were extremely successful at getting diapers to parents. They grew very, very fast, made a lot of revenue. And Amazon decided that they wanted to get into that category. So they made an offer to acquire Quidsi. And the founder's records he said no, we don't. We think you're undervaluing us. We think we can do better on our own. And Amazon said, Okay, let's see how that goes. And they, according to Ars Technica, in dropping their prices to underprice Quidsi. They allegedly took a $200 million loss. So they were basically willing to sell diapers at a loss in order to underprice Quidsi prices, or Diapers.com prices, and take away their customers. And it's very similar to Standard Oil. They would go in, and this is the most famous monopoly from the early 20th century, late 19th century, where they would go in and underprice their oil to take out competitors in a regional market. And then all the competitors couldn't survive with those low prices, they would go out of business or get acquired by Standard Oil and then Standard Oil would bring their prices up to a more normal market rate and make incredible profits. And that's essentially I don't know if I'm pretty sure that Amazon did raise their prices back up after they acquired Diapers.com, but they ended up buying it for way less than their initial offer because the value of the company was so low because they lost a bunch of customers to Amazon. So they are able to acquire their tech and their service operations to get diapers to people quickly, at a much lower price than they originally offered.
Jay Haynes 30:10
Yeah, that's such an incredibly useful story for companies. For a number of reasons. One it brings up the question about whether or not Amazon should be regulated. That's, that's a whole other question. But actually, one we might want to address at some point, because how would you use jobs-to-be-done to figure out what to regulate? That's an interesting question. But in this case, that is head to head competition with undifferentiated product. Meaning the diapers were the same if you're buying X branded diaper on Amazon, X branded diaper and Diapers.com. So Diapers.com was doing a great job of competing on the consumption side. They were getting diapers, you very quickly. Faster than Amazon, I believe, I believe one of their innovations was like, you need diapers, we're getting them to you. And if you're a parent, obviously, you need diapers. So yeah, so that was differently on a consumption job that is unsustainable, even if Amazon didn't exist in the market, it's really hard to compete against.
It's like oil. And not to compare diapers to oil, they're both messy. But, a gallon of oil is a gallon of oil. And diapers today are pretty good. So you might have a favorite brand. And they try and differentiate a little bit, but diapers are good. And most importantly, if you need diapers for your baby, you're getting any diapers that are available. So. it's really, really hard to differentiate. Now you might be able to differentiate, there have been brands that are super sustainable, there's flushable diapers that - we have four kids, we tried every possible diaper that was out there. But that's really hard to compete with Amazon like that, in the absence of regulation. Because they're going to come in. They're going to be able to underprice you.
To use the example of getting a baby to sleep through night, if you really have a great system to get a baby to sleep through night, and it works, then, and it might be a combination of products, might be hardware, software, products, a network, services, like getting a baby's sleep through the night, like we've looked at that job, it takes a lot, it's not just one thing. And that's an example where you create kind of a platform for that job. But that would be much harder for Amazon to compete with. Much, much, much harder, because you've got differentiation, and then you're building that relationship directly with those customers. And one of the reasons we bring this up all the time, and I think the Diapers.com example is a useful one is because when you have a new baby, you now have jobs to get done that you didn't have to before. And what's interesting is that baby's going to grow up and you have jobs to get done for that baby until they leave your house and really as a parent, your jobs-to-be-done for your kids until they retire. And you die. Right. And, and so that's the start of an incredibly valuable relationship with consumers. And I think Amazon probably recognizes that very smartly to say, Wow, if Diapers.com is doing an incredible job with new parents who have babies, what about when they're toddlers? And then what about when they are in elementary school?
Jared Ranere 33:34
In this article Bezo is quoted as what I can tell you is that the idea of using diapers and products like that to attract new customers who have new families is a very traditional idea.
Jay Haynes 33:44
Yeah. Right. And, and it makes sense, because it makes sense just from a traditional perspective.
Yeah, you get a customer for a long time.
Jared Ranere 33:56
Yeah, and one other I think your point about diapers being a commodity and can you get more of the job done to innovate and have a better service is hard to compete with is very interesting because you think about, okay, if somebody drops their prices a lot and they're underpricing, you, what can you do? Well, you can move to potentially a premium segment and differentiate your services and provide them more such that that premium segment paying you more is worth it, and you could actually potentially increase your prices. But in order to make that work, you have to have a differentiated solution. And how do you know how to differentiate? Well, it gets more of the job done. So you have to have a real sense of like, Why do people want diapers? Like what are they doing with them? Well, they're trying to get their kids to be able to poop without making a mess everywhere. And maybe there are other things you can do, right, like, diaper pails can get smelly. Taking out diaper trash is terrible. There's more to the job than just getting the diapers to your house, preventing diaper rash, there's all kinds of stuff in there. And maybe if you can expand your service and what you're trying to do with your kid, you can move to a different segment serve their needs better, and then not have the price war.
Jay Haynes 35:15
Yeah, and I think that's a great example. Because you could package up a lot of jobs, you have to get done as a new parent. And just here, I push a button, and you send me everything I need as a new parent. Now, people are gonna want the nice clothes that they like for their kids, the toys they want. But there's a lot to that early parenting that is incredibly difficult. And if you could just push a button and have delivered that to me, and I subscribe to the service. So it could be a whole series of services and coaching and teaching. And there's a whole bunch of stuff you could do there. But the key would be to look at all those jobs to really understand what they are to build products and services that would get those jobs done, and then just kind of really help new parents in a profoundly different way than just like,I got to go shop for a whole bunch of new stuff for my baby. And that's true in every category of customer.
Now, Amazon's targeting B2B customers with AWS. But for consumers, if we just stick to consumers, that's true, no matter what activity you're doing as a consumer, whatever life stage, so if you're trying to compete with Amazon, you do the same thing in any category, whether it was travel or education, or financial, or whatever it is for consumers, you look at one job, you tried really differentiate on it, you build out into other jobs. And hopefully you create a platform where you can continue to expand, and you definitely do not go head to head. You don't make the Diapers.com mistake, even if you're doing a great job on that consumption job. Just the way that markets and jobs and innovation works. You can't sustain that long enough to be able to be able to withstand something like a competitive threat from Amazon.
Jared Ranere 37:00
I totally agree. And one example I want to offer before we close out is Lovevery in the baby category. Lovevery is a subscription service where you sign up and every I think it's monthly, they send you a box of toys. And it's not just the toys, they also send you a book that describes the developmental phases, you should expect your kid to be going through at that time. How to use the toys they provide to help them with those developmental phases. How to benchmark your kid and not feel bad, they give you books that help them advance. So the job isn't get toys, the job that they're helping with is to help your kid progress through developmental stages. And there's probably a better way to frame that. But that's essentially the concept there. And I don't have to go to a store and pick out toys or, or developmental skill sets for them. I don't have to learn about them. It all just shows up in a box every month. And I don't have to think about it. And as a result, we haven't bought any toys from Amazon. Maybe one or two out of the dozens that we have, I don't even know. But they are taking me away as a customer of Amazon's where I might have otherwise been browsing around like crazy and just purchasing random stuff. Because they're getting more of the job done in a way that's faster and more accurate. And it's been incredibly valuable to our family. And I think it's a great innovation on a product category that otherwise we'd be using Amazon for.
Jay Haynes 38:28
Yeah, that's great. There's so many things that we could just do a whole podcast on child development jobs. Because they're incredibly stressful. It's super emotional. In today's hyper competitive world you're worried about are my kids oh my gosh, my toddler is like six months behind the other toddler, right? I mean, it's crazy. But it's real, that anxiety is real. And those are very important functional jobs, of course, but they're very important emotional jobs for parents. And that type of thing, a subscription service that says hey, Jared, you're doing okay, don't worry. This is where you are, this is where you should be. Just knowing that is really really useful. And that is a great example of how to compete with big competitors you don't don't think like that. Don't think I'm gonna compete as a retailer and even if you're Target or Walmart or a direct competitor to Amazon. The registry example we talked about with Matt at Target. That's a great example. Matt's team really thought they really use jobs-to-be-done to think about, Okay, what's happening between these gift givers and gift receivers? What are all the emotions tied up? How can this go wrong? Where do they struggle to get this correct, etc. And it's way more than just click and send to a friend.
Jared Ranere 39:41
Jay Haynes 39:43
We could talk about Amazon forever, because it's obviously a huge company. But, in short, the takeaway if you're going to compete with Amazon, figure out which customer you're gonna target, what the job is, and where the unmet needs are and really focus on something and potentially go direct to consumer. As you mentioned,Jared, Lovevery. It's a subscription model generates negative working capital. That is the holy grail of business is a product or service that gets the job done better than competitors is highly differentiated on functional consumption and emotion dimensions and generates negative working capital and an infinite sustainable growth rate.
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