On April 5, Amazon announced 83 launch contracts for its new satellite infrastructure. The bulk of recent commentary on the subject focuses on two things: First, how expensive this project will be; second, that SpaceX is notably absent on the list of contractors – which does include Jeff Bezos’s Blue Origin. Those are probably the wrong take-aways. The emphasis should, instead, be on the hope that Amazon’s satellite efforts, and the company’s larger strategic framework, offer for a new generation of American industry.
For decades, the US commercial system has optimized for short term profit over long-term growth, quarterly returns over next generation positioning. US companies have consistently outsourced not only manufacturing, but also research, development, and engineering — opting for immediate profit margins over future growth and resilience. They have focused on developing products immediately to sell immediately, instead of on dedicating capital to building infrastructure that promises future, outsize reward. They have gotten fat off their advantages in today’s markets rather than working to protect those in tomorrow’s.
As conventional wisdom has it, this short-termist orientation is inescapable, an endemic feature of the free-market, publicly listed US system. It dooms American industrial and economic competitiveness – and, at the same time, global supply chains, infrastructure, and markets to Chinese control. Unfortunately, there’s plenty of evidence to back the argument up. But all it takes to refute it is one case to the contrary; one example of a major US market player taking the opposite approach.
“Here is a leading US tech champion– its every move scrutinized, and its annual statements even more so – deliberately putting future positioning ahead of today’s profit.”
Amazon offers precisely that. In its board rooms and on the ground, the company is deliberately adopting frameworks and investments designed to foster long-term competitiveness, even what that comes at the expense of quarterly returns or shareholder enthusiasm. Here is a leading US tech champion — its every move scrutinized, and its annual statements even more so – deliberately putting future positioning ahead of today’s profit. And here, therefore, is a model for American companies that care about tomorrow. Maybe the peanut gallery has been too quick to write off America’s future competitiveness. Maybe we just need more Amazons.
In the board room, Amazon has rejected executive reward structures that incentivize short-term thinking: The company refuses to tie compensation to “discrete performance goals,” as do most of its competitors and counterparts. Why? According to regulatory filings, Amazon sees those as undermining “experimentation and long-term thinking.” And Amazon is sticking to this approach even though it risks not being popular among shareholders – who are reportedly calling on the company to adopt a more conventional model.
Whether causation or correlation, Amazon’s on the ground capital expenditures bear out this emphasis on the long term, immediate profits and shareholder pressures be damned. The company is deliberately shelling out capital to build infrastructure networks – both today’s and tomorrow’s. It has spent heavily on those directly relevant to its e-commerce business, including on warehouses, delivery stations, vans and planes. And Amazon is also, now investing in a satellite infrastructure for Project Kuiper, the company’s satellite-based internet service.
Satellites are a key part of emerging infrastructure systems. For Amazon, in-house satellite internet also promises the virtual network equivalent of vertical integration – a link to be connected to Amazon Web Services and also to empower the company’s logistics systems. This is what sets Project Kuiper apart from SpaceX: It’s not a one-off bid for a certain infrastructure system or domain, but rather part of a vertically integrated effort to build and control an entire ecosystem.
This is a logical, even necessary strategic move to compete for tomorrow’s foundational systems – and to protect Amazon’s resilience as a company. It’s also directly anti-orthodox, and absolutely something that shareholders are poised to push back against. Project Kuiper will be expensive: Amazon reportedly plans to spend some ten billion dollars on it. And those billions of dollars are going not to the smart, shiny, downstream tech capabilities that investors flock to, but to the “dumb pipes” such capabilities are built on. Yet here as with executive compensation, Amazon appears intent on executing its vision, and protecting its future.
This is what America needs. This is also proof that America’s system is not antithetical to long-term thinking. Now we just need other companies to take a page out of Amazon’s playbook.
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