Bezonomics – the economics of AI Automation

In reviewing the book Bezonomics by Brian Dumaine , I compare similarities in the personal characteristics of Jeff Bezos and Elon Musk . I also discuss differences in their individual approach to business. I discuss what the Bezonomics philosophy is and how companies can both adopt it and compete against it. Although the book covers anti-trust concerns and potential regulator induced break-up implications for Bezos company- Amazon and the rest of the FAANGs (Facebook, Amazon, Apple, Netflix, Google), I do not cover these in my review. In summary, Bezonomics is an AI-automation philosophy focused on using AI to learn customer transaction data which is then used to keep customers happy through understanding their needs at scale and providing what they need, when they need it at the lowest prices on offer even if initially loss-making. It is focused on selling through all channels possible and to all potential customers- foe and friend alike – with goal of achieving scale economies in AI learning of customer needs that then translate to automation driven operational efficiencies that decimate the competition. This then yields market dominance and generates predictable cash flow that can then be used to subsidize expansion into new related verticals. This philosophy is superior especially for retail focused businesses. All business owners should seriously consider implementing this philosophy in their businesses or working with emerging AI business leaders like Adebayo Alonge as well as platforms like RxAll and StorsApp that provide them the understanding of AI business transformation strategies as well as AI tools to differentiate their business.

Recently had the opportunity to finish this book in between managing a rapidly growing tech company.

I find the cover of Jeff Bezos and this book was a great reminder of great book on another of my business mentors Elon Musk titled ELON MUSK: TESLA, SPACEX, AND THE QUEST FOR A FANTASTIC FUTURE.

Similar traits I saw between Bezos and Elon is their pure grit, resilience and the bravery to take on staid traditional industry incumbents using emergent tech. They also share similarities in having hot tempers, a hyper-focus on perfection and possessing a hard-driving task master persona through which they drive their teams to the limit.

Elon however appears to be more adventurous in terms of his starting multiple companies using often disparate emergent technologies vs. Bezos who prefers to drill deep with a single company using his core AI technology developed in one company to expand into new verticals.

Jeff Bezos has achieved his success from using AI to achieve scale efficiencies in multiple verticals while also monetizing new internally developed & used innovations such as his cloud hosting services business-AWS, to customers and competitors alike.

Elon has focused on monetizing new visionary technologies in traditional industries that have not seen disruption. He prefers to work in a directly confrontational manner against competitors. ‘Coop-etition’ does not appear to be something he is interested in which is a major difference between him and Bezos.

In short Bezos is focused on achieving cost efficiencies using AI in vertically intersecting business operations while Elon is interested in creating new businesses in traditional industries using various and very different deep tech that often are not integrated or rarely intersect.

Back to this book Bezonomics, the author emphasizes that Bezos model is to use AI to automate retail services in multiple verticals by automating AI to understand the needs of his customers at a granular level. His AI is able to then provide customers what they need when they need at the lowest prices possible at scale with limited human intervention. This then increases customer traffic which in turn increases number of sellers looking to sell to them on his platform. This in turn increases selection which drives more customer traffic, increases orders and improves the data that his AI learns with. This in turn improves the AI to be more accurate in predicting customer needs and thus leads to improving customer satisfaction which further drives customer traffic. The virtuous cycle continues and Bezos becomes the world’s richest man by applying the same model into multiple retail industries.

The author argues that this way of running business makes Bezos a formidable competitor because he runs an AI-first company and has the resilience to sustain losses in pursuit of a long term strategy of aggregating customer demand for low prices, wide selection and fast deliveries. He is famous for saying- “your margin is my opportunity” Bezonomics is as much a business process as a mindset.

His track record offers him access to deep pools of capital that are willing to back his losses in return for his achieving dominance of whatever industry he decides to target. They discount losses for fast growth and potential to generate annuities from vast pool of satisfied active users into the far future.

Traditional businesses need to adopt an AI-first business automation process to have any chance to compete. In addition they need to differentiate and not compete on price- which is something Bezos does extremely well. They can differentiate by focusing on selling through purpose, curated selection, individualized customer services, community based relationship selling , providing omni-channels i.e. online, in -person, and a mix of online + in-person channels for customers to purchase from/interact with them.

Bezonomics is a business philosophy that all businesses need to learn and adopt to have an chance of surviving this new age of AI driven business automation.

Ultimately there will be 2 types of companies-those that succeed and those that die. Those that practice Bezonomics are likely to succeed.

Leave a Reply

Fill in your details below or click an icon to log in: Logo

You are commenting using your account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

This site uses Akismet to reduce spam. Learn how your comment data is processed.