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    Published on: February 3, 2021

    Amazon pretty much dominated much of the business news yesterday, with the release of a sterling financial report, and the announcement that CEO Jeff Bezos would be stepping down.

    •  Amazon yesterday announced that its Q4 net sales increased 44% to $125.6 billion in the fourth quarter, compared with $87.4 billion in fourth quarter 2019.  The Seattle Times points out that this was Amazon's first-ever quarter with more than $100 billion in revenue.  Q4 net profit increased to $7.2 billion, compared with net profit of $3.3 billion during the same period a year ago.

    Amazon's 2020 net sales increased 38% to $386.1 billion, compared with $280.5 billion in 2019.   Net income increased to $21.3 billion, compared with net income of $11.6 billion in 2019.

    The company also said that "the 2020 holiday season was the best ever for independent businesses selling on Amazon - nearly all of which are small and medium-sized businesses - with worldwide sales growing over 50% compared to the same period in 2019. Sellers surpassed $4.8 billion in worldwide sales from Black Friday through Cyber Monday, growing about 60% from the previous year. During the holiday season as a whole, small and medium-sized businesses in the U.S. sold nearly one billion products in Amazon’s store."

    Amazon's subscription service revenue, which includes Prime fees, grew 35% in 2020 compared with the previous year, to top $25 billion.

    •  The Washington Post reports that "Amazon unveiled plans Tuesday to build a futuristic building modeled after a double helix to serve as the centerpiece of its Arlington, Va., headquarters.

    "In artists’ renderings, the 350-foot-tall building - designed by Seattle-based architectural firm NBBJ to reflect nature’s fondness for the helix in areas from DNA to the Milky Way galaxy - climbs above its National Landing neighborhood like the swirl on an ice cream cone or the tip of a giant screw that has punched through the Earth’s surface. NBBJ also designed the Spheres that anchor Amazon’s principal headquarters, in Seattle.

    "Amazon officials said the structure is intended to be an alternative workspace, not a traditional office building, where employees would be able to air out ideas and find downtime beyond their cubicles. Trees dot terraces along two walkways that spiral upward, evoking the feel of a stroll through the Blue Ridge Mountains. The streetscape below, with wood-frame retail pavilions and green space, is designed to appeal to people and keep them around when the workday ends."

    •  As reported yesterday in an MNB Special News Alert, Amazon announced that its founder, Jeff Bezos, will step down from the CEO role and become executive chairman.    He will be succeeded by Andy Jassy, the CEO of Amazon Web Services (AWS).

    The transition will take place in the third quarter of this year.

    The New York Times writes that "Amazon’s announcement marks the second major executive transition at the company in the past year. In August, Jeff Wilke, the chief executive of Amazon’s vast consumer business, said he planned to retire in early 2021 after more than two decades with the company. Dave Clark, who ran the fulfillment and logistics operations, was promoted to replace him.

    "Mr. Jassy has long been a trusted lieutenant to Mr. Bezos. Mr. Jassy, who grew up in New York, joined Amazon in 1997 when it was still a start-up and took on different roles as the company expanded."

    The Wall Street Journal writes about how Bezos " imbued the Seattle-based company with a 'Day 1' philosophy of always maintaining an underdog startup ethos.

    "However, in recent years, Mr. Bezos has stepped back from day-to-day management of the tech giant—with a brief pause when he became more actively involved in the early days of the pandemic. Many in his inner circle describe Mr. Bezos’s role over the past few years as akin to that of an executive chairman. The executive famously tries to not schedule meetings before 10 a.m. and to make all of his tough decisions before 5 p.m. Amazon employees say the billionaire is elusive, with many saying they have never spotted him on the company’s sprawling downtown Seattle campus."

    The Journal also cites some of Bezos' key management/leadership tenets:  "Make a small number of high-quality decisions" … "Obsess over customers" … "Innovate. Then innovate some more" … "Embrace failure" … "Most meetings are pointless. Make them matter" … "Ignore the stock market."

    The Journal describes Jassy "as a true believer in Amazon’s relentless culture, a nitty-gritty technocrat who lets teams explore ideas and products in a decentralized fashion. He is known for his curiosity and respect for data, according to people who have close ties to the company."

    The Washington Post writes that "Jassy’s Amazon career is defined by his leading Amazon into a wholly new market, cloud computing, a business the company has come to dominate just as aggressively as it leads in the world of e-commerce. And the fact that Jassy now succeeds Bezos offers insight into Amazon: that the company still values high-risk, high-reward bets and is less defined by online shopping than some might think."

    From the Los Angeles Times:

    "Under his watch, Prime Video became a worthy competitor to Netflix.  Amazon Studios bought prestigious films such as Manchester by the Sea and the company paid $250 million for the rights to make a series based on 'The Lord of the Rings.'

    "So will the e-commerce giant’s interest in entertainment wane with Bezos’ move?

    "Don’t count on it, people familiar with the company said Tuesday.  'I don’t believe it will change things at the studio level,' said one former Amazon executive who requested anonymity to speak about an ex-employer. 'True, Bezos likes the studio business, but I think this move is largely freeing him from daily running the entire retail operation. The teams below will continue the entertainment business at the same level'."

    The Seattle Times puts the basic of its analysis in its headline:  "Amazon CEO Jeff Bezos may step down without stepping away."

    In his letter to Amazon's employees, Bezos wrote:

    Fellow Amazonians:

    I’m excited to announce that this Q3 I’ll transition to Executive Chair of the Amazon Board and Andy Jassy will become CEO. In the Exec Chair role, I intend to focus my energies and attention on new products and early initiatives. Andy is well known inside the company and has been at Amazon almost as long as I have. He will be an outstanding leader, and he has my full confidence.

    This journey began some 27 years ago. Amazon was only an idea, and it had no name. The question I was asked most frequently at that time was, “What’s the internet?” Blessedly, I haven’t had to explain that in a long while.

    Today, we employ 1.3 million talented, dedicated people, serve hundreds of millions of customers and businesses, and are widely recognized as one of the most successful companies in the world.

    How did that happen? Invention. Invention is the root of our success. We’ve done crazy things together, and then made them normal. We pioneered customer reviews, 1-Click, personalized recommendations, Prime’s insanely-fast shipping, Just Walk Out shopping, the Climate Pledge, Kindle, Alexa, marketplace, infrastructure cloud computing, Career Choice, and much more. If you get it right, a few years after a surprising invention, the new thing has become normal. People yawn. And that yawn is the greatest compliment an inventor can receive.

    I don’t know of another company with an invention track record as good as Amazon’s, and I believe we are at our most inventive right now. I hope you are as proud of our inventiveness as I am. I think you should be.

    As Amazon became large, we decided to use our scale and scope to lead on important social issues. Two high-impact examples: our $15 minimum wage and the Climate Pledge. In both cases, we staked out leadership positions and then asked others to come along with us. In both cases, it’s working. Other large companies are coming our way. I hope you’re proud of that as well.

    I find my work meaningful and fun. I get to work with the smartest, most talented, most ingenious teammates. When times have been good, you’ve been humble. When times have been tough, you’ve been strong and supportive, and we’ve made each other laugh. It is a joy to work on this team.

    As much as I still tap dance into the office, I’m excited about this transition. Millions of customers depend on us for our services, and more than a million employees depend on us for their livelihoods. Being the CEO of Amazon is a deep responsibility, and it’s consuming. When you have a responsibility like that, it’s hard to put attention on anything else. As Exec Chair I will stay engaged in important Amazon initiatives but also have the time and energy I need to focus on the Day 1 Fund, the Bezos Earth Fund, Blue Origin, The Washington Post, and my other passions. I’ve never had more energy, and this isn’t about retiring. I’m super passionate about the impact I think these organizations can have.

    Amazon couldn’t be better positioned for the future. We are firing on all cylinders, just as the world needs us to. We have things in the pipeline that will continue to astonish. We serve individuals and enterprises, and we’ve pioneered two complete industries and a whole new class of devices. We are leaders in areas as varied as machine learning and logistics, and if an Amazonian’s idea requires yet another new institutional skill, we’re flexible enough and patient enough to learn it.

    Keep inventing, and don’t despair when at first the idea looks crazy. Remember to wander. Let curiosity be your compass. It remains Day 1.


    KC's View:

    As I wrote yesterday in MNB's instant commentary, this could go several ways.

    It could go like the first time that Howard Schultz stepped down as Starbucks CEO, became the company's chairman, and then, at the first sign of trouble (the economy was tanking), he took back the reins;  I've always argued that Schultz has a bit of a Messiah complex, and circumstances played to that impulse.

    Or, it could go like the second time Schultz stepped away from the company, in part because he wanted to run for president in 2020.  The campaign tanked, but because he stepped away completely, it appears that his successor, Kevin Johnson, hasn't had that particular shadow to deal with.

    Or, it could go like Tim Cook's continuing tenure at Apple, where he's had to deal with Steve Jobs' legend but, even if the innovation wasn't happening at the same pace, the financials have been pretty much outstanding.  (Cook, of course, didn't have to worry about Jobs returning.)

    One thing that Amazon and Jassy have going for them, it seems to me, is that Jeff Bezos has a lot of other interests.  A lot of other interests.  Even if he is Amazon-obsessive, and there's no reason to think that'll change, there are lot of other things to occupy his time.  And' he's doing this on his terms, not being forced by circumstances, and certainly not hanging past his expiration date.

    Plus, if things go badly - and there's no reason to think they will - he's there as a resource and inspiration.

    Plus, as Bezos is fond of saying, it isn't an experiment if you know how it is going to turn out.

    But let's be clear, as Jeff Bezos steps down from the CEO role.  There is little question that he will go down in history as one of the most important businesspeople in American history.  He has changed almost everybody's life, in one way or another.  Often for the better, though sometimes not so much.

    But the impact of his sensibility and passion is undeniable.

    Published on: February 3, 2021

    There were several other, less-positive items concerning Amazon that made the news yesterday:

    •  The Los Angeles Times reports that "Amazon will pay more than $61.7 million to Flex drivers from whom it withheld the full amount of customer tips to settle a Federal Trade Commission investigation.

    "The settlement comes nearly two years after the Los Angeles Times first exposed that Amazon was dipping into customer tips to cover the base pay guaranteed to Flex drivers, who deliver Amazon Fresh, Prime Now and other orders.

    "The money will reimburse Flex drivers whose tips Amazon withheld over the last 2½ years, according to the FTC."

    •  Reuters reports that Amazon-owned Whole Foods "must face a proposed class-action lawsuit claiming it deceived shoppers about the contents of its 365 Organic Honey Graham Crackers."

    According to the story, "U.S. District Judge Gregory Woods said Chandra Campbell plausibly alleged that the words 'Honey' and 'Graham' on the box misled reasonable consumers into thinking that the crackers contained more healthy whole grain flour than non-whole grain flour, and that honey rather than sugar was the main sweetener."

    The judge said that the plaintiffs could pursue the case under consumer protection laws, though he "dismissed fraud and negligence claims."

    Amazon has been arguing that "Campbell was being 'unreasonably literal,' and could have checked the ingredient list on the back if she were unsure."

    •  From the Washington Post:

    "Some workers in Amazon’s Bessemer, Ala., warehouse complain that the company’s aggressive performance expectations leave them little time to take bathroom breaks.

    "When they do get there, they face messaging from Amazon pressing its case against unionization, imploring them to vote against it when mail-in balloting begins Feb. 8.

    "'Where will your dues go?' reads a flier posted on the door inside a bathroom stall.

    "'They got right in your face when you’re using the stall,' said Darryl Richardson, a worker at the warehouse who supports the union. Another pro-union worker who spoke on the condition of anonymity for fear of retribution said of Amazon’s toilet reading: 'I feel like I’m getting harassed'."

    The Post writes that "the stakes couldn’t be higher for Amazon, which is fighting the biggest labor battle in its history on U.S. soil. Next Monday, the National Labor Relations Board will mail ballots to 5,805 workers at the facility near Birmingham, who will then have seven weeks to decide whether they want the Retail, Wholesale and Department Store Union to represent them. If they vote yes, they would be the first Amazon warehouse in the United States to unionize.

    "What’s more, a union victory could spark a wave of organizing campaigns among the 400,000 operations staff at the hundreds of other Amazon warehouses and delivery sites that dot the nation."

    Published on: February 3, 2021

    Now that the Seattle City Council has voted to mandate that grocery stores pay workers $4 an hour more in "hazard pay," Trader Joe's has fashioned an unusual response.

    According to the Seattle Times, the retailer is instituting a temporary pay raise for all its employees around the country.

    “After seeing this occur with a few cities in California and Washington we have determined that such actions are unfair for all stores throughout the Company,” the company said on its website.  “Accordingly, effective February 1, we will increase our thank you pay for all Crew Members by two dollars, making the 'thank you pay' equal to $4 company wide.”

    The Times writes that "the raise at, least partially, undercuts arguments from business leaders and the grocery industry that Seattle’s legislation was untenable in a business with slim profit margins."

    Similar hazard pay mandates have been passed in the California communities of Long Beach and Berkeley;  in Long Beach, Kroger said that it would close two underperforming stores that were made non-viable by the pay increase mandate.

    Trader Joe's said, however, that it would cancel its regular mid-year pay increases because of the immediate wage hike.

    KC's View:

    I always thought the idea of hazard pay was a good one, though I think that offering bonuses rather than temporary hourly pay increases would've made more sense, simply because it avoids the bad optics of taking the raises away.

    I've always thought that many retailers offer lip service about how important it is to have a positive corporate culture, and that a lot of employees didn't feel essential before the pandemic, won't feel essential after the pandemic, and that this is the real problem that needs to be addressed in many companies.  (I don't think Trader Joe's is one of those companies.)

    But I also continue to believe that selectively forcing grocery stores to pay higher wages to store employees is bad public policy.  Set a minimum wage, and then let companies make their own decisions about pay scales and benefits above that, competing with each other to be employers of choice.

    Published on: February 3, 2021

    The Boston Globe reports that Uber Technologies will spend $1.1 billion in cash and stock to acquire alcohol delivery service Drizly, a move that the story says "strengthens the San Francisco tech company’s foothold in the delivery sector, which has become more crucial during the pandemic as brick-and-mortar stores looked to bring their offerings online."

    Drizly has a presence in more than 1,400 cities, and its CEO/co-founder, Cory Rellas, said that it "has spent the last 8 years building the infrastructure, technology, and partnerships to bring the consumer a shopping experience they deserve."

    The Globe writes that "eventually, Drizly’s alcohol marketplace will appear in the Uber Eats app, but consumers will still be able to use the separate Drizly app. The Drizly acquisition is expected to close in the first half of the year.

    "Uber Eats has already been branching out from local restaurant takeout by adding grocery, convenience, and liquor stores to its app."

    KC's View:

    The expectation here is that this is likely to ramp up competition in the alcohol delivery space, with players looking to make sure that the Uber/Drizly combo doesn't achieve such a strong beachhead that it prevents others from making any headway.

    Published on: February 3, 2021

    From the Wall Street Journal:

    "Google rode a surge in online holiday spending to record revenue in the fourth quarter, even though it disclosed for the first time continued losses in its closely watched cloud division.

    "The internet titan’s earnings, released Tuesday afternoon, reflected a continuing recovery in global ad spending that took a hit in early 2020 when people paused travel plans and other purchases in response to the coronavirus pandemic.

    "Google parent Alphabet Inc. posted a record $56.9 billion revenue, up from $43.2 billion a year ago. The company’s advertising units pulled in $46.2 billion, up nearly 22% from a year earlier … Google also revealed details about the costs of its cloud division for the first time. While that unit brought in $3.8 billion in revenue, overall it lost $1.2 billion in the fourth quarter. This announcement will enable investors to better compare the results of Google’s cloud business with those of Inc. and Microsoft Corp."

    Published on: February 3, 2021

    Random and illustrative stories about the global pandemic and how businesses and various business sectors are trying to recover from it, with brief, occasional, italicized and sometimes gratuitous commentary…

    •  In the United States, we've now had 27,027,430 confirmed cases of the Covid-19 coronavirus, resulting in 457,868 deaths and 16,750,647 reported recoveries.

    Globally, there have been 104,478,862 confirmed coronavirus cases … 2,264,868 fatalities … and 76,358,593 reported recoveries.

    •  The Washington Post reports that "at least 26.8 million people have received one or both doses of the vaccine in the U.S.  This includes more than 6.3 million people who have been fully vaccinated … 52.7 million doses have been distributed."

    •  From the Wall Street Journal:

    "Newly reported Covid-19 cases in the U.S. appeared to have declined from a day earlier, but deaths increased sharply, as hospitalizations for the disease continued their steady decline … Hospitalizations were at 92,880, according to the Covid Tracking Project, the lowest number since Nov. 28 and the 21st straight day of declines."

    •  The Associated Press reports that the federal government "is moving to expand access to COVID-19 vaccines, freeing up more doses for states and beginning to distribute them to retail pharmacies next week. The push comes amid new urgency to speed vaccinations to prevent the spread of potentially more serious strains of the virus that has killed more than 445,000 Americans.

    "Starting next week, 1 million doses will be distributed to some 6,500 pharmacies across the country, the White House said. The administration is also boosting by 500,000 the weekly allocation of vaccines sent directly to states and territories for the coming weeks, up to 10.5 million. It is allowing state and local governments to receive additional federal dollars to cover previously incurred expenses relating to the pandemic."

    •  From the New York Times:

    "The vaccine developed by the University of Oxford and AstraZeneca not only protects people from serious illness and death but also substantially slows the transmission of the virus, according to a new study — a finding that underscores the importance of mass vaccination as a path out of the pandemic.

    "The study by researchers at the University of Oxford is the first to document evidence that any coronavirus vaccine can reduce transmission of the virus.

    Researchers measured the impact on transmission by swabbing participants every week seeking to detect signs of the virus. If there is no virus present, even if someone is infected, it cannot be spread. And they found a 67 percent reduction in positive swabs among those vaccinated.

    "The results, detailed by Oxford and AstraZeneca researchers in a manuscript that has not been peer-reviewed, found that the vaccine could cut transmission by nearly two-thirds."

    •  The Wall Street Journal reports that "British authorities say they have discovered a potentially supercharged version of the country’s more-contagious coronavirus variant with a new mutation—one also detected in strains in South Africa and Brazil—that appears to make some vaccines less effective.

    "Public health officials said they were set to go door to door to test residents in areas where cases of the latest worrisome iteration of the pathogen responsible for Covid-19 have been detected to try to contain the spread before it catches fire in the community."

    •  From CNN:

    "About 70% to 85% of the US population should be fully vaccinated against Covid-19 before the country can begin to return to a sense of normalcy, Dr. Anthony Fauci told CNN Tuesday night.

    "So far, less than 2% of Americans have received both doses of a Covid-19 vaccine, according to data from the Centers for Disease Control and Prevention."

    •  Gothamist reports that New York City Mayor Bill de Blasio "wants the state to expand COVID-19 vaccine eligibility to include restaurant workers before indoor dining resumes in New York City.

    "While Governor Andrew Cuomo said last Friday that restaurants could resume welcoming indoor guests at 25% capacity starting on Valentine’s Day, he offered no details on when restaurant workers would get the authorized vaccines.

    "De Blasio believes that's not safe, because this workforce regularly interacts with groups of people not wearing masks while eating … On Monday, Cuomo said there aren't enough doses for people who are currently eligible, given the fact that 7 million can now sign up for the vaccine but only 300,000 doses arrive per week. He said that calls to give restaurant workers priority are part of a 'cheap and insincere discussion'."

    People unfamiliar with New York politics may not realize that tensions between the NYC mayor and NYS governor are a tradition - not a good one, but the kind of frustrating crap that always seems to be less about politics than ego.

    •  Los Angeles Magazine  reports on how, "after 40 to 60 anti-vaccination protestors shut down the COVID-19 mass inoculation center at Dodger Stadium for nearly an hour on Saturday, officials will establish a dedicated protest zone at the site so that future demonstrators may rail against the vaccine without causing further delays for people who want the shots … Although no arrests were made and, according to the mayor’s office, no appointments were canceled at the vaccination site - one of the nation’s largest - when the protestors clogged Stadium Way waving signs deriding the use of face masks and shouting baseless claims about vaccinations, it’s unknown if any of the hundreds of motorists who had been waiting in line gave up their spots during the 55 minutes that the Fire Department shut the main entrance."

    If you don't want to get a vaccine, that's one thing.  But trying to stop other people from getting a vaccine that could save their lives … well, there ought to be a law.  (Wait.  There probably is.)

    •  USA Today reports on how "Covid-19-related snags have delayed shipments of products and raw materials across the economy the past couple of months, pushing up wholesale costs and raising the likelihood of higher retail prices by midyear.

    "Behind the snarls: Some factories in the U.S. and abroad are shuttered while many others are running at partial capacity because of employee Covid-19 cases or social distancing requirements. Ports, warehouses and trucking companies are similarly grappling with worker absences. And containers for overseas shipments are in short supply. Even the rollout of Covid-19 vaccines is playing a role, taking up shipping capacity and slowing other deliveries.

    "Such bottlenecks were prevalent when the pandemic began in early spring as factories shut down across the globe. Since then, the crunch had gradually eased. But recent COVID-19 spikes, combined with a resurgence in customer demand, have sparked the direst shortages and delays yet."

    •  The New York Times reports that "although low-income communities of color have been hit hardest by Covid-19, health officials in many cities say that people from wealthier, largely white neighborhoods have been flooding vaccination appointment systems and taking an outsized share of the limited supply.

    "People in underserved neighborhoods have been tripped up by a confluence of obstacles, including registration phone lines and websites that can take hours to navigate, and lack of transportation or time off from jobs to get to appointments. But also, skepticism about the shots continues to be pronounced in Black and Latino communities, depressing sign-up rates."

    The Times writes that "fixing the problem is tricky, however. Officials fear that singling out neighborhoods for priority access could invite lawsuits alleging race preference. To a large extent, the ability of localities to address inequities depends on how much control they have over their own vaccine allocations and whether their political leadership aligns with that of supervising county or state authorities."

    Published on: February 3, 2021

    •  Axios reports that "wearables that double as credit or debit cards are enjoying a burst of popularity," at least in part because the pandemic has created demand for touchless payment systems.

    "Several recent product launches point toward a future where payment features are built into clothing and jewelry — and may include biometric features," the story says.  "That includes low-cost payment bracelets, linked to reloadable accounts, that come in multiple colors and can be used to spend up to $1,000 at a time."

    Indeed, Axios writes, "The next generation of wearables will likely be cheaper and/or more fashionable."

    Published on: February 3, 2021

    •  IRI is out with new Super Bowl-related prognostications, reporting (not surprisingly) that "viewing parties will be different than last year, when four-in-10 watched with their immediate family and nearly 20% watched at a party. COVID-19 has changed this expectation for 2021, with nearly half of all viewers expecting to watch with their immediate household members.

    "Interestingly, younger millennials and Gen Z are more apt to report that they’ll watch with friends compared to older generations.

    "Consumers forecast that their spending will increase modestly for 2021’s Super Bowl. IRI’s proprietary research suggests that the average spend is forecasted to be $41.50, up $1.50 from last year’s event."

    •  The Wall Street Journal reports that "Kraft Heinz  is nearing a deal to sell its Planters snack business to Skippy peanut butter owner Hormel Foods Corp., according to people familiar with the matter.

    "A deal, valuing the century-old brand at around $3 billion, could be announced as soon as next week, assuming the talks don’t fall apart, the people said."

    Published on: February 3, 2021

    •  Instacart announced that Asha Sharma, vice president of Product at Facebook, has been hired as its new COO.

    The company said that "as COO of Instacart, Sharma will oversee the Instacart Marketplace, which includes the Instacart App, Instacart Logistics, Growth and Marketing. She'll also focus on engaging new and returning customers as Instacart continues to serve as a lifeline for millions of people across North America."

    Published on: February 3, 2021

    Amazon's Super Bowl ad this year features actor Michael B. Jordan as the physical embodiment of its Alexa virtual assistant.