
What Jeff Bezos Knew Back in 1997 That Made Amazon a Gorilla - andrewvalish
http://www.forbes.com/sites/ericjackson/2011/11/16/6-things-jeff-bezos-knew-back-in-1997-that-made-amazon-a-gorilla/
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InclinedPlane
I'd add to this: the most sure fire way to dominate a market is by executing
with a combination of skills that do not naturally tend to go together.

Google succeeded by combining high quality software engineering with cutting
edge computer science research and beyond state-of-the-art data center
operations.

Apple succeeded by combining solid software engineering with equally solid
internet services engineering and more than anything exceptional design and
aesthetics.

Amazon succeeded by combining solid web development with state of the art
inventory management and fulfillment processes.

It's easy to do one thing well, there are literally millions of talented
people in the world who can do one thing exceptionally well. But to be a
company like Google, Amazon, or Apple you need to have a combination of
talents that are typically unusual or difficult to keep together.

There are so many tech companies out there who have a band full of guitarists
who all have the same musical tastes and background and they wonder why they
haven't conquered the world yet.

~~~
erichocean
Agree this is a great point.

Sadly, companies that are good at two things have a very difficult time
getting funded. My own company, Fohr, has made it to the full partner round at
one very highly-respected VC firm, but because we're in two industries (tech
and film), and innovating in both, we're in a no-mans land for funding. :(

~~~
InclinedPlane
It's not just about diversity of competencies. It's about complementary but
dissimilar skills. Apple is able to make beloved consumer electronics because
they mesh aesthetic sensibilities and design with quality hw&sw construction.
Google succeeded because better algorithms (page rank) led to higher quality
results and good software engineering techniques (map-reduce, sharding)
married to novel data center operations (heavily automated consumer hw based
servers) allowed them to crank out results faster and cheaper than the
competition, making ad revenue all that more potent and enabling lower margin
ads (such as adwords).

Without a solid track record of success I can imagine it might be difficult to
convince outsiders of the merits of a company that is more unusual than its
competitors. I think the solution to that is the same as always, keep
efficient and execute well until you acquire the profit or the funding to
grow.

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asr
Most of these points strike me as contrary to traditional lean startup advice
--e.g. it's ok to expend a huge amount of resources without seeing results for
5-7 years, and it's important to be first in a big market.

Obviously, this worked for Amazon, and there are some opportunities you won't
be able to take advantage of in any other way, but it's certainly high risk. I
mean, Pets.com arguably followed much of this advice.

I suspect what really separates Amazon from the pack is their actual customer
experience--but that's only 1 of 6 points here.

~~~
jpwagner
Some research companies will build things that are 5 years off from being
viable and that approach is generally contrary to "lean startup advice".

But Amazon built something that was viable immediately AND fit into a 5-7 year
plan.

~~~
smokinn
Amazon was nowhere near immediately viable.

It was founded in 1994. It had its IPO in 1997. It posted its first net profit
in 2002.

It lost money for 8 years. Hardly "something that was viable immediately".

On the other hand it didn't take that much investment before IPO. It was
seeded with 300K from Bezos and his family followed by 50K in angel money and
finally an 8MM round.

[http://www.quora.com/Who-were-the-original-investors-in-
Amaz...](http://www.quora.com/Who-were-the-original-investors-in-Amazon-and-
how-much-pre-IPO-investment-did-Amazon-receive-in-total)

It rode the cheap cash infusion from the dot com bubble for as long as it
could until the bubble collapsed. At that point it had cash but was going to
run out eventually which is why I imagine they decided then it was time to try
and make the company profitable rather than expand through investment.

~~~
jpwagner
Maybe a better word to make my point would have been "launchable" rather than
viable.

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hsshah
I observed these traits from a unique vantage point.

Worked with the "world's biggest auction site" for 8 years since 2002. I
remembered the pride the company had about it being profitable from Day 1 and
the dismissal of Amazon for not turning any profit for so many years. The
company had strict quarterly goals and any decision, no matter how
appropriate, if it hurts the quarterly goals was discarded.

Comparing this myopic view with Amazon's patience, stubbornness and customer
focus; it's no wonder that Amazon went from half to more than double the
market cap of my previous company.

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mseebach
_One thing I learned a long time ago about really smart people: study, read,
or listen to the things that they think are great. It’s a shortcut to
greatness._

No. No. No. No. A million time NO. Granted, at least it's better advice to
study the things great people study, rather than study great people
themselves.

By obsessing over what successful people do, we forget to study what the vast
majority of people who did not become great did. For the six lessons listed,
you can trivially find businesses who did that and failed. I sure you can find
businesses for whom that is straight forward bad advice. And finally, you can
find businesses who did not do it, and who still succeeded.

Those six things was probably the right thing to do for Amazon, at the time
Amazon did them. Except abstracted beyond recognition, they are not generally
applicable.

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michaelpinto
My favorite: "It’s ok to make mistakes but it’s not ok to be timid." I know in
silicon valley that sort of thinking is encouraged, but in most of corporate
America it's very rare.

~~~
wanorris
If your job is to shepherd, say, Proctor and Gamble forward, then the upside
of boldness is radically less than if you're Amazon. And the downside of
boldness, profligate spending, is likely to come out of your margins without
ever being made up in the long term.

In a relatively mature segment, operational discipline is more important than
big ideas and plans. Since the reward system is different, it attracts
different people, and a more suitable mentality.

This is heavily related to why it's so often that the best people from a
growth company leave as the business matures -- the skills that make you great
at growing a company will not make you equally successful at managing an
existing business, even aside from the fact that growth-company people usually
don't _like_ doing the more mundane tasks of a later-stage business.

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chubot
Yup, that is why I bought Amazon stock in 2005 (really, from an interview that
was very similar to this one). Jeff Bezos talks about long term thinking and
also executes on it.

I think it also relates to the point made a few weeks ago about Silicon Valley
being ADD in some respects -- chasing the hottest new thing, rather than
conscientiously building value over years. I think someone said something
about Bezos choosing Seattle for that reason. He wasn't from that area like
Bill Gates -- he was in NYC I believe and moved out to Seattle to start the
company.

~~~
FrojoS
I agree, though, zero sales tax certainly plaid a role, too.

~~~
Zimahl
Zero sales tax where? WA has a 7.6% state sales tax and individual counties
have added on top of that.

WA doesn't have an income tax (if that's what you actually meant).

~~~
kemiller
All over the place. They have deliberately avoided establishing tax nexus in
almost every major metro area. California orders all ship from Nevada, for
example.

Seattle is the exception, for obvious reasons.

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alecco
A great article but it lacks reference cases to compare with. We easily fall
for survivor bias.

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Macsenour
Just curious, couldn't we apply all 6 of these to Groupon? I think you'd get a
"yes" on all of them.

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thesash
It's an impressive testament to Bezos's vision and integrity that he was able
to both articulate these principles early on _and_ stick to them for 15 years.

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ofca
I would just add that all these things are common knowledge. The most
remarkable thing he did is - he followed and delivered on all those things.
Just look at number 2:"Think long-term meaning 5 – 7 years, not 5 – 7 months".
Almost every sane person knows this. But only few deliver. It takes a lot of
guts and integrity to undertake such a journey, and Jeff made it look easy.
Great guy.

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jpwagner
awesome interview from 2000:

<http://www.wired.com/wired/archive/8.07/bezos.html>

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ahi
"Infrastructure web services had to happen."

Honest question, why? I'm glad they did it, and Amazon is pretty good at it,
but I'm not sure why it was inevitable.

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vaksel
stuff like this is pretty much why my online shopping is almost exclusively
done at Amazon.

Even if it's a few bucks more compared to some other site, I just trust them
not to screw me over.

