futurelevel strikes again

Steven Johnson on the impending electric car revolution being led by Tesla:

And if that’s the case, then the automobile industry will go through exactly what the computer and software world went through with the rise of the PC, the Web, and the mobile revolutions. Smaller companies that bet heavily on the new paradigm will become dominant in an amazingly short amount of time; behemoths who cling to the old models will swiftly become afterthoughts. The EV revolution will be like Hemingway’s classic line about going broke: it will happen gradually, then all of a sudden.

Agreed. This is going to happen sooner than most people think.

[via Daring Fireball]

Eugene Wei on a key facet of Amazon’s business that few people think about:

Almost all customers paid by credit card, so Amazon would receive payment in a day. But they didn’t pay the average distributor or publisher for 90 days for books they purchased. This gave Amazon a magical financial quality called a negative operating cycle. With every book sale, Amazon got cash it could hang on to for up weeks on end (in practice it wasn’t actually 89 days of float since Amazon did purchase some high velocity selling books ahead of time). The more Amazon grew, the more cash it banked. Amazon was turning its inventory 30, 40 times a year, whereas companies like Barnes and Noble were sweating to turn their inventory twice a year. Most people just look at a company’s margins and judge the quality of the business model based on that, but the cash flow characteristics of the business can make one company a far more valuable company than another with the exact same operating margin. Amazon could have had a margin of zero and still made money.

Amazon continues to fascinate me because increasingly, they’re playing the same game as Apple (meaning in the same markets: music, movies, books, tablets, phones, etc). But they play the game in the opposite way — and it still works.