Walmart founder Sam Walton’s brilliant autobiography, Made in America (my summary,) was published a few weeks before his death in 1992. The penultimate page reads,
Could a Wal-Mart-type story still occur in this day and age? My answer is of course it could happen again. Somewhere out there right now there’s someone—probably hundreds of thousands of someones—with good enough ideas to go all the way. It will be done again—over and over, providing that someone wants it badly enough to do what it takes to get there. It’s all a matter of attitude and the capacity to constantly study and question the management of the business.
Jeff Bezos started Amazon just two years later. After eight years on Wall Street, Bezos dreamt up Amazon during a drive from New York to Seattle in 1994. His wife (now ex-wife) MacKenzie drove, and Jeff “tapped out a business plan on his computer along the way.”
Bezos’s and Amazon’s dominant leadership values echo those of Sam Walton and Wal-Mart: frugality, a bias for action, long-term focus, motivating staff to think like owners, and customer obsession.
The Everything Store (2013,) Brad Stone’s excellent chronicle of the rise of Amazon notes, “In his autobiography, Walmart’s founder expounds on the principles of discount retailing and discusses his core values of frugality and a bias for action—a willingness to try a lot of things and make many mistakes. Bezos included both in Amazon’s corporate values.” On an earnings call, Bezos famously declared, “there are two kinds of retailers: there are those folks who work to figure how to charge more, and there are companies that work to figure how to charge less, and we are going to be in the second, full-stop.”
All along, Bezos has made big bet-decisions that hurt it in the short term but created value in the long term. Amazon’s market capitalization has rocketed up from $4.55 billion in 2001 to $1.08 trillion before the Coronavirus/COVID-19 infected the stock markets. Amazon’s secret, in Bezos’s words, is,
We are genuinely customer-centric, we are genuinely long-term oriented and we genuinely like to invent. Most companies are not those things. They are focused on the competitor, rather than the customer. They want to work on things that will pay dividends in two or three years, and if they don’t work in two or three years they will move on to something else. And they prefer to be close-followers rather than inventors, because it’s safer. So if you want to capture the truth about Amazon, that is why we are different.
Amazon has not been consistently profitable over the years, and that is a deliberate upshot of how Bezos approaches business. Amazon cycles through periods of substantial investments that beget future revenue growth (with low profits) and periods of increasing profits as its investments ebb.
Not all of Bezos’s bets have succeeded. However, investors have come to acknowledge that his long-term initiatives will produce rich results several years down the road. Little wonder, then, that Amazon’s stock has defied short-termism by continually progressing upward even during quarters of little or no earnings.
Postscript: Bezos has been, until recently, the world’s wealthiest person since about 2018. Walton was the richest man from 1985 until his death in 1992. His inheritors, the Walton family, are collectively more affluent than Bezos!