Jeff Bezos is currently the richest man on Earth. In hindsight, it’s easy to think that Amazon was bound to be a success with the boom in technology and internet. However, the Amazon story is quite remarkable and Bezos went through his fair share of struggles before this giant empire got established. After the initial madness and motto of “Get Big Fast”, Bezos decided to deploy a “Get the House in Order” philosophy and never shied away from thinking longer-term. He knew that great businesses fail because they are reluctant to embrace promising new markets that might undermine their traditional businesses and that do not appear to satisfy their short-term growth requirements. So, Bezos always kept an eye on the future and thus the Kindle and Amazon Web Services (the fastest growing and the most profitable segment) were born.
One of my most favorite Jeff theories is “the regret minimization framework”, which he came up with when he was switching from his lucrative job at D.E. Shaw to potentially starting Amazon.
“When you are in the thick of things, you can get confused by small stuff. I knew when I was eighty that I would never, for example, think about why I walked away from my 1994 Wall Street bonus right in the middle of the year at the worst possible time. That kind of thing just isn’t something you worry about when you’re eighty years old. At the same time, I knew that I might sincerely regret not having participated in this thing called the Internet that I thought was going to be a revolutionizing event. When I thought about it that way, it was incredibly easy to make the decision.” – Jeff Bezos
Bezos’ point is that when you start thinking about the longer-term consequences, the small everyday confusions begin to disappear.
Even in the worst of times, Bezos did not give up this attitude. During the dot-com bubble burst, Amazon stock dropped from $57 to $33, shedding almost half its value. Bezos scrawled “I am not my stock price” on the whiteboard in his office and instructed everyone to ignore the mounting pessimism. “You don’t feel thirty percent smarter when the stock goes up by thirty percent so when the stock goes down you shouldn’t feel thirty percent dumber,” he said at an all-hands meeting. He quoted Ben Graham, “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. If Amazon stayed focused on the customer, the company would be fine.”
I’ll end with some of Jeff Bezos’ main tenets:
- Customer obsession
- Be patient
- Invent your way out of boxes
- Invent your way into the future
- Operational excellence so you can find defects at the root and fix them
Recommended book: The Everything Store: Jeff Bezos and the Age of Amazon by Brad Stone
Recommended Podcast: The Investors Podcast: Learning from Jeff Bezos