In 1994 and 1995, Amazon lost $52,000 and $300,000, respectively. Despite the losses, Amazon CEO Jeff Bezos projected $74 million in sales by 2000, and $114 million if everything went well. The actual sales in 2000? $1.64 billion.
Beginning in the 1990s, Web-mania fueled the meteoric rise of “Amazon.com” to a higher valuation than Sears. Barnes & Noble and Borders Bookstore first popularized the superstore model over independent mom-and-pop bookstores, but Amazon looked to the future for its business model. Amazon quickly became known for its core values of customer obsession, frugality, bias for action, ownership, high bar for talent, and innovation. Founder and CEO Jeff Bezos prided himself on pioneering innovation via novel features like Amazon Sales Rank, 1-Click ordering, and the Alexandria Project. Bezos once told an employee, “Your job is to kill your own business […] You are basically already late,” accentuating the perpetual quest for innovation that was ingrained in the company’s culture (234). While competitors like Barnes & Noble waited for small markets to grow enough to warrant investment, Amazon effectively positioned itself to capture market share and reap the rewards once markets caught up to Bezos’ innovative vision. Despite a tumultuous path, Amazon has succeeded in developing into a fundamentally sound, pioneering conglomerate that now dominates retail worldwide.
Amazon’s secret to success has been its ambitious, demanding leader. Jeff Bezos is notorious for prioritizing his customers at the expense of his employees. Since the startup phase, the customer has remained the company’s highest priority. Bezos understood and prioritized the perspective of the customer and intentionally designed products and services to appeal to customers with convenience and performance.
Amazon’s visionary Founder and CEO Jeff Bezos understood that e-commerce would enable brick-and-mortars to personalize the consumer experience using data analytics only available online. Bezos pioneered the personalization of commerce, setting the stage for future collaborative filtering across industries, from Netflix to Amazon itself. By implementing Amazon’s P13N personalization, Amazon generated appealing recommendations for customers based on the items they browsed and purchased (133). Bezos also insisted on a customer-friendly 30-day return policy and implemented Amazon Marketplace to increase customer selection, despite the uproar from suppliers. Amazon’s mission has always been to drive inefficiencies out of the supply chain and offer the lowest prices for its valued customers. As such, frugality has been utilized since Amazon’s inception to sustain innovation and customer happiness via low prices and resourcefulness.
In stark contrast, Bezos demands superior performance from his employees, constantly pushing them to the limit. Bezos once told employees “The reason we are here is to get stuff done, that is the top priority […] That is the DNA of Amazon. If you can’t excel and put everything into it, this might not be the place for you” (90). He even prefers to frame negative press over company successes, exploiting fear to drive results. Bezos is notorious for his amusingly degrading criticism, as he callously tells subordinates, “I’m sorry, did I take my stupid pills today?” or “Why are you ruining my life?” (177). Amazon often saw high employee turnover because of the demanding CEO, with countless senior executives leaving soon after joining.
However, Bezos never despaired over the employee exoduses. He was known for effectively motivating employees without developing personal attachments. Bezos worked employees to exhaustion, but occasionally showed unexpected expressions of appreciation to his closest colleagues, including lavish farewell parties (267). With this in mind, Amazon employees are well aware of the intense environment. As one ex-Amazon employee said, “Everybody knows how hard it is and chooses to be there […] You are learning constantly and the pace of innovation is thrilling” (328).
Bezos also keenly sought to gain a competitive advantage. He wanted to have more user generated content than any competitor, thus establishing a sustainable competitive advantage and switching costs over brick-and-mortar competitors. In Good to Great, Jim Collins describes Amazon’s sustainable flywheel model: low prices increased sales and attracted more third-party sellers, which offset fixed costs and increased efficiency, further lowering prices (126).
While building the company, Bezos was stubbornly unwilling to mortgage the future of the company to generate profitability now. Even with the stellar sales in 2000, Amazon still lost $1.4 billion, investing massive amounts in new markets for future profitability. Amazon did not report a profitable quarter until 2002 – a symbolic penny per share profit at that. Bezos established the “holy scripture” of Amazon as making decision based on long-term prospects of future cash flow and growing market share rather than short-term profitability (69).
Realizing the Vision
Bezos’ confidence in his vision and devotion to realizing his vision differentiated him from the competition. Looking to our trip and beyond, emulating his vision and tirelessly pursuing the vision can be integral to a startup’s success.
From the beginning, Bezos held an inconceivable vision of an “Everything Store”, and successfully stood by his vision and made it into a reality. Bezos envisioned a personalized customer experience utilizing high-speed internet, essentially unheard of at the time, and an “Everything Store” that would compete with Sears, even when Amazon only sold books. To make it happen, he let his uninhibited ambitions inspire subordinates and propel the company forwards. Bezos encouraged employees to be aware of the bigger picture and understand that they were working to improve the greater company, saying “There will be only a few enduring brands, and we will be one of them” (66). Even in troubled times, Bezos would reaffirm his commitment to building a lasting company, learning from his mistakes and developing a brand associated with the “abstract concept of starting with the customer and working backward” (105). As Sam Walton wrote, Bezos understood that anyone could develop a competing company, but the differentiator would be his attitude and ability to learn and adapt.
Never one to doubt himself during tough times, Bezos constantly defended his vision and ensured that it would come to fruition. When Howard Schultz criticized Amazon’s lack of physical presence, Bezos disagreed and said “We are going to take this thing to the moon” (54). Later on, he began to actively pursue his dream of the “Everything Store”, named Project Fargo, and saw the potential when no one else did. Amazon has recently come to embody Bezos and David Shaw’s original vision of the “Everything Store” by selling millions of products, expanding across industries, filling gaps in Amazon’s product lineup, and disregarding the seemingly impossible boundaries to his mission.
After reading The Everything Store, I can confidently say I would recommend it to anyone interested in the fields of business or technology. Author Brad Stone offers little-known insights into the brain of Amazon’s mastermind and documents the company’s meteoric rise from startup to world domination. With a market cap of $600 billion, Amazon’s growth has impossibly continued through revolutionary breakthroughs and forward-thinking dominance across diverse product areas. For a company in constant flux, Bezos has maintained continuous innovation in every industry imaginable. Stone’s book highlights the importance of maintaining a vision and constantly working to make the vision a reality, as Bezos did. Interestingly, with Bezos’ Blue Origin, space exploration may be the next frontier and the next step in his vision. As Jeff’s high-school girlfriend said, “The reason he’s earning so much money […] is to get to outer space” (153). We’ll have to wait and see if Blue Origin turns into the next major success in Bezos’ illustrious career!