The news that Amazon founder Jeff Bezos was stepping down as CEO of the company he founded created quite a stir in the corporate sector. Bezos started Amazon from a garage thirty years before that became the e-commerce giant hovering over corporate world. Bezos will make way for Andy Jassy, currently head of Amazon’s cloud computing business, to take day-to-day control. Jeff Bezos will not entirely give up the reins, instead assuming the role of executive chairman.
Currently, Amazon is one of the most valuable public companies on the planet, with Bezos vying with Tesla’s Elon Musk for the title as world’s richest man. What started as a small online book retailer has become a global phenomenon, spanning home delivery, cloud computing, advances in artificial intelligence and the streaming of movies and sports. And that has brought Amazon much criticism, ranging from accusations it has contributed to the decline of the High Street to complaints about working conditions in its vast warehouses.
Amazon’s innovation can be clearly seen in its financial results. In 2018, it became the world’s second-ever public company to be valued at $1 trillion, after Apple, and today it has the third-highest market valuation in the US, after Apple and Microsoft. The huge success of the online giant is also evident in its revenue. Sales for 2020 reached $386 billion, up from $280 billion a year earlier. Net profit almost doubled to $21 billion. Bezos’s success has been driven by the firm’s global expansion but mainly by expanding into a wide variety of other sectors. Video streaming services and devices, cloud services and most recently groceries, with the acquisition of Whole Foods Market, have allowed the company to compete directly with technology giants such as Facebook, Apple, Google and Netflix.
And the whole story started with selling books as in 1995 Amazon launched with online book sales. He recollected fondly that when he started his venture everybody was apprehensive mentioning that he and his associates were just computer guys and that they did not know anything about selling books. However, the huge stockpiling space that the company had at the time in the US helped Amazon become a leader in the sector and enabled it to offer a wider selection of books than its bricks-and-mortar rivals. Then e-books arrived and Amazon was smart enough to become a key player in that market too.
In 1999 Amazon becomes the biggest online sales platform in the world. In the late 1990s, Amazon decided to start selling other goods, starting with music and DVDs. Soon Bezos’s empire grew to include electronics, toys and kitchen utensils. The growing network of US warehouses helped extend what the company could offer, dramatically increasing its popularity with customers. Ten years later, Amazon had become the biggest online seller in the US and around the world.
Following the creation of Amazon Marketplace in 2000 – which opened the platform up to thousands of small businesses – Amazon felt the need to boost its delivery service for loyal customers. Amazon Prime was launched in 2005, offering quicker shipping for selected items. This boosted sales of all sorts of goods. More than 100 million paying customers are now members of subscription service Amazon Prime, which also offers video and music streaming. It is the second-largest paid membership programme in the world.
Amazon never forgot its bookselling origins. When e-books started to become popular, Bezos launched the Kindle in 2007, eventually becoming the global leader in the sector. The Amazon smart devices department grew exponentially, facing fierce competition from Apple and Google in the early 2010s. Amazon, however, was the first company to launch a smart device: the Echo speaker, equipped with the firm’s own artificial intelligence system, Alexa. It is now the third-largest seller of smart devices in the US.
After quitting Amazon, an unleashed Jeff Bezos will seek to shift space venture Blue Origin into hyper-drive. He is expected to turn up the heat on his space venture, Blue Origin, as it faces a pivotal year and fierce competition from Elon Musk’s SpaceX. The 57-year-old Bezos, a lifelong space enthusiast and the world’s second-richest person behind Musk, said he looks to focus on personal projects. Blue Origin has fallen far behind SpaceX on orbital transportation and lost out to SpaceX and United Launch Alliance (ULA) on billions of dollars’ worth of US national security launch contracts which begin in 2022. ULA is a joint venture of Boeing Co and Lockheed Martin Corp.
Now, Blue Origin is battling to win a competition with SpaceX and Dynetics to develop a new lunar lander for NASA’s potentially multibillion-dollar push to return humans to the moon in a few years. Dynetics is owned by Leidos Holdings Inc. Winning the lunar lander contract and executing its development are seen by Bezos and other executives as vital to Blue Origin establishing itself as a desired partner for NASA and also putting Blue on the road to turning a profit. With limited revenue streams, Bezos has been liquidating about $1 billion of Amazon stock annually to fund Blue, which he said in 2018 was the most important work that he was doing.
NASA is expected to winnow the lunar-lander contest to just two companies by the end of April, adding pressure as Blue Origin works through problems such as wasting millions of dollars on procurement, and technical and production challenges. One of the development struggles Blue has faced is getting the lander light and small enough to fit on a commercially available rocket. Blue has modified its design since it was awarded the initial contract last April and that its current design fits on an additional number of available and forthcoming rockets, including Musk’s Falcon Heavy and ULA’s Vulcan.
Bezos already has transplanted Amazon’s culture on Blue, down to enforcing similar leadership principles and kicking off meetings by reading documents in silence. Bezos needs to take a hands-on, operational role if he is going to fix a number of problems like bureaucratic processes, missed deadlines, high overhead and engineer turnover which have emerged as Blue Origin seeks to transition from development to production across multiple programmes.
An interesting factor is the rivalry between Bezos and Musk. Founded in 2000, Blue Origin, based in Kent, Washington, has expanded to around 3,500 employees, with sprawling manufacturing and launch facilities in Texas, Florida and Alabama. Its ambitious portfolio includes selling suborbital tourist trips to space, heavy-lift launch services for satellites, and the lander – none of which is yet fully commercially viable. Blue has overcome combustion stability problems on its BE-4 rocket engine – another business line and test engines for ULA’s inaugural Vulcan rocket are expected to arrive at Florida’s Cape Canaveral soon with the first-flight engines and booster coming later this spring.
By comparison, Musk’s SpaceX, founded two years after Blue Origin, has launched its Falcon 9 boosters more than 100 times, launched the world’s most powerful operational rocket – Falcon Heavy – three times, and transported astronauts to the International Space Station. SpaceX had 10,000 users on its nascent satellite-based broadband service, dubbed Starlink, which Musk says will provide crucial funding to develop his Starship rocket for missions to the moon and, eventually, Mars. Blue is also hoping for a steady stream of revenue for its heavy-lift New Glenn rocket – potentially set for a debut late this year – from Amazon’s forthcoming constellation of some 3,200 satellites dubbed Project Kuiper. Amazon aims to have half the constellation in orbit by 2026, but there is no public timeline for a first launch. TW