What is diapers.com

I think you got into baby formula pretty early on, right? Vinny : Yeah, yeah. So, yeah, it was diapers and wipes to start, and then we added formula a little bit thereafter. This is a little bit later on cleaning out all of their Huggies and Pampers. Andrew : Wow, you must have racked up the miles too.

Vinny : Racked it up. So, you know, it was all free for him. How much. It was just the [non-thing ], right because you had to pay back the investors. It was on your salary there for the few years that you were there. Investors got their money back, and then yeah, we were employees, so just as a normal employee. I became a General Counsel, and Marc went round to run one of their units out West.

And so yeah, there was no equity really from that, and it was just our salaries. Andrew : Somehow you guys were able to keep families going considering that he had a brand-new baby and working is enough to make it tough, working late nights is tougher, and then cutting back on salary. Vinny : Yeah, yeah, that was it. Vinny : You mean financial challenge? Financial challenge. Andrew : Or anything. I mean, I think for Marc, it was probably a little bit different, but Marc had.

For me, I mean, look, as, you know, you talk to a lot to these entrepreneurs every day and all day. It was okay with one stay-at-home mom. It was more like the execution was killing us. Andrew : Because the drugstores, there were people doing e-commerce at the time. I get that. You came in as two outsiders. I think what we saw was we saw initial extraordinary customer traction and so that meant that our marketing cost was very, very low. And then the second thing is we saw a path towards how you could make the margin work.

So I think a lot of people were scared off, you know, shipping heavy diapers and wipes because of the pets. It was earlier. And so we had constructed this model where we knew pretty specifically. And I think we were fairly analytical and modeled out. But if we can get other stuff into the box, you know, this is the high margin baby accessories, clothing, toys, all these other things, the incremental margin there would more than pay, you know, for the low margins that we were making in the margins.

And does that make sense? Andrew : It does make sense. And then the other thing that I remember reading in a book was that you guys had customized boxes for diapers, which reduced your shipping fees versus others who were doing more general shipping. Am I my right in that memory of your book?

I think, yeah, what we did, we had a whole unit called special ops. We call them special ops. And, you know, from beginning to end, we focused like a laser on trying to take cost out of the system any way we could. So with our boxing, we created something called Boxem, which was a software that was going to tell the warehouse precisely what the dimensions of the order was going to be.

You used to see boxes come from Amazon at the time where you get like a big box, not only is that a terrible user experience, but extraordinarily expensive. So we knew if we were going to play in this game, we had to be really efficient. Andrew : You strike me as someone who uses spreadsheets in his personal life. Do you? Do you have an example of like. I am not a spreadsheet personal life guy.

Vinny : What do I like? It sounds like maybe for his grades in college or for his household budget when he was starting out. What is it about you that. What is it that you love about business? How do you express that in your personal life?

Actually, it does, definitely does. Highly analytical. As I was saying earlier, I was General Counsel. And as a lawyer, you get to really be able to analyze the facts, present the facts, relate them to the law, and make your case. Let me take a moment though to talk about my sponsors, a company called HostGator. And as you were talking about The Pit, Vinny, you gave me an idea. Tell me if this would work.

They cared about buying and trading their heroes. Vinny : Love it. Andrew : All right. Can you imagine like the Andrew Warner card on this website? All right. If anybody out there wants to take that idea or any other idea over to hostgator. Frankly, they already offer a lower price.

Because it gives me credit for sending them over, and it helps my podcast out. Vinny : Why did we switch the name? Andrew : Yeah, because you started to see a bigger vision. What was the bigger vision? So we knew right from the outset that the diapers, the wipes, and the formula were the kind of marketing tactic to get customers into the door and to basically be the anchor for the frequency.

It was the reason why people had to come back and so that was very, very effective, but very low margin in that. So the whole margin game was going to be how do we add selection? How much more stuff can we sell these moms? And then the other thing was our special sauce was specialization. So we were not. The way we were taking on Amazon, it was all about the category that we were operating in, whether it was baby products or something else.

The curation, the user experience, that was the other differentiation for us. So when we talked about how we were going to grow, we knew we needed to add selection to increase the LTV of our customers, and we knew we had to keep the specialization. And then we wound up creating. And so all of these brands were related, but we needed to come up with a new parent company name to represent all these brands, so we came up with Quidsi.

Andrew : Why not unite it under one big brand that is. I think Brandless is starting to do something like that. Why not pursue one big brand name that combines it all, that stands for family or stands for something? We had endless debates about this. I mean, huge debates at the company until we left. Now, you put it all into one brand, you start to get. And so, hey, look, we would debate this at some point down the road. We actually created another brand, an uber brand, we called it Familyhood.

Andrew : So you created another brand called Familyhood. Vinny : We did. And this was sort of to your point. You can really get a perfect experience for it, but if you wanted to, you know, in one shopping cart, you could shop across the sites. That was the UX. You could, in fact, open up one universal account, one experience, but at least, when you were shopping, the categories were really pure, you know, versus the. Andrew : Amazon wanted you to do like, Family Plus from what I understand, right, which was your answer to Prime.

Am I right? Maybe that was after. Andrew : Yeah, I see that from What year did you sell? Vinny : We sold in , and we left in the middle of We were always trying to come up with new programs.

Maybe they launched Family Plus after we left. And so I get a sense of what you were doing. I understand how you started to grow and expand beyond it. It seems like from what you told our producer and what I researched, Amazon really did, at some point, recognize that you were a threat and start to come after you. In , yeah, you started to see Amazon play a little bit more aggressively. This was about moms and dads. And I think we came to understand that even more about how important it is to own mom and dad and Diapers was the way in.

Andrew : But you did notice as you were changing your prices, they changed their prices, so they were clearly zeroing in on your price. I just saw you gave me a look as I said that. Vinny : Yeah, in fairness, they do that. They, at least back then, were doing that with anybody. Andrew : And they were losing money on it? Like, on a case of diapers, right? You know, maybe if you charge it for. Like, 13 bucks off. And on the wipes too. Hundreds of millions of dollars if you kept that going forever.

Andrew : You know what? The founder of Perfect Audience came in here for Scotch night one time. He said that he was so worried that at any minute Facebook could destroy his business or someone else that he would sleep with the phone under his pillow every night. He was, like, anxious. This kind of weird coincidence. And when we sold to Amazon later, that was a funny thing that the Amazonians would always say.

Andrew : Bring it on. At the time, was it scary? For Diapers. Even as the founders of Diapers. It offered significant discounts and free shipping services on diapers and other baby necessities Source. Amazon made an offer to acquire Quidsi, and Wal-Mart responded with a counteroffer.

On realizing the Wal-Mart counterbid, Amazon resorted to threats. Executives representing Amazon at the talks told Lore and Vinit that Bezos would do whatever it takes; even if it meant driving diaper prices to zero.

The threat compelled the Quidsi board to stick with Amazon, and the deal was announced in November Source. Following its acquisition, Quidsi would continue to operate independently under its current leadership until April Source. Even though Lore agreed to sell to — and work for — Amazon, it was still an open secret that he did not enjoy his time there Source. Lore left to launch Jet. The idea was to create a new megastore that would compete with Amazon Source.

In , Walmart announced that it was buying Jet. They optimized their packaging for baby products and positioned warehouses close to metropolitan areas. That not only allowed them to get cheaper ground-shipping rates—it also allowed them to provide overnight shipping to most of their customers—in many cases, faster than Amazon's own shipping.

Quidsi's plan was to gradually expand into other retail categories, much as Amazon had done a decade earlier. If Quidsi's growth had continued unchecked, the company could have become a major Amazon rival. But Amazon made sure that didn't happen—first by launching a brutal price war, then by buying the company.

The new emails provide an inside view into Amazon's thinking during this fight. Mary Gay Scanlon D-Pa. Bezos responded he didn't remember the specifics. When Scanlon asked how families benefitted from Amazon raising prices after driving out a major competitor, Bezos responded, "I don't agree with that premise.

By early , Quidsi's growth had attracted the attention of Amazon executives. They apparently have lower fulfillment costs than we have. In a followup a few minutes later, he wrote that "we need to match pricing on these guys no matter the cost.

According to Stone, an Amazon executive met with Quidsi's founders in and encouraged them to consider selling the company. There wasn't a thing Diapers did to which Amazon didn't have a rebuttal. Bezos excels at evaluating Internet, retail and logistics people who want nothing more than to study their clients' needs and habits and think of ways to make the operation more efficient. And he wrote them a pretty big check. It can afford to buy Diapers.

Even Barron's realized, a tad belatedly, that Amazon's idea wasn't so stupid; there was a reason it was thrashing the competition. Zdnet is still around too. Last year, when Barron's wrote a flattering cover story on Amazon, "World's best retailer," Zdnet decided to compare that article with the previous one. In Barron's suggested that investors "add shares of Amazon. Ten years before, Barron's wrote that Amazon looked like any other retailer, complete with expensive warehouses stuffed with stock.

This year, Barron's writes in favor of Kindles, those digital reading devices. Ten years before, Barron's was predicting that e-books would crush Amazon like a bug. In essence, he is a middleman, and he will likely be outflanked by companies that sell their wares directly to consumers," Barron's predicted at the time.

For one thing, publishers could hawk books online themselves; they don't need Amazon to do it, it wrote. But it will happen," Barron's predicted wrongly, Zdnet says. And this year, Barron's likes Amazon stock better than Wal-Mart, while in , it predicted that Wal-Mart would stamp all over the online upstart.

Has Amazon changed in the last 10 years? Did Jeff Bezos? Probably: He learned and gained experience.