Ambition is not a Dirty Word
4 Lessons for Entrepreneurs from Jeff Bezos’ 2019 Annual Letter to Shareholders
Jeff Bezos’ letter to shareholders is our yearly glimpse into the mind of one of the world’s most successful entrepreneur. Although Amazon is no longer a start-up by any stretch (it’s the second publicly traded company ever to hit a $1T market cap), Bezos’ still thinks like an entrepreneur, keeping Amazon far more nimble and less-risk averse than competitors. Even if your goal is not to create the next unicorn, Bezos’ 2018 letter published earlier this month, contains some important lessons for entrepreneurs.
- Ambition and Competitiveness aren’t Dirty Words
Even as the richest man in the world, Bezos’ ambition is still palpable in his letters. He’s not resting on his laurels, but rather begins his annual letter to shareholders by stating that “Third-party sellers are kicking our first party butt. Badly.” His focus on Amazon’s point of weakness, belies his competitiveness. Bezos’ notoriously high standards are driven by his unbridled ambition and competitiveness. As a society, ambition and competitiveness aren’t held up as desirable traits (especially for women… but that’s a topic for another day), but I think they are vital for any entrepreneur. At least in my experience, they two very motivating factors and ones which I draw on when facing what seems like an insurmountable obstacle. They inspire the sheer force of will needed to push past challenges that hold others back.
2. Co-founder Traits: Efficiency vs. Creativity
In my personal experience, lesson #1 can give you tunnel vision. Especially as a highly motivated entrepreneur, it’s easy to dismiss anything that doesn’t directly serve your goals. When resources are scarce and there doesn’t seem to be enough hours in the day, it seems ludicrous to expend energy on what seems like non-essential activities. Being efficient feels like the most important thing to do. However, Bezos’ letter encourages businesses to “wander.” He acknowledges that “Wandering in business is not efficient … but it’s also not random. It’s guided — by hunch, gut, intuition, curiosity, and powered by a deep conviction that the prize for customers is big enough that it’s worth being a little messy and tangential to find our way there. Wandering is an essential counter-balance to efficiency. You need to employ both. The outsized discoveries — the ‘non-linear’ ones — are highly likely to require wandering.”
It’s almost impossible to be someone who is highly focused and efficient, but also able to step back and “wander.” This is why your co-founders or early hires are so important. You need to find people you trust who can provide a balance to your strengths. To hold you up and force you to think creatively when you can only see the next hurdle, or spurring you forward and keeping you focused, driving your business to be more productive and efficient.
3. Calculated Failure
Failure. The word that keeps entrepreneurs up at night. While Bezos doesn’t seem like the poster boy for failure, in his letter he calls “failure and invention ‘inseparable twins.’” He posits that without failure we can’t create new ideas. When we become too focused on not failing, we miss out on opportunities to succeed. Success takes experimentation and a willingness to take risk. As Bezos said, “most organizations are willing to embrace the idea of invention, but are not willing to suffer the string of failed experiments to get there.” However, he’s not suggesting that risks should be taken lightly. He recommends taking risks that are appropriately scaled to your company size. While Amazon can make a multi-billion-dollar failure, he’s not suggesting that every company can take such massive risks. They need to look at what they can afford to lose and “work hard to make [risks] good bets, but not all good bets will ultimately pay out. The good news for shareowners is that a single big winning bet can more than cover the cost of many losers.”
4. Customers, Customers, Customers!
Steve Blank, the father of modern entrepreneurship, recognized for developing the Customer Development method that launched the Lean Startup movement would agree with Bezos on this one. So many entrepreneurs come up with an idea they think they “know” is good, because they themselves would use it, but fail to realize that there isn’t actual a product-market fit. Getting consumer feedback is free and should be done before any money is spent. A detailed business plan with beautiful prototypes and totally made-up cash flow projections might get you some funding, but if you aren’t providing something that consumers actually want, you’re screwed. As Blank would say… Get out of the building! Go talk to your consumers, do hundreds of interviews. You might not like what you hear, but it’s better to pivot before you’ve accepted funding or quit your day job for a brilliant concept that no one wants.
