A good behind-the-scenes look at Jeff Bezos and Amazon. Amazon is a company that is ubiquitous now but has been overshadowed by other big companies during its growing years. It felt like Amazon just came out of nowhere to be the “everything company.” An online retailer that transitioned to technology by successfully launching Amazon Web Services is commendable.
Amazon wouldn’t be Amazon without Jeff Bezos. The DNA of Jeff Bezos is in Amazon. It is amazing how one man can change industries and predict the future despite what the current data says. Jeff Bezos made mistakes but his genius and vision overcame all the shortcomings.
I thoroughly enjoyed getting a close look at Amazon and the mind of Jeff Bezos.
“We are genuinely customer-centric, we are genuinely long-term oriented and we genuinely like to invent. Most companies are not those things. They are focused on the competitor, rather than the customer. They want to work on things that will pay dividends in two or three years, and if they don’t work in two or three years they will move on to something else. And they prefer to be close-followers rather than inventors because it is safer” (Jeff Bezos pg. 12).
“But don’t be worried about our competitors because they’re never going to send us any money anyways. Let’s be worried about our customers and stay heads-down focused” (Jeff Bezos pg. 58).
“Any company that might be used to doing things a certain way, will find it hard to be nimble or to focus attention on a new channel” (Jeff Bezos pg. 65).
Five core values at Amazon: customer obsession, frugality, bias for action, ownership, and high bar for talent.
The Amazon we know today, with all of its attributes and idiosyncrasies, is in many ways a product of the obstacles Bezos and Amazon navigated during the dot-com crash, a response to the widespread lack of faith in the company and its leadership.
Bezos made a big show of keeping one chair open at the conference table “for the customer.”
“In the short term, the stock market is a voting machine. In the long run, it’s a weighing machine that measures a company’s true value” (Benjamin Graham pg. 111).
Costo was all about customer loyalty. Costco buys in bulk and marks up everything at a standard, across-the-board 14 percent, even when it could charge more. It doesn’t advertise at all and earns most of its gross profit from the annual membership fees.
“My approach has always been that value trumps everything…. The reason people are prepared to come to our strange places to shop is that we have value. We deliver on that value constantly. (Jim Sinegal, founder of Costco pg. 125).
One of his (Bezos) gifts, his colleagues said, was being able to drive and motivate his employees without getting overly attached to them personally.
It is, of course, unknowable whether the unusual circumstances of his (Bezos) birth helped created that fecund entrepreneurial mix of intelligence, ambition, and a relentless need to prove himself. Two other technology icons, Steve Jobs and Larry Ellison, were adopted, and the experience is thought by some to have given each a powerful motivation to succeed. (Bezos was separated from his biological father, Ted Jorgensen, since he was three years old. He grew up with his step dad Mike Bezos).
Bezos’s high school friends say he was ridiculously competitive. He collected awards for best science student at his school for three years and best math student for two, and he won a statewide science fair for an entry concerning the effects of a zero-gravity environment on the housefly.
I got the sense that Jackie and Mike were the kind of parents who always encouraged Jeff and nurtured his creativity (Ursula Werner, Jeff’s high school girlfriend, pg. 152).
In high school, Bezos has dreams of saving humanity by creating permanent human colonies in orbiting space stations while turning the planet into an enormous nature preserve.
“The reason he’s earning so much money is to get to outer space” (Ursula Werner, pg. 153).
Like other great entrepreneurs including Walt Disney, Henry Ford, and Steve Jobs, Bezos was turning imagination into reality, the fancies of his youth into actual physical things. (On Jeff Bezos founding his rocket company, Blue Origin).
Blue Origin Latin motto, Gradatim Ferociter, “Step by Step, Ferociously.”
Bezos vowed to run Amazon with an emphasis on decentralization and independent decision-making. People closest to the problem were usually in the best position to solve them.
On flat hierarchical structure for organizations: Adding manpower to complex software projects actually delayed progress. One reason was that the time and money spent on communication increased in proportion to the number of people on a project (The Mythical Man-month by Frederick Brooks).
Bezos was applying a kind of chaos theory to management, acknowledging the complexity of his organization by breaking it down to its most basic parts in hopes that surprising results might emerge.
When Amazon was growing, they had issues with the supply chain. Amazon would have to rewrite all the software code. Instead of exiting the business of distribution, they had to reinvest in it.
Amazon does not use Powerpoint presentations in their meetings. They write six-page narratives written in prose. The narrative should take the shape of a mock press release. The goal was to get employees to distill a pitch into its purest essence, to start from something the customer might see and work backward.
Bezos didn’t believe anyone could make a good decision about a feature or a product without knowing precisely how it would be communicated to the world.
While he was charming and capable of great humor in public, in private, Bezos could bite an employee’s head right off. Steve Jobs reportedly fired employees in the elevator and screamed at underperforming executives. Bill Gates used to throw epic tantrums. Steve Ballmer had a propensity for throwing chairs. Andy Grove, longtime CEO of Intel, was known to be harsh and intimidating that a subordinate once fainted during a performance review. Jeff Bezos fit comfortably in this mold.
Right or wrong, Bezos’s behavior was often easier to accept because he was so frequently on target with his criticisms, to the amazement and often irritation of employees.
Bruce Jones, the former Amazon vice president, describes leading a five-engineer team working to create algorithms to optimize pickers’ movements in the fulfillment centers while the company was trying to solve the problem of batches. The group spent nine months on the task and presented them to Bezos. Bezos read the paper and said, “You’re all wrong.” “He had no background in control theory, no background in operating systems. He only had a minimum experience in the distribution centers and never spent weeks and months out on the line. Yet what he laid out in his argument was true. He has this unbelievable ability to be incredibly intelligent about things he had nothing to do with, and he was totally ruthless about communicating it” (Bruce Jones pg. 178).
Bezos believed that high margins justified rivals’ investment in research and development and attracted more competition, while low margins attracted customers and were more defensible. Bezos didn’t want to repeat “Steve Jobs’s mistake” of pricing the iPhone on a way that was so fantastically profitable that the smartphone market became a magnet for competition.
The Innovator’s Dilemma by Clayton Christensen – book that would significantly affect Amazon’s strategy. Christensen wrote that great companies fail not because they want to avoid disruptive change but because they are reluctant to embrace promising new markets that might undermine their traditional businesses.
“Jeff does a couple of things better than anyone I’ve ever worked for. He embraces the truth. A lot of people talk about the truth, but they don’t engage their decision-making around the best truth at the time. The second thing is that he is not tethered by conventional thinking. What is amazing to me is that he is bound only by the laws of physics. He can’t change those. Everything else he views as open to discussion.” (Rick Dalzell, Bezos right hand, pg. 267).
Bezos abhors what he calls “social cohesion,” the natural impulse to seek consensus. He’d rather his minions battled it out in arguments backed by numbers and passion.
“Jeff his very clear and simple about his goals, and the way he articulates them makes it easy for others, because it’s consistent. If you look at why Amazon is so different than almost any other company that started early on the Internet, it’s because Jeff approached it from the very beginning with long-term vision… The notion that he can accomplish a huge amount with a larger time frame, if he is steady about it, is fundamentally his philosophy” (Danny Hillis, Bezos friend, pg. 336).