Jeff Bezos. Founder of Amazon.com. The 5th richest person in the world. Leader in modern retail. How did he do it? What was the secret to his business strategy?
The book The Everything Store, reveals all. It details Jeff Bezos’s journey as he built Amazon.com into one of the world’s largest, most successful companies. The author interviewed hundreds of Jeff’s closest associates, including the man himself.
In this article, you’ll learn timeless strategies from a man who built an Internet company from nothing to one of the largest companies in the world in under 20 years.
Here are the top lessons I learned from the book:
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1.Choose The Option That Will Give You Less Regret
Jeff invented what he calls the “regret minimization framework” to decide whether to stay at his safe job or to start his company. He considered what he would regret more on his death bed. He knew he would regret not taking a stab at the Internet (which was changing everything) versus leaving his safe job. It was a tough decision because he was not young and he had a family to support.
In the moment, you can overemphasize the importance of small pleasures and hold onto them. But if you use this framework, everything becomes a lot clearer.
Steve Jobs has a similar quote that he said during a Stanford commencement speech:
“Remembering that I’ll be dead soon is the most important tool I’ve ever encountered to help me make the big choices in life.
Almost everything–all external expectations, all pride, all fear of embarrassment or failure–these things just fall away in the face of death, leaving only what is truly important.
Remembering that you are going to die is the best way I know to avoid the trap of thinking you have something to lose. You are already naked. There is no reason not to follow your heart.” -Steve Jobs
2. Niche Down First To Grow
Bezos always had the plan to create a store that sold everything online. However, he did something very smart: He started by only selling books and dominating that category online.
This was very calculated. He mapped out a list of 20 different things he could sell including computers and CD’s. He started with books because they were a commodity that could be sourced from many places and were mainly published by two big publishers.
3. Investor Money Is Sometimes OK
I used to be really against getting investor money for most situations. I think it’s illogical to get that funding unless you need the cash or the business advice from the investor. Most people do this simply because they see everyone else doing it, they want to be on TV, or they think you make it once you get millions in funding.
Having studied the origin stories of Facebook, Apple, Walmart and Amazon.com more closely, I realize that there are situations where investor money is needed. And these companies support the reasons I just mentioned: if you need the money to grow or maintain your business and you need that investor’s mentorship.
In Amazon’s case, they needed the money to sustain and grow.
Note: if there’s no incredible urgency to grow, then you should be less inclined to accept investor money. Walmart took investor money in its early days because they were in a new, growing industry of discount retail and thus needed to take as much marketshare as soon as possible.
At the height of its growth, Walmart exhausted all forms of borrowing from banks and turned to going public as the last option to get the influx of cash it needed.
4. Set Big Goals Because You Just Might Reach Them… And Then Some.
Jeff set projections that he deemed reasonable. It was 1994. His company was on course to love over $300,000 that year. He told his investors that he projected that by 2000, they’ll get $60 million in sales if they did well and $100 million if they did really well. By 2000, they were doing $1 billion.
I really dislike overoptimistic projections. 99% of the time, it’s one of thousands of naive youngsters who underestimates the difficulty of business and is trying to sell how his idea will generate “billions of dollars.”
Having said that, Jeff is one of those practical exceptions. He told investors as well as friends and family that Amazon had a 70% of failure.
He set big goals and his projections were based on the volume of books and other goods he would sell. He was right.
When Jeff Bezos first pursued the idea of the Kindle, an eBook reader, he had ridiculous demands.
Before cell phone data usage was really a thing, he demanded that his designers created an eBook reader that could choose, buy, and download a book to read instantly from any location.
The designers complained back that it was impossible. In standard Jeff Bezos fashion, he responded, “I’m in charge of the business model. I’ll handle how it’s possible. I want it done. You’re the designer. Make it happen.”
This reminds me of Henry Ford.
According to the book Think and Grow Rich, Ford had ridiculous, impossible demands. He asked his engineers to create a car that was impossibly efficient. The engineers kept telling him it was impossible but he just told them that he wanted it done.
Eventually, it was made.
There seems to be a drive by great innovators to create impossible things despite discouragement from others.
5. Create A Culture of Top Achievers
Hiring is incredibly important.
Jeff made it a point to set a culture where you are always increasing the level of top talent, even back when he was a small start-up.
His method was to keep hiring increasingly better people to raise the bar. He would have high standards and go as far as asking for the applicant’s SAT score. That way, every new applicant compared himself to increasingly higher skilled employees.
He didn’t believe in work-life balance. So he looked for people who didn’t care about work-life balance and would gladly work a minimum of 60 hours a week. Those were outrageous standards, but he made it happen by finding people that fit this mold.
Jeff made sure to create a work culture and environment that encouraged less partying, less slacking off, and more time spent in the workplace.
He canceled a party for a milestone that was hit because he didn’t want the culture standard include partying for every milestone as he knew there were many more milestones they would hit in the future.
Since parking spots at work were limited, someone came up with the idea of Amazon paying for employee bus vouchers. Jeff disapproved it because he wanted people to stay at work and having a spot for their car encouraged them to stay.
Jeff said that Amazon will live or die by the quality of the engineers it hires. Because of the increasing standard for hiring, he replaced a lot of the original employees with betters ones overtime.
His promise was that if you stuck with the company, you would be rewarded. They were rewarded with the profits that Amazon eventually got but many employees were often still angry that they got replaced.
Throughout the history of Amazon, Jeff burned out a lot of top executives who left the company because they couldn’t handle working weekends and late hours. They wanted to spend more time with family.
This method seems a bit overboard to me. However, this may not be the whole story.
Jeff did surprise one of his partners during his 5 year anniversary at Amazon. He flew him and all his relatives to Hawaii for 3 days.
I think it’s important for employees to have some time to relax and take care of family. But it is true that you get ahead by working harder than others. Jeff intelligently solved the issue of employees burning out or hating the tough work hours by hiring only people who enjoyed what they did and wanted to help achieve his big vision.
6. Help Customers Make Better Buying Decisions
Jeff realized he could get ahead of his competitors, Borders and Barnes and Nobles, by having more online reviews for each book. He was the first to open it up to the public for reviews on books and products.
He had his employees write honest reviews to increase the count. Some of the employees were truly honest and gave bad reviews on books they read.
He got angry call from a big businessman saying that it was a stupid idea to discourage people to buy a book by having negative reviews.
Jeff completely disagreed. He said that he wasn’t in the business of selling. He was in the business of educating the customer to help them make better buying decisions.
I can’t say that this motto should or does apply to all industries and businesses.
But what you can take from this is that Jeff had the enviable position of being the supplier of the best product no matter what. Therefore, by being honest and letting customers know what sucks, he gained their trust and loyalty.
7. eCommerce Can Do Powerful Things Brick-and-Mortar Can’t
The internet allows businesses to do things that you just can’t do in person. There’s pros and cons to this.
The biggest pro is that you know a LOT more about a customer than you do offline. Jeff understood this and ran with it.
He significantly increased sales by creating an algorithm that recommended products based on your past purchases.
He set up an affiliate program that allowed anyone online to recommend Amazon products. If a sale was made, they would get a commission. This resulted in a billion dollar affiliate program.
The obvious weakness of the internet is that you can’t speak face to face with a customer that walks into your store and sell them on things. Having said that, eCommerce makes up for it with scalability, reach, and convenience.
I was reading an interesting story in the Power of Habit. Apparently, brick-and-mortar stores aren’t that far behind either. They know a LOT about you. To a creepy level.
They have sophisticated, database systems that will detect your shopping behavior before you’re even aware and send you coupons in the mail to draw you in.
For example, they got in trouble when they mailed a Dad coupons for baby items weeks before he found out his teen daughter was pregnant. Knowing a lot about your customer can help. But you have to be savvy enough to do it without pissing off your customers.
8. Everyone makes mistakes and that’s ok
Jeff wasn’t perfect. He invested and lost over $100 million in Internet businesses during the Dot Com Bubble. These included big internet websites like Pets.com
Amazon learned that they didn’t have enough bandwidth to deal with all these different businesses. They were better off doubling down on what’s working, which was Amazon.com
Jeff Bezos is famous for his honking laugh. He’s not scared of making mistakes. Image by Steve Jurvetson. No changes made to image. License.
9. Set Value Principles for Your Company
This correlates with what was said in Good to Great, a book that studied some of the most profitable success stories in business history. They found that these companies always had a set of core values that were clearly defined for all employees.
Jeff decided on these values early on. Since then, he’s slowly added to the list. You can view the latest version at https://www.amazon.jobs/principles and they’re called Amazon’s Leadership Principles now.
Some of the original ones included Ownership, Customer Obsession, a Bias for Action, and Frugality.
10. Be Frugal and Efficient In Your Spending
It seems obvious but it’s not.
A great majority of businesses I examine aren’t very efficient or frugal with the money they spend. Every dollar should be properly examined and put to proper use.
However, I see a lot of naive business owners spend widely. I’ve seen it on TV Shows like Shark Tank and from many tech businesses in Silicon Valley. It angers me.
We’re talking horror stories like horrendously mismanaging and poorly spending $250,000 to millions and making no profit from it.
Jeff seems to be one of the few exceptions. In fact, he may be a little too harsh on it. In the book, Jeff is mentioned numerous times cutting any costs he can. He won’t let employees fly business class. He added an employee loyalty program to save money.
Apparently, he learned this from Sam Walton, one of the most successful businessman to live. Jeff loves Sam’s book Made in America. I love it too. It’s one of my favorite business books.
I think people get a skewed idea that rich people spend wildly because of the small percent of celebrities, musicians, or show-off’s who do. In the book The Millionaire Next Door, they did a study on all the millionaires out there.
They found that the majority of them were very frugal. They got there by spending less than they made. They had modest houses and cars.
I find that this is often also the case with billionaires. In the book, there’s a story where Jeff gets invited by the CEO of Walmart to meet for a big negotiation.
Now, Jeff is a cost-cutting machine. He won’t let employees fly business class and he packed top executives in a Holiday Inn, 2 people a room, for business trips.
Walmart’s also been known to be frugal. And it still was. They had lunch with Jeff at a Chili’s and paid for his hotel costs at a nearby Holiday Inn.
Note: I generally agree with this approach of saving money. But Brian Tracy has said that in negotiations, it’s better to wine and dine your guests. Perhaps, they knew Jeff was a frugal guy and didn’t care so they saved themselves money.
The point is that I’ve seen a lot of billionaires who are quite frugal and still are, including Warren Buffett who still drives a modest car, lives in a modest home, and eats McDonald’s everyday. And he’s worth over 60 billion.
Spend less than you make. It’s a simple key to wealth.
I can’t say everyone does this. Richard Branson, Bill Gates, and Mark Zuckerberg have huge mansions. But there’s a lot more billionaires outside of the limelight who are probably pretty frugal though.
Having said that, I think it should be noted that you don’t want to go too far with cutting costs. Sam Walton said that how you treat your employees will permeate to how your customers are treated.
If you do want to splurge a little, do it on things that show employees appreciate and give them what they want (maybe it’s employee benefits, maybe it’s more salary).
Don’t go overboard with it. In Dan Pink’s book Drive, we find that what motivates us effectively isn’t always money.
The high performers a top-notch company wants to attract aren’t motivated primarily by more salary. They look to meaning, purpose, and higher goals. Therefore, you can attract the wrong person or get diminishing returns when you pile on employee benefits and extra salary compensation.
An example would be Google. I think they’ve gone too far with the employee perks. They literally give their employees free buffets, massages, trains, day care, and almost everything you can name. But I’ve noticed that employees will still leave Google and it usually has nothing to do with money or benefits.
Even late into Amazon’s success, Jeff got angry when he found a TV installed in a room. He said it waste of money and a failure of communication within the company. He said he should have been told.
I definitely agree more with Jeff than millionaire tech entrepreneurs that spend frivolously on expensive things. He makes the businesses money go as far as possible by cutting needless costs. Having said that, I think he underestimates the value of spending a little more to take care of your customers.
11. Think of Crazy possibilities and Try it out
Jeff did this multiple times.
The biggest example would be when he decided to create an infinite best-sellers ranking list. He realized newspapers cap out at a list of the Top 100 because they run out of paper.
He wanted to go infinitely because the Internet let him. It was a crazy idea because the database technology at the time couldn’t handle it, but he made it happen and it still exists to this day.
When eBay came in as a competitor, Jeff competed fiercely with his own auction technology. It ultimately failed and was morphed into a 3rd party seller platform, which was fairly successful.
In the process, the online auction market was given to eBay.
This reminds me of “Crazy Jack”, who founded the multi-billion dollar Chinese internet company Alibaba. I recommend the documentary Crocodile in the Yangtze to see how Jack pushed out eBay from China even though his company was the underdog.
Jack had his own crazy ideas. How he did it was kind of in the name of the documentary. Long story short, Jack gave away everything free for years and ate away at eBay’s market share.
“eBay might be a shark in the ocean. But Alibaba is a crocodile in the Yangtze. If we fight in the ocean, we lose. If we fight here in the river, we win.” -Jack Ma
Jeff took the leap from his safe 9-to-5 job because he would regret not doing it more than he would doing it and failing. Image by Donkey Hotey. No changes made. License link
12. Obsess Over Making The Customer’s Experience Better. Put Them First.
Jeff has a golden principle of always putting the customer first. He says that if you had to decide between obsessing over customers or over competitors, always choose customers.
I’ve heard many billionaires say something similar. In the 2016 Annual shareholder meeting I watched Warren Buffett said “Generally speaking, if you take care of your customer, they will take care of you.”
When he says, they’ll take care of you, it means you’ll make a lot of money in return over time.
Jack Ma of Alibaba, one of the richest men in China, said that he puts customers first, employees second, and investors third.
Jeff was so behind this principle that he had an empty chair “for the customers” when he sat down for intense negotiations with Toys R Us.
Jeff probably learned this principle from Sam Walton.
Having said that, I’ve studied a lot of wealthy people. I don’t think customers are solely #1. Treating your employees well is a close second, if not also a #1.
Sam Walton even said in his book that how you treat your employees is how they’ll treat the customers.
A lot of wealthy people have echoed similar points, such as Richard Branson. Based on what I’ve read in this book, Jeff needs a bit of work on the employee part.
Jeff continued to see how he could provide greater service to the customer in the long run. He was so glued to this that Amazon wasn’t turning a profit in the short term for years. He managed to add in “free shipping with any total order value of $100+” and reduce it all the way to $25.
The other executives were pressured by the investors to turn a quarterly profit, but Jeff wasn’t disturbed. I agree with Jeff. Why should you care at all what random “investors” and big investing companies think? They will abandon you the moment your stock looks a bit bad. You should care about the long-term profitability of your business.
Jeff made it a point to always think of how the customer would benefit from a new product or idea. Every task and manufacturing and fulfillment was considered with the question of “how will this bring value to the customer?”
Jeff was so adamant about putting customers first that one time, he yelled at a top executive for emailing a customer promotions about sexual ointment and embarrassing the customer.
He screamed, “We can become a $100 Billion company without sending a fucking email!”
While Amazon relied on a lot of data and metrics, Jeff was often willing to move heaven and earth because of one customer complaint because it spelled a bigger problem.
After a bit of discussion, they ended up completely ending the email marketing campaigns for many big departments, such as healthcare products, because of that one customer complaint email.
13. Make Your Decisions Based On The Best Long-Term Outcomes. Don’t be Influenced by Short-Term Opinions of Investors or Stock Prices.
The stock market is a voting machine in the short term and a weighing machine in the long term.
This is something Warren Buffett and his mentor Ben Graham have constantly voiced.
In the short term, your company’s stock price will be all sorts of crazy high and low prices because of the euphoric, ignorant nature of the media and general public.
In the long term, your stock price will rise if you take care of your customer, maintain and grow the value of your company, and maintain profitability.
Most people think long term means in a couple years and short term is minutes, days, or weeks.
In reality, short term could stretch up to several years. Long term is 10+ years.
In the book, Jeff tried to remain cool as a cucumber despite the media, stock analysts, and even his own employees going crazy over daily fluctuations of stock price and new announcements of earnings or loses for the quarter.
He was really good at it for years, but he eventually caved from the pressure of stock analysts to make money. He was losing money and started slowly pushing up the price of some of his products.
That was until he met James Sinegal.
James is the founder of Costco, one of the underrated, overlooked business successes in recent times. Sinegal was even around when Sam Walton was growing Walmart to be the giant it was.
He even declined Sam’s offer to buy Costco.
James taught Jeff some great lessons that he carried with him from them on.
The first big one is to be in it for the long term. James wanted to work for Costco until he died. There was no “exit strategy” for him.
I’ve realized a lot of billionaires are the same way, while many millionaires (especially from Silicon Valley) are short-term focused on “exit strategies.” This basically means that you’re trying to build a million dollar business mainly to sell it and make a lot of money. That’s pretty much saying that you don’t enjoy your business and you want to get out of it as soon as possible for the money.
I thought this was really stupid and a huge mistake to why anyone should start a business. You’re not going to have the passion to make it through if you’re looking at it that way.
You need a stronger motivation than money to get through the tough time.
14. Embrace Low Margins
“Your margin is my opportunity.” – Jeff Bezos
Jeff believes that margins are opportunity to beat the competition. If you’re not familiar with what margin means, it’s the amount of dollars between how much a product cost you and how much you’re selling it for.
A lot of people prefer high margin businesses because you generally have to do less work, while making and selling less products to do make a lot of profit.
Jeff Bezos went the other way; he says you should embrace low margins and start lowering the price. This will help the customers (because they like paying less for good quality stuff) and bring more of them to you from your competitors.
He used Costco as a model. Costco is probably one of the most successful, but overlooked subscription service successes in history. Costco makes a lot of its money off its annual membership fees. They have almost no profit margins on the actual products they sell. That is why they can sell so much great stuff for so cheap.
By doing this, they become the #1 undisputed place to go.
It’s funny because in Delivering Happiness (affiliate link), a book written by the the founder of Zappos, a company acquired by Amazon, the author says he prefers high margin businesses for the reasons stated. He walks through his childhood journey as an entrepreneur and said he learned it through experience.
So how do you reconcile this conflicting advice? My theory is that it depends on the industry and the present and future competition levels. Amazon, Costco, and Walmart can produce so many customers that they can thrive off low margins because of the sheer volume. But if you are in any small business that few people have considered starting, you have less competition and can charge higher margins and get away with it. In the long term though, it seems like any industry or business that is highly profitable and gets increasingly well known naturally attracts competition, which pushes down prices and margins.
15. Copy What’s Working From Others Shamelessly
James Sinegal taught Jeff something else that was echoed by Sam Walton in his autobiography, Made in America.
James said that he shamelessly copied everything valuable from other people.
Sam said something similar. He said all of his great ideas were copied from other people.
Now, people have a different perspective on copying. I’ve seen entrepreneurs and artists on Youtube who refused to copy any ideas for moral reasons.
I totally understand and applaud your ethics.
But if it’s legal to copy them, and it’s clear it’s a great idea, you will be stupid not to.
Sam Walton was running a convenience store when he saw discount retailers like Target sweep into his area. He knew that if he didn’t start his own discount retailer, they would run him out of business.
He saw the future and didn’t fight or get mad at the economics of the situation. He joined them.
Plus, there are people out there who have no ethics and are blatantly already copying you right now. You’re going to have to compete with these people.
Rather than waste your time arguing or fighting people who will copy you, you need to get it out of your head that copying is always wrong.
This is especially true when it’s legal for them to copy your business structure or model. Patents can help with this. The billionaires who created GoPro and Spanx both credited patenting as a big part of this.
It’s one of protecting your uniqueness and advantage.
Copying alone won’t help you succeed. Because you’re just an echo or commodity that looks like someone else.
Jason Fried said it best in his book. Purely copying someone puts you in a reactive mode. You want to be proactive.
You have to be innovating and doing unique stuff too. Sam was the first to start researching and using satellites in his company.
He saw the future and he was right.
Satellite communication put him a decade ahead of his competition.
He also bought a one-seat airplane and would fly over large regions. From up high, he could see where populations clustered and where the best places to build Walmarts were. No one else did this.
Sam did a hybrid of both. He did new things. He also would relentlessly monitor his competition to copy or do things better. He would go into their stores and take notes on what they did.
16. You Don’t Have To Be Perfect
When I used to look at geniuses like Mozart or Warren Buffett, I partially assumed already lost because I was already too old and hadn’t found my “gift” yet.
But you don’t have to have decided already on your passion when you were a little kid.
If you want to play at the top 1% of the 1% in sports, music, or business, it certainly helps. But Jeff Bezos proves that this isn’t always necessary.
Jeff was still trying to figure out what he wanted to do for a while. He was really into space and science fiction. He still is. He loved Star Trek.
He studied electronic engineering.
Jeff worked as an employee for years in a stock market company. He learned business through the company rather than through business school. It took him a while to get into business for himself and learn.
As the book details, he made a lot of mistakes. Probably the biggest that kept popping up was his failure to retain top level executives as employees. A close runner-up was his inability to praise people for great work often enough.
Don’t overwork your employees or push them to work so hard that they leave the company. Jeff had dozens, if not hundreds, of executives leave over the years. It seemed like most of them gave politically correct answers for why they left without revealing anything. There seemed to be a common premise of “more time with the family” though.
Jeff believed in no work-life balance. 80 hour weeks were a norm. I can’t say Amazon has really changed anything about their culture yet based on what I’ve heard from employees.
Praise employees profusely when they deserve it. Jeff didn’t seem to be good at praising employees for great work. I think Warren Buffett and Sam Walton are 2 people who do this very well. Read Warren’s shareholder letters or Sam’s book Made in America. Both of them only praise when people deserve it. But when they do, it’s detailed, specific, and it calls them out by name to a wide audience. Saying the name of the person you praise is really important. If you can’t even remember the manager’s name, it makes the praise ingenuine.
Jeff honestly made a ton of mistakes. See the Conclusion section of this article for more. But he clearly had personality issues. He had outbursts, called executives idiots, and lacked empathy with employees. He didn’t seem to praise people enough.
Perhaps he’s learned and improved from those mistakes over the years.
What I do know is that he has definitely succeeded despite not doing things perfectly.
17. Have Great Role Models Who Show You That You Can Achieve What You Want
Jeff’s childhood friend said:
“If you want to know why Jeff is successful, just look at his mother.”
Jeff Bezos’s mother was a hustler. She pushed really hard for Jeff to get into a gifted school when he was first rejected.
She ended his job cleaning Gerbil cages because his boss was pulling Jeff out of school to talk about her personal issues.
Jeff’s mom really fueled him to work really hard and become valedictorian of his school. He took on many honors level courses and won many science and math competitions.
Jeff’s friend said:
“Once Jeff decided to become valedictorian, everyone else was competing for #2.”
Jeff had a reputation of being so hard working that he would get what he wanted. The other classmates resigned trying to get the #1 class rank after he decided on it.
Find a great role model to model yourself after and learn after. Choose carefully.
18. Be Willing To Do What Your Workers Do
Jeff was more than willing to step in and do the handy work of the people in fulfillment or manufacturing if he had to.
When Amazon was working at its maximum capacity, he often had to step in himself to get the highest impact results.
As Napoleon Hill said, great leaders must be willing to do what his followers do. Otherwise, his followers will cease to follow him.
19. Move On Quickly From Tests That Fail
Jeff’s big goal was always to become an “everything store.” This meant that he wanted an online store that sold and shipped anything you could possibly buy.
During his journey, he ended up finding products that just weren’t a great fit for online shopping.
One time, he tried to get into jewelry. He and his team spent an incredible amount of time negotiating with manufacturers, designing jewelry boxes, and getting things just right.
He even had a free custom diamond and ring selection tool on his website.
Ultimately, it failed. People wanted to still go in person to wear, test out, and buy jewelry.
Jeff was fairly quick in packing things up, removing the tool from his website, and moving on to testing other products like shoes and apparel.
When he saw a losing proposition, he was quick to recognize it and move on rather than stubbornly wasting time and money.
This is more of an art than a science. How d o you know if something will always be a losing proposition or is something that you just haven’t persevered long enough to crack? I can’t say I know the answer. I do know that Steve Jobs and the Wright Brothers factor in your love and passion to get something right no matter how long it takes.
Google is also an example of a company that’s fairly fast at moving on and pivoting. When they created the social network Google Plus and the tech glasses Google Glass, there was so much hype.
They put a lot of investment money into it, but if they succeeded, profits would have well made up for it.
Both ultimately failed and they were moderately fast and recognizing it to pack things up and move on.
Honestly, they could have been faster with Google Plus. But it’s still not bad for such a large company.
I remember being told by people with millions of followers on Google Plus and social media experts directly in comments that “Google Plus is not a dead platform. You’re just not using it right.”
I had a gut feeling that they were wrong. The hundreds of young adults that I interacted with in the real world clearly had a lukewarm feeling about the platform.
I ended up wasting a lot of time on there and now, it’s clearly a dead platform. There’s a lot of jokes made about it. I overheard one just the other day.
I’m starting to think that the general public of youth is a great gauge on what’s actually working and what’s not online. There’s jokes being made constantly about Bing, but Snapchat is actually a serious thing. People actually use this constantly and I see it in real time.
20. Eliminate bottle necks
A great book was used as a centerpiece for Amazon’s manufacturing and fulfillment. It’s called The Goal: A Process for Ongoing Improvement by Eliyahu Goldratt.
One of the main point is to identify the bottleneck and spend as much as you can to eliminate it. A bottleneck is a part of a process that holds up everyone to wait for it because of how slow or limited it can do things.
An example would be a factory machine that works really slow with thousands of workers ready to do work behind it. Even though there’s all this capacity behind the machine, the machine is going so slow that all those workers aren’t being put to use.
Another example would be a traffic jam caused by an accident. The limited amount of roads to move through around the accident act as a bottleneck to slow things down.
Amazon used this process to utilize a ton of its maximum capacity that was rarely being put to use.
21. Stay In Your Lane
Jeff let Steve Jobs take a large percent of the music industry market share from him. He was in negotiations with Steve for sometime for an Amazon-Apple music store, but things fell apart because Steve wanted it to be a seamless, easy-to-use program while Amazon wanted something as part of their “everything web store.”
Over the years, Apple dominated the music industry with iTunes. When examining Steve’s and Jeff’s lives, you realize that it makes sense why Steve succeeded in music when Jeff didn’t.
Steve lived and breathed music. He listened to the Beatles and other great singers. He even dated a singer.
Steve also took a typography class in college out of interest, even though he didn’t see any application of the skill in his future. Decades later, that typography class came into great use in the design of the letters for the keyboard.
Jeff, on the other hand, didn’t know a thing about music. He once grabbed albums indiscriminately from a store as if they all were the same. What he did love was books. He would mark and take notes on almost every page of a book. He lived and breathed books. It made sense that Amazon succeeded by first selling only books.
22. It’s better to clean out what’s going obsolete yourself than have your competitors do it for you
“It’s better to cannibalize yourself than let your competitors do it.”
What this means is that you must recognize and acknowledge that an industry is going obsolete. And make it a point to take yourself out of that business as soon as possible before competitors do it for you.
A great example would be the horse carriage industry after cars were invented.
Amazon did this when they realized that digital books were the future. They saw how fast iTunes took over the music industry from its previous brick-and-mortar fashion. They knew that they had to move fast before a competitor took over the eBook industry.
Richard Branson has admitted similar stuff. He said in his books that one of his big mistakes was not moving out of the music industry fast enough. He let the internet and digital world negatively affect his record company.
In the book, Amazon also pointed to Kodak. Kodak invented digital cameras and used to be the front runner in the field. They were unwilling to innovate and risk money on new ideas. Soon, they fell way behind and became a horrible business.
23. Question How The Best Do Things
While it’s often very useful to get better by learning from masters, you sometimes get to a point where it’s time for you to innovate and come up with even better strategies.
Jeff Bezos questioned the way that some well-known juggernaut companies, like Walmart or Microsoft, did things.
He saw that they were often intimidating, crushed the little guy, and didn’t have a fan base that would stick up for them.
He wrote a memo on the website Amazon.love (it’s gone now) about what he thought actually made a company cool. You can read it below:
“Rudeness is not cool.
Defeating tiny guys is not cool.
Close-following is not cool.
Young is cool.
Risk taking is cool.
Winning is cool.
Polite is cool.
Defeating bigger, unsympathetic guys is cool.
Inventing is cool.
Explorers are cool.
Conquerors are not cool.
Obsessing over competitors is not cool.
Empowering others is cool.
Capturing all the value only for the company is not cool.
Leadership is cool.
Conviction is cool.
Straightforwardness is cool.
Pandering to the crowd is not cool.
Hypocrisy is not cool.
Authenticity is cool.
Thinking big is cool.
The unexpected is cool.
Missionaries are cool.
Mercenaries are not cool.” – Jeff Bezos
Jeff admitted that his memo and statements were rather opinionated rather than based on facts or studies.
I wouldn’t take these statements as rules, but there’s definitely some truth to them. A good portion of them directly reflect the sentiment of how I think customers perceive big companies.
The most useful thing I got from this list is to don’t manipulate, be too robotic, or be win-lose through pandering, crushing smaller people, being too transactional, being rude, or being too corporate and predictable.
24. It’s Not The Customer’s Job To Invent. You Must Invent.
This tip comes from the book Delivering Happiness. In the book, Bezos says that one of the critical reasons for the success of Amazon was their constant pursuit of inventing better ways of serving the customers.
He notes that it’s not the customers’ responsibility to do this. They will not tell you how to do something better. At best, they will just say they do not like how things are. It is up to the business to invent new ways of serving someone.
“If I had asked people what they wanted, they would have said faster horses.” -Henry Ford
Conclusion & Book Review
I don’t know how accurate this book was about Jeff Bezos’s story.
I trust that it’s fairly accurate though because it was based on hundreds of interviews of former and current employees, including Bezos himself. Of course, there’s always going to be some bias in there from the author.
I was really surprised by what I discovered in the book.
I thought the creation of Amazon and how Jeff Bezos behaved would have been near perfect just by the reputation of the company.
It turns out you can make a lot of mistakes and still do well. Jeff was often rude and impatient. He had tons of outbursts. He seemed a bit too frugal with everything. He called top executives idiots and useless when they did stupid things. He burned out hundreds of executives from overwork.
One might mistakenly infer that this is the best way of doing things if one just reads this book. Having read and studied a lot of billionaires, I don’t think this is the case.
If you study Sam Walton or Warren Buffett, they truly demonstrate the power of appreciating and taking care of their employees. They weren’t naturally doing this either. They were also both frugal and learned it the long, hard way.
There was one passage about how Amazon installed medal detectors, hired a security team, and installed a negative point system to avoid shoplifting.
Having seen a ton of employee theft myself over the years at different jobs, I have realized that it’s almost natural for everyone to steal when it’s very easy and a ton of temptation. But purely focusing on negative reinforcement to discourage this may not be the best way of going.
To decrease employee theft, the best thing I have come across was from Sam Walton’s book. He explains human nature very well and mentions a system that really saved his business a lot of money, while reducing theft. He says that people don’t really want to do bad things if they can help it. He added a positive, reward program that gave people cash if the numbers showed that they didn’t steal for that week. Even with the extra cash they gave out, Walmart still saved money from the decrease in theft.
I learned a lot about business and the awesome things Jeff Bezos did. There’s a lot that he does very well that we can all use to succeed ourselves.
I really liked how recent the book was. I read this in 2016 and it was published in 2013. Other than Oprah or Richard Branson’s book, this was probably the most modern book by a billionaire that I’ve read.
It’s a bit different when you’re reading about a business or era that is very different since it was so long ago. It’s the first time where I keep hearing about stuff that is still very relevant today, like Microsoft, eBook, Nooks, one-day shipping, and Amazon Prime. It’s interesting seeing all the business, legal fights, and politics behind the curtain.
Jeff still has a lot of life to live. I don’t think his journey is over in the least.
Just look at Warren Buffett. He’s 85 years old and still doing incredible things.
Jeff still has a deep interest in space exploration and will probably do something with that. I’m excited to see the rest of his story unfold.
I think this book needed to be written. It told a great story of Amazon’s beginnings to where it is not in an easy-to-read fashion. Hopefully, another book will be written 20 years from now detailing his future journey.