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The Founder's Notes

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The template only earns its keep if you actually put two cases next to each other.

This is the reason every teardown answers the same questions in the same order. Put a luxury house beside a console platform and the differences stop being vibes — one is refusing sales to protect a price, the other is selling below cost to collect a toll, and both are defending a moat.

Retail · NYSE: GAP

Gap Inc.

A four-brand American apparel portfolio — Old Navy, Gap, Banana Republic and Athleta — that owned the wardrobe of the 1990s, spent two decades forgetting what it was for, and is now carried by the cheaper copy of itself it launched in 1994.

Technology · NASDAQ: AMZN

Amazon

Runs a near-breakeven retail operation at enormous scale, and earns essentially all of its profit from renting out the two things that operation forced it to build — computing capacity and shelf placement.

The thesis in one line

Gap's best decision was to compete with Gap. Everything since has been an attempt to remember why.
The store is not the business. The store is the customer acquisition cost for the businesses.

Verdict

Own it
Own it

Moat

Contested

Scale economics · Distribution · Brand

Wide

Scale economics · Network effects · Process power · Switching costs

Porter's five forces

Competitive rivalry
Threat of new entrants
Threat of substitutes
Buyer power
Supplier power
Competitive rivalry
Threat of new entrants
Threat of substitutes
Buyer power
Supplier power

Headline figures

Net sales
$15.4B
Old Navy share of sales
57%
Operating margin
7.3%
Company-operated stores
2,474
Net sales
$638B
AWS share of operating income
~58%
Retail operating margin
~5.4%
Third-party share of units
~60%

Unit economics

One pair of Gap jeans with a $69.95 ticket, sold at a typical promotional price of about $45 (illustrative, from the FY2025 margin structure)

Nearly a third of the ticket is given away before the jeans reach the till. Every dollar of that discount is pure operating profit forgone, which is why a creative director who can make a pair of jeans feel worth the ticket is a margin decision dressed as a marketing one.

One $50 third-party item sold through Amazon

Amazon captures roughly 38% of the sale price and carries none of the inventory risk. The seller took the risk, paid for the warehouse, and then paid again to be found in a search of Amazon's own catalogue.

What would change her mind

If Old Navy's comparable sales turn negative for two consecutive quarters, the one asset I am paying for is slipping and the rest of the portfolio cannot cover it. I would also sell on any large acquisition — the balance sheet has funded bad ones before, and the discipline since 2023 is a large part of why I am here.
If AWS revenue growth falls below 15% for two consecutive quarters while segment operating margin also declines, the cloud business is being commoditised rather than merely contested, and the capex is being spent defending share rather than buying growth. That combination — decelerating growth and compressing margin at the same time — breaks the thesis outright. A single weak quarter on either measure alone does not.

No mechanisms in common

These two share no tagged mechanism, which usually means the comparison is about contrast rather than pattern — a useful thing to know before you start writing.