45 Life Lesson From Jeff Bezos
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1. Long term Thinking
Long-term thinking is listed throughout the Amazon SH Letters (the "Letters") consistently.
The fundamental measure of success for Amazon has always been shareholder value created over the long term.
Decisions at Amazon reflect this focus. Always.
Long-term thinking is listed throughout the Amazon SH Letters (the "Letters") consistently.
The fundamental measure of success for Amazon has always been shareholder value created over the long term.
Decisions at Amazon reflect this focus. Always.
2. Customer focus
Amazon doesn't focus on customers, they obsess over their customers.
Their focus is on offering customers value and efficiency.
The more customers that use Amazon, the more they are able to offer value.
Make decisions with the customers in mind.
Amazon doesn't focus on customers, they obsess over their customers.
Their focus is on offering customers value and efficiency.
The more customers that use Amazon, the more they are able to offer value.
Make decisions with the customers in mind.
3. Hire right
When Jeff interviews people, he tells them "you can work long, hard or smart, but at Amazon you can't choose two out of three".
Set the bar high. Hire the best. Your colleagues will determine your future.
When Jeff interviews people, he tells them "you can work long, hard or smart, but at Amazon you can't choose two out of three".
Set the bar high. Hire the best. Your colleagues will determine your future.
4. Capital efficiency
Amazon benefitted as a cash-favored and capital-efficient business.
They did not need physical stores nor did they need to stock inventory, which allowed them to grow without significant capital investment.
Amazon benefitted as a cash-favored and capital-efficient business.
They did not need physical stores nor did they need to stock inventory, which allowed them to grow without significant capital investment.
5. No rest
Jeff constantly reminds Amazon employees to be afraid, to wake up every morning terrified.
Not of competition. Of their customers.
Without customers, there is no Amazon.
Without evolution, there are no customers.
There is no rest for the weary.
Jeff constantly reminds Amazon employees to be afraid, to wake up every morning terrified.
Not of competition. Of their customers.
Without customers, there is no Amazon.
Without evolution, there are no customers.
There is no rest for the weary.
6. Hiring questions
To hire the best people, ask yourself:
1 - Will I admire this person
2 - Will they raise our average
3 - Where can they be a super star
Your colleagues make or break the business. Hire colleagues who will raise the bar.
"Work Hard, Have Fun, Make History".
To hire the best people, ask yourself:
1 - Will I admire this person
2 - Will they raise our average
3 - Where can they be a super star
Your colleagues make or break the business. Hire colleagues who will raise the bar.
"Work Hard, Have Fun, Make History".
7. It gets better
If we are doing things right, as a business, we are the best we have ever been, and we are the worst we will ever be.
The opportunities and risks ahead of you are greater than those behind you.
Act accordingly.
If we are doing things right, as a business, we are the best we have ever been, and we are the worst we will ever be.
The opportunities and risks ahead of you are greater than those behind you.
Act accordingly.
8. Operational excellence
What is your definition of operational excellence for your business?
At Amazon, they defined operational excellence as two things "delivering continuous improvement in customer experience and driving productivity, margin, efficiency and asset velocity"
What is your definition of operational excellence for your business?
At Amazon, they defined operational excellence as two things "delivering continuous improvement in customer experience and driving productivity, margin, efficiency and asset velocity"
9. Share value
In 2000, Amazon's shares were down 80% in value.
By almost any measure, the company felt they were in their strongest position. How?
As Benjamin Graham said, "In the short term, the stock market is a voting machine; in the long term, it's a weighing machine."
In 2000, Amazon's shares were down 80% in value.
By almost any measure, the company felt they were in their strongest position. How?
As Benjamin Graham said, "In the short term, the stock market is a voting machine; in the long term, it's a weighing machine."
10. Think differently
In 2001, Amazon noted:
- processing power 2x every 18 months
- price performance of disk space 2x every 12
- price performance of bandwidth 2x every 9
They predicted it would allow 60x bandwidth per customer in 5 years at the same cost per customer.
In 2001, Amazon noted:
- processing power 2x every 18 months
- price performance of disk space 2x every 12
- price performance of bandwidth 2x every 9
They predicted it would allow 60x bandwidth per customer in 5 years at the same cost per customer.
11. Consumer franchise
We talked about Amazon's obsession with customers. It continues.
It was built on the two pillars of selection and convenience.
A third pillar, relentlessly lowering prices, was added.
Ask yourself: what do I know my customer will never be unhappy with.
We talked about Amazon's obsession with customers. It continues.
It was built on the two pillars of selection and convenience.
A third pillar, relentlessly lowering prices, was added.
Ask yourself: what do I know my customer will never be unhappy with.
12. Cash is King
Amazon has always focused on cash flow. Why?
A company's future cash flow and it's future number of shares are all you need to determine the fair value of that stock today.
The more we can increase future cash flow, the more we can increase today's value.
Amazon has always focused on cash flow. Why?
A company's future cash flow and it's future number of shares are all you need to determine the fair value of that stock today.
The more we can increase future cash flow, the more we can increase today's value.
13. Fixed costs
How can Amazon focus on the best customer experiences at the lowest prices?
Amazon transforms much of the customer experience into fixed expenses.
With those costs largely fixed [think publishing versus retailing], each new customer drives margin and cash flow.
How can Amazon focus on the best customer experiences at the lowest prices?
Amazon transforms much of the customer experience into fixed expenses.
With those costs largely fixed [think publishing versus retailing], each new customer drives margin and cash flow.
14. Owners vs tenants
Owners differ from tenants
Jeff tells the story of tenants who nailed a Christmas tree to a hardwood floor, instead of using a tree stand.
An owner would not be that short-sighted.
Many investors rent shares.
Don't rent. Own them for the long term.
Owners differ from tenants
Jeff tells the story of tenants who nailed a Christmas tree to a hardwood floor, instead of using a tree stand.
An owner would not be that short-sighted.
Many investors rent shares.
Don't rent. Own them for the long term.
15. Decisions 1 / 3
There are two types of decisions:
- Math based
- Judgment based
Math based command agreement.
Judgument based are debated and controversial, at least until proven.
If you will not endure controversy, you only make math based decisions.
There are two types of decisions:
- Math based
- Judgment based
Math based command agreement.
Judgument based are debated and controversial, at least until proven.
If you will not endure controversy, you only make math based decisions.
16. Decisions 2 / 3
If you are unwilling to make judgment based decisions, you will limit controversy, but you will also "significantly limit innovation and long term value creation."
If you are unwilling to make judgment based decisions, you will limit controversy, but you will also "significantly limit innovation and long term value creation."
17. Decisions 3 / 3
Amazon decision making:
- relentless customer focus
- long-term market leadership
- Analytical assessment of decisions
- Make bold, rather than timid, decisions
Learn from successes and failures.
Increase investment in those that work. Decrease otherwise.
Amazon decision making:
- relentless customer focus
- long-term market leadership
- Analytical assessment of decisions
- Make bold, rather than timid, decisions
Learn from successes and failures.
Increase investment in those that work. Decrease otherwise.
18. Plant seeds
At Aamzon, "planting seeds that will grow into meaningful new businesses takes some discipline, a bit of patience, and a nurturing culture."
Amazon invests in new businesses it expects can generate specific returns on capital and scale to a meaningful size.
At Aamzon, "planting seeds that will grow into meaningful new businesses takes some discipline, a bit of patience, and a nurturing culture."
Amazon invests in new businesses it expects can generate specific returns on capital and scale to a meaningful size.
19. Patience
Be decisive and bold with action.
Be patient with expectations of the results.
The seeds planted in 18 take time to mature.
A runaway success at Amazon "can only begin to be meaningful to the overall company economics in...three to seven years."
Be decisive and bold with action.
Be patient with expectations of the results.
The seeds planted in 18 take time to mature.
A runaway success at Amazon "can only begin to be meaningful to the overall company economics in...three to seven years."
20. Evolve the tools
"We humans co-evolve with our tools. We change our tools, and then our tools change us."
Ask yourself, how can you build a tool that is convenient for customers and friction-free.
What tool will change human behavior for the better? Build that tool.
"We humans co-evolve with our tools. We change our tools, and then our tools change us."
Ask yourself, how can you build a tool that is convenient for customers and friction-free.
What tool will change human behavior for the better? Build that tool.
21. Working backward 1 / 2
Based on its obsession with customers, Amazon works backward from customer needs.
This "can be contrasted with a 'skills-forward' approach where existing skills and competencies are used to drive business opportunities."
Based on its obsession with customers, Amazon works backward from customer needs.
This "can be contrasted with a 'skills-forward' approach where existing skills and competencies are used to drive business opportunities."
22. Working backward 2 / 2
A skills-forward approach will drive innovation. It will not push the development of new skills or learning. Your skills will, eventually, be outdated.
Working backwards will always result in evolution and new competencies, which wins long term.
A skills-forward approach will drive innovation. It will not push the development of new skills or learning. Your skills will, eventually, be outdated.
Working backwards will always result in evolution and new competencies, which wins long term.
23. Prudent spending
Amazon realized what we realize in the financial independence community:
1. Earn more
2. Spend less
3. Invest the rest
The goal is to reduce waste, decrease spending and maintain cash flow (shareholder value), which allows investment in new businesses.
Amazon realized what we realize in the financial independence community:
1. Earn more
2. Spend less
3. Invest the rest
The goal is to reduce waste, decrease spending and maintain cash flow (shareholder value), which allows investment in new businesses.
24. Process over results
Amazon executives spend little time on financial results.
Focusing on the process of controllable inputs is "the most effective way to maximize financial outputs over time."
By focusing on customers and executing, the financial outputs will happen.
Amazon executives spend little time on financial results.
Focusing on the process of controllable inputs is "the most effective way to maximize financial outputs over time."
By focusing on customers and executing, the financial outputs will happen.
25. Constant invention
At Amazon "Invention is in [their] DNA and technology is the fundamental tool [they] wield to evolve and improve every aspect of the experience [they] provide [their] customers."
Amazon invests heavily in technology across more areas than you can imagine.
At Amazon "Invention is in [their] DNA and technology is the fundamental tool [they] wield to evolve and improve every aspect of the experience [they] provide [their] customers."
Amazon invests heavily in technology across more areas than you can imagine.
26. Avoid gatekeepers
As we noted in 25, constant invention is mandatory to Amazon's growth.
Gatekeepers slow innovation, which is why many Amazon services are self-service.
With no gatekeeper, more ideas are pursued. Some of those ideas work, and we all benefit.
As we noted in 25, constant invention is mandatory to Amazon's growth.
Gatekeepers slow innovation, which is why many Amazon services are self-service.
With no gatekeeper, more ideas are pursued. Some of those ideas work, and we all benefit.
27. Customers > Competitors
Amazon focuses on its customers, not its competitors.
A benefit is Amazon does not wait for external pressure, it is internally motivated to: improve services, add benefits and features, and lower costs before it needs to.
Amazon focuses on its customers, not its competitors.
A benefit is Amazon does not wait for external pressure, it is internally motivated to: improve services, add benefits and features, and lower costs before it needs to.
28. Colleagues matter
When the team is rowing in the same direction, everyone wins.
Amazon colleagues:
- take the long view
- continuously reinvest normal
- Relentlessly focus on customers
This allows Amazon to be successful across a broad array of initiatives.
When the team is rowing in the same direction, everyone wins.
Amazon colleagues:
- take the long view
- continuously reinvest normal
- Relentlessly focus on customers
This allows Amazon to be successful across a broad array of initiatives.
29. Pay to Quit
You want people on the team who want to be on the team.
If they don't want to be on the team, you want them off the team.
Amazon, borrowing from Zappos, offers $2,000 to colleagues to quit. The offer increases $1,000 per year until $5,000.
You want people on the team who want to be on the team.
If they don't want to be on the team, you want them off the team.
Amazon, borrowing from Zappos, offers $2,000 to colleagues to quit. The offer increases $1,000 per year until $5,000.
30. Veteran Hiring
Amazon is a member of Joining Forces and the 100,000 Jobs Mission.
Amazon seeks leaders who can:
- invent
- think big
- deliver results
- have a bias for action
These are traits that men and women in the armed forces embody.
Amazon is a member of Joining Forces and the 100,000 Jobs Mission.
Amazon seeks leaders who can:
- invent
- think big
- deliver results
- have a bias for action
These are traits that men and women in the armed forces embody.
31. Dream Business
Amazon defines a dream business as one that has four characteristics:
- customers love it
- it can grow to a large size
- it has strong returns on capital
- it can endure long term - decades
When Amazon finds these, they go all-in on them.
Amazon defines a dream business as one that has four characteristics:
- customers love it
- it can grow to a large size
- it has strong returns on capital
- it can endure long term - decades
When Amazon finds these, they go all-in on them.
32. Principle based
Amazon and Amazon Web Service are principle-based businesses:
- Customers > Competitors
- Eager to invent and pioneer
- The patience to think long term
- Willingness to fail and learn from it
What are the principles that guide your business, if any?
Amazon and Amazon Web Service are principle-based businesses:
- Customers > Competitors
- Eager to invent and pioneer
- The patience to think long term
- Willingness to fail and learn from it
What are the principles that guide your business, if any?
33. Culture matters
Corporate cultures are enduring, stable and hard to change.
They are "created slowly over time by the people and by events - by the stories of past success and failure that become a deep part of the company lore."
People self-select for culture. In or out.
Corporate cultures are enduring, stable and hard to change.
They are "created slowly over time by the people and by events - by the stories of past success and failure that become a deep part of the company lore."
People self-select for culture. In or out.
34. Failure is feedback
You cannot succeed without failure long term.
Jeff believes Amazon is the best place to fail, and that failure and invention are inseparable twins.
You win big when you go against convention. Convention is generally right. Be willing to be wrong.
You cannot succeed without failure long term.
Jeff believes Amazon is the best place to fail, and that failure and invention are inseparable twins.
You win big when you go against convention. Convention is generally right. Be willing to be wrong.
35. Type 1 and 2 decisions 1 / 3
Type 1 decisions "are consequential and irreversible or nearly irreversible." A one way door.
Type 2 decisions are changeable and reversible. A two way door.
Type 1 decisions "are consequential and irreversible or nearly irreversible." A one way door.
Type 2 decisions are changeable and reversible. A two way door.
36. Type 1 and 2 decisions 2 / 3
Type 1 decisions should be very methodical - slow, careful, deliberate, and should involve consultation.
Type 2 decisions should be made quickly by individuals, or small groups, who have high judgment capabilities.
Type 1 decisions should be very methodical - slow, careful, deliberate, and should involve consultation.
Type 2 decisions should be made quickly by individuals, or small groups, who have high judgment capabilities.
37. Type 1 and 2 decisions 3 / 3
As a company grows, it defaults to type 1 decision making, for all decisions.
This results in slow decisions, risk aversion, and failure to experiment. Ultimately, it leads to decreased invention.
You need to fight this at all costs.
As a company grows, it defaults to type 1 decision making, for all decisions.
This results in slow decisions, risk aversion, and failure to experiment. Ultimately, it leads to decreased invention.
You need to fight this at all costs.
38. Always Day 1
Day 1 at Amazon is growth, always moving forward.
Day 2 is stasis, "Followed by irrelevance. Followed by excruciating, painful decline. Followed by death."
This is how I view life. If you are not learning and growing, you are dying a slow miserable death.
Day 1 at Amazon is growth, always moving forward.
Day 2 is stasis, "Followed by irrelevance. Followed by excruciating, painful decline. Followed by death."
This is how I view life. If you are not learning and growing, you are dying a slow miserable death.
39. Day 1 defense
To always be Day 1, Amazon focuses on four things:
- Resisting proxies
- True customer obsession
- Embracing external trends
- High-Velocity decision making
What can you do in your life to maintain Day 1.
For me, it is a continuous pursuit of learning.
To always be Day 1, Amazon focuses on four things:
- Resisting proxies
- True customer obsession
- Embracing external trends
- High-Velocity decision making
What can you do in your life to maintain Day 1.
For me, it is a continuous pursuit of learning.
40. Resisting proxies
As you grow, there is a tendency to proxies.
A common example is with processes.
As a company grows, the process becomes the proxy for the result you want.
Your team stops looking at results and focuses on the process.
The process is not the outcome.
As you grow, there is a tendency to proxies.
A common example is with processes.
As a company grows, the process becomes the proxy for the result you want.
Your team stops looking at results and focuses on the process.
The process is not the outcome.
41. Customer obsession
Always focus on the customer.
Relentlessly work backward from what the customer wants.
- Fail
- Invent
- Plant seeds
If you can keep your colleagues obsessed with the customer, you will never be in Day 2.
Always focus on the customer.
Relentlessly work backward from what the customer wants.
- Fail
- Invent
- Plant seeds
If you can keep your colleagues obsessed with the customer, you will never be in Day 2.
42. Embrace external trends
We too often see businesses fail, because they didn't see trends.
Whether it's Kodak or Blackberry, you cannot ignore powerful external trends.
The big trends are visible, easy to spot, but large organizations are challenged to embrace them.
We too often see businesses fail, because they didn't see trends.
Whether it's Kodak or Blackberry, you cannot ignore powerful external trends.
The big trends are visible, easy to spot, but large organizations are challenged to embrace them.
43. High-Velocity Decision Making
Large organizations make slow deicsions. Day 2 decisions.
You have to make high quality, high-velocity decisions.
If it's a type 2 decision, move quick.
Make decisions with 70% of the information. Waiting for 90% or more is too slow.
Large organizations make slow deicsions. Day 2 decisions.
You have to make high quality, high-velocity decisions.
If it's a type 2 decision, move quick.
Make decisions with 70% of the information. Waiting for 90% or more is too slow.
44. Disagree and commit
When making a decision that is contentious, in a desire to keep the decision high-velocity, it is helpful to say :
"Look, I know we disagree on this but will you gamble with me on it? Disagree and commit?"
Ask this, and be willing to do this.
When making a decision that is contentious, in a desire to keep the decision high-velocity, it is helpful to say :
"Look, I know we disagree on this but will you gamble with me on it? Disagree and commit?"
Ask this, and be willing to do this.
45. Escalate misalignment
We do not want a decision to be made, because one person, or group, has more stamina than the other side.
This means a decision is slow, and potentially poor.
When you realize there is misalignment, escalate the issue immediately.
We do not want a decision to be made, because one person, or group, has more stamina than the other side.
This means a decision is slow, and potentially poor.
When you realize there is misalignment, escalate the issue immediately.
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