What in the world would you do with $188 billion dollars? That amount is just beyond imagination.
Jeff Bezos is currently the richest person on the planet. Amassing his wealth from online retail giant Amazon, the CEO and founder started his company in July 1994 in his garage. From humble beginnings to becoming the first person with a fortune exceeding $100 billion, he has always believed that the growth of the Internet would overtake the brick and mortar industry.
The year 2020 has been an amazing one for the world’s wealthiest people. Apart from Bezos, Elon Musk and Mark Zuckerberg have also added billions to their bank. Today, Bezos is on the verge of being the first man to reach the $200 billion mark. He might just be the world’s first trillionaire if things continue to go in his favor.
A highly intelligent individual, the Princeton graduate has grown Amazon into one of the most powerful companies. This brilliant mind does things his own way, he refuses to have a typical meeting structure with PowerPoint presentations. Many years ago, he replaced these presentations with reading and silence. Each meeting begins with attendees reading the memo for the first 30 minutes of the session.
This is just an example of how he leads. But besides his management style, his success is mainly attributed to his business strategies. He might not have the charisma of Elon Musk, but his entrepreneurial brains are worth picking. If you’re interested in running your own business, there’s so much you can learn from this guy.
Here are his top 10 business strategies:
When you’re setting your goals, think big and picture how you see yourself in the next few years. Having big dreams will give you the energy and excitement to keep chasing. Even if you don’t end up achieving that goal, you’ll be occupied with activities every day that will make you an improved person.
When Bezos first started Amazon back in 1994, he warned investors that there was a 70% chance of failure. But he also told them that by 2000, sales would reach $100 million. In fact, the sales outperformed his projections and reached $1 billion.
His early success was due to his courage to pursue the impossible. With Kindle, Bezos imagined a world where readers would be able to buy, download, and enjoy a book from anywhere. This was before cell phone data hit it big.
When he told the designers his idea, they responded with negativity. He didn’t care that the designers were hesitant. He told them to just get it done and eventually they did.
Hiring is Key
The employees are the backbone of the company. They’re what keeps the engines running. Depending on your style of leadership and principles, always try to hire the best out there. You don’t want to end up with someone that doesn’t want to work towards your goals and vision.
As for Bezos, he’s always had high standards for new recruits. He believes that you have to continue raising the bar. Contrary to popular practices, he does not support work-life balance. Once again, hiring also varies on the way you run your company.
It might seem outrageous, but he firmly sticks to his judgment. He’s only on the lookout for people who are gladly willing to work 60 hour weeks. He finds people that also share similar expectations.
Dare to experiment
This is a great quote by Bezos:
“If you double the number of experiments you do per year you’re going to double your inventiveness.”
Through experimentation, new innovations are born. It’s how companies stay competitive in the market. You have to keep finding ways to improve your product or introduce a new one into the market.
Here’s how Amazon ran a few experiments:
- The effectiveness of TV advertising: Bezos wanted to know how this strategy would impact their sales. For 16 months, they advertised in two markets – Portland and Minneapolis. After an expensive campaign, he had the answer. Although Amazon sales slightly edged higher, he decided that it simply wasn’t worth it. In the end, this experiment led to Amazon having a more focused advertising strategy.
- Free shipping for orders above $25: Amazon has a program called Super Saver Shipping. It offers free shipping only for orders over $25. This makes the customers extremely happy, but when you do the math, it’s simply not feasible. From this experiment, Bezos learned that he gained customer loyalty and more orders in the long run.
If you believe in something, don’t be afraid to test it out. If it doesn’t work out, quickly accept and recognize the failure and move on.
You should invent, not the customer
As an entrepreneur, you should always be passionate about coming up with something new. It’s your responsibility and not the customers. If you ask your customers for their opinion, they will just tell you what they don’t like. They won’t exactly tell you how to do something in a different way.
No matter what field you’re in, you need to be brainstorming and experimenting. According to Bezos, inventing is one of the most important factors for him and his team at Amazon. Ever since his childhood days, he’s always loved creating and when he’s hiring, he tends to choose those that love it too.
Regret minimization framework
Living life as an entrepreneur or startup founder poses its many challenges. You’re going to be faced with choices and life-changing decisions. There isn’t a single method that works for everyone as we are all unique individuals. However, if you’re stuck and contemplating certain decisions, you could try out this mental framework.
Here’s the framework coined by Bezos when he chose to start his own company. At the time, he wasn’t young and it was a very risky move considering he had a family to feed. But it all came down to what he would regret more on his death bed.
I knew that when I was 80 I was not going to regret having tried this. I was not going to regret trying to participate in this thing called the Internet that I thought was going to be a really big deal. I knew that if I failed I wouldn’t regret that, but I knew the one thing I might regret is not ever having tried.
The eCommerce founder was faced with the decision to play it safe with his stable job or take his chances with his business idea. With this framework, he easily decided to go for it. He looked into his future as an 80-year-old man and thought about minimizing whatever regrets he might have. He knew that at 80, he wouldn’t regret going down this path.
Put the magnifying glass on your customers
This is Bezos during an interview with Charlie Rose:
“We’re not competitor obsessed, we’re customer obsessed. We start with the customer and we work backwards.”
Many companies do the opposite. They brainstorm the idea first, then start developing the product, and finally test it in the market.
When you can identify the customer’s needs and problems, you’ll be able to build what is best for them. In turn, that will be what’s best for the company as well.
Here are some examples of how Amazon focuses on its customers:
- Warn customers about having duplicate orders: there’s a feature that warns customers when they visit the same page of a product they had already purchased.
- Encourage customers to leave a review: this feature provides genuine and honest value. When potential customers want to conduct research on a product, they check reviews before deciding to make a purchase. By being transparent with them, you’re actually gaining their trust and loyalty.
- Allow competitors to advertise on your website: it’s best to give customers more choices, but still stay within the Amazon marketplace.
The limitless potential of eCommerce
The eCommerce industry has been booming with the help of the Internet. Scalability, reach, and convenience has turned many shoppers into online shoppers. You can find just about anything on the Internet these days.
As Bezos was building his empire, he noticed the many strengths of eCommerce and took advantage of them. He understood that you could get deeper insights into your customers as compared to offline. For example, he created an algorithm that recommended products based on your purchase history. This resulted in an increase in sales. Another example was the affiliate program he set up. This program allowed anyone to join and recommend products. Today, it has grown into a billion-dollar affiliate program.
Be frugal and thrifty
Especially when you’re just starting out, you have to be smart with money. You can’t be forking out cash on things that aren’t important. Every cent counts and must be used properly. And even when you’ve earned a good amount, always try to spend less than you make.
Although you see many wealthy people splurging and living the high life, you’ll see Bezos trying to cut costs anywhere he can. It is rumored that he adopted his frugality from a successful businessman named Sam Walton. He learned it from Walton’s book ‘Made in America’.
I think frugality drives innovation, just like other constraints do. One of the only ways to get out of a tight box is to invent your way out. – Jeff Bezos
Here are some examples of Bezos being thrifty:
- His employees are not allowed to fly business class
- During business trips, his employees are put up in the Holiday Inn (2 people per room)
- He created an employee loyalty program to save money
Lower margins, higher turnover
If you’re new to the business world and haven’t heard the term “margin”, it is the difference in price between the product cost and selling price. Depending on the way you want to model your business, you could either go for high or low margins. Many businesses prefer high margins because it means having to do less work.
For the Amazon tycoon, he sees lower margins as the perfect opportunity to beat the competition. When you have lower margins, your customers will be over the moon. Customers love paying less for good quality products. And you’ll have new customers as they leave your competitors.
Lower margins can result in having a higher turnover. A huge sales volume with small profits accumulates into a lot of money.
Be on the frontlines with your employees
There are many leadership styles out there. Frontline leaders are doers. They’re able to do what their employees do. It is inspiring for many to see that their leader is willing to actively participate in daily work activities.
As a leader, your role is to create an environment that reflects your vision, mission, and values of the organization. You are setting an example that others will follow.
In terms of leadership, Bezos is willing to do any type of work. He would even do the handy work in the manufacturing department if there was a need for it. When Amazon was at its busiest, you would see him around doing work and wearing many hats.
Today, Amazon isn’t just the online bookseller it set out to be. With its many business strategies and strict practices, it has dethroned Walmart as the biggest U.S retailer. Besides the retail industry, it is poised to disrupt others such as consumer electronics, artificial intelligence, cloud computing, and entertainment media.
In the next ten years, you’ll continue to see Bezos owning the internet as well as jumping into new ventures. With Project Kuiper, it will be years before it takes off, but he’s already begun to compete with Elon Musk’s SpaceX. Although Musk was the first to work towards offering satellite-based broadband internet, Bezos has joined the race.
Having leased over 200,000 square feet in Redmond, Washington, Project Kuiper is set to roll out Bezos’ broadband internet plans. The project has been described as a constellation of 3,236 satellites deployed in low Earth orbit for high-speed broadband. When this gets launched, the world will witness total internet domination by Bezos.
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