Jeff Bezos Steps Down As Amazon CEO: Lessons For Indian Founders

BOOM spoke to Haresh Chawla and Sharad Sharma in order to understand the importance of Jeff Bezos for Amazon, the road ahead post the transition and lessons for Indian entrepreneurs.

Recently, Jeff Bezos, founder of Amazon announced that he will be stepping down from the post of CEO after running the company for 26 years. Andy Jassy will be taking over as CEO at Amazon.

Staring his entrepreneurial journey in 1995 when he founded Amazon as a online book retailer, Bezos grew the company into a massive $1.7 trillion global retail, logistics and cloud services business. During this period, the success of Amazon has also made Bezos into one of the world's richest people. Jassy who joined the company in 1997, headed the cloud services vertical. Jassy has often been credited for Amazon's successful diversification from an online retailer to the new age cloud services business.

BOOM spoke to Haresh Chawla and Sharad Sharma in order to understand the importance of Jeff Bezos for Amazon, the road ahead post the transition and lessons for Indian entrepreneurs.

"We are in the era of missionary entrepreneurs and philosopher CEOs," said Sharad Sharma, Co-Founder iSprit.

Sharad Sharma said that while there are several lessons for Indian entrepreneurs to learn from Amazon, the need for quick returns has corrupted our ecosystem. Sharma emphasised that there is a strong need to advance the entrepreneurial system in the country.

"We've not had the time to absorb and pass on the lessons of the culture of grab leaders to understand what it means to build an institution that outlasts themselves," said Haresh Chawla, Partner, True North

The experts in conversation with BOOM's Govindraj Ethiraj also focused on the importance for companies to build a good work culture where people have role models to look up to. It is not always about cutting costs but understanding the significance of the market.

You can read the edited excerpts of the conversation below.

Govindraj Ethiraj:

Remember that Amazon has had an amazing run, particularly in the last one year, it has a market capitalization of over $1.6 trillion dollars 70% of that growth has come in the last 12 months along Of course, with other technology companies, the last quarter was over $100 billion dollars at about $125 billion dollars. So it's a record run in in many ways. So you could argue that maybe the best time to step aside is when you think you're on the top. So let's try and understand this. also equally and importantly, with an Indian lens. To do that, I am joined by Haresh Chawla, partner of Truenorth. Also an active speaker and commentator on in the venture capital and innovation circuit. I'm also joined by Sharad Sharma, co founder of iSPIRT, the foundation that looks at product companies, and also an active speaker, commentator and player in the innovation circuit in India. Thank you both for joining me, so Haresh Why don't you go first? So how do you view this sudden announcement from Jeff Bezos?

Haresh Chawla:

No, I yeah. I think it's come at a time when you know, Amazon is clearly cemented itself in the landscape after the post COVID surge and e commerce. So I think what's really happening is that there are multiple facets that we need to look at. One is, you know, Jeff Bezos, his own personal agenda to drive innovation, not only at Amazon, but other ventures. The second thing is the tech and the scrutiny that's coming in from regulators. And Jeff Bezos has been the face of Amazon all these years. So there is scrutiny coming and there's a big cry for breakup of tech, too, clearly, there is a need for getting a new face there, probably see what happens, you know, will the regulators allow such high dominance in e-commerce and cloud services all to be in one company. So that's the other aspect here.

And the third is I think your company is fully ready, Amazon has built a fantastic operating system for Amazon. And you've seen how some of these founders have managed to build an operating system within the company, we saw that whole transition that unfortunately happened in Apple with the demise of Steve Jobs. But frankly, they had built an executive team that really took the company forward on the same, you know, same ethos, the same culture. So my sense is that, you know, this is the time he probably wants to bring that sense, that culture into some other ventures that he's already working on, and spend more time on them. Because Amazon is really now become a machine. An incredible machine, which is gobbling up business across the world. Good or bad is a separate part of the discussion, but the operating system of the business is fantastic. And I think that every company tries or should emulate actually.

Govindraj Ethiraj:

Okay, so we'll come to the part about whether it's good or bad in a moment. Sharad, your thoughts

Sharad Sharma:

I agree with Haresh, I think companies grow in innings. We see that happening even in India, you know, make my trip was one type of company, international travel, then it became, you know, domestic travel. And as Haresh said, most likely, it means a breakup of Amazon. And at least you know, 50:50 is currently the profit pool between the cloud and the retail portion. And regulatory pressures are high, this is going to give them the space to make that change. It's very hard to make that change if the founder CEO is on top. So to me, this is a very strong signal, and that this is a breakup. You know, I've had an opportunity to meet both of these guys, including a very long dinner. Okay, you know us three, four of us with Jeff and so he is a highly intense guy and very clear headed, you know a big learner. So I think his motive remains to be very busy in other ventures but Amazon will probably devolve into two or more players as we look at it.

Govindraj Ethiraj:

Okay. And we'll come back to that dinner in a moment Sharad. So Haresh, if you look at now e-commerce or retail specifically, what is changed and was changing in the last, let's say a couple of years, which perhaps will be impacted or has an impact on the transition that we're talking about.

Haresh Chawla:

So, you know, at the very core, e commerce was always a bit handicapped in the retail space. And Amazon understood that that since you couldn't touch or see or feel the product you were buying, the company that was selling online had to actually work harder, and make it much more frictionless, give you same day or next day delivery. So there were a lot of additional costs that e-commerce companies, you know, put in to make sure that they could keep growing and give you a good alternative to stepping out of your home and, and buying in retail. Amazon also has been a capital story, because they have managed to raise money at the lowest cost, they've managed to keep the working capital cycle so tight, that they're able to fund this little handicap, and have managed to be really the only company that has set the ground rules as how to work on these handicap. Post COVID, the handicap has actually gone away, you actually now worry whether you should go to a retail location. So across the board, I think companies and not just Amazon across the board, all companies that have come to this new realisation that the consumer expectations has been set by Amazon.

But the cost of doing business or on online is the cost of getting a customer, cost of making sure that they are able to leave behind the handicap and really transact with you has gone down. So I think that the whole market, which is why you think Shopify again takes off in a massive manner. So my sense is, for e-commerce as a whole, this is a completely new world post COVID. For Amazon, my sense of competitive intensity actually goes up because the rent Amazon charges to sell on this platform is massive. It takes away 30 to 40% of a product company's margin. It's not cheaper than selling on lets say modern trade or commercial retail. But now several companies will start using Shopify kind of platforms and try and reach customers to direct directly. And that unbundling where logistics will become one part when you get separated out. And the whole shopping experience now is much more easy to do because consumers wanting to transact online is going to be a fundamental shift across the world indexing.

Govindraj Ethiraj:

So and let's talk about cloud services for a moment and the selection of Andy Jassy No, of course, he's an old time lieutenant and was widely seen as someone taking this position. But he's also the person who conceptualised, launched and grew cloud services to what it has become today, which is also not just help helping Amazon but also helping companies like Microsoft grow. So any thoughts on what that means and the selection of an Andy Jassy, beyond what we know.

Haresh Chawla:

I think in the selection process, and the cool thing, too, that a founder looks at is that we carry the DNA forward. So I would read much more into the Andy as a person and their relationship and how he can carry the flag forward of a company that works in the manner that Amazon does the extreme aggression, extreme focus, the willingness to embrace failure, the willingness to make mistakes. I think when you put all of this together, I think the candidate choosing happens there. Because what's great about a company that you know, if you're trying to build an institution that has to outlast you, it's the DNA and the culture that has to outlast you. And therefore you end up grooming a person over a few years. And you look for the traits that can allow that DNA to continue getting replicated again and again, which is why Tim Cook was not a very obvious choice for Steve Jobs as well. So therefore, that relationship between those two people I don't think we can comment on but the driving force of that relationship is the fact that can the DNA continue to carried on in the same strength and manner as before?

Govindraj Ethiraj:

Okay. Sharad, your thoughts on cloud and the potential for cloud? And if could that have been at all a driving decision as Haresh says, in a in a very Tim Cook, Steve Jobs style, it's really the DNA in the person you really trust to hand over the entire enterprise

Sharad Sharma:

No I think he's right, DNA plays a very important role. important role, and especially, I think Jeff had actually become what he called as a culture Inspector, inside the company, right? He told us in that dinner that we had that, you know, the business is too big for him to get involved anyway. So he picks two to three areas where he goes all the way down to the shop floor to the janitor and does every role. And he can only do that for one or two things there. And why does he do it, he doesn't do it to understand the business alone, he does it to understand how the culture is translating at every step of the way. So he had become the custodian of the culture, you know, and this is even several years back. And he had set up an engine, which was actually taking the business forward. And so absolutely, I think it is, you know, the DNA is going to be an important factor.

Also, keep in mind, you know, the cloud business and retail business are very different retail businesses. And it's a fundamentally different way of thinking about that business. And if you go deeper, Andy brought that thinking to life, now, we don't hear of that so much here in India, although now that we have people wanting to get into the data center business, some of those learnings will apply. But actually, they had conceptualised inside a business, a very different model for thinking about commerce, when it comes to non finished goods, right. And, and versus finished goods. So you will see that jostling take place as you go forward. In India, we only wrestled with the finished good parts. So you know, some of that will become more visible to us because of Andy coming in that role as we go.

Govindraj Ethiraj:

Right. Okay. And he is going to be Haresh he is going to be executive chairman. So which means he's still going to have control, but I'm sure he will also hand over a lot of roles, I mean, tasks and roles.

Haresh Chawla:

I don't think the stamp of Jeff Bezos will go away from Amazon, I think that that's going to continue. And I think that, in fact, if you think about it, you want that strengthened even more, the long term thinking equally combined with a day one thinking, you know, you see the unique combination of being continuously innovative, but continuously ensure that the processes are replicable at scale without error. So that combination is what most business leaders miss out on. Because we end up either focusing our team very hard on the process, and that drive, outcomes and innovation, take a backseat. But Amazon has this unique combination to execute at scale without error by heart processes. And to be able to go and innovate and make mistakes and learn new categories, learn new segments and build businesses there.

Govindraj Ethiraj:

Right, you know, so he does talk about in that letter that he wrote, he says, I believe we are at our most inventive now. And I hope you are proud of our inventiveness as I am. And I think you should be Sharad at how do you read these lines? And, you know, is there any application for us in our own enterprises and so on?

Sharad Sharma:

Yeah, so I think we are in an era of, of what you would call as missionary entrepreneurs, and philosopher CEOs. And Andy and Jeff actually has a presence that he was a missionary entrepreneur was all about, you know, and although in the later years, Amazon did become, you know, penny pinching, but in the early years, that wasn't the case, it was about growing, the market was more significant. And frankly, he's a very philosopher, first principles CEO, you know, he is not willing to take what's in fashion, he'll unpack it, get to the first principles and then build forward from there. And you we have such entrepreneurs in our system, and they are not recognised, because they're not VC funded. But I think Shridhar vembu is clearly one of those people. And I think, you know, we we've corrupted our entrepreneur system, by the need for private equity type returns, you know, early, quick returns. And, and we've, therefore created a type of archetype that is probably not going to succeed in India.

Govindraj Ethiraj:

Haresh, your sense on missionary entrepreneurs and philosophy?

Haresh Chawla:

I agree with Sharad there. I think Indian management has to mature, we have multiple styles sitting there. We've grown as a country over the last two decades or three decades, actually, suddenly, we've not had the time to absorb and pass on the lessons of culture of grab leaders understand what it means to build an institution that outlasts themselves. So I don't think there are many institutions, we've seen how a company has suffered through these management transition. And that's a direct result of the fact that culture has always taken a backseat. Plus our management style in India, some people are feudal, some people use matrix, some people use deep bureaucracy and hierarchies. So I think this is something that will take us time to arrive at and as struggle. This is the role models we are missing. Where do you hear people talking about how they've built their organisation? How the people are proud of them, the only real example is TATAs.

Govindraj Ethiraj:

Right? So, you know Sharad, to put the question back to you now is this is not an easy prescription. You can't say, go become a missionary entrepreneur or a philosophy CEO and come back and then start a company you are, I'm assuming, to some extent this is ingrained in you and either it's too late, or maybe it can never be done. So how do you then I mean, what is the lesson or the takeaway, as we view the Amazon, the great Amazon transition of a great individual in a great company? What is the lesson or takeaway for folks? Right here?

Sharad Sharma:

I think it is happening. I am cautiously optimistic, like how vicious I think this is a learning that is taking place in the ecosystem. And it is happening, I think, clearly, you know, one understanding that has developed is that a copy paste model doesn't work. Right. I mean, our copy of Amazon itself, you know, while it was a great exit for the investors, you know, it wasn't really a big success story, you don't hear of it as a place to go to for lots of good lessons learns, right. So there is a there is a realisation that copy paste doesn't work, you know, let's get into the some of these segments very quickly, you know, when they're just evolving, and and build from there. The second big lesson, I think, which is coming is that we traditionally went back and changed our game, only when it stopped working. You know, but you look at what Silicon Valley does, they actually when things are going well, they reinvent themselves. You know, Netflix has, you know, the DVD business was doing extraordinarily well, when they reinvented themselves and said, You know, we're going to offer something to the cloud inside the board, you know, as things have come out, the board tried to stop them and say, No, no, what are you doing this, you know, that, you know, your business is doing? Well, you got to focus on that business. Now, had they not reinvented themselves that DVD business would have gone away. Now, when the cloud business was doing well, they reinvented themselves and today they have more Emmys than almost anybody else in the market, right? And they became a content player. So the goal of a company is to reinvent itself when the going is good. And Amazon is a very good example of that. Now, this was a very bizarre idea because in India, why take on why mess with things that they are going well to reinvent yourself? And but that idea is beginning to come and and i think i'm cautiously optimistic. We have this new class of athletic Gavaskar entrepreneurs that are emerging and some of them are young. They understand the platform piece Well, they understand how to fight a David versus Goliath battle well, very early in the game. You know, I, in some respects phone pay is an example of that Samir and, and Rahul had to face Google pay very early in the game, you know, within the first year, and actually, so so we have entrepreneurs that are emerging, I think the people where things have to catch on are the enablers. And, and the story has to change in this evolution today, other mainstream VCs, and, and they are somehow stuck in the past, and they are holding the ecosystem back. And I am hoping that some of that change will also happen in the years to come.

Govindraj Ethiraj:

Okay, Haresh, do you want to respond to that? Because there's a second time that Sharon mentioned this. I mean,

Sharad Sharma:

he should know much capital courses. That's what I'm talking about others, not him? Let me be clear.

Haresh Chawla:

Mature capital also comes in, which is what much longer term horizon? Right? I think that's the whole thing. is a founder willing to do the same thing, 20 years from now? Is the investor willing to back and get an exit seven 8 10 years from now? So that whole short term thinking once is taken away? Then you sit back? And you say, How do I build a company that will go through change without breaking. And then people start focusing on culture, the kind of team they build the DNA they build? So I said, I asked you a founder this question that okay, we fund funding today. But are you willing to do it 10 years later, you and if the business is not doing well? Are you willing to continue at it? Because great companies take time to build and give you access? and business success may come early? But that's a good company. That's not a great company

Govindraj Ethiraj:

Okay. And I'm gonna ask you a bit of a trick question in as we as we conclude. But Haresh before that, what is the lesson that you do not take away from Amazon, or Jeff Bezos in from his journey so far?

Haresh Chawla:

Okay, now, frankly, you know, you can't blame a company for saying I want to maximize profits, I want to maximize shareholder value. But there has to be a conscience that a business needs to build as to what actions it is take, and it will not take that conscious. And remember, the market is trying to impose conscious, which is regulation. But regulation is far behind on technology, it cannot it'll I think over the next decade, you find that regulation will not catch up. At that point, companies need to grow a function. And all of them have failed, frankly, even Apple has failed. If you see what happened to the battery scam, it's not you know, and today, of course, they are touting privacy because they have a capital base of customers. And they really don't need to bother. It's a closed ecosystem. So they can talk about privacy equity. But the whole issue is that as you grow and mature as a company, do you grow a conscience or not, you get the market is going to be always late and imposing upon. And the market will then impose a breakup on you, or regulation will do something crazy, that will actually cement a position. So some of you guys Welcome regulation, because regulation, you know, narrow is the entry point for nuclear. So we are in a tough battle where, you know, the control they wield over society over our thoughts is so high that we need these companies to grow a conscience frankly,

Govindraj Ethiraj:

right. Okay, that's a good point Sharad on that any lesson that you would not take away from Amazon or Jeff Bezos?

Sharad Sharma:

Not Amazon, it made a strategic mistake for which they're going to pay a big price. And that is when they started competing with their own sellers, right. And when you do that, you know, conscience or regulation, or different kind of a rule applies. So this is why you have a situation where make my trip clear trip Yatra, when you ask for a flight, they'll show you all the flight options that are there. And why that happens. Because back in time, 1958 Sabre, which was doing that for travel agents was owned by American Airlines and American Airlines was the world's largest airline. So senate and the US government put in a rule saying that you can't give preferences to your own airline, right. And now that that logic, which prevails in some sectors, it prevails even in India, although India doesn't have a rule of related to that, because the GDS is enforce that rule, because Europe and US follows this, and they don't want to have a different market in India, and make my trip would be very happy to say, Hey, I will only show you flights from my friends. And to be a friend, you will have to pay me a fee. Right? And they can't do that. And so therefore nobody pays them a fee at all right?

When you book a flight on any of these places. So that's a different regulatory structure. Why that regulatory structure exists is because you don't want to compete with your own partners that is there. And Amazon did see this coming and they broke that rule and eventually they'll pay a very big price and most likely the breakup and subsequent regulation will come from that now unless Andy Jassy who understands this because he operated in a different structure altogether, where this rule was applicable. Right? He comes in and changes things in on the retail side. Now there is a small window for him to do that which will take off regulatory pressure. If he does not do that, then you will have the same problem that many of the other Silicon Valley companies have. They used open networks when they needed them called net neutrality, but they didn't deliver open networks when their customers needed them, and this kind of an arbitrage or regulatory arbitrage is no longer we know people are not willing to tolerate whether it comes to media, it comes to news, or it comes to Amazon. And I think companies that adapt to this will deal with this better and those who don't want and I am hoping that Andy, Jesse will make some of those changes, and Amazon will adapt and therefore, you know, will preempt some of the regulation that is on debit.

Govindraj Ethiraj:

Right. Okay. Last question. You know, the end from the last line of this letter, which, you know, Jeff says, Let curiosity be your compass. It remains day one. This is of course, now a legendary statement, you know, it's always day one in Amazon, what is day one mean to you, both of you? Haresh do you want to go first?

Haresh Chawla:

Add here a very quick way to actually say that don't be bound by the past, don't be bound by the, you know, mental models that get created because of success and look at everything afresh and the and embrace the change that's happening in the world. Okay.

Sharad Sharma:

My daughter was born in 97. And Google roughly came around that time, and I think the shift is, in our world of pre-97 people, either focus was on learning. For the post 97 world, the focus is on unlearning. Right? So unless you unlearn stuff, you can't and you don't learn new stuff. And day one is about having a beginner's mind. Right? And therefore, always be unlearning and learning, right? And, and that's a very powerful concept. So keep a beginner's mind with the world around this changing, be willing to unlearn and learn as you go forward. So that's what that communicates to me. That line it's a very powerful line.

Govindraj Ethiraj:

So right and that's a good note to end on. We've run out of time. Thank you, Sharad and Haresh for sharing your thoughts on on this transition and Amazon which should and will have a lot of lessons for everyone, including the the young startups or the many startups back home in India. Thank you so much.



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