![]() And each of the other FAANG companies has delivered (leaving aside Netflix, a special case): each now sits on a gusher of profits. Investors in growth companies buy today on the promise of bigger profits tomorrow. The lake of red ink at the heart of Amazon retail results directly from Amazon’s desperate hunt for the revenue growth needed to sustain its membership in the great FAANG family of high growth companies (Facebook, Apple, Amazon, Netflix, Google). That incredible retail business has now become the millstone dragging down the company. After the massive distortion of the pandemic and lockdown is removed, Amazon’s profitability is clearly sliding, largely because its retail business has grown too fast and too far, creating a vast lake of red ink (documented closely in my book about Amazon). They seemed to reflect the manifest destiny of Amazon’s inevitable march across the economic landscape: it looked like Amazon could not be stopped. These initiatives reflect what I call a “growth panic.”įor a time, these growth initiatives worked. It entered increasingly difficult online niche markets. It found billions in revenue by growing an enormous advertising business. And for the last five years at least, it’s been a badly misguided transition, as Amazon acts as a strategic ostrich, trying to avoid the unavoidable. So Amazon is transitioning from startup to behemoth. This level of growth at this scale is not sustainable. If by some miracle it did so, that would just impose even more crushing demands the following year. Amazon cannot just look behind the sofa and find another $100 billion in new revenue. Target has been highly successful recently, and grew 13% in 2021 – but it’s only a quarter the size of Amazon. In fact, they cannot do it at all if they are engaged with the physical world. Companies that size simply cannot grow at 20% for ever. In fact, it is Amazon’s extraordinary success that dooms Day 1.Īmazon is now a behemoth, with revenues of $470 billion in 2021. Now Bezos is gone, and Day One is ending. What an accomplishment! What Bezos did with Amazon was unique and extraordinary.īut despite every best effort, the sun does set. For decades, Amazon revenues grew at 20% or better every year. Amazon remained agile and entrepreneurial, with structures, processes, and personne l that served the great god of growth. And that is why it is always Day 1.”įor many years, Bezos won. Followed by excruciating, painful decline. As he said in his 1997 shareholder letter, “Day 2 is stasis. He demanded that Amazon always act as a startup, that it would always be Day 1 at Amazon. Here are some key events in Amazon's rapid evolution.For more than 20 years, Jeff Bezos fought against the entropy inherent in large organizations. It will account for nearly half of online retail sales in 2018, according to eMarketer, and is laying the groundwork for a physical retail business - equipped with labor-saving technologies like cashier-free checkout that has legacy grocery and convenience chains scrambling to catch up. Meanwhile, Amazon has moved into almost every imaginable type of product, media, and service. Instead, Borders filed for bankruptcy protection in 2011 and has since closed hundreds of stores. Even after the company had built warehouses to store inventory, making it a business with real revenue and real assets, plenty of investors wrote Amazon off as another dot-com fever dream, destined to be gobbled up or wiped out by Borders and Barnes & Noble. Jeff Bezos and his first few employees packed books and took them to the post office themselves in those first days. As large and ubiquitous as Amazon is today, it's difficult to remember that it started in a garage.
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