9 awesome business lessons from Amazon founder Jeff Bezos
The living tech legend has created the world’s largest online retailer. How did he do it?
“Amazon swings to loss”, “Amazon disappoints” and “Amazon stock on rollercoaster”. The world’s biggest online retailer got a lot of bad press last month after the company posted a $274 million loss for the July to September period.
Founder Jeff Bezos’ reaction? A few shrugs, chuckles and a bold statement: “Our approach is to work hard to charge less.”
You may scoff at the tech titan’s cavalier attitude towards the balance sheet but Bezos has proved many times over that he can go from “whipping boy to poster boy in nanoseconds”. In 2001, when Amazon’s stocks hit an all-time low, Bezos convinced major US retailers like GAP and ToysRUs to join forces with him. And bam! In January 2002, Amazon posted its first net profit of $5m.
From selling nappies to launching rockets, the 48-year-old is up for any outlandish product or service under the sun. And indeed fortune favours the brave as Bezos is the 11th richest man in America with a $23.2 billion fortune.
Now, who wouldn’t want to build a company that has a selection as big as the Earth’s longest river? Here are a few ways to do it, Bezos-style:
1. Go long. Really long
No yearly targets for Bezos, he likes thinking in “decades and centuries”. Not surprising for someone who’s named his company after one of the world’s longest rivers and invested $42 million in a gargantuan clock inside a Texan mountain that aims to run for 10,000 years.
But why is he so hell-bent on focussing on the long term? “We’re willing to plant seeds, let them grow - and we’re very stubborn,” he says.
“If everything you do needs to work on a three-year time horizon, then you’re competing against a lot of people. But if you’re willing to invest on a seven-year time horizon, you’re now competing against a fraction of those people, because very few companies are willing to do that. Just by lengthening the time horizon, you can engage in endeavours that you could never otherwise pursue. At Amazon we like things to work in five to seven years.”
2. Customer service? Waste of time!
We’re all up to our ears with retailers banging on about their “24/7, 365 days customer service”, but that’s not how Bezos rolls – he likes to get it right in one go.
“Every time a customer contacts us, we see it as a defect.
“I’ve been saying for many, many years, people should talk to their friends, not their merchants. And so we use all of our customer service information to find the root cause of any customer contact. What went wrong? Why did that person have to call? Why aren’t they spending that time talking to their family instead of talking to us?”
3. “Shiny companies” will tarnish
Last year, Google CEO Eric Schmidt said that there are four horsemen of technology now: Google, Apple, Facebook, and Amazon. But that doesn’t send Bezos on an ego trip. He doesn’t want Amazon “to get addicted to being shiny, because shiny doesn’t last.”
“You really want something that’s much deeper-keeled. You want your customers to value your service,” he says.
And how does he plan to keep the sheen? “By working hard to offer low margins.”
“We’d rather have a very large customer base and low margins than a smaller customer base and higher margins.”
You need to read:
4. A.T.T.E.N.T.I.O.N to detail
To make it big Bezos-style, you need to be nit-picky, pedantic and a fusspot. Bezos likes the mull over the minutest detail to make sure he’s hit the bull’s eye.
When Kindle was about to hit the markets last year, Bezos’ marketing team were exchanging hi-fives for the TV promotions they had created. The advert showed a Kindle-carrying reader transforming into a matador who gets tossed into the air by a charging bull. All the Amazonians found it funny but Bezos didn’t like the joke. “I know it’s cute, and lots of people will think the bull is funny. But the customer right there is getting his ass kicked. We can’t let him get hurt.”
Result? The marketing team had to redo the advert. Ouch.
5. To go forward, work backwards
For Bezos, the customer is god. In fact, he’s so obsessed by them that he actually brings an empty chair into a room to demonstrate the presence of the customer. Probably that’s why he attributes Kindle’s success to ‘starting with the customer and working backwards’ approach.
“There are two ways to extend a business. Take inventory of what you’re good at and extend out from your skills. Or determine what your customers need and work backward, even if it requires learning new skills. Kindle is an example of working backward.”
6. Don’t be a “Me too company”
Cut, copy, paste is a no-no for Bezos, he thinks that ripping off somebody else’s strategy does not work on the Internet.
“You need to have a twist. An overwhelmingly strong customer value proposition - something that improves the thing it’s replacing by a factor of 10.”
7. “Maintain a firm grasp of the obvious at all times.”
Bezos likes to keep it simple with a S. “Selection, speed of delivery and lower prices” has almost become an idiom of sorts in the Amazon offices as Bezos keeps chanting it to his employees.
Amazon’s “approach is to work hard to charge less. Sell devices near break even and you can pack a lot of sophisticated hardware into a very low price point,” he says.
8. “This is Day 1 for the Internet. We still have so much to learn.”
This philosophy is both his signature quote for all interviews and the trick to grow the tentacles of his business.
“For two years, people have been telling me that everything that could be invented has been invented. This is insane. …Look at Napster - this guy is in his dorm room, one person with no funding, a little bit of software, and he launches this thing and nine months later the music industry is petrified. Think what that implies about the power of an idea to change the world.”
The tech titan’s gusto for customer obsession, passion for invention and long-term vision makes debates and heated discussion inevitable. He likes his employees to be candid, outspoken and “energetic around debate and controversy”. He disses the idea of swapping “social cohesion with truth seeking”.
“It’s a sort of mantra that I repeat over and over, because it takes energy to seek the truth. It’s easier to just get along.”