Thematics Portfolio:Why Amazon and not Apple

On our recent marketing, we were asked why we have Amazon but not Applein our Thematics Portfolio. In our view, Jeff Bezos provided the best answer inthe latest letter to Amazon shareholders in which he compared ‘Day One’ vs.‘Day Two’ companies. As Bezos describes it, ‘in Day Two, you stop looking atoutcomes and just make sure you are doing the process right; the outsideworld can push you into Day Two, if you won’t or can’t embrace powerfultrends quickly. If you fight them, you are probably fighting the future; embracethem and you have a tailwind’. Bezos was essentially describing companieswhere stasis, incremental improvements and KPIs take precedence. Thisapplies to almost everyone, and even companies that used to be ‘Day One’,usually morph into ‘Day Two’ (think of HP, Dell, Nokia, Ericsson, Yahoo andmultiple other examples). In our view, management consultancies grew upand prospered primarily with the sole objective of managing corporate declinefrom ‘Day One’ to ‘Day Two’ in as orderly fashion as possible.

    This is what makes Amazon different. Since 1997, it pioneered morebreakthroughs than almost any other corporate and, in our view, causedgreater disruption than almost anyone else (from product distribution topublishing and cloud computing to AI), and unlike other corporates that havedifficulty re-inventing themselves more than twice in their life time, Amazonnever stopped morphing into something else. It does not mean that it is softon poor decisions; rather it tends to correct bad ones and move rapidly to thenext stage, before most other corporates recognize an opportunity. The abilityto continuously change is exhausting and companies run by the likes of Bezos(today) or Steve Job’s Apple (late 90s-late’00s) are not easy places to work atbut this is the price of perpetual innovation and restlessness.