The Everything Store

Books · Management, Startups

(Read this in March 2020, adding to Notion in Feb 2021)

URL:

The Everything Store

Summary

  1. Frequent communication is a sign of dysfunction. It means that teams are relying on ad-hoc measures instead of good processes. Teams should be communicating less with each other day to day – not more. Coordinating among people takes time. The people closest to a problem are the best folks to solve them. Decentralize decision making and reduce the frequency of communication.
  2. Be wary of the iPhone dilemma – pricing the product at a price that is so fantastically profitable that the industry became a hotbed of disruption. Bezos believed that high margins justified rivals’ investment in R&D and attracted more competition. Low margins attracted customers and were more defensible.
  3. When you’re trying to be a platform/provider of services – stay away from exclusivity no matter how appealing it may seem in the short term. Amazon refused to be a platform for multiple brands in 2001, including Sony Electronics and others. This helped Amazon become much a bigger entity later on
  4. Agreements are never really binding. If an agreement doesn't serve your interests anymore, renege on it and deal with the fallout. If you're about to have a heart attack, worrying about getting a parking ticket because you parked in front of the hospital is stupid
  5. Be steely eyed when making decisions about hiring and firing. If people who started off with you aren’t up to scratch anymore — replace them. Sentimentality has little place in executive decisions
  6. Have as many meetings as you can from the senior executives of competitors and potential partners, and be a sponge in these meetings. Learn as much as you can and engage with them at least one – even if you have no intention of following through
  7. Use anger strategically as a tool to get your message across. As long as your criticism is on target, it’ll help get more out of your employees

Highlights

Personal Psychology

Be steely eyed when making decisions about hiring and firing. If people who started off with you aren’t up to scratch anymore — replace them

Signalling cultural values is super important. What you do is who you are

  • Customer Obsession
  • Frugality
  • Bias for action
  • Ownership
  • High bar for talent
  • Innovation

Key business decisions

When you’re trying to be a platform/provider of services – stay away from exclusivity no matter how appealing it may seem in the short term. Amazon refused to be a platform for multiple brands in 2001, including Sony Electronics and others

Understand the value you bring to partners, and relentlessly educate them on that value

Have as many meetings as you can from the CEOs of competitors and potential acquirers, and be a sponge in these meetings. Learn as much as you can. Even if you have no intention of selling the company

Don’t let signing off on a decision be a limiting factor if you later realise it was a bad decision. Change your mind quickly if you get better data and ideas moving forward

Operational Decision Making

Have a very clear idea of what drives your business. For Amazon, it was every day Low prices leading to more customers leading to better utilisation of fixed costs leading to the ability to price even lower

Amazon divided its customers into two groups in order to better price discriminate

Bezos was always more focused on the Long term goal of being the everything store, rather than short term deals with giant brands (however lucrative)

Automate, personalise, scale up

Find and empower young, really smart people. They can change your business for you and think from first principles

Team management

Frequent communication is a sign of dysfunction. It means that teams are relying on ad-hoc measures instead of good processes. We want teams to be communicating less with each other day to day; not more. Coordinating among people takes time. The people closest to a problem are the best folks to solve them.

Use anger strategically as a tool to get your message across. As long as your criticism is on target, it’ll help get more out of your employees

Early on, Bezos was almost alone in rooting for Prime. He tracked daily signups every day and told his team to promote prime again if promotions for it were every dropped from the home page

Be a sponge and get ideas from everywhere.

Be very wary of the institutional no. If you let your organization stay on its status quo, it’ll lead to statis

Just like when automated recommendations replaced editorial and when AWS replaced manual setups of servers – machines, not people, would drive Amazon’s biggest breakthroughs

Pricing

Bezos was wary of repeating Steve Jobs’ mistake with the iPhone – of pricing the product at a price that was so fantastically profitable that the industry became a hotbed of disruption. Bezos believed that high margins justified rivals’ investment in R&D and attracted more competition. Low margins attracted customers and were more defensible.