Amazon and the “insurance policy” acquisition

In This Internet Millionaire Has a New Deal For You, Tim Rogers describes a breakfast meeting between Jeff Bezos and Woot founder Matt Rutledge soon after Amazon acquired Woot:

At length, after a bit of business talk that maybe resembled a cousin of an actual breakfast meeting, Rutledge blurted out a question that had been troubling him: “Why did you buy Woot?”

So there sat Bezos at the breakfast table, faced with a question for which he was apparently unprepared. Many painful seconds passed without an answer. Rutledge let the pause lengthen as long as he could bear it and was just about to tell his host to forget it, when Bezos finally spoke.

He looked down at his plate. Bezos had ordered a dish called Tom’s Big Breakfast, a preparation of Mediterranean octopus that includes potatoes, bacon, green garlic yogurt, and a poached egg. “You’re the octopus that I’m having for breakfast,” Rutledge remembers Bezos saying. “When I look at the menu, you’re the thing I don’t understand, the thing I’ve never had. I must have the breakfast octopus.”

…In 2012, two years into his three-year deal with Amazon, Rutledge walked.

(1) What’s the breakfast octopus analogy? Perhaps Bezos meant this: “Woot has an approach that’s completely different to the way we think, and it seems to be working. That’s potentially threatening to us. So we bought you to understand what you’re doing. It’s an insurance policy.”
(2) If you’re happy to sell only for the money, fine. If you want your company to survive and thrive, perhaps “insurance policy acquisitions” aren’t great.

2 thoughts on “Amazon and the “insurance policy” acquisition

  1. Pingback: Rakuten announces $100M fund and the PayPal mafia

  2. Pingback: Week 27 | import digest

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