The irony of all this is that while Amazon’s public financial statements make it extremely difficult to parse out its various businesses, it is extremely forthright and honest about its business plans and strategy. It’s the reason Jeff continues to reprint its first ever letter to shareholders from 1997 in its annual report every year. The plan is right there before our eyes, but so many continue to refuse to take it at face value. As a reporter, it must be so boring to parrot the same thing from Jeff and his team year after year, so different narratives must be spun when the overall plan has not changed.
Take this most recent article in The Atlantic, from Derek Thompson. It’s a good read, comparing Amazon to Sears, but it’s also a great example of how Amazon’s basic strategy is always couched the same way, with a general veneer of skepticism. … It has every element of the classic Amazon coverage story. “Flip the switch.” The faceless community of Amazon’s naive and trusting investors. The charitable organization quote, ™Yglesias 2013. And above all, a fairly clear and accurate statement of Amazon’s actual business strategy.
What a wonderful feeling, to be able to conceal a secret in plain sight. Laid bare before its competitors, its investors, the press, is the recipe and the blueprint, in plain language. I agree with Thompson and others that it is increasingly difficult to find real business moats or competitive advantages in the modern world, what with the internet eliminating many previous physical moats of time and space. What remains , though, is a footrace of beautiful simplicity, one in which Amazon is both tortoise and hare. It is patient, it plays for the long-term like no other company, it will take failure after failure and never lose heart, and yet it will sprint when it picks up a scent. And it will take the race to an arena with the thinnest of air.
Eugene Wei was the first strategic planning analyst at Amazon, way back in the 90s, so he got to work with Jeff Bezos and early leadership up close. His description of Bezos earlier in the essay is classic supervillain, or maybe squiggle-maximiser to a greater extent than you run of the mill biz/tech tycoon:
I’m convinced Amazon could easily turn a quarterly profit now. Many times in its history, it could have been content to stop investing in new product lines, new fulfillment centers, new countries. The fixed cost base would flatten out, its sales would continue growing for some period of time and then flatten out, and it would harvest some annuity of profits. Even the first year I joined Amazon in 1997, when it was just a domestic book business, it could have been content to rest on its laurels.
But Jeff is not wired that way. There are very few people in technology and business who are what I’d call apex predators. Jeff is one of them, the most patient and intelligent one I’ve met in my life. An apex predator doesn’t wake up one day and decide it is done hunting. Right now I envision only one throttle to Jeff’s ambitions and it is human mortality, but I would not be surprised if one day he announced he’d started another side project with Peter Thiel to work on a method of achieving immortality.
Reminds me of this passage from Eugene Wei’s 2013 essay Amazon and the “profitless business model” fallacy:
Eugene Wei was the first strategic planning analyst at Amazon, way back in the 90s, so he got to work with Jeff Bezos and early leadership up close. His description of Bezos earlier in the essay is classic supervillain, or maybe squiggle-maximiser to a greater extent than you run of the mill biz/tech tycoon: