Founders - #180 Jeff Bezos (Invention of a Global Empire)

Episode Date: May 17, 2021

What I learned from reading Amazon Unbound: Jeff Bezos and the Invention of a Global Empire by Brad Stone.----Get access to the World’s Most Valuable Notebook for Founders by investing in a subscription to Founders Notes----[1:47] Every interesting thing I've ever done, every important thing I've ever done, every beneficial thing I've ever done, has been through a cascade of experiments and mistakes and failures. I'm covered in scar tissues as a result of this.[6:19] I absolutely know it's hard, but we'll learn how to do it.[8:30] Thinking small is a self fulfilling prophecy.[12:13] Begin any conversation about a new product in terms of the benefit it creates for customers.[19:08] Bezos deployed his playbook for experiments that produced promising sparks: he poured gasoline on them.[22:41] You can regulate yourself quite easily or think about what you're going to do with your existing resources. Sometimes, you don't know what the boundaries are. Jeff just wanted us to be unbounded.[25:48] If I have to choose between agreement and conflict, I'll take conflict every time. It always yields a better result.[27:19] Don't come to me with a plan that assumes I will only make a certain level of investment. Tell me how to win.[35:50] He preached the wholesale embrace of technology, rapid experimentation, and optimism about the opportunities of the internet instead of despair.[45:17] Bezos’ one constant edict: Go faster.----Get access to the World’s Most Valuable Notebook for Founders by investing in a subscription to Founders Notes----“I have listened to every episode released and look forward to every episode that comes out. The only criticism I would have is that after each podcast I usually want to buy the book because I am interested so my poor wallet suffers. ” — GarethBe like Gareth. Buy a book: All the books featured on Founders Podcast ----Founders Notes gives you the ability to tap into the collective knowledge of history's greatest entrepreneurs on demand. Use it to supplement the decisions you make in your work.  Get access to Founders Notes here. ----“I have listened to every episode released and look forward to every episode that comes out. The only criticism I would have is that after each podcast I usually want to buy the book because I am interested so my poor wallet suffers. ” — GarethBe like Gareth. Buy a book: All the books featured on Founders Podcast

Number one, his genius was not in inventing. Rather, it was in inventing a system of invention. Dozens of researchers and engineers and tinkerers labored beneath Edison in a carefully constructed hierarchical organization that he founded and oversaw. Number two, it has always seemed strange to me the things that we admire in men, kindness and generosity, openness, honesty, understanding and feeling, are the complements of failure in our system.

And those traits that we detest, sharpness, greed, meanness, egotism, and self-interest, are the traits of success. And while men admire the quality of the first, they love the produce of the second. So those are two quotes that appear at the very beginning of the book that I'm going to talk to you about today, which is Amazon Unbound, Jeff Bezos and the Invention of a Global Empire. And it was written by Brad Stone. This is the sequel to The Everything Store. So this is The Everything Store. And this is part three in this miniature three-part series that I'm doing on Jeff Bezos.

You don't have to listen to them in order, but it might be helpful if you do. I think starting with the Everything Store before Amazon Unbound makes a lot of sense because it does go in sequential order. So a lot of what I found most interesting in the book and what I'm going to talk to you more about today is really there's a lot of quotes from Jeff Bezos that are occurring not only in public speeches, but also internally in the company. And I think that's going to reveal a lot about how he thinks about building the company. And the reason I wanted to start with those two quotes, one, both are from actually novels. The first quote was from a fictional account of the race to electrify America, where Thomas Edison is obviously a central character in that. And I want to start with a quote that Jeff Bezos says that could have easily come out of Thomas Edison's mouth over 100 years ago. And Jeff says, every interesting thing I've ever done, every important thing I've ever done, every beneficial thing I've ever done has been through a cascade of experiments and mistakes and failures. I'm covered in scar tissue as a result of this. And so what is the same thing if you go back and read the biography of Thomas Edison? I think I've done two or three books on him.

It's the same thing that Jeff Bezos is saying is that you grow through experimentation and the inevitable failure that occurs as a result. They both say it's not an experiment if you know the outcome of that experiment. And the only way you're going to grow is by taking a risk, by going into the unknown and saying, hey, I have an idea. I'm going to test this hypothesis I have. I know I'm going to eventually make a mistake. And then I'm going to learn from those mistakes, course correct, and move forward. And so we're going to see in Jeff's philosophy on building business, like what was so remarkable about reading this book, is that you see a lot of the ideas that he developed when Amazon was just a company selling books and then eventually just a company that focused on retail.

He applies those same lessons and philosophies over and over again in developing all these different disparate business lines that Amazon has. And so by the end of this podcast, even if you've never read any other books on Jeff Bezos, you'll have an idea of how he thinks, his counterintuitive, unique way, and in some cases, a very relentless and ruthless way, no doubt about it. He's a very, very extreme character, as you can see the second quote that's in the book. He has a lot of those traits, like a lot of the founders that we study. But the point I'm trying to make to you is that he just has a really consistent methodology of how he goes about experimenting, taking the experiments that

are showing signs of success and relentlessly moving forward to make those small businesses into big businesses. So I'm going to just read some highlights here. This is the idea that you should develop your own metric of success. And this is something Jeff did at very early days. You can read his very first shareholder letter and you're going to see his operating philosophy. So it says Bezos wanted to set his own metric for success without interference from impatient outsiders. So he encoded his operating philosophy in his first letter to shareholders. So this is the first letter for shareholders for Amazon. We're going to see that he also wrote a similar document for Blue Origin. It's a founding memo. And it's actually was never it hasn't been released.

According to Brad Stone, it had never been released before this book. And so it's it's in the towards the end of this book. Vowing a focus not on immediate financial returns or on satisfying the myopic demands of Wall Street, but on increasing cash flow and the growing market share to generate value over the long term to loyal shareholders. So he takes that very same idea, the one that works for the retail business of Amazon, applies it to when they're developing the Echo, when they're developing the AWS, when they develop their ad business. Now, what's interesting to me is once you know, it's not like he's going to go on forever and be like, okay, we're not going to focus on immediate financial returns. Later on in the book, what I found one of the most interesting points was even though he spends a lot of his time on new businesses, he is very attuned to the like the core businesses.

They're very mature and like the let's take the retail business of Amazon. And when he sees it slipping, he is I'm going to use the word ruthless again, because that word appears a lot. Ruthless is a good way to think about his approach, but he will not let them take the financial success and the higher margin of his higher margin newer businesses and let rest on their laurels and allow them to lose ground they already made up over two decades. That'll make more sense when we get to that part later. So this book also tells us about a lot of the people that jeff keeps around them the people he chooses to promote and you can tell a lot about the traits that jeff admires by who he keeps around him who he promotes and one of them is this guy named jeff

wilk who i think just retired actually uh wilk was a lot like bezos uh precocious ambitious and focused on satisfying customers over just about everything else, including the feelings of his employees. And so this is an example. They're talking about the Kindle, about how crazy it was that they even started working on the Kindle, considering they were losing money at the time on their main businesses. Like, why are we going to go and now try to build hardware? And really, the sentence I'm about to read to you,

it's Jeff's understanding that you're never going to grow if you're only working on things that you already know how to do. So his point is like you have to learn how to do these things. Of course, it's supposed to be hard. Anything worth doing is hard. So his colleagues thought it was crazy for the money losing Amazon to make gadgets. Now, here's a quote from Bezos. I absolutely know it's hard, but we'll learn how to do it. Another thing that I've learned from Jeff is the importance of whether it's an entire company, a small group that you're leading. I would even say this could apply to your friends and even

family, but it's really important to have a shared base of knowledge. And so there's going to be many examples of when Jeff reads something he thinks is important, he makes sure that his executive team, the people he's working with on the project, are also on the same page. And so this quick part is really the importance of having a shared base of knowledge and always looking for a better way. Jeff was a Rabin's reader, leading senior executives in discussion on books like Clayton Christensen's The Innovator's Dilemma. And he had an utter aversion to doing anything conventionally. So the author calls the early days of Amazon when they transitioned from just a retailer at the time they were selling books, CDs, and movies, DVDs, I think. And then they transformed from that company

into a full-blown technology company with all these different business lines. And he talks about it's one of the greatest turnaround stories ever. And what I thought was interesting is a decade past that experience and now having a wildly successful company, Jeff doesn't ever want to forget this. This is very similar. Warren Buffett keeps newspaper clippings from the Great Depression on his office wall as a constant reminder to how bad things can get. And we see Jeff doing taking that same idea. He says why he had triumphed against

enormous odds. Jeff preferred those negative articles like the old Amazon dot bomb cover story to be posted on his office walls so that he and his colleagues would remain frightened and motivated. This is something that we're going to see that he repeats his colleagues would remain frightened and motivated. This is something that we're going to see that he repeats over and over again. I'm going to read the sentence first. I'll tell you what I mean by that. If Bezos took one leadership principle, so Amazon famously has 14 leadership principles. I talked about a lot in the bonus episode on working backwards

that came out a few days ago. So I'm just going to skip over to the most important one. So if he took one leadership principle, most to heart, uh, which would define the next half decade, decade at Amazon, it was the principle. Number eight, think big. This is the, the, the quote from the leadership principles. Thinking small is the self-fulfilling prophecy leaders create and communicate a bold direction that inspires results. They think differently and look around corners for new ways to serve customers. So bigger, bold, gasoline, that's too conservative. These are quotes from

Jeff that you're going to see over and over again. They're repeated. The gasoline will make more sense because as I continue to give you examples of, he runs a ton of experiments within Amazon. Most of them won't work. The ones that show small signs or little sparks that are going to work, then his role is to go in there and push you harder than you've ever been pushed. And he uses the same strategy used for the Amazon retail business, get big fast. And so he pours gasoline. And sometimes that's pushing you harder. Sometimes that's literally giving you unlimited financial resources to turn that little success into a giant success. So he's constantly pushing people to think bold, think bigger, pour gasoline in your successes, and then he'll chastise you if you're in a meeting with him.

He's like, this is too conservative. This is not what Amazon exists to do. And so one example of that, he says he's meeting with, so he has these TAs. They call him technical advisor. That's a terrible name in my opinion. It's Jeff Shadow. It's somebody usually, I think it lasts for two years. You go everywhere with Jeff.

It's a way for you to learn rapidly. You sit in all the meetings. And then after that, like the CEO, the current CEO, Jassy, the current CEO of Amazon was the first Shadow, right? The guy, one of the co-authors that wrote Working Backwards was another shadow. So now this is the guy that's going to run what Jeff's, Jeff has this idea for a screenless voice computer. Really interesting. So we know that as the Echo, Jeff thought about it as a screenless voice computer. So one of his shadows, he's going to put in charge after the 10 years up of doing this, of developing Jeff's idea. And so in this like one paragraph, maybe two paragraphs, we see a lot of how Jeff thinks

about new businesses. And that's really what I want to spend a lot of time talking to you about today, because the ideas that Jeff uses to develop new businesses are ones that we can use in whatever that we're working on. So it says his tenure as a shadow is wrapping up. So it discusses several possible opportunities to lead new initiatives at the company. I'm going to skip over a couple of this. Jeff jotted their ideas down on a whiteboard, adding a few of his own, and then started to apply his usual criteria to assess their merit. If they work, will they grow to become big businesses? These are all questions they're asking themselves in this meeting, right? If the company didn't pursue them aggressively now, would it miss an opportunity?

There's a, I'm going to pause there. This is actually something that, a trend that you see if you read the book, that a lot of, Jeff likes to start discussions with a question. It's really interesting. And I'll show you some examples why that's so effective in a couple different examples in these meetings that he's having. Eventually, Bezos and Hart, that's his shadow,

crossed off all of the items on the list except one, pursuing Jeff's idea for a voice-activated cloud computer. But here's the problem. Hart's like, I don't know how to do this. And you're going to see him repeat himself like he just did on the Kindle a decade and a half earlier.

Jeff, I don't have any experience in hardware. And the largest software team I've led is only about 40 people. Hart recalled saying, you'll do fine, Bezos replied. So essentially he's saying you'll do fine because you'll learn how to do these things. Just like we learned how to sell books on the internet. Just like we learned how to develop hardware. I think that's extremely, extremely important idea. This is just a simple, really one sentence, a very powerful idea. You could argue that they wrote that working backwards is an entire book on this very powerful idea. Begin any conversation about a new product in terms of the benefit it creates for customers. So that made me immediately think of two of my favorite quotes, right?

And the best description of what a product or a business is, in my opinion, came from Richard Branson. And when you think of it in terms like he does, the opportunities to build a new business, to build a new product are unlimited, right? And he says, what's a business? It's simply an idea that makes someone else's life better. And Jeff is saying, begin any conversation about a new product in terms of the benefit it creates for customers. And so also while you read this book and as they focus on, you know, this starts as an idea, maybe in a meeting or in a six-page document, and then it turns into a business that my favorite quote on entrepreneurship ever came from Peter Drucker. Entrepreneurship is neither a science nor an art. It's a practice. And the truthfulness in that statement becomes very apparent any time you study the early history

of a new business, a new product, a new service. It's not a science. It's not an art. It's a practice. So let's go back to this development of this screenless voice computer, which I think is such a fascinating idea. It's the Echo. They obviously have sold, I think, hundreds of millions of them at this point. It's an insane number like that. But like any first draft, it was terrible at the beginning. So I just want to use this as a reminder for you. They're talking about the beta testers. The beta testers at the time of Echo, because Jeff Bezos, like Steve Jobs, was obsessed with secrecy. And so the only beta testers were coming internally from Amazon employees at the time.

They're going to realize, hey, this is a failed strategy. And I'll talk to you more about that in a minute. But it says other early beta testers didn't mince words either remember this is a the first draft of the device that's going to wind up selling hundreds of millions uh this is a quote from an early beta tester this didn't work for shit and i didn't miss it when it was gone i thought this thing was doomed another quote i think this is a stupid product. This is a quote from Jeff Bezos. So they're talking about engineers were worried because they're they're taking all the audio they're getting from the Echo. They're transcribing them and they're transcribing Jeff. Jeff has one in his early prototype at his house. And he says in a peak of frustration over its lack of

comprehension, Jeff told Alexa to go shoot yourself in the head. Alexa, it was clear, would need a brain transplant. Oh, interesting enough, too, Bezos actually came up with the name of Alexa, and he suggested it as an homage to the ancient library of Alexandria, which is at the time regarded as the capital of knowledge. I thought that was really interesting. Let's go back to the development of the, if we're going to develop, really the section I'm about to read to you is if we're going to develop a great screenless voice computer, we need to think big. So they come in, they're not collecting enough data. It's a rather dumb device is the way they're describing it. Like it has a limited set, a limited set of questions they can respond to. This is not good enough. And so Bezos is getting, sitting in on a presentation on how they're going to improve this. And we see just, you know, he has just

no patience for mediocrity or thinking small at all. He says the meeting did not go well. You're going about this the wrong way, he said. First, tell me what would be a magical product, then tell me how to get there. So that's another way of saying, hey, work backwards from an optimal experience for the customer, and then we develop how to get there, right? And they start talking, and he says, let me get this straight. You are telling me that your big request is to make this product successful, and instead of it taking 40 years, it's going to take us 20? So he starts getting really mad, and as a result, you guys aren's going to take us 20. So he starts getting really mad and this is the result. You guys aren't serious about making this product.

And he stood up and abruptly ends the meeting. And their response to this was, hey, he's right. Internal testing with Amazon employees was too limited and they would need to massively expand the Alexa beta program while somehow still keeping it a secret from the outside world. So this is when they start. They do something I would never even think to do. I was very surprised by it. It's this project called Amped. So they rent these apartments and

houses all over the country. And then they hire like a, what are they called? Temp agencies. And eight hours a day, six days a week, they have a stream of people showing up apartments and houses, reading scripts off of iPads. And all across the house or the apartment will be these devices. Again, they don't want no one knows which devices. There's a bunch of listening devices. Some of them look like what the Echo is going to look like. Some are like decoys.

And they just do this over and over and over again to the point where people would start complaining. One of the apartments got shut down because they're like, oh, they're either there's like a prostitution ring in there or they're selling drugs because you got all these strange people coming in and out all day like what the hell's going on but it's just a reminder of like when you're the founder of the company it says hey you you need to think way bigger than you're doing you're thinking right now and yet you still have to do so without revealing to the outside world what we're working on. You come up with just unpredictable solutions to the problem. And this solution winds up working.

And this is the result of thinking big. And Jeff is extremely happy. But Amazon was anything but embarrassed. They're talking about because people are saying some of the beta testers like this is so dumb. The company that behind this should be embarrassed about what's happening. And they're like, no, we're now we actually have trained this screenless voice computer, and it's actually a useful tool that a lot of people will get value from. uh heart the guy the the former shadow who's running this hadn't asked for approval for the amped project but for but a few weeks before the program began he updated bezos with a six-page document that described it as a mil uh described it and its multi-million dollar cost now that's

funny right because he's like okay i'm not gonna ask permission i'm gonna i'm already doing this and so i gotta tell you how much it's gonna cost's going to be a lot of money. And look at Bezos' response. A huge grin spread over Bezos' face as he read. So this is what I mean. You really get a good sense by reading about this guy, like how he thinks and what's important to him. It's like, OK, now I'll spend money, but I'm not going to spend money on small things. And then he says, so huge grin spread over Bezos' face. Now I know you're serious about it.

What are we going to do next, he asked. And so they develop a product. It sells really well. I think they sell like 100,000 units the first week. And this is, again, Bezos has, I'm not saying his playbook is simple by any means. That's not the right way to describe it. But he's just, he's very consistent. And so we see he's there's two things that happen here.

He's and he's done this on multiple projects. Pour gasoline on your winners. And do you have professional pride or not? So it says Bezos deployed his playbook for experiments that produce promising sparks. He poured gasoline on them. She's like, OK, cool. We sold one hundred thousand. How do we sell one hundred million?

Commenting on the race to build a virtual assistant and smart speaker, Bezos said Amazon's going to be fine if someone comes along and overtakes us. But wouldn't it be incredibly annoying if we can't be the leader in creating this? So he knew Google, Apple, other people are going to eventually get in this. We have a lead since we're the pioneer here. Wouldn't we really suck if we don't keep our lead? In other words, he's saying, do you have professional pride? You've created a whole new product category. Don't let somebody else take it from you. And so a year later, what's the result? Over the course of the 2015 holiday season, Amazon sold a million Echo devices. Lex's division-wide motto became, get big fast. The same slogan used in the early years for Amazon.

History was repeating itself. An organization of a few hundred employees swelled to a thousand in the first year after the launch and then incredibly to 10,000 over the next five years. Through it all, like a crazed pyromaniac, Bezos kept spraying lighter fluid on the fire. And so I want to share another story with you. This is, you know, good ideas come from everywhere. And one of the greatest ideas that I thought they talked about in the book, Working Backwards, is the fact that anybody can email Jeff. He has a public email address, jeff at amazon.com. And, you know, he's got a team siphoning through this. He reads some of them as well. But a lot of decisions they make and improvements they make from their product come from people that are buying them realizing hey there could be better ways to do this so this is a very and i you can actually put this idea in stone if you

want to actually hire somebody who could do this i mean you probably get better ideas just from seeking it from your customers but uh the founder of sony akio marito he hired up in the early days of sony he hired a paid critic somebody somebody that had a passion. He kept getting messages from this. He was, I think, a music student at the time. And he was a big believer in Sony. He was like, this is not good enough. You could do better. And so eventually he's like, hey, do you want a job?

And I want you to attack with a critic's ear, right? Attack the weaknesses of our product. Tell us the weaknesses you find that we may be missing. And that guy, I forgot his name, but he went to becoming the president of Sony one day. It was a remarkable story. I covered that on, I think it's like Founders 102, Made in Japan, Sony and Akio Morita, I think is the name of the book. Fascinating. But anyways, customer anecdotes are valuable sources of intelligence is essentially what I'm telling you here. And so at the time, they're only selling Alexa devices in English speaking

countries, even though that even if it's not a primary English speaking country, there's people in those countries that speak English. So they get an email says in early 2017, a Swedish customer emailed Bezos to ask why Amazon was waiting to develop language specific versions of Alexa before introducing the Echo in Europe. Why couldn't they just sell it everywhere in English first? And this is we see how fast Bezos moves. Bezos got that email at 2 a.m. And by the following morning, there were a half a dozen independent groups working to sell Alexa in 80 new countries. That's bananas. And we see the role that Jeff plays, the person that he knows more about the company than anybody else. he knows more about the company than anybody else. He cares more about the company than anybody else. That's what a founder's role is. And so he's going

to push you to go and stretch what you think is possible. And so this is a person working on the Alexa division. It says, Jeff gave us the license and permission to do some of the things we needed to do to go faster and go bigger. You can regulate yourself quite easily or think about what you're going to do with your existing resources. Sometimes you don't know what the boundaries are. Jeff just wanted us to be unbounded. So think about the name of the... I didn't realize why the book was named what it was until I got to that sentence. Jeff wanted us to be unbounded. So he's talking, obviously, Amazon Unbound. He doesn't want just your division, your election division to be unbounded. So he's talking, obviously, Amazon unbound. He doesn't want just your division, your election division to be unbounded. I want my entire giant conglomerate, or however you want to

describe Amazon today, to be unbounded. And that made me think of one of my favorite quotes from Bruce Lee that I think, if I could ask Jeff, I'm pretty sure he would agree with what Bruce Lee said. He says, if you always put limits on everything you do, physical or anything else, it will spread into your work and into your life. There are no limits. There are only plateaus. And you must not stay there. You must go beyond them. Another main idea from the life and career of Jeff Bezos said, if you want to invent, you must be patient.

He seemed to have an unusual wellspring of patience for those at the company who practice the challenging art of invention. He never asks us, how much is this going to cost me? Or can we make money in X amount of time? He would look at us and say, I know this is really hard and there's a lot of fatigue that comes with inventing something new. You're heading in the right direction. So I want to talk about this idea he has. And I would say that you should narrow your product down to its essence. At the time, they haven't released Amazon Go yet, where these are like small grocery stores.

You can just walk in, you just pick up everything, and then you walk out. And there's a series of cameras and software that captures everything you're doing and automatically charges at your Amazon account. So Jeff loved that idea because for years they're talking about, why don't we get into physical retail? Why don't we get into physical retail? It's like, because I don't have any kind of differentiation. I'm not doing it better than anybody else has done. Come to me with an idea that makes it better and more unique, and then we can do that. And so they build these, in Seattle, they build these prototypes, these giant warehouses.

And you go in and it's like testing the customer experience before you open the stores, right? And so Jeff goes through this and he realizes, oh, okay. And this is really fascinating, the fact that he could pick up on this when you have dozens, maybe hundreds of smart people working on this and they missed it. So again, think about the section as narrow your product down to its essence. What is the most valuable part of your product? Just focus on that. He told them that while all they had done was a fine job, the experience was too complicated. Customers would have to wait in line for meat and seafood and fruit to be weighed and added to their bill, which contrasted with the store's major selling point, the absence of time-wasting queues. He felt the magic was walking out without

waiting. This is such a unique idea that he has here. It's the physical equivalent of Amazon's one-click ordering system. And he wanted to focus the effort on that with a smaller and simpler experience. So he says, you're almost there. You had it right, but then you added this extra complicated layer

that goes against what your main value proposition to the customer is. Just get rid of it. They can go buy seafood and meat elsewhere. Here's a quote from Jeff that tells you all you need to know about his personality and the way he's going to run his company. If I have to choose between agreement and conflict, I'll take conflict every time. It always yields a better result. Another great idea. So this is, I'm still in the section about developing Amazon Go, but they use this idea over and over again. And it's saying, hey, you got a project that's inside your company that's moving too slow. Set up another team with the same goal and have them

compete. So it says Bezos was getting impatient. Despite three years of work, Amazon hadn't opened a single store. So in the peculiar fashion of invention at Amazon, they created separate teams to pursue the singular goal of bringing the company into the vast realm of physical retail. Bezos liked to say Amazon was stubborn on vision but flexible on details. And here was an illustration. Groups working on parallel tracks would essentially compete to fulfill the just walk out ideal and solve the problem of the cashier less store another simple sentence that tells you a lot about his personality jeff is the master of this isn't working today but could work tomorrow i just want to bring your

attention to another meeting he's having at this time they're trying to figure out how to set up amazon in india it's a vast economy very much more complicated than selling things in like I just want to bring your attention to another meeting he's having. At this time, they're trying to figure out how to set up Amazon in India. It's a vast economy, much more complicated than selling things in America. So they're trying to figure out, it just has its own set of rules, different infrastructure. But this is really, this is Jeff in five words. Tell me how to win. So they're having a meeting, and again, he's just not going to let you waste any time. So he's constantly interrupting.

He interjected while the presentation was still going on. You guys are going to fail, he bluntly told them. I don't need computer scientists in India. I need cowboys. Don't come to me with a plan that assumes I will only make a certain level of investment. Tell me how to win, then tell me how much it costs. Jeff on just keep setting the tone constantly that Amazon's going to invent, run experiments, run experiments. The more experiments we run, the more inventions we, the more experiments we run, the more successful inventions we'll find

through trial and error. So he talks about the idea of the one way door and two way doors, one way door decision. You have to spend a lot of time planning because there's no going back. It's like decision to what you want to work on. Right. Think about that deeply, who your spouse is going to be, whether you're going to have kids or not. All these things, you know, they're not easily reversible. Two way doors. You just go down a path like, oh, not working. OK, I'll back up. So his point is like, listen, you have a lot. Most of your decisions are two-way door decisions. So stop planning and start speeding up your experiments.

There are two ways of building a business. This is a direct quote from him, by the way. There are two ways of building a business. Many times you aim, aim, aim, and then shoot. Or you can shoot, shoot, shoot, and then aim a little bit. That is what you want to do here. Don't spend a lot of time on, and then aim a little bit. That is what you want to do here. Don't spend a lot of time on analysis and precision.

Keep trying stuff. Another main idea from Jeff is you don't want to give your competitors any valuable information. So at this point, I think AWS has been around for almost a decade. They kept the financial results of AWS hidden. And they did so intentionally because they're like, oh, my God, we're printing money. We don't want to invite competition in this. So it says in October 2014, former Microsoft CEO Steve Ballmer appeared on the talk show Charlie Rose and threw serious shade at Amazon. I don't know what to say about Amazon. I like Amazon. Nice company. But they make no money, Charlie.

In my world, you're not a real business until you make some money. And what Steve didn't know at that time is they had a secret business that was printing money. And that was intentionally that he doesn't want Steve or anybody else to know. And so it talks about Bezos realizing, hey, if Amazon's only retail company, I'm just limited to what I can do with these tiny little margins. So it says he invested Amazon winnings like a crazed gambler at the craps table in Las Vegas. Years ago, he had learned that there were no annuities in retail. So that quote right there, years ago, he knew, he had learned there were no annuities in retail.

That is something that Jim Senegal, founder of Costco, actually told Jeff in a meeting. And he talks about you constantly have to deliver on the value to customers. And that's why Costco is so narrowly focused. Because customers, and continue this quote here, customers were fickle and could change their lowercase at the moment they were presented with a better offer elsewhere. Same thing. If somebody can out Amazon, Amazon, they'll just switch. So Jeff's like, I got to find businesses that have higher margins that are, that can scale and leverage. And what's really interesting, we're going to get into a lot of examples. It is extremely clear. And I'll share a couple examples with you, the kind of businesses Jeff wants. And it's not, what's interesting to me, it's not the business that he started, the very first one. So it says Amazon could only stay

ahead of its rivals if it kept inventing new technologies and improving levels of service. In 2015, an early wager had finally started to pay off. So now this is where it gets so large, the amount of income that Amazon's driving from AWS, they have to state it, right? In its April earnings report, Amazon revealed for the first time the financial health of its 10-year-old cloud business, so they could hide this for 10 years, Amazon Web Services, and shocked Wall Street with its underlying sales growth and profitability. Over the course of that eventful year, Amazon's stock more than doubled. It turned out that Steve Ballmer's broadside against Amazon was a perfect contrarian indicator. It would mark almost precisely the start of one of the most dramatic increases in corporate value and personal wealth in the entire history of capitalism. Ballmer had little grasp of how Amazon's eventual engine of profitability, AWS, was performing.

And that was how Jeff Bezos wanted it. Over the first decade, AWS's revenues and profits were a closely guarded secret. Amazon disguised their numbers along with their nascent advertising revenues, which is now a gigantic business as well. And I'll talk about more of the decision. He makes a very surprising decision, and I didn't understand why until I thought about it through the scope of, well, what kind of business does Jeff actually like? And I'll get there in a little bit. Along with its nascent advertising revenues

in the other category on its income statement so that potential competitors like Microsoft and Google would not recognize how attractive a business cloud, how attractive a business cloud computing actually was. And so the CEO of AWS turns into the CEO of Amazon. This is a guy named Jassy. And really, he's running a culture that's very similar. The note of myself is Jeff is AWS incarnate.

So it says AWS's culture was a microcosm of Amazon. Tough, unrelenting, and focused on meeting impossibly high standards. So let me rewrite that sentence myself. Jeff is tough, unrelenting, and focused on meeting impossibly high standards. Another idea that I think you already know, if you've listened to any of these episodes, all the greatest founders in history stole great ideas. That's the entire point of us doing this project, right? We want an easy way to steal great ideas. And so Jeff steals an idea from Jack Ma. They had been analyzing their deteriorating competitive position in China and the success of Alibaba's annual holiday shopping extravaganza. It's called Singles Day. For the last five years,

Jack Ma's e-commerce juggernaut had turned the date of 11-11 into a hybrid of Black Friday and Valentine's Day, offering a frenzy of deals which generated in 2014 more than $9 billion of sales in one day. That's bananas. And it gives you a dependable tsunami of free press, they say. So Jeff proposed that Amazon might fashion its own such shopping holiday. He suggested that the company roll out the holiday globally and use it to try to add new members to Prime. So this is the idea that turned into Prime Day. But again, it comes directly from seeing what Jack Ma was doing.

Okay, oh, good idea. I'm going to go ahead and steal that myself. Okay, so let's go to another idea that Jeff learned from other people, the idea of stack ranking. Jack Walsh has used this. Steve Jobs uses a similar system. It's a way to constantly eliminate the bottom performers in your company and keep bringing in better performers over time. The idea is that if you do this over time, the overall level of quality of employee increases.

So it says Bezos also advocated for the practice of stack ranking, where employees were rated by their managers on the basis of job performance, and the lower performers were pushed out the door. Bezos had absorbed the practice from this book called Top Grading, which was written by Bradford Smart, who had helped the legendary CEO Jack Welch set up hiring systems at General Electric and classify job candidates into A players, B players, and C players. I think I remember reading Jack's book a long time ago. I think they fired automatically at the bottom like 15%. It was some number like that every year automatically. Bezos wanted to apply those principles, not just in recruiting, but inside the company as well. And this is his reason. Bezos suspected that managers couldn't be counted on to voluntarily embrace the hassle of additional hiring and feared that a tolerance for mediocre performers would spread through the company and erode the day one mentality. Stack ranking would force managers to upgrade the talent on their teams. So Jeff also has another idea first about you need to enjoy the gifts of the Internet.

He's at this point, he's already bought the Washington Post. They thought, okay, maybe we'll just run this. It's like a philanthropy project. He's like, no, this is going to be a disciplined standalone business. And so we see he uses a lot of the same ideas that he's learned. Now he's what, three or four, three decades into his career by this point. And he's like, these ideas work, they can work for you as well. In addition to wanting the Washington Post to operate within its means, Bezos applied elements of his well-tuned business philosophy to the newspaper. He preached the wholesale embrace of technology, rapid experimentation, and optimism about the opportunities of the internet instead of despair. You've suffered all the pain of the internet, but you haven't yet fully enjoyed its gifts, Bezos told his new employees. Distribution is free and you have a massive audience.

And I can't remember. I think it went from losing. I should have took note. I read in the book, but they went from losing like, I don't know, let's say 30 million a year, some number like that to within like three or four years to making a similar amount. The point I'm trying to make would be better if I actually had the numbers in front of me and I can't, I don't have them at the moment. But the point is, he turned the paper around and went from losing money to growing into making money. Oh, I thought this point was interesting. Still in the Washington Post section, Jeff's not a fan of bundles. He's like, I guess I should, this is not surprising to anybody to study this guy. He wants control. Right.

When Apple solicited The Washington Post to join a bundle of publications in a new service called Apple News Plus, other people within Washington Post saw the gaudy potential of one point five billion iPhones and iPads and wrote a six page memo. See, he's making Washington Post people write memos just like Amazon, right? And again, I think that's one of the benefits of reading this book and other books is because you see him apply the same ideas over and over again. That should set off alarms in our minds like, hey, these ideas clearly work. We should copy them. He wrote a six-page memo outlining the pros and cons of joining. But Bezos reasoned that it would undermine the Post's identically priced subscription offering and argued against

it passionately. The post passed on this opportunity. And I think that's like a microcosm. Jeff does not see himself, he's not part of a group. He's a unique individual. And so no, I'm not joining your group so you have other control. I'll build my own distribution. Thank you very much. This paragraph is really just a reminder that we live in remarkable times, that there's impossible to be able to predict the crazy valuations a business can achieve. This is how Jeff spends $250 million in 15 seconds for a show about cars. I mean, if you go back 15 years and read this paragraph, you'd be like, this is impossible. And this is the world we inhabit. Amazon then outbid Apple and Netflix to sign

him and his co-host to a three-year, $250 million deal to make a similar show, The Grand Tour. It was one of the largest deals in unscripted television history. This is the guy that did Top Gear on BBC. Many times in the book, they talk about it's kind of nice if you don't have Bezos' focus, because when he does have his focus, he's going to do this. When Amazon CEO paid close attention to what you're doing, he generally wanted everything to be bigger, bolder, and more ambitious. So now they're applying his ideas, philosophy to that product, the FBA, where you can sell products on Amazon's platform,

and they'll take care of all the fulfillment. But it talks about he's got Jeffisms, which is these things that he repeats over and over again, and they list a bunch of greatest hits. I'm going to pull out two for you. And really I feel this is very similar to the idea that Henry Ford had. And so the first one, focus on lowering cost structure. It is better to have low cost and then charge to maximize your value versus charging to cover costs.

The same idea, a similar idea rather stated a second, a different way is in the second quote. We do not charge more because we can't figure out how to make it cost less. We invent to make it cost less. So Ford said, hey, I want to sell a car. It's going to be $500. And we're going to start with that idea. We're going to work backwards.

We're going to make sure that we have no waste, no inefficiency. We're going to keep our costs low. What Ford picked up that I think somewhere along the line in the history of capitalism, other people forgot, is like you want low prices, low cost, but high wages. That third part is where I think businesses really screwed up and didn't realize what Ford had learned 100 years ago. The less expenses and waste you have, the lower your cost can be, which means the lower your product can be, which means you'll sell more of them, which also means you can pay people high wages. And if you pay people high wages, obviously globalization was not nearly as pronounced in Ford's day than it is now. And that's why I think you see this massive shift to this. But the higher the wages, the better the economy because your employees can now go out and buy.

They have more money to spend to other businesses, which can then do this cycle over and over again. This gets distorted when you have money and talent just flowing across the globe in milliseconds. I mentioned earlier that a lot of the genius in the way Bezos runs his companies, he starts with a question. And this is, how would you get a million sellers? So this is their third party business still. Bezos was frustrated by its lack of progress and tore up the team's document. He's constantly doing this and demanded a more more ambitious rewrites. How would you get a million sellers into this marketplace? He asked. So he's saying you're not ambitious enough.

Start with that. The guy running the business says he understood that there's only one answer to Bezos's interview question. You couldn't possibly reach out to sellers and recruit a million of them one by one. You have to build a machine that would have to be self-service that is a that's a one trait of a bit of you'll see over and over again that the businesses bezos loves self-service self-service self-service we want revenue to grow way faster than headcount that's going to give us leverage because the more revenue we have the more we can invent and it's that huge cycle over and over again he talks about this constantly you have to build a machine that would have to be self-service, and sellers would have to come to Amazon instead of the other way around.

So he's saying the product is called Seller Central. You have to rebuild Seller Central, the website for third-party merchants, giving merchants the ability to easily list their products, set prices, and run promotions, all with a minimum of oversight by Amazon employees. So in this next paragraph, we see this is a description of oversight by amazon employees so in this next paragraph we see this is a description of what bezos likes he likes a business that is self-service where revenue grows faster than headcount bezos was delighted by the progress that year for the first time the value of goods sold through the marketplace surpassed sales from amazon's retail side best of all since the business was largely self-service revenues were growing faster than headcounts. Finally, a business that is able to get some leverage after it becomes successful, Bezos said. Holding the six-page narrative to his chest, he said, I'm going to take this document home

and sleep with it. So let's continue on this theme, and we have an understanding of why he wants this. In his shareholder letter that was published in 2019, Jeff wrote that the independent merchants were now responsible for 58% of all units sold on the site. Third-party sellers are kicking our first-party butt, he wrote. Okay, but why? Why would Jeff want this? Because he likes self-service where the revenue grows faster than the headcount. And that happens a lot more on a third-party seller than if they have to control everything. And this is on the next page, you see a description of that. The higher margin proceeds from third-party seller than if they have to control everything. And this is on the next page, you see a description of that. The higher margin proceeds from third-party marketplace, which were at least double the profits from Amazon's own retail efforts. So of course you

want that. You're double the profits when third-party sellers kick your first-party butt, right? So it says, which were at least double the profits from Amazon's own retail efforts, would go on to nourish other parts of his business empire. He's going to take that money at the higher profits and keep inventing. And then he's going to have another business. How many multiple billion dollar businesses can Amazon build? We don't know the answer to that question yet. Okay. Another idea from Jeff. He's not going to rest on your laurels. He's going to constantly try to make the service that he's offering to customers even better. So at this point in Amazon's history, they already have Amazon Prime. There's tons of members. You're getting anything you order from Amazon Prime. Two days is delivered to you, right?

And Jeff's like, well, why not one day? Why not one hour? And so this is Prime Now, which I think goes by a different name currently, but this is the development. So this is a very simple paragraph. What should I read? I'm trying to figure out if I should read my note first or the paragraph first. Hold on one second. Okay, I'm going to read the paragraph, then I'm going to read my interpretation of this paragraph. So he's got Jeff Wilk running this. Jeff Wilk announced that he wanted to attack this problem from a totally different angle. They were going to form an independent team to build a service that was separate from the Amazon website and singularly devoted to the ultra fast delivery.

So we've seen this again. Separate team going to compete against us ourselves. And it's going to have one goal and one leader. Right. Ultra fast delivery. The goal. And then this next part, I can't leave off. The goal was to launch it with 100 days.

Let me tell you the interpretation of what's happening, what I wrote to myself here. They're trying to take something that is already successful and make it more successful. So they're trying to take prime and make it even better, right? So step one, let's give it one goal, which is ultra fast delivery. Step two, set it up outside your company and have it attack your existing product. This goes back to the Edwin Land quote, by far one of the most important and intelligent entrepreneurs to ever live, the founder of Polaroid, the person that Steve Jobs modeled much of his career after. And he said, somebody's going to make your product obsolete. Make sure it's you. So number two, set it up outside your company and have it attack your

existing product. Number three, give it an ambitious deadline to force it to go fast. They wound up hitting this. Instead of 100 days, it's like 108 or 111 days. It's remarkable. I'm going to read a sentence in this development. Again, I've already repeated this. It's important. Most of the job of a founder is going to be repeating themselves for a decade.

Bezos was reviewing everything and issuing one constant edict, go faster. Another reminder that good ideas that work in one business are transferable to another. This is Jeff. He's buying all these companies, but then he lets the CEO just run them by themselves. This is exactly what Warren Buffett does. One thing Amazon didn't do was to turn over the Whole Foods management team. Bezos often allowed acquired companies and their eccentric CEOs to operate autonomously. And why? Because he preferred to learn from their experience and harvest the data and business lessons that emerged. In other words, they give him leverage.

Oh, this is amazing. This is how to make half a billion dollars leasing airplanes. There's this huge, think about the fight for the last mile delivery right uh they're using ups they're using fedex they're using united states postal service um they're using like independent contractors to deliver things uh some of which are in vans and they realize like uh that they're they have more amazon has more ambitious goals uh to get things faster to customers than even their main suppliers. So they're like, we need to build our own freaking airline, our own air system. But Bezos doesn't want to own the planes.

He doesn't want to get into the pilot union workforce and all the other stuff. So, hey, what if we come up with an idea similar to how we did with the, what do you call them? The vans you see everywhere, they're vans. They say Prime on the side. Similar to how we did with like the, what do you call them? Like the vans you see everywhere. They're vans. They say Prime on the side. They have people delivering things to your building or to your house or whatever the case is. But even though they're labeled Prime, they're actually independent contractors. So they take that same idea and apply it to airplanes, right? But then they find a way to actually have, they wind up

investing in these companies and make more, so much money in the investment that essentially pays for itself. So it says, in the spring of 2016, Amazon announced it was leasing 40 Boeing 767s from a pair of airlines. So two airlines called ATSG and another one called Atlas. The airlines would continue to maintain and operate the aircraft, but the planes would be rebranded with the Prime Air logo and requisitioned into Amazon service for a period of five to ten years. As part of those deals, Amazon purchased warrants to buy 19% of ATSG stock and 20% of Atlas' parent company.

Amazon knew that investors in those companies would be excited by the partnership with the e-commerce giant and would want to participate in the upside. Sure enough, after each company announced the news, their stock prices soared. So they wind up getting an email from Jeff. Fantastic job. That's how it's done, he said. Amazon had simultaneously achieved its goal of securing exclusive access to air routes and earned nearly a half a billion dollars on its investments. OK, this is what I referenced earlier. I just looked it up. Amazon made around $20 billion from ads in 2020, the year before they made $9 billion. And we're going to go back to

where this came from. So the important part is Jeff was able to get to what is important by starting with a question. And then he's not going to let you paper over poor business performance because you've now developed, especially the old retail Amazon retail business is using ads as a way to paper over poor performance, right? And then we're going to get into his counterintuitive. This is crazy. This one decision he's about to make here is now making them $20 billion a year.

I just asked how many multiple billion dollar businesses is Amazon capable of making? We might need a couple more decades to answer that question. This is bananas. Executives later wondered whether Bezos planned the ambush before or reacted when reading the document. What they noticed in the moment was while Bezos turned the pages was that his brow furrowed, his eyes narrowed, and his head cocked. I wonder what unit profitability was in 2017 without advertising. So they weren't separating those numbers out.

Oh, shit, I got to figure this out. So it says retail executives considered ads to be a key part of their unit's performance, not a separate element to be plucked out of their profit and loss statement. Well, Jeff doesn't agree with that. So this guy, Stevenson, says, hang on, Jeff, I'll get that. They do a calculation. They get a result. So then goes, Jeff goes, what was it for 2016? Everybody's like, oh no. So then they have to do another calculation. He gets that. Stevenson produced another number. And then Jeff

says, what is it for 2014? And so this is why he's doing this. Again, he starts with the question, very, very smart. Without advertising, the financial picture of Amazon's domestic retail business suddenly looked far less rosy. He picked up on that. And he hasn't been focused on the retail business in a very, very long time. Its underlying economic health had actually been deteriorating. So they're hiding that. I don't know if they're not saying they're doing it intentionally, but they're hiding that because you have this huge growth in this high profit, self-serve business, which is the advertising the advertising, which again is why Jeff's about to make the decision he's going to make. Remember, we know what kind of businesses he likes, right? He argued that the growth of advertising was concealing stagnation in online retail. He wanted to go back as far as possible to find when this troubling trend had started. He insisted that they radically scale back their hiring plans and other investments and commit to returning to the underlying profitability that had achieved years before without the safety blanket of advertising. This is a completely different strategy than he uses for new businesses. He will give you time to achieve profitability in new businesses. But when you've already gotten

that time, you achieve profitability, he's not going to let you slide backwards. He's like, what are you doing? Hold on here. No, no, you are not adhering to my impossibly high standards. Fix this immediately. And what happens is if you can fix that immediately, well, you are not adhering to my impossibly high standards. Fix this immediately. And what happens is if you can fix that immediately, well, now your underlying performance business is back to normal. Hopefully, it's improving slowly or steadily. But now you've layered on to that same business, this unbelievably gigantic profitable business on its own.

So this is where we get into his decision to sell more ads. And I haven't left a note here that's repeating it. It tells us about the businesses he loves, their self-service, their higher margin. And then he's going to use that money to leverage as leverage. He's going to use that money as leverage to invent more products. When sponsored ads, so they're running tests and they realize what happens when you put sponsored ads on the Amazon product pages when you're searching for something, right? And this is a surprising decision he makes because it lowers purchases, but not if you understand that what the business is he really wants. When sponsored ads were prominently displayed,

there was a small statistically detectable short-term decline in the number of customers who ended up making a purchase. While they would almost certainly be collateral damage because there were fewer customers finding what they wanted, sponsors' products also made money, a lot of it. And in that respect, Bezos' decision whether to expand ads to the top of all search queries also consisted of a single word. Yes, Amazon should continue to expand the percentage. Remember, I'm going to read, I'm going to stop myself here. I'm going to read his answer. Right. And just think about it in the context. Last year, 2020, they did 21 billion. 2019, they did 9 billion. Who the hell knows what the size of this business is going to get. Right. Seems to me online advertising is not going to slow down anytime soon. Right. So he says, yes, Amazon should continue. He's making this decision. Is this 2017, 2018? It's a few years ago. OK, now we're seeing the effects of this decision. This is the point I'm trying to make to you. Yes.

Amazon should continue to expand the percentage of search results that included sponsored listings. Yes, it should increase the number of sponsored listings on each page of search results, even if that meant a small corresponding drop off in customer clicks. That was the part I was like, I didn't understand until I put it into the context of what he likes. Search ads had all the business characteristics that Bezos loved. Customers weren't transported off Amazon when they clicked, but were sent to individual product pages where they make purchases. The system was largely self-service. And once the technology was in place, search ads would produce tremendous leverage and a huge windfall that Bezos could use to finance

new inventions, also known as new businesses. And if you have a playbook that you develop over multiple decades that you know works, then of course, I'm going to keep using this playbook to build and see how many freaking businesses I can build with it. Moving ads to the top of search pages was a game changer. Sponsored products would be nothing close to what it is today if that decision wasn't made and Jeff was the one who signed off on it. Now, I want to skip ahead to a couple ideas. I've already done an entire podcast on the competition between Elon Musk and Jeff Bezos on SpaceX and Blue Origin. There's one chapter in this book on Blue Origin.

I'm going to pull out a couple things here. I think that's Founders number 38 if you haven't gone back and listened to it. I think it's interesting. But Bezos, one thing was surprising bezos uh so so uh gwynne shotwell is like uh elon's like right hand woman and spacex bezos tried making her the ceo of blue origin she said no uh so he says he wanted to look for something blue origin never had in its history a ceo the process included uh reaching out to shotwell and who quickly rebuffed it. But I want to go back to this, not go back.

I want to go to his origin memo, his Blue Origin memo. It's like a founding document, which is very interesting as Amazon's adhered to their founding document. He realizes the principles in my founding document for Blue Origin based on what I'm seeing SpaceX accomplish and we're not, we have to, I'm going to read the document, but understand that really the main point is that Bezos also is going to react to new information. It's like, okay, we need a different philosophy here. In June 2004, he wrote an 800-word memo. It's called the Welcome Letter. So it was given to every new employee, and it's never been revealed publicly up until now. We are a small team committed to seeding and enduring human presence in space.

Blue will pursue this long-term objective patiently step by step. He described releasing new versions of its rockets at six-month intervals. He cautioned employees to focus on the task at hand and work methodically. I love this metaphor, though. We've been dropped off on an unexplored mountain

without maps, and the visibility is poor. You don't start and stop. You keep climbing at a steady pace. Be the tortoise and not the hare. Keep expenditures at sustainable levels. He changes that because now he's dumping, I think, multiple billions into this. He started out with a billion. Now I think between contracts and his own private funding, it's more than that.

Assume spending will be flat to monotonically increasing. That's not true anymore. And I accept that Blue Origin will not meet a reasonable investor's expectation for return on investment over a typical investing horizon. So he's, okay, thinking long term, I understand I'm not going to get my money back soon, maybe, if not ever. He condensed its central idea into its company's Latin motto, which translates into step-by-step ferociously. And we see he starts to change this. This is more contrast with SpaceX. Blue's headcount soared past a thousand people in 2017 and then doubled in 2018. A portion of those employees came from Musk's company. And the damning refrain in the industry was that Blue was the country club

you go to after toiling at SpaceX, which would have infuriated Bezos if he had heard it. The new CEO of Blue is this guy named Bob Smith, and Smith hired veteran executives from Raytheon, Rolls-Royce, Boeing, Lockheed Martin. I'm not going to list all of them, but they're a bunch of legacy companies. And this is different than what Elon tries to do. SpaceX executives were openly contemptuous of such firms because they viewed them as complicit in the decades of stagnation and space innovation and the reason i included that because i'm personally interested like what

what is now and this book i don't know i wouldn't say it's very flattering towards turds bezos by any by any means um so don't be surprised at that tone if you read it. But the reason I say this is like, it basically seems like they make the point like, okay, he's retiring from being CEO of Amazon. He's got a new girlfriend. He's going to all these parties. He's building this giant yacht. Like, is he just enjoying being one of the richest people in the world

or is he actually going to go back to work? What I'm most interested in, he says in the the book that the most important work he's doing is his space company i'm very curious if he dedicates more of his actual physical presence because before he retires from amazon he's doing like a one day a week kind of thing um so i don't know i'm very curious what happens obviously you know people should be free to if he chooses to hey i worked really hard now i'm going to join myself do whatever you you know, people should be free to, if he chooses to, Hey, I worked really hard and I'm going to enjoy myself, do whatever, you know, she should be free to make that decision for himself. But I'd be very curious if he says, no, he's, he's just this crazy, relentless driven person, which he seems to me to be. And he says, I'm going all in on this, but, uh, we'll have to see.

All right. Another one of these great ideas. Books are the original links. I might read this book. It sounds interesting. And it's a book, again, Bezos talks about having a shared base of knowledge with the people you're working with. He reads the book, then all the executives have to read the book because they're being attacked. Amazon's size is being attacked by regulators, politicians, unions, all these people. So it says in the fall of 2018, the S-team and Amazon's board of directors read The Great A&P and the Struggle for Small Business in America. So there's a book written by this guy named Mark Levison. The book traces the rise and fall of the first American grocery chain of the 20th century, as well as strategic drift after the death of its founders and the decades long crusade against it by populist politicians determined and determined trust busters.

This is going to echo what Amazon's going through, right? The campaign against AMP, the book concludes, was mostly political, propelled by the cumulative complaints of thousands of sympathetic mom and pop stores and their suppliers. By this time, I'm already paragraph into this, you see why they'd be reading it, right? You see how it echoes what they're going through. So of course, they're going to go back because they knew human nature doesn't change. Let's see how they responded to this, because it may be an indicator of how people respond to us. And by a company that exhibited unusual passivity in the face of early criticism. That's one thing Amazon's changing. They learn from this book. We're not going to be passive.

Though AP was known for its strong arming suppliers and undercutting rivals with predatory prices. Amazon does the same thing. The idea that the company actually doomed itself by failing to properly answer critics and then to plan for succession after the death of its founders seemed to resonate with Bezos and other Amazon executives. The takeaway was this is going to happen.

It's inevitable. This is kind of how our society reacts to large institutions. So this is when Bezos decides, hey, I'm going to fight back. And so they start taking, they have a huge communications department now. If somebody says something,

like a politician says something in public, they think it's actually inaccurate, they'll actually correct the record. They essentially try to fight information about Amazon with more information about Amazon. Some of it, they're actually right. And Bezos' point, he's like, listen, you have to use criticism as valuable intel. And that valuable intel can help you instigate change so they're getting you know

jeff becomes the richest person in the world and people start like well why are you making so much money not and not paying your employees and so he says what i teach and preach inside amazon is that when you're criticized first look in the mirror and decide are your critics right and if they're right change don't resist. And so as a result of this, what he's talking about in this section of the book is that we can pay people more and we should pay people more. And so they wind up going from, at the time, the federal minimum wage was $7.25. Some people at Amazon were making as little as $10 an hour. And then they're just like, okay, everybody's going to everybody's going to make $15 an hour. And so now when people say you're not paying them enough, like, well, my the minimum wage at Amazon is actually higher.

Meaning when they were talking to politicians like our minimum wage is higher than your minimum wage. And so, again, he's using criticism as valuable intel and he instigated that change. OK, not only did he realize by reading the books and, you know, not being an idiot that. It looks terrible if you have hundreds of billions of dollars and you're paying somebody ten dollars an hour like come on you can raise wages and this is what i meant about henry ford understood that i think a lot of larger companies especially at least larger american companies are missing the point on and so now towards the end of the book i want to close on just this idea where i'm reading this and i'm

going to tell you which of all the jeff books I think like what order I'd read them. And if you haven't read them yet, but I just got the sense that this is not fun anymore. Like running Amazon is not fun. It's completely different than what it was at the beginning. The growth, it's more than doubled in size, not only in market cap, but in the amount of employees you have, the amount of attention and negative stuff you have to fight. So it just makes complete sense when you see all the crap that he has to go through, why he'd say, OK, I'm handing the reins to somebody else.

And so it says, the move heralded a formal changing of the guard at Amazon and the end of one of the most epic runs in modern business history. Over the course of two and a half decades, Bezos had taken an idea to sell books on a new medium called the web and through invention, the unencumbered embrace of technology and the ruthless pursuit of leverage spun it into a global empire worth more than one and a half trillion dollars. Bezos had another reason to elevate himself out of the top role. Being Amazon CEO was a lot less fun. read i read in the following order first start with the everything store um if you haven't read it already it's probably the most insightful book that i've ever read if you if you could somehow come up with a formula like how many insights per page that that probably has the most insights per

page of any other book and not only that you understand his early life is covered in more detail who he was how he thinks about things so you're not just taking his ideas like your ideas will stick to you more you'll remember them if you understand the person behind it and why they're doing what they're doing, right? Then from there, I would read Invent and Wander because it's every single Bezos shareholder plus edited transcripts of some of his best talks. The third book I would read is Working Backward because that's all about the ideas, the application of Bezos' ideas with inside Amazon. And that's just a good book to the application of Bezos' ideas with inside Amazon. And that's just a good book to read, because then you can see how they use it and then take those ideas and apply it in your own company. And then I'd read this fourth. So if you've already read

all those other books, and you want to buy this book and support the podcast at the same time, buy the book using the links in the show notes in your podcast player, and you are supporting the podcast at the same time. If you want to have a shared base of knowledge with people you're working with, your spouse, any friends, and you want to buy them a gift subscription to Founders, do that to use a subscription to Founders as a way to have a shared base of knowledge. I'll leave a link in the show notes. You can do that as well. And that is a hundred, that makes one, what am I at? I'm pretty sure 180 books down, 1,000 to go. Thank you for your time and attention. I'll talk to you again soon.