Summary
In his non-fictional book “The everything store” published 2013, Brad Stone describes how Jeff Bezos developed from a gifted child to the driven CEO of Amazon.com. With the help of the internet, Jeff Bezos creates a single online store that sells nearly everything.
Early in his career Bezos shows several leadership qualities. His colleagues describe him as confident, persuasive and charismatic as well as hard working and most importantly extremely intelligent.
In 1994 Bezos discusses creating an online everything store with his Boss at D. E. Shaw and CO. (Desco), the Wallstreet Firm he works for. But he realizes that with the internet in its infancy he has to focus on one category in the first place. And as a well-read person he chooses books. Bezos also realizes that it wouldn’t be his company if he pursues the venture with Desco, therefore he leaves his well payed job at Desco to settle down in Seattle to sell books over the internet.
Bezos brainstorms about a name for the company including relentless.com and cadabra.com. In October 1994 Bezos reads through the dictionary and notices the word Amazon, it is earth’s largest river an appropriate name for what he envisioned to be the earth’s largest book store. He registers the url in November 1994. As soon as the site goes online to all users in July 1995, the orders are constantly increasing. The motto now is get big fast! In 1996 Amazon.com launches its first big innovation, paying other websites commission for a referral to Amazon.com this created a new industry known as affiliate-marketing.
In 1998 Bezos decides it is the right time to expand beyond books. Music is the first first target, followed by DVDs. Bezos also acquires many other websites such as the movie database IMDB.com. Amazon begins poaching Walmart executives, more than a dozen are moving over to Amazon, resulting in Walmart suing Amazon for stealing trade secrets. However Bezos reads Sam Walton’s, the Walmart founder, autobiography and it resonates with him particularly by its fraction and its thriftiness.
Amazon continues to innovate and try new idea’s, they use personalization on the site to help customers discover new items and sales rank is introduced to show authors how their books are selling. Bezos also patents the one-click ordering process. In summer 1998 Bezos meets with two Stanford PhD students Larry Page and Sergey Brin, who are starting a little company called Google. Bezos is impressed and invests $250, 000, it is not known if he has still all of his Google holdings which are currently worth over $1Billion. In 1999 Amazon expands to toys and electronics.
Also in 1999 sales increase up 95% compared to the year before and Amazon has 20 million registered accounts.
Bezos becomes one of the youngest ever receivers of the Time’s person of the year award. Despite to all of its expansion Amazon.com is about to lose over $1 million as the dot com hype declined in 2000. Amazon survives insolvency by slowing down expansion and focusing on discipline and efficiency and eliminating waste.
In November 2000 Amazon launches the function marketplace allowing third party sellers to sell their products on Amazon.com in exchange for a small commission. This provides Amazon with a greater selection of products.
In January 2002 Amazon.com reports a net income of $5 million, its first ever profitable quarter. The following year became Amazon’s first ever profitable 12 months.
After becoming one of the richest people in the world, Bezos secretly starts a new
company devoted to space exploration something he thought and dreamed of since high-
school. The company is called Blue Origin and is first revealed to the press in 2003.
It’s aim is to reduce costs and increase safety of technology that gets humans into space.
During this time Amazon is expanding into sporting goods, jewellery and other categories as
well as expanding into other counties such as China and Japan. Amazon has a competitive
advantage over rivals by having a completely rewritten logistics network software system,
which allows for efficient shopping of products and precise delivery times for customers. The
introduction of Amazon Prime, this new service provides free 2 day shipping on any orders
after the customer pays an annually fee, that turns customers into Amazon
addicts.
However, Bezos wants to define Amazon as a technology company rather than a retailer. To do so they need to invent new features. Bezos launches “search inside the book” a feature that allows the customer to search for a word or phrase inside the book they want to purchase. They also create a set of API’s that allows developers to plug into the Amazon website and publish parts of the product catalogue including descriptions and prices on their own sides. They could also use Amazon’s payment systems and shopping cart. This is the beginning of what is now called Amazon web services. Amazon web services now sells computer infrastructure to other companies. They have some very high profile customers using its services like Netflix, Instagram, Nasa and the CIA. They help to introduce the cloud concept. Amazon is now unquestionably a technology company. Having seen Apples dominance in the digital music market, Amazon doesn’t want to lose its core business books, if they became popular in a digital format too. In 2004 Bezos started an experiment in Silicon Valley called Lab 126. The mission was to create an e-book device. On 17 November 2007 the first Kindle is unveiled, the Kindle 2 is introduced in early 2009. In 2007 the hard work is paying off, the quarterly sales equal over $3Billion and yearly sales rocket up to be $14.8 billion. That is more than Amazon’s main competitors eBay and Barns& Nobles put together. After the dot com bubble bust, Bezos notices a company that could be a potentially rival called Netflix, which was at the time specialized in DVD rental and moved on to streaming on demand. Amazon.com decides to purchase Lovefilm a company similar to Netflix that controlled the majority of the British and German market. To give Amazon a strong foothold in the industry. Lovefilm is soon after offered to Amazon Prime customers in the United States as video streaming service. A couple of years before its 20th anniversary Amazon has grown to about 88,0000 employees.
In 2012 and the first half 2013 its stock rose 60%. Amazon acquires a company that builds mobile robots for $757 million in hope that one day they will replace humans picking objects in Amazons fulfillment centers. Bezos himself is not only in charge of Amazon.com and Blue Origin, he owns a venture capital firm called Bezos expeditions that holds stakes in Twitter, Uber and Business Insider. He also owns the Washington Post since 2013. Despite all this, his main focus is still Amazon.com that with web services, video streaming and other technologies he has turned into not just an everything store but an everything company.
Reflection
“The everything store” leaves me impressed by Jeff Bezos’s biography. In the following I want to focus on my main takeaways from the book.
First of all, the quote that really got stuck in my head is Jeff Bezos’s regret minimization framework, it is the framework he based the decision on to quit his well payed job at Desco and found Amazon.com to participate in the new thing called the internet.
Jeff Bezos: “When you are 80 years old and in a quiet moment of reflection narrating for only yourself the most personal version of your life story, the telling that will be most compact and meaningful will be the series of choices you have made. In the end we are our choices.” In my opinion this is a great way to base your important choices on. As it is true that at the end of my life I would remember the important choices I made, like moving to Thailand and start studying Entrepreneurship at Bangkok University. And I if I would never have taken this step I would have regret it. I never really thought of it this way before.
Furthermore, Bezos main motivation to get that wealthy he is today, was since he was a teenager, not to get insanely rich but to have the financial capital to get outer space. What he fulfilled with founding blue origin, his company dedicated to space exploration. This illustrates how important it is for anyone to launch a very successful business to have a greater vision of their future than just getting rich.
It is obvious that in any business there is not only a straight line to success. Amazon.com was about to lose $1 million as the dot com bubble busted after 2000 and many people stopped believing and investing in dot com companies. Amazon had to change its focus from get big fast to get our house in order. Including slowing down expansion and develop Amazon’s fulfillment-centers to be more efficient.
The Amazon.com we know today with all its attributes is in many ways a product of the obstacles Bezos navigated through during the dot com crash. Resulting in frugality as the first of 6 core value.
Second core value is customer obsession. This is the abstract concept of starting with the customer and working backwards from there. In order to create the service as customer centric as possible.
Third, bias for action, as taking action tops everything in business. Bezos even instituted the Just-Do-It-Award for his employees, to motivate them to do something notable outside of their normal job responsibilities.
Fourth core value is ownership. As an employee at Amazon your mindset is directed to long term value and not to sacrifice long-term value for short-term profit. Because leaders are owners, they own this mindset.
Fifth, high bar for talent hiring process, Amazon wants to raise the performance bar with every hire and promotion. As every new employee should raise the hiring bar for the next one.
Sixth, innovation, this core value was developed as Amazon.com changed from only an online retailer to a technology company. Bezos expects and requires innovation and invention from his teams to always find ways to simplify and improve.
One point that is important to make is Jeff Bezos’s management style, as many of his employees fear him in a healthy way. Many employees at Amazon.com especially at its start-up times said “If you’re not good, Jeff will chew you up and spit you out. And if you are good he will jump on your back and ride you into the ground.” This metaphor illustrates that if you do not fulfill Jeff’s expectations you can see yourself as fired and if Jeff sees your potential he expects that you work long, hard and smart and you can not only choose 2 out of these 3.
In conclusion, Jeff Bezos made his decision to found Amazon.com with his regret minimization framework. He had the greater vision of getting wealthy to be able to explore space since he was a teenager as his main motivation. The obstacles Jeff faced and overcame define Amazon.com today. He has an extreme leadership style, which is known and feared between his employees but obviously gets the right people to work for him.
I would recommend this book to people that have an interest in entrepreneurship, or generally economics as it is rich in technical terms and written in a very formal way. But with some background knowledge this book gives you a great insight into founding and maintaining a business.