When a kidney stone dropped into Jeff Bezos’s ureter while he was touring the Galapagos Islands by boat on New Year’s Day, his discomfort triggered an emergency airlift from the bay where he was cruising to the airport where his private plane was waiting to whisk him out of there. Kidney stones are no fun. Their characterization as painful on the order of childbirth for men is accurate. I know. I’ve had two, 23 years apart. But they’re usually not life threatening. Nonetheless, Bezos’s health scare reminded traders on Wall Street that they didn’t know much about what a post-Bezos Amazon.com would look like. The company has never said anything about its succession plan.
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The stock dropped about 1% when trading opened again on Jan. 2, but rose during the day and was actually stronger on Jan. 3. On Monday, Jan. 6, it traded as low a 3.6% below its 2014 high of $402.49. Uncertainties about the future are perhaps less worrisome for Amazon than for some large companies (e.g., Hewlett-Packard has had quite a difficult time with succession), but maybe more so than for others (e.g., Intel has always executed smooth transitions to internal candidates in a well-oiled process).
I asked Amazon for a comment before continuing with my own speculations, and they were polite but had nothing official to say. They did note that my proposed scenario was pretty much on the mark, which is no surprise, since this question has as pretty stock answer: Yes, we have a succession plan because large companies are required to have one legally and for insurance purposes, but no, we’re not telling you who is in line for the throne; that’s a trade secret.
But looking more closely at the company, it has in place a strong management team (with 11 senior vice presidents), a solid board (with senior representatives from Madrona Venture Group, Kleiner Perkins, Electronic Arts, and the Bill and Melinda Gates Foundation), a clear culture, and a number of potential candidates for the top spot.
The visible ones are people like Michelle Wilson, the attorney, and Mark Peek, the CFO, but Brian Valentine, former Microsoft lead developer, and Jeff Blackburn, the civilized dealmaker, are likely the real power behind the throne. There are various dark-horse internal possibilities, like Steve Kessel, the digital media guy, Jeff Wilke, the operations man, and Andrew Jassy, who runs the Web services business. They’re all strong, and two or three are top contenders.
None, of course, is a substitute for Bezos, the grand visionary. But many big firms — notably the Disney Company and Apple — have managed to replace their founding leader with competent successors who have gone on to run their companies profitably for years.
It should be noted that there are some unknown future businesses that will never mature once the great man is gone, and that loss of future earnings has to be factored into any company valuation and stock price, but often shareholders do quite well over the medium term, even after the visionary founder is gone. In a piece about Steve Jobs, published six weeks before his death in October 2011, I pretty much predicted Apple’s subsequent stock price movement based on a three-phase reaction to the loss of the firm’s leading light.
The succession at Apple was potentially much riskier than the one Amazon faces. Steve Jobs was a scorched-earth type, a Genghis Khan who killed off any potential little Steve Jobses maturing around him, leaving largely yes men. He was lucky to have Tim Cook, a quiet diplomat, to take over, but several other top managers have left the company since Jobs died.
My sense is that Jeff Bezos is a more rational man than Steve Jobs was. Naturally, he has thought a lot about his own mortality. Almost everyone has. But all signs point to an orderly transition to an internal candidate. An outsider seems unlikely at the moment.
However, what is written on paper and the real story are two entirely different things. With regard to succession, it is instructive to look at leadership transitions during the Roman Empire to see how messy things can get. Tiberius Caesar Augustus, having lost his own sons, couldn’t even guarantee that his grandson, Tiberius Gemellus would succeed him, and, indeed, Caligula, has grandnephew, had Gemellus executed and then spent the rest of his crazy days dissipating Tiberius’s 2.7 billion sesterces, turning the palace into a brothel, appointing his horse consul, and dooming the Julio-Claudian dynasty in short order.
Good thing for Amazon that kidney stones are more painful than dangerous.