Since Amazon was a tiny startup selling paperbacks, Jeff Bezos has been focused on the long game. In his first letter to shareholders in 1997, he advised investors to strap in for a bumpy financial ride that could include short-term quarterly losses and risky acquisitions that fail to pan out. “We will make bold rather than timid investment decisions when we see a sufficient probability of gaining market leadership advantages,” he wrote. “Some of these investments will pay off, others will not, and we will have learned another valuable lesson in either case.”
Two decades later, what Bezos was building toward book by book has arrived. Amazon is an internet goliath whose products affect nearly every online user. If you’ve ever received an Amazon package, watched a livestream on Twitch, or checked an actor’s filmography on IMDb, you’ve dealt with the retail giant’s properties directly. But if you’ve streamed a movie on Netflix, booked a flight on Expedia, or sent a selfie on Snapchat, you’ve also felt Amazon’s reach via its cloud computing services, now in use by more than 1 million online businesses.
Amazon is steadily eating the digital world. On Friday, it took a critical step in subsuming the physical world as well by launching a bid to acquire the upscale grocer Whole Foods for $13.7 billion. For Amazon, Whole Foods opens up plenty of new business opportunities. The grocer’s affluent shoppers are ideal customers for Amazon Prime. Amazon has been trying and mostly failing to break into the grocery market for years — Whole Foods offers an immediate boost in market share and a group of trusted brand products that Amazon customers may actually pay to have delivered to their door. And with 464 new stores in its arsenal, Amazon has a variety of test beds for its retail experiments, like the convenience store without cashiers it’s been testing in Seattle.
The surprising acquisition left little doubt that Bezos has become the most powerful man in the technology sector, with investments spanning a wide range of galaxy-conquering pursuits. He’s building a digital media giant at The Washington Post, which has become a powerful international force in journalism covering issues such as the Trump White House and police-citizen interactions. He’s doubled down on his commitment to Blue Origin, his space exploration startup, by promising $1 billion in additional investment every year. He also has investments in Uber, Airbnb, and Twitter (and a giant clock that’s supposed to last for 10,000 years).
Ultimately, though, the nexus of Bezos’s power lies with Amazon, whose soaring stock price has catapulted its CEO to an $84 billion net worth, making him the second-richest person on earth. For years, Amazon was powerful but unprofitable, forcing Bezos to keep falling back on the long-term rhetoric of that first shareholder letter. But the rise of cloud computing, which Amazon dominates over rivals Microsoft and Google, has been a boon for the company’s bottom line. Amazon has now been profitable for eight straight quarters, giving Bezos more leeway to keep pursuing his ambitious, capital-intensive goals in retail, such as owning a massive chain of grocery stores and building an internal FedEx rival.
Bezos’s power will only continue to grow as his company becomes more essential to the everyday lives of millions of people. Amazon’s original value proposition was low prices first and foremost, but that advantage is fading. Instead, Amazon wants to save customers time, whether through packages delivered in an hour via Prime Now, or laundry detergent mindlessly ordered by mashing a Dash button. Even before the Whole Foods buy, Amazon was the one tech giant whose core business was about organizing atoms as well as bits. Now the company will have a physical footprint that extends to 42 states and three countries.
It’s clear Bezos has at least some awareness that he will have to make an effort to not be painted as a villain as his influence expands. On Thursday, following questions about his charitable giving from The New York Times, he sent a tweet crowdsourcing ideas for philanthropic efforts that could help people “here and now.” Like Mark Zuckerberg, Bezos is likely to be thrust into a pseudo-political role as his company becomes both one of America’s largest retailers and employers. He needs to show he’s doing good for the world with his fortune.
Bezos’s ambition to reorganize the world as an Amazon storefront has been evident since that first shareholder letter. But the brilliant thing about his business model is that his world-beating plan only gets easier as Amazon grows. “The stronger our market leadership, the more powerful our economic model,” he wrote. He had to strategically outmaneuver bookstores to take over that market. To become a leading grocer, he simply had to open his wallet.
