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

Short Briefings on Long Term Thinking - Baillie Gifford

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