THE STATE OF AMAZON:
Amazon has become the world’s first company to lose $1 trillion worth of market value dropping
from $1.88 trillion down to $879 billion. This isn’t just some sort of market over reaction
either as Amazon’s fundamentals aren’t looking much better. In fact, Amazon’s trailing 12 months
profit has plunged from over $30 billion down to even negative numbers. As such,
they’ve been cutting jobs like crazy, having laid off 27,000 people within the past several months
itself. And all of this has unfolded within just 2 years of Jeff Bezos retiring from his position as
CEO. This has led to many investors feeling that it was Bezos that was the secret sauce to Amazon’s
success, sparking rumors that Bezos will return to the helm to turnaround the company. One investor
named Michael Batnink has even gone as far as predicting that Bezos will return by the end
of 2023. This might sound unprecedented but that’s not actually the case. In fact, it’s pretty common
for CEOs to return if things aren’t going great. Michael Dell for example retired back in 2004,
but as Dell started struggling as we headed into the financial crisis, Michael got back
to work. More recently, Bob Iger retired in 2020 after serving as Disney’s CEO for 15 years. But,
after Disney stock fell 50% and Disney+ became a money pit, Iger returned to his position in late
2022. Likely the best example of a CEO returning though is Howard Schultz who just can’t seem to
get a break from Starbucks. Everytime he leaves the company, the stock goes into the toilet,
so he basically just comes back on an as needed basis having served 3 different terms so far. So,
the idea of Bezos returning is not that far fetched. And considering the current position
of Amazon, it’s well warranted too. So, join me as we look into whether Jeff Bezos will actually
make a grand reentrance and what exactly that could mean for the future of Amazon.
THE CASE FOR BEZOS: Starting off with the case for Bezos,
the first thing we have to consider is whether Bezos is even in a position to return and the
answer is absolutely. For one, he’s not even 60 years old meaning that he has plenty of working
years left. Schultz and Iger were closer to 70 when they returned to their respective
companies. Also, it’s not like he’s gotten super involved in some sort of other effort. Yes, he has
been focusing on Blue Origin, his rocket company, but it’s not like this is a new endeavor. People
often like to mock Bezos for copying Elon Musk and SpaceX and in some aspects he definitely has. But,
Blue Origin has actually been around since 2000. So, most of its growth was achieved without Bezos
being directly involved. In fact, Bezos isn’t even the CEO of Blue Origin, it’s actually some
guy named Bob Smith. Also, the only reason Blue Origin is even possible is because of Bezos wealth
from Amazon, so if Bezos wants to give Blue Origin the best chance of success, it would make sense to
protect his Amazon fortune which brings us into the incentive argument. The bottom line is that
there is no one in the entire world that’s as incentivized to turnaround Amazon as Bezos.
Amazon’s current CEO, Andy Jassy, owns about a quarter billion dollars worth of Amazon stock.
Meanwhile, Bezos still owns about $123 billion worth of Amazon stock. So, theoretically speaking,
Bezos should be 500 times as financially incentivized as Jassy to turn around Amazon but
I would argue that the motivation goes much deeper than just financial gain. For Bezos, this is the
company he founded way back in 1994 that he spent virtually his entire adult life building. So,
it’s safe to say that Bezos wouldn’t just sit on the sidelines and watch his empire crumble
especially if he could do something. In fact, he’s probably the best person to do something
because he’s already handled a far worse situation back in early 2000s. During the dotcom crash,
Amazon stock straight up fell 95%. And at the time, Amazon was still very much a startup during
a time where virtually all other internet startups were collapsing. This meant that it was extremely
hard to raise money, recruit talent, and gather the resources needed for a turnaround. But, Bezos
was able to do it. He diversified the business and launched AWS and the rest is history. Today,
Amazon is indeed doing bad, but they’re still one of the biggest corporations on the planet with $64
billion in the bank. So, if Bezos was able to turn around the 2000 Amazon, he has a pretty good shot
at turning around the 2023 Amazon. But, the truth is that a lot of Bezos’ impact on Amazon wouldn’t
even be strictly strategic. This isn’t to say that Bezos wouldn’t make great strategic decisions but
I would argue that his bigger role at Amazon would actually just be his presence itself. The
reality is that there’s only so much that a single person can do. But, that single person’s spirit
and morale can accomplish infinitely more. Now, I know that the general public nor the media is
exactly the biggest fan of Bezos. Most people just see him as the bald slave driver. But, this isn’t
the case with Wall Street or Amazon’s corporate side. Sure, they might not like him either but I
can assure you they think that he’s effective as hell. I mean, just look at this. This is Amazon
under Bezos leadership. And this is Amazon under Jassy’s leadership. If you were a corporate Amazon
employee and most of your compensation depended on stock comp and growth, who would you rather have
lead the company? I’m gonna guess Bezos and this is especially true for leadership who’s
entire compensation is basically stock. As such, Bezos simply returning could be the morale boost
that investors and executive leadership needs to get back on track. If you’re not a fan of
Bezos returning though, don’t worry as there’s a pretty strong case for him not returning as well.
THE CASE AGAINST BEZOS: For starters, the case against Bezos returning
begins with the fact that he never really left in the first place. Sure, he gave up his position as
CEO but he simply switched to being executive chairman. It’s not like Bill Gates who has
completely left Microsoft. Something else to note is that even as CEO, Bezos was serving in more of
chairman type of capacity. He was never really in the weeds of operations like Elon or something.
Bezos strongly felt that as a senior executive, he job was to make a small number of super high
quality decisions. In fact, he didn’t even start work till 10 AM and his job each day was to just
make three good decisions. Now, I’m not here to argue the effectiveness of this type of role
but what I can say is that it’s not particularly time intensive. Mentally intensive sure, but not
time intensive. So, it doesn’t really necessitate Bezos to take on the CEO role again. He can just
make his 3 decisions a day as executive chairman. And speaking of decisions, Bezos strongly believes
in making decisions that play out over the long term. In fact, when friends congratulate him for
a good quarter, he tells them “Thank you, but that quarter was baked three years ago.” So, according
to Bezos himself, a CEOs decisions can’t be judged until 3 years later. News flash, Jassy hasn’t even
been CEO for 2 years so according to Bezos’ own logic, none of this is Jassy’s fault. All of it
is actually Bezos’ fault as the decisions that led to Amazon’s current situation where actually made
in 2019 and 2020 when Bezos was CEO. So, while it may seem like Jassy taking over is what screwed up
Amazon, the real culprit was actually Bezos last decisions before he retired. So, by that logic,
it makes no sense for Bezos to takeover once again as this was all his fault. Also,
Jassy hasn’t had enough time to really be judged as CEO yet, so we can’t jump to conclusions about
him just yet. The reality is that Jassy is actually super qualified to be CEO. I mean,
that’s why he was picked for the job in the first place. He joined the company way back in 1997
before the dotcom bust so he was also very much involved in Amazon’s dotcom turnaround. In fact,
you could argue that Jassy was the architect of Amazon’s turnaround. Bezos original idea to turn
around the company was to actually launch something called Merchant.com. The service
was supposed to help other retailers set up their own e commerce platforms similar to Shopify. But,
this turned out to be a massive failure and that’s when Bezos allowed Jassy to startup AWS or the
cloud side of Amazon. And eversince then, AWS has been the lifeblood of Amazon. In fact, it’s
the only reason that the retail business was even viable as AWS was able pay for all the losses and
upfront investments. This is true even today as Amazon’s retail busines is still teetering between
profitability and unprofitabilty. So, really, it was Jassy that turned around Amazon back
in the 2000s. From that perspective, it actually makes more sense to give Jassy a shot than Bezos
a shot. It would also play out much better on the media which brings us into our next point
which is that Bezos is a PR nightmare. It’s no secret that the media hates Bezos and there are
plenty of good reasons to hold a grudge against the guy. The reality is that his involvement or
lack of involvement doesn’t really change any of the bad attributes of Amazon. It’s
not like the lives of warehouse and delivery workers suddenly became magical after Bezos’
departure. It’s also not like Amazon suddenly stopped avoiding taxes as much as possible. But,
when Bezos is not directly involved, all of this is just written off as a big evil corproation
doing big evil corporation things. When Bezos is involved, however, it all of a sudden
becomes personal. It’s no longer Amazon that’s causing all this damage, it’s actually Bezos,
the world’s richest man, who’s doing all this. He’s the reason. He’s the one abusing warehouse
workers. He’s the one evading taxes. He's the physical manifestation of evil rich dude. Whether
this is accurate or not is irrelevant. When the public has such a large bias against a dude,
probably not the best idea to put him back in the spotlight especially as a consumer business.
HINTS FROM BEZOS: Clearly, there’s quite few reasons going for and
against Bezos, but what does Bezos think? Well, he hasn’t publicly talked about the situation
but that doesn’t really mean anything. This isn’t the type of situation that you plan on. I mean,
there’s a reason that he retired. Bob Iger for example says that he was very very surprised by
his own return to Disney. So, Bezos hasn’t exactly dropped any hints but we can dubiously speculate
based on his principles and overall thoughts. While Bezos is likely disappointed by the current
state of Amazon, I don’t think he’s particularly surprised. In fact, he’s been anticipating this
moment for his entire career as he always knew that Amazon’s downfall was inevitable.
With that in mind, Bezos could return to Amazon but what’s the purpose. Sure, he might be able
to turnaround the company and get them to $2, 3, 5 trillion, but what does that accomplish. He’ll
just be even more hated and it’s not like saved Amazon completely. He would’ve simply delayed
their downfall by another 10 or 20 years but the eventual death of Amazon is still inevitable. So,
why waste time on such a vanity metric especially when he could be working on rockets or his earth
fund and hopefully actually be creating long term change. This is precisely what Bill Gates did.
After he left in 2000, Microsoft got destroyed. In fact, the stock didn’t move for the next 17 years.
But, Gates didn’t come back. He actually stepped back further, sold more stock, and focused even
more on his foundation. And given that Bezos has also reduced his stake down to the single digits,
I’m pretty sure that Bezos leans on the side of not returning. But who knows, Amazon is his baby.
So, I’m sure he’ll have tough time just watching the carnage from the sidelines. It’s not just
Amazon that’s facing an existential crisis. All of big tech is going through similar turmoil. If
you’d like to learn why all monopolies eventually fall, check out this video.