Amazon buys MGM, AI as your Teammate
Seconds and Cents, It's been a couple of weeks. But I'm back. I want to start by saying that my purpose with this entire podcast is to sort of document the journey of what it's like to be a big ambitious entrepreneur growing a company. My goal is to have a diary to be able to look back at, but also to give people a real world sense of what it's like. And to give new entrepreneurs a real world sense of what it's like, because it's really easy to get caught up in the day to day and to kind of look at things over year long timeframes.
When entrepreneurs work in our long time frames and day long time frames. And you know, you look back at the founding stories of some of the great companies like stripe, and Amazon and SpaceX and Apple, and they talk in years and you think like, Oh, well, it just happened over like three years, and then you realize how long three years is when you're in it. And my goal is to just sort of document "hey, here's what's going on, in the world of an entrepreneur," both for other people and for myself. Looking back later.
We're going to start with big news coming out of the world today, Amazon either is considering buying or has just bought MGM Studios. It's a deal valued at around $9 billion. And this I think, is a great deal for Amazon. I think it's a great deal for MGM too. But I really think it's a great deal for Amazon. The reason why is because I think prime video, you have to look at what prime video is really all about. Well, is prime video about making money the way that Netflix makes money. No, because it's included in the prime subscription. Could Amazon sprint, spin it off and make it a ton subscription? Yes, they could. But will I do it? Who knows? But what is prime video really well, if you're in love with the Marvelous, Mrs. Maizel. Your likelihood of canceling a prime subscription goes down because Mrs. Maizel is coming back for season four. That's kind of the general theory, right, is that it would reduce churn if it would reduce churn because you want to watch Mrs. Mays but you can't because you don't have a prime subscription. So you might as well pay the $100. Well, then what happens? Well, what happens is then you shop more on Amazon, because you have a prime subscription, and you're going to pay for the you're going to pay prime for the two day shipping. So and but now Amazon's getting 30% cut or whatever it is of all those prime shipping items. And so Amazon's really monetizing you on on that Prime component more than they're monetizing you on the prime video component. Well, why do I think MGM is such a great idea? It's going to keep a lot of people on prime. I also think that you know, you just have to spend a lot of money on content every year, if you're going to be a streaming platform, in order to stay relevant. I mean, Netflix spent something like 10 billion a year on content. Disney is there, it's their whole business concept. Amazon buying MGM allows you to skip 10 years worth of purchasing content and licensing content in order to be able to catch up to Netflix and Disney. I really think it's a great idea. It's a great idea. It also gets Amazon into the major movie movie business.
I was watching a movie, I cannot tell you what movie it was, but they had a trailer. And one of the one of the kind of companies that was featured inside of the trailer was Tencent movies. Tencent is a Chinese company. They own large, large, large apps, like WeChat and qq, which both have something like a billion daily active users. And I think there's something to be said, for having your company being in the entertainment space, having your company be able to kind of create and launch major mass movies, and then monetize them the same amount of ways that Disney does, except for possibly amusement parks. And so I think for Amazon makes a ton of sense. I think for Amazon, it also makes their business even more bulletproof. And it does it in a way that's totally not anti competitive. It's not setting prices. It's not eliminating competition by any means. It's purely acquiring some intellectual assets, or acquiring visual assets and video assets and then acquiring the talent that comes along with it in order to be able to continue to bolster their existing services and programs. When it makes total sense to me, that Prime video would be used as a way to reduce churn that they can do a similar type of thing as the Disney plus with premiere access for you by Disney plus, but then you still have to pay $30 to watch the movie, it would make total sense of the diversify their revenue streams even further get into that entertainment space, they have their own distribution, which is key, but they can also use movie theater distribution, which is awesome. And it makes total sense that because they're reducing churn inside of prime, more and more people are going to use Subscribe and Save more and more people are going to continue to use prime for for the majority of their purchases, and Amazon will continue to become the household name that it is. So really, I think this is this is just a great deal for Amazon.
Second, on the list of things for seconds and cents. Last year, we changed the name of the company to Yavay. Why Yavay? What it meant was it meant the feeling of peace that when you know something is being taken care of it came from an old Hindi word. That's how I feel about automation about AI. Ai just get stuff done. Automation just does stuff 24 seven, without ever taking a break a vacation or asking for a raise. Knowing that a computer has stuff taken care of for you, is a very peaceful feeling as a business owner. That said, nobody remembered how to spell it, nobody remembered how to say it. And we didn't have the.com domain, nor could we buy the.com domain, the sellers weren't selling it. So we've decided to change the name again, this is going to be the last one.
Over the last year, the focus of our business has also changed radically. So our business last year, we spent a lot of time on Pinterest, we spent a lot of time with Lede AI. We still spend a lot of time on Lede AI but we focused. So, we've decided that we're going to discontinue our Pinterest service, our existing customers are going to be serviced as long as they want at the same price. But we're going to discontinue selling the Pinterest service. I wasn't expecting on doing a post mortem on this, but I'm going to do a post mortem. So we had the Pinterest service. This is for entrepreneurs who are considering shutting down a business unit or shutting down a product that they have where the Pinterest service for 18 months, there'll be times when we would have you know enough reoccurring revenue that it was really, really exciting. And there would be times where our reoccurring revenue was very, very low. with certain customer demographics, we had very high churn with certain customer demographics with very low churn. Ultimately, what we found with the Pinterest service is that we were not able to deliver the value that we wanted to be able to deliver for the people that we wanted to be able to serve, at the price point. What did we want to deliver? What we wanted to deliver was 1000s and 1000s of website visitors per month. These would be high conversion website traffic because we did a lot of the kind of the qualification work on Pinterest for them. So by the time that they're clicking through to the site, they're really really optimized for conversion. And we wanted to help a lot of entrepreneurs make a lot of money by driving great website traffic on Pinterest. Beyond that a lot of people understand Facebook and Instagram, not a lot of people understand Pinterest. And so we could guide people through Pinterest, we could be their Pinterest teammate.
And they could see the benefits at $349 a month. at a low low price.
Well what happened at a technical level? We had challenges. We weren't able to use automation the way that we thought we were going to be able to. At the end, it is all human done. Now, that doesn't make sense for our business. We're an AI business. Second of all, we just couldn't get it. We couldn't accomplish the value that we wanted to accomplish at the price point that we wanted to be able to do it for and be able to scale well. We can do it with our existing clients. But with every 10 new clients that we take on, we have to add people, but that doesn't scale that well. $349 a month that scales just find out like a $750 a month service. But at $349 a month that's hardly gonna pay salary expenses for new people. Number three, I think, you know, we were driving great website traffic we are for for our clients, we're driving great website traffic and but our goal was always great website traffic. And I think there are there are too many other ways that you can get great website traffic for us to be able to really stand out. And so the mix of those three things, plus some of the indicators that that I personally had, which was I just didn't love it. I wasn't excited about it. I was when there was automation. But when it became fully done by humans, I wasn't excited. I want to repeat, if you're an existing customer, we're going to serve you as long as you want. We're just not accepting new customers. We decided that we're going to shut down the business unit. What are we going to focus on? We