Two decades ago, only a bunch of people understood the commercial importance of the internet. Jeff Bezos was working for the hedge fund D.E. Shaw & Co., in 1994. He and some of his colleagues had a project in their mind. They were sharing a dream that an online company selling everything that exists in the world. The company was going to be the center of trading by connecting the producers and the consumers on the same platform.
With the rapid spread of the internet, Bezos quit his job and started to strive for his online company dream. He was so sure about himself that he gave up everything in New York and moved to Seattle, where he launched his dream company Amazon in a garage.
After the launch, he was trying to improve his work and he realized that he wouldn’t be able to sell everything, at least for the beginning. Firstly, he needed to start with certain products, then he would expand his market with other products. So, he decided to choose books as his first product type.
Then, one thing followed another and Jeff Bezos’ brilliant career came forward. Such that, his career revealed his unique way of thinking to the world. The Everything Store not only will give you how Bezos’ unique ideas were shaped and how Amazon ascend the throne in time but also it will give you the negative moments that changed the course of company’s history.
1 – Amazon offered a service focusing on what customers needed and wanted.
Amazon’s main focus was on customers’ needs and desires from the first day it was launched. Certainly, the company reached its goal by taking over other companies worldwide. It wasn’t competing with companies from one industry, it was competing with companies from “every” industry.
As time went by, the online store added new features and functions to the website. At first, the new features were criticized by being useless, but it appeared that they were all beneficial for the customers.
For instance, Amazon presented the customer review feature for the books that customers purchased. Of course, publishers did not want this new feature for the fear of customer reviews would cause a decrease in their selling. Also, the feature of selling used products faced with lots of oppositions, however, it turned out that customers were contented with it.
Furthermore, Amazon always improving and working on its coordination and delivery systems to meet customers’ desire to get their orders at a rate of knots. Amazon customers don’t see and know the sophisticated centers which make wonders for them.
While Jeff Bezos was improving his company, he discovered one of the crucial internet commerce advantages: customer behaviors could be easily analyzed on the site.
Have you ever wondered how recommended products come up after you do a specific search on the internet? Well, it was based on the Bezos’ discovery. Your behaviors on the site are used to recommend you relevant products that you might buy. Amazon uses this method to give more personal experiences to its customers. And of course, the method increased the sales of the company.
Jeff Bezos’ plan to manage Amazon was to use move with customer orientation. An Amazon shared its business model as follows: “Our goal is to be Earth’s most customer-centric company.”
Due to the strict policies of Amazon, customer service workers were afraid of Jeff Bezos in case he forwards a customer complaint e-mail with a comment of only a big question mark.
2 – Prudence is everywhere in the company: no need to lavish.
Amazon is a multi-billion-dollar company today, thanks to the prudence that had been applied when it first launched. Back then, the company had to fight with the other companies despite its minimal profit margins. Until today, Amazon’s company values were shaped with the prudence that might seem extreme to some others.
Despite all the comments, Jeff Bezos is persuaded that limitations lead to the innovations and prudence motivates workers to focus on the most important things like customer satisfaction.
Workers at Amazon pay for their parking permits and they don’t get snacks for free. When they are on a business trip even managers have to buy the flight tickets on their own and they share a double room.
Generally, Amazon has a strict policy in the company and their motto is: “You can work long, you can work hard, you can work smart, but at Amazon, you can’t choose two out of three.”
Fulfillment centers take the role as proof of the strictness of Amazon. Low-paid workers walk about 30 kilometers every day to obtain the products. Even though the workers go back and forth in the huge corridors and see the other workers, they never speak to each other. Because it is the rule: they can be fired for talking with each other.
Also, ever since the launch, temporary workers have played a great role in Amazon’s expansion. The company hired tens of thousands of them especially in the busy seasons such as Christmas. After the busy seasons, the company goes back to work with the main employees, in other words, the company lays off the temporary workers.
How does their temporary employee system work? Well, the company chooses an economically weak are and establishes a fulfillment center there. Of course, locals see the place as a new job opportunity and believe that it will help to improve their area. However, Amazon hires more employees with low wages in the busy season and then fires them when at the end of that season. Surely, the company is aware of the fact that they will need more employees in the busy seasons and the locals will be waiting to work for them. Such a way to exploit people…
3 – Even though the company has an unusual corporate culture, it brings effective ideas to the table.
Amazon has a different corporate culture. For instance, internal meetings are most-known with the presentations, however, in Amazon no one gives presentations. Instead, employees write a six-page paper about their ideas, which all the participants have to read silently. This task lasts about 30 minutes, and yes, Jeff Bezos himself also joins and does the same thing.
According to Bezos, this method lets employees come forward with more innovational ideas and they present their ideas better than in a presentation.
Another unusual thing in the company is the two-pizza rule. According to the rule, teams should have enough members to fed with only two pizzas. In other words, each team gets only two pizzas.
Jeff Bezos believes that big teams are unproductive in contrast to smaller teams. That’s why the whole company is organized in autonomous units with fewer than ten employees per unit. Moreover, these teams compete with each other for gaining resources. Their task is to solve the problems as quickly as possible, especially the ones relating the customer satisfaction.
“Communication is terrible!” This quote was heard by Jeff Bezos who wants to have small groups in his company. His idea was to create a decentralized organization in which small groups produce more innovative ideas than the big brainstorm groups. Accordingly, the biggest advantage of small groups is agility. Ideas are produced, improved and applied quickly to provide the best service for the customers.
Majority of Amazon’s meetings are excessively data-driven. In other words, all employees have to support their arguments with hard data. So, these meetings are more than just customer anecdotes. Key performance indicators are shared in the Excel sheets. The company uses numbers for the use of evaluation of aspects such as customer behaviors, the effectiveness of marketing measures, etc. There is a reason for that as the saying goes: “Numbers don’t lie.”
4 – Within 20 years, long-term thinking strategies will become prominent in the business.
Others don’t understand Amazon’s policies, this is our greatest strength and we are willing to keep it that way, says Jeff Bezos.
Rival companies and other outsiders talk about Amazon’s frequent short-term losses. However, in reality, Amazon is aware of the short-term loses they make. Since the company is thinking in the long-term, short-term loses doesn’t affect them that much. Because, they aim to achieve their future goals and for this cause, they are willing to accept the short-term loses.
Over the years, Amazon spent a great deal of money on developing the company infrastructure. Several investors sank into despair because the company was in more debt than its total value. But, thanks to those great investments back in the day, today Amazon is in a different place – universal online retailer. In other words, Amazon became a company that prints money like a mint.
You read about Bezos’ big desire for putting customers first. The same desire applies here. He thinks that even if they lose money in the short-term, they will get happy customers’ loyalty which will lead to the company to make more money.
The e-book incident is a great example of long-term thinking. When the e-book became mainstream, Bezos started to sell them for $9.99 per book. Normally, Amazon bought e-books and their printed equivalents at the same price. But, selling them for $9.99 made the company lost around $5 per book sold.
Bezos was aware of the loss but he believed that the publishers would lower their prices eventually. Also, his other goal was to make Amazon as the go-to marketplace for e-books. Later on, prices dropped and Amazon became the go-to marketplace for e-books. Then, wıth the development of the Kindle, Amazon hit the billion-dollar mark.
There is one crucial difference between other companies and Amazon: Amazing focus on the long term. Bezos’ was ambitious from the very first days of his company and his extreme precognition made it possible for Amazon to be the giant e-commerce company in the world.
5- What Bezos has in his mind other than Amazon?
Jeff Bezos had and has other projects other than Amazon, which are shaped by his long-term thinking.
In 2018, he started to finance the building of a massive 10,000-year clock in a Texas mountain. The clock was designed to work for 10,000 years with only a small number of maintenance in time. The inventor of the clock Danny Hills explains the Clock of the Long Now like this: It will only tick once per year. The “century hand” will move once every a century and after every millennium, a cuckoo will come out of the clock and sing.
If everything goes according to plan, this iconic project will draw significant attention. Bezos says that the clock was designed as a symbol for long-term thinking. Also, people will have a feeling for a wider time horizon. Consider how the photographs of the earth taken from outer space change our understanding of space. In the same way, the clock is aiming to change the way we perceive the time.
There are lots of projects that Bezos has in his portfolio. But, his most well-known project is the space program called Blue Origin. The project aims to build a road to space with reusable launch vehicles. Such that, it is planned to be the cheapest and the easiest space-traveling project ever.
Blue Origin project goes step by step, ferociously. They introduce the project with this sentence: “We are not in a race, and there will be many players in this human endeavor to go to space to benefit Earth.” Also, their long-term goal is to lead humans to have a permanent presence in outer space.
Jeff Bezos always had a dream of going to space. His dream was the biggest motivation for his works and projects. Now that he has more than enough resource, he is much closer to achieving those dreams.
6 – Every mistake was a new lesson: bold moves brought their rewards.
In the late 1990s, Amazon bought a couple of start-ups that were on the verge of going down. However, it caused the company to lose hundreds of millions of dollars. After those devastating events, Amazon learned its lesson. From that day forward, the company became much more careful when acquiring new companies. Also, the company developed a DIY culture, in other words, it began to create its product rather than buying them from others.
Amazon has such a brave approach that it can jump into new projects before analyzing them down to the last detail. Let’s say that approach resulted in mistakes, then Bezos chooses to overanalyze everything first. Of course, that means the loss of many opportunities for trying something new that might work.
Jeff Bezos is true to his words. The company’s launch is proof of that. His colleagues who he shared the e-commerce dreams in the hedge fund stayed at their jobs, while Jeff followed his dream and moved to the other end of the country where he launched his online bookstore, thanks to his and his parents’ savings.
From the first days of Amazon, Bezos has always had an encourager role towards his employees. He has wanted them to not afraid of failure and try new things, which has caused to slowdowns in some cases. One of the failures was Amazon Auctions. The new marketplace was established in 1999 but it couldn’t compete with its rival eBay. It was suspended in a couple of months.
However, there were many other cases which taking risks lead to splendid innovations such as Amazon’s 1-Click ordering option.
Besides, Bezos created an award called “Just Do It” for those who come up with a noteworthy idea, preferably outside of their department. Also, employees who took risks while putting forward an idea and end up with failure can get the award. Only in one condition: they should have a brave and solving attitude in the process.
And, as an example of the company’s savingness, there are not any cash prizes for the employees. In the case of rewarding, employees get a pair of huge Nike sneakers that belonged to basketball players.
7 – Amazon is not just an online shopping site: there is more than you think.
Bezos started Amazon as an online book retailer. When everything went well, it began to sell other stuff such as albums, films, toys, electronic devices, etc. After they sold well, this time Bezos offered people to sell their products both used and new on Amazon. Last but not least, with the introduction of Kindle, Amazon became the most well-known e-book reader in the world.
Besides all these, Amazon has many other additional services offers that most of the people don’t know. One of these services is the cloud services platform AWS (Amazon Web Services). Thanks to the AWS, Amazon’s online retailer image gained a new face ─ tech company. A variety of businesses, the US government, NASA and the CIA purchase storage space and computational power via AWS. Also, many online start-ups like Netflix and Instagram use the servers that belong to the AWS, in other words, AWS takes the role of the backbone of many companies.
Amazon had only one kind of a customer group, but, with the new image, the company gained a new group of customers: start-up developers who buy terabytes worth of space. They needed those spaces to solve some of the world’s most exciting problems.
The Kindle showed how much Amazon care about their customers. People began to see Amazon’s customer satisfaction approaches. Not only their needs continually recognized and met, but also their possible needs are foreseen and handled. After Bezos started to sell e-books he realized that people were going to need an e-reader to be able to read e-books.
Bezos’ idea of an e-reader had been developed and the Kindle came forward. The first launch of the Kindles was in November 2017. Surprisingly, within six hours they sold out. The following 5 months Kindles sold out in a very short time. It is still the bestseller in e-readers. Amazon is very happy about their selling rate and accordingly over a million Kindle devices had been sold so far.
8 – Everything Store: A dream come true.
Ever since the beginning in Jeff Bezos’ garage, Amazon has been in constant growth. Every single day the company is coming closer to realizing the original dream: Everything Store.
Bezos never stopped working for his dreams, despite all his accomplishments. Maybe, someone with the same fortune as he would already take a rest for life. But, according to him, there are still tons of work to do to achieve his dreams. His long-term ideas still waiting for him to be developed and worked onto.
For example, he wants to see the Amazon same-day product delivery. He wants to get into the grocery business with the name of Amazon Fresh. He wants to have a vehicle fleet with trucks in it. Moreover, he wants to turn Amazon into a publisher and media company which has an Amazon film studio in it. Also, he wants to produce Amazon smartphones and televisions. Last but not least, he wants to expand Amazon to new countries.
There is nothing Amazon can’t do, it can sell every single product online, believes Jeff Bezos. According to him, there are still too many things to create and waiting to be discovered in the future. Amazon’s story began thanks to the Internet, that’s why he believes the amazing power of it. He is not tired at all; the journey has just begun.
Amazon company owes its success to Jeff Bezos’ unique way of thinking. The company always open to changes, rewrites the rules day after day and never stops improving itself. Started as an online book retailer but has become the Everything Store after all. Even though Jeff Bezos says that his journey has just begun, the company makes $75 billion per year already.
The Everything Store: Jeff Bezos and the Age of Amazon by Brad Stone Book Review
Amazon owes its success to its principles such as long-term thinking, putting customer satisfaction above all, and most importantly, constantly developing. Its founder Jeff Bezos is the man who made it all possible. His unique way of thinking and managing the company made the Amazon what it is today. He is brave enough to take risks, always open to trying new things. Also, his future-oriented thinking leads to his other projects such as Blue Origin space program and 10,000-year clock put into the practice.
“Communication is terrible!” As the quote shows, Bezos is not in favor of speaking while working. He shaped his workplaces according to this philosophy. For instance, he wanted his employees to write down their ideas and others read those in complete silence, rather than one employee speaks in a presentation and others listen. He thinks that people can think and organize what they will write, however, speakers don’t have much of that opportunity.
Small teams, better ideas. Amazon has a two-pizza rule. Accordingly, teams should be fed with maximum two-pizzas. In other words, each team should have less than 10 members. So, the teams bring more innovative ideas than the bigger teams and compete with each other to be more useful for the company. It is obvious that it worked for Bezos’ company and brought the Amazon from a small online book retailer to the world’s biggest store ─ Everything Store.