Embedded Files
Welcome to our new issue. With the lockdown and the following containment, we looked for new topics that might interest you. This month, we invite you to review the Amazon saga with an external and European eye. “Why Amazon?” you wonder. “It has become a juggernaut; it has nothing to do with us!” It is true that it belongs to the GAFAM club, those companies that change the world. And the Covid crisis which accelerates the digital leapfrog, will further advance it. Wall Street has already distinguished Amazon, $ 3000 the share yesterday! In B2C, Amazon is behind many game-changing innovations, not just in Retail. In B2B, with their Amazon Web Services offer, they have revolutionized and disrupted IT departments as we know them. Besides, many of you are probably considering using their services to become a SaaS player all over the world.
Welcome to our new issue. With the lockdown and the following containment, we looked for new topics that might interest you. This month, we invite you to review the Amazon saga with an external and European eye. “Why Amazon?” you wonder. “It has become a juggernaut; it has nothing to do with us!” It is true that it belongs to the GAFAM club, those companies that change the world. And the Covid crisis which accelerates the digital leapfrog, will further advance it. Wall Street has already distinguished Amazon, $ 3000 the share yesterday! In B2C, Amazon is behind many game-changing innovations, not just in Retail. In B2B, with their Amazon Web Services offer, they have revolutionized and disrupted IT departments as we know them. Besides, many of you are probably considering using their services to become a SaaS player all over the world.
It seems to us that there are a lot of lessons in this saga and we took the biased perspective, to analyze only the Shareholders‘ Letters. We voluntarily leave aside all the controversies on the social problems, the debate on its monopolistic position, its possible dismantling, the reputation of the founder and CEO, Jeff Bezos, with his capacity to go to the fight against stronger than him, tradition that all the company preserves even today in its balance of power, including with States and governments around the world. The letter has been sent to Amazon’s shareholders every year since the IPO in 1997, and we can clearly see that it is also addressed to the customers, the employees, partners and competitors of Amazon. Each year, to better complete the circle, Jeff Bezos delivers his first letter. What is quite impressive is that the initial plan resonates today.
It seems to us that there are a lot of lessons in this saga and we took the biased perspective, to analyze only the Shareholders‘ Letters. We voluntarily leave aside all the controversies on the social problems, the debate on its monopolistic position, its possible dismantling, the reputation of the founder and CEO, Jeff Bezos, with his capacity to go to the fight against stronger than him, tradition that all the company preserves even today in its balance of power, including with States and governments around the world. The letter has been sent to Amazon’s shareholders every year since the IPO in 1997, and we can clearly see that it is also addressed to the customers, the employees, partners and competitors of Amazon. Each year, to better complete the circle, Jeff Bezos delivers his first letter. What is quite impressive is that the initial plan resonates today.
The saga begins in 1997. For the record, the company was created 3 years before. We are clearly dealing with a startup at that time as Jeff Bezos said in the first year that they started the year with 150 employees. We have no revelation to make on the genesis, on the reflections of Jeff Bezos between his exit from Princeton with a diploma in Computer Science, his first experiences and then these few years spent in finance in particular in a hedge fund (Shaw & Co). One can imagine that he saw the rise of the potential of the internet. It was a promise back then, remember! and besides he made a play on words in his first letter when speaking of "World Wide Wait"! What is in his head we do not know, and we will leave the hand to more insight’s sources. As usual, we are analyzing only public information here.
The saga begins in 1997. For the record, the company was created 3 years before. We are clearly dealing with a startup at that time as Jeff Bezos said in the first year that they started the year with 150 employees. We have no revelation to make on the genesis, on the reflections of Jeff Bezos between his exit from Princeton with a diploma in Computer Science, his first experiences and then these few years spent in finance in particular in a hedge fund (Shaw & Co). One can imagine that he saw the rise of the potential of the internet. It was a promise back then, remember! and besides he made a play on words in his first letter when speaking of "World Wide Wait"! What is in his head we do not know, and we will leave the hand to more insight’s sources. As usual, we are analyzing only public information here.
These are the 6 key points that we wish to emphasize:
These are the 6 key points that we wish to emphasize:
Customer focus:
Customer focus:
Amazon, since its creation, has repeatedly said that it has only one obsession: customer satisfaction. It’s the mantra to go from the customer, the customer’ needs and to go backward to a potential product or service. In all arbitrations, Jeff Bezos tells us that preference always goes to the customer before any other stakeholders.
Amazon, since its creation, has repeatedly said that it has only one obsession: customer satisfaction. It’s the mantra to go from the customer, the customer’ needs and to go backward to a potential product or service. In all arbitrations, Jeff Bezos tells us that preference always goes to the customer before any other stakeholders.
Enchant customers, delight them and surprise them continuously. Increasing value by lowering prices. Our belief is challenged. When we learned that what is free has no value, Jeff Bezos thinks at the contrary that one of the pillars of his value proposition is the guarantee of having the lowest prices. The other elements of historic values are the speed of delivery, the selection and, the choice.
Enchant customers, delight them and surprise them continuously. Increasing value by lowering prices. Our belief is challenged. When we learned that what is free has no value, Jeff Bezos thinks at the contrary that one of the pillars of his value proposition is the guarantee of having the lowest prices. The other elements of historic values are the speed of delivery, the selection and, the choice.
Customer focus helps maintain the vitality of creativity and expansion (Day 1) and is therefore the anti-virus for disease and decline (Day 2). It prevails over all other focuses. He opposes it to the competition focus (Amazon CEOJeff Bezos doesn’t want to be a follower), product, technological, business model focus...
Customer focus helps maintain the vitality of creativity and expansion (Day 1) and is therefore the anti-virus for disease and decline (Day 2). It prevails over all other focuses. He opposes it to the competition focus (Amazon CEOJeff Bezos doesn’t want to be a follower), product, technological, business model focus...
Internationalization:
Internationalization:
Jeff Bezos plans from the start to become a global player. He thinks that the demand for Amazon’s services overseas is just as great as in the United States. At this level, we at StartEuropa think the same thing. You who have an innovative offer that is breaking through in North America, think of internationalization in Europe with an experienced partner. Amazon will be established very early in Germany and UK (98) France (2000) as well as in Italy (2010) Spain (2011), NL (2014). Europe was a real effective launch to conquer the world afterward. The localized storefronts will multiply ; Japan (2000), Canada (2002), China (2004) Brazil (2012) India (2013).
Jeff Bezos plans from the start to become a global player. He thinks that the demand for Amazon’s services overseas is just as great as in the United States. At this level, we at StartEuropa think the same thing. You who have an innovative offer that is breaking through in North America, think of internationalization in Europe with an experienced partner. Amazon will be established very early in Germany and UK (98) France (2000) as well as in Italy (2010) Spain (2011), NL (2014). Europe was a real effective launch to conquer the world afterward. The localized storefronts will multiply ; Japan (2000), Canada (2002), China (2004) Brazil (2012) India (2013).
Technology:
Technology:
Amazon is a technology company. The technological platform is its main asset. Focused on customer needs, their platform aims to provide more and more services. It is a key to understanding them because from outside we used to confine them to a market. We said it is an actor of e-commerce, as we said at first that they were only an online bookstore. It’s a major key to perceive them as a technology player. Technology is everywhere, it is not apart and especially not in a dedicated R&D department. In value, we arrive at huge amounts of investment in R&D: $ 22.6 billion ahead of Alphabet (Google) $ 17 billion or Microsoft $ 12 billion (and these are figures from 2018, since then Amazon has taken even more ahead). In the Build versus Buy debate (which we addressed in our newsletter of May 8) it is obviously Build because it is the heart of their competitive advantage.
Amazon is a technology company. The technological platform is its main asset. Focused on customer needs, their platform aims to provide more and more services. It is a key to understanding them because from outside we used to confine them to a market. We said it is an actor of e-commerce, as we said at first that they were only an online bookstore. It’s a major key to perceive them as a technology player. Technology is everywhere, it is not apart and especially not in a dedicated R&D department. In value, we arrive at huge amounts of investment in R&D: $ 22.6 billion ahead of Alphabet (Google) $ 17 billion or Microsoft $ 12 billion (and these are figures from 2018, since then Amazon has taken even more ahead). In the Build versus Buy debate (which we addressed in our newsletter of May 8) it is obviously Build because it is the heart of their competitive advantage.
With the platform, they can project themselves everywhere. They returned to IT departments with AWS (Amazon Web Services). They can deeply "disrupt" any sector.
With the platform, they can project themselves everywhere. They returned to IT departments with AWS (Amazon Web Services). They can deeply "disrupt" any sector.
Innovation process
Innovation process
Jeff Bezos is obsessed with decline process. He keeps saying it's Day 1, the expansion phase. He emphasizes the importance of daring, the word “bold” keeps coming up in his letters. Amazon multiplies innovations because it multiplies experiences. Amazon encourages a culture of seeding small businesses with big potential. Small streams that can become billions of dollars line of businesses, dreamy businesses (the client loves it, very large growth, strong return on capital and sustainable over decades). AWS (Amazon Web Services) is one such dreamy businesses, for example. Decentralizing decision making is key to generating innovation. Amazon seems to encourage wandering, risk taking and de facto failure. The ability to multiply failures explains the number of successful innovations. To succeed few times, we need to try much more.
Jeff Bezos is obsessed with decline process. He keeps saying it's Day 1, the expansion phase. He emphasizes the importance of daring, the word “bold” keeps coming up in his letters. Amazon multiplies innovations because it multiplies experiences. Amazon encourages a culture of seeding small businesses with big potential. Small streams that can become billions of dollars line of businesses, dreamy businesses (the client loves it, very large growth, strong return on capital and sustainable over decades). AWS (Amazon Web Services) is one such dreamy businesses, for example. Decentralizing decision making is key to generating innovation. Amazon seems to encourage wandering, risk taking and de facto failure. The ability to multiply failures explains the number of successful innovations. To succeed few times, we need to try much more.
Performance Management
Performance Management
In his letters, he lets us glimpse the used techniques as Lean, Kaizen… It is interesting to see his typology of detailed objectives described in 2009. He insists on the inputs which can be piloted and controlled and not on the results. In its typology of detailed objectives, 80% relate to the Customer Experience, only 2% to the turnover. In 2016, Jeff Bezos gives us a management course. To stay in Day 1, you have to keep this customer obsession, resist proxies (be careful when the process becomes the thing and owns you), embrace external trends (like machine learning and Artificial Intelligence) and above all know how to make decisions quickly. For this, he distinguishes reversible decisions, they can be delegated. Make decisions with 70% of the information you need without waiting for 90% (the better is the enemy of good), recognize true misalignment issues and escalate them. In order not to slow down decision-making, he plays his “disagree and commit” card. “I disagree but I am committed to move forward. Don't waste time convincing me.” Speed matters.
In his letters, he lets us glimpse the used techniques as Lean, Kaizen… It is interesting to see his typology of detailed objectives described in 2009. He insists on the inputs which can be piloted and controlled and not on the results. In its typology of detailed objectives, 80% relate to the Customer Experience, only 2% to the turnover. In 2016, Jeff Bezos gives us a management course. To stay in Day 1, you have to keep this customer obsession, resist proxies (be careful when the process becomes the thing and owns you), embrace external trends (like machine learning and Artificial Intelligence) and above all know how to make decisions quickly. For this, he distinguishes reversible decisions, they can be delegated. Make decisions with 70% of the information you need without waiting for 90% (the better is the enemy of good), recognize true misalignment issues and escalate them. In order not to slow down decision-making, he plays his “disagree and commit” card. “I disagree but I am committed to move forward. Don't waste time convincing me.” Speed matters.
Retail 4.0
Retail 4.0
This way of managing performance at Amazon is influencing the entire retail industry. The data culture infuses everywhere. The term Retail 4.0, which will come later from the academic world, insists in traditional retail on the importance of Data. Before we used to say :“Location Location Location” now it is “Data Data Data”. Jeff Bezos recognizes in 2018 that 90% of world retail is in brick and mortar. It is a challenge for traditional commerce to become omnichannel and we can see this precisely with the Covid-19 crisis. After having resisted investing in physical stores for a very long time (because it consumes a lot of capital) Amazon has launched itself into physical retail, also seeking to revolutionize the customer experience. To be continued!
This way of managing performance at Amazon is influencing the entire retail industry. The data culture infuses everywhere. The term Retail 4.0, which will come later from the academic world, insists in traditional retail on the importance of Data. Before we used to say :“Location Location Location” now it is “Data Data Data”. Jeff Bezos recognizes in 2018 that 90% of world retail is in brick and mortar. It is a challenge for traditional commerce to become omnichannel and we can see this precisely with the Covid-19 crisis. After having resisted investing in physical stores for a very long time (because it consumes a lot of capital) Amazon has launched itself into physical retail, also seeking to revolutionize the customer experience. To be continued!
This is very quickly what we wanted to share with you. We strongly recommend that you read those Shareholders’ Letters. They are richer and you will probably find inspiration there, relevant to your business mission. If we have to summarize, we advise you to make bold decisions. The Covid froze the decision-making process. Doing nothing does not help the situation and can be dangerous in the long run. We are hammering out our mantra, now is the time to move forward and in particular to invest in Europe (before your competitors wake up). With a partnership with us StartEuropa, you place your bets where your downside is capped but your upside is quite unlimited. Let's talk about it!
This is very quickly what we wanted to share with you. We strongly recommend that you read those Shareholders’ Letters. They are richer and you will probably find inspiration there, relevant to your business mission. If we have to summarize, we advise you to make bold decisions. The Covid froze the decision-making process. Doing nothing does not help the situation and can be dangerous in the long run. We are hammering out our mantra, now is the time to move forward and in particular to invest in Europe (before your competitors wake up). With a partnership with us StartEuropa, you place your bets where your downside is capped but your upside is quite unlimited. Let's talk about it!
In the meantime, we wish you a good summer and know that our next newsletter will appear on September 8.
In the meantime, we wish you a good summer and know that our next newsletter will appear on September 8.
Have a good day !
Have a good day !
Best regards
Best regards
Daniel Giovanelli
Daniel Giovanelli
CEO and Co-Founder StartEuropa
CEO and Co-Founder StartEuropa
We open the doors for you in Europe!
We open the doors for you in Europe!
Google Sites
Report abuse