#321 Working with Jeff Bezos

Summary Notes


In a dynamic conversation, Speaker A announces an upcoming live show in New York City with Patrick O'Shaughnessy, urging listeners to attend for a guaranteed engaging experience. The episode segues into discussing the profound impact of high-quality sleep on decision-making, highlighting the benefits of Eight Sleep's temperature control feature, which Speaker A credits for significantly improving sleep quality. Additionally, Speaker A introduces Vesto, a financial tool for businesses to invest idle cash in U.S. Treasuries, emphasizing personal endorsements and the opportunity to directly interact with Vesto's founder, Ben. The core of the episode delves into the insights and principles from Amazon, particularly Jeff Bezos's emphasis on high standards, as exemplified by the "Be like Howard Hughes" anecdote. The book "Working Backwards," co-authored by Colin Breyer and Bill Carr, is spotlighted for its detailed exploration of Amazon's culture and Bezos's direct involvement in decision-making and instilling company values. Speaker A underscores the importance of single-threaded leadership and the elimination of unnecessary communication within a company, drawing on Amazon's innovative approach to foster speed and autonomy. The episode concludes with a powerful lesson from Bezos: making swift decisions with partial information is often more beneficial than waiting for full certainty.

Summary Notes

Live Show Announcement

  • David Senra is hosting a live show in New York City with Patrick O'Shaughnessy from the podcast "Invest Like the Best."
  • The event is scheduled for October 19 and tickets are available on the Founders Podcast website.
  • David Senra recently recorded episode 343 on "Invest Like the Best," which is available on the podcast feed.

"29 days from now. I am doing a live show in New York City on October 19 with Patrick O'Shaughnessy from Invest like the best... It is episode 343. David Senra in service of Founders if you live in New York City or you're looking for an excuse to travel to New York City, highly recommend coming out to the show."

The quote announces the live show and encourages listeners in or traveling to New York City to attend for an engaging conversation.

Importance of High-Quality Sleep

  • David Senra shares insights from Jeff Bezos on the importance of getting 8 hours of sleep for improved mood, energy, and decision-making.
  • Bezos believes high-quality sleep is crucial for making high-quality decisions.
  • Senra endorses a product called Eight Sleep, which has helped improve his own sleep through temperature control features.

"One of my favorite things that I don't think I talk about in the episode that I heard Jeff Bezos say that changed my perspective on the importance of high quality sleep was he was giving an interview and he said that he makes sure he gets 8 hours of sleep a night."

The quote highlights Jeff Bezos's emphasis on the importance of getting sufficient sleep to enhance decision-making abilities.

Business Investment - Vesto

  • Vesto is a service that helps businesses invest their idle cash in US treasuries, providing a government-backed return.
  • David Senra knows the founder, Ben, and suggests scheduling a demo with him for interested businesses.
  • Vesto is used by venture-capital-backed businesses and bootstrapped companies to manage cash effectively.

"Vesto makes it easy for you to invest your business's idle cash... I have one founder friend who raised a bunch of venture capital, and he uses Vesto as a way to extend his Runway. I have another founder friend who bootstrapped his company, and he uses Vesto to get a better rate of return than if his money was just sitting in his bank account."

The quote explains how Vesto is used by different types of businesses to maximize the return on their idle cash.

Jeff Bezos and High Standards

  • Jeff Bezos emphasized the necessity of setting and maintaining high standards within Amazon.
  • He used the example of Howard Hughes from the movie "The Aviator" to illustrate the importance of attention to detail and quality.
  • Steve, an Amazon executive, was encouraged to apply the same meticulous scrutiny to Amazon products.

"Not long after the launch, my boss, Steve, took me aside. He told me that he had an interesting meeting with Jeff, who made it very clear that setting and insisting on high standards was an essential part of Steve's job."

The quote conveys Jeff Bezos's directive to maintain high standards, using the analogy of Howard Hughes's perfectionism.

Book Excerpt - "Working Backwards"

  • The book "Working Backwards" by Colin Breyer and Bill Carr offers insights into Amazon's principles and processes.
  • Both authors have extensive experience working with Jeff Bezos and provide detailed accounts of his decision-making and communication style.
  • The book aims to provide readers with actionable principles that can be implemented in their own businesses.

"This is the second time I've read this book. And I think this book is actually perfect to giving you an idea of what it was like working with Jeff Bezos."

The quote emphasizes the value of the book in understanding Jeff Bezos's approach to business and the culture at Amazon.

Amazon's Founding Principles

  • Jeff Bezos handpicked a core team to pursue a once-in-a-lifetime opportunity with the internet.
  • Amazon's early culture was defined by customer obsession, innovation, and high standards.
  • Bezos was involved in every aspect of the business and instilled his principles in the team from the outset.

"Amazon opened for business in July 1995, staffed by a handful of people handpicked by Jeff Bezos... He wanted to create a new and compelling experience for customers."

The quote describes the founding of Amazon and Jeff Bezos's early vision for the company, emphasizing customer experience.

Single Threaded Leadership

  • Amazon's concept of single threaded leadership involves having a dedicated leader and team for each project to avoid dependencies and bureaucratic drag.
  • This approach allows for faster, more autonomous team action and reduces the need for cross-team communication.
  • Jeff Bezos views internal communication as a dysfunction and advocates for machine-based interaction through APIs to promote autonomy.

"The basic premise is that for each project there is a single leader whose focus is that project and that project alone."

The quote defines Amazon's single threaded leadership approach, which is designed to streamline project management and increase efficiency.

Eliminating Dependencies

  • Amazon identified the need to eliminate dependencies among teams to increase the pace of building and innovation.
  • By reducing the need for coordination, teams can work in parallel and focus more on creating new products and features.
  • This shift in approach led to more experimentation and the discovery of customer behaviors and preferences.

"We finally realized that all of this cross team communication didn't really need refinement at all. It needed to be eliminated."

The quote captures the realization at Amazon that reducing inter-team communication would facilitate faster progress and innovation.

Speed and Decision Making

  • Jeff Bezos emphasizes the importance of making decisions quickly with about 70% of the information.
  • Waiting for 90% of the information is usually too slow.
  • Quick recognition and correction of bad decisions are crucial.
  • Speed is valued over slow, meticulous decision-making because slow is costly.

"Jeff suggested that most decisions should probably be made with somewhere around 70% of the information you wish you had. If you wait for 90%, he said, in most cases, you're probably being slow."

This quote highlights Jeff Bezos' philosophy that faster decision-making with sufficient (not complete) information is better than being slow and potentially missing opportunities.

Leadership and Team Management

  • Great leaders are identified as a limiting factor for company growth and innovation.
  • Brilliant managers are rare, even in large companies like Amazon.
  • Leadership requires full-time dedication to be effective.

"Even at Amazon, great team leaders prove to be rarities."

This quote underscores the challenge of finding and cultivating exceptional leadership within a company, which is critical for its success.

The Single Threaded Leader Model

  • Ownership and accountability are easier to establish under the single-threaded leader model.
  • Leaders are evaluated based on one primary responsibility.
  • This approach helps to remove bottlenecks and dependencies, fostering faster innovation.

"Ownership and accountability are much easier to establish under the single threaded leader model."

The quote explains that when leaders are focused on a single project or area, it is easier to hold them accountable and ensure ownership of results.

Learning from External Resources

  • Jeff Bezos and Peter Thiel value learning from various sources like papers, books, and conversations.
  • This approach is likened to viewing the world as a classroom.
  • Many ideas for Amazon were inspired by external resources.

"You'll be shocked at how many ideas Jeff got from reading a paper, reading a book, having a conversation that he used inside of Amazon."

The quote emphasizes the importance of continuous learning and drawing inspiration from a variety of sources to innovate and improve business practices.

Amazon's Meeting Culture

  • Amazon meetings begin with a period of silence while participants read a six-page document.
  • The company transitioned from PowerPoint to written narratives to communicate ideas.
  • This shift was inspired by an essay by Edward Tuft and led to a more thorough understanding of ideas.

"Amazon relies far more on the written word to develop and communicate ideas than most companies."

This quote highlights Amazon's unique approach to meetings and the value they place on written narratives over traditional slide presentations.

The Importance of Reading

  • Jeff Bezos ensures his executive team reads important materials he finds valuable.
  • Billionaires often read extensively, which correlates with their success.
  • Reading and learning provide a wealth of useful information that can translate into business success.

"There is a massive amount of useful information that is being transferred in those 20 minutes."

The quote refers to the silent reading period in Amazon meetings, emphasizing the efficient transfer of information through reading.

Producing Unique Insights

  • Jeff Bezos has a unique approach to reading, where he assumes each sentence is wrong until proven otherwise.
  • This critical thinking leads to unique insights that others might not see.

"He assumes each sentence he reads is wrong until he can prove otherwise."

This quote reveals Bezos' critical approach to reading, which helps him to challenge ideas and generate unique insights.

Working Backwards Approach

  • Amazon's working backwards approach starts with defining the customer experience.
  • The PR FAQ document is used to detail the product and anticipate tough questions.
  • This process led to the successful development of products like the Kindle.

"Most of Amazon's major products since 2004 have one thing in common. They were created through a process called working backwards."

The quote explains the fundamental process that underpins product development at Amazon, focusing on customer experience first.

The Role of Founders

  • Founders are seen as forcing functions within their companies.
  • They push for clarity, thoroughness, and precision in thinking and communication.
  • The founder's belief system often becomes the language and culture of the company.

"Founders force the issue. Founders are forcing functions."

The quote describes the influential role founders play in driving their companies towards specific outcomes and maintaining a culture of innovation.

Innovation and Constraints

  • Jeff Bezos insists on constraints, such as document length, to force clarity and precision.
  • These constraints lead to better thinkers, communicators, and ultimately, better products.

"Restricting the length of the document is a forcing function."

This quote illustrates how imposing constraints can lead to improved thinking and communication within a company, fostering better outcomes.

Customer Obsession

  • Amazon's culture is built around obsessing over customers.
  • This obsession is evident in practices like executives working in customer service to better understand customer needs.

"We're going to obsess over customers, he'd make every single person in the company, including himself, work customer service, actually take calls."

The quote highlights the extent of Amazon's commitment to understanding and prioritizing customer needs by having all employees, including top executives, engage directly with customers.

Importance of Data and Anecdotes

  • Data and anecdotes are crucial when they align and serve as checks when they do not.
  • Jeff Bezos participated in Amazon's Customer Connection program, showing the value he placed on customer service.
  • Bezos's actions demonstrate his commitment to customer experience, influenced by Toyota's quality control methods.

"Data and anecdotes make a powerful combination when they're in sync and they're a valuable check on one another when they're not."

The quote emphasizes the complementary nature of data and anecdotes in business strategy, highlighting their roles in validating and challenging business practices.

Amazon's Customer Connection Program

  • Amazon requires corporate employees to work as customer service agents every two years.
  • Jeff Bezos, as an employee, also took part, signifying the importance of understanding customer issues firsthand.
  • Bezos's personal involvement exemplifies leadership and commitment to customer service.

"Every two years, the corporate employee is required to become a customer service agent for a few days."

This quote illustrates Amazon's policy of immersing corporate employees in customer service to better understand customer experiences and challenges.

Jeff Bezos and Customer Service

  • Bezos was skilled at handling customer service calls and sometimes exceeded company policies in favor of the customer.
  • His approach to customer service was inspired by Toyota's focus on quality control and continuous improvement.

"Jeff was particularly good with customers over the phone, though he was sometimes overly generous."

The quote describes Bezos's hands-on approach to customer service and his tendency to prioritize customer satisfaction, even beyond company policy.

Toyota's Influence on Amazon

  • Amazon adopted Toyota's Andon Cord system, empowering frontline workers to address quality issues immediately.
  • The system highlights the importance of quick response to customer service issues and continuous improvement.

"Jeff yelled out, we need an Andon cord for customer service."

This quote captures the moment Bezos recognized the need for a system that would allow immediate action on customer service problems, inspired by Toyota's practices.

Working Backwards Principle

  • Amazon's working backwards principle focuses on starting with customer needs rather than company capabilities.
  • This approach requires developing new skills and can lead to significant long-term advantages.

"Working backwards exposes skill sets that your company needs but does not yet have."

The quote explains that by focusing on customer needs first, companies may discover they need to develop new competencies, which in turn adds value to the organization.

Development of Kindle

  • The meeting with Steve Jobs influenced Amazon's approach to digital media, leading to the invention of the Kindle.
  • Amazon's strategy was not to copy successful products but to invent and create unique value propositions for customers.

"A meeting with Steve Jobs led to the invention of the Kindle."

This quote links a pivotal interaction with Steve Jobs to the strategic thinking that resulted in Amazon's development of the Kindle, emphasizing the impact of external influences on internal innovation.

Jeff Bezos's Belief System

  • Jeff Bezos's belief system, as expressed in shareholder letters, emphasizes long-term thinking, customer obsession, and the willingness to fail.
  • Bezos believes failure and invention are inseparable, and that long-term patience can lead to significant achievements.

"Failure and invention are inseparable twins. To invent, you have to experiment."

The quote encapsulates Bezos's philosophy that failure is an inherent part of the invention process and that true innovation requires the willingness to take risks.

Single Threaded Leadership

  • Jeff Bezos advocates for single-threaded leadership, where leaders focus exclusively on critical initiatives.
  • This approach is meant to prevent important projects from being overshadowed by larger, existing business segments.

"You need to have single threaded leadership on every single important initiative or project inside your company."

The quote stresses the importance of dedicated leadership for important projects to ensure focus and priority, which is a key part of Amazon's strategy.

Invention vs. Copycat Approach

  • Amazon's strategy involves inventing new products with unique value propositions rather than copying existing successful products.
  • Bezos's decision-making process after meeting with Steve Jobs was methodical and strategic, focusing on long-term vision rather than immediate action.

"We could be a fast follower and make a close copy of successful products. We could just make another iTunes, right? Or we could invent a new product on behalf of our customers."

This quote highlights the strategic crossroads Amazon faced and the conscious choice to pursue invention over imitation, reflecting Bezos's commitment to innovation.

Transition to Digital Media

  • Amazon's shift from physical to digital media required a change in competitive strategy, focusing on unique offerings and customer experience.
  • The decision to enter the hardware market with the Kindle was controversial but aligned with Amazon's goal to differentiate and own the customer experience.

"The idea that Amazon, a pure e-commerce distributor of retail products made by others, would become a hardware company and sell its own reader device was controversial."

The quote underscores the bold and unconventional decision for Amazon to create its own hardware, a move that was risky but ultimately played a crucial role in Amazon's digital media strategy.

Strategic Importance of Internal Capabilities

  • Companies entering new business areas without internal expertise often outsource, which can hinder innovation and differentiation.
  • Brick and mortar retailers moving online outsourced to third-party developers, which limited their ability to innovate compared to Amazon.
  • Outsourcing deprived retailers of the ability to test new products quickly and limited them to a menu of options from their provider.
  • Amazon's internal capabilities allowed them to be innovators and transform from e-commerce distributors to hardware makers.

"Many companies that decide to enter a business area in which they have little internal expertise are capability, which is what Amazon doesn't have a description of Amazon at this time. Right? They choose to outsource, this can sometimes be a mistake."

This quote emphasizes the risk of outsourcing when entering a new business area without existing internal expertise, as it can be a strategic mistake.

Founder’s Commitment to Investment

  • Founders like Jeff Bezos are willing to invest significant time and money to develop new products like the Kindle.
  • Bezos showed commitment by being willing to invest all available funds into the Kindle project, underscoring its strategic importance.
  • Bezos's reaction to the increased costs of the Kindle development highlighted his long-term vision and prioritization of strategic projects.

"At some point in the debate, someone asked Jeff point blank, how much more money are you willing to invest in kindle? Jeff calmly turned to our CFO, shrugged his shoulders, and asked, how much money do we have?"

This quote illustrates Bezos's unwavering commitment to investing in the Kindle, indicating a willingness to allocate substantial resources to strategic initiatives.

Leveraging External Innovations

  • Jeff Bezos was influenced by the BlackBerry's constant connectivity, which inspired the Kindle's design to be wireless and PC-independent.
  • Bezos's approach to innovation involved learning from other companies and applying those principles to Amazon's products.
  • The development of Amazon Prime was influenced by Costco's business model, showing how external ideas can shape company strategies.

"Jeff loved that his phone was always connected and automatically refreshed itself to display every new email. In those early days of digital media, this was a first."

This quote captures the inspiration Bezos took from BlackBerry's connectivity, which he wanted to replicate in the Kindle's design.

Amazon Prime’s Rapid Development

  • Jeff Bezos initiated the development of Amazon Prime with a sense of urgency, recognizing the need to improve customer experience around shipping.
  • Prime was built with a future-oriented approach, anticipating the norm of faster shipping and aligning shareholder interests with customer interests.
  • The creation of Prime demonstrated Amazon's commitment to providing optimal customer experiences and differentiating from competitors.

"We need a shipping membership program. Let's build and launch it by the end of the year."

The urgency in this quote reflects Bezos's directive to rapidly develop and launch Amazon Prime to enhance the customer experience.

Customer Obsession and Differentiation

  • Jeff Bezos's customer obsession led to the rejection of mediocre propositions and the pursuit of superior options like fast and free shipping.
  • Amazon's fulfillment capabilities were initially insufficient for Prime's goals, but this did not deter the company; instead, it was a starting point for development.
  • Bezos's discomfort with mediocrity and insistence on acquiring necessary skills to improve the customer experience are key aspects of Amazon's culture.

"Jeff exhibits discomfort when presented with an either or proposition in which both results are mediocre."

This quote highlights Bezos's refusal to accept subpar outcomes, always pushing for the best possible customer experience.

Walking the Store and Continuous Improvement

  • Jeff Bezos practiced "walking the store" by regularly reviewing Amazon's online presence and communicating his findings to relevant teams.
  • This practice underscores the importance of constant vigilance and improvement in the online retail space.
  • Bezos expected ideas to be evaluated and communicated back to him, showing his hands-on approach to leadership and innovation.

"It was not unusual for me to wake up at 07:00 a.m. On a weekend and read five or six messages from Jeff to the relevant teams on issues that he had found while walking his store that morning."

The dedication in this quote demonstrates Bezos's commitment to continuous improvement and direct involvement in Amazon's operations.

The Genesis of Amazon Prime Video

  • Jeff Bezos's idea to include streaming video as a Prime benefit was influenced by Netflix's strategy of offering streaming to DVD subscribers.
  • Amazon Prime Video's addition was a differentiation strategy, leveraging Amazon's position to offer both prime shopping and streaming services.
  • The decision to create original content was driven by the desire to be truly differentiated and not rely on bidding wars for content.

"Jeff argued that prime with streaming video would be a unique offering and a competitive differentiator."

This quote explains the strategic reasoning behind adding streaming video to Amazon Prime, aiming to create a distinct and competitive service.

Amazon Web Services (AWS) and Undifferentiated Heavy Lifting

  • The concept of undifferentiated heavy lifting was identified as an opportunity for AWS to provide services that enable companies to focus on their unique offerings.
  • AWS's goal was to democratize access to computing infrastructure, allowing anyone from a student to an Amazon engineer to have the same resources.
  • The PRFAQ document for AWS encapsulated the vision of providing world-class computing infrastructure to a broad audience.

"We wanted the student in a dorm room to have access to the same world-class computing infrastructure as any Amazon software engineer."

This quote captures the egalitarian vision behind AWS, aiming to provide high-quality computing infrastructure to users regardless of their scale or resources.

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