Day 2 is stasis. Followed by irrelevance. Followed by excruciating, painful decline. Followed by death. And that is why it is always Day 1.
- Jeff Bezos
Amazon was founded in 1994.
Each year since 1997 - the year it went public - Jeff Bezos has addressed those shareholders with a letter.
This book is an accumulation of those letters as well as a few other speeches and important addresses that Jeff Bezos has made since starting his incredible journey.
While there are a few key themes that outline both this book and his life - perhaps the most important revolve around ideas about life, innovation & stategy, as well as some of what it takes to build a company.
While the story of Jeff Bezos and Amazon in particular are still being written, it is amazing to take pause and consider some of the moments and lessons that have created the company and entrepreneur we see today - through his own words.
I've reordered these takeaways.
In contrast, wandering in business is not efficient-but it's also not random. It's guided-by hunch, gut, intuition, curiosity, and powered by a deep conviction that the prize for customers is big enough that it's worth being a little messy and tangential to find our way there. Wandering is an essential counterbalance to efficiency.
People who love all fields of knowledge are the ones who can best spot the patterns that exist across nature.
Reflect on this from Theodor Seuss Geisel: "When something bad happens you have three choices. You can either let it define you, let it destroy you, or you can let it strengthen you."
The way you earn trust, the way a you develop a reputation is by doing hard things well over and over and over.
When his colleagues protested that one of Jobs's ideas or proposals would be impossible to implement, he would use a trick he learned from a guru in India: he would stare at them without blinking and say, 'Don't be afraid. You can do it.' It usually worked.
Even though Edison was the more prolific inventor, Bezos came to admire Disney more because of the audacity of his vision.
"It seemed to me that he had this incredible capability to create a vision that he could get a large number of people to share," he says.
There has to be risk taking. You have to have instinct. All the decisions have to be made that way, he says. "You do it with a group. You do it with great humility."
“I'm always trying to figure out one thing first and foremost: Is that person a missionary or a mercenary?" Bezos says.
“The mercenaries are trying to flip their stock. The missionaries love their product or their service and love their customers and are trying to build a great service. By the way, the great paradox here is that it's usually the missionaries who make more money."
When Bezos interviews people, he warns them, "You can work long, hard, or smart, but at Amazon.com you can't choose two out of three."
At Amazon.com, we use the term customer experience broadly. It includes every customer-facing aspect of our business from our product prices to our selection, from our website's user interface to how we package and ship items. The customer experience we create is by far the most important driver of our business.
We humans coevolve with our tools. We change our tools, and then our tools change us.
Invention comes in many forms and at many scales. The most radical and transformative of inventions are often those that empower others to unleash their creativity-to pursue their dreams.
We'll approach the job with our usual tools: customer obsession rather than competitor focus, heartfelt passion for invention, commitment to operational excellence, and a willingness to think long-term.
Day 2 is stasis. Followed by irrelevance. Followed by excruciating, painful decline. Followed by death. And that is why It is always Day 1.
There are many ways to center a business. You can be competitor focused, you can be product focused, you can be technology focused, you can be business model focused, and there are more.
Customers are always beautifully, wonderfully dissatisfied, even when they report being happy and business is great. Even when they don't yet know it, customers want something better, and your desire to delight customers will drive you to invent on their behalf.
The process is not the thing. It's always worth asking, do we own the process or does the process own us?
Good inventors and designers deeply understand their customer.
A remarkable customer experience starts with heart, intuition, curiosity, play, guts, taste. You won't find any of it in a survey
People have a voracious appetite for a better way, and yesterday's "wow" quickly becomes today's "ordinary." I see that cycle of improvement happening at a faster rate than ever before.
Cleverness is a gift; kindness is a choice. Gifts are easy-they're given, after all. Choices can be hard. You can seduce yourself with your gifts if you're not careful, and if you do, it'll probably be to the detriment of your choices.
Regret Minimization Framework: When I'm eighty, I want to have minimized the number of regrets that I have in my life, and most of our regrets are acts of omission, things we didn't try, the path untraveled. Those are the things that haunt us.
I like the phrase "work-life harmony." I know if I am energized at work, happy at work, feeling like I'm adding value, part of a team, whatever energizes you, that makes me better at home. Is your work depriving you of energy, or is your work generating energy for you?
Zero-sum games are unbelievably rare.
We'll wander a little bit too. We have some very specific ideas about what we want to do, but I believe In the the power of wandering. All my best decisions in business and in life have been made with heart, intuition, and guts, not analysis. When you can make a decision with analysis, you should do so, but it turns out in life that your most important decisions are always made with instinct, intuition, taste, and heart, and that's what we'll do with this Day One Fund too. It's part of the Day 1 mentality.
Jeff, what’s going to change in the next ten years?” And I enjoy playing with the answer. That's a fun dinner conversation. But there's an even more important question I almost never get asked: "What's not going to change over the next ten years?" And that question is so important because you can build your plans around those things."
To sustain it you need the right people; you need innovative people. Innovative people will flee an organization if they can't make decisions and take risks. You might recruit them initially, but they won't stay long. Builders like to build.
In addition to good luck and great people, we have been able to succeed as a company only because we have continued to take big risks. To invent you have to experiment, and if you know in advance that it's going to work, it's not an experiment. Outsized returns come from betting against conventional wisdom, but conventional wisdom is usually right.
In fact, Amazon has made billions of dollars of failures. Failure inevitably comes along with invention and risk-taking, which is why we try to make Amazon the best place in the world to fail.
I always point out that there are two different kinds of failure. There's experimental failure--that's the kind of failure you should be happy with. And there's operational failure.
The most important factor for nimbleness is decision-making speed. The second-most important factor is being willing to be experimental. You have to be willing to take risks. You have to be willing to fail, and people don't like failure.
As a company grows, everything needs to scale, including the size of your failed experiments. If the size of your failures isn't growing, you're not going to be inventing at a size that can actually move the needle.
To be certain, a big part of the challenge for us will lie not in finding new ways to expand our business, but in prioritizing our investments.
We challenge ourselves to not only invent outward facing features, but also to find better ways to do things internally-things that will both make us more effective and benefit our thousands of employees around the world.
Nothing gives us more pleasure at Amazon than "reinventing normal"- creating inventions that customers love and resetting their expectations for what normal should be.
We have the good fortune of a large, inventive team and a patient, pioneering, customer-obsessed culture great innovations, large and small, are happening every day on behalf of customers, and at all levels throughout the company. This decentralized distribution of invention throughout the company-not limited to the company's senior leaders -is the only way to get robust, high-throughput innovation. What we're doing is challenging and fun-we get to work in the future. Failure comes part and parcel with invention.
A dreamy business offering has at least four characteristics. Customers love it, it can grow to very large size, it has strong returns on capital, and it's durable in time
One area where I think we are especially distinctive is failure. I believe we are the best place in the world to fail (we have plenty of practice!), and failure and invention are inseparable twins. To invent you have to experiment, and if you know in advance that it's going to work, it's not an experiment. Most large organizations embrace the idea of invention but are not willing to suffer the string of failed experiments necessary to get there. Outsized returns often come from betting against conventional wisdom, and conventional wisdom is usually right.
One common pitfall for large organizations-one that hurts speed and inventiveness-is "one-size-fits-all" decision making.
Some decisions are consequential and irreversible or nearly irreversible-one-way doors and these decisions must be made methodically, carefully, slowly, with great deliberation and consultation. If you walk through and don't like what you see on the other side, you can't get back to where you were before. We can call these Type 1 decisions. But most decisions aren't like that-they are changeable, reversible they're two-way doors.
If you've made a suboptimal Type 2 decision, you don't have to live with the consequences for that long.
Type 2 decisions can and should be made quickly by high judgment individuals or small groups.
The outside world can push you into Day 2 if you won't or can't embrace powerful trends quickly. If you fight them, you're probably fighting the future. Embrace them and you have a tailwind.
Day 2 companies make high-quality decisions, but they make high-quality decisions slowly. To keep the energy and dynamism of Day 1, you have to somehow make high-quality, high-velocity decisions.
Second, most decisions should probably be made with somewhere around 70 percent of the information you wish you had. If vou wait for go percent, in most cases, you're probably being slow.
If you're good at course correcting, being wrong may be less costly than you think, whereas being slow is going to be expensive for sure.
Most of the inventing we do at Amazon goes like this: somebody has an idea, other people improve the idea, other people come up with objections for why it can never work, and then we solve those objections. It's a very fun process.
You need to be thinking two or three years in advance, and if you are, then why do I need to make a hundred decisions today?
1. Focus on the long term. It’s all about the long term. [...] long-term orientation is essential for invention because you're going to have a lot of failures along the way.
2. Focus relentlessly and passionately on the customer. The core of the company is customer obsession as opposed to competitor obsession," he said. "The advantage of being customer focused is that customers are always dissatisfied. They always want more, and so they pull you along. Whereas if you're competitor obsessed, if you're a leader, you can look around and you see everybody running behind you, maybe you slow down a little.
3. Avoid Power Point and slide presentations.
4. Focus on the big decisions. You get paid to make a small number of high-quality decisions. Your job is not to make thousands of decisions every day."
5- Hire the right people. We know our success will be largely affected by our ability to attract and retain a motivated employee base, each of whom must think like, and therefore must actually be, an owner."
During our hiring meetings, we ask people to consider three questions before making a decision:
- Will you admire this person?
- Will this person raise the average level of effectiveness of the group they're entering?
- Along what dimension might this person be a superstar?
Math-based decisions command wide agreement, whereas judgment-based decisions are rightly debated and often controversial, at least until put into practice and demonstrated. Any institution unwilling to endure controversy must limit itself to decisions of the first type. In our view, doing so would not only limit controversy-it would also significantly limit innovation and long-term value creation.
Amazon's culture is unusually supportive of small businesses with big potential, and I believe that's a source of competitive advantage.
That firsthand experience and the culture that has grown up around those successes is, in my opinion, a big part of why we can start businesses from scratch.
“Working backward" from customer needs can be contrasted with a "skills-forward" approach where existing skills and competencies are used to drive business opportunities.
However, if used exclusively, the company employing it will never be driven to develop fresh skills. Eventually the existing skills will become outmoded. Working backward from customer needs often demands that we acquire new competencies and exercise new muscles, never mind how uncomfortable and awkward-feeling those first steps might be.
A word about corporate cultures: for better or for worse, they are enduring, stable, hard to change. You can write down your corporate culture, but when you do so, you're discovering it, uncovering it not creating it. It is created slowly over time by the people and by events-by the stories of past success and failure that become a deep part of the company lore.
We seek leaders who can invent, think big, have a bias for action, and deliver results on behalf of customers.
First, there's a foundational question: are high standards intrinsic or teachable? In fact, people are pretty good at learning high standards simply through exposure. High standards are contagious.
What do you need to achieve high standards in a particular domain area? First, you have to be able to recognize what good looks like in that domain. Second, you must have realistic expectations for how hard it should be (how much work it will take) to achieve that result - the scope.
From very early on in Amazon's life, we knew we wanted to create a culture of builders -people who are curious, explorers. They like to invent. Even when they're experts, they are "fresh" with a beginner's mind. A builder's mentality helps us approach big, hard-to-solve opportunities with a humble conviction that success can come through iteration: invent, launch, reinvent, relaunch, start over, rinse, repeat, again and again. They know the path to success is anything but straight.
The Design of BusinessBook Summary
The Uncertainty MindsetBook Summary
Book List 2020Blog Post
The Innovator's SolutionBook Summary
Business Model Innovation StrategyBook Summary
The Innovation StackBook Summary
No Rules RulesBook Summary
The Ride of a LifetimeBook Summary
Change By DesignBook Summary