business news in context, analysis with attitude

Business Insider has a piece noting that "since starting Amazon in 1994, Jeff Bezos preached the importance of a 'Day 1' mindset: No matter how old a company, it should always preserve the speedy, risk-taking entrepreneurial zeal of that founding moment. 

But 28 years on, Day 2 has finally arrived, according to more than a dozen current and former Amazon employees who cited problems including a stodgy engineering culture, extra management layers, and rising red tape."

It is, the story suggests, "a perilous moment for Andy Jassy, who took over as CEO last July. Bezos once described Day 2 culture as 'stasis, followed by irrelevance, followed by excruciating, painful decline, followed by death.'

"Amazon isn't dying of course. But inflation and a looming recession, combined with a post-pandemic return to in-store shopping, have hammered growth. Revenue rose 7% in the latest quarter from a year earlier, the slowest in nearly two decades. Amazon's stock is down 20% this year, almost double the decline of the S&P 500 index."

Business Insider writes that at least part of the problem seems to be a lack of the tools necessary to keep the company both speedy and effective:  "Like any technology company, Amazon relies heavily on an army of talented engineers to churn out inventive new software to keep its businesses growing. And within these ranks, some say the company's building culture has significantly weakened in recent years. 

"During an internal all-hands meeting in November, an Amazon software developer told Jassy that the engineering tools needed to do their jobs were inadequate, making their work more challenging … Jassy acknowledged this as a problem and said it was part of a question on 'how do we remain speedy and fast.' The CEO noted that he had already told two of the company's most senior technical executives, Dave Treadwell and Peter DeSantis, to lead an effort to 'make things even faster for our developers'."

Business Insider also writes that "it's not just engineers or the founder who have felt Day 2 nearing. Those on the business side told Insider there are more processes, paperwork, and decision-makers involved in every step. 

"A salesperson on the advertising side, for example, said Amazon can take 6 to 7 days to close large customer deals compared to other companies that typically wrap them up in 48 hours. This person said the turnaround time is 'arduous' because Amazon requires approvals from multiple teams across legal, ad policy, finance, and pricing, among others. The slow process upset some larger advertising customers, this person added.

"Another salesperson at AWS said the rigid frameworks Amazon created in the sales process forces them to waste time navigating internal tools. Even a small contract amendment could take weeks, if not months, to complete due to the multiple approvals required, and AWS salespeople have to manually fill out forms across different portals, which means more time spent on non-customer facing work."

And this doesn't even include all the problems that Amazon has had in the physical stores arena, where the company has not been able to translate a significant financial investment into proportionate market share.

You can read the entire story here.

KC's View

Gee, it certainly seems like Bezos got out at a good time.   The question is, at what point do the problems start sticking to Jassy, making his situation less tenable?  I think it won't happen anytime soon, but the possibility is there.

One of the points that Business Insider makes is that  executives there are more and more thinking with their feet, leaving to go places where they can build more and more easily, and thrive in more nimble environments.  This won't kill Amazon … but it will make Amazon more like other companies, which dilutes its advantages.