Our story opens with a garage. Inside it, there is a man surrounded by boxes. There are hundreds of books in these boxes, which explains their neat, soldierly stacks. What’s he building in there? How’s this for a clue: the year is 1994, and the man in the garage is Jeff Bezos.
While many of us were kicking up our Airwalks with an episode of Friends playing in the background, Bezos was laying the groundwork to change the way people shopped forever. He called his invention the “Everything Store,” a place where, using the as-yet-untapped power of the Internet, people could purchase virtually anything they might need.
Twenty years later, the Everything Store exists. It’s currently valued at $150 billion and disrupts industry after industry, and goes by the name Amazon.com.
So, how did an idea planted in a Bellevue garage grow into one of today’s most successful businesses? Dedication, innovation, and seven habits that nurture success.
We tapped Brad Stone’s book “The Everything Store” to pinpoint them and round them up here.
Habit 1: Focus on customers.
Perhaps the clearest advantage of an online business is that it facilitates measuring customer behavior. And measuring is something Bezos and Amazon have prioritized: over the years, the company has added features with the sole aim of making their customers happy, which in turn bolstered sales.
Take, for example, Amazon.com book reviews. Although publishers at first scolded Amazon for allowing the laity to critique books, Amazon encouraged its customers to post their thoughts, even if those thoughts were critical or negative. Customers loved sharing their opinions and reading others’, too, and reviews are now one of the best-trusted aspects of the modern e-commerce platform.
Habit 2: Be frugal.
Amazon got its start in a simple, functional space in Washington state and operated on a market with minimal margins. Amazon comes with thriftiness practically baked in — and it seems to help the company focus on the most important things: its customers and innovation.
What does frugality look like for Amazon? To name just a few, employees pay for their own parking tickets and snacks, and when they travel, employees bunk in double rooms, summer camp style. Amazon isn’t driven by relaxed days brainstorming over coffee. Instead, staff works long, hard, and smart — no compromises on any of the three.
Habit 3: Make your own rules.
If you always hated essays in school, Amazon might not be the place for you.
Early on, Amazon established the law that anyone who wants to propose a new idea must first distill his or her thoughts into a six-page document. Before any decision is made, those involved, including Bezos himself, must take the time to read and dissect the six-pager.
Another rule introduced by Bezos is the Two-Pizza Team: no team should be so big that you couldn’t feed it with two pizzas. According to Bezos, larger groups are less productive, so the company is organized into autonomous units of 10 or fewer that compete for resources (but not pizzas) in their mission to make their customers happier.
Habit 4: Focus on tomorrow — and two years from now, too.
Bezos started Amazon with the long game in mind — a play that meant accepting short-term losses that not everyone liked. The e-book is a prime example: when e-books first entered the market, most publishers sold them at prices commensurate to their print editions.
Bezos, however, projected that their long-term price would be around 10 dollars and started selling them for $9.99. The company lost about 5 dollars per e-book at first, but later, when the price eventually dropped, Amazon had become everyone’s first stop for e-books. With this surprising strategy, Bezos had also laid the foundation for one of the company’s greatest successes, the Kindle.
Habit 5: Risk it.
Before that big idea in the Bellevue garage took off, Jeff Bezos had a secure job at a hedge fund. Still, he quit it, set up shop, and poured his savings into making the Everything Store a reality.
In this case, the risk was worth the reward, a lesson that informs how Amazon runs to this day. Being willing to risk it certainly led to failures like Amazon Auctions, a division that simply couldn’t compete with eBay, but it’s also spawned the wildly successful 1-click purchase and many other innovations.
To support a culture of initiative and risk-taking, Bezos created the “just do it” award, which is given to employees who tried and succeeded — and also to those who tried and failed. The core message is that having taken the risk is always better than being too fearful to move.
Habit 6: Decide with data.
If you were born after 1985, you might not realize that Amazon started out as a book shop. The initial product selection was no happy accident on Bezos’s part, but the result of logic and facts. Books can be shipped without breaking, they’re rarely returned, and they’ll never expire (even if the knowledge therein grows stale). In short, books are the ideal product for e-commerce.
Nearly every aspect of commerce and customer behavior is quantifiable, so Bezos demands that all decisions be based on data. Meetings are about metrics, not customer anecdotes.
Habit 7: Stay hungry.
Amazon began with books, but conquered music, movies, electronics, and toys in very short order. Next came the Kindle, and with it, they won their niche. Even now, there are Amazon services completely under the radar to most consumers. Did you know that Amazon Web services provides cloud computing services to big businesses, the US government, and even NASA?
How did this happen? It certainly didn’t come from Bezos getting complacent. To the contrary, he believes that there are no products and services Amazon couldn’t sell. Soon, the company will have its own delivery fleet, become a publisher and media company, and perhaps even offer 3D printing services. For Bezos, the future is rife with possibility, opportunity, and inventiveness — and he’s hungry for all that it brings.
Jeff Bezos’s unique way of thinking long-term, rewriting rules, and taking smart risks has made the company into a giant. So take it from Amazon’s founding striver: focus on customers, stay hungry, be frugal, and hey, take a peep into the garage. If you look past the lawn mowers and rakes, it might be full of potential.
Source: Business Insider