The startup founder stereotype is a curious one. The caricature ridiculed in HBO’s Silicon Valley - New Age spirituality, buzzword doublespeak, and passive-aggressive social skills - has an uncomfortable grounding in the truth.
Jeff Bezos does not fall into that mold. This book makes it clear that Jeff is a true visionary and entrepreneur, but he works with a relentless, hyper-rational drive that can frustrate and burn out those around him.
Amazon reviews led me to expect that this book is a biography of Jeff Bezos, yet it takes the form of a history of Amazon in which the founder is impossible to extricate from the story.
Overall, I recommend this book for two reasons:
- Most books in the startup space align with that Silicon Valley caricature or advertise the business equivalent of a get-rich-quick scheme. This piece shatters those fashions and reminds the reader how hard work, tough decisions, and bitter enemies actually face successful entrepreneurs.
- The platform business model / ecommerce business model are worth describing in detail because they are critical to most businesses in the 21st century.
Amazon Link -
Regret Minimization Framework
Eventually, I will get around to writing about the mental models that guide my daily life. Until then, know that Bezos’ “Regret Minimization Framework” has been perhaps THE most influential on my life since college.
This concept is discussed in The Everything Store, but I will provide the more comprehensive explanation from my forthcoming review of Algorithms to Live By: The Computer Science of Human Decisions
Regret can also be highly motivating. Before he decided to start Amazon, Jeff Bezos had a secure and well-paid position at the investment company D. E. Shaw & Co. in New York. Starting an online bookstore in Seattle was going to be a big leap — something that his boss (that’s D. E. Shaw) advised him to think about carefully. Says Bezos:
“The framework I found, which made the decision incredibly easy, was what I called — which only a nerd would call — a “regret minimization framework.” So I wanted to project myself forward to age 80 and say, “Okay, now I’m looking back on my life. I want to have minimized the number of regrets I have.” 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. I knew that that would haunt me every day, and so, when I thought about it that way it was an incredibly easy decision.”
PowerPoint Bans and Six-Page Pitches
This is my favorite management philosophy from Amazon, and one I wish I had the authority to instill in my own organizations. Bezos believes that PowerPoint and Excel are imprecise communication mechanisms that conceal lazy thinking.
“It is fantastically easy to hide between bullet points. You are never forced to express your thoughts completely.” - Jeff Holden, former Amazon and Uber exec
Accordingly, all employees are forced to write presentations in prose, with a six-page limit. Meeting start with the narratives handed out to attendees, followed by 10-15 minutes of quiet reading before discussions take place. Bezos encourages the narrative to take the shape of a mock press release, emphasizing a belief that no one can make a good decision about a product or feature without knowing precisely how it could be communicated to the public.
Having seen my fair share of vacuous consulting decks and buzzword-filled presentations, I love this meeting format.
Microsoft was infamous for a top-down management approach with layers of middle managers, a system that ended up stifling innovations and slowing decisions. Many of Amazon’s executives saw exactly what they needed to avoid becoming, thus prioritized autonomous working units.
Bezos took it to the extreme and restructured the entire company around “two-pizza teams”, autonomous groups of fewer than 10 people (who could be fed with two pizza pies when working late). These teams would be let loose on Amazon’s biggest problems, sometimes duplicating efforts and competing for resources, but ultimately moving faster and getting features to customers quicker.
The rigorous review frameworks applied to each team (to measure performance) ended up being the downfall of that strategy on a company-wide basis, but the concept lives on and is useful in my profession for right-sizing meetings and design sessions.
When Amazon Web Services was born, Bezos envisioned his company like an electric grid, providing computing infrastructure for the web. Upon hearing a breakeven hourly price for EC2 instances, Bezos unilaterally forced the price down by a third, knowing the company would lose money for a long time. He believed other companies like Google and IBM would hesitate to enter the market, seeing profit margins so low. Stated more broadly, high margins justify rivals’ investments in R&D, inviting more competition, whereas low margins attracted more customers to your platform.
The philosophy worked. Amazon S3 was debuted in 2006. Azure didn’t follow until 2010, with Google Cloud lagging until 2012.