"Every overnight success takes 10+ years"
Short-term (do great work); long-term (be patient, reverse-engineer the goal)
CNBC interview with Jeff Bezos
Amazon is an outlier in approach, scope, scale, and profits. So, let’s listen in on an interview with someone who knows a lot about the company. Founder, Jeff Bezos, quotes in blue italics.
My big takeaways:
Amazon was not a “sure thing.” It took grit, experimentation and salesmanship
Customers are more dissatisfied than you think; you need to constantly invent for them
Think 3 years out; the current financial quarter was determined 3 years ago
Experimentation inevitably results in a lot of “good failure”
“Bad failure” does exist – screwing up what you should be getting right
All “overnight” successes take 10 years
Baseball is not a good business analogy. With technology, the returns can be asymmetrical. What if you swung the bat and hit the ball so hard you got 1,000 runs?
Focus on 2-3 big, 10-year ideas and pour your energy into them
Forty “No” to get to Twenty “Yes”
I raised $1 million from 20 investors, $50,000 each, they got 20% of the company for $1 million. . . 40 told me no. So I had to take 60 meetings to get 20 “Yes” First question was always “What is the internet?” It was 1994, and early 1995. It has been one foot in front another, I think that is true for most businesses. You proceed adaptively, step by step, you figure it out, you have a success, then you double down on that success, you figure out what customers want. (1:33)
Customers are always dissatisfied
Customers are always dissatisfied, even through they don’t know it. Even when they think they are happy. . . Customer obsession is not just listening to customers. It is also inventing on their behalf. It is not their job to invent for themselves. (6:35)
This financial quarter was fully-baked 3 years ago
Amazon is long-term oriented. . . Think in 5-7 year time frames. . . When someone congratulates Amazon on its financial quarter, I am thinking to myself those quarterly results were pretty much fully baked about 3 years ago. If you start thinking that way, it changes how you spend your time, how you plan, where you put your energy. Your ability to look around corners gets better. So many things improve, if you can take a long-term approach. It is not natural for humans. It’s a discipline that you have to build. (7:00)
Experiment = lots of good failure
You cannot invent and pioneer, if you cannot accept failure. To invent, you need to experiment. And if you know in advance that it will work, it is not an experiment. . . They are inseparable twins: failure and invention. So, you have to be willing to do that, and it is embarrassing to fail. (10:12)
Baseball limits you to 4 runs
With technology, the outcomes can have a very long-tail, and the payoff can be very asymmetric, that’s why you should do more experimentation. Everyone knows that if you swing for the fences, you get more home runs and you strike out more. With baseball, that analogy does not go far enough – no matter how much you connect with the ball, you can only get 4 runs. The success is capped at 4 runs. But in business, every once in a while you step up to the plate, and you hit the ball so hard, you get 1,000 runs. When you have that kind of asymmetric payoff, one at-bat gets you 1,000 runs. It encourages you to experiment more. It’s the right business decision, and it’s better for your customers (10:45)
Overnight success = 10 years
All overnight success takes about 10 years. (15:50)
Difference between good and bad failure
There is a different kind of failure, which you don’t want. You have operating history, you do know what you are doing, and you just screw it up. So, that’s not a good failure, that’s not an experiment. That’s just bad operational excellence. We have opened 130 fulfillment centers, we are on generation 8 of the fulfillment technology. . . There are different kinds of failure, and you need to make sure you are making the right kind of failures. (17:00)
Identify 2-3 big ideas, then execute
You need to identify your big ideas, there should only be 2-3 of them. The main job of a senior leader is to identify 2-3 big ideas, then enforce execution against those ideas. The good news is that the big ideas should be easy to identify. . . The way that you know that they are big ideas is that they are obvious. Little things can distract you from the obvious. (18:10)
Big ideas are stable in time
The good thing is that these big ideas is that they are stable in time. . . No matter what happens in technology and everything else, . . .it is impossible for me to imagine a scenario that 10 years from now a customer comes to me and says, “Jeff, I love Amazon, just wish that you could deliver a little bit more slower.” . . . You can have great conviction – as a leader – to continue to put energy into driving speed of delivery. . . and you can keep putting energy into those things and spin-up those flywheels, and they will pay dividends 10 years from now. . . pick things that will still be true 10 years from now, 20 years from now. (19:20)
Great video here with a valuations tear down of Amazon here. Professor Damodaran, NYU Stern. (hat tip: FM). In the YouTube notes, you can also download his excel worksheets and enter your own assumptions. Rockstar professor.
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