Learning from Jeff Bezos

Recently I finished reading the book The Everything Store: Jeff Bezos and the Age of Amazon by Brad Stone. In spite of a 1 star review from Jeff Bezos wife, I enjoyed reading the book. There is a lot to learn from Jeff Bezos and in this post I have captured some them.

1. Regret Minimization Framework

During early 90’s Jeff had an idea of starting an online bookstore. At that time he was working at D.E.Shaw as a vice president. To pursue his idea he had to leave his high paying job. At that time not many people knew about Internet. Status Quo would have prevented most of us to not leave the high paying job. But Jeff thought differently using what he calls “the regret-minimization framework“.

“When you are in the thick of things, you can get confused by small stuff”, Bezos said a few years later. “I knew when I was eighty that I would never, for example, think about why I walked away from my 1994 Wall Street bonus right in the middle of the year at the worst possible time. That kind of thing just isn’t something you worry about when you’re eighty years old. At the same time, I knew that I might sincerely regret not having participated in this thing called the Internet that I thought was going to be a revolutionizing event. When I thought about it that way … it was incredibly easy to make the decision”.

2. No PowerPoints

Amazon employees had been using Powerpoint and Excel to present their ideas in meetings. Jeff did not like it and instead he made employees write their presentations in the form of narratives. There was a six page limit on the narratives. I like this approach as writing is thinking on paper and powerpoint sometimes can conceal lazy thinking.

Bezos announced that employees could no longer use such corporate crutches and would have to write their presentations in what he called narratives. The S team debated with him over the wisdom of scrapping PowerPoint but Bezos insisted. He wanted people thinking deeply and taking the time to express their thoughts cogently. “I don’t want this place to become a country club,” he was fond of saying as he pushed  employees harder. “What we do is hard. This is not where people go to retire.” … Meetings no longer started with someone standing up and commanding the floor as they had previously at Amazon and everywhere else throughout the corporate land. Instead, the narratives were passed out and everyone sat quietly reading the document for fifteen minutes – or longer.

3. Honest

In early 1995, Bezos’s parents invested $100,000 in Amazon. Before taking the money from his parents

Bezos told his parents there was a 70 percent chance they could lose it all. “I want you to know what the risks are, because I still want to come home for Thanksgiving if this doesn’t work.”

4. Avoid Narrative Fallacy

We are wired to tell simple stories to explain complex things we do not and cannot know. In the book The Black Swan – Taleb calls this as narrative fallacy.

Humans are biologically inclined to turn complex realities into soothing but oversimplified stories. Taleb argued that the limitations of the human brain resulted in our species tendency to squeeze unrelated facts and events into cause-and-effect equations and then convert them into easily understandable narratives. These stories Taleb wrote, shield humanity from the true randomness of the world, the chaos of human experience, and, to some extent, the unnerving element of luck that plays into all success and failures.

Bezos wanted his senior executives to avoid the narrative fallacy and they are required to read The Black Swan.

Amazon employees must support all assertions with data. If the data has a weakness, they must point it out or their colleagues will do it for them. Data-Driven Marketing is read by Amazon employees to support their assertions with data.

5. Build Primitives

During the 90’s Bezos read the book Creation by Steve Grand. In that book

Steve Grand, the developer of a 1990s video game called Creatures that allowed players to guide and nurture a seemingly intelligent organism on their computer screens. Grand wrote that his approach to creating intelligent life was to focus on designing simple computational building blocks, called primitives, and then sit back and watch surprising behaviors emerge. Just as electronics are built from basic components like resistors and capacitors, and as living beings spring from genetic building blocks, Grand wrote that sophisticated AI can emerge from cybernetic primitives, and then it’s up to the “ratchet of evolution to change their design.”

Bezos directed groups of engineers in brainstorming possible primitives. Storage, bandwidth, messaging, payments, and processing were listed down as primitives. Each group focused on building the primitives.

Their efforts became the Elastic Computing Cloud, or EC2 – the service that is at the heart of AWS and that became the engine of the Web 2.0 boom.

If I expand these primitives from computing to multiple disciplines it reminds me of Charlie Munger’s – Latticework of mental models.

Video: Jeff Bezos address to Princeton University’s Class of 2010