#155 Jeff Bezos (Shareholder Letters and Speeches)
What I learned from reading Invent and Wander: The Collected Writings of Jeff Bezos, With an Introduction by Walter Isaacson.
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[2:38] The whole point of moving things forward is that you run into problems, failures, things that don't work. You need to back up and try again. Each one of those times when you have a setback, you get back up and you try again. You're using resourcefulness; you're using self-reliance; you're trying to invent your way out of a box. We have tons of examples at Amazon where we’ve had to do this.
[4:08] I would much rather have a kid with nine fingers than a resourceless kid.
[5:51] I am often asked who, of the people living today, I would consider to be in the same league as those I have written about as a biographer: Leonardo da Vinci (#15), Benjamin Franklin (#115), Ada Lovelace, Steve Jobs (#5), and Albert Einstein. All were very smart. But that’s not what made them special. Smart people are a dime a dozen and often don’t amount to much. What counts is being creative and imaginative. That’s what makes someone a true innovator. And that’s why my answer to the question is Jeff Bezos.
[8:26] One final trait shared by all my subjects is that they retained a childlike sense of wonder. At a certain point in life, most of us quit puzzling over everyday phenomena. Our teachers and parents, becoming impatient, tell us to stop asking so many silly questions. We might savor the beauty of a blue sky, but we no longer bother to wonder why it is that color. Leonardo did. So did Einstein, who wrote to another friend, “You and I never cease to stand like curious children before the great mystery into which we were born.” We should be careful to never outgrow our wonder years—or to let our children do so.
[11:50] Jeff’s childhood business heroes were Thomas Edison and Walt Disney. “I’ve always been interested in inventors and invention,” he says. Even though Edison was the more prolific inventor, Bezos came to admire Disney more because of the audacity of his vision. “It seemed to me that he had this incredible capability to create a vision that he could get a large number of people to share.”
[17:49] Keeping his focus on the customer, he emailed one thousand of them to see what else they would like to buy. The answers helped him understand better the concept of “the long tail,” which means being able to offer items that are not everyday best sellers and don’t command shelf space at retailers. “The way they answered the question was with whatever they were looking for at the moment. And I thought to myself we can sell anything this way.”
[19:26] Every time a seismic shift takes place in our economy, there are people who feel the vibrations long before the rest of us do, vibrations so strong they demand action—action that can seem rash, even stupid.
[22:00] “No customer was asking for Echo,” Bezos says. “Market research doesn’t help. If you had gone to a customer in 2013 and said, ‘Would you like a black, always-on cylinder in your kitchen about the size of a Pringles can that you can talk to and ask questions, that also turns on your lights and plays music?’ I guarantee they’d have looked at you strangely and said, ‘No, thank you’”
[24:14] We will continue to focus relentlessly on our customers.
[24:58] We are working to build something important, something that matters to our customers, something that we can all tell our grandchildren about. Such things aren’t meant to be easy.
[26:22] We are doubly blessed. We have a market-size unconstrained opportunity in an area where the underlying foundational technology we employ improves every day. That is not normal.
[29:14] Start with the customer and work backward. That is the best way to create value.
[32:19] Amazon’s culture is unusually supportive of small businesses with big potential, and I believe that’s a source of competitive advantage.
[35:47] Seek instant gratification —or the promise of it—and chances are you’ll find a crowd there ahead of you.
[37:51] At a fulfillment center recently, one of our Kaizen experts asked me, “I’m in favor of a clean fulfillment center, but why are you cleaning? Why don’t you eliminate the source of dirt?” I felt like the Karate Kid.
[39:21] When we are at our best, we don’t wait for external pressures. We are internally driven to improve our services, adding benefits and features, before we have to. We lower prices and increase value for customers before we have to. We invent before we have to. These investments are motivated by customer focus rather than by reaction to competition.
[42:48] Outsized returns often come from betting against conventional wisdom, and conventional wisdom is usually right. Given a ten percent chance of a one hundred times payoff, you should take that bet every time. But you are still going to be wrong nine times out of ten. We all know that if you swing for the fences, you’re going to strike out a lot, but you’re also going to hit some home runs. The difference between baseball and business is that baseball has a truncated outcome distribution. When you swing, no matter how well you connect with the ball, the most runs you can get is four. In business, every once in awhile, when you step up to the plate, you can score one thousand runs. This long-tailed distribution of returns is why it’s important to be bold. Big winners pay for so many experiments.
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