3 pieces of advice in Jeff Bezos’ Shareholder Letter

In my previous post, I urged you all to take a moment and make some price comparisons before buying from Amazon, which is no longer the cheapest or the best place to buy stuff. Other options are equally convenient — it not as fast — especially when it comes to returning stuff that isn’t up to scratch.

However, in the process of writing that post, I ended up spending a lot of time reading (and re-reading) Jeff Bezos’ letter to Amazon shareholders. Here is some wisdom that can apply to all types of organizations – teams, small startups, partnerships, and large groups.

  1. Create a culture of builders

“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.”

  1. Wander

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 counter-balance to efficiency. You need to employ both. The outsized discoveries – the “non-linear” ones – are highly likely to require wandering.

  1. Failure is okay if it teaches us something.

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. Amazon will be experimenting at the right scale for a company of our size if we occasionally have multibillion-dollar failures. Of course, we won’t undertake such experiments cavalierly. We will work hard to make them good bets, but not all good bets will ultimately pay out. The good news for shareowners is that a single big winning bet can more than cover the cost of many losers.

As an example, Jeff points out the lessons learned from the Fire phone led to a push on the Echo and Alexa, and look at where they are today.

The idea also had origins in two other arenas where we’d been building and wandering for years: machine learning and the cloud. From Amazon’s early days, machine learning was an essential part of our product recommendations, and AWS gave us a front row seat to the capabilities of the cloud. After many years of development, Echo debuted in 2014, powered by Alexa, who lives in the AWS cloud. No customer was asking for Echo. This was definitely us wandering.

Bezos’ comments about wandering, creativity and taking calculated bets with conviction have been part of the company’s thinking for a long time. In his 1997 letter to the shareholders, he pointed out:

Today, online commerce saves customers money and precious time. Tomorrow, through personalization, online commerce will accelerate the very process of discovery. Amazon.com uses the Internet to create real value for its customers and, by doing so, hopes to create an enduring franchise, even in established and large markets.

Damn it; he told us that he was going to charge us more and we didn’t listen.

A letter from Om

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