Amazon’s endless Day 1

I look forward to a few letters to shareholders every year – Warren Buffett’s Berkshire Hathaway letter, Jeff Immelt’s GE letter and Jeff Bezos’s Amazon letter.

Bezos’ latest letter reeks of paranoia which allows Amazon to keep entering and conquering new markets.

The letter starts with

“Jeff, what does Day 2 look like?”

That’s a question I just got at our most recent all-hands meeting. I’ve been reminding people that it’s Day 1 for a couple of decades. I work in an Amazon building named Day 1, and when I moved buildings, I took the name with me. I spend time thinking about this topic.

“Day 2 is stasis. Followed by irrelevance. Followed by excruciating, painful decline. Followed by death. And that is why it is always Day 1.”

To be sure, this kind of decline would happen in extreme slow motion. An established company might harvest Day 2 for decades, but the final result would still come.

I’m interested in the question, how do you fend off Day 2? What are the techniques and tactics? How do you keep the vitality of Day 1, even inside a large organization?

Such a question can’t have a simple answer. There will be many elements, multiple paths, and many traps. I don’t know the whole answer, but I may know bits of it. Here’s a starter pack of essentials for Day 1 defense: customer obsession, a skeptical view of proxies, the eager adoption of external trends, and high-velocity decision making.”

The letter gets better. Highly recommend a read. 

Comments

[Brent Williams]

I had that same discussion with Steve Ballmer in about 1994, when I was the Microsoft analyst at IDC. He claimed that Microsoft would never get big and slow-moving like IBM. In great part, he said that's because his people were smarter. But in fact, Microsoft did exactly that -- got bigger and dumber in some ways than IBM. Microsoft's continuing embarrassment in search engine capabilities are a key example.

I think that all organizations get increasingly complex and spend increasing amounts of time making decisions that don't directly affect the customer-facing part of the business. This is inevitable because brand value is usually directly correlated with consistency of execution in delivering the core product or service. There are many other externalities that distract management.

Over time, the definition of "customer obsession" changes, the speed of "high-velocity decision making" slows as so many more decisions have to be made and the consequence of bad decisions grows. And so forth.

I give them another 10 years, less if Bezos steps completely away from the business. The litmus test for when they're basically done is when you see more than a smattering of news articles in major business publications refer to them as "beleaguered internet retail giant Amazon.com" in the first paragraph...