The efficiency effect: how four companies shaped up for a new era

Sometimes, you have to take a step back to leap forward. Over the past couple of years, Meta, Amazon, Block and Shopify are among the growth companies to have made efficiency cuts following the pandemic. Gary Robinson, an investor in Baillie Gifford’s US Equity Team, says that’s made them more agile and resilient – qualities that will let them take advantage of artificial intelligence and other opportunities to drive long-term growth. Background: Gary Robinson is joint manager of the Baillie Gifford US Growth Trust, a manager of the American Fund and a partner in our firm. In this episode of Short Briefings on Long Term Thinking, he explores how four leading internet-focused firms have streamlined their operations and reallocated resources to become more adaptable during a period of rapid change. Robinson draws a parallel with companies that made cutbacks after the global financial crisis to suggest that the markets may have underestimated how much growth can be unlocked by leaders taking a hard look at their firm’s spending, organisational structure and business priorities. Robinson suggests that recent efficiency drives will help Shopify, Meta and Amazon pursue AI-related opportunities that could meaningfully increase their earnings. And at Block, efforts to bring two products closer together could help the firm challenge Visa, Mastercard and American Express. Resources: Behind The Tech: Tobi Lütke: CEO and Founder, Shopify Dwarkesh Podcast: Mark Zuckerberg – Llama 3, Open Sourcing $10b Models & Caesar Augustus Bent Flyvberg: How Big Things Get Done Cyril Northcote Parkinson: Parkinson’s Law, and Other Studies in Administration More from Gary Robinson: Lessons from evolutionary biology Why companies should embrace chaos Companies mentioned include: Amazon Block Meta Netflix Shopify Timecodes: 00:00 Introduction 01:40 A background in biochemistry 02:55 The appeal of American companies 03:30 Parallels with the global financial crisis 04:40 Post-Covid efficiency efforts 06:25 Addressing overhiring and patched-together processes 07:40 Future-proofed businesses 08:00 The potential of AI 08:10 Shopify and the distraction of side quests 10:45 Shopify’s Sidekick assistant 12:50 Engineering Shopify’s internal operations 14:20 The authority of founder-leaders 16:00 Meta’s ‘year of efficiency’ 18:00 How AI can drive further growth at Facebook and Instagram 20:10 Business chatbots on WhatsApp and Messenger 21:15 Investing in Block 22:30 Capping employee numbers without compromising growth 24:40 Square and Cash App’s potential to rival Visa and Mastercard 26:35 Meeting Jack Dorsey 27:40 Discipline and focus at Amazon 29:00 Amazon’s fast-growing advertising business 30:20 Generative AI’s trillion-dollar opportunity for AWS 31:25 Offloading routine tasks to artificial intelligence 32:25 Book recommendation 33:40 Outro

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