Episode 18: The Everything Store: Jeff Bezos and the Age of Amazon
Hello and welcome to Episode 18 of Metamorphosis, featuring, The Everything Store: Jeff Bezos and the Age of Amazon by Brad Stone, a Bloomberg Technology and Businessweek journalist.
The book is replete with the complete history, strategy and philosophy of Amazon, the iconic company that understood the internet’s infinite shelf space and its founder’s intellectual acuity. This one is about the multi-billionaire, Jeff Bezos, founder, executive chairman and former president and CEO of Amazon.
(Fun fact: A sizeable amount of Jeff’s net worth in the early days can be attributed to his initial series investment of $250,000 in Google, in 1998 which held its IPO in 2004)
Amazon is a modern juggernaut success story that has impacted the internet and life more than anything else. Wearied yet undefeated by the beleaguering jabs of Wall Street expectations in its early days, the company has played on its long-term vision and has timelessly proved its sceptics wrong. It cemented a chess grand master’s view from the start by betting on an exponentially growing playground, i.e., the internet. In 1994, Jeff realized that traffic on the internet grew at 2300x the previous year(!) This was a rarity and he didn’t waste any time acting upon it.
“This book is an account of the first twenty years, one that attempts to chronicle a different set of high-stakes battles- to turn a simple idea into an actual business,” Brad Stone writes, “Relentless and ruthless, are words that will show up repeatedly in the following pages. Getting the lethal combination precisely right has been Bezos’s prodigious talent and perhaps Amazon’s greatest asset.”
(Fun Fact: If you type relentless.com on the internet, you get redirected to Amazon.com, it was the URL that was registered in 1994)
To this day, the company culture lives on ideals, so-called Jeffisms, that are so consistent with the original ideas of the founder, making it a fascinating case study. What makes it even more compelling is Jeff’s enigma, as he is/was rarely seen to speak at conferences, give media interviews, speeches or talk widely about his story of building Amazon. He keeps thoughts and intentions private.
One of his thinking processes that are widely known is the ‘regret-minimization framework.’ Which is my first takeaway from the book:
“Projecting yourself forward to your marginal decade and looking back at your life, you want to have minimized the regrets you have.” That is a cogent technique to make tough decisions when you are standing at crossroads!
Even though Jeff had a stable well-paying job at D.E. Shaw, the decision he had to make was to quit compared to the opportunity cost of not 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 which I thought was going to be a revolutionizing event. When I thought about it this way, it was incredibly easy to make the decision.”
My second takeaway lies in ‘leveraging the paradigm shifts by standing on shoulders of giants’
Bezos was enamoured by Sam Walton’s autobiography, Sam Walton: Made in America and had this passage underlined, describing borrowing the best ideas of his competitors.
“Every company stands on the shoulders of the giants that came before it.”
Walton, the founder of Walmart, wrote: “Could a Wal-Mart-type story still occur in this day and age? My answer is of course it could happen again. Somewhere out there right now there’s someone- probably hundreds of thousand so someones – with good enough ideas to go all the way. It will be done again, over and over, providing that someone wants it badly enough to do what it takes to get there. It’s all a matter of attitude and the capacity to constantly study and question the management of the business.”
Jeff was later heard saying,
“Treat Google like a mountain, you can climb the mountain, but you can’t move it. Use them but don’t make them smarter.”
“The history of Amazon.com, as most people understand it, is one of the iconic stories of the Internet age.” As Eric Schmidt, said, ‘To me Amazon is a story of a brilliant founder who personally drove the vision.’
My final takeaway is from Jeff’s first company letter to its public shareholders. Amazon’s IPO took place in 1997, the word bold was used repeatedly.
‘We will make bold rather than timid investment decisions where we see sufficient probability of gaining market leadership advantages,’ they wrote. ‘Some of these investments will pay off, others will not, and we will have learned another valuable lesson in either case.’
Setting the backdrop for another classic bold move by Jeff, staying rooted in his long-term vision of building the everything store. (Make bold bets, failures teach)
‘In the short term, the stock market is a voting machine. In the long run, it’s a weighting machine’ that measures a company’s true value. If Amazon stayed focused on the consumer, Bezos declared, the company would be fine.'
He, incidentally, had all of the Senior Executives read Nassim Nicholas Taleb’s book, Black Swan, which coined the term, ‘Narrative Fallacy.’ Describing how humans are biologically inclined to turn complex realities into soothing but oversimplified stories. Taleb argued that the limitations of the human brain resulted in our species’ tendency to squeeze unrelated facts and events into cause-and-effect equations and then convert them into easily understandable narratives.
Bezos favoured experimentation and clinical knowledge over storytelling and memory, something that we can all try to selectively choose.
Thanks for spending some time to go through this episode of Metamorphosis, as always ending with some words to live by:
“In the end, we are our choices.”
