Master level wisdom from Mr Jeff Bezos

I recently listened to an interview with Jeff Bezos on the Lex Fridman podcast, one of my favourites by the way, and if you are not familiar with Lex Fridman already, I highly recommend him to anyone interested in long-form conversations with an eclectic range of fascinating guests. You can find the link to the podcast at the end of this article. ?

This interview with Jeff Bezos is packed full of nuggets of wisdom for business owners and business lovers alike, and after watching it I felt an incontrollable urge to share this wisdom in the B2B EVO newsletter which led to the creation of the Master Wisdom Edition of B2B EVO.

Thanks for reading, and here we go!

Let’s start this one off with a bit a background history on Amazon.

The birth of Amazon

Amazon was founded by Jeff Bezos in July 1994 in Seattle, Washington. Bezos initially conceived the idea of an online bookstore because of the growing popularity of internet use. He saw an opportunity to create a platform that could offer a vast selection of books to customers at competitive prices.

The Early Years

In July 1995, Amazon.com was officially launched. Initially, the company operated out of Bezos's garage (check out this quick tour of the Amazon HQ back in the day, https://www.youtube.com/watch?v=ltcesVdRtEs ).

Amazon focussed on books back when it was initially founded but the vision was always to expand into other product categories. The company went public in 1997 with an IPO (Initial Public Offering) that raised significant capital for expansion.

And just to linger a little longer on the subject of the IPO, investors who purchased 1 share back in 1997 would now have 240 shares. There have been 4 stock splits in the history of Amazon with a cumulative multiple of 240.

Share prices back in 97 during the IPO were $18 per share, and just recently share prices were $173 per share, so you do the math if you can take the pain of the regret that sweeps over you if you had a chance to invest back in the day, but didn’t.

But hey, it’s like Bezos says in the interview, rounding up investment was really difficult at the beginning to get Amazon going because most start-ups fail, and who would have thought that an online book selling company which started in the founders garage would one day become the number 2 company on the Fortune 500 List (2024)? Amazing.

Diversification and Innovation

Over the years, Amazon has expanded its product offerings beyond books to include pretty much anything you need. The selection of products available to shoppers nothing short of astounding. The company has also developed new services such as Amazon Prime, a subscription-based service that offers free shipping and other benefits. The introduction of the Kindle e-reader in 2007 marked Amazon's entry into the hardware market.

Amazon Web Services (AWS)

In 2006, Amazon launched Amazon Web Services (AWS), a cloud computing platform. AWS has since become a major player in the cloud services industry, providing infrastructure and services to businesses and organizations worldwide.

Acquisitions and Partnerships

Amazon strategically acquired several companies to expand its reach. Notable acquisitions include Zappos (2009), an online shoe and clothing retailer, and Whole Foods Market (2017), a high-end grocery store chain. Amazon also formed partnerships and collaborations, such as its joint venture with JPMorgan Chase and Berkshire Hathaway to address healthcare (2018). Other acquisitions include Alexa Internet, Audible, Twitch, Pill Pack and MGM.

Disruption and Market Dominance

Amazon's obsession with customer satisfaction, innovative technologies, and a vast logistics network have all contributed to its market dominance. The company disrupted traditional retail models, leading to the decline of numerous brick-and-mortar stores.

The Role of Jeff Bezos

Jeff Bezos served as the CEO of Amazon from its inception until he stepped down in 2021, being succeeded by Andy Jassy. Bezos played a pivotal role in shaping Amazon's culture of customer obsession, innovation, and long-term thinking.

Today, Amazon is a global conglomerate with a presence in e-commerce, cloud computing, artificial intelligence, streaming services, and more. Its impact on various industries has been substantial, and its story continues to evolve as it explores new ventures and technologies.

Now, a company with that type of track record is definitely worth investigating further, so listening to this business master who ran the show for so many years share some insights into how things are done at Amazon is pure gold!

Nuggets of wisdom from the interview

Focus obsessively on the customer

Mr Bezos has said so many times that at Amazon they are obsessed with customer service. You hear a lot of “we are customer-centric” out there in the business world, but it takes an awful lot of commitment to really live up to this type of affirmation.

All of us would agree that a mission statement is important for any company, and Amazon has a very clear one. Below is an extract taken from their Amazon Europe website under the section. “Who We Are”:

"Amazon is guided by four principles: customer obsession rather than competitor focus, passion for invention, commitment to operational excellence, and long-term thinking. Amazon strives to be Earth’s most customer-centric company, Earth’s best employer, and Earth’s safest place to work."

What I love most about the first sentence is that at Amazon they understand that achieving a sustainable advantage is about a proactive approach to continually striving to create unbeatable value for its customers. Many companies fall into the trap of a more reactive approach to competing in the market by reacting to competitor activity, and simply trying to outperform their rivals rather than pursuing differentiation to make the competition irrelevant.

Day one thinking

Mr Bezos describes “day one thinking” as a way of thinking in business which allows for “renewal, rebirth, and that every day you get the chance to make fresh decisions” about the business which helps avoid a sense of being trapped by who you were in the past.

This way of thinking is the complete opposite of what he calls “day two thinking” which he described as “stasis, followed by irrelevance, followed by excruciatingly painful decline, followed by death” in one of his first letters to share holders back in 1997.

Judging from how he feels about "day two thinking", it is very clear that Mr Bezos understands the business life cycle extremely well, and that the only way to ensure the longest life cycle possible is to fight off the sequential life cycle phases through constant evolution. It’s simple to understand and deeply compelling at the same time, and without a doubt, extremely difficult to execute, but if business adopts “day one thinking” it will, without a doubt, increase its chances of success and longevity. ?

Fighting off day two thinking

When asked about how to fight off “day two thinking” he admits that he doesn’t have the full answer on how to do this with 100% effectiveness, but he does point to four different defence techniques:

1.?????? Customer obsession

2.?????? A sceptical view of proxies

3.?????? The eager adoption of external trends

4.?????? High velocity decision making

When leveraged within a business, all four of the above can be extremely powerful and he offers some insight into scepticism about proxies which is another valuable piece of advice from this master of business.

Metrics are necessary, but make sure they are the always right ones

He uses a metric as an example of proxies (e.g. proxy metrics being a stand-in for your high-level metrics), and how businesses which have been around for a few years, and have attained inertia will start managing their business to specific metrics. The danger with metrics is that they can suddenly become redundant as the market shifts slightly from underneath you and you begin forgetting the truth behind the metric you are attempting to seek. This then means that the metric has to be continually reassessed to find out if it’s still relevant, or missing something.

So for example, if you have a proxy metric which has been designed to help measure customer satisfaction, it should always be challenged, and scrutinized, but only if it really does have an effect on customer satisfaction.

If your business uses metrics, make sure you truly understand why they exist, and what they mean so that you can constantly check to make sure that they are still relevant and effective in what you are trying to achieve. If one day you realise that the metric no longer serves its purpose, get rid of it and develop a more effective metric that helps discover the truth you are seeking.

Failure to do this could mean that you slip into “day two thinking” without even realising it!

“When data and anecdotes disagree, it’s usually the anecdotal evidence which is correct”

This bit of wisdom can only be attained through years of experience. If there is a contradiction between metric data and anecdotal evidence, then according to Mr Bezos, a business should always doubt the metric and its efficacy.

He provides us with a real life example of how he adopted this way of thinking.

Mr Bezos entered a regular business review meeting where they had to discuss customer complaints about caller waiting times. A metric was created to measure this KPI and their goal was to maintain caller waiting times to under one minute. ?The metric data was presented, and the customer complaints information and metric data were contradictory, and so he decided to call the contact number himself during the actual meeting. Much to the surprise of everyone at the meeting, they did in fact have to wait for well over one minute, and that allowed them to take immediate action on improving the metric.

The message here is always be ready to question your data if another source of information puts in doubt!

Truth telling - Truth matters a lot in business so get over your ego and be prepared to listen

This one resonates with me so much because truth telling cultures in businesses are so hard to come by, and Mr Bezos explains why this is so important in business.

He starts off by explaining why truth telling is such a challenge in business and describes how in general, “we are not truth seekers animals, we are social animals” and uses the perfect example of how during tribal life if you “went along to get along” you increased your chances of survival, and if you were the village truth-teller could may have been assassinated in your sleep!

In business, truth telling can many times be misinterpreted as negative criticism and if there is ego in the room when you are discussing something that challenges the status quo, this can create a very negative dynamic, especially when individuals take a defensive stance against ideas that may actually hold a lot of truth.

Don’t be a prisoner of your own ideas!

Mr Bezos wholly supports truth telling and insists that all businesses should, even though it’s very challenging, adopt a truth telling culture which has the mechanisms in place to allow for this type of dialogue, and here is where he drops a very inspiring nugget of wisdom….

“You want to set up a culture where the most junior person can overrule the most senior person (if they have the data)”

Ask yourself how often you think this happens in business? And come on, be honest, very rarely. As we all know, and I’m sure most of us have experienced that in the business world many individuals will use their seniority to enforce unchallengeable truths which can not only have an extremely detrimental effect on staff motivation but can also have a very damaging effect on overall business performance.?

Listen first, speak last

In every single meeting Mr Bezos says that he always speaks last. Why? Well because he wants to hear the unfiltered version of what people at the meeting have to say about the topic up for discussion. He makes a very good point about the negative impact a very senior figure speaking first can have on the rest of people attending the meeting. Imagine a situation where a junior person has come to the meeting with some ideas they have about a certain area of the business which are worth exploring further but they never reach the light of day because they have began to lose confidence in what they thought was great the minute they start listening to a senior figure’s ideas first. This is so damaging to a business, and Mr Bezos suggests that the most junior person should start with their ideas first, and then gradually move up the ranks of seniority until you reach the most senior person in the meeting.

This approach of listen first, speak last makes so much sense, but is this something that is common place in business? It’s just another example of simple and great advice.

Unless you know a better way

In the interview, Mr Bezos describes how they work on projects such as program design using tenants which he says are kind of like principles, but more tactical, meaning that they are the main ideas that Amazon want the program to contain. Once the tenants have been defined you’d think that the project then begins, and on to the next one, however at Amazon, they write the words “unless you know a better way” in brackets on the project document.

This is so powerful in the sense that it doesn’t imprison the company in a “one way of doing things” mentality, and as a consequence, shackling the company to the past. It allows for continuous evolution by empowering its staff members with the freedom to think beyond the realm of what has worked well up until now, and that in itself is something that is very difficult for any competitor to replicate.?

Big things and little things

This is great advice for any business.

“There are big things and then there are little things” (Mr Bezos’s name for the little things is Papercuts).

His definition of the “big things” are the things that are not going to change over the next ten years (e.g. customers are still going to low prices, great delivery times and a large selection of items). When you’ve identified the big things you can invest time in them because they are stable over time, and most of the energy goes into continually improving these “big thing” areas of the business.

Then there are “little things” which you need to think about (e.g. creating a frictionless online order process for your customers). These “little things” require dedicated and specialized teams to work on to get them finished or improved, and these are the things that allow Amazon to create unparallel customer value.

As we all know, it’s the little things that really can make the difference!

Hope you found this article both insightful and useful, and thanks for reading.

The Lex Fridaman Podcast: https://lexfridman.com/podcast/

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