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E-commerce giant Amazon, now the world’s most profitable firm, outperformed Apple and Google in June last year, to be valued at $315 billion. Jeff Bezos, the company’s founder, and CEO is a name that needs no introduction in the corporate world. In 1993, Bezos quit his job at DE Shaw and moved across the US from New York to Seattle.
Writing a business plan on this trip to his home city, he started an online bookshop in his garage on July 5, 1994. Today, as the ambitious entrepreneur turns 56, his company’s reach is seen across several sectors.
After a huge run on Amazon’s stock price, Bezos surpassed the long-running holder of the title for the richest man in the world, his fellow tech billionaire, Bill Gates. Not only did Jeff Bezos disrupt a variety of sectors, but he also disrupted the very way he did business.
Back in the old days, about 20 years ago, the common approach would be that a start-up would get into an industry, spend a few years (usually 2-3) running on losses, and hopefully, begin to generate profits after capturing some market share.
Those profits would either be retained in the business or partially reinvested in it, but a good portion would be distributed to the shareholders to make them happy. No more! No more! Bezos has abandoned the old model in favor of reinvesting all surplus cash flow in the company and sharing some of it with Amazon’s customers who enjoy consistently lower prices.
This approach has enabled Amazon to dominate the e-commerce scene in the United States and disrupt entire industries (like traditional bookstores) while kicking off entirely new ones (like digital publishing). Over the years, Bezos has expressed his insights on doing business and achieving success through interviews or letters from the shareholder.
In this post, I’ve gathered a few quotes that illustrate his way of thought. Hopefully, we will be able to gain valuable insights that will help us develop our companies in a similar way.
“There are two kinds of companies. Those that work to try to charge more and those that work to charge less. We will be the second.”
Staying on the issue, Bezos has strategically agreed that Amazon is going to be a business that tries to lower its customers’ prices instead of raising them (Hello Apple!). This is possible by reducing profit margins, as we have seen above, and by investing in technology and infrastructure that will allow the business to do more with less in the future. Adopting such a pricing policy, Amazon goods are available to a broader consumer base, rendering the company more open to the public.
“If you don’t understand the details of your business you are going to fail.”
This statement seems super obvious, but most eager entrepreneurs and business people seem to forget about it. This is something I’ve written many times about: You need to learn and understand every aspect of your business, from how your sales model functions to your financial numbers. It is challenging to create a sustainable, profitable company without a clear understanding of its mechanics and internal mechanisms.
“If you double the number of experiments you do per year you’re going to double your inventiveness.”
Amazon is a fiercely creative organization. With Bezos at the helm, the e-commerce giant is able to make big decisions and make world-changing experiments. Of course, these experiments are not always successful.
The Amazon Fire cell phone, for example, was a huge flop. From time to time, though, a big gamble will pay off, much like Amazon’s Web Services, which is already a major profit earner for Amazon.
“Frugality drives innovation, just like other constraints do. One of the only ways to get out of a tight box is to invent your way out.”
By this statement, Bezos emphasizes the importance of resourcefulness and thriftiness as the main drivers of innovation. Humans, whether in modern business or the ancient desert, are forced to become more imaginative and resourceful by having limited resources and being frugal. The restrictions make it difficult for them to explore and come up with more creative solutions.
Sure, on certain occasions, having more capital will allow you to run faster and more ferociously. Yet more money is not always the solution to your problem. This has become apparent in modern times when startups continue to raise incredible sums of money, but at the same time, losing their resourcefulness and ultimately failing to deliver a valuable solution to the marketplace.
“The most important single thing is to focus obsessively on the customer. Our goal is to be earth’s most customer-centric company.”
I think it’s painfully obvious that Amazon is obsessively customer-focused, and they’re going to spend a lot of time providing their customers with the best experience while keeping prices down.
This strategy helps the company to create a solid, loyal customer base who will come back to Amazon’s online marketplace again and again while building confidence and equity that Amazon can leverage in the years to come.
“My own view is that every company requires a long-term view.”
Not a lot to explain. Jeff Bezos and Amazon have embraced a long-term perspective that lacks short-term strategies for investing in the future. Well, it seems to be working on the basis of their stock price success over the past twenty-plus years.
***“Keep experimenting or become extinct, no two ways about it.” ***
Many big corporations have the term ‘innovation’ emblazoned everywhere but are not willing to innovate enough to be considered creative. Conventional wisdom may give you enough firepower to succeed, although moderately; but relentless inventions and changes are what will make you cut above others.
“If you’re not stubborn, you’ll give up on experiments too soon. And if you’re not flexible, you’ll pound your head against the wall and you won’t see a different solution to a problem you’re trying to solve.”
Jeff realizes and emphasizes this with his multi-million-dollar investment in the Amazon Research Labs. He knows that the only way to stay ahead of the next interruption is through disruption.
“Our success at Amazon is a function of how many experiments we do per year, per month, per week, per day.”
“What’s dangerous is not to evolve.”
***“Risk is the key ingredient to success.” ***
Everyone knows what Amazon is now, but most don’t realize it’s got a lot of gaffes on the way. Which include the Fire Phone, the biggest mess in Jeff’s history; Register, their retail credit card processing service; Amazon Local, the Groupon-like deal platform – all of which were massive failures.
“The death knell for any enterprise is to glorify the past – no matter how good it was.”
But risk can come in any way – Jeff also made bets that paid rich dividends, including Kindle e-reader, Amazon Web Services, Data Business Center, and its third-party online marketplace. In Jeff’s words, “Bold bets pay for a lot of bad luck. I made billions of dollars of mistakes at Amazon.com. We can’t be in survival mode. We’ve got to be in a development mode.”
“I wanted to project myself forward to age 80 and I knew that when I am 80, I am not going to regret having tried this.” Jeff once said, “I was not going to regret trying to participate in this thing called the internet, that I thought was going to be a really big deal. I knew that if I failed, I wouldn’t regret that. But I knew the one thing I might regret is not ever having tried. I knew that that would haunt me every day.”
“Your margin is my opportunity.”
Assessing the market, Bezos scoffs at the concept of concentrating on the margins and managing them in such a way that you produce profits. Instead, as I described above, he uses whatever income surplus exists to further rising prices and invest heavily in the business.
On top of that, he’s not working on the conventional “earnings metrics” that can be distorted easily. He focuses on the absolutely free cash flow of the dollar; this is what matters in the long term. Now, just to be not confusing. This does not mean that he deems the financial figures that show the health of a company as unimportant. This means that he is able to forgo gains in the short term so that he can produce huge positive cash flow in the long run.
“The customer is the king. Period.”
Twenty years of e-commerce operations have been a success, considering that thousands of e-commerce sites have come and shut down in that timeframe. Yet Amazon is still standing there at the top of the mountain.
“We see our customers as invited guests to a party, and we are the hosts. It’s our job every day to make every important aspect of the customer experience a little bit better. Start with the customer and work backward.”
This may have been due to Jeff’s loyalty to his customers. He once told in an interview that a happy consumer in the physical world would tell their experience to five people, while an angry customer would spread their bad experience to 5,000 people in the digital world.
“If we can keep our competitors focused on us while we stay focused on the customer, ultimately we’ll turn out all right.”
Walking to the bank, Jeff knows that his fortunes are the end product of his years of persistent effort. So, for any budding entrepreneur who’s looking to make it big, use these takeaways as markers to make your path to the pinnacle of success.
“You have to be willing to be misunderstood if you’re going to innovate.”
Adding on the previous argument, if you’re willing to invent, gamble, and make big decisions, it’s likely that most people won’t understand your ambitions, and they may even ridicule you. Occasionally, in order to win big, you need to abandon a consensus view and follow a more inconsistent approach. You need to go where other people don’t want to go. Something like this takes tremendous bravery and a very long-term outlook, qualities that Jeff Bezos definitely possesses.
“Take criticism in good stead and keep working towards improving.”
Adored and watched by millions, Jeff still has a lot of naysayers and critics who keep writing off the tycoon and his projects. His critique is very simple: you take what you can do and forget the rest of it.
“If you’re doing anything interesting in the world, you are going to have critics. You can’t stop it. Move forward. It’s not worth losing any sleepover.”
The bigger waves you generate in the business world, the bigger the ruckus your critics make. There is no way around criticism, particularly if you want to try something fresh and interesting; embracing criticism is the only way forward.
“When you receive criticism from well-meaning people, it pays to ask, ‘Are they right?’ He believes, “And if they are, you need to adapt what they’re doing. If they’re not right, if you really have the conviction that they’re not right, you need to have that long-term willingness to be misunderstood. It’s a key part of the invention.”
16. “We are comfortable planting seeds and waiting for them to grow into trees.”
17. “There are two ways to extend a business. Take inventory of what you are good at and extend out from your skills. Or determine what your customers need and work backwards, even if it requires learning new skills.”
18. “Friends congratulate me after a quarterly-earnings announcement and say, ‘Good job, great quarter.'” “And I’ll say, ‘Thank you, but that quarter was baked three years ago.'”
19. “‘Jeff, what does Day 2 look like?’” “Day 2 is stasis. Followed by irrelevance. Followed by excruciating, painful decline. Followed by death. And that is why it is always Day 1.” “To be sure, this kind of decline would happen in extreme slow motion. An established company might harvest Day 2 for decades, but the final result would still come.”
20. “Day 2 companies make high-quality decisions, but they make high-quality decisions slowly. To keep the energy and dynamism of Day 1, you have to somehow make high-quality, high-velocity decisions.”
Jeff Bezos on innovation:
22. “We innovate by starting with the customer and working backwards. That becomes the touchstone for how we invent.”
23. “When [competitors are] in the shower in the morning, they’re thinking about how they’re going to get ahead of one of their top competitors. Here in the shower, we’re thinking about how we are going to invent something on behalf of a customer.”
24. “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 you they’d have looked at you strangely and said, ‘No, thank you.'”
25. “I do get asked, quite frequently: ‘what’s gonna change in the next 10 years?’ I rarely get asked, and it’s probably more important — and I encourage you to think about this — is the question what’s not going to change? The answer to that question can allow you to organize your activities. You can work on those things with the confidence to know that all the energy you put into them today is still going to pay dividends in the years to come.”
26. “Failure and invention are inseparable twins. To invent you have to experiment, and if you know in advance that it’s going to work, it’s not an experiment.”
27. “I think frugality drives innovation, just like other constraints do. One of the only ways to get out of a tight box is to invent your way out.”
28. “There’ll always be serendipity involved in discovery.”
29. “You have to be willing to be misunderstood if you’re going to innovate.”
30. “If you double the number of experiments you do per year, you’re going to double your inventiveness.”
31. “Invention requires a long-term willingness to be misunderstood. You do something that you genuinely believe in, that you have conviction about, but for a long period of time, well-meaning people may criticize that effort. When you receive criticism from well-meaning people, it pays to ask, ‘Are they right?’ And if they are, you need to adapt what your’re doing. If they’re not right, if you really have conviction that they’re not right, you need to have that long-term willingness to be misunderstood. It’s a key part of invention.”
32. “One common pitfall for large organizations – one that hurts speed and inventiveness – is ‘one-size-fits-all’ decision making…The end result of this is slowness, unthoughtful risk aversion, failure to experiment sufficiently, and consequently diminished invention. We’ll have to figure out how to fight that tendency.”
33. “To get something new done you have to be stubborn and focused, to the point that others might find unreasonable.”
34. “If you decide that you’re going to do only the things you know are going to work, you’re going to leave a lot of opportunity on the table.”
35. “If you’re watching your competitors, you’re unlikely to invent a bunch of stuff on your own.”
36. “Me-too companies have not done that well over time.”
37. “Sometimes (often actually) in business, you do know where you’re going, and when you do, you can be efficient. Put in place a plan and execute. In contrast, wandering in business is not efficient … but it’s also not random. It’s guided – by hunch, gut, intuition, curiosity, and powered by a deep conviction that the prize for customers is big enough that it’s worth being a little messy and tangential to find our way there. Wandering is an essential counter-balance to efficiency. You need to employ both. The outsized discoveries – the “non-linear” ones – are highly likely to require wandering.”
38. “No customer was asking for Echo. This was definitely us wandering. Market research doesn’t help.”
39. “Development of the Fire phone and Echo was started around the same time. While the Fire phone was a failure, we were able to take our learnings (as well as the developers) and accelerate our efforts building Echo and Alexa.”
40. “Staying in Day 1 requires you to experiment patiently, accept failures, plant seeds, protect saplings, and double down when you see customer delight.”
41. “Most decisions should probably be made with somewhere around 70% of the information you wish you had. If you wait for 90%, in most cases, you’re probably being slow.”
42. “To invent you have to experiment, and if you know in advance that it’s going to work, it’s not an experiment.”
43. “Most large organizations embrace the idea of invention, but are not willing to suffer the string of failed experiments necessary to get there.”
Jeff Bezos on taking risks:
44. “We take risks all the time, we talk about failure.” “We need big failures in order to move the needle. If we don’t, we’re not swinging enough. You really should be swinging hard, and you will fail, but that’s okay.”
45. “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.”
46. “The difference between baseball and business, however, 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 a while, when you step up to the plate, you can score 1,000 runs.”
47. “If you’re not stubborn, you’ll give up on experiments too soon.”
48. “If you’re not flexible, you’ll pound your head against the wall and you won’t see a different solution to a problem you’re trying to solve.”
49. “If you never want to be criticized, for goodness’ sake don’t do anything new.”
50. “Companies are rarely criticized for the things that they failed to try. But they are, many times, criticized for things they tried and failed at.”
51. “We understand that and believe in failing early and iterating until we get it right. When this process works, it means our failures are relatively small in size (most experiments can start small), and when we hit on something that is really working for customers, we double-down on it with hopes to turn it into an even bigger success.”
52. “When you look at something like, go back in time when we started working on Kindle almost seven years ago…. There you just have to place a bet. If you place enough of those bets, and if you place them early enough, none of them are ever betting the company. By the time you are betting the company, it means you haven’t invented for too long.”
53. “As a company grows, everything needs to scale, including the size of your failed experiments. If the size of your failures isn’t growing, you’re not going to be inventing at a size that can actually move the needle. Amazon will be experimenting at the right scale for a company of our size if we occasionally have multibillion-dollar failures.”
Jeff Bezos on life and your career:
54. “When you think about the things that you will regret when you’re 80, they’re almost always the things that you did not do. They’re acts of omission. Very rarely are you going to regret something that you did that failed and didn’t work or whatever.”
55. “You can have a job, or you can have a career, or you can have a calling.”
56. “If you can somehow figure out how to have a calling, you have hit the jackpot, cause that’s the big deal.”
57. “If you can make a decision with analysis, you should do so. But it turns out in life that your most important decisions are always made with instinct and intuition, taste, heart.”
58. “Where you are going to spend your time and your energy is one of the most important decisions you get to make in life.”
59. “The smartest people are constantly revising their understanding, reconsidering a problem they thought they’d already solved. They’re open to new points of view, new information, new ideas, contradictions, and challenges to their own way of thinking.”
60. “People who are right a lot listen a lot, and they change their mind a lot. People who are right a lot change their mind without a lot of new data. They wake up and reanalyze things and change their mind. If you don’t change your mind frequently, you’re going to be wrong a lot. People who are right a lot want to disconfirm their fundamental biases. “
61. “Life’s too short to hang out with people who aren’t resourceful.”
62. “In the end, we are our choices. Build yourself a great story.”
63. “Cleverness is a gift, kindness is a choice. Gifts are easy — they’re given after all. Choices can be hard.”
64. “If I have three good decisions a day, that’s enough.” “They should just be as high quality as I can make them.”
65. “We all know that distinctiveness – originality – is valuable. We are all taught to “be yourself.” What I’m really asking you to do is to embrace and be realistic about how much energy it takes to maintain that distinctiveness. The world wants you to be typical – in a thousand ways, it pulls at you. Don’t let it happen.”
66. “You have to pay a price for your distinctiveness, and it’s worth it. The fairy tale version of ‘be yourself’ is that all the pain stops as soon as you allow your distinctiveness to shine. That version is misleading. Being yourself is worth it, but don’t expect it to be easy or free. You’ll have to put energy into it continuously.”
67. “Luck plays an outsized role in every endeavor, and I can assure you we’ve had a bountiful supply.”
Jeff Bezos on customer service
68. “We see our customers as invited guests to a party, and we are the hosts. It’s our job every day to make every important aspect of the customer experience a little bit better.”
69. “The best customer service is if the customer doesn’t need to call you, doesn’t need to talk to you. It just works.”
70. “The balance of power is shifting toward consumers and away from companies… The right way to respond to this if you are a company is to put the vast majority of your energy, attention and dollars into building a great product or service and put a smaller amount into shouting about it, marketing it.”
71. “We don’t focus on the optics of the next quarter; we focus on what is going to be good for customers.”
72. We invent before we have to. These investments are motivated by customer focus rather than by reaction to competition. We think this approach earns more trust with customers and drives rapid improvements in customer experience – importantly – even in those areas where we are already the leader.”
73. “One advantage — perhaps a somewhat subtle one — of a customer-driven focus is that it aids a certain type of proactivity. When we’re 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.”
74. “Great innovations, large and small, are happening everyday [at Amazon] on behalf of customers.”
75. “There are many ways to center a business. You can be competitor focused, you can be product focused, you can be technology focused, you can be business model focused, and there are more. But in my view, obsessive customer focus is by far the most protective of Day 1 vitality.”
76. “There are many advantages to a customer-centric approach, but here’s the big one: customers are always beautifully, wonderfully dissatisfied, even when they report being happy and business is great. Even when they don’t yet know it, customers want something better, and your desire to delight customers will drive you to invent on their behalf. No customer ever asked Amazon to create the Prime membership program, but it sure turns out they wanted it.”
77. “Good inventors and designers deeply understand their customer. They spend tremendous energy developing that intuition. They study and understand many anecdotes rather than only the averages you’ll find on surveys. They live with the design.”
78. “I’m not against beta testing or surveys. But you, the product or service owner, must understand the customer, have a vision, and love the offering. Then, beta testing and research can help you find your blind spots. A remarkable customer experience starts with heart, intuition, curiosity, play, guts, taste. You won’t find any of it in a survey.”
I hope you enjoyed reading these quotes as much as I enjoyed gathering them!
These thought-provoking Jeff Bezos quotes have inspired me to follow my dreams. To be successful, we not only need qualities like consistency, hard work, and determination but also have a futuristic vision due to the fast-paced technological advancements. The best learning for me is that we should work on setting and achieving long-term goals to be successful in any aspect of life.