Jeff Bezos – 2000 books
Jeff Bezos is the richest man in the world today. His net worth is in access of 100 Billion Dollars, making him one of the most successful entrepreneurs in the history of mankind.
Just for the sake of comparison, there are about 100 countries whose GDP IS LESS THAN JEFF BEZOS’S NET WORTH.
So, how did Jeff Bezos achieve such massive success? Today, I will be breaking down some of the greatest success lessons from Bezos’s life so make sure to get a pen and paper and take plenty of notes for your entrepreneurial venture.
1. Start where you are. Execute. Learn. Evolve.
Amazon started as a bookseller selling 1 book then 2, 4 ,10 and 200, 400, 1000, 20000. Then, they moved from books to music, to electronics to toys; and now, they sell everything – even cloud computing. But it just didn’t happen in a day with one brilliant idea. It took a long time and a lot of effort.
Let me share with you how one of Amazon’s most profitable ventures started.
While Amazon was going through its growing pains, its engineers were complaining about the lack of computational resources. They had to get time on their internal server farms in order to do some heavy-duty computing and that was very frustrating for engineers.
When Jeff Bezos heard about it, he decided to increase the computing capacity at Amazon.
However, once Amazon increased its internal computing capacity, they found that they had an excess computational capacity that was not being used.
That is when Amazon made one of the smartest moves that revolutionized how we do online business today.
Amazon started selling it’s additional computational resources to external 3rd parties. Today, it is referred to as cloud computing and assumed to be common knowledge, but Amazon was one of the pioneers in that area.
Jeff Bezos says that allowing Amazon web services to share its computational resources is like having a grid of electricity available to the world. 100 years ago when electricity was just getting started – If you wanted electricity, you needed your own power plant. Everyone who needed electricity needed their own power plant but once the Electric grid came into being, you did not need your own power plant; you could just take electricity off-grid and pay whatever you used.
This is exactly what Amazon Web Services (also known as S3) did by providing on-demand cloud computing. 20 years ago, if you wanted to have a website you had to have your own in-house servers and computational resources. Now, starting a website and doing any kind of computational work is as easy as clicking a few buttons and paying for the computational resources you need.
The key lesson here is that – innovation happens as a result of Execution and Evolution. Amazon S3 was not an idea that Bezos dreamt up one day. It was not a big idea to start with – but it evolved into one of the most profitable arms of Amazon. Amazon was just trying to solve it’s own problems and landed on a multi-billion dollar business opportunity.
This is a very important lesson for entrepreneurs – don’t wait for a great idea in order to get started. Instead, start with whatever idea you have, execute, learn, change course, evolve, adapt …. and that will lead to great ideas and great outcomes over time.
Realize that all great businesses started small; they started where they were and they kept on executing, kept on evolving and kept on improving.
So, start where you are. Execute. Learn. Evolve
2. Failure is essential on the path to success
In 2014, Amazon launched the Amazon fire phone with great fanfare and it turned out to be a complete failure. A lot of investors began to doubt Bezos – asking him why he was investing in things like this.
A reporter once asked him: “What do you think of this big failure of the Fire Phone? Are you concerned about the future of Amazon?” To which Bezos replied – “Well if you think this is a big failure, you should wait and watch because we have a lot bigger failures in store.”
Bezos believes that any experiment has a chance of failure. “That is why we call it an experiment,” Jeff explained.
In business, we have to conduct experiments. We have to try things because some things will fail. If we only try to do things that we think will succeed, we’re not conducting experiments. And If we don’t conduct experiments, we’ll never find out how far we can go.
Bezos went on to say: “We have to conduct experiments. We’ve got to keep on experimenting. We, as a company, have to allow ourselves to fail.”
He said that if he stops people from experimenting and if he dissuades them from failing, then he is doing the company a huge disservice.
So, here is a very important lesson we can learn from Jeff Bezos: As entrepreneurs, we must Fail often; Fail rapidly and Figure it out in the process. Failure is an essential part of growing your business. If you are not failing, you are stuck in your comfort zone.
So remember: Failure is essential on the path to success.
3. Intense Customer Focus
In order to make the buying experience better for the customer, Amazon started the Review and feedback system where customers could give genuine and honest feedback on products they bought from Amazon.
A lot of investors were against such an idea because they thought Amazon would lose sales as a result of bad reviews.
However, Jeff Bezos was convinced that this is something the customers need and will value tremendously. Amazon might have seen a short term dip in sales as a result of bad ratings and reviews, but over the long term, Amazon has increased its sales dramatically as a result of the ratings and reviews.
Jeff Bezos supported another initiative that let customers buy products from 3rd party vendors using the Amazon Platform. A lot of investors thought it was a bad strategy because Amazon would lose out to other competitors selling products on Amazon platform.
However, Jeff Bezos believed that a customer who is searching for a product on Amazon must not go back empty-handed and hence he stuck with that strategy. Now, Amazon Marketplace is a huge part of the Amazon business and has fueled massive growth of the Amazon Platform.
As you can see, Jeff Bezos has an intense customer focus and that is one of the biggest reasons why Amazon continues to succeed.
And that is a very important lesson for all entrepreneurs: You must focus on creating a great customer experience even if it comes at the cost of losing some business in the short term. In the long term, great customer experience will always win.
So remember: You must have an intense customer focus.
4. Constant Reading and learning are keys to greatness – You don’t have all the answers
Jeff Bezos is an avid reader and he literally runs a book club with his management team that meets every Saturday.
One of Jeff Bezos’ favorite books is Sam Walton’s Made in America. This is the autobiography of Sam Walton, the man who founded Walmart and built it into the largest retailer in the world. Bezos has studied the book so many times that his copy is highlighted, marked-up and tattered as a result of it.
Some of the key lessons he learned from Sam Walton were frugality and a bias for action. And he has imbibed those values into the Amazon culture.
Another book that Bezos learned a lot from is Clayton Christiansen’s The Innovators’ Dilemma.
Here, Christiansen talked about the idea that as a big company, you are always being threatened by a small upstart. A focused small company can dethrone an established large company over time.
So, How do you, as a big company, not get disrupted? That was the big question.
Jeff learned from The Innovator’s Dilemma that to ensure that a big company does not stumble when competing with new competitors, it must set up a small independent company or small company inside the company that actually competes to break the current business model.
That’s what Jeff Bezos did when his physical book business was thriving.
He appointed the chief of the physical book business and told him, “Now go and run the e-book business. Go, figure out Kindle.”
The chief of the physical book business said, “I can run both. I can run the physical bookstore and I can run the electronic books business.” Jeff Bezos said, “No, you have to be separate. Your job is to kill our physical book business.”
And today, Amazon’s kindle business is thriving as a result of that decision. And no upstart has been able to make a real dent on Amazon’s Kindle business.
Another book that Jeff Bezos loves is Jim Collin’s Good to Great where he figured out the idea of the flywheel.
BTW, I have a full summary of Good to Great on our channel – so check it out if you want to understand the flywheel principle in detail.
Bezos says that all he is doing now is creating momentum for the Amazon flywheel.
He said: “We don’t necessarily have 1 big advantage; we just have a lot of small advantages that we have put together and we continue to gain momentum and speed up the flywheel”.
As you can see, Jeff Bezos is a lifelong reader and learner. However, he doesn’t just read books. He reads the books, discusses them with his executive book club and puts the learnings to action.
And that is a very important lesson for all entrepreneurs: You don’t have all the answers so it is extremely important to feed your mind with high-quality knowledge which only comes from books. So remember: Constant reading and learning are keys to greatness.
5. If you want to build a great business, you must have a long term vision.
When Jeff Bezos started Amazon, he said, “We are building Amazon for decades. We are not building this company to make a quick buck and get out of the whole internet flash-in-the-pan thing.” And He has always maintained that.
In the early days of Amazon, when Bezos was trying to strike deals with much bigger companies they would often ask for Amazon stock in return.
That was the commonly accepted practice – Big Companies would take a share in a smaller company in order to do business deals with it.
However, Bezos refused to give away Amazon shares to strike deals with bigger companies.
Instead, he paid them cash because he believed in the long term value of Amazon.
He had a long term vision and he knew that the big companies were undervaluing Amazon at the time.
Hence he decided to do cash deals which were much more expensive for Amazon in the short term…. but much more lucrative in the long term.
If you have followed Amazon for any period of time, one of the interesting things about Amazon is that it doesn’t necessarily generate a lot of profit, and stock price is questionably low at times.
The fact is that Jeff Bezos himself doesn’t really care about the stock price which triggers a lot of questions about it.
Jeff Bezos has a funny way of explaining his philosophy which he learned from Warren Buffet.
He quoted Buffet when he said “You can either host a rock concert or a ballet. Just don’t advertise a rock concert as a ballet.” A rock concert is for Rock fans and ballet is for Ballet fans.
What he is saying is that Amazon is a company designed for long-term investors; it’s not designed for short-term traders.
If you are an investor, you can either be a long-term investor or you can be a short term trader. However, Amazon doesn’t advertise the company as something that’s supposed to make money in the short-term. The company is here for the long-term.
That’s what Jeff Bezos is after; and that’s what he really wants his investors to invest in.. the long term vision.
There is another thing that Jeff Bezos learned about the stock market from the book, The Intelligent Investor by Benjamin Graham. Graham said, “The stock market in the short term is a voting machine; but in the long term, it’s a weighing machine.”
Jeff Bezos wants the stock market to weigh Amazon and not vote on it. And that is why he is focused on the long term vision – not the short term.
And this is a very important lesson we have to learn as entrepreneurs.
So remember: If you want to build a great business, you must have a long term vision.
6. To build a Great Business for the long term: Be a Missionary, not mercenary
One of the things Bezos likes to say is that, “in Business, you can either be a missionary or a mercenary. Amazon chooses to be a missionary business not a mercenary business.”
What does that mean?
Well, A “missionary” is on a mission to help and serve people.
On the other hand, a “mercenary” will do anything for money. A mercenary does not care about the mission or principles or ethics or values – all a mercenary cares about is how he or she or the business can make money.
So what is Amazon’s mission?
Well, I just pulled it from Amazon.com a few days ago. Here is what it says:
“Our vision is to be earth’s most customer-centric company; to build a place where people can come to find and discover anything they might want to buy online.”
Amazon’s primary mission to create a great customer experience. Jeff Bezos is obsessed with customer experience. That is why in his meetings, he always has an empty chair. The empty chair signifies the customer.
Now there is a very interesting paradox at play here.
Bezos once said: “Mercenaries are just trying to make money. Missionaries are on a mission and they end up building better products and services. Paradoxically, even though the mercenaries focus on just trying to making money, the missionaries always end up making a lot more money.”
A mercenary business might make a lot of money in the short term while a missionary business might find it hard to make money in the short term….
However, in the long term, the missionary business will end up making a whole lot more money.
And that is the story of Amazon. For many years, Amazon did not even make any profits while all its competitors were trying to squeeze out profit by using mercenary tactics.
Today, Amazon is one of the biggest companies in the world while most of its mercenary competitors have disappeared.
This idea really ties with the idea of having a long-term vision.
When you have a long-term vision, You can stay true to the mission – you can give and you can serve.
But when you have a short-term vision, you will try to be a mercenary. You will try to take …. you will take as much as you can.
So remember: If you want to build a great business, you must “Be a missionary, not a mercenary.”
So, these are some of the key lessons I learned from Jeff Bezos and the rise of Amazon.
If you are an entrepreneur or an aspiring entrepreneur, I highly recommend you read this book “The Everything Store by Brad Stone”.
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These top 20 lessons come from Warren Buffett, Steve Jobs, Elon Musk, Jeff Bezos, and many other great Billionaire entrepreneurs.
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