How to beat Amazon, Bernard Arnault, The New Celebrity Chefs

In which I write about Square's innovation stack

Hey everyone,
Greetings from Washington, D.C.!

The most interesting things don’t happen on the internet. The most interesting things happen when the internet clashes with the real world. Over the last decade – starting with the 2011 Arab Spring protests – the internet has ripped through the long-standing shibboleths of politics, media, and human interaction. This week, it came for the world of high finance.

I won’t lie – I feel like I had split loyalties during the ensuing GameStop drama. On one hand, I am a child of the internet. Whether it’s sharing memes or sending memos, I feel like I am very online person. On the other hand, my education has been steeped in traditional institutions so I have a natural inclination towards the status quo. I understand this makes me the exception rather than the rule amongst even the small tribe of newsletter writers and certainly amongst the larger online world.

For whatever reason, I feel oddly comfortable in my position at this generational mid-point. But I feel extremely uncomfortable knowing that the future tilts towards one side – it’s just not clear which side it will be – so my centrist point of view is probably wrong. One thing is certain: the old power structures will definitely come for the public and they will almost certainly use the new networked tools of the public. When that happens, it will not be pretty for the public. This will be the central conflict of my lifetime.

In the 89th issue of Snapshots, I want to explore:

  • The Square Story and Jim McKelvey’s idea of an innovation stack

  • Lessons learned from reading the last 10 years of Bernard Arnault’s shareholder letters

  • The New Celebrity Chefs and BATNA

  • Instagram and the pandemic, Block Party, and dogs trained to sniff out COVID-19

Book of the week

What happens when a company whose website is the re-direct from relentless.com stares you in the face? What do you do when the business equivalent of a 800-pound gorilla threatens to enter your business? What happens when a company so perfectly designed to kill any competitor that “what happens if they get into your business” is a standard question that almost every investor asks during any pitch?

Those are the questions that Square co-founders Jim McKelvey and Jack Dorsey (then ousted from the other company he had founded) found themselves having to answer in the summer of 2014. Mr. Bezos was knocking on their doors and he wanted every piece of the financial platform that they had built to aggregate payments from the long tail of merchants.

To everyone’s surprise, they did nothing. And still, Amazon lost.

Why? And what lessons can other companies learn from this encounter with an apex predator that the destined-to-be-prey scraped by without incident?

That’s the central premise of The Innovation Stack by Jim McKelvey. In part the story of Square, in part personal memoir, and in part a business framework book, it was one of the more idiosyncratically written book I have read recently. McKelvey zooms in and out of the core story in a way that can be hard to follow.

But that’s okay – I do the hard work of teasing apart these threads so you don’t have to. Here were my two main takeaways from the book:

  • The idea of an innovation stack: Think of what McKelvey calls innovation stacks as a set of characteristics of your business that compound on each other (no one sue me plz.) These characteristics rarely happen by design. Often, they happen as a company is simply looking to survive. It’s like if you had never played a game of Jenga, you would think that the haphazardly maintained tower was deliberately designed that way. Square’s innovation stack looked something like this:

    To beat Square, Amazon would have had to beat them at each of these points – a task too difficult for even the perfect killing machine.

  • Copy everything: If there is something that works, then plug into it. Then, if it’s a major cost center, then try to replace it with internal tooling. Think of how Amazon started by plugging into USPS, UPS, and Fedex. Only once did it achieve sufficient scale did it start the fulfillment by Amazon program and bought its own trucks and planes. Only innovate when necessary.

The book falls just outside of the classic business book genre with its folksy humor, fascinating Jack Dorsey anecdotes, and the examples that McKelvey pulls across industries to demonstrate the idea of innovation stacks. At times, it feels like McKelvey should concentrate on one of these. But as someone who struggles to avoid tangents, I can empathize – I bet it was really fun to write this book!

Long read of the week

The shareholders letters of Bernard Arnault

One of the most elusive CEO’s in the world is Bernard Arnault of LVMH Moët Hennessy – home to luxury brands like Louis Vuitton, Moët & Chandon, and Christian Dior. Arnault has built an empire in silence.

That silence carries forward to the written word. But you can get glimpses of his vision.

That vision includes protecting the image and heritage of craftsmen, collaborations across brands, and an idea towards the future. Those things can feel like they are in conflict with each other – but Arnault and his team have tiptoed this line for decades now.

Does this sound interesting and would you be interested a deeper dive into these letters? If so, respond to this email and let me know.

Business move of the week

The New Celebrity Chefs

Ask the average college student or young professional if the name Grant Achatz sounds familiar and you are likely to get a facial expression dripping with disdain and a “what do you want from me boomer?” sentiment.

Ask the same person if they know what Binging With Babish is, and they will respond with something along the lines of “Yes, I’ve cooked [insert a recipe] from it!”

Grant Achatz is the co-founder and Head Chef at Alinea, one of the best restaurants in the world. Binging with Babish is a Youtube channel with eight million subscribers.

If I asked an aspiring chef which one they would rather be 10 years ago, the unanimous answer would have been Grant. Today, I suspect more up and coming chefs will fall on the other side of the decision.

At this point, I want to put it on the record that saying that Grant Achatz does the same thing as Andrew Rea (the man behind Binging With Babish) is like saying that Logan Paul and Christopher Nolan are both filmmakers! They are both technically true but feel viscerally incorrect.

But it offers a glimpse into the future of work – both in the culinary world and across industries.

In the culinary world, I suspect that the specter of more talented chefs trying to create a personal brand will force kitchens around the world to offer better working conditions and higher pay. While the innovation that happens at a decorated restaurant today stays at that restaurant, chefs will be increasingly in a position to carry their innovations – in some sense, their intellectual property – across jobs. Parts of this phenomenon were covered in the amazing book, The Uncertainty Mindset by Vaughn Tan.

If we abstract this out, we can think about it like platforms like YouTube, Substack, Onlyfans, and so on increasing the BATNA (Best Alternative To a Negotiated Agreement) for individuals. BATNA can be thought of as – “if not this, then what?” Without these platforms, individuals are forced to work for institutions without a very high BATNA. This decreases risk-taking, cross-pollination of ideas, and personal development. With these platforms, all these levers increase in aggregate.

I don’t know about you but at least for me, this makes the future a lot more exciting.

Odds and ends of the week

Three articles this week:

Cooking, Instagram, and the Pandemic: A great inside look into how Instagram is helping cooks and chefs survive the pandemic. Just don’t read on an empty stomach – the photography is guaranteed to make you reach for the closest food items within reach.

Tracy Chou’s Block Party: First, the fine people over at the Protocol have been doing an amazing job writing about under-covered, important topics in the tech industry. Second, given that even as someone who has a very, very modest public life (mostly as a function of this newsletter), I have been on the receiving end of some pretty visceral emails. I can’t even imagine how Tracy persisted through her Reddit AMA – there’s a nasty side of that side which is difficult to ignore. I highly recommend you read this.

The Dogs trained to Sniff out COVID-19: After a series of bunch of heady topics, let’s all just take a back seat and enjoy some dog photos.


That wraps up this week’s newsletter. You can check out the previous issues here.

If you want to discuss any of the ideas mentioned above or have any books/papers/links you think would be interesting to share on a future edition of Sunday Snapshots, please reach out to me by replying to this email or sending me a direct message on Twitter at @sidharthajha.

Until next Sunday,
Sid