The Paradox of Jeff Bezos

Can I be philosophical for 30 seconds? I mean the real kind, not the pseudo-philosophical mass-market kind. Soren Kierkegaard -- 19th-century philosopher, check him out -- had an idea that the ultimate expression of faith lies in the acceptance of paradoxes. If that's the measure, then I've achieved the highest level possible for Amazon (NASDAQ: AMZN  ) CEO Jeff Bezos. I believe that Bezos is one of the best CEOs in the marketplace right now, but I'm also pretty sure that things aren't going to work out for him.

Bezos as great CEO
I'm sure that a lot of the respect that I have for Bezos comes from the fact that he's made it so that you can no longer talk about retail companies without mentioning his company. That's a direct product of Bezos' market share push, which has seen the company ignore traditional financial metrics in favor of selling as much stuff as possible.

His recent purchase of The Washington Post from Washington Post  (NYSE: GHC  ) showcases his view of business. In a recent interview, Bezos said that the three ideals that drove his success at Amazon could be applied to the Post as well. First, the company has to put customers first. Second, it needs to innovate. Third, it has to put in the time and be happy to play the long game.

For 18 years, Bezos has put customers first. The company has made shipping cheap, reviews easy, and returns simple. When it purchased other brands, it left the people who ran those businesses in charge to make sure that customers continued to get what they expected -- Zappos is a perfect example. As a result, customers have flocked to the business, pushing annual revenue up past $50 billion.

Bezos may never put the last piece in place
Commentators have said from the very beginning that the real reason to invest in Amazon is for the switch that's coming further down the line. The business will someday stop sinking all of its cash into innovation, and just make more money. For instance, that $52 billion in sales last year turned into a $39 million loss -- when does that stop? As time has gone by, I've come to believe that it may never stop.

Looking back at a few years of earnings, Amazon hasn't put up a quarterly profit margin of more than 2% since back in the first quarter of 2011. Now in 2013, quarterly revenue had risen 63% over the 2011 period, but the profit margin had fallen to 0.5%. Again, this isn't about Amazon making the wrong decisions, it's about Bezos having no desire to do what the market wants him to do.

For me, that matters. I lean toward slower-growing, more mature companies. I recognize that that puts me at odds with many investors, but it's the method that works best for me. That's why I have trouble with Bezos. For me, maturity comes with the achievement of your goals, but Bezos has seemingly uncompletable goals. I love what he's trying to do, but I don't think he can really do it.

Going back to my earlier point about faith, I have an abundance in Bezos. I think his purchase of the Post is going to be a boon for that paper, and maybe he has specific, achievable goals in mind. But for Amazon, my faith in Bezos doesn't translate into faith in the future of the business. I have no doubt that Amazon will continue to do well, but I don't think that shareholders are any closer to seeing that profit boost than they were when the company went public in 1997.

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