'Amazon will fail'
That's a quote from Jeff Bezos. Here's the context. Also, 7 other things worth knowing today.
Jeff Bezos was on top of the world five years ago. His net worth made him the world's richest person, and Amazon had just recorded its greatest quarterly profit to date: $2 billion.
Yet, behind the scenes, he was convinced that one day it would all end. As early as 2013, Bezos shared his assumption that Amazon eventually would be disrupted just as it had disrupted the world.
"I don't worry about it because I know it's inevitable," he told 60 Minutes that year. "Companies come and go, and the companies that are the shiniest and most important of any era—you wait a few decades and they're gone."
And in 2018, he told employees at an all-hands meeting in Seattle:
I predict one day Amazon will fail. Amazon will go bankrupt. If you look at large companies, their lifespans tend to be 30-plus years, not a hundred-plus years.
Guess what? Bezos incorporated Amazon in 1994, which means it celebrates its 29th birthday next year, not that far off from the "30-plus years" that Bezos predicted as the typical lifespan of a large company.
So, how far are we from the prediction he started making publicly a decade ago, if not more? Maybe closer than people might otherwise think, if we consider three recent developments:
1. Customer satisfaction
The Wall Street Journal reported last month on a series of surveys of Amazon customers showing lower customer satisfaction numbers than in the past.
In one survey, 79 percent of customers said they were "extremely" or "very satisfied" with the company (down from 88 percent a decade ago). Another survey of 1,000 Amazon customers "found that nearly a third of them reported regularly receiving products late or getting an item of low quality."
In fairness, these numbers don't sound terrible. But customers have been the focus of Amazon from the beginning—to the point that when I ran the full text of the first 23 Amazon shareholder letters through a word cloud generator, the word customer appeared more often than any other: 443 times.
If that bedrock starts to feel shaky, it could be a clear early warning sign.
Last month, Amazon started laying off 10,000 people, which the New York Times reports are its largest job cuts ever, after reducing head count by 80,000 through attrition:
The number of layoffs remains fluid and is likely to roll out team by team rather than all at once as each business finishes plans, one person said. But if it stays around 10,000, it would represent roughly 3 percent of Amazon's corporate employees and less than 1 percent of its global workforce of more than 1.5 million, which is primarily composed of hourly workers.
Another publication says the real target is actually 20,000. In a memo to employees, Amazon CEO Andy Jassy wrote: "I've been in this role now for about a year and a half, and without a doubt, this is the most difficult decision we've made during that time."
Somewhat related to the layoffs, the Alexa division, which was once Bezos's "brainchild" and "pet project," has reportedly become "a wasted opportunity."
In short, while Amazon has sold millions of Echo devices, they are a relatively low-margin product, and Amazon's hope had been to make money on things people did with their voice devices, not by selling the devices in the first place.
But voice-activated sales and apps just haven't caught on the way Amazon predicted and hoped, to the point that the division reportedly lost $5 billion in 2018 and is on track to lose $10 billion this year.
Right about a lot of things
To be sure, I'm not predicting the demise of Amazon anytime soon; not soon enough to make a difference during the lifetimes of most people reading this article.
For one thing, failed, bankrupted companies can have a long lifespan after death in our society. Toys R Us came back from the dead. Somehow, Sears still has 22 stores. Heck, there's even a single Blockbuster video store still going strong. (Well, strong-ish.)
I’m also not rooting for Amazon to fail. Case in point: if you’re on my Christmas gift list, there’s probably a 50 percent chance at least that Amazon was somehow involved.
But, Bezos was practically obsessed with the idea that someday in the not-so-distant future, Amazon would decay and would be upended, just as it had upended others.
He was right about a lot of things. Someday he'll be right about that, too.
7 other things worth knowing today
(Stay tuned for the nominations & poll in the last item below.)
After investigating for more than a year, the House committee probing the Jan. 6 attack on the Capitol on Monday culminated its sweeping investigation by announcing it would make multiple criminal referrals to the Department of Justice against former President Donald Trump on multiple charges related to his actions surrounding the riot at the Capitol. (ABC News)
An incoming member of Congress is facing a report that suggests he might have made up major portions of his resume. The New York Times published an investigation which alleges that the college that Congressman-elect George Santos of Long Island says he graduated from can't confirm he attended, the companies he says he worked for (Citigroup and Goldman Sachs) say they can't verify, and that he faces pending charges of check fraud in Brazil from when he lived with family there in 2008. (NY Times)
Kind of interesting (that's the standard, right?) More than one-third of people living in Japan say they'll "never travel again," according to a poll. Top reasons: the Covid pandemic and the falling value of the Japanese yen. Other nations where lots of people say they'll never travel again: South Korea (15%), China (14%), and the good ol' USA (also 14%). (CNBC)
Related to the Bezos story above: Bezos has reportedly lost interest in The Washington Post, which he'd once said he hoped to build into a tech and media powerhouse. Today? "Bezos is focused on other things—literally too far out in space, as one Post employee noted, to pay much attention." (Semafor)
'Kidults'—adults who buy toys for themselves—are now the biggest source of growth for the industry. These kids at heart are responsible for one-fourth of all toy sales annually, around $9 billion worth, and are the biggest driver of growth throughout the industry, according to data from the NPD Group. (CNBC)
Overrun with tourists drawn to Amsterdam in pursuit of sex and drugs, the city has a new marketing campaign. The goal: "actively discouraging international visitors with plans to 'go wild' in Amsterdam," which has been dubbed as the "stay away" campaign." (CNN)
For the fourth year in a row, Mariah Carey's "All I Want for Christmas Is You," which was originally recorded in 1994, is at the top of the Billboard Hot 100. As of 2017, she'd made $60 million on this song; probably double that now. I was actually going to do a full newsletter on perennial holiday songs like this, but I could go on forever ... so here's what I'm going to propose instead:
Today, let us know in the comments what your favorite holiday or Christmas song is. It can be anything you love hearing this time of year—literally anything, no judgement—from “O Come All Ye Faithful,” to “Fairytale of New York” by The Pogues, (one of mine) to ... [fill in the blank here; I can’t pick just one “third” song]...
Later today, I’ll look in the comments and pull out the five-most-mentioned songs. We’ll treat these as nominations, and tomorrow we’ll run a poll in the newsletter asking people to vote on their favorites. That way we can crown our “Understandably Top Holiday Song of 2022.” Eat your heart out, Billboard and Spotify.