The reason Amazon's organizational choices are significant is that there are a lot of opportunities for big companies that can emulate the best characteristics of a startup.
Amazon Go is a good example. It's hard to imagine a small startup pulling this off. The technology that makes the store work — using cameras and other sensors to track a customer's every step and instantly detect when he takes an item off a shelf — is a sophisticated feat of computer science that undoubtedly cost millions of dollars to develop. To recoup those investments, Amazon is going to have to spend years — and millions more — opening stores in an industry not known for its fat profit margins. That requires the kind of deep pockets and longtime horizons that startups rarely have.
Back in the 1990s and early 2000s, the high-tech frontier was on the web. Scaling a website from hundreds of users to millions is technically challenging, but it doesn't necessarily require a huge team or a ton of physical infrastructure. That's why companies like Google and Facebook grew from nothing to billion-dollar companies.
In contrast, the next generation of innovations is likely to be more tied to the physical world and to conventional industries: apartment sharing, self-driving cars, retail stores, health care innovations, and so forth.
Google, Uber, Tesla, and conventional car companies are all working on self-driving technology. To succeed in this market, companies are going to have to bring together software, hardware, sophisticated maps, and a strategy for navigating complex regulatory issues — a combination that could be too difficult for an independent startup to manage.
Amazon and Google are both working on drone delivery technology, which has a similar mix of hardware, software, and regulatory challenges. The companies' existing financial, technical, and lobbying infrastructure will give them a big leg up in these markets.
One way to deal with the conundrum is for big tech companies to acquire startups early in their growth. That allows a startup's innovations to be combined with the resources of a big company. Uber acquired the self-driving truck startup Otto less than a year after it was founded. GM paid a billion dollars for the self-driving car startup Cruise in March.
But acquiring fast-growing startups is a very expensive way for a big company like Google or Uber to stay on the cutting edge. And in many cases, this strategy doesn't even work. Google's $2 billion acquisition of Nest was supposed to accelerate the company's growth, but instead the company has struggled under the Alphabet umbrella.
This is what makes Amazon's evident success at nurturing entrepreneurial projects internally so significant. Amazon doesn't need to rely so heavily on expensive and risky acquisitions because it has developed a system for nurturing entrepreneurial projects internally. And as technology invades the real world, there are going to be more and more opportunities for these kinds of entrepreneurial projects.