Throughout history, there have been a few individuals that have disrupted entire industries and even created new ones. A key quality all of these individuals share is their unwavering belief in themselves. The “Confidence” Award goes to Jeff Bezos of Amazon, who was one of the founding fathers of e-commerce and one who is obsessed with re-defining the status quo of nearly any industry he can get his hands on.
Jeff Bezos left a high paying job on Wall Street to move to Seattle so he could sell books online. Perhaps this does not sound that ridiculous now, but back in 1994 this was the equivalent of saying that I will be moving to a Mars colony next week. The legendary confidence of Bezos, however, managed to convince both early investors and key employees that selling books online was not a joke. After setting up a no frills operation in his garage, Amazon.com within thirty days sold books across the United States and in 45 countries with no press promotion. During its meteoric rise, Amazon has created the model for safe, online payments and popularized customer reviews to the dismay of the “experts.” Bezos was ultimately able to disrupt the book industry twice: once by making any book in the world quickly available and the other through the launch of the Kindle e-reader. In 2006, Amazon created a new model for cloud computing called Amazon Web Services whose revenues will hit $8.8 billion in 2015, up from $6.2 billion in 2014. This is yet another industry that Amazon has transformed.
The business tactics of Jeff Bezos are commonly referred to as ruthless and evil, and his management style has been described as demanding and relentless. All of these opinions, however, seem to fade away as the success of Amazon continues on its upward trajectory. While Amazon employees are pushed hard, they are also given stock options that have made many of them quite wealthy. Investors continue to want to own Amazon stock, even though the company shows no profitability and pays no dividends. Why? It is because they all believe in Jeff Bezos.
At the end of last year, the pundits were again questioning Amazon’s sky-high price to earnings ratio (above 500 at the time). Jeff Bezos, however, has always believed that paying taxes on profits is a far worse strategy than reinvesting them back into new projects that have the potential to drive revenue growth. On this scale, this is a business tactic that only works for Jeff Bezos due to the enormous credibility that he has built since his garage days back in 1994. With expected revenue growth in excess of 20% over the next 5 years, Amazon's $74.5 billion revenue is expected to balloon to over $185 billion. I think it is clear that the critics will once again be silenced and patient employees and investors will be amply rewarded. The “Confidence” award goes to Jeff Bezos for always dreaming big and never doubting himself for a single second.
For more information on Leadership, please refer to the following articles:
Amazon: Beyond The P/E Ratio, Seeking Alpha, October 16th, 2014
How far can Amazon go?, The Economist, June 21st, 2014
The Boss That Is Jeff Bezos, Business World, Rajeev Dubey & Chitra Narayanan, October 17th, 2014
For more information about the Corvinus Global Business blogger, go to https://www.linkedin.com/in/kevinmjackson1.