This podcast answers the following questions:
- Who is Jeff Bezos and what is the book, The Everything Store, about?
- What are the secrets we can learn from Jeff Bezos?
- Ask The Investors: How do I find the best stock picks?
This article provides an overview of the book, The Everything Store, which is an account of Billionaire Jeff Bezos development of Amazon.com. If you want to read our executive summary of, The Everything Store, view this page instead. If you would like to download all of our book summaries, click here.
In today’s episode, the Investors are accompanied by Hari Ramachandra who was first featured in episode 4. Hari works as the Senior Engineering Manager at LinkedIn, but is also an entrepreneur running his own blog BitsBusiness.com. Working and located in Silicon Valley, Hari has been invited back to provide the audience unique insights about Amazon.
Who is Jeff Bezos and what is the book, The Everything Store, about?
Jeff Bezos is the CEO and Founder of Amazon and his net worth is over $30 Billion. In this book, the author takes the reader from the very first Amazon sale – Bezos packing books in his garage – to the world’s biggest online store. The book is highly documented with more than 300 interviews from family, friends, former and current employees, and Bezos himself.
What are the secrets we can learn from Jeff Bezos?
1. Focus on customer. The biggest challenge for leaders is typically the balancing act between shareholder, employees, and customer. Jeff Bezos sees this differently; his sole focus is on customers. In fact, he’s so emphatic about pleasing customers that he keeps an open chair in every conference room during meetings. If the customer is happy, he believes that everything else will work-out in time. Bezos has the philosophy that high margin products, like smart phones, attract a lot of competition, while low margin products attracts customers. Many believe that Bezos adopted this opinion after reading, and internalizing, Sam Walton’s book, Made in America.
2. Outrun the competition. The book has a strong focus on the growth of Amazon and it continuously refers to the staggering revenue that Amazon generates. In just 20 years, sales went from $0 to more than $85 Billion. Bezos had a phrase that he uttered through the halls during the first 10 years of business: Get Big Fast. Sometimes in business, the most important variable is beating your competition to the punch. This was something that Bezos understood and capitalized on. With the advent of the Internet, Bezos understood the potential of an online retail store that could sell anything, and the last thing he wanted was a missed opportunity. As a result, he instilled a culture within his company that speed was of the essence. Bezos’s approach was more like, “let’s own the market, and worry about the profits another day.” The irony is Amazon now owns the online market, but the culture hasn’t gone away. The company is still growing, and many wonder how Bezos will handle the transition once the company’s revenue growth starts to dissipate.
3. Staying focused on areas of competence? Amazon started out as a retailer, but as they continued to grow, they quickly found new opportunities in other arenas. Inherently, the online business had many technical aspects, but as traffic to the site grew, so did their demand for processing and storage. In a short amount of time, Amazon found itself serving millions of visitors a day, and building a world-class computer processing and storage infrastructure. In an effort to maximize revenues, Amazon entered the commercial cloud computing market (competing with companies like IBM and Google). Jeff Bezos does not believe that you can put him a box – he wants the best from both worlds, and he builds the company in both directions. The key learning point for the audience is that you should take advantage of obvious opportunities, but also mitigate any risks of over-extending yourself. When Jeff Bezos entered this market, it was a natural fit for his business model. He wasn’t stepping into a brand-new business model without having some experience in the business. Many business leaders extend their business into areas they don’t understand or need to operate in.
4. Long-term thinking. Jeff Bezos like many other billionaires, are really long-term thinkers. Anytime he looks at a new business opportunity, he tries to see how that product/service might work in 10 years from now. One of the most impressive pieces in the book was the foresight Bezos had for the company. From the very beginning, Bezos’s plan was to have a store that could sell everything. Instead of trying to develop that grandiose model from the beginning, Bezos took the process in smaller steps. He reduced his risk for failure by just starting as a bookstore. He did this because there were only two major book distributes (Ingram and Baker & Taylor) in the US, and he found it easier to deal with just a few companies opposed to hundreds or thousands. In general, one of Bezos’s greatest strengths was his ability to plan for the long-term future.
5. The 6 core principles Amazon is built on. When reading this book, I found it very important when the author described Jeff Bezos’s key principals for running the company. The principles are: customer focus, frugality, bias for action, ownership, high bar for talent, and innovation. If you want a more detailed outline of the principles we encourage you to download our full PDF-summary of The Everything Store.
Ask The Investors: How do I find the best stock picks?
The Investors’ answered that stock screeners are a good starting point. Here’s a link to a video that shows you how to use a stock screener. If you use a stock screener you can filter stocks according to predefined key ratios. Once the filter narrows-down the field of opportunities, the investor will want to conduct thorough research on the companies that look most promising. Another approach is to conduct research on what other famous investors are buying at the present time. It’s called a 13F and it is filed quarterly. Although the market price can change a lot in 3 months, you’ll at least know what price the stock was purchase for and you can attempt to find the same deal in the future. You should definitely think on your own, but you can use it as a starting point for potentially finding a great business. For Instance, The Investors are always interested in what Warren Buffett is buying.
Books and resources mentioned in this episode
Hari’s Blog: BitsBusiness.com
A Fantastic Speech by Jeff Bezos