The Everything Store summary
My key takeaways from this book.
- Bezos uses a regret-minimization framework when it comes to making the big decisions (like deciding to leave a stable finance job to start a business).
- When you are in the thick of things you can get confused by small stuff,” Bezos said a few years later. “I knew when I was eighty that I would never, for example, think about why I walked away from my 1994 Wall Street bonus right in the middle of the year at the worst possible time. That kind of think just ins’t something you worry about when you’re eighty years old. At the same time, I knew that I might sincerely regret not having participated in this thing called the Internet that I thought was going to be a revolutionizing event. When I thought about it that way … it was incredibly easy to make the decision.”
Start by targeting one market category. Eventhough Bezos knew he wanted to create the "everything store" from the start, he decided on books as a first category, because (i) an online bookstore would have the advantage over incumbent stores by being able to store an unlimited selection, and (ii) a book was a fairly standardised product that was easy to ship.
Know what your competitors are up to, but don't focus on them. Obsess over your customers instead, to beat the competition. Your competitors are not the ones who are going to pay you money after all.
- “Look, you should wake up worried, terrified every morning,” (Bezos) told his employees. “But don’t be worried about our competitors because they’re never going to send us any money anyway. Let’s be worried about our customers and stay heads-down focused.”
- Don't be afraid of trying to put yourself out of business. If you're afraid of cannibalising your own sales, even if it's the right decision, someone else will come along and do it for you. As an example, Amazon entered the ebook market intending to take over their physical book market business.
- The Reggios (the people in charge of Barnes & Noble) were reluctant to lose money on a relatively small part of their business and didn’t want to put their most resourceful employees behind an effort that would siphon sales away from the more profitable stores. On top of that, their company’s distribution operation was well entrenched and geared toward servicing physical stores by sending out large shipments of books to a set number of locations.
- Amazon's leadership principles for every employee:
Have backbone; disagree and commit
Leaders are obligated to respectfully challenge decisions when they disagree, even when doing so is uncomfortable or exhausting. Leaders have conviction and are tenacious. They do not compromise for the sake of social cohesion. Once a decision is determined, they commit wholly.
Leaders do not believe their or their team’s body odor smells of perfume. Leaders come forward with problems or information, even when doing so is awkward or embarrassing. Leaders benchmark themselves and their teams against the best.
Thinking small is a self-fulfilling prophecy. Leaders create and communicate a bold direction that inspires results. They think differently and look around corners for ways to serve customers.
Bias for action
Speed matters in business. Many decisions and actions are reversible and do not need extensive study. We value calculated risk taking.
- Use data and metrics to make decisions. Bezoes thought from first principles and used data and metrics to design and improve the processes that he knew would be Amazon's growth driver. This included redesigning their distribution centers from scratch because he knew they would need to become a world-class distributor if he didn't want to hamper Amazon's growth potential.