
Amazon’s Next Business Venture: It’s not what you think
If you were Jeff Bezos, what would your next business be?
Tough call. With all the resources at his disposal, proven track record, and an already amazingly well integrated platform — it certainly could be a tough call.
So — I made the call instead. Here is one for you, Jeff.
My earliest orders with Amazon were for books and music CDs — back in 1999. I am comparing that with some of my purchases in the last 30 days that included earrings for my wife, cookie crunch protein bars for my son, broom, dustpan and plastic organizer for our son who is in college. And of course a ton of books.
From books to earrings — my buying patterns on Amazon has evolved. More importantly, so has Amazon. From selling books to earrings and brooms, Amazon has reinvented itself a hundred times over.
From selling on its own, Amazon opened up its platform for anyone to sell his or her products. With a platform that robust, Amazon figured, it might as well take advantage of what the competition had to offer. Now the competition sells on its website — and pays Amazon for it as well. You can’t beat that kind of brilliance.
With the growing e-commerce business, Amazon needed infrastructure that will be always on, resilient, secure, and robust. That’s exactly what Amazon did. Built itself a scalable, on-demand infrastructure. Amazon then topped it all with an interface that made adding computing power much like any utility — in fact easier than that. Now, what would you do if you had all that and were Amazon? You sell it as a service, of course. And thus was born Amazon Web Services which is one of its biggest business divisions and gives a run for its money even to the largest data center providers from traditional technology players.
Amazon’s growth has been based on a very simple philosophy. Figure things out for itself. Perfect the packaging and delivery. Make it available to the masses. Start making money.
This rinse-and-repeat formula worked so well for Amazon, that it has become part of the fundamental fabric that makes the company.
The rapid growth, in all these different areas, meant Amazon had to constantly hire people and expand its workforce. A good problem to have. Except that the growth Amazon was experiencing was like no other. The demand constantly exceeded the supply of qualified candidates. It was a constant game of catch-up. Few companies had experienced growth like Amazon.
According to Geekwire, Amazon now employs over 341,000 people. From just 32,000 employees five years ago, Amazon has grown over a 1000% and doesn’t seem to be slowing down at all.
Now, hiring is only part of the problem Amazon faces.
Think about it. Hiring people involves, putting them to work as quickly as you can. The sooner you can put a hired hand to work, the faster you reap the benefits of the labor. Now, multiply that with 100,000 recruits a year — the problem becomes huge, and certainly screams for help in ways that we have not heard or seen before.
Converting a new hire into a productive employee takes time and training.
If the productivity of a hired hand is delayed by even a day — it could mean disaster for a company that hires a hundred thousand of them every year. That is one hundred thousand unproductive man-days. On the flip side, if they all get to work sooner — even by half a day — that is fifty thousand productive man-days — a deal breaker for any company.
The solution — training. Training them as fast as they can. Using every training tool in their armor. And even those that are not already in their armor. That means inventing new ones. And bringing home talent for delivering targeted, meaningful, and effective training in ways that will benefit its employees and get the most out of its workforce. The need to find a solution to this problem is as radical to Amazon, as any other business problem they have or will face in the future.
With truckloads of cash at its disposal, finding means and ways to solve this problem is easier for Amazon than any other company. Except, in this case, for a company like Amazon, cash is not its only advantage. Having proven its expertise in building efficient solutions over and over, the company has the brainpower to make it happen better than and faster than any company on the planet today. Very few companies can boast of repeated success in more than one completely different business ventures. As Warren Buffet would say “I’ve never seen a guy succeed in two businesses almost simultaneously that are really quite divergent in terms of customers and all the operations…”
If Amazon has not already solved the training problem for its employees and contractors, it sure is under the gun to solve it quickly. Real dollars are at stake here. And the burn rate is pretty high — considering the huge numbers Amazon is hiring year after year. Knowing Amazon, they will find an elegant solution soon enough.
If Amazon’s history were any indication, what do you think Amazon will do when it finds the solution?
Rinse-and-Repeat, of course.
But, what does Amazon have to gain this time around. The answers might lie in the state of the industry itself.
The Training Industry
Training Industry (www.trainingindustry.com) estimates the global training market to be worth over $350 B. This is a humongous by any stretch of imagination. However, a market this big is currently fragmented into teeny tiny pieces and segments. From academic institutions to private training companies, from government funded education to non-profit sponsored training — the fragmentation is mind boggling — not to mention the fact it is becoming increasing difficult to tell the good from the bad.
Take any professional skill as an example. Top tier universities offering executive education for that skill, prices it at a level that is beyond the reach of 95+% of the working population. The only ones who can afford it are the senior directors and vice presidents of the organization — and even then only those who are in the Fortune 1000 group of organizations. Everyone else has to resort to courses offered by private training institutions from the likes of Center for Creating Leadership to customer specific training offered by the likes of Korn Ferry International and Learn iT!. Add to this the thousands of smaller players who cater to cities or industry segments run by family owned entities. MOOCs like Coursera and EDx pose a major presence in the online training world, while still trying to solve some fundamental issues around adoption and course completion. Online marketplaces like Udemy and Udacity fill a niche that involves people looking for value pricing on topics of their choice.
By far, the biggest problem with all these training models is the lack of a centralized view of quality and consistency — not to mention value that the customer derives from it all. Paying fourteen thousand dollars for a three-day program at a Tier 1 university is no guarantee for quality; neither is the thirty-dollar program purchased at a marketplace.
The bigger issue is that the consumer has no way of comparing a course across ecosystems, institutions or companies. All comparisons today — have to be done within a specific ecosystem. There is no credible way to compare the executive education taken at one university with the other. The problem becomes incredibly complex if the comparison request had to be for the ones offered by nonacademic institutions and smaller players.
A universal training model that allows for choices for the customer, with easily accessible knowledge about its value creation, quality, comparison, and cost benefit advantage just does not exist. Not at the scale that is required today. And certainly not by a third party that has the credentials to offer such a solution.
Back to Amazon
As the world’s most customer-centric company, Amazon has earned its stripes — rightfully so — in every business it has stepped foot in. A quickly expanding global presence, a highly flexible, robust, responsive, and integrated platform, disposable cash to buy the necessary brain power, a PR machine like no other — are only a few advantages that Amazon has over any other industry titan who would want to get into this business.
Amazon’s demand to add manpower to its existing businesses is as real as anything gets. Without the manpower Amazon could be strapped in its ability to service its rapidly growing businesses. Amazon Job Days and other such efforts are starting to produce the results. But that is only half the solution. The other half will depend on how Amazon will solve in getting those hired hands to become productive — sooner.
My prediction is this. Amazon will solve the training problem for itself — if it has not solved it already. Amazon will go on to polish the kinks out of the training platform and make it as robust as its e-commerce platform or AWS.
Once done, Amazon will unleash the training solution to the rest of the world. From there — it will be history making all over again — for Amazon that is.
If history is any indication — a number of things could happen -
- Amazon will invite content creators from all over the world to build, deliver, and monetize content on its platform.
- Amazon will create its own content and/or share existing content that it uses internally to train its own employees.
- Amazon will find interesting ways to bundle content across different market segments.
- From making it available via Amazon Prime to Amazon Business, Amazon will find any number of delivery vehicles to position content in front of its ever-hungry consumers.
- Amazon is the king of all marketplaces, the best the world has seen to-date. Making content available via this marketplace will be a natural extension of its strategy — and most likely the starting point for its foray into this business.
- With a few strategic acquisitions, Amazon can acquire tons of content, putting it years ahead in the business — than creating every bit of it all by itself. Imagine Coursera, EDx, and Udacity being acquired by Amazon.
- Amazon University is not far away from reality. Either on its own, or by acquiring an existing university, Amazon will create its own academic institution and build it into an enviable organization worldwide.
- Amazon getting into the training business will be highly profitable for its other business. Every trainee is going to need course material, books, and stationery. And when they do, they won’t have to look beyond Amazon.com. More business for Amazon.
The possibilities are endless. And so is the money making potential of this idea.
Outside of academic institutions, I can’t think of any private training company that has ventured into the billion-dollar mark thus far. Half a billion — yes. But, the billion-dollar mark is still vacant and available and my bet is that Amazon will be the first one to get there. Knowing Amazon, the chances of training becoming a multi-billion dollar business division is very real and could happen faster than it did with AWS.
Competition could come from a few places. Alibaba could certainly enter the space — since they face the very same problems that Amazon faces — and they sit right smack in the middle of a billion people captive audience. There could be others — but between Amazon and Alibaba — we are talking all the Earth — unless Jeff and Elon Musk tie up to take the idea to Mars.
