Dan Rose Profile picture
24 Jan, 14 tweets, 3 min read
I learned an important lesson in business when I launched a new retail category early in my career at Amazon: Fail Fast! I spent 18 months shipping a product that should have taken a few months, delaying the oppty to learn and adjust to our initial failure. Here's what happened:
I was originally hired at Amazon on the business development team. After a year I got recruited to help ship a new computer store and run merchandising. I jumped at the opportunity to launch a new business and learn new skills. Amzn was great at creating these opportunities.
Two weeks after joining the retail team, I was in a meeting presenting our pro forma P&L for our computer store launch. I was forecasting inventory turns and gross margins. It was exciting to be thrown into the deep end. I felt like I was at a start-up inside of a start-up.
Our store was predicated on a deal w/ HP that had been part of their earlier bid to win our datacenter biz. Amzn had driven a hard bargain, and when HP couldn't go any lower on server prices they offered to pay us $10M to be our anchor tenant in a new computer store.
HP's consumer business was getting disrupted by Dell who had invented configurable on-line ordering + on-demand manufacturing. HP thought they could fight back by leveraging retail distribution. They would plug their yet-to-be-developed configuration engine into our front-end.
As head of merchandising, I was responsible for executing this HP deal. But integrating their configuration engine proved harder than we thought. This was new ground for them, and for us. Months into the project we were already delayed, HP admitted they were in over their heads.
The HP integration was hard, but at least I didn't have to predict inventory. I wanted to carry other brands in the store, but everyone told me PCs were like bananas: if you don't sell them right away they go rotten quickly. So I signed a drop-ship agreement with Ingram Micro.
My deal with Ingram Micro was Amazon's first experiment with drop-shipping. We built the plumbing that would eventually power this model for many product lines. But it was complicated and took a lot of time to build. Now I was managing 2 complex technical integrations in parallel
We finally launched the store in 2002, a year late. Perhaps predictably, it was a failure. If you wanted to configure a computer online, it was much easier to go to Dell. And it turned out Ingram Micro didn't have a lot of inventory to choose from - they didn't want the risk!
Fortunately our svp of retail had come from Apple and insisted we carry Macs. I had traveled to Cupertino to meet Tim Cook who agreed to make us an authorized Mac retailer. I even pitched him on paying us a coop fee for being a launch partner, and he threw us a small bone.
So we had an HP configuration tool which barely worked. We had drop-ship from Ingram Micro with virtually no selection. And we had Macs. In our first year of business, 80% of our sales were Macs. And on a revenue plan of $100M, we did $10M. But no excess inventory :-)
In our first annual review with Bezos, he said "the problem with your computer store is there aren't any computers in it." He approved a new plan to start carrying more inventory, and slowly we started to grow. We leaned into Macs and became one of Apple's largest retailers.
My failure wasn't missing our plan by 90%, it was spending over a year on complex integrations before knowing if we had a winning approach. I thought we didn't have a choice - HP owed us $10M, I didn't want to lose money on stale inventory, etc. But those are just excuses.
One of Amazon's great strengths is its willingness to try new things and tolerate failure. Over time the company developed more velocity with its experiments. I like to think I contributed in some small way to that, by failing slowly in 2002 when I could have failed faster.

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More from @DanRose999

8 Jan
I was at Amzn in 2000 when the internet bubble popped. Capital markets dried up & we were burning $1B/yr. Our biggest expense was datacenter -> expensive Sun servers. We spent a year ripping out Sun & replacing with HP/Linux, which formed the foundation for AWS. The backstory:
My first week at Amzn in '99 I saw McNealy in the elevator on his way to Bezos' office. Sun Microsystems was one of the most valuable companies in the world at that time (peak market cap >$300B). In those days, buying Sun was like buying IBM: "nobody ever got fired for it"
Our motto was "get big fast." Site stability was critical - every second of downtime was lost sales - so we spent big $$ to keep the site up. Sun servers were the most reliable so all internet co's used them back then, even though Sun's proprietary stack was expensive & sticky.
Read 15 tweets
13 Dec 20
I had a December tradition at Facebook of delivering a one-hour "end of year talk" to my org. The topics changed each year but the common thread was a reflection on life and work outside of our day-to-day. Here's a high-level summary of some of the themes I shared in those talks:
One of my favorite books is Flow: The Psychology of Optimal Experience. We all have activities where we are in a flow state. For me it's surfing - when I see a wave on the horizon coming towards me and suddenly I'm lifted up - I'm not thinking of anything else in that moment.
When we close our eyes and imagine our flow state activities, most of us picture things we do in our free time - cooking, rock climbing, music, writing, etc. But when we evaluate our waking time, most hours are spent at work. What would it look like to experience flow at work?
Read 16 tweets
21 Nov 20
A few days after I joined as head of biz dev at Facebook in 2006, MySpace announced a partnership w/Google worth $1B. I sent an internal email suggesting we pursue a similar deal and Zuck gave me a hunting license. Here's how I signed the biggest deal of my career with Microsoft:
Microsoft had been left at the alter with MySpace. They bid more than Google for the right to run banner ads, but MySpace was owned by NewsCorp and Rupert liked Google better. Ballmer was reportedly very upset about losing, so my first call was to some folks I knew at Microsoft.
MySpace had 10x more users than Facebook at the time, but we were #2 and growing. I told Microsoft we could be their “rebound date,” but they had to move fast because Google was also pursuing us (which was true). I didn’t mention we were wary of Google’s competitive ambitions.
Read 13 tweets
8 Nov 20
I got my first real job in '99 on the biz dev team at Amazon. Like most first jobs, it was a combination of hustle and luck. I had no idea Amazon (or later Facebook) would become what it is today, but I knew I wanted to work there. Here's how it happened:
In high school I thought I wanted a career in business, but my dad was a doctor, my mom a therapist, aunts/uncles physicians & lawyers. I had no role model in biz except my grandfather who owned a fleet of taxi cabs in NY. And my grandmother who always told me "work for yourself"
Harvard had no business major so I thought I would try economics. But after taking Econ 101 freshman year, I decided it wasn't for me (too theoretical and math heavy). Instead I studied Sociology and went down a path of learning about human behavior.
Read 15 tweets
17 Oct 20
In 2004 I had an offer to join the new Kindle team at Amzn and I jumped at the oppty. I was on our retail team at the time -> Kindle was new/sexy. But a week before I was scheduled to start my new job, I was told to stay put and I learned an important lesson. Here’s the story:
2 years earlier I had been given P&L responsibility for Amzn’s cell phone store. We sold phones + plans (like Car Warehouse and Best Buy). This was Amzn’s highest margin biz, but it was tiny and not growing and I was told it could get shut down. I had 6 mos to turn it around.
The industry model at that time was give phones for free w/ service plan attach. I reinvested the service plan margin to make phones less than free, and rev growth exploded. GM % plummeted, but profit $ went way up. My little biz was our fastest growing segment at Amzn!
Read 10 tweets
3 Oct 20
In 2008 Facebook’s user growth hit a wall at 80M and we were having serious debates about whether any social network could ever reach 100M users. 2 years later we had doubled our user base and not long after that we reached 1B users. Here’s how we did it:
I joined FB in summer ‘06 when we had 7M users and were adding 5k/day. Over the next 18 months, Zuck shipped News Feed, Open Registration, Platform and community-led translation. By end of ‘07 we had 70M users and it seemed like we couldn’t be stopped.
Towards end of ‘07 I helped raise our Series C at $15B valuation. We had <400 employees and only $250M revenue, but we had explosive user growth and powerful network effects. Our entire valuation was based on how fast people were signing up for FB all over the world.
Read 13 tweets

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