Amazon is a disappointment.
In the fourth quarter of 2015, it made a measly $482 million profit on sales of $35.7 billion. That’s a 22% gain in revenue from a year ago, and over a 100% gain in profit. In that year, Amazon also doubled its market value to over $300 billion.
Bunch of deadbeats…
Last week, Amazon’s share price took a beating in after hours trading, dropping 15%
Serves you right, slackers…
And this all happened because despite Amazon’s healthy performance, it “didn’t meet analyst’s expectations.”
Maybe it’s time to look at those expectations.
Amazon is what those analysts call a “growth” stock. If you compare it against the rest of the Fortune 500, it might even be called a “hyper-growth” stock. It’s doubling of market value outperformed other growth stocks like Apple, which has had it’s own history of disappointment. We expect great things from anything prefaced with “hyper.
You all know what hyper means. It means “above” – as in “above” normal. In terms of growth of revenue and market value, Amazon would certainly qualify. It’s in the top few percent of all companies of the Fortune 500 in both categories.
But we expect more. We expect “hyper” performance. And it you don’t measure up, you disappoint us. It’s like kicking your kid out of the house when they come home with a straight A report card in grade 10 because they didn’t qualify for early admission to Harvard.
Here’s the thing about “hyper.” Not everything can be “hyper.” Something needs to be the opposite of hyper. Do you know what the opposite of “hyper” is? It’s “hypo.” Everyone knows what hyper means, but I bet it’s been a long time since you used “hypo” in a sentence.
That’s because we’re fixated on “hyper”. But the way we use “hyper” makes it an outlier. It’s a statistical anomaly on the far right of the normal distribution curve. It doesn’t represent reality. But we think it does. We expect everything to measure up to some unrealistic measure of performance. When we start a business, we expect to be as successful as Google. When we look at our bank account, we expect it to be as big as Kanye West’s. When we buy a stock, we want it to outperform every other stock in the market.
We have over-hyped “hyper.”
This tendency is starting to impact other aspects of our lives. As we quantify more of who we are, we tend to measure ourselves against the “hyper” end of the yardstick. It’s becoming a real problem. Even our friendships are now quantified, thanks to Facebook, Twitter and Instagram. The result is that it’s now almost impossible to measure up to expectations.
We, like Amazon, are disappointing. The difference is that Amazon disappoints analysts. We disappoint ourselves.
This can be a real bummer. Tom Magliozzi, co-host of NPR’s Car Talk show, summarized the problem in five words:
“Happiness Equals Reality Minus Expectations.”
If our expectations keep moving to the “hyper” end of the scale, it will never match up to reality. We’ll never be happy. According to this blog post by Tim Urban, it’s a big problem for Generation Y. And Tim should know. He’s a 31-year-old Harvard grad who owns a couple of tutoring businesses and has started a blog that grew virally to over 300,000 subscribers.