[Sandeep Krishnamurthy is dean of the School of Business at the University of Washington, Bothell.]
Commentary: Jeff Bezos just announced plans to step down as Amazon’s CEO. He will remain as executive chairman, the model in vogue for CEO transition. He will continue to be influential in many decisions within the company. But there will be a new CEO starting in the third quarter: Andy Jassy, the long-serving leader of Amazon Web Services.
While this is indubitably a global story, it is also an excellent time to recognize the top echelon of business leaders to emerge from the Seattle region. Jeff Bezos now joins Bill Boeing and Bill Gates as the three most significant entrepreneurs in Seattle history. Together, they have established our region as an inventive powerhouse, spearheading entirely new spaces.
The companies that the “three B’s” developed are world-beaters: Boeing, Microsoft and Amazon. And they remain at the very heart of the Pacific Northwest economy. They all offer compelling products that define markets and change the lives of customers. Flying a Boeing plane, working on a device that uses Microsoft software, or having products delivered through Amazon are simply part of the fabric of the customer’s life all across the world today.
Each of the companies is exceptionally profitable, and all three are world-class employers. In 2020, Amazon’s revenue was $386 billion, Microsoft’s revenue was $143 billion and Boeing’s was $58.2 billion (although, it was as high as $100 billion a few years back).
And it all happened here in Seattle.
Each of these innovators launched products that were regarded as absolutely impossible. Nobody thought we could fly. Even after the Wright Brothers demonstrated it, there was little evidence that we would have a worldwide network of travel using airplanes. Yet, Bill Boeing, a timber merchant, found a way to leverage his experience to not just build the first commercial airplanes, but spawn an entire industry.
Very few people saw the future of personal computers. The early efforts were viewed as ultra-technical. Yet, Microsoft-powered computers now run the most complex organizations in the world. And, nobody thought that the Internet could be leveraged to order anything we can imagine for rapid delivery. And yet, Amazon has become the machine that translates customer clicks to brown cardboard boxes that mysteriously arrive on doorsteps.
Bill Boeing and Jeff Bezos both migrated to this region. Boeing was from Detroit. Bezos was born in New Mexico, and later worked on Wall Street. Bill Gates is a native. They all recognized the regional advantages: physical infrastructure, technical workforce and a receptive business environment, to name a few.
All three of these entrepreneurs found ways to leverage their initial success to build diverse portfolios of profitable businesses.
The conglomerate that Bill Boeing built included United Airlines (transportation), Pratt and Whitney (aircraft engines) and, of course, the Boeing Co. (airplanes). Microsoft is now a fundamentally global corporation with diverse software and hardware (e.g., Xbox, HoloLens) operations.
Similarly, after starting out as an online bookstore, Amazon has grown into a company with a plethora of dimensions. Amazon now owns a fleet of planes, satellites and drones. In many ways, Amazon has already become a transportation conglomerate.
In contrast to its relatively modest initial ambitions, the breadth of Amazon’s current operations could not have been envisioned on day one. Amazon as it stands right now has a few key pillars: online retail, third-party fulfillment/logistics, advertising, and the AWS cloud platform, which, along with Microsoft Azure and Google Cloud, is redefining the very nature of computing.
Fundamentally, all three companies democratized major industries. Bill Boeing envisioned a commercial airline where everybody could fly. Bill Gates imagined computers not occupying entire buildings, but helping the average person be more productive. Bezos democratized the world of online shopping by putting the customer in charge rather than traditional stores.
All three business leaders also built powerful cultures capable of sustaining or accelerating their original vision.
Bill Boeing had a sign on his wall that said, “2329 Hippocrates said: 1. There is no authority except facts. 2. Facts are obtained by accurate observation. 3. Deductions are to be made only from facts. 4. Experience has proved the truth of these rules.”
Bill Gates made famous his “think weeks” where he took a personal retreat, reading memos written by employees from all over the company.
Jeff Bezos created a work culture where employees write six-page memos and time is spent first reading the memo by the group. He advocated making a few high-quality decisions, obsessing over customers, not paying too close attention to the stock market and embracing failure.
All “three B’s” went through antitrust investigations. The scale of the organizations that they built were so strikingly immense that they attracted the attention of regulators.
Bill Boeing’s company was broken up into three separate entities: the Boeing company, Pratt and Whitney and United Airlines. Microsoft went through a hard-fought antitrust action around linking the operating system and the web browser. And, Jeff Bezos has had his share of antitrust attention, particularly focused on third-party sellers.
Philanthropy and Societal Impact
In addition to this immense scale of innovation within Amazon, the reality is that Bezos is now bigger than Amazon itself. He owns the prestigious Washington Post, the standard-bearer in American journalism. And, his space company, Blue Origin, is focused on sub-orbital flight. I have a feeling that he will simply not stop here. By stepping down as CEO, Bezos has acquired for himself the flexibility to innovate even further. He can invest or start new ventures that have immense potential.
All “three B’s” got involved in philanthropy in meaningful ways. Bill Gates is clearly the leader of the three with his Bill & Melinda Gates Foundation, which has now become the largest non-profit in the world. Jeff Bezos arrived at philanthropy late. Arguably, he really only started to even think about it in the last decade or so, and many argued that he and Amazon simply had not done enough. It is impressive to see the focus on homelessness and sustainability, in particular.
As with any other philanthropic effort, there are detractors and critics. But, there is no doubt that these efforts have made a big difference in many lives. Boeing has been a strong supporter of various community organizations ranging from health and human services to education. The consistency of its support has been particularly appreciated. But, there is valid criticism about Bill Boeing’s role in housing covenants.
Certainly, Jeff Bezos paid attention to the political climate as he made his decision to step down. There is momentum for the unionization of Amazon warehouse workers, including an imminent vote. Democratic Presidential candidates also made the case that Amazon does not pay its fair share of taxes. In a major departure, the company reported paying $1.8 billion in taxes in 2020 according to the Wall Street Journal and will be expecting to pay even more in the coming years in a Biden-Harris administration.
The changing political climate may have further exacerbated the pressure on the company in terms of affordable housing, environmental sustainability and support for unions. It remains to be seen if Amazon will deal with these issues by automating even further or supporting its people. Many are seeing the hire of Jassy as being supportive of the automation route, but that is just speculation at this point.
The decision to step down is always tricky for a founder. Bill Boeing left the company after the antitrust action and airplane designerClaire Egtvedt took over as CEO. Bill Gates left Microsoft to his long-time colleague, Steve Ballmer, who has since been succeeded by Satya Nadella as CEO. Now, Jeff Bezos has left the reins to Andy Jassy.
There is a pattern of handing over the reins to a long-standing employee and Amazon is no different. In the case of Microsoft, Ballmer changed the tenor of the company from a technology-centric corporation to a sales-driven entity. Given the technical work of Andy Jassy, he is likely to drive a future that places AWS in a more central position.
Overall, there must be something in the water here in Seattle. We have had a tremendous track record in building large-scale innovative companies. Here’s to the “three B’s” and their immense contributions to society and the world. I am sure the next generation of diverse innovators will be ready to continue this tradition in the coming years.
The opinions expressed here are those of Dr. Sandeep Krishnamurthy. They do not purport to be an official position of the University of Washington or UW Bothell.