"Our energy at Amazon comes from the desire to impress customers rather than the zeal to best competitors," wrote then-CEO Jeff Bezos in an April 2013 letter to shareholders. "We lower prices and increase value for customers before we have to."
Bezos stepped down this week, turning over leadership to Andy Jassy, who formerly headed up Amazon Web Services (AWS), the company's division that provides pay-as-you-go cloud computing services.
Bezos, who helmed Amazon for 27 years and will now be serving as executive chairman of its board, was known for his intense customer focus, which sometimes came at the expense of turning much of a profit. Amazon's success is a lesson in both the value of focusing on consumer needs and desires above all else and the inevitable political pitfalls of that strategy.
"Over the past five years…the retailer of the future managed to more than triple its sales while slicing profits by more than half. It's a business success story like no other in the world," wrote Matthew Yglesias at Slate in 2014. "Like many other dot-coms, it steadily lost money in pursuit of growth."
Amazon, which has existed since 1995 and survived the dot-com bubble burst, has long been an object of fascination due to continuously reinvesting profits back in the company, distinguishing itself from other currently not-so-profitable growth-first tech companies by actually having a clear revenue strategy.
"Understanding Wall Street as he does, he's hit upon the ultimate way of avoiding the piggybank problem—just don't earn the profits that create the cash hoard in the first place. Invest the revenue instead," wrote Yglesias. Though Amazon is routinely rebuked for not paying "enough" in taxes due to this reinvestment strategy, the practice hasn't really shaken broad public trust in the company. That's because reinvesting in itself has made Amazon a better company for customers.
That reinvestment strategy means that, for many years, Amazon did not post giant profits, but profits aren't necessarily the best or only way to measure a company's health. Focusing instead on free cash flow, Rani Molla wrote at Recode in 2019, "enables it to do everything from paying its employees, suppliers, and shareholders to investing in its future." The company's payment cycles mean it has cash on hand to work with, provided Amazon continues to grow: "It takes Walmart on average nearly three days to receive payment for goods after it paid its suppliers," Molla wrote, "while Amazon on average receives payment about 18 days before it paid its suppliers."
And grow it does. Bezos had near-limitless ambition for the company. In his letters to shareholders, he talked up Fulfillment by Amazon, which lets third parties contract with Amazon to house their products in Amazon warehouses, making them eligible for Prime shipping, which gives customers more and better products to choose from; he also mentioned the company's commitment to paying book royalties to authors more often than is typical; and he even slid in a sly Apple diss, writing, "We don't need our customers to be on the upgrade treadmill. We can be very happy to see people still using four-year-old Kindles!"
Amazon under Bezos wasn't just defined by his obsession with customers, but also by the fact that the company's potential seemed limited only to what Bezos could dream up—so not very limited at all. The company is now a major player in web hosting, book sales, video streaming, grocery delivery, and traditional e-commerce retail. Amazon is the leader in shipping speeds, with click-to-ship time hovering at around half what it is for competitors; and the company is now committing to increasing the speed of same-day delivery so that customers can receive select products within mere hours of placing an order. Bezos has his hands in other jars, too: a Montessori-inspired preschool, providing internet to more of the world by launching thousands of satellites into orbit, getting people to space.
At times, Bezos bit off more than he could chew. In 2018, he announced that a health care alternative was in the works, in partnership with Berkshire Hathaway and JPMorgan Chase. After three years, the promised health care disruptor never materialized, and the venture quietly folded.
Much of the opprobrium directed toward Bezos had to do not with the fact that he put customers first, but rather the perception amongst critics that he failed to do the same for workers, with multiple stories focusing on working conditions and pay at Amazon warehouses. Libertarians, meanwhile, will remember Amazon's bad bidding war behavior when vying for an HQ2 location, in which the company held out its hands and asked localities for tax breaks and other crony perks. Most cities were all too happy to oblige, and taxpayers ended up footing part of the bill for Amazon's second headquarters in Northern Virginia.
Still, Bezos' creation has enabled millions of people to buy everything from HDMI cables to baby formula, from books to blood glucose monitors; the frivolous and the essential, all inhabiting the same marketplace, accessible at all hours of the day. Americans view Amazon more favorably than they view the FBI, the CDC, and the Supreme Court. Millions of lives have been improved by Bezos' obsession with how to deliver a wider selection of goods, cheaper than ever before, in as little time as possible.
And when a pandemic came that forced vulnerable people to be locked inside their houses for fear of a quick-moving contagious virus, it was often Bezos' company that came through for them, allowing them to remain homebound when it was especially important to do so. What started as a modest book-selling business has morphed into something that delivers affordable goods to all corners of the country in hours or days flat, in no small part due to Bezos' vision and drive.
As for the recently departed CEO, Bezos is doing what any other high-level executive would do when met with some newfound free time: a bit of relaxing, off-the-beaten-path travel to a place that won't be overrun with tourists, a place Amazon doesn't even deliver to (yet).