Jeff Bezos' INSIDE
..or a nifty love note for Amazon
Quotable Quote
[..] Come on, Jeffrey, you can do it
Pave the way, put your back into it
Tell us why, show us how
Look at where you came from, look at you now
Zuckerberg and Gates and Buffett
Amateurs, can fucking suck it
Fuck their wives, drink their blood
Come on, Jeff, get 'em!Bo Burnham, "INSIDE”, Bezos I (explicit)
Almost every story about Amazon inevitably starts off with an old interview clip of a glowing Jeff Bezos with a smile on his face (and a maniacal laughter in his eyes) talking about the 2300% year over year growth rate of the Internet. The clip is only 5mins long and has aged super well - especially when you realize the interviewer begins his line of questioning with “Who are you? And what is your claim to fame?”
Amazon - the name - came about after it was preferred over the the original choice of Bezos - relentless.com (Useless trivia: You should try shopping on relentless.com sometime) - which was considered too inward looking or revealing of their working style.
Its easy to add to the treasure trove online about both Amazon and Jeff Bezos - mostly for the wrong reasons, including (but not limited to) work culture, anti-trust, twitter fights with Bernie Sanders, space-trip and even Elon Musk. But just for today, I have left my judgy goggles in the corner of the internet where someone bought the below picture for 33 ETH (approximately 103k USD).
Rent my customers while I sniff you out
Bezos has been transparent in multiple interviews about choosing books as the first product to sell on Amazon because as a product segment books had largest number of categories within any particular genre, and hence building an online store with the largest possible collection was in scope and a genius move. Plus there was the added benefit of lower pricing due to no sales tax being imposed compared to physical stores. And the straight forward packaging without the fear of receiving broken/ damaged goods made it easier to travel via the postal system. Once this model flourished, Amazon quickly added other categories to stay one step ahead of the naysayers.
Not to forget that this is happening in late 1990s - Netscape Navigator was the browser of choice, computer was that clanky thing in a very few households and to get to the mostly text Amazon website you had to use a dial-up connection. The experience of purchase had to create enough value for the buyer to be indulging in it again and again. Which is what led to Bezos’ focus on customer experience or customer ecstasy as he would describe it to the fellow employees.
Amazon called its own supply chain of publishers as “gazelles” to be pursued by the “cheetah”. And a metaphor commonly used was attacking the weakest gazelle (publisher) and forcing him (/her) to accept Amazon’s terms, and moving up the chain when ultimately the clamor from the previous kills ends up cementing Amazon’s position as the king of the jungle. And handing them unlimited negotiating power.
As much as has been made in the recent headlines about Amazon trying to compete with the sellers on the platform by replicating the product lines - It’s a feature, not a bug. Since its humble beginnings, Amazon created its own digital stores to sell the same items its sellers were selling. They were even capturing purchase specific granular data (items saved in the cart but not purchased, time spent by an item in the cart etc) as early as 1995-1997.
Because of our emphasis on the long-term, we may make decisions and weigh tradeoffs differently than some companies... We will continue to make investment decisions in light of long-term market leadership considerations rather than short-term profitability considerations or short-term Wall Street reactions...We aren't so bold as to claim that the above is the 'right' investment philosophy, but it's ours, and we would be remiss if we weren't clear in the approach we have taken and will continue to take.
Jeff Bezos, 1997 letter to shareholders
This was written in 1997. Let that sink in. (And then maybe cry about not owning enough stock by selling your kidneys on the Amazon platform in 2005)
<Sniff> Moving on.
In terms of improving the financials, launch of Amazon Prime was a masterstroke that worked wonders for the company. It needs its own post (just like AWS - I promise we will come back to this in a future post) in context of the direct contribution to the growth in Net Income. (In a quick summary of the timeline - Prime was launched in 2005, however the benefits remained limited to 2-day free shipping. Video content offered to Prime customers in 2011. Prime Music debuted in 2014. Amazon Prime Day was created in 2015.)
In hindsight, Amazon’s playbook was to obsess on customer experience to retain the highest number of customers. This would then attract third-party sellers to the platform, which would then increase the product offerings, and this in turn would become a positive feedback loop attracting even more customers. Increased product sales led to operational efficiency and a stronger negotiating power. The savings (by eating up the supplier’s margins) were then ploughed back into the business to contribute to the rocket-ship of a growth model.
To wit, it is only contextual that I end this post with the following,
Occam’s Earworm
Remember to send brickbats and bouquets my way.
Thanks for reading.