Three (not so) Secret Ingredients You Can Borrow to Build Your Empire
He’s the (second) richest human on earth and in orbit as it turns out. His platform, a little startup called Amazon, handled more than half of online spending over the pandemic.
That’s worth saying again: Amazon peddled 51.2% of digital retail spend in 2020.
We are, of course, talking about Jeff Bezos – the first ever centibillionaire on the Forbes wealth index.
Bezos is many things and his achievements and firsts could add a Whole (Foods) chapter to the Guiness Book of Records. He doesn’t just feature on any and all lists of the most successful business people, he owns the lists and sells them online, delivered to your doorstep, next day, guaranteed.
Like all good garage-to-MET-Gala stories, the foundations were set, literally, in a garage in 1994. The business plan for Amazon, which started life as an online bookstore, was written during a cross-country drive from New York City to Seattle. Lots. Of. Good. Thinking. Time.
Three years later, Bezos went public with an IPO, granting anyone investing US$1,000 in the business on that day (15 May 1997) shares worth US$1.2m by May 2020.
But how did Bezos do it? What sits at the heart of his success? And what, if anything, can other mere mortal leaders like us, learn from him?
According to Sunil Gupta, a Harvard Business School professor who has spent years studying successful digital strategies – and to a large degree, stalking Bezos – Amazon’s success is down to diversifying into multiple products and services. At the intersection of this process lives a blend of Bezos’s “obsession with the customer” and his personality.
“Bezos is full of experiments,” Gupta says. “His company and his whole style is known for experimentation. In his own words – ’if you want big winners then you have to be willing to have many failures”. His argument is that one big winner will take care of a thousand failed experiments.” (You can listen to the full podcast here: https://hbr.org/podcast/2020/11/how-jeff-bezos-built-one-of-the-worlds-most-valuable-companies).
Bezos himself refers to his style in the title of his book “Invent and Wander” – a collection of writings he published in late 2020. The “wandering” part, for him, is the preparedness to move away from the safe, paved road and to discover new paths and unlit alleyways – even if most of the time spent “wandering” comes to nothing more than walking down a dead-end.
It was one of his earlier wanderings, in the early 1990s, that led him to look and realise that the internet – which in 1994 still had no real commercial aspect to it – was growing at a phenomenal rate, with usage increasing by around 2,300% a year. Combined with his discovery that there was no comprehensive mail order catalogue for books, he set out to learn everything he could about both the internet and the book trade. He wandered, and as it turned out, he saw the wood for the trees and started printing money with it.
Bezos had to trust his instincts too. When he first came up with the idea for his book-led e-commerce platform, his then boss at D. E. Shaw & Co. did his best to talk him out of pursuing his madness. But it was in Bezos’ DNA to create “something different”, and away he went. Wise decision, as it turned out. But instincts aren’t always accurate. During an attempt to fundraise in Amazon’s first year Bezos predicted $74 million in sales by 2000, undershooting by a billion, give or take ($1.64bn in 1999).
Since then, Jeff has done plenty of wandering and inventing with more than 30 of his major investments, projects, and philanthropic endeavors featuring here BezosExpeditions.com.
So what’s his secret? The elements behind his success?
Here are three key ingredients in the success of Bezos and Amazon.
1. Wander - but decide which way first
For all his wandering and experimenting, it’s not like Bezos just sets off completely blind. As Professor Gupta puts it: “His experiments aren’t aimless. There is a certain part and process behind what experiments to do and why they connect to the overall picture of what Amazon is today.”
As a result, Bezos (and Amazon) has transformed conventional corporate strategy by expanding into multiple products and services. What started as an online bookseller now offers streaming services, consumer electronics, business services, loans and gaming. From Amazon Prime to Kindle and Amazon Drive, it has it all.
2. Customer obsession
Rather than looking sideways to beat the competitors, Bezos and Amazon are utterly obsessed by their customer and as such create new and delightful experiences they don’t even know they want yet.
Bezos states it himself: “The No. 1 thing that has made us successful, by far, is obsessive compulsive focus on the customer”.
There is no better way to witness this obsession than to sneak into an Amazon top team meeting. There, you would always find a single empty chair – to represent the customer.
3. Insist on long-term thinking
Bezos has said he’s always thinking three years out. Understanding the current business environments is important – understanding future ones is what makes companies great.
In a letter to Amazon shareholders back in 2003, when the company’s revenues were “only” US$5.2bn (compared to US$386bn in 2020), Bezos wrote: “Long-term thinking is both a requirement and an outcome of true ownership. Owners are different from
tenants. I know of a couple who rented out their house, and the family who moved in nailed their Christmas tree to the hardwood floors instead of using a tree stand. Expedient, I suppose, and admittedly these were particularly bad tenants, but no owner would be so short-sighted.”
So go forth and wander, obsess and think.