JEFF BEZOS HAS just become the richest man in recorded history with his wealth crossing $150 billion. In absolute terms, he was already the richest man on the planet, far ahead of Microsoft founder Bill Gates by more than $50 billion. But in 1999, Gates had been worth $100 billion and adjusted for inflation that was around $149 billion today. That record now stands broken. It is somewhat meaningless for both Gates and Bezos. This is not a milestone they have in mind. The former wants to change the health of the world’s poor and Bezos is driven by making Amazon a superstore that stocks and sells every item in the universe and delivers it almost as soon as a customer wants.
What explains Bezos’ record wealth is the extraordinary increase in Amazon’s share price. As of now, the company is in a race with Apple to be the first that touches $1 trillion in market value. To get a sense of what this means, consider that just three years ago, the difference between Apple and Amazon’s market capitalisation was $600 billion. Now that gulf is down to $50 billion. Apple is still ahead, but if the recent past is any indication, then not for long. And this is despite the hard numbers being all on Apple’s side. As a CNBC report had noted, Apple made more profits in one quarter than all profits that Amazon had ever made. ‘The smartphone maker generated a $48.35 billion in profit during its fiscal 2017 and made $13.8 billion in net income during the March 2018 quarter. In comparison, Amazon’s total net income since inception is about $9.6 billion,’ it said. The value of a company, however, is determined by expectations of future profits and the world clearly believes at present that Amazon is the horse to ride. It is a faith that rests entirely on Bezos, who has never shied away from forgoing a profit to fulfil the vision of Amazon. Once it overwhelms the market, profits will follow. And Bezos still follows that principle, as Amazon’s India strategy shows.
Currently, Amazon India’s valuation is estimated at around $16 billion. But the company has been losing money heavily outside the US—it logged international losses of $3 billion in 2017—and much of it is being swallowed by India. Even so, after slating $5 billion for India, Amazon recently announced that it would put in another $2 billion. This is to counter the Walmart takeover of Flipkart, currently India’s biggest e-commerce player. But whereas Flipkart has just merchandise, Amazon is creating a loop around Indians through music, video fare and free deliveries for a nominal annual fee. In his latest Letter to Shareholders released in April this year, Bezos wrote, ‘Amazon.in is the fastest growing marketplace in India, and the most visited site on both desktop and mobile, according to comScore and SimilarWeb. The Amazon.in mobile shopping app was also the most downloaded shopping app in India in 2017, according to App Annie. [Amazon] Prime added more members in India in its first year than any previous geography in Amazon’s history. Prime selection in India now includes more than 40 million local products from third-party sellers, and Prime Video is investing in India original video content in a big way, including two recent premiers and over a dozen new shows in production.’
Bezos’ focus on customer service has been manic to the point of ruthlessness towards every other player in its ecosystem— employees, vendors, etcetera—including, perhaps Amazon itself. In Brad Stone’s biography The Everything Store: Jeff Bezos and the Age of Amazon, an anecdote illustrates just why Bezos could turn Amazon into what it is. When he decided to launch the Kindle and create a culture of digital reading, he called a senior executive who had been part of the traditional books division, which was thriving, and gave him charge of the operation. ‘“Your job is to kill your own business,” he told him. “I want you to proceed as if your goal is to put everyone selling physical books out of a job.” Bezos underscored the urgency of the effort. He believed that if Amazon didn’t lead the world into the age of digital reading, then Apple or Google would. When Kessel (the executive) asked Bezos what his deadline was on developing the company’s first piece of hardware, an electronic reading device, Bezos told him, “You are basically already late.”’
And then there is the mythical ‘?’ that he sends down the line when he receives an email complaint at [email protected]. com. The world’s richest man still reads mails from customers. It fits in with a culture of what he calls customer obsession, as opposed to the competitor obsession of other companies. As he explained during an interview at an event recently, “If you are the leader and if your whole culture is competitor- obsessed, then it is hard to stay energised and motivated. Whereas customers are always unsatisfied. They always want more. So no matter how ahead you are of your competitors you are still behind your customers. They are always pulling you along.” They have so far pulled Bezos to $150 billion, and if he keeps going with them, how much will his wealth eventually be?