It's nice to see non-union employees treated well and paid well, not because of any negative feelings toward unions or unionization, but because I think it shows that you can be a successful capitalist without trying to suck every ounce of productivity and profit out of your lowest-paid employees.
In the 1880s Bismarck increased the modern welfare state (it was called State Socialism https://en.wikipedia.org/wiki/State_Socialism_(Germany) ). The idea was that, if the poor people can get some form of social welfare from the existing state, they're less likely to support a proper socialist/communist revolution. Sounds like that. People won't unionise when they don't think they need to.
This is a great discussion of company culture, treatment of employees, worker cooperatives, etc., but I hoped HN would go deeper into the business and technology implications.
What is the strategic logic behind this move?
NYT, WaPo, WSJ, Bloomberg all take the same line: this is about Amazon's expansion into brick-and-mortar retail. They need a physical footprint, knock out Instacart for delivery, accelerate Amazon Go, and so on.
But is this really Amazon's play here? Seems to me this is just the superficial and obvious rationale, and these analysts completely missed the bigger implications.
Since Amazon said they're not renaming the stores, how can this be about Amazon's brick-and-mortar expansion?
Seems more likely that Amazon's strategy is actually the opposite of this.
Instead, maybe the bigger opportunity is to "Amazonify" a good brand, good people, good merchandising and thousands of relationships with good suppliers.
Customers already trust Whole Foods and they like the assortment, but (1) only a small percentage of the population has access to a store, and (2) an even smaller percentage of the population can afford it.
What if this is about taking the Whole Foods concept online in a big way ... make it dramatically more efficient, aggressively lower prices, and deliver all this goodness to a far larger percentage of the population?
Whole Foods market share is less than 2%. Amazon could turn this $13 billion business into a $130 billion business by plugging WF into Amazon's existing apparatus for merchandising, pricing, inventory control, online sales, logistics, and direct-to-consumer delivery.
Taking WF market share up from 2% to 20% is a much bigger opportunity than going the other direction, and just using WF stores to sell Amazon's grocery assortment.
It's worth pointing out that the purchase, as based on today's price action, was effectively "free".
Amazon market cap went up 3.5% as of the current tick, roughly $15.5B. The market effectively rewarded AMZN for the transaction far beyond the actual $13.7B tender offer!
No, they are paying in cash, not stock. The company sold the stock a long time ago, so whatever the stock does has no impact on the company. The stockholders, however, benefited 3.5%, assuming they sell now.
This is not accurate. Companies hold back some stock during their IPO for various reasons. Amazon held back 23 million shares. It also has repurchased a fair number of shares it holds as "treasury stock" on its balance sheet that appears to have netted them a few billion in appreciation.
This of course pales in comparison to the 478 million outstanding shares, so, you are correct: their shares don't appreciate nearly enough from the $15 billion surge in market cap to pay for the $13.7 billion purchase. However, to say "whatever the stock does has no impact on the company" is also inaccurate.
No, the cash is owned by the corporation. The shareholders own the right to participate in corporate governance in the degree appropriate to the particular shares they own, and own the right to take ownership of a particular share of the net assets if and when the corporation should be dissolved.
They do not, either in theory or in practice, own the assets of the corporation while it exists.
You've got to be able to understand it, though, to make sense of market capitalism. Basically if the stock went up the price of that acquisition plus two billion dollars, that is a very powerful price signaling and a difficult command to disobey.
It means there's an opportunity cost: all other things being equal, it would cost Amazon two billion dollars in market capitalization to NOT do whatever the hell Wall Street THINKS they're going to do with Whole Foods.
Maybe the market thinks they're going to use them as bases for grocery distribution: reward, the cost of acquisition plus a bonus two billion. Maybe the market thinks they're going to gut the company, fire everybody, and then there's one less competitor for what Amazon means to do with groceries! Maybe the market thinks they'll take the existing Amazon grocery stuff and rebrand it Whole Foods and the rabble will buy into that for a time.
The point is that this money really isn't free: it's conditional on whether Amazon does what the investors think they're gonna do, with the acquisition. If Amazon fails to do that, the market capitalization can evaporate.
My own hunch is that the market thinks Amazon is super efficient and acquisitive, and that Whole Foods is weak and inefficient and misguided. As such, the expectation of greedy and amoral investors is that Amazon will take over and whip Whole Foods into shape, maybe even fire everybody and replace 'em with Amazonians, and that will make Whole Foods 'better' and justify the exercise. They certainly aren't buying into Whole Foods' 'enlightened' memes: that has no place on Wall Street.
So I'm guessing it's BECAUSE Whole Foods has been 'enlightened' that the prospect of wrecking that so motivates investors. They figure that the Amazon way is clearly the winning way, and they figure there will be a BIG difference in how things are done, and it's a difference they characterize as 'good for capital', so there's a synergistic effect that makes it 'free' for Amazon plus a bonus. And then Amazon is obligated to do what's expected of them, which I think is probably kinda predictable.
To me I fail to see the value because Aldi is here and expanding and now Lidi is following. while they may be on the opposite end of the market from Whole foods I do think they are where the market will truly end up. The middle to higher end grocery stores are going to face a tough time with the discounters and we have yet to see if the European model of grocery can covert a large number of shoppers.
with regards to the purchase I can imagine cobranding or in store only advertising. perhaps they can use it let people pick up orders themselves? Online grocery ordering but only where a Whole Foods store is available.
The value is that Aldi is nowhere near here, and Lidi is completely un-heard-of.
The only reason I know about Aldi is that I spent a couple of years working in Chicago (and living further out), and even there I had to drive a long ways out of my way to find an Aldi. I think I went once in the 2 years I was there.
Well, I'm wrong. There are ~430 WF locations worldwide; there are 1,600 Aldis in the US. it's just that aside from southern California, they don't seem to have a lot of locations in the West. My closest Aldi is ~550 miles away; my closest Whole Foods is a lot closer.
> Customers already trust Whole Foods and they like the assortment, but (1) only a small percentage of the population has access to a store, and (2) an even smaller percentage of the population can afford it.
> What if this is about taking the Whole Foods concept online in a big way ... make it dramatically more efficient, aggressively lower prices, and deliver all this goodness to a far larger percentage of the population?
Efficiency and cheapness would go against the Whole Foods brand.
> Efficiency and cheapness would go against the Whole Foods brand.
For their existing customers, yes, but WF has become an aspirational brand.
What if the play is to gain a large number of less affluent customers by WF-labeling lots of inexpensive things?
Search Amazon for some commodity like corn meal, or rolled oats. There's a huge price difference between Quaker brand and Bob's Red Mill. Amazon could insert Whole Foods brand right in the middle and skim customers from both ends while maintaining handsome margins.
Only if you erode their core customer values and degrade the products. I find it easy to imagine a more streamlined business with more affordable prices in Whole Foods. Why not?
> Efficiency and cheapness would go against the Whole Foods brand.
I don't know what this means. The WF experience has nothing to do with these things. The price (cheap or less-than-expensive) and efficiency (I think you mean availability?) aren't really important, other than they are successful in the same way Trader Joes is successful, in fewer locations.
Agreed. My first thought was: "Sweet, now prices will come down, WF stores will probably have come out with some innovations we didn't even know we needed but then won't imaging living without and overall customer experience will be awesome." They're going to figure out how to take WF to the next level.
Interesting comparison. In this case, people aren't unionizing for essentially the opposite reason. Rather than state provided social welfare, their needs are satisfied through this capitalistic solution. Employees are empowered and rewarded through their work.
It is important to note that the antagonism between union and management is especially bad in the U.S. Germany demonstrates one arrangement that generally works to align the interests of the two.
Just calling this out to try to counter the tendency of U.S. folks to assume that there is only one, unchanging form of capitalism. In fact, ours is increasingly a weird outlier.
If a certain amount of workers agree they can form a workers council which is a legally protected union within the company. And they have much stronger legal rights, seats on the board of directors, legal requirements to see certain documents, strong protection against being fired.
Lest you think this makes the country uncompetitive, Germany still makes cars, and the UK (which doesn't have this legal system) has vastly de-industrialised and doesn't make cars.
I'm not sure if you can call this capitalistic, though. WF as a commune could likely share many of the benefits or exceed them even without requiring shareholders to satisfy. Instead, a devotion to profits will ensure they are given the minimum to execute their job well.
It'll be interesting to see what bezos does with it for sure.
Mondragon corporation has existed in spain since the 1950s as a worker-owned cooperative and employs about 75,000 people. Whole foods employs about 91,000 but I'd say that puts them in the same ballpark. You could argue in addition that Mondragon has been limited by a) Spain having been a dictatorship until the 1980s, b) the relative youth of the EU single market vs that of the US leading to a more regional business culture and c) the additional language barriers in Europe that make business expansion a bit slower than in the US.
Employee-owned means the owners retired by selling the company through an employee stock purchase plan. Publix, Woodman's etc. are good places to work but they aren't communes or cooperatives.
In the U.K. both the Co-op (a consumer owned co-operative) and John Lewis/Waitrose (a worker owned partnership) have similar revenue figures to Whole Foods.
Whole foods is vastly larger than the majority of organizations world wide. Remember the world GDP is only ~80,000 billion so there is a rather small number of Organizations with 10 billion per year in Revenue.
But, if your just mean billion plus dollar orgs then something like : https://en.wikipedia.org/wiki/United_Farmers_of_Alberta is an interesting comparison. Further, measuring the success of such organizations is hard especially when they are not trying to make a profit. I mean how do you measure something like the US Democratic and Republican parties?
Why? What's your point? Just sayig you can't possibly pin the benefits on capitalism—you know very well whole foods would avoid hiring anyone if they didn't have to. That is capitalism: minimize loss of money.
Whole foods is a good employer IN SPITE of being capitalist.
There is a competitive advantage in having real loyalty from employees. Treating people well makes them want to be loyal.
Even Walmart has started realizing this. It turns out that when you hire unmotivated people, pay them as little as possible, screw them on medical benefits, pay them too little to get their own apartment and in general work them harder than everyone else in that job sector that you get people who don't do a good job. In the past several years, Walmart has instituted new wage plans, better medical benefits, productivity goals from corporate that are still unreasonable but not insane and they think it is worth the money.
I don't know if Amazon has learned this expensive lesson, but a business can run with high employee turnover and dissatisfaction for a long time before it catches up to them. Once it becomes apparent it is often too late to fix without losing heavily in the marketplace.
There may be competitive advantages to happy employees, but there's always a cost, and capitalism is about minimizing those costs. Again, if a business could get away with it, they would simply not hire anyone to keep costs down.
Simply put, human welfare is directly in contest with maximization of profits. This occasionally can result in being paid well—it's cheaper than hiring two people at a lower rate.
Seems like the idea was "Whole Foods as a commune" i.e. viewed as a commune. In other words a conceptual lens through which you could view any organization. Amazon itself is a commune in some ways, and so is Whole Foods; therefore my two examples. in history. are Amazon and Whole Foods. So much for that.
And looky there, other commenters supplied a bunch more (actual) examples. I'll throw in: The Catholic Church. The nation of Yugoslavia. What the heck: the Hell's Angels. Far outstripping Amazon's "scale" in terms of heads smacked with wooden fenceposts, that's for sure, or maybe not.
Which is my next point - adjust the "scale" appropriately (and unfortunately you left no indication RE: scale of what, whether it be dollars in sales, people involved, people served, ham sandwiches set aflame, heads smacked, or dogs painted blue) in proportion to the amount of money/wealth existing in the world at that time. in history. or to the number of people alive at that time. in history. and that'll probably turn up a bunch more examples.
There's also the question of "successful at what"? At providing for its employees/members? At serving its customers? At enriching its shareholders? At painting dogs blue?
Also we should really make passing mention of the waxing and waning support for capitalistic enterprises vs. other types of communes in various places and times. in history. Is it a valid comparison between a company like Amazon, operating in one of the most capitalism-friendly sociopolitical environments (post-Reagan America) seen in some time, vs. another type of organization operating in the same environment that doesn't support that organization or even actively suppresses it?
Your comment reflects an overabundance of confidence in things that are by no means simple or certain.
What's not capitalistic about it? A company can be setup with any number of metrics that determine success besides just pure profit. That most don't is a matter of who is running them, not that capitalism doesn't allow it to take place!
Look at airlines--exec bonuses used to include metrics such as "customer satisfaction" and today those metrics are gone and only profits count. Nothing changed with capitalism, though. It's the asshole MBAs that changed.
I mean if you think about it, Unions act as a protection mechanism. If your workplace is already labor friendly you feel less of a need for Unions, which cost money and time.
Prussia was also a highly militaristic state, so it had the side benefit of keeping the young men fit and hearty enough to get conscripted for the next time they needed to bloody France's nose. It would also have the young women fit enough to bear many much young men that they could conscript into future wars.
The logic of trench warfare era militarism is even more depressing than the normal logic of war. It's mind-boggling to think leaders figured it was appropriate to just throw demographically significant numbers of 16-20 year old boys into a meat-grinder just to keep the machinery of colonialist industry well greased.
I work 40 hours a week. Sometimes I work 45, and I usually offset it by cutting it shorter the next week. I have no need (or desire) to "strike" just because some businesses/orgs/teams are garbage.
No competent programmer I know has to work 40 hours a week to have their needs met. The best ones charge rates would allow them to have their needs met working <10 hours a week.
First of all, what does that have to do with ANYTHING being discussed in this thread? Second, any "programmer" working 10 hours a week and charging enough to live comfortably on that isn't a programmer, they are a consultant.
It has this to do with this thread: programmers who say they don't need to unionize because "their needs are being met" in return for "40 hours a week" don't understand the basic economics of their craft of what being compensated fairly means, and that's something a union could help them with. I've heard more than one case of a big company saying "thanks for that optimization that will save us >$15M/yr for at least a decade, here's a ~$10k bonus!".
The few engineers who care to engage in the negotiations which yield their true market value end up making several times that of the average. Yes, some of them are exceptional engineers, but some are not, and the only real distinction is being able to find and negotiate optimal market rates for their work.
I am a consultant that writes software, does that mean I am not a programmer.
If wasn't supporting a whole raft of people who aren't my kids I could get by on 10 hours a week. Most of these people will be self sufficient in the fall. Then we will see I can get fewer hours.
Charge hourly, produce good work(actually work those hours you charge) and spend enough time learning to stay proficient in your niche of the craft. This recipe won't make you a millionaire quickly, and it won't get you a house in the bay area, but it has given me great financial freedom in the Midwest.
I work 35-40 hours per week and am quite competent and senior engineer in London. You need to find a company which isn't trying to make employees work unpaid overtime. Lots of companies out there are fine with 40 hours per week and pay market rate salaries for senior people.
Travel can be extremely cheap nowadays, e.g. budget airlines on weekdays, last minute deals from the big tour operators. Working one 10 hour day a week will allow for way more travel than 4x the money on a 4 or 5 days work week.
Last year I had a consulting gig in a Europe based company, with offices next to a big airport. As summer was slow anyway I'd work 30h weeks (invoicing four 7.5 hour work days) Tuesday - Thursday, and spend the other 4 days at a beach in Ibiza, Bulgaria or Cape Verde (with occasional remote login to take care of emergencies).
That's true..but IMO, if you want to reach that level of expertise, you have to spend a whole lot of time every day/week learning new stuff/technologies. At least that's the case for me as a software developer.
When I was hired I became the best paid person I knew. I think it would be pretty hard to unionize, but damn if I ain't pissed that that wage fixing scandal wasn't a bigger deal. I work at one of the guilty companies, and I would be happier if I felt like most workers even knew it happened. (even though this was not wage fixing for the average engineer, but for certain high profile roles.)
That's something a worker's organization would help with, even if I don't feel like I need them in wage negotiation.
It would be worthwhile to simply have an organization so that when shitty things happen, you don't have to try and form one while simultaneously dealing with shitty things. A union is like insurance in that way. You get it when you're healthy so that it'll be there for you when you're not.
"Some massively rich companies colluded to keep their 5%-er employees from making even more..."
Not that I disagree that it was a huge deal, it's hard to gather greater sympathy/empathy from people that tend to make less than half of those aggrieved.
Exactly. If you're making $35k a year, all that story meant to you was "a bunch of billionaires colluded so someone making 5x what I make couldn't make 5.5x what I make."
It gets worse when you think about how often those "screwed" people that make 5x the median income of an area, make software that replaces 10,000 jobs. This software often comes in an app store and is given away for free with an ad at the bottom.
I agree... however, the reason it wasn't reported in the news, is because it wouldn't get a good response for the news agency, and likely piss more people off about the victims of that oppression. I'm not saying they weren't in the wrong, only pointing out why it wasn't more reported in mainstream news.
The 40 hour work week is arbitrary. It was made for railroad workers who had high workplace accident rates and worked 6-7 days a week. Many died because pre-implementation they worked at night w/o sufficient electric lighting as it was not widespread yet. After the war; WWI iirc, the framework was applied to other industries.
So if you don't want to work 40 hours, don't. I have much less sympathy for a software engineer who has better leverage than a kid who works at McDonalds and couldn't earn a living wage working 60 hours.
The fact that you could strike and not really sacrifice much; and if it failed find another job, puts you in a great position. Unions are good for protecting those that can't afford to protect themselves and are at a disatvantage. SE is not IMO a vocation that needs to organize.
I think game dev is the way it is because so many romanticize game development. A ton of grads fresh out of college want to get in and are competing for a the limited (but large) amount of work it takes to make a game. The big a-hole studios realize this and charge sub-prime wages because after they burn a dev out there will be another to replace them still starry-eyed from a childhood playing games.
I have read several stories of people leaving game deve for a nice boring job writing insurance software for more money and fewer hours. Many could be doing it the other way around, write software for a lame, but lucrative, insurance company, then make a small lifestyle business writing indie games with a few friends.
> The big a-hole studios realize this and charge sub-prime wages
First of all, "sub-prime wages" is not a thing I've ever heard of. Absolutely nothing on Google so I'm assuming you mean below market wages, which game industry wages are by definition not.
Secondly, and perhaps most importantly, paying people what they are willing to earn does not make game studios assholes. Everyone developing software for game studios knows they could make more writing software for a bank or some YC CRUD app.
> I have read several stories of people leaving game deve for a nice boring job writing insurance software for more money and fewer hours.
With the right skills, you can leave any industry and go to any other industry and make more money. Not sure what your point is here.
Your argument boils down to, "If they agree to it, there's absolutely nothing wrong," which is an argument that I've never accepted before. A person in a position of power, which the studios are, taking advantage of young people to pay them below market wages (which these are, despite whatever you try to argue) and work them insane hours, is wrong, full stop. There is absolutely zero reason why game wages should be below regular development wages.
Also, I think it is hard to get product market fit. You pretty much have to release a whole game before you know if it's successful. Unless you are established it is much harder to bootstrap. You can release a level and optimize but games are super hard.
I agree there is the romantic factor in play as well. You have a lot of supply of devs and a random walk of success stories.
Most people who are super excited to make games are gamers themselves, and it seems to me that most gamers are pretty open minded. In my own research it seems to me that most indie titles that "don't suck" turn at least a modest profit. Don't suck needs to be defined objectively, but not being riddled with bugs (unless that's the point [Goat simulator, Desert Bus]), having a consistent even if primitive art style and being fun to at least some gamers is a reasonable definition.
The breakaway successes like Minecraft and Super Meat Boy should not be examples. Better example are Rovio's 50 games before Angry Birds. They made enough money to live on and make the next title while having a decent but not affluent lifestyle.
Why would I strike for that? I'm salaried and typically work about 30-35 hours a week. I sit right next to my boss and he has no complaints about my hours or my work so I would be crazy to ask to work more hours. I'm actually shocked at how much they pay me for such enjoyable work.
no thanks. look at what collective/forced/politicized bickering over hours has done to the job market everywhere its been tried. look at the corruption. i enjoy my freedom to negotiate my terms as I, as an individual, and my employer see fit.
I lived and worked in Iceland for five years, and they have a virtually 100% unionization rate. It's handled at the industry level rather than individual companies, but when you start a job, you are pretty much automatically enrolled in the union relevant for your work. A little money comes out of your paycheck, and the union is there in case you have problems.
The unions also provide other benefits. For example, most of them own summer houses that any member can reserve to go spend a weekend away. You rarely hear the average Icelander on either side of the worker/manager divide complain about them at all. Everyone more or less views them as beneficial.
Once or twice a year they make headlines when one group of workers or another feels aggrieved and it escalates to a brief strike in some small sector of the economy, but on the whole, I don't think many Icelanders would trade their system of employment for ours.
Like so many other areas, I think the problem is that we in the US are just so very much worse at running our society and country than most other comparable countries. Look at health care. No one liked the ACA; no will will like the AHCA or whatever the Republicans pass. The problem isn't that it's impossible to do a decent job at a health care system. The problem is that we specifically suck. Put us in charge of anything, and we'll turn it into something awful that doesn't work, but provides some brief period of outsized shareholder value.
I'm always skeptical whenever someone parades a Scandinavian country as an example of anything. The nature of their economies (Norway's massive oil wealth, for example) and the size of their populations means that lessons from these countries are rarely applicable to the US, China, India or other large countries.
"It wouldn't scale up" is common conservative response to progressive or liberal comparisons that involve suggestions of doing it (anything) some other way.
So while the EU plugs away making incremental improvements each year we keep jumping around in fits and spurts forward and backward. There is still a strong belief of American Exceptionalism even in fields where we are clearly inferior. Look at Healthcare Europe figured something out that we didn't and their is cheaper and better.
Well, there could be legitimate reason that it couldn't scale up, but... "necessity is the mother of invention" and I don't feel it should be left at that. (Particularly on HN, where people seem to take inordinate pride in their ability to find ways of scaling things up.)
Iceland is demographically homogenous (over 90% Icelandic), and 64% of their population lives in one city. It is fairly easy for that kind of grouping of people to reach agreement on things because they have a lot of common interests, and a shared history and culture.
As you "scale up" in diversity, population, and geographic distribution the set of things people can agree on falls off dramatically.
I love how people like to explain things to me as though a wikipedia article presents something over actual knowledge and experience.
Iceland has a very divisive political system at the moment. The ruling government has been a coalition of the Progressive and Independence parties, roughly the european versions of the social conservative and pro-business factions of the Republican party respectively. Though it should be said that no one in Iceland really touches quite how regressive American social conservatives are. And, of course, being (sort-of) Scandinavian, there's a massively strong Social Democrat/Pirate/Left-green contingent in the Reykjavik area that can't stand the agenda of the main ruling parties.
Iceland doesn't function because they manage to get people to agree more than Americans do. There are something like 13 political parties in an average election, and they stand in bitter opposition to one another across a huge variety of issues. Iceland functions because they make their government function anyway. Nothing about being small makes it easier for two opposing parties to somehow figure out a way to get the damned bills paid. You could replace the entire American republic with Donald Trump and Barack Obama, and we'd get no more done than we do today, because the government isn't trying to solve problems. They're trying to preserve whatever problem is most plausibly the fault of the other party.
You are mixing up blue collar and white collar unions.
Go look at the film industry, and the Writers / Directors / Screen Actors Guilds. The WGA doesn't stop screenwriters from negotiating their own terms. Do you think someone like JJ Abrams is getting paid the WGA set fees? That Tom Cruise works SAG and Equity rates? Of course not.
The point of the guilds in these industries is to set minimum standards for pay and benefits. It is designed to stop studios from exploiting people desperate to work in the industry. I majored in film and many of my classmates have gone on to work in Hollywood - I don't know anyone of them who would say their unions aren't a good thing.
This is US-specific, in some European countries at least you're automatically part of some union by law if you're a software developer. They don't tend to do collective bargaining, but they're there.
Intelligent people capable of negotiating their pay in a market such as that for software development would only be encumbered by unions. Are there warts? Sure there are. Nothing is perfect.
That's an incredibly insulting and dismissive framing of the issue.
Unions are important in many industries, including software development. You and your employer may have a good method of negotiating your pay, but that doesn't make it universal
Belittling the presumed intelligence is completely unnecessary
Oh, come on. It has not been that long since we found out that major tech companies were colluding to suppress SWE salaries. Have you already forgotten?
>I think it shows that you can be a successful capitalist without trying to suck every ounce of productivity and profit out of your lowest-paid employees.
“Our employees are our number one asset, period,” Kevin Stickles, the company’s vice president for human resources, told Reuters in 2012. “The first question you ask is: ‘Is this the best thing for the employee?’ That’s a totally different model.”
Having moved from an area with Wegmans to one without, I can sympathize. They're in Massachusetts, New Jersey, and New York, but Connecticut is a sad dead spot in the middle.
Maybe, but the fact that they were just acquired by a company notorious for abusing its low-level employees shows the limitations of this model (as did the pressure they began to face from investors to tighten up on that front when they started to become less profitable).
A lot of time when companies like that get acquired, someone is hoping to profit on the difference between the purchase price, and the value of the company when the management culture switches to wringing every last bit of productivity out of employees. Amazon might have a more strategic goal, but the above strategy is a common one.
Well Amazon is not sitting on hordes of cash, just looking to diversify. This is a strategic move for them. I'd say the odds are greater than 50% that WF culture, and in turn the store experience, gets worse. I mean, Amazon had the choice to not turn their website into a flea market, and we know how that went.
Not sure, but hearing about how Amazon is running into trouble with their grocery stores, they might want to learn something from Whole Foods (similar to Zappos).
There was also an article that talked about the brilliance of Amazon biz organization. Business units are set up like API interfaces, ones that serve both internal needs as well as external customers. The author's claim is that it helps trim the fat, with what was normally internal services being exposed to market forces. It makes me also wonder about WF's fate from that perspective.
WF most likely will fail under Amazon (if WF must adapt to Amazon's business methods), opening the market for local competitors and similar national chains to absorb that market share. Great opportunity for Aldi on the low end and Trader Joe's on the high end.
I don't really see TJ as a WF competitor beyond the earthy crunchy vibe. TJ is mostly pretty weak in the produce, meat, cheese, and fish sections which are exactly the areas where WF is often worth the premium. I suppose they compete in the frozenprepared food that pretends to be Artisanal.
TJ is a good deal for some things but it only somewhat overlaps.
I don't see Amazon doing much as far as cultural changes. Twitch was largely left untouched and continues to operate as before. This was a strategic purchase so Amazon. They want you to go to Amazon for everything and a popular nation-wide grocery chain is exactly what they needed.
What you will see is a relationship between Amazon Prime and WF. But, as with the case with Twitch, it will be Amazon that deals with that and WF will likely continue to do its thing while Amazon generates MORE customer loyalty and a new customer base.
I don't know. WF does have a very loyal base of users. Unless Amazon fucks with them majorly, I don't see it changing very much. In fact, with less pressure from activist investors to cut back on expenses, they might actually get more resources to experiment with new concepts.
If money weren't a matter, I would love to shop at whole foods: shopping for groceries seems more of an experience there than at other places. Maybe using Amazon's superior operations management would let them lower prices even further attracting more regular customers.
Depends on the place. In Sedona, when Whole Foods bought the local alt grocer, people got upset at WF's corruption of the grocer's values.
When I airbnb'd in someone's Portland home once, The host worked for another local alr grocer chain, proudly telling me it is like WF but better.
Just a tangent: the downtown Seattle WF has a fantastic eatery ... and in the months before I moved, it turned into a major Amazon employer hangout, after the Amazon HQ moved there. Now I marvel at the irony it is effectively an externalized company cafeteria.
There are a lot of troubles with the logistics around distributing produce. The models Amazon has for managing non-perishable goods is not working well for things like bananas. It would be stupid of Amazon not to try to learn from logistics experts from Whole Foods, and Amazon has a good track record for not being stupid.
Side note: just yesterday, my wife and I went to our local Fry's for our normal shopping. They are testing hand-held devices to scan items while you shop and then just settle at the self-checkout line; this was fairly new. We gave it a try just to see what the experience is like (and likely, by the time my step-daughter comes to age, something like this will be normal). I remarked to my wife that Fry's isn't sitting still, waiting for Amazon to take over grocery shopping with Amazon Go, either.
> Aldi on the low end and Trader Joe's on the high end
Trader Joe's has limited selection and is mostly on the cheap side, often even cheaper than Ralph's in SoCal. Its the place I go for cheap produce that just happens to be organic/natural/etc... (though I don't really care about the latter).
If WF were to fail under Amazon's tutelage, maybe we shouldn't be looking at nationwide competitors but at local stores for replacement?
Here in the Bay Area I'm really happy with Draeger's. Haven't really been back to WF much since I started going there. Unlike Trader Joe's it does have a reasonably complete selection of meats (and for specialty cuts there are local butchers).
We had WF delivery for a couple of years. It was great for us. But, you could tell they were trying (unsuccessfully) to monetize it. When they curtailed it they offered a pickup service as replacement: Instacart is the app for placing orders. On the whole, the pickup service works pretty well except you don't get sale prices.
I can see delivery coming back now that Amazon is in the picture. I can also see a bigger push to sell prepared foods for delivery. Prepared foods are the real money makers.
Yeah, now they can offer "healthy"/organic/fresh etc foods for delivery with Whole Food's brand (more trusted than Amazon Fresh). Prepared foods - absolutely. Packaged meals, granolas, sandwiches. Good point.
1) As long as Mackey can run the company WF employees will stay. Once he leaves (likely soon), they will leave. This is an opportunity for some other investor with Mackey's same principles to buy up WF's human capital. For example, Starbucks will benefit b/c former WF employees make good baristas.
2) Amazon will be left with the infrastructure of WF, primarily the real estate, warehouses, storefronts and whatever slice of humanity Amazon hires to replace former WF employees. So maybe Amazon wants WF primarily for the locations, the real estate and the warehousing capacity. They're getting a good price by buying while WF is at a low.
Amazon is simply too much - time for the monopoly-busters to break them apart.
Amazon is simply too much - time for the monopoly-busters to break them apart.
What exactly does Amazon have a monopoly on?
Selling books? Nope, Barnes & Noble and Walmart and others compete there.
Cloud computing? Nope, check Google, Microsoft, IBM, Racksapce, Linode, etc.
Selling other random stuff on the net? No, Target, Walmart and a bazillion specialty sites also do that.
Groceries? Obviously not.
The idea behind anti-trust / monopoly law is generally to prevent a company from leveraging a monopoly in one area to gain excessive control in another area. I don't see how anyone can argue that Amazon are doing anything like that.
Being big and successful is not, in and of itself, wrong.
Good old investors, so short sighted, they only care about the next 3 months. Whole Foods probably would have been better off as private company, especially with the culture they were trying to create.
They had their chance, the culture did not help keep the company above water.
Noted by a friend who used to work there:
- They treat each store (and each department within each store) like its own separate business, which is great for teaching individual managers about waste, efficiency, profit/loss. However they can't bother to get together on a corporate level and combine purchasing power on most things. Every store has to work on making a deal on their own merchandise, separately.
- In a show of solidarity, all employees, whether floor workers or corporate IT, must work holidays and instead have floating holidays for time off. Then predictably there is a seniority effect where the long-term workers get to have their holidays and the recent hires have to come in on a completely useless day and stay till 3 or 4 when the management "lets" them leave.
Also I recently shopped at their 365 store and it's a great store with better prices, but their website sucks and my name comes up as "firstname lastname" on their computers. If Amazon can knock some sense into their IT, that would be a huge win.
> Good old investors, so short sighted, they only care about the next 3 months.
Yeah, darn those investors. How dare people with pensions, 401k's, IRAs, and other investments expect some kind of return on their investment? It's disgraceful. /s
EDIT: The sentiment against investors is rather ironic considering the amount of equity collectively held by HN readers.
The idea that I can't criticize pathological behaviors by investors because I myself invest in things makes about as much sense as saying I can't criticize bad US policies because I live in the US.
You are the investor causing the pathological behavior. A very large part of wall street is investors like you that just have a little bit in their retirement accounts.
Do you vote the proxy for all the funds in your 401k? Do you understand how your vote affects the above - it all does.
But you are because you own the fund that in turns owns the company.
It might not be your intent, and you might not have enough of a vote to stop it, but you are still doing it. (sort of like Americans opposed to the current foreign policy are still at fault for it)
There is always a need to balance both the short term and the long term. I rather doubt anyone who has retired and is drawing on their retirement investments will be thinking long term since, to be morbid, they simply aren't going to be around in the long term.
You know at some point the 401k is supposed to be paying your bills, yes? That's its raison d'être. When you have investments paying your bills, you might understandably be focused on those investments yielding some immediate returns. Maybe to pay for that leaky roof, or broken down AC...
Any short term returns from the market should be remarkably small per individual managed by a firm. It's the long term growth that you're banking on when you prepare for retirement years in advance.
I think your comment is a non-sequitur. I am highly invested in my 401K and IRA but I would much rather have returns over the next 10 years than the next 3 months.
If your retirement is 3 months away, then sure you should be thinking short term, which actually means you should be moving away from stocks entirely. Investors that are really that short term should be in bonds or cash.
Your comment rests on the implicit premise that investors were getting no return worth talking about. There's a big space between not getting and adequate return and squeezing out every last bit of profit.
Is there any reason they would get a different amount per share than other shareholders? I'd assume it would only depend on how much stock they have obtained either by purchasing it from the market, using the stock purchase plan (where they can buy it for 85% of market price if they agreed to keep it for 2 years), or the stock-grants that were given to employees.
And the ones who bought stock (including those that did so at the 85% discount) will get the value of their stock. However, shareholders aren't guaranteed any returns. If they bought their stock in 2013 they lost money. Employees who bought stock with the 85% discount won't be quite as bad off as non-employee shareholders.
Imagine suggesting that any employee who was hired when the stock price was higher than the selling price now had to pay money to those who were hired when the stock price was lower. Fortunately, employees are not held liable for the valuation of the company at which they work. If they WANT to participate in that risk and reward they can buy stock--sometimes at a discount like Whole Foods offered.
The top 5% own >70% of all stock, so no it mostly isn't grandma's 401k or grandpa's pension. Half of all Americans don't own a single share of anything in any form.
You have to admit, whether or not this was ever anyone's intent, from a social control perspective, tying your retirement to the health of the market is a real masterstroke.
I didn't say there should be no return. Suggesting that is quite dishonest on your part.
I merely stated that the bulk of reward should go to those who actually DO something, not those who's only contribution is already having money. Of course they should get a return on that money. It just shouldn't be the bulk of the reward.
Boy aren't you looking to get offended :). I said less OR no return, since it wasn't explicit in your comments. Picking only parts that suit you is ginormously dishonest if my logical OR seems 'quite dishonest' to you :)
But investors are actually doing something as well - they are putting their hard earned money towards a venture. And as it stands today, we have more need for capital than 'actual work'. So it gets rewarded more. In simplistic terms, If you want an investor to put his money into a business you are starting instead of buying up rare resources or hoarding his cash, you give up equity. And hence their reward are relative to the money they put in.
I was just trying to see if you have any alternative plans to encourage such investment. This is back to basics economics as I know, but I don't know much there. Hence my query.
OK, so the vast majority of people are "either stupid or lazy or both." What a cheery worldview. How would we have anything resembling today's businesses if everyone over the age of 30 were running a business?
And the shareholders are [usually/pretty much] the entire reason there is a company there for them to work at and potentially hold some shares in. There are two sides to that.
> Maybe, but the fact that they were just acquired by a company notorious for abusing its low-level employees shows the limitations of this model (as did the pressure they began to face from investors to tighten up on that front when they started to become less profitable).
...or monomania of "the [stock] market," and the myopia of those who look to it to determine what "works."
Maybe. But how have some of Amazon's other acquisitions gone? I believe Audible and Zappos were largely left alone after they were bought, but I could be wrong.
While I fully agree that it's great to see employees treated well, Whole Foods is not an example that you can be a successful capitalist this way. They worked well for a while but the reason they got bought now is because they struggled over the past years. Probably unrelated to their treatment of employees (US groceries is very competitive at the moment) but AMZN didn't buy a hugely successful company.
It's a $13 billion sale. I struggle to see the scenario under which that is considered a failure. Most start-ups that get $120k from YC are considered a success here. Someone selling their struggling CRUD app to Amazon for $13 million would probably be considered a success here.
But the $13 billion sale of a public company is a bunch of hemming and hawing about what the stock was worth a few years ago.
I'm not saying it couldn't have been more successful. I'm not saying Amazon won't completely destroy the culture (they may, they may just let it continue as is and use it as Amazon Fresh logistics hubs as some have speculated).
But I don't see how this isn't a great example of how you can treat your employees well - better than almost anyone else at the same level - and make a lot of money while doing it.
> I struggle to see the scenario under which that is considered a failure.
Wasn't Whole Foods valued at over $20 billion a few years ago? If you bought Whole Foods stock at that point (either as an outside investor or an employee) it might feel like Amazon is buying it for $13 billion because Whole Foods has been having trouble staying competitive in the market.
Of course, if you actually started the company $13 billion may be a very big success if your goal was to sell.
Not if you bought it for $20bn. Wholefoods is publicly owned and the price that Amazon pays is below their price a few years back. It's not about size, $13bn is a lot of money. But Wholefoods needed a strategy or buyer, otherwise they would've faced serious problems in a few years.
This is a great question. Are there any open and fee apis where one can look up a publicly traded stock and get out dividends paid out over a time period? Surely that's at least as interesting as the rise and fall of the stock price.
If I had $20bn to buy it in the first place, or be in the position where I could even raise that kind of capital, I would already be successful (in my mind at least).
OK, but WF stock is held mostly by ordinary people (or by pension funds acting on behalf of ordinary people) and the argument being made above is that there are signs that the reason WF ended up being owned by a company without WF's reputation for good treatment of employees is that selling the company was the only way for WF's management to meet their fiduciary responsibility to those ordinary people who hold WF stock.
I think what they might be talking about is that Whole Foods has had a rocky few quarters and might be forced to sell, where they wouldn't have sold in a different circumstance.
I agree. I just heard this [1] podcast about the Oneida company. It was one of the first companies to show that paying and treating the lowest-paid employees very well and being very profitable are not mutually exclusive.
Of course it's not--you just have to have leaders who don't want 100X what the average employee makes! It's about greed, it's always been about greed.
And it's so much worse than that, really. A lot of public companies are being strip-mined of their true wealth by the insiders. Pump the stock, gut the company, screw the investors.
I think many over estimate how much better off people are with unions in grocery level employment and similar. while unions can be beneficial in some areas of employment it is not a miracle worker or guarantee of better outcome.
