Amazon’s Black Box
Companies — like people — demonstrate their true values in the face of antagonism, opportunity, or radical change. In the 1970s a young Disney animator named John Lasseter went to his management team and pitched his idea to work toward creating the first feature length film done completely on a computer. The board listened patiently, and then summarily fired Lasseter. They cited his “distractions” as the reason for his termination. Though Disney lost what would have been the development of a multibillion-dollar business, they made up for it a quarter of a century later, by purchasing Pixar Animation Studio for seven billion dollars. Quite a different outcome occurred within the much younger company, Amazon. Whereas Disney feared new entrepreneurial ideas as distractions, Amazon’s CEO, Jeff Bezos revered these new wild ideas. He saw the right idea at the right time as an incredible opportunity to grow the company he had founded.
In 2006, a young Amazon engineer named Benjamin Black saw an opportunity. He had a wild idea. He was not a high level executive; he had no major clout at Amazon; he was merely a diligent worker. He was then working as a leader of an engineering team. Amazon was growing fast, but their I.T. systems were not keeping up. Black realized part of the issue was the infrastructure of their servers. They needed to develop more servers as the company grew. As he thought through the problem, he realized that the operational expertise that Amazon had — expertise that made Amazon such an efficient retailer — could be repurposed toward offering access to computer servers to businesses.
Companies — like people — demonstrate their true values in the face of antagonism, opportunity, or radical change.
It didn’t take long for Black to discover the market potential for his idea. If Amazon invested in computer servers, they could rent online storage, that is, computing power, to other businesses that did not or could not invest in their own servers.
Bringing the idea to his manager, Chris Pinkham, the two developed a paper explaining the concept and then pitched it to Jeff Bezos, Amazon’s founder and CEO. Unlike Disney, Bezos listened intently and seriously. He challenged some parts and asked clarifying questions about others. Once he saw there was a real business here, he greenlit it.
He realized that the operational expertise that Amazon had — expertise that made Amazon such an efficient retailer — could be repurposed toward offering access to computer servers to businesses
Of course, the old-fashioned, Wall Street trained Amazon Board, balked at the idea. “Web Servers?” They asked. “What does that have to do with retail?”
Bezos, however, wouldn’t back down. He had investigated Black’s arguments and was now thoroughly convinced of its viability on the market. Eventually, the board caved to Bezos.
Amazon Web Services (AWS) launched in 2006 and by 2013 brought in eight billion dollars in revenue.
Unlike Lasseter’s managers, Bezos himself was a founder. He had experienced the negative feedback for a seemingly wild idea, when he first conceived of selling books online in the 90s. In contrast, the men and women on the Disney board were not around when Walt was founding the company. They didn’t have the founder’s mindset any more than their janitor. So when Lasseter came to them with his idea the board saw only “distraction.” Valuing entrepreneurship within an organization is an easy word to throw around, but values must be acted on. Disney revealed their more traditional, laggard mentality in the way that they acted, and Bezos reflected Amazon’s willingness to take on new risks with his actions. Thus, revealing that Amazon truly valued the founder’s mindset.
Valuing entrepreneurship within an organization is an easy word to throw around, but values must be acted on
