The internet store owner is stepping down


Jeff Bezos announced that he will be stepping down as CEO of Amazon. What an incredible run he's had as an entrepreneur! From quitting a lucrative job as a trader to starting an online company during the early days of the internet to the world's largest company that spans multiple business lines and geographies. Love him or hate him, there's no denying that he's one of the most accomplished and capable business leaders of our generation. 

I have enjoyed and learned a lot from JeffB's shareholder letters and interviews. Here are some of my main lessons: 

1) Culture

I joke, only half in jest, that all of Amazon's leadership team and tenured employees are Jeff Bezos clones. Jeff Bezos's biggest achievement is not any product that Amazon has built. It is the living, breathing, and evolving high-functioning and entrepreneurial culture that continues to be effective over many decades and even as the company has scaled to over 1 million employees and multiple business lines.

One of the surprising and unique things you'll observe when working at Amazon is how often Amazon's leadership principles like Customer Obsession, Ownership, Invent and Simplify, High Standards, Think Big, Dive Deep, Bias for Action, and Earn Trust - are quoted and visible in individual actions, team meetings, business decisions, hiring, performance, results, etc. 

Beyond the principles, Amazon also has several unique and effective processes. One notable example is a strong preference for dense, written documents to make and communicate proposals (versus simply talking or slide decks). Preemptive press releases, 2-pagers and 6-pagers take a ton of effort, sometimes weeks, to write and iterate on. But it's worth it because writing forces clarity and effective communication. Business metrics reviews and QBRs with prescriptive formats, interview bar raisers, and single-threaded leaders are some other uniquely Amazon and effective methods that come to mind. 

2) Genius business playbook

Amazon's principles and Jeff Bezos' wisdom aren't just nice things that prettify their office lobby or career page - they are a genius and opinionated playbook to build the world's largest business. Amazon's not-so-secret sauce is consistently following this difficult playbook. Here are a few of my favorite rules from the playbook: 

Customers obsession: because customers are always "divinely discontent" and trying to satisfy them will force high standards and invention. Jeff also wants to be a company that is trying its best to reduce prices, not increase prices. “Your margin is my opportunity.”

Think big and long-term: Setting big goals and small goals are self-fulfilling. According to Bezos, if you want to invent, you need a long time scale. At Amazon, teams are encouraged to set vision and strategy in 5-7 year timeframes. Success, expertise, and advantages compound over the long run.

Focusing on inputs rather than outcomes: Jeff Bezos' advice is to not pay too much attention to outcomes like stock price because they are lagging and imperfect metrics. Instead, focus on the quality of inputs and internal metrics. This is especially essential when pursuing high-risk, long-term outcomes where your external outcomes are going to be negative or absent.

There's an endless list of brilliant business and personal life wisdom from Jeff. For more, check out this book with JeffB's annual shareholder letters and memos and this tweet thread.

 

3) Problem space, vision, and winning strategy

The first rule of fishing is knowing where to fish. Jeff Bezos started out to create "the online everything store", a massive and audacious space. He had the vision to take a huge bet on the internet when it was just a vague emerging trend. 

In addition to operating in a large and tractable problem space, you need a winning strategy. Amazon's famous for this flywheel of accumulating advantages that improve their service and widen their competitive moat. Such accumulating advantage exists in almost every new business they launch. Jeff Bezos and Amazon leaders are incredibly thoughtful, prescient, and aggressive in placing and pursuing bets. 


4) Risks and Expansion 


Most businesses follow an S-curve. They grow quickly, but eventually flatline and cease to exist. Amazon hasn't flattened in its S-curve core business. They have continuously expanded into new product categories, marketplace models, and invested in every layer of the shopping vertical - to even owning their own planes and robots. In addition to their core business, they have created multiple new business lines with new S-curves - AWS, Alexa, Healthcare, Physical stores etc. 

The key catalyst for this is Jeff and Amazon's incredible ambition, appetite for taking risks, and for knowing how to operate new ventures alongside growing the core business. According to Jeff Bezos, if you have a 10% chance at 100x returns, you should always take it. Another Jeffism is that the size of your failures should increase as you grow more successful - that is a healthy indicator of taking bold risks and not getting complacent. In Amazon, risk-taking is celebrated - the head of the Amazon Kindle Fire Phone team was promoted even after its spectacular failure because when it comes to risky endeavors, you have to reward inputs and approach, not outcomes. I also know of incidents where junior or mid-level employees were able to pitch product ideas to Jeff Bezos and received funding to start their own product team. 

In his parting memo, Jeff Bezos revealed that he's going to be spending more time on Amazon's new ventures and his other ventures like Earth Fund, Blue Origin, Washington Post etc.  It isn't about retirement - it is about the pursuit of curiosities and passions. And what a way to step down! He's leaving Amazon in a phenomenal position - with record-breaking revenues and growth, strong leadership bench, and a potent culture. I echo Paul's sentiment and excitement for JeffB's next play: 

"Keep inventing, and don’t despair when at first the idea looks crazy. Remember to wander. Let curiosity be your compass. It remains Day 1."
- Jeff
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