By Alan Murray and Geoffrey Smith
June 26, 2017

Good morning,

I spent last week biking in Italy, blissfully ignoring news from Travis’ troubles to Bey’s babies. But one story grabbed my attention as carrying the possibility for profound change in the business world: Amazon’s purchase of Whole Foods.

Readers of this newsletter know that Jeff Bezos has topped the list of CEOs most admired by Fortune 500 colleagues for two years running. That’s because, like Steve Jobs before him, he’s become a serial disrupter of industries—first books, then e-commerce, then computer services. Those of us struggling to survive disruption in the media business have watched with admiration as he has used his personal investment to transform The Washington Post, investing heavily in its journalism and massively increasing its digital subscription base. Now he’s making a big bet, not just on groceries, but on the entire $800 billion packaged food business. It’s no surprise that the day after the bid, battered stocks included not only Kroger, Target, and Walmart, but also General Mills, Kellogg’s, and 3-G owned Kraft Heinz.

I wrote earlier this year about how the Kraft Heinz effort to buy Unilever represented a clash between two models of capitalism—the first focused on short-term cost-cutting, the second on social benefits. Bezos represents a third model, ignoring short-term profit at the expense of long-term innovation and dominance. It’s no surprise many smart investors want to go along for that ride. We’ll see if he delivers once again.

We have some news of our own at Fortune today. We’ teamed up with Barclays to launch a new family of stock indices based on the Fortune 500. Why? Because all the evidence we’ve seen suggests: 1) size matters in business, perhaps today more than ever; and 2) success tends to breed success. If you held an equal-weighted portfolio of Fortune 500 stocks since 1980, rebalancing with each new year’s list, you would have earned twice the return of an investment in broader market indices.

News below. Also, take time today to read Brian Patrick Eha’s fascinating story about the first Bitcoin felon, and his effort at a comeback. And thanks to Geoff for skillfully minding the top in my absence.

Alan Murray



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