Re-defining OCD
Jeff Bezos and his OCD (Obsessive Customer-Centric Disorder)
How the richest man in the world has created his empire.
This mad man is taking over the world with incredible business acumen and visionary approach. With more than 100 B’s worth of net worth, Jeff Bezos is currently the richest man on planet earth and its high time we understand how this man reached the top of Fortune List.
The Interview
It is when I was watching a 1999 interview of Jeff Bezos when I realized how obsessed he was with customer service. “It doesn’t matter to me whether we are internet play, what matters to me is to provide the best customer service.” these were the lines of Jeff Bezos when he was asked if his company was an internet play or not.
Since I love digging deep into how outliers performed and thought in their early days. I decided to dig deep into the archives of Jeff Bezos and luckily I stumbled upon an interview from 1999. 5 Years since its inception, Amazon was able to become one of the most talked-about Internet Startups in the world. During one of his interviews in 1999, Jeff was asked multiple questions ranging from why he thought his company was a viable business model, to how Amazon was acquiring real-estate.
One of the things which I could not ignore was how obsessive Jeff was with customer service and how all he wanted was to give the best possible customer experience by giving surprisingly thoughtful services for that time, which included, selection, ease of use, low prices, more information to make more purchase decisions with, plus 30 day return policy.
Throughout the interview, every question asked by the interview was answered by Jeff Bezos in different sentences which majorly included the same few words, Customer, Customer Service, obsessive attention to Customer, obsessed attention to customers end to end, wait, did I mention Customer?
Transcript
Interviewer: Given the decades of wisdom that has built up in the business world investors, it sounds like you’re saying you’re making a big speculative bet if they’re investing in your company’s stock.
Jeff Bezos: Well, I think all Internet companies you know the stocks are incredibly volatile…
Interviewer: But even the long term.
Jeff Bezos: Long term I believe. That it’s very easy to predict that there are going to be lots of successful companies born of the Internet. They’re going to have very large market caps and so on. I also believe that today where we sit it’s very hard to predict who those companies are going to be. So you know you can make bets on these things and I think that Amazon.com if we don’t if we’re not one of those important lasting companies born of the Internet we will have nobody to blame but ourselves and we will be extremely disappointed in ourselves. But there are no guarantees. It’s very very hard to predict.
If you go back and look at the companies created by the P.C. revolution in 1980 you wouldn’t have predicted the five winners the five biggest winners. There’ve been lots of winners So this space is a little different and brand name may need may mean more and then there are some increasing returns kinds of things maybe more. But I believe that if you can focus obsessively enough on customer experience, selection, ease of use, low prices, more information to make purchase decisions with. If you can give customers all that plus great customer service and with our toys and electronics we have a 30-day return policy. If you can do all of that then I think you have a good chance. And that’s what we’re trying to do.
Interviewer: You’re not really a pure Internet company anymore either. I mean you’ve got millions of square feet now of real estate. You’ve got a growing huge and growing inventory of items with you keep in stock. You’ve got thousands and thousands of employees now.
Jeff Bezos: We have over 3000 employees and over four million square feet of distribution center space. And those are things I’m very very proud of because with that distribution center space and half a dozen distribution centers around the country it allows us to get products close to customers so that we can ship it to customers in a very timely way which improves customer service levels. That’s what we’re about. If there’s one thing Amazon.com is about its obsessive attention to the customer experience, End to end. And that’s what those distribution centers.
Interviewer: But you are not a pure Internet Play?
Jeff Bezos: It doesn’t. It doesn’t matter to me whether we’re a pure Internet play it matters to me is we provide the best customer service. Internet Shminternet. It’s that’s you know that it doesn’t matter.
Interviewer: Well but it does matter to your investors to know whether they’re investing in a company that is…
Jeff Bezos: No, they should be investing in a company that obsesses over customer experience in the long term. There is never any misalignment between customer interests and shareholder interests.
Interviewer: Well that’s the same argument that somebody at WalMart would make as well.
Lex Luter, Ahhmm, JB: I don’t see why not. I think they should make that an argument. So it’s a correct argument.
Interviewer: OK.
Interviewer: So you’ll open as many square feet of space physical space as you have to hire as many employees as you have to…To service customers.
Jeff Bezos: Absolutely. And we’ll do it as rapidly as we can.
Interviewer: That’s a very cost intense proposition.
Jeff Bezos: Not compared to opening an equivalent network of retail stores. So if you open a bunch of chain stores. Look when we open a distribution center we’re opening places that may have square where we may pay 30 cents a square foot for a lease instead of paying seven dollars a square foot which you might pay in a high traffic retail area. So when you compare those things they’re not the same. You can’t compare a big chain of of of of retail stores to half a dozen distribution centers. It’s just not you know it’s bad math.
Interviewer: Either way whichever side of the argument you believe you’re making what it seems to me.
Jeff Bezos: There’s only one side which obsesses over customers.
Interviewer: But it seems to me that. Both with the speed of your growth in terms of the number of stores online that you’re opening the different businesses you’re getting into the number of distribution centers and you’re opening new employees you’re hiring That you are making an intense gamble here which is twofold. One that you can run this number of businesses different businesses well. And two that you can make money by selling vast volumes of products and essentially razor-thin profit margins.
Jeff Bezos: I think that the first one, in particular, I agree with wholeheartedly which is that where There there’s no guarantee that Amazon.com can be a successful company. What we’re trying to do is very complicated. There’s huge execution risk involved. We have a terribly complicated business. We’re growing, you know, historically very rapidly. We’re opening new product categories we’re expanding in new geographies. We have whole new business models with things like auctions. Now we think this is the less risky of the two approaches because the scale is important in this business. And you need scale also to offer the lowest prices and the best customer service to people. So scale is important to us and we’re going to go after that kind of scale. But it does mean that the execution challenges are huge. And so you’ll find a bunch of people back in Seattle and around the world working very hard to make sure we serve customers at the level that they’re used to. And then even improving that.
Interviewer: Isn’t it to some extent a certain amount of, with all due respect, corporate arrogance to assume that you can come into these businesses which you have no experience in and virtually overnight enter a huge variety of different businesses and become the best in those businesses and the market leader in those businesses. There are other companies that have been running these types of businesses for decades if not more.
Jeff Bezos: I don’t think so. So you know when we first started selling books four years ago we were everybody said look you’re just computer guys you don’t know anything about selling books. And that was true. But what we really cared about customers and now we know a lot about books and when we first started selling music people said the same thing but we hired the right people. So we don’t do this in a vacuum. We go out and hire the best industry experts in each of these categories. That’s the same with toys electronics. So you know we take this very seriously we take the commitment to the customer very seriously and we’re not about to release something or announce something before it’s ready.
“We will continue to focus relentlessly on our customers.”
Key Takeaways
1. Investors and customers have the same interest in the longterm.
We have always been told that as a business leader you have to somehow find that magic spot where the interest of the consumers is met while the investors are also happy. Well thanks to Jeff Bezos’ early days in investment banking, Jeff decided to come up with a contrarian believe that in the long term, Investors are happy only when the customers are.
2. Be afraid of your Customers not your competitors
“It’s okay to be afraid, but don’t be afraid of our competitors, because they’re never going to send us any money. Be afraid of our customers. And if we just stay focused on them, instead of obsessing over this big competitor that we just got, we’ll be fine.”
3. The opportunist and Planned Risk Taker
Thanks to the benefit of seeing it from the hindsight, we can say that every move made by Amazon in the early days were planned by a genius. The actual story is far from reality.
Well as our beloved Rihanna said “We Plan And God Laughs, Right?”
Well, the truth is that even though planning might not work out, what important is having a long vision and actin fast on it. Jeff, himself said that the opportunity on the Internet was (still is) enormous but it was very difficult to see who was going to be on the top. What we can say is that Jeff saw a huge opportunity and decided to jump on it with all he had.
4. Looking far into the future
Jeff has always said that “It’s still Day 1 at amazon”; this line shows how much respect Jeff has for startups. Why startups, you ask? Well, startups have a lot of factors that differentiate it from a large corporation (pssst, Amazon). These startups tend to look far into the future, the employees are extremely passionate and the company iterates and pivot within months instead of years. This startup mentality helps amazon take radical steps, betting hard on the future.
You can also read my article on Visualizing Disruption to understand why most of the progress we have seen in tech is even the tip of the iceberg and why these tech companies are betting on the future.
5. Extremist Mentality
Startups founders and employees are extremists in many ways. The founder is told to have a mild form of Asperger's according to Peter Theil; They also tend to work so hard that it is considered extremely unhealthy and these people take massive risks by giving up on, otherwise, satisfactory life.
The Most powerful Lizardman/Robot/Alien Mark Zuckerberg dropped out of Harvard, Old man Bill Dropped as well, Peter Theil left his secured venture capital career and Jeff Left his position of Vice-president from DE Shaw & CO (a multinational investment management firm).
Jeff decided to follow the ritual of starting a startup from a garage and made sure that the company stayed as focused and startup-like for as long as possible. You can also see that Jeff practices what he preaches by looking at early pictures of Jeff’s office.
The above is of Jeff’s first office space which many described to look just like a start-up office. The first office was also described as “cramped” since there was not enough space for appliances and employees. The extremist nature of Jeff’s frugality could also be seen from the fact that Jeff decided to covert cheap door as desktop tables since they were cheaper than buying actual desks. This extreme can be seen in Amazon employees who have according to many sources started peeing in bottles to meet their goals.
In fact, it is also said that until 2013 Jeff used to travel to work in a Honda car. This is not really a frugal mentality, considering he could buy whatever he wanted by then; Jeff, you see, thinks that one should “spend money on things that matter to customers and not spending money on things that don't.”
Conclusion
The conclusion is obvious. We should be obsessing over our customers, the problem, however, is that most of the people don’t have empathy towards customers to provide the best service possible. What I can understand for sure is that apart from a lot of macro and micro events/judgments which made Amazon what it is today, Jeff Bezos loved obsessing over his customers.
“A customer is the most important visitor on our premises. He is not dependent on us. We are dependent on him. He is not an interruption of our work. He is the purpose of it. He is not an outsider of our business. He is part of it. We are not doing him a favour by serving him. He is doing us a favour by giving us the opportunity to do so.”
- Mahatma Gandhi