Walmart parking lots, and you have a very interesting market
advantage.^35
In late 2016 Walmart acquired Jet.com for $3 billion, or $6.5
million per employee. Jet.com had no viable business model (needed
to get to $20 billion in revenue to break even) and was spending $5
million a week on advertising when the deal went through. However, it
has a horseman skill: storytelling. Dynamic pricing, as told by the
founder of a firm acquired by Amazon, Quidsi, made Marc Lore a
potential savior. I believe Jet.com was the equivalent of $3 billion hair
plugs purchased by a retailer in a full-blown midlife crisis. However, to
be fair, the firm does seem to have gotten its groove back regarding e-
commerce. Lore has pushed for operational efficiency, price
transparency, and savings via in-store pickup.^36 We’ll see.
But Walmart seeking Botox is just the beginning. The firm has
access to immense capital, but it’s not cheap, as the firm trades at a
multiple of profits, which is customary for a retail firm. When the
Arkansan retailer announced earnings would take a hit, as they were
(rightfully) increasing CapEx to compete with Amazon, the next day
the firm shed the equivalent of Macy’s from its market cap.
In addition, Walmart is not very likable, as they are the largest
employer in the world with more minimum-wage workers than any
other U.S. company but also populate the wealthiest people in the
world list with a host of Walton kids, who are worth more than the
bottom 40 percent of American households. Finally, if you ever
wondered who are the people and households that don’t own a
smartphone or have broadband, look no further. It’s the Walmart
shopper. The term late adopter defines Walmart shoppers. Digital
programming and innovation gets less traction with this cohort.
Microsoft
Microsoft is no longer the Beast of Redmond, the company that utterly
dominated the PC era. But Windows still powers 90 percent of the
installed basis of desktop computers (even if half of those are still
creaking along with Windows 7).^37 Office remains the world’s default
productivity suite, and professional products such as SQL Server and