[This fragment is available in an audio version.]

Amazon announced their financial results for the January to March quarter last Thursday. I was reading them when an email popped up asking if I wanted to talk about them on CNBC Squawk, which I did. In preparation, I re-read the report and pulled together a few talking points; here they are.

Top line · Amazon’s gross revenue increased 41% year-over-year, to $108.5B. To use a technical term: HOLY SHIT! This sort of growth on that sort of base is mind-boggling. Granted, shoppers suffering from Covid coop-up played a substantial role. But still, at some point you have to run into the Law of Big Numbers.

Branching out · But maybe not. One way to increase revenue is to enter more markets, and does Amazon ever do that. The quarterly summary mentioned online pharmacy, NFL merch, “Amazon One” payment tech, “Amazon Business” global procurement system with 5M customers and a $25B top-line, Prime Video’s partnership with the New York Yankees’ media empire, wireless earbuds, and video doorbells. Is there any business sector Amazon is not charging into?

Which brings us to…

AWS · Revenue moved up to a $54B annual run rate, the highlight being 30%-ish growth with 30%-ish operating margin, generating 47% of Amazon’s overall profit. I’d use another technical term but you get the idea.

AWS benefits less from Covid than the rest of the company, I guess; but at this revenue level, both those 30% numbers are pretty astonishing. People wonder why Andy Jassy got the CEO job, but these numbers are all you need to know.

There’s lots more room for growth, too. AWS is like $54B/year these days and my guess is that’s probably around a third of global public-cloud spend. Global Enterprise IT spend is a much, much, bigger number, so there’s no risk of the Cloudistas hitting the limits of their addressable market any time soon.

On the other hand, as I’ve said before, there’s a major potential headwind here. Anyone who’s spending say $1M/month with AWS has to be thinking that they’re sending $3.6M/year to Amazon’s bottom line, and that’s not a very comfortable feeling if Amazon is competing with you, which it probably is, and if it isn’t, apparently will be next year.

If I were an Amazon shareholder (I’m not) or executive, I’d seriously look at doing that AWS spin-off while they can do it the way they want, not the way Washington DC, which seems unusually flush with antitrust energy, says, while pointing a gun at them.

Climate emergency · Moved up the carbon-neutral date from 2030 to 2025, yay! Journalists: Keep a close eye on them for evidence of dodgy carbon accounting, which is not exactly rare in the business community. If they manage to pull this off, that’s a titanic achievement and I hope they share lots of details, because Amazon is a reasonably typical enterprise, just bigger; plenty to learn here.

The other interesting thing is the Climate Pledge, which now has over 100 signatories including a whole bunch of famous names. This may be significant; when Amazon announced the Pledge, I was too polite to say that it looked like it’d been hastily cooked up and there weren’t many, as in any, other recognizable names attached. The Pledge’s zero-carbon date is 2040, which is way too late, but still, let’s hope this turns into a good thing for the world.

People issues · In Jeff’s goodbye letter he said they were adding top-level corporate goals, and they have. The new text: Amazon strives to be Earth’s Most Customer-Centric Company, Earth’s Best Employer, and Earth’s Safest Place to Work. The last two out of three didn’t used to be there. And I place a whole lot of weight on the last one, about safety. It didn’t get that much public traction, but I thought the most damaging Amazon reportage of the last couple of years was the series of stories about elevated injury rates at Amazon warehouses. Credit is due to Will Evans and the people at RevealNews.

I really sincerely hope that Amazon can bend this particular curve in a better direction.

But while that’s important, there’s a way more important “people” issue. When I got on CNBC, the host (in a segment omitted from the excerpt above) asked me about the unionization story and Amazon announcing a general warehouse-worker raise and so on. He asked “So, are they doing enough?”

No, obviously.

The developed world’s egregious inequality curve, which has been getting monotonically worse since the Seventies, is not going to be addressed by another buck an hour to powerless entry-level workers. Anyhow, it’s not an Amazon problem, Amazon is a symptom. And if you have to take a disempowered entry-level job, there are way worse places to go that Amazon.

I don’t claim to understand American Politics, but I do note that both Bernie Sanders and Josh Hawley are mad at big tech in general and Amazon in particular. But it seems obvious to me that, going forward, a central issue for business leaders — maybe the central issue — will be dealing with political pressure to redress society’s imbalances.

Once again, if I were in leadership, I’d be working on getting out in front on this stuff while I still have the reins in my hands.



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From: Proust (May 05 2021, at 19:39)

Have followed you for years, admired your technical contributions from afar, and have never heard your voice. Glad to finally hear it! At the risk of offending you, I have to say that on camera and in perspective you remind me a bit of David Brooks. I mean that as a compliment!

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