With the recent announcement that Jeff Bezos will be stepping down as CEO of Amazon later this year, there have been countless articles about the legacy that he will be leaving behind, as well as about the next act that is expected to follow. A big part of this legacy is centered around innovation.
Do any of you remember Amazon’s Fire Phone? Perhaps not. It was a complete failure. But that doesn’t matter because most people only remember the successes — everything from Amazon Prime to AWS, the latter of which was heavily doubted at the time. Isn’t this a distraction from the core business of selling books?
This recent FT article by Dave Lee also makes a good point about another one of Amazon’s innovations: thinking long-term and getting the market to buy in to that approach.
But another Bezos innovation has been his relationship with Wall Street, a world he was intimately familiar with, having previously worked at investment firm DE Shaw.
Starting with his first letter to shareholders in 1997, Bezos consistently warned investors that profits would forever be secondary to growth, in what would become a recurring theme throughout Amazon’s history as it expanded its distribution network from seven dedicated facilities in 1999, to more than 1,500 today.
“Bezos has an unparalleled ability to peddle his vision to Wall Street,” says Stacy Mitchell, from the Institute for Local Self-Reliance, who advocates breaking Amazon into smaller pieces.
“He was given this incredibly long leash, selling books at a loss. Independent bookstores could have multiplied across the country with that business model. But of course, they weren’t allowed to lose money.”
It reminds me of a blog post that Fred Wilson penned at the end of last year, where he argued that speculative frenzies tend to be off in their magnitude, but directionally correct.
The point he was making was that who knows what the market cap of a company like Tesla should be. With its current market cap, it has been able to raise a lot of money without much dilution and that is going to accelerate our shift toward electric vehicles — a good thing and the right path forward.
Of course, if you’re an independent bookstore owner, you may not look at Amazon’s approach as being all that innovative. In fact, you may have another word in mind.
But if you look at the parcel room in any condo or apartment building (as I do all the time), it’s pretty clear to me that the majority of ecommerce transactions are happening on Amazon. A machine has been built that seemingly renders people what they want, how they want it.