The Sicilian Offense


‘Bezos, are there rocks ahead?’

Thereat King Robert muttered scornfully,

“‘T is well that such seditious words are sung

Only by priests and in the Latin tongue;

For unto priests and people be it known,

There is no power can push me from my throne!”

The Sicilian’s Tale: King Robert of Sicily, by Henry Wadsworth Longfellow (1893)

Man in Black: You
guessed wrong.                         

Vizzini (Laughing):
You only think I guessed wrong! That’s what’s so funny! I switched glasses when
your back was turned! You fool! You fell victim to one of the classic blunders!
The most famous is “Never get involved a land war in Asia.” But only slightly
less well know is this: “Never go in against a Sicilian when death is on the
line!” (Vizzini laughs uproariously and then suddenly keels over, dead)

The Princess Bride (1987)

Somewhere along the line, authors and filmmakers decided
they would imbue Sicilians with the fatal flaw of pride. It’s always struck me
as a bit odd, and not just because every Sicilian I’ve ever met has been just a
lovely person. It’s also odd because, if anything, Sicily has served to thwart the hubris of great powers! This
covers not least the Athenians, who probably did more to lose their grasp on
imperial ambitions in the failed siege of Syracuse than anywhere else.

But for all the foolish arrogance Wadsworth’s King Robert could
muster, and for all the brazen overconfidence Wallace Shawn’s brilliant turn as
Vizzini might convey, neither would, I think, be capable of answering this:

What the hell was
Amazon thinking?

Don’t get me wrong. I love the product. America loves the
product. For good reason. Jeff Bezos’s little dream has made the lives of
everyday Americans much simpler, and the brokerage accounts of investing
Americans much larger. I have just as many Amazon boxes in my garage as you,
people. But when both Tucker
Carlson and Alexandria Ocasio-Cortez
find common cause against you,
you’ve either done something inconceivably stupid or profoundly good. Hint: in
this case, it’s the former.

Amazon is a trillion dollar company – well, was a trillion dollar company, but
what’s a couple hundred billion dollars between friends? The incentives it
gained through negotiations with its new HQ cities are a pittance, not just in
comparison to the market capitalization or revenue of the company, but relative
to the extent to which they put both of those things at risk through this misadventure.

How? Well, let’s just walk through it.

There are – without much exaggeration – only two things that
Amazon has to do to keep its position: (1) grow a lot and (2) not attract the
attention of government officials to the fact that it has the ability to
squeeze or directly compete with any supplier, any vendor, any distributor, and
any shipping company whenever it damn
well pleases,
or the fact that we’re not too far away from being able to
say that they have the power to do the same to their customers, even if they
largely haven’t chosen to exercise that power. Yet.

Let’s say that we practice what preach here, and we presume
good faith and intentions. Let’s assume
that the HQ2 process wasn’t just a bold information-gathering expedition to set
the stage for future concessions and negotiations from local governments across
the country. Let’s assume that the
split HQ wasn’t a bait-and-switch ruse designed to yield the benefits of a full
HQ for half the commitment from Amazon. Even then, if you are Amazon, the world
that exists today looks like this:

  • The President of the United States sees you as a
    political enemy, and thinks the newspaper your founder owns is Fake News.
  • You made the governors of a couple dozen states
    and mayors and administrators of 236 cities and regions across North America
    look foolish.
  • You did the same to thousands of community leaders, lawyers, political organizers and
    ambitious politicians who participated in the process.
  • You aligned practically all facets of both the
    political right and political left – including the extreme wings – to join
    together to criticize your strategy as transparent cronyism, whatever your
  • You have made it not only possible, but desirable for politicians and
    bureaucrats to pursue political power by making an example out of your perceived

I’d spin you the old pigs
and hogs
yarn here, but around these parts, we’ve got a better word: coyotes. You
stood at the edge of the woods, and when America shook its jar of pennies, you
stared right back and howled. I’m sure there are some folks in Seattle who are
counting the billions they ‘made’ for
the company and shareholders through this process and these negotiations, but
they are wrong. In one fell swoop, it went from being almost politically
impossible not to submit a bid for
the HQ, to being a political risk to been seen to partner with Amazon. At least
for a while.

That is what we mean by a metagame failure.

Still, Amazon is a trillion dollar company. We’ve all still
got to do our Christmas shopping, and Trumpy Bear is eligible for Prime
delivery, y’all. Americans – and investors – have short memories, and for the
most part, the market seems to be yawning about all this. If history is any
guide, they’re probably right. Even with
all I’ve said, I don’t know that any investor’s mean long-term expectation ought
to shift an inch.
But in a probabilistic sense, has this changed the risks
to the company? Is it likely to change narratives around the company going

Oh, yeah.

Note: In case you were
wondering, we don’t own stocks of individual companies (long or short). We
don’t allow it.


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I felt like this week might be one to circle on the calendar to mark where current team elite began to lose control of the narrative:
1. HQ2 panned. Even Kirsten Gillibrand!
2. Facebook corruption/shady dealings exposed including an interesting damaging leak about Schumer (by Warner?).
3. While Schumer was re-elected senate minority leader, it appears Nancy Pelosi is having a difficult time
4. Lots of Apple downgrades
5. Lloyd Blankfein implicated in 1MDB scandal



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