Leadership| Inspiration |Life is like that
Jeff Bezos Steps Down As Amazon CEO. Talks About Yawns and I’m Hooked.
When Boring is Beautiful
Jeff Bezos had this to say on his last day as CEO of Amazon.
“If you do it right, a few years after a surprising invention, the new thing has become normal. People yawn. Yawn is the greatest compliment an inventor can receive. When you look at our financial results, what you’re actually seeing are the long-run cumulative results of invention.”
His contemporary, Elon Musk, named one of his companies — boring company.
There is something beautiful about the boring yawn. Here are some yawns that Jeff Bezos rattles off.
“We pioneered customer reviews, 1-Click, personalized recommendations, Prime’s insanely-fast shipping, Just Walk Out shopping, the Climate Pledge, Kindle, marketplace, infrastructure cloud computing, Career Choice, and much more.”
Almost all of them bear convenience and personify bore. Here are some key milestones in his checkered career.
1. Punchline is Perception
To define the world’s richest man Jeff Bezos, it starts with this fantastic quote about Amazon.
“Only 1 company on earth can buy a grocery chain, be rumored to buy enterprise software company and in both cases be lauded for strategic vision.” — former LinkedIn CEO, Jeff Weiner.
Why is this a great quote? I believe it sums up Jeff Bezos in much the same way Warren Buffet’s made his real money.
Warren is worshiped for his contrarian chutzpah. What stands out for me is his ability to ween away momentum, short term players and attract the long term investors — and keep it that way. One simple sign — he keeps Berkshire Hathaway at high prices without stock splits.
In a similar vein, Walmart executives may be wondering why Amazon gets the price appreciation compared its earnings. One simple reason — Jeff Bezos’s Amazon is perceived as versatile — a low margin retail brand like Walmart in combination of a geeky, backoffice, high margin server company in the cloud.
Portfolio theory would suggest that the stock holders are better off diversifying themselves by buying a retail company and a cloud company separately. That is economics. Perception is another story.
Perception by way of exceeding expectations of retail investors is what Warren Buffet excels at. So does Jeff Bezos.
2. His (former) spouse believed in him and is a good person.
This story is famous..
“In 1992, When Jeff Bezos came up with the idea of online book store, he was was a senior vice president for the New York hedge fund D.E. Shaw. He took a stroll in central park with his boss and described his dream. His boss listened intently before offering a bit of advice: “That sounds like a really good idea, but it would be an even better idea for someone who didn’t already have a good job.”
It took Bezos all of 48 hours to decide to quit his job and get started.
The often unspoken part, in those 48 hours — his wife backed his decision to the T. She did it again when they divorced taking in less than her 50% share and giving away more than nearly $6 billion in charitable gifts last year. Innately she is a great person — unlike many large donors, she did not attach any restrictions or even naming rights requirements to her donations.
3. Knows when to let go of what made his company thrive
This is the hardest part. Until 2010, Amazon was throbbing — thanks in part to the time it took for the tax laws to catch up for online stores. In the hyper competitive and razor thin margin business of retail, his company had local sales tax advantage.
Amazon — rather than fight hard to retain this advantage, it let it go. Where did Jeff and team double the bet on? Building up local warehouses in the states and collect local sales tax.
In other words, he increased his bets manifold on one thing that stood the test of his time. His unwavering belief — convenience to customers — the yawn inducing stuff. In this case, building stores close to customers for quicker delivery.
In 1999, I sent him directly a customer service email. It was promptly answered by someone in his team.
Today, at the peak of Amazon stock performance, he let go of the CEO title and passed the baton to division head of his most profitable business — Amazon Web Services.
4. He bet on changing customer behavior — one small difference — a long haul bet.
My father was leery of using a credit card — even if he could pay it off in full when due. My generation saw it as a credit build — when done right.
When Amazon started, a generation was comfortable going to the store. Driving a car was a class act. For generation next, Uber is the norm and online is the default.
Jeff Bezos did not convert customer behavior, he waited for the right customers to arrive! And the momentum of herd mentality takes over. I have seen parents turning to Amazon — influenced by their grown-up, earning kids.
That was a 20 year bet. He is reaping the benefits now.
We often hear — change is hard. Jeff Bezos understood it better — changing routine is hard. He waited until his norm was the routine for a new generation. Beautiful.
5. Best for last — how in the world did he get to be so versatile?
Hiring smart people could be one thing. But not in itself sufficient. How can you screen the best ideas quickly is key. Time is a premium. And how did he squeeze the time? He banished power point.
“We don’t do PowerPoint (or any other slide-oriented) presentations at Amazon. Instead, we write narratively structured six-page memos. We silently read one at the beginning of each meeting in a kind of ‘study hall,” Bezos words in his annual letter to Amazon shareholders.
Try squeezing your best idea in six-pages of prose — it will take you days to crystallize. Jeff Bezos benefited from those succinct narratives from his smartest hires.
One of such “random” ideas was the cloud server business for which Netflix evinced a keen interest to be an early customer.
Funniest part, even as AWS ( Amazon Web Services) grew, he did not explicitly disclose the top margins this side hustle made. His fear — like all normal humans — perceived for diluted focus.
In 2014, his hand was forced by market forces and he reluctantly disclosed it. And the stock rocketed. The analyst lapped it up for the high margins in the back server room business. The market lapped it up for the brand recognition in the retail space — front and center on the world wide web.
And he became perceived as the versatile man. And became the richest man in the world.
And today, he is letting go of what he knows best and into new adventures.
Summary
Most of the points in the narrative above are worthy of a yawn. In combination, that is the story of Jeff Bezos as seen from afar. To summarize
- Your spouse believing in you early helps.
- Respecting to wait for new generation with new behavior rather than believing you can change behavior of existing generation.
- Ability to adapt and let go of what enabled you to make a dent early.
- Becoming the reluctant, versatile man.
On the last two points— Jeff Bezos, like Bill Gates, knows a thing or two about leaving on the high. They know there are other things to do that are worthy of your yawn.
If there is one difference between Steve Jobs and Bill Gates. One was a legend for his generation, another would be deemed a legend for future generations. The key difference — having time for a second boring innings.
At 57, Jeff Bezos is embracing the gift of choice with glee.
Wishing him the very best on his second innings away from being Amazon CEO.
Karthik Rajan is the author of the “connect the dots” short story-letter, available at this link.
