Jeff Bezos is having a ball. Amazon not only crossed $100Bn in sales, but AWS itself did $10Bn which is seriously a big deal!
Here are some key excerpts from his letter to shareholders (emphasis is ours).
Plain LUCKY ?
Customer Focus Vs Competition Focused
Is it only a coincidence that two such dissimilar offerings (Amazon and AWS) grew so quickly under one roof? Luck plays an outsized role in every endeavor, and I can assure you we’ve had a bountiful supply. But beyond that, there is a connection between these two businesses.
Under the surface, the two are not so different after all. They share a distinctive organizational culture that cares deeply about and acts with conviction on a small number of principles.
I’m talking about customer obsession rather than competitor obsession, eagerness to invent and pioneer, willingness to fail, the patience to think long-term, and the taking of professional pride in operational excellence.
Failure And Experiments
One area where I think we are especially distinctive is failure.
I believe we are the best place in the world to fail (we have plenty of practice!), and failure and invention are inseparable twins.
To invent you have to experiment, and if you know in advance that it’s going to work, it’s not an experiment. Most large organizations embrace the idea of invention, but are not willing to suffer the string of failed experiments necessary to get there. Outsized returns often come from betting against conventional wisdom, and conventional wisdom is usually right.
Given a ten percent chance of a 100 times payoff, you should take that bet every time. But you’re still going to be wrong nine times out of ten. We all know that if you swing for the fences, you’re going to strike out a lot, but you’re also going to hit some home runs.
The difference between baseball and business, however, is that baseball has a truncated outcome distribution. When you swing, no matter how well you connect with the ball, the most runs you can get is four. In business, every once in a while, when you step up to the plate, you can score 1,000 runs. This long-tailed distribution of returns is why it’s important to be bold.
Big winners pay for so many experiments.