In early 1997, Jeff Bezos flew to Boston to give a presentation to the Harvard Business School about e-commerce and the overall online market space. After the presentation, Bezos stuck around as some of the brightest students in the country dissected Amazon's prospects for success. Their conclusion, Jeff Bezos should sell Amazon to Barnes and Noble as soon as he could because they did not stand a chance of competing against the traditional retailers.
Forecasting the Potential Change in Human Behavior
Fast forward to this past week and Bezos announced that he is stepping down in the third quarter this year as CEO of one of the most successful companies in world history. A company that has disrupted multiple industries and continues to do so expanding into areas including cloud computing where it is a market leader. So, why did the students of Harvard get it wrong? I don't believe it was their math that let them down but rather it was their ability to forecast the potential change in human behavior that was coming.
But here's the thing: if it was so easy to see what was going to happen there would have been a million Amazon's created. But there wasn't – there was one Jeff Bezos and one Amazon. The students at Harvard didn't necessarily get their analysis wrong, but what they got wrong was the human equation.
Now, for every Amazon there are probably 1,000 companies that failed that you have never heard of so I don't want you to take this as some sort of investment thesis. We base our investment strategy on fundamental analysis, things we can measure with consideration for things that we can expect to happen based on a track record of good disciplined management and ethical practices.
Words of Warren Buffett
I'm bringing this up because I believe this story represents what makes our society here in North America so unique. We live in a place where I believe anything is possible if you are willing to work hard for it. Most of us should consider ourselves so fortunate to have that opportunity. As Warren Buffett says, "we've won the ovarian lottery simply by being born in this time and in this place." But there will always be roadblocks standing in your way and excuses for not doing things.
In Bezos' case, there was a group of Harvard Students, some of the best and brightest in the world, who told him to fold. Can you imagine how different our world might be today had he listened to them?
Taking Advantage of the Opportunity
This pandemic has forced us to re-evaluate the way we live, what is important to us and who is important to us. It has brought on incredible challenges and incredible heartache. But It has also brought on incredible innovation and opportunity for those who are willing and able to take advantage of it.
Today, I believe that traditional industry has never been more vulnerable to the speed of this innovation. Today, customer experience has never been more important and in order to be successful, businesses will need to focus more on what their customers/clients want and being agile to adapt quickly to changing needs and wants. If they don't, I guarantee that another Amazon has just started up and within 15 years, inflexible businesses will be wondering what happened.
For my fellow entrepreneurs. This is just the beginning of the opportunity. Are you ready to do what is necessary?
- Grant White, CIM, CFP
Grant White is a Portfolio Manager/Investment Advisor at Endeavour Wealth Management with iA Private Wealth, an award-winning office as recognized by the Carson Group. Together with his partners he provides comprehensive wealth management planning for business owners, professionals and individual families.
This information has been prepared by Grant White who is a Portfolio Manager for iA Private Wealth and does not necessarily reflect the opinion of iA Private Wealth. The information contained in this newsletter comes from sources we believe reliable, but we cannot guarantee its accuracy or reliability. The opinions expressed are based on an analysis and interpretation dating from the date of publication and are subject to change without notice. Furthermore, they do not constitute an offer or solicitation to buy or sell any of the securities mentioned. The information contained herein may not apply to all types of investors. The Portfolio Manager can open accounts only in the provinces in which they are registered.
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