(CNN Business)In 1997, the year Amazon (AMZN) became a publicly traded company, CEO Jeff Bezos promised investors they would be in for a journey. Amazon would not chase short-term profits, he warned in a letter to shareholders. It would focus “relentlessly” on customers. It would act with urgency but prioritize long-term investments. And it would run a lean culture that minimized costs and cut waste.
A quarter-century later, Bezos’s approach has made Amazon a global behemoth that employs more than a million people and touches almost every aspect of modern life, a fact that’s become even more apparent during the pandemic. Bezos, the world’s richest person until recently, has gone from selling books out of his garage to running a company that makes consumer electronics, produces award-winning films and TV shows, offers organic groceries and hosts some of the world’s biggest websites. His company’s ambitions include delivering packages to households using flying drones and spreading facial recognition technology to virtually every consumer’s front doorstep.
Jeff Bezos has been halfway out the door for a whileWith each new innovation, Bezos and Amazon have offered the promise of making life easier, more convenient and enriching for customers. But these services also became testaments to Amazon’s ever-expanding power, influence and self-interest, inspiring fierce criticism from the company’s opponents: that Amazon kills brick and mortar businesses; that it bullies workers; that it uses the data from its massive online storefront to maintain a monopoly; that its partnerships with law enforcement have made it an accessory to discriminatory policing. “The guy was just obsessed with the end user. They were the highest priority,” said James Bailey, a professor of leadership development at George Washington University’s business school. “It’s one of those situations where your biggest asset is also your biggest liability.” Read MoreNow, as he prepares to step down as CEO of the $1.7 trillion business he built and take on the role of executive chair, Bezos leaves behind a company that’s created immense value for consumers, investors and many small businesses, but which has also triggered a national reckoning over the costs it may have created for everyone else.
A model for building online companies
Bezos’s ambitions were large from the start: He launched Amazon at a time when few people knew what the internet was and chose the name, he later told journalist Brad Stone, in part because the Amazon river is “not only the largest river in the world β it’s many times larger than the next biggest river. It blows all other rivers away.” To achieve his vision, Bezos frustrated some shareholders by investing heavily in the business. It wasn’t until the end of 2001 that Amazon had its first profitable quarter, and its first profitable year didn’t occur until 2003. Amazon would continually flirt with profitability for the next decade. This approach would become a model for many others in Silicon Valley, and perhaps even something of an excuse for cash-hungry startups that seemingly burned through money without a pathway to profit. “Bezos created the blueprint for building internet businesses, being hyper customer-centric, and scaling disruptive innovation,” tweeted Aaron Levie, the CEO of enterprise cloud company Box.com.
Jeff Bezos is stepping down as CEO of Amazon after more than 25 years at the helm. He turned Amazon into a massive company by focusing on customers only to be hit by scrutiny about the broader societal costs of what he built. No other innovation symbolized Bezos’s appetite for losses like Amazon Prime, which was launched as a $79-a-year subscription plan and introduced what became the company’s most recognizable offering: free two-day shipping. On the surface, Amazon Prime stood to lose money. The cost of its benefits β which came to encompass not just fast shipping but streaming media, digital photo storage and discounts on groceries β outweighed what the company made in subscription fees. But it was another example of Bezos’s long-term plan to lure new customers into Amazon’s orbit and persuade them to become mega-spenders on the platform, thereby allowing Amazon to lower its costs even further to attract yet more customers, creating a virtuous cycle, or what Bezos called a “flywheel effect.” The company last year announced it has more than 150 million Prime subscribers worldwide.
Relentless, or ruthless?
As Amazon became a bigger player in retail, it inevitably came into conflict with others, both big and small. In some cases, it effectively drove them out of business. The bookseller Barnes and Noble announced in 2019 it was going private after a decade of trying to keep pace with Amazon. Toys”R”Us has blamed Amazon’s aggressive pricing for crushing the quintessentially American toy store. Rightly or wrongly, Amazon is often listed as a contributing factor behind the so-called retail apocalypse. And these days, the mere mention of Bezos’s interest in a new service is enough to send an entire industry’s stocks into a downward spiral. Like Walmart before it, Amazon has come to be viewed as “the new big bully, at least in the internet retail space,” said Bailey.
Photos: Amazon founder Jeff Bezos
Photos: Amazon founder Jeff Bezos Jeff Bezos, the founder of Amazon, is photographed in Seattle in 2017.Hide Caption 1 of 30
Photos: Amazon founder Jeff Bezos Bezos is seen in 1996, a year after he started Amazon.com. At the time it was just an online bookseller.Hide Caption 2 of 30
Photos: Amazon founder Jeff Bezos Bezos and Sotheby’s president and CEO Diana Brooks pose in a customized Volkswagen Beetle from the film “Austin Powers: The Spy Who Shagged Me” in 1999. Sotheby’s and Amazon had teamed up to launch sothebys.amazon.com, an online auction site that would offer a broad range of objects, including this car.Hide Caption 3 of 30
Photos: Amazon founder Jeff Bezos Bezos holds a power drill and a stuffed Pikachu in 1999. By this point, Amazon had started to sell items other than books.Hide Caption 4 of 30
Photos: Amazon founder Jeff Bezos Gregory Nixon, left, delivers a set of antique golf clubs he sold to David Robichaud, center, via Amazon.com Auctions in 1999. Bezos was there for the moment, as Robichaud, a construction worker, was Amazon’s 10-millionth customer.Hide Caption 5 of 30
Photos: Amazon founder Jeff Bezos In 1999, Bezos was named Time magazine’s Person of the Year.Hide Caption 6 of 30
Photos: Amazon founder Jeff Bezos Bezos looks on as Microsoft CEO Bill Gates presents a T-shirt as a retirement gift to Clippy, the Microsoft Office assistant, in 2001. Microsoft was launching Office XP.Hide Caption 7 of 30
Photos: Amazon founder Jeff Bezos Bezos and his wife, MacKenzie, arrive at a media conference in Sun Valley, Idaho, in 2003. They divorced in 2019 after 25 years of marriage.Hide Caption 8 of 30
Photos: Amazon founder Jeff Bezos Jeff Bezos stands with one of Amazon’s trademark door-desks at the company’s Seattle headquarters in 2004.Hide Caption 9 of 30
Photos: Amazon founder Jeff Bezos Bezos introduces the Kindle e-reader at a news conference in 2007.Hide Caption 10 of 30
Photos: Amazon founder Jeff Bezos Bezos announces the Kindle DX in 2009.Hide Caption 11 of 30
Photos: Amazon founder Jeff Bezos Bezos, third from left, meets with NASA Deputy Administrator Lori Garver at the Blue Origin headquarters in Kent, Washington, in 2011. Bezos’ Blue Origin was started in 2000 with the goal of providing low-cost access to private space travel.Hide Caption 12 of 30
Photos: Amazon founder Jeff Bezos Bezos holds up the new Kindle Fire HD during a news conference in Santa Monica, California, in 2012.Hide Caption 13 of 30
Photos: Amazon founder Jeff Bezos Bezos appears on “Late Night with Jimmy Fallon” in 2012.Hide Caption 14 of 30
Photos: Amazon founder Jeff Bezos Bezos unveils the Fire Phone during an event in Seattle in 2014.Hide Caption 15 of 30
Photos: Amazon founder Jeff Bezos Bezos poses on a truck while visiting Bangalore, India, in 2014.Hide Caption 16 of 30
Photos: Amazon founder Jeff Bezos Bezos tours The Washington Post’s new offices in 2016. Bezos bought the newspaper in 2013.Hide Caption 17 of 30
Photos: Amazon founder Jeff Bezos Bezos listens to first lady Michelle Obama at a White House event in 2016. The event announced commitments from more than 50 companies to hire and train veterans and military spouses. Bezos announced a commitment by Amazon to hire 25,000 more military veterans in the next five years.Hide Caption 18 of 30
Photos: Amazon founder Jeff Bezos Bezos joins “Transparent” actor Jeffrey Tambor and director Jill Soloway after the Amazon Studios show won Emmys in 2016.Hide Caption 19 of 30
Photos: Amazon founder Jeff Bezos Bezos discusses his Blue Origin reusable rocket system in 2017. Reusable rockets would substantially reduce the cost of space flight.Hide Caption 20 of 30
Photos: Amazon founder Jeff Bezos US President Donald Trump and Microsoft CEO Satya Nadella listen to Bezos at a White House meeting of the American Technology Council in 2017. According to the White House, the council’s goal is “to explore how to transform and modernize government information technology.” Hide Caption 21 of 30
Photos: Amazon founder Jeff Bezos Bezos tours the Spheres, a gathering and working space for Amazon employees, at its opening ceremonies in Seattle in 2018. The space contains hundreds of plant species from cloud forest environments around the globe, and it maintains a tropical climate similar to Costa Rica or Indonesia. Hide Caption 22 of 30
Photos: Amazon founder Jeff Bezos Bezos shakes hands with Kim Kardashian West while attending the Met Gala in New York in 2019. Actor Jared Leto is on the right.Hide Caption 23 of 30
Photos: Amazon founder Jeff Bezos Bezos is joined by the children from the Blue Origin Club for the Future in 2019. At the event in Washington, DC, Bezos unveiled a Blue Origin prototype of a lunar lander.Hide Caption 24 of 30
Photos: Amazon founder Jeff Bezos Bezos shows off Blue Moon, Blue Origin’s lunar landing prototype, in 2019.Hide Caption 25 of 30
Photos: Amazon founder Jeff Bezos Bezos announces the co-founding of The Climate Pledge in 2019. Bezos’ broad plan to fight climate change includes meeting the Paris climate agreement 10 years early. That would make the company carbon-neutral by 2040. Bezos also announced that Amazon would purchase 100,000 electric vans.Hide Caption 26 of 30
Photos: Amazon founder Jeff Bezos Bezos stands next to Hatice Cengiz, the fiancee of the late journalist Jamal Khashoggi, as a plaque is unveiled near the Saudi consulate in Istanbul in 2019. It was a year after Khashoggi, a Washington Post columnist, was killed.Hide Caption 27 of 30
Photos: Amazon founder Jeff Bezos Bezos sits between his girlfriend, Lauren SΓ‘nchez, and Vogue magazine editor Anna Wintour at a Tom Ford fashion show in Los Angeles in February 2020.Hide Caption 28 of 30
Photos: Amazon founder Jeff Bezos Bezos testifies before a House subcommittee during an antitrust hearing in July 2020. Other powerful tech figures, including Apple CEO Tim Cook and Facebook CEO Mark Zuckerberg, were also questioned about their competitive tactics.Hide Caption 29 of 30
Photos: Amazon founder Jeff Bezos Bezos posted this photo of him and his mother, Jacklyn, after Blue Origin’s rocket-catching recovery boat was named in her honor.Hide Caption 30 of 30
Amazon famously clashed with book publishers over who controlled e-book pricing. It deliberately lost money selling diapers in order to thwart Diapers.com β then, according to a landmark antitrust investigation by US lawmakers, it acquired the company before raising diaper prices. (Bezos has said he does not recall giving an order to raise prices.) Amazon’s growing clout has allegedly given it immense leverage to squeeze its suppliers and to use third-party sellers’ own sales data against them to gain an anti-competitive edge. Bezos has argued that Amazon prospers not at others’ expense, but rather when it helps grow the whole pie. “Amazon’s success depends overwhelmingly on the success of the thousands of small and medium-sized businesses that also sell their products in Amazon’s stores,” he told Congress. Bezos also ruffled feathers when he held a highly publicized contest for the privilege of hosting Amazon’s newest headquarters. The so-called “HQ2” was pitched as an engine for local job creation and economic growth, particularly to small and mid-sized cities seeking development. For months, dozens of city leaders jockeyed for Amazon’s favor with offers of tax breaks and real estate. Ultimately, though, Amazon opted for Northern Virginia β just outside of Washington, D.C. β and New York, two of the nation’s wealthiest and most obvious metro areas, leaving many onlookers perplexed. (It later withdrew from New York after facing backlash from members of the community.) The entire episode was a bizarre flex of Amazon’s power and influence. To some critics, the good that Bezos has created does not negate the alleged harms. On the 2020 campaign trail, figures like Sen. Elizabeth Warren called for Amazon to be broken up, and regulators are circling. “The US and Europe are coming for Big Tech, and I don’t think the lawsuits against Facebook and Google are the end of it,” said Paul Gallant, an industry analyst at Cowen & Co.
What’s good for customers isn’t necessarily good for workers
Just as Bezos’s growing empire raised questions about whether it was good for other businesses, it also raised questions about whether it was good for workers. Rising automation, complaints about working conditions and a tough stance against unions all contributed to years of employee walkouts, petitions and, in some cases, lawsuits. Many of the company’s white-collar workers have also protested Amazon’s impact on the environment, calling on Bezos to make stepped-up commitments on climate change. (Amazon and Bezos later pledged to do more, with Bezos committing an initial $10 billion of his own money to fight climate change.)
Read Jeff Bezos's letter to Amazon employeesEarly on in the pandemic, Amazon faced a warehouse worker revolt over a lack of hand sanitizer, masks and other protective gear. After one New York-based employee organized a protest over the issue, Amazon fired him for violating the company’s Covid quarantine policy. Amazon has since said it’s put in place temperature checks at fulfillment centers, ramped up its cleaning regimen, and established some 150 “process changes” to keep workers safe. Amazon has won plaudits for increasing its minimum wage to $15 an hour, but only after intense pressure from labor groups and some US lawmakers, including Sen. Bernie Sanders. And the same day that Bezos announced his plans to step down as CEO, the Federal Trade Commission said Amazon would pay more than $60 million to settle allegations that it withheld tips from its contract delivery drivers. In the coming weeks, Amazon workers in Alabama will vote on whether to form the company’s first US union. In response, Amazon has pushed for in-person voting despite the ongoing pandemic and launched a campaign to discourage unionization. “Jeff Bezos built his multibillion-dollar empire on exploitative practices including wage theft and surveillance tactics designed to bully workers into silence and prevent them from organizing,” said Rashad Robinson, president of the civil rights group Color Of Change.
A tech icon whose reputation reflects his industry’s
Despite the criticisms, Bezos will undoubtedly be remembered in the business world as a brilliant strategist and a disciplined entrepreneur. Bill Gurley, a prominent venture capitalist, called Bezos’s tenure at Amazon “the most spectacular CEO run of my lifetime.” In many ways, Bezos’s story with Amazon mirrors that of Silicon Valley. He began with a small idea in his garage that would change the world. He was lauded for innovating his way to success, putting in hard work and taking calculated risks. But those same choices also led to claims that his company had grown too powerful for its own good, and for the good of society. Now as allegations about Amazon’s power and approach to competition may be leading to a showdown with Washington, the billionaire CEO is tapping out.
In a letter to employees this week, Bezos said he plans to spend more time on his newspaper, The Washington Post, and his spaceflight company, Blue Origin. He also plans to get more involved with his philanthropic initiatives, perhaps following in the footsteps of another transformational tech CEO β Microsoft’s Bill Gates.”Bezos wants to go out on top,” said Gallant.
Source: edition.cnn.com
