How Amazon Ends

Why Giant Corporations Can’t Survive In A World Of Effortless Connection

Consider the Chinese restaurant.

I’m talking about the purely american invention: General Tso’s chicken and fortune cookies, soy sauce packs and plastic forks and not a pork porridge in sight. In many ways, walking into a Chinese restaurant is like walking into a McDonalds: you’ve already memorized the menu, with a few variations you’ll get the same decor and cuisine in Austin and Anchorage. Both McDonalds and Chinese restaurants are a kind of franchise model. McDonald’s owners get a loan to start a restaurant, then open up a catalog given to them by the McDonald’s corporation and order all of the food, decorations, and uniforms they’ll need to get started. Scrappy entrepreneurs starting a Chinese restaurant do much the same thing, only they’re scouring a handful of catalogues from a rich ecosystem of Chinese restaurant suppliers. This diverse ecosystem has many of the properties that we associate with corporations: it has a well-known brand, it manages supply chain, it helps people access the capital they need, it has internal fiefdoms that are constantly warring and forming alliances, networks of support for when vital parts of the ecosystem go through hard times. The only thing it’s missing is a CEO.

Founded in 1994 by Jeff Bezoz, Amazon.com Inc. touches more diverse components of my life than any other single corporate entity. I got to sleep at night reading an e-book on my Amazon Kindle in bedsheets delivered by their vast sales and logistics empire. I spend my days building software tailored for Amazon Web Services, the web’s leading provider of cloud infrastructure by a massive margin. Most of the things that I buy, I buy from Jeff. And with his aggressive moves towards drone delivery and always-on voice recognition it doesn’t look like that’ll be changing anytime soon. If anything can threaten his dominance, it’ll be another giant corporate entity: Uber will beat him at logistics or Google will beat him at machine learning or some mega corporation yet unborn will crash onto the scene. If Jeff is the CEO of McDonald’s, he’s worried about Burger King and those weird Taco Bell/KFC hybrids, he’s not worried about Chinese restaurants. But maybe he should be.

To understand why let’s look at the history of Jeff’s job, all the way back to the 1600s in the Dutch merchants guilds where the modern corporate form was born. Dutch merchants wanted to hire ships to send their goods across the globe. Many of these merchants had never been to sea, but they knew that the seas were dangerous and that a good captain was the key to whethering storms, avoiding pirates and ensuring that ships came back laden with riches in a timely manner. So the merchants would interview captains, pool their resources to hire the ones that they liked, and send them off to hire a crew and set sail.

Note the information asymmetry here. The merchants don’t know the crew or anything that’s happening on the boat while it’s at sea. The crew (for the most part) don’t know one another until they step on deck. The only person with all of the information is the captain, so he’s given absolute authority to make decisions. The crew and the merchants all need the captain because he’s the most efficient way for them to know how to work together.

Let’s go back to Jeff, who may occasionally liken himself to a seaboat captain of old. His roughly 350,000 employees need one another at various times, and they need the capital that he raised from investors and then earned in revenues. His customers need the value that his employees are producing, his investors need the revenues that his customers are forking over, and for the moment at least all of those need him to weave them together.

What if they didn’t?

Imagine you had a slider that made it easier or harder for people to form relationships with one another. Move the slide one way and communication is constantly breaking down, agreements take exhaustive time and energy to reach and are almost immediately outdated. Move the slide the other way, and it’s almost effortless to get in meaningful conversations with people who can make your life better, agreements happen effortlessly and continuously evolve through effective communication.

Now think about the effect of this slider on the restaurant industry. Make communication hard, and McDonalds is a sound investment. It’s a known entity, and the command and control structures of a centralized corporation will provide efficiencies that will keep costs low and margins high. As an entrepreneur you want to start a McDonalds because it provides clear, cookie-cutter stability in an unstable world.

But make communication easy, and starting a Chinese restaurant looks a lot more appealing. Because your ecosystem of suppliers is constantly competing with one another they’ll beat McDonalds at efficiency, and without a restrictive franchise agreement you’ll be free to customize your restaurant to your local neighborhood. You can make it upscale or downscale, add in local favorites, and otherwise fit the market in a way that a McDonalds never could.

As relationship formation becomes easier the world gets drastically better for pretty much everyone but Jeff. Instead of metaphorically investing in big clunky ships, investors can choose from a swarm of smaller vessels delivering exactly what is needed to the right ports at the right time. Instead of working for a massive corporation, employees can choose between an ecosystem of employers that will give them equity, or can run out and get investment themselves. Instead of relying on a single brand to shop for bedsheets, recommend books, and provide in-home voice assistance customers will be able to pick and choose their favorite way to do each, with an ecosystem of trusted third party services competing to help them make that choice. Creeped out by Alexa listening to your every word? Just install the virtual assistant endorsed by the EFF and written by the team behind Signal.

So how does Amazon end? It starts with subtle technological improvements that make relationship formation easier. A new era of the social internet, one that’s focused not on harvesting your data for advertisers but on efficiently helping you discover how to spend meaningful time with the people in your community. If clicks were the currency of the .com boom and shares are the currency of this one, relationships are the currency of a new wave of internet technology.

And with this new wave of innovation, the benefits of a stable Amazon job look less appealing. If you’re a capable janitor who’s successfully managed sanitization at Amazon for years, why not cash that reputation in and create your own janitorial services company? In this efficient relational economy, the right reputation can get you the investment and services you need in a matter of hours, not months. Amazon starts bleeding talent. And investors, watching the ebbs and flows of his business, start asking Jeff why they have to bet on both Amazon Web Services and the Kindle with the same stock purchase. A new buzzword, “investor-led portfolios” (ILPs) becomes code for wall street not trusting CEOs to decide which parts of a corporate empire deserve the most money. Eventually AWS spins off. Then smaller units starts spinning off from that. In the tech hubs of SF, Austin, and Detroit “swarming out” replaces the IPO as the endgame of a successful startup.

Whether or not you believe that large corporations are doomed as a means of organizing capital and labor, it’s worth exploring the question of what happens to our world if our ability to form meaningful relationships becomes radically more efficient. This efficiency may come more from social than digital technology, it may well have more to do with what’s happening in the movement for black lives than what’s happening on the blockchain. The advantages of relationship are so vast that the ark of history will tend to evolve towards them. Here’s hoping we can help it along.

Head of mobilization @ the Center for Humane Tech, fascinated with the way that relationships and movements form.

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