Events

Reviews

The ICON IT Giants Series: An evening with Brian McBride, Managing Director, Amazon UK
Tuesday 25 September 2007

Brian McBride is the Managing Director of Amazon UK, which he joined at the beginning of 2006. He has over 25 years experience in IT, working his way through a number of very large corporates from Xerox, IBM, Lucent, Dell, Madge Networks and latterly T-Mobile.

Questions were put to Brian by Joe Fay who has been covering technology for the past 16 years, including a spell at Computerwire in San Francisco. He has been The Editor of The Register for the past two years.

It is a great time to hear what has been going on at Amazon as the shares have been the darling of the sector, they have massively outperformed NASDAQ having tripled this year, giving Amazon a market capitalisation of $38bn. Not bad for a business that has sales of $12bn and pre tax profits of (only) $480m.

That share price performance must have resulted in many happy faces at UK HQ in Slough as all Amazon staff have a salary and share package in lieu of bonuses or cars. Though I doubt whether Brian is getting too carried away as the man who was termed "Frugal MacDougal" at Dell seems to have his feet firmly on terra firma. This down to earth approach is also typified by the fact that as Brian explained, at Amazon they don't employ "strategic consultants or MBA types" preferring to use the "2 pizza" team to solve problems and generate innovation.

Focusing on "what the customer wants" is a slightly tired phrase that you hear from many organisations but when you hear that Brian receives the total of one customer complaint a week, then Amazon must have a lot of customers that are getting what they want.

Brian talked of the diversification away from books which now account for only 30% of business. Interestingly, many people still just think of Amazon as primarily an online book retailer but the reality is that they now have a broad range of products and as a result Brian says they see themselves as more of "a shopping mall rather than a shop".

New products and markets are not the only focus as seasonality of the business brings its own issues and opportunities. Some 40% of revenues are in Q4 in the run up to Xmas and so there's considerable spare technology capacity that's available during the rest of the year after the Xmas rush is over. This spare capacity is now sold to other retailers such as M&S and Mothercare for their online businesses and has boosted margins.

Asked by Joe what tips he has for entrepreneurs, Brian responded that to be an entrepreneur you need to be driven, courageous, put your weight behind ideas and for those that are climbing the ladder he advises respect of leadership but not to be in awe of leaders.

Alan Bristow of ICON Corporate Finance noted that Amazon had been a $10,000 garage start up just 13 years ago, what tips did Brian have for technology start ups? Brian replied that he advised entrepreneurs to "get 100% behind their ideas and be courageous, yet know your limitations and hire to fill those gaps". He believes that Amazon still feels like a start up because of the relentless passion of its people – there are over 400 people in UK from over 20 nationalities.

Finally, asked whether he saw television shopping channels as likely to emerge to compete with online shopping he commented that "shopping channels were better than the test card - but only just!!". I guess that's a "no" then.