The Everything Store Summary -Jeff Bezos Biography book summary

Left his job at the age of 31 to start the business

Here are the 5 most important lessons to learn from Jeff Bezos’ Biography – The Everything Store – Jeff Bezos and the age of Amazon. 

  1. Having a long-term vision

As entrepreneurs, we have this tendency to think short-term, to think only for the next quarter or for today or for tomorrow or for a week or two, a month or even a year. When Jeff Bezos started the company, he said, “We are doing this for decades. We’re building this company for decades. We are not making this company to make a quick buck and get out of the whole internet flash-in-the-pan thing.” He has always maintained that.

If you have followed Amazon, one of the interesting things about Amazon is that it doesn’t necessarily generate a lot of profit, and stock price is questionably low. The fact is that the CEO himself doesn’t really care about the stock price which triggers a lot of questions about it.Jeff Bezos has a funny way of explaining his philosophy which he learned from Warren Buffet. He quoted Buffet when he said that “You can either host a rock concert or a ballet. Just don’t advertise a rock concert as a ballet.”  That means that if you are an investor, you can either be a long-term investor or you can be a trader. Amazon is a company designed for someone who wants to be a long-term investor; it’s not designed for someone who wants to be a short-term trader.

So, Amazon doesn’t advertise the company as something that’s supposed to make money in the short-term. That’s absolutely not what it’s after. The company is here for the long-term. That’s what Jeff Bezos is after; and that’s what he really wants you to be after as an investor – to have a long-term vision. If you’re thinking about what you’re doing with your business, don’t think short-term, don’t think a quarter or 6 months, think way more long-term. What would make this business successful in the long-term? How can you make this business really grow and succeed in the long-term rather just thinking about making a quick buck here, making a quick buck there.

Now, let’s go back to the whole idea of the stock price. There’s a discussion about how he does not care about the investors who just enter to make a quick buck. A lot of times, the investors say, “Hey, we need the stock price to go up. We need the stock price to go a little higher.” Jeff Bezos is a very rational person and he  thinks of controllable input that can bump up their stock and starts working backwards.  Well, if you want to increase the stock price, you increase the revenue, decrease the cost. Well, let’s talk about decreasing the cost –  what is controllable input in decreasing the cost? Let’s figure out. Maybe, we need to lower the technology prices but that’s not a good idea. Maybe, we need to lower the infrastructure cost. Again, you keep on working backwards to the point where you have a controllable input –  an idea that I talk about quite a lot. In the book 4 Disciplines of Execution this idea is explained in detail – When something is controllable as an input, we call it a lead factor while the lag factor is the output.

So, the stock price is not necessarily a lead factor; it is a lag indicator. Jeff Bezos says, “As a CEO, let me just focus on lead indicators – things that I can directly control.” “I don’t want to be influencing price –  stock price every few months or every few weeks or something like that,” he says very frankly. He doesn’t even monitor the stock price on a day to day basis. He does not care. There is another thing that Jeff Bezos learned on the stock market from Benjamin Graham. Graham said, “The stock market in the short term is a voting machine; but in the long term, it’s a weighing machine.” What Jeff Bezos was  saying is this: , “At Amazon. we are in for the long term. We want the stock market to weigh us, not vote us.” It’s a really good idea to make sure you think long term. Don’t think short term about your business.

2. Failing is essential

The 2nd takeaway from Jeff Bezos is about trying and failing. He said time and again that he is a very rational person. He believes  that any experiment has a chance of failure. “That is why we call  it an experiment,” Jeff explained. In business, we have to conduct experiments. We have to try things because some things may fail.  If we only try to do things that we think will  succeed, we’re not conducting experiments. If we don’t conduct experiments, we’ll never find out how far we can go.

A big example of this was the fire phone which did not succeed. It has been a black spot in Amazon history and a lot of investors were asking why they are investing in stuff like this. Jeff reiterated, “We have to conduct experiments. We’ve got to keep on experimenting. We, as a company, have to allow ourselves to fail.” Jeff said that if he stops people from experimenting and if he dissuades them from failing, then he is doing the company a big disservice. So, fail often; fail rapidly; figure it out. Failure is a part of growing your business. If you are not failing, you will not get to the next level.

3. Reading and learning

The 3rd big idea is about learning and reading. Jeff is a big-time reader and learner. Apparently, one of his favorite books is Sam Walton’s Made in America which we have summarized in the past.  https://2000books.com/made-in-america-sam-walton/  Jeff said that he has a tattered copy which is highlighted and marked-up because he really enjoys learning from one of the greatest retailers who has ever lived.

He said that some of the things he took away from Sam Walton were frugality and a bias for action. These values are very evident in Amazon culture. They have a very strong bias for action and they are a very frugal company in the way they operate their business.

Another book that Jeff found and learned a lot from is Clay Christiansen’s The Innovators’ Dilemma. Here, Christiansen talked about the idea that as a big company, you are always being threatened by a small company. They are going to start at the smaller end; then they will  disrupt you. How do you, as a big company, not get disrupted? That was the big question. Jeff learned from the book,  The Innovators’ Dilemma – that to ensure that a big company does not stumble when competing with these small competitors, it must set up a small independent company or small company inside the company that actually competes to break the current business model.

Well, that’s what Jeff Bezos did when his physical book business was thriving. He appointed the chief of the physical book business and told him, “Now go and run the e-book business. Go, figure out Kindle.” Then, the chief of the physical book business said, “I can run both. I can run the physical bookstore and I can run the electronic books business.” Jeff Bezos said, “No, you have to be separate. Your job is to kill our physical book business.” That’s how clearly he thinks; he learns from his books. He’s really a sharp guy; always looking to learn, always looking to grow, always looking to read more. In fact, he has his own executive book club that meets every Saturday and they talk about these business books.

Another book that Jeff loves is Jim Collin’s Good to Great where he figured out the idea of the flywheel. He continues to say that today, all he is doing is creating momentum. “We don’t necessarily have one big advantage; we just have a lot small advantages that we have put together and we continue to gain momentum.”

Jeff does not like the idea of putting together a lot of misguided acquisitions because that is what Jim Collins asked to totally avoid. Jim said, “Don’t do it’” and Jeff Bezos agrees with that. Jeff applies what he learns from these books and he has been a lifelong learner ever since he was a young kid.

4. Start small; take action; evolve

The 4th big idea to take away from this book is that sometimes as starting entrepreneurs, as owners or founders of a startup, you get a little concerned because you think your dream is small.  You want to dream as big as Amazon but you are starting off in a garage –  just one person trying to make it happen.

But what we see in this journey of Amazon is how every journey starts. Amazon started as a bookseller selling one book then 2, 4 ,10 and 200, 400, 1000, 20000. Then, they moved from books to music, to electronics to toys; now, they sell everything. But it just didn’t happen in a flash. So, don’t get discouraged when you are fighting it out in the trenches, when you feel that your dreams are too small compared to the great enterprises that have been built over time. Realize that all these great enterprises, all these great businesses started small; they started where they were and they kept on evolving, kept on upgrading.

For example, Amazon web services, also called s3, did just not start off as someone’s brainchild as in “Okay, let’s just offer our servers to the external world for work. No. While Amazon was going through its growing pains, its engineers were complaining about the lack of computing resources. They had to go and get time on the server farms in order to get computational resources. Jeff said that we need to increase the computing capacity. They found out that as they increased capacity, they had excess capacity. Then they started farming it out to outside people. Now, everyone uses Amazon web services. Jeff Bezos says that allowing Amazon web services to operate this way is like having a grid of electricity. Having that computational power available to everyone is like having a grid of electricity. 100 years ago when electricity was just getting started – If you wanted electricity, you needed your own power plant. Everyone who needed electricity needed their own power plant but once the grid came into being, you did not need your own power plant; you could just take electricity off grid and pay whatever you used. Same thing as what they have done with s3. You can just take the computing that you need from s3. Similarly, when the e-book reader evolved – Jeff Bezos saw what Apple was able to do with iPod (being able to sell music through the iTunes store) and he said that this is what we need to do for the e-book store. These are all results of experiments; these are not massive brainchild ideas that just suddenly happened in one day. That’s not how it works. These are small things evolving and that’s the key to Amazon’s success – evolution, evolution, evolution…Don’t try to dream the greatest idea right away. Just let it unfold;  keep on executing; keep on working

5. Missionary, not mercenary

The 5th big idea that you want to learn from Jeff Bezos is that he is obsessed with customer satisfaction. One of the things he likes to say is that you can either be a missionary or a mercenary. Now, what that means is that as a “missionary” –  you’re out to help and serve. On the other hand, as a “mercenary”, you’re out to take, you’re out to kill, you’re out to make a buck and that’s how a lot of businesses are operating today. What Jeff Bezos was saying is “I want to make the customer experience so good that they keep coming back to us.” What Jeff Bezos says is a paradox; it’s a very interesting paradox because in the end, the “missionaries” end up making a whole lot more money than the “mercenaries.”

This idea really ties with the idea of having a long-term vision. When you have a long-term vision, you can give and you can serve; when you have a short-term vision, you want to be a mercenary, you want to take …. you want to take as much as you can. Having that customer obsession and being a missionary rather than a mercenary helps Amazon dial in and continue to get to the next level.

So, these are some of the key lessons to be learned from Jeff Bezos and the rise of Amazon.


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