The Birth of a “Corpse”
Bezos graduated from Princeton with a degree in electrical engineering and computer science. He works in the technology sector but has a career in finance. At 30, he is vice president of an investment fund, DE Shaw & Co. When a young secretary and aspiring writer is hired, she falls in love with the loud laughter of the manager. It is MacKenzie Tuttle, future ex-Mrs. Bezos. Jeff has an idea running through his head: it is called e-commerce. He ditches DE Shaw & Co. to sell books online and invest $10,000 out of his pocket.
The ideas, however, are apparent from the start: the pages would have been just the beginning. The company is registered under the name “Cadabra.” When the first legal counsel reads it, he points out to Bezos that it sounds remarkably like a “cadaver” (corpse). It’s a little macabre for an e-commerce site. The founder is convinced. Evaluate Relentless.com (guess where this address is referring today) and then opt for Amazon, the American name for Amazon. The river also enters the first logo: an “A” crossed by a stream.
Bezos is the Man of the Year
Amazon was listed on May 15, 1997, less than three years after the foundation and two years after the site’s launch. It is worth $300 million and is “the largest bookstore in the world.” The managers of Barnes & Noble (always them) do not go down and take Amazon to court; the definition would be false because the site is not a shop but an intermediary. The matter was closed a few months later with an agreement. No money at stake: both allow the other to define themselves as the largest bookstore on the planet. Bezos has one more thing to look after: the company’s expansion.
Amazon began to plant its flag around the United States, multiplying the distribution centers. In 1998, it stopped being just books and sold CDs. In 1999, the first cocoon of what the company would have made excellent arrived: Amazon is a digital center for other retailers. Initially, it was a way to find and buy rare books. Then, accept the merchandising linked to some titles. It so Bezos, at 35, is Time’s Man of the Year, which defines him as “the king of e-commerce.” No CEO had won the cover among popes, activists, and presidents. But just as his big face goes to press, his company is under pressure. The dot com bubble bursts and stocks plummet from over $100 to less than $10 in just a few months. Ten years will pass before we review the levels of ’99. The climb has been continuous, except for the thud that united the technology sector at the end of 2018.
Successes and Failures
As shares recover and e-commerce expands, Bezos is making a move that, more than any other, makes the group’s prospects brilliant today: it launches Amazon Web Services, the infrastructure on which the rest of the services, from cloud hosting.
Today, the company is a leader in this sector, ready to intercept a growing turnover flow. In the latest quarterly, Amazon grossed $59.7 billion. Most still come from e-commerce, but more than 12% is from AWS, with higher growth rates and margins (half of operating profits come from there). The hardware sector instead had alternate fortunes. They promoted the Kindle, the e-reader launched in 2007. It rejected the Fire Phone.
Not even Bezos has resisted the charm of smartphones without, however, breaking through. It was a complete failure—one of the few. A completely different sign is the debut of Echo, the line of digital butlers animated by the digital assistant Alexa. Bezos arrives before the others and imposes its importance in a market that is not just hardware. The research, purchases, and future data pass through the smart speakers. Entering homes means opening a door connecting users’ living rooms with Amazon’s services and marketplace.
The Discovery of the Brick
When Amazon imposed its domain, many thought physical stores would die—many but not Bezos. Since 2015, the CEO has added brick to digital, starting (once again) with pages and paper: the first bookstore opened in Seattle. The importance that Bezos dedicates to stores is confirmed by the fact that the company’s largest acquisition is made of shelves, not bits. In 2017, Amazon paid $13.7 billion to the Whole Foods supermarket chain.
Amazon 4-star (which sells items with positive online reviews) and Amazon Go (supermarkets without cashiers) have also arrived. A physical network, together with the increasingly widespread distribution centers, has a double purpose: on the one hand, it opens new revenue channels; on the other hand, it creates a system of “sentinels” that in the future could be used as outposts of e-commerce, for super-fast deliveries or to order online and collect at the checkout. Although the business involves increased sectors (and who knows how many more, starting with food delivery), Bezos does not lose sight of e-commerce.
The company’s heart needs constant stimulation: in the last quarter, sales grew “only” by 14% year on year. That is why they are already moving from Seattle, testing deliveries with drones and robots, reducing shipping times for Prime subscribers to one day, and starting construction of an airport that will allow them to manage the entire logistics chain.
The “Day One” Creed
Like successes, discussed working conditions are part of Amazon’s story. Bracelets have been talking about monitoring workers and imposing unsustainable rhythms on them. An unsafe environment in which the intervention of ambulances is undoubtedly familiar. In the United States (but not in Italy), there is also an algorithm based on which warehouse workers are evaluated and fired.
The company has always defended itself, denying the accusations but highlighting the economic effects an Amazon center has on employees and induced. Last November, he responded to pressure from the US parliament by raising the minimum hourly wage to $15. Cash registers certainly do not have the problem of having to count loose change. The group closed in 2018 with a turnover of $233 billion. In 2005 it was still below 10. It exceeded the one hundred billion quota in 2015. In recent years, profits have risen, historically kept low to have aggressive prices. Until three years ago, they had only exceeded the billion mark once (in 2010). In 2016, they reached 2.3 billion, and in 2017, 3 billion.
Bezos preferred (and partly still likes) expanding rather than making immediate gains. And it is precisely this that has produced a paradoxical effect: Bezos has become the wealthiest man on the planet. This is thanks to the Amazon shares that have pushed – for a brief period – the capitalization over one trillion dollars. Last year, they exploded: 10 billion. It is all consistent with Bezos’ philosophy, explained in a letter to shareholders from 1997:
“Experiment patiently, accept failures, plant seeds, protect saplings, and up the ante when the customer’s pleasure is seen.”
It is the “day one” creed: lead your company as if it were just born. It’s as if you were in that depressing office that became a meme. But with a more toned physique and $150 billion in his pocket.
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