Amazon: Gorilla Mode – Appendix: In Bezos’ Words

As the company moves on so many initiatives simultaneously, it’s hard not to pay attention to Amazon. As Bezos put it,

“If we can keep competitors focused on us while we stay focused on customers, we’ll be alright.”

So how does one compete successfully? Here’s what Bezos has said through the years about that very topic:

KNOW YOUR MODEL AND COMMIT.

“There are two ways to build a successful company. One is to work very, very hard to convince customers to pay high margins. The other is to work very, very hard to be able to afford to offer customers low margins. They both work. We’re firmly in the second camp. It’s difficult—you have to eliminate defects and be very efficient. But it’s also a point of view. We’d rather have a very large customer base and low margins than a smaller customer base and higher margins.”

“A dreamy business offering has at least four characteristics. Customers love it, it can grow to very large size, it has strong returns on capital, and it’s durable in time – with the potential to endure for decades. When you find one of these, don’t just swipe right, get married.”

“People will shop in different ways… There are department stores and chains and independent stores and big stores and small stores. All these companies can be successful.”

“Customer obsession… competitor obsession… business model obsession… product obsession… technology obsession… There are many ways to center a business… Many of them can work. I know and have friends who lead very competitor-obsessed companies and those companies can be successful… I like customer obsession.”

“Three big needle movers: selection, price, delivery/speed/convenience.”

BE PROACTIVE.

“When we’re at our best, we don’t wait for external pressures. We are internally driven to improve our services, adding benefits and features, before we have to. We lower prices and increase value for customers before we have to. We invent before we have to. These investments are motivated by customer focus rather than by reaction to competition. We think this approach earns more trust with customers and drives rapid improvements in customer experience – importantly – even in those areas where we are already the leader.

“To me, trying to dole out improvements in a just-in-time fashion would be too clever by half. It would be risky in a world as fast-moving as the one we all live in. More fundamentally, I think long-term thinking squares the circle. Proactively delighting customers earns trust, which earns more business from those customers, even in new business arenas. Take a long-term view, and the interests of customers and shareholders align.”

DEFINE WHAT IT MEANS TO BE CUSTOMER-CENTRIC IN YOUR MODEL.

“Our energy at Amazon comes from the desire to impress customers rather than the zeal to best competitors.”

“Invention is not disruptive. Only customer adoption is disruptive.”

“We don’t seek to disrupt, we seek to delight. If you invent something completely new and radical and customers don’t care about it, it’s not disruptive. Radical invention is only disruptive if customers love it.”

WHEN THEY ARE LIKELY TO PAY OFF, TAKE THE HARDER ROUTES.

“A brand for a company is like a reputation for a person. You earn reputation by trying to do hard things well.”

UNSEXY THINGS ARE IMPORTANT.

“When many of the dot-com companies went out of business when the internet bubble burst. One of the reasons is that they hadn’t really put enough attention into their back end. They hadn’t put enough attention into what some of the people consider the less glamorous part of the business.”

PRODUCE SOMETHING WORTH BUYING.

“In the old world, you devoted 30% of your time to building a great service and 70% of your time to shouting about it. In the new world, that inverts.”

“I strongly believe that missionaries make better products. They care more. For a missionary, it’s not just about the business. There has to be a business, and the business has to make sense, but that’s not why you do it. You do it because you have something meaningful that motivates you.”

“If I were just setting out today to make that drive to the West Coast to start a new business, I would be looking at biotechnology and nanotechnology. I also think about data security… These are fundamental technologies, things that are going to change the world. But the truth is, I probably wouldn't do any of those things because I grew up programming computers. So maybe I'd think about data security, but I'm sure I'd do something with software and computer science and software engineering. Certainly, in the spring of 1994, the thing that motivated the formation of Amazon.com was noticing that Web usage was growing at 2,300% a year.”

BE NIMBLE AND RESPONSIVE.

“Most decisions should probably be made with somewhere around 70% of the information you wish you had. If you wait for 90%, in most cases, you're probably being slow.”

SEEK CUSTOMIZATION OPPORTUNITIES.

“In the online world, businesses have the opportunity to develop very deep relationships with customers, both through accepting preferences of customers and then observing their purchase behavior over time, so that you can get that individualized knowledge of the customer and use that individualized knowledge of the customer to accelerate their discovery process.

If we can do that, then the customers are going to feel a deep loyalty to us, because we know them so well. And if they switch to a competitive website, as long as we never give them a reason to switch, as long as we’re not trying to charge higher prices or providing lousy service, or don’t have the selection that they require; as long as none of those things happen, they’re going to stick with us because they are going to be able to get a personalized service, a customized website that takes into account the years of relationship we’ve built with them.”

HAVE PATIENCE. LOTS AND LOTS OF PATIENCE.

“If everything you do needs to work on a three-year time horizon, then you’re competing against a lot of people. But if you’re willing to invest on a seven-year time horizon, you’re now competing against a fraction of those people, because very few companies are willing to do that. Just by lengthening the time horizon, you can engage in endeavors that you could never otherwise pursue. At Amazon we like things to work in five to seven years. We’re willing to plant seeds, let them grow -- and we’re very stubborn. We saw we’re stubborn on vision and flexible on details.

"In some cases, things are inevitable. The hard part is that you don’t know how long it might take, but you know it will happen if you’re patient enough.”

“The common question that gets asked in business is, why? That’s a good question, but an equally valid question is, why not? This is a good idea, we have a lot of skills and assets to do this well, we’re already going to do it for ourselves—why not sell it, too?”

“By the way, it’s not natural for humans… It’s a discipline… Get rich slowly schemes are not big sellers on infomercials.”

“Even once you have a strategy that makes sense and holds together from different angles, optimism is essential when trying to do anything difficult because difficult things often take a long time. That optimism can carry you through the various stages as the long term unfolds. And it's the long term that matters.”

FOCUS.

“You need to identify your big ideas… and there should only be two or three of them… For Amazon, the three ideas are low prices, fast delivery, and vast selection… [These things] are stable in time… Customers are always going to like low prices.”

“As a company, one of our greatest cultural strengths is accepting the fact that if you’re going to invent, you’re going to disrupt. A lot of entrenched interests are not going to like it. Some of them will be genuinely concerned about the new way, and some of them will have a vested self-interest in preserving the old way. But in both cases, they’re going to create a lot of noise, and it’s very easy for employees to be distracted by that. It could be criticism of something that we actually believe in. It could also be too much praise about something that we’re not doing as well as the outside world says we’re doing it. We’re going to stay heads-down and work on the business.”

“The thing I worry about the most is that we would lose our way… lose our obsessive focus on customers or would become somehow short term-oriented or.. become overly cautious, failure-averse.”

IDENTIFY YOUR CIRCLE OF COMPETENCE.

“I went to Princeton to be where Einstein was. It is an extraordinary department. I learned a valuable lesson there: I learned that I am not smart enough to be a good physicist.”

BE OBJECTIVE.

“The great thing about fact-based decisions is that they overrule the hierarchy.”

STRIVE FOR PERFECTION.

“We really obsess over small defects. That’s what drives up costs. Because the most expensive thing you can do is make a mistake. We can afford to focus on smaller and smaller defects and eliminate them at their root. That reduces cost, because things just work.”

“The companies that rely on brand loyalty are insane. Customers will be loyal to you because you don’t take them up on it. It is one of those paradoxes. There is no resting on your laurels. If you assume anything, you are doing a disservice to your customers and they shouldn’t be loyal to you. Our customers are loyal to us right up until the second that somebody else offers them better service. We live or die based on the customer experience.”

“There’s no chance that anything is perfected yet. I don’t believe that.”

INSTALL TRUSTED LAYERS OF LEADERSHIP

“Almost all the people I work with on a daily basis, are paid volunteers – at this point I’ve been working with them for more than a decade, and they can do whatever they want, they could be sipping margaritas on a beach, but they’re here. Paid volunteers are the best people to work with as they’re here for the right reasons. I have a team of people that I love. And we get to work in the future, and that’s so fun, so I hope so.”

“They are missionaries of what they do… You can’t do that with people who are watching the clock all day… I like to use the phrase ‘work/life harmony’... You can be out of work and still have terrible work/life balance… For most people it’s about meaning. People want to know that they’re doing something interesting and useful… We get to work in the future. And it’s super fun to work in the future for the right type of people.”

“Most of our compensation is done in terms of stock compensation. Part and parcel with ownership is long-term thinking… Owners think longer term than renters do.”

RECRUIT TALENT THAT WANTS TO BE THERE.

“If you’re ever talking to a college student… you should definitely advise them that the best way to pick your job is who has the best massages... [laughs].“

CONSIDER TECHNOLOGY AN ENABLER.

“All the effort we put into technology might not matter that much if we kept technology off to the side in some sort of R&D department, but we don’t take that approach. Technology infuses all of our teams, all of our processes, our decision-making, and our approach to innovation in each of our businesses. It is deeply integrated into everything we do.

“We live in an era of extraordinary increases in available bandwidth, disk space, and processing power, all of which continue to get cheap fast.”

IF RELEVANT TO YOUR MODEL, CREATE A DIFFERENTIATED PHYSICAL EXPERIENCE.

“One of the things we don’t do very well at Amazon is a me-too product offering. So when I look at physical retail stores, it’s very well served, the people who operate physical retail stores are very good at it…the question we would always have before we would embark on such a thing is: What’s the idea? What would we do that would be different? How would it be better? We don’t want to just do things because we can do them…we don’t want to be redundant.”

“It will force stores to get better. The ones that don’t get better will go by the wayside. Stores will have to have better-trained people. They will have to be cleaner and better lit. They will have to provide something unique. The stores no one wants to go to will disappear. I don’t say everything will change, though. People will still go out. They like to interact with other human beings. The Net is pretty cool, but the physical world is the best medium ever. There are many things you can do with physical stuff that you can’t do with a computer. So the environments are going to coexist nicely. And it’s all good news if you are the customer. More choices, more competition, better service.”

BUILD A MOAT.

“Your job is to kill your own business… I want you to proceed as if your goal is to put everyone selling physical books out of a job.”

“We will make bold rather than timid investment decisions where we see a sufficient probability of gaining market leadership advantages. Some of these investments will pay off, others will not, and we will have learned another valuable lesson in either case.”

OFFER THINGS AMAZON DOESN’T WANT TO SELL.

“Firearms. Living creatures. Body parts. [laughs] Actually Pets.com, which is not Amazon.com but is a company we work with, is going to start selling fish. Apparently they can be delivered safely and reliably. So there will in fact be living creatures. But still, no body parts.”

“We won’t get into things where the price of admission is so gigantic… as an example… oil exploration.”

NEVER BE COMPLACENT.

“All businesses need to be young forever. If your customer base ages with you, you're Woolworth's.”

[In conversation with Charlie Rose]
JB: “Companies have short life spans Charlie. And Amazon will be disrupted one day.”
CR: “And you worry about that?”
JB: “I don't worry about it 'cause I know it's inevitable. Companies come and go. And the companies that are, you know, the shiniest and most important of any era, you wait a few decades and they're gone.”
CR: “And your job is to make sure that you delay that date?”
JB: “I would love for it to be after I'm dead.”

Jeff Bezos is 53 years old, and looks to be in excellent health. Confidential succession planning has been in place for years.