News & Views

Go Long or Go Home

by Katrina Dodd

Over the last few weeks, Contagious has been running a series of articles focused on the benefits of embracing the principles of ‘agile long-termism’. And with last Monday’s surprise launch of the Amazon Go store creating headlines around the world, it felt appropriate to reflect on the company that has surely become the poster child for playing the long game: Amazon.

The interest around this latest milestone has been fierce – but not just because the shop’s ‘Just Walk Out’ technology has redefined the grab-and-go retail experience. The narrative around Amazon’s reimagined convenience store has been dogged by a vexatious, inconvenient truth, remarked on by The Wall Street Journal: ‘the technology functions flawlessly only if there are fewer than about 20 customers present, or when their movements are slow.’

For a store designed to embody the idea of simplicity, the irony, of course, is that getting there is extremely complex and resource-intensive. Amazon Go’s year-long failure to launch out of its extended beta phase might have dented the reputation of a lesser brand. But Amazon has spent the last 20 years working relentlessly to set and play by its own rules.

More or less since the company’s inception, Jeff Bezos has been training investors to avert their eyes from the quarterly reports and join him in thinking about the future, about the big picture. From his first letter to shareholders, he’s been clear on what they should expect:

Having spelled out what has remained its consistent modus operandi to investors, the company’s mission statements – its goals and objectives – are worth a look too. [I found these on Ben Thompson’s brilliant Stratechery blog, where they’re cited in his fascinating analysis of Amazon’s Whole Foods acquisition]

In 1997, its initial S-1 filing stated:

By 2003, however, the mission had to be redefined to accommodate not only Amazon’s success, but also the increasing scope of the opportunities presented by the evolving business landscape:

A few years after that, another revision was required. By dropping everything after the semi-colon and simply aiming to be ‘the most customer-centric company’ on Earth, Amazon freed itself to explore and exploit a wider range of opportunities than anyone, other than perhaps Jeff Bezos, foresaw. And all the while, its commitment to long-term thinking has meant that those opportunities have been given a fair crack of the whip.

So, while Amazon has relentlessly reinforced its credentials and capacity as an ecommerce platform, its approach has also built out a multi-billion dollar revenue-generating cloud-computing platform, Amazon Web Services. The game-changing Kindle e-reader was the start of a drive into hardware that pushed past the obvious evolution into Fire tablets and continued undaunted by the notable flop of the Fire phone. In 2014, the launch of the Amazon Echo smart speaker line saw the Seattle-based company stealing a march on its Silicon Valley competitors with a range of devices that’s finally helping us to imagine a future beyond the smartphone.

There’s more. In the field of content, we’ve seen experiments turn into established parts of the Amazon ecosystem, from the budget-friendly Fire media streaming stick to the launch of Amazon Studios, now bankrolling several award-winning TV series. The test-and-learning continues with content-for-commerce punts like Amazon Overhaul, an influencer-led home makeover show designed to help surface and shift products.

And for every eye-catching foray into the further future – like drone delivery – there are a host of projects flying under the radar that are nevertheless extending Amazon’s influence in our lives. Already the largest seller of apparel online in the US  its increasing range of private label clothing brands, which now numbers 29, is quietly gaining traction amongst budget-conscious shoppers.

This constant investment and reinvestment in building the scope and scale of Amazon’s influence requires shareholders with as much patience as Jeff Bezos. But the undeniable success of Jeff’s ‘Jam tomorrow’ long game is forcing other businesses to reassess their own abusive relationship with the short-term quarterly reporting cycle and consider the possibility that there might be another way.

Amazon Go may have had a difficult birth, but where lesser companies might have balked at missed deadlines and mounting costs, Amazon has something better than just tolerance for such eventualities: it’s the expectation.

In a quick-fix culture, the company now embodies the idea that inventing the future means thinking beyond – well beyond – your next report to shareholders. At the Internet Association’s annual gala in Washington DC last May, Bezos laid it out: ‘I ask everybody to not think in two-to-three-year time frames, but to think in five-to-seven-year time frames.’

Paying Bezos a compliment on a strong quarter, he says, will get you a polite thank you: ‘But what I'm thinking to myself is … those quarterly results were actually pretty much fully baked about 3 years ago. Today I'm working on a quarter that is going to happen in 2020. Not next quarter. Next quarter for all practical purposes is done already and it has probably been done for a couple of years.'

To move as fast as these guys, you have to take your time.