Page 28 - Forbes Magazine-September 30, 2018

JEFF BEZOS
question can be asked about it. Buffett, WHEN YOU WALK AMONG THE Seattle
for his part, concurs, having explained high-rises, the most interesting building THE WORLD’S
to me a few months ago: “We were del- in Amazon’s neighborhood—with apol-
uged by people after the announcement ogies to a stunning new biosphere de- MOST INNOVATIVE
who said, ‘We want to join in.’ And we signed to serve as something of a com-
said, ‘You don’t have to join in. Steal ev- pany commons—is a food store that
What did Thomas Edison have that
erything we get, if we get anything.’ ” The pokes out from the bottom of Day 1 Nikola Tesla didn’t? Well, the latter
“if we get anything” is key. “Like Colum- Tower. Amazon’s $13 billion Whole died penniless. And Edison had what
bus leaving, we don’t know where the Foods purchase last year is only the sec- professors Jeff Dyer of Brigham Young
hell we’re going exactly,” Buffett added. ond-most-interesting grocery initiative University and Nathan Furr of INSEAD
“But we hope there’s another continent at Amazon; the first is Amazon Go, an business school call innovation capital.
out there and we don’t go off a shelf at 1,800-square-foot experiment in fric- Dyer and Furr have ranked the leaders
with the greatest innovation capital
some point.” tionless brick-and-mortar purchases today by measuring four essential
But even if they do sail off the Earth, that opened in January.
qualities: reputation for innovation
Bezos wins, as Amazon burnishes its Go, a food store, might be the most (looking at media coverage over five
skills accounting for around one fifth of Amazonian thing at Amazon. Bezos has years), social connections and networks
the domestic economy. While any break- always stressed frugality, and here are (on Twitter and LinkedIn), track record
throughs developed with Buffett and his employees (and a few Seattle resi- for value creation (based on the market
Dimon “would still be inside that non- dents and tourists) shopping for their value growth of their companies) and
profit entity,” Bezos says, “each of the lunches, buying them from Amazon investor expectations for future value
creation (measured by the premium
companies can pursue their own initia- and in doing so also providing the com- investors put on their companies’ stock).
tives.” Bezos has already started. In June, pany reams of data to hone its skills. Here are the ten top finishers; Forbes
Amazon agreed to pay almost $1 billion More important, Go demonstrates will publish a full list of the 100 most
for PillPack, a startup that delivers pre- what’s possible when different aspects innovative leaders in 2019.
packaged daily prescription envelopes. of Amazon’s myriad operations come
It’s everything that Amazon is good at: together. Go en com passes knowledge
fulfillment, customization and depend- gained from purchases at Whole Foods; Amazon puts all the pieces together.
ability. And it’s another toe in the health- from Amazon’s increasingly sophisti- The most important aspect of it all is
care pool. cated algorithmic and hardware capa- Prime. At its core, it’s a marketing tool,
Bezos is also going to school in ad- bilities, in the form of AI, camera and a way to encourage buying—and gener-
vertising. Amazon’s most recent quarter- sensor technologies, which combine to ate recurring subscription revenue (an es-
ly performance revealed a startling num- figure out what’s taken off the shelf (and timated $10 billion in 2017)—in a similar
ber: Amazon is on pace to exceed $8 put back) and who did the taking; and vein to warehouse clubs like Costco and
billion in advertising revenue this year— from Amazon Pay, which seamlessly BJ’s Wholesale. But as it grows, it’s surged
roughly double last year’s total. And why handles the transaction once the com- into a way to shower its 100 million-plus
not? Google might know what you’re in- pany’s app registers the inputs. Grab- subscribers with perks and privileges.
terested in buying, Facebook might be bing a chocolate milk here on the way And those perks create endless new adja-
able to deduce what you’d be inclined out feels like shoplifting—no check- cencies and business lines. Prime explains
to buy, but Amazon knows what you’ve out lines, no scanning, no swiping. If why Amazon has started to encroach on
actually bought, or even whether you healthcare and advertising represent Netflix and is expected to spend $5 bil-
showed intent to buy. huge expansion verticals on Amazon’s lion on programming this year, including
That raises all sorts of issues. Bezos de facto vertical campus, Go brings to- the highly touted Marvelous Mrs. Maisel.
talks exuberantly about his consumer ob- gether what’s possible horizontally when In just three years, “Prime Day”—an an-
session, but there are few customers who nual 36 hours of special deals just for
want to be targeted with more ads. Bezos members, with participants spending bil-
says the trust that Amazon has built lions on more than 100 million products
with its customers will ensure the com- “TRUST IS this July—has become a shopping holiday
pany doesn’t cross a line—and that cus- WHAT ALLOWS with a mania surpassed only by Black Fri-
tomers, in turn, will give him the bene- day and Cyber Monday. Access to Prime
fit of the doubt. “It’s very valuable, and so YOU TO is how Amazon gets its outside retailers to
you would never do anything to jeopar- pay more for Fulfillment by Amazon.
dize it,” he says. “It’s what allows you to EXPAND THE Prime also underpins Amazon’s
expand the business.” If Bezos can walk BUSINESS,” brick-and-mortar strategy. Prime’s
that line, it’s easy to envision the Face- same-day deliveries and pickups require
book-Google advertising “duopoly” gain- BEZOS SAYS. more physical beachheads, which in
ing a third major entrant. turn help underwrite expansion into all

84 | FORBES SEPTEMBER 30, 2018