The year is 1994. The scene: Jeff Bezos’ parents garage.Read full content
While many of us were kicking up our Airwalks with an episode of Friends playing in the background, Bezos was architecting a grand plan that would change the way people shopped forever. He called it the “Everything Store,” a place where, using the as-yet-untapped power of the Internet, people could purchase virtually anything. Twenty years later, the Everything Store makes billions worldwide and goes by the name Amazon.com.
What grew an idea planted in a Bellevue garage into one of today’s most successful businesses? Dedication, innovation, and 7 smart habits that you can use to nurture the success of your own enterprise.
1. Focus on Customers
Jeff Bezos understood early on that the advantage of an online business was in measuring customer behavior. Over the years, Amazon constantly adds features that are aimed of making their customers happy which, in turn, bolsters the company’s sales.
Look at Amazon.com book reviews, as an example. Despite receiving a scolding from publishers, Amazon encouraged customers to post their thoughts, even if those thoughts were critical or negative. Customers loved sharing their insights and reading others’, too, and now, reviews are one of the best-trusted aspects of the modern e-commerce platform.
Make the core of your business customer satisfaction. Hunt relentlessly for what makes your customers smile, and innovate based on their needs.
2. Practice Frugality
Though not geographically far from the swank, luxuriously-stocked offices of Silicon Valley, Amazon got its start in a simple, functional space in Washington state and operated on a market with minimal margins. Frugality is in Amazon’s very DNA and seems to help the company focus on the most important things: its customers and continuing innovation.
What does frugality mean for Amazon? For starters, employees pay for their own parking tickets, snacks at the office aren’t free, and, when traveling, employees bunk in double rooms. In general, Amazon isn’t a place where staff spend relaxed days brainstorming over coffee. The norm is to work long, hard, and smart, with no compromises on any of the three.
Sometimes success doesn’t require any special conditions. A studied rejection of luxury can make for lean innovations and improve company focus.
3. Make Your Own Rules
What’s an internal meeting without a PowerPoint? Well, at Amazon, it starts with a written argument. Anyone who wants to propose a new idea must first distill his or her thoughts into a 6-page document. Before any decision is made, those involved, including Bezos himself, must take the time to read and dissect it.
Another rule introduced by Bezos is the Two-Pizza Team: no team should be so big that you couldn’t feed it with two pizzas. According to Bezos, larger groups are less productive, so the company is organized into autonomous units of 10 or fewer that compete for resources (but not pizzas) in their mission to make their customers happier.
Honor organizational outlaws. It’s often the radical or outlandish approaches to daily business that make the most impact.
4. Think for the Long Term
Bezos started Amazon with the long game in mind–a play that meant accepting short term losses that not everyone understood.
Consider the e-book. When e-books first entered the market, most publishers sold them at prices commensurate to their print editions. Bezos, however, projected that their long-term price would be around 10 dollars and started selling them for 9.99. At first, this decision generated losses of about 5 dollars per e-book, but when the price eventually dropped, Amazon had already become the go-to for e-books. With this surprising strategy, he’d also laid the foundation for one of the company’s greatest successes, the Kindle.
Don’t be afraid to make decisions that might be unpopular in the moment but will reap future rewards.
5. Risk It
Before that big idea in the Bellevue garage took off, Jeff Bezos had a secure job at a hedge fund. Still, he quit it, set up in his parents’ garage, and poured his savings into making the Everything Store a reality. And it worked.
Today, Amazon operates on the premise that the risk is worth the reward. This approach has led to flops such as Amazon Auctions, a division that simply couldn’t compete with eBay’s hold on the market, but it’s also spawned Amazon’s wildly successful 1-Click Purchase. To support a culture of initiative and enterprise, Bezos created a “Just Do It” award, conferred to both employees who tried and succeeded, and also to those who tried and failed. The core message is that taking a risk is preferable to being too fearful to move.
Risks are worth taking. Half the time, you’ll fail, but when that initiative results in a win, it just might be big and bold.
6. Let the Data Decide
It might surprise you that Amazon.com started off as a book shop. The initial product selection was no happy accident on Bezos’ part, but rather the result of a long look at hard facts. Books can be shipped without breaking, they’re rarely returned, and they’ll never expire (even if the knowledge therein grows stale). In short, books are the ideal product for e-commerce.
Every aspect of commerce and customer behavior is eminently quantifiable, so Bezos demands that all decisions be based on that intel. Meetings are not about customer anecdotes, but rather Excel sheets filled with relevant metrics.
Before making a call, consult the data. Humans can get it wrong, but numbers never lie.
7. Stay Hungry
Never ceasing to learn, evolve, and innovate might be the ultimate ingredient for success. Amazon began with books, but no sooner had they gained a foothold in that market than they conquered music, movies, electronics, and toys. Later came the Kindle, and with it, they won their niche. Even now, there are Amazon services completely under the radar to most consumers. Did you know that Amazon Web Services provides cloud computing services to big businesses, the US government, and even NASA?
Becoming a viable player in such a variety of different arenas never came from Bezos sitting back, satisfied with the goods already reaped. To the contrary, he believes that there are no products and services Amazon couldn’t sell. Soon, the company will have its own delivery fleet, become a publisher and media company, build smartphones, and perhaps even offer 3D printing services. For Bezos, the future is rife with possibility, opportunity, and inventiveness–and he’s hungry for all that it brings.
The road to success is paved with dissatisfaction. Never accept the status quo or say, “I’ve done enough.” Instead, keep searching for potential and inciting growth.
Jeff Bezos’ unique way of thinking long-term and taking smart risks has made Amazon into the company it is today, one that writes its own rules and evolves every minute, not to mention one that rakes in an annual revenue of 75 billion dollars. Take it from Amazon’s founding striver: focus on customers, stay hungry, be frugal, and maybe, take a peep into the garage. If you look past the lawnmowers and buckets of paint, it just might be teeming with potential.
This piece is based on knowledge from Brad Stone’s The Everything Store: Jeff Bezos and the Age of Amazon.
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