When Bezos started Amazon on “Day 1,” the Seattle startup was mostly selling books online and building out its infrastructure. On that first day, he wrote a letter to early shareholders on his aspirations for the company, one he continues to attach to his annual letter today. It was Day 1 for both Amazon and the Internet.
Bezos emphasized that the company was relentlessly focused on the long term and its customers. It would not let the pressures of being a public company deter it from its mission.
Revenue in 1997 was $147 million, an 838% increase from 1996. In 2017, Amazon’s revenue topped $177 billion.
We learn the following about Amazon from this year’s letter:
- Amazon Prime has more than 100 million members globally. They pay $99 per year. That’s $9.9 billion Bezos used to build his company’s infrastructure.
- Amazon Web Services (AWS) has not only brought in $20 billion in revenue, but has also accelerated innovation in the fields of machine learning, artificial intelligence, the Internet of Things and serverless computing.
- In 2017, for the first time in company history, more than half of the units sold on Amazon Marketplace were from third-party sellers. More than 300,000 small businesses in the U.S. started selling on the platform.
- inis the fastest growing marketplace in India and the most visited site on both desktop and mobile, per comScore and SimilarWeb. The mobile shopping app was also the most downloaded in India, ever.
- Amazon employs 560,000 people around the world. It hired 130,000 people in 2017, not including employees added through acquisitions.
- And finally, that the perfect handstand takes about six months of daily practice, there are handstand coaches out there ready to help, and that Bezos still has a long way to go before accomplishing that perfect handstand himself!
These accomplishments are incredible. How did this online bookseller transform itself into this Dynasty?
A key Bezos mentions in his letter is customer experience and how to deliver it.
“One thing I love about customers is that they are divinely discontent. Their expectations are never static – they go up. It’s human nature. We didn’t ascend from our hunter-gatherer days by being satisfied. People have a voracious appetite for a better way, and yesterday’s ‘wow’ quickly becomes today’s ‘ordinary.’”
“How do you stay ahead of ever-rising customer expectations? There’s no single way to do it – it’s a combination of many things. But high standards (widely deployed and at all levels of detail) are certainly a big part of it.”
Amazon’s commitment to “high standards” has forced it to push itself to become one of the leading companies in the world.
This continued push has led to Amazon being ranked No. 1 in the American Customer Satisfaction Index eight years in a row, among many other impressive rankings.
During his talk about the role of higher standards, Bezos list four elements about them:
- They are teachable
- They are domain-specific
- You must recognize them
- You must explicitly coach realistic scope
“For us, these work at all levels of detail,” Bezos said. “Everything from writing memos to whole new, clean-sheet business initiatives. We hope they help you too.”
While writing about the use of memos within Amazon, Bezos gave an example of six-page memos that are shared before every meeting. When sharing memos, he said you can often tell the quality of the memo based on the expectation of scope. Poorer quality memos are often that way because the writer thought they could make a high-standard, six-page memo in a few days or even a few hours.
Meanwhile, higher quality memos often take a few weeks of writing, complete with rewrites, edits and reviews with other coworkers. The key takeaway, Bezos said, is results can be improved just by teaching scope.
Disruptions in All Industries
It’s not just the retail industry that has seen disruptions over the years. Take, for instance, the disruptions that the digital revolution has caused.
But don’t think that the disruption is almost done. More disruption is coming. The key is that we must learn how to become a disruptive innovator like Bezos.
By being ahead of the disruption and trying to find ways to take advantage of it, Amazon could innovate and create key features used by millions today. Amazon Prime was scoffed at early on, but now has 100 million subscribers worldwide and more than five billion items shipped through Prime.
Amazon also innovated with its Alexa digital assistant and Echo devices. Now, the company has started its next innovation with Amazon Go, its new store where no checkout is required.
Getting ahead of the disruption and being an innovator doesn’t have to be limited to major companies like Amazon. Using The Outthinker Process, an essential training/learning tool, was essential to my annual Planning & Strategy sessions this past year. If the process is not in your plan for 2018, you need to rethink your plans!
Winning & Losing Moves
Why do some ideas succeed and others do not?
In the face of uncertainty, our first instinct is often to reject novelty, looking for reasons why unfamiliar concepts might fail. However, by committing to higher standards and potential disruption, your company can become an innovation leader as well.
Here are some of my takeaways for multifamily owners and developers from the Jeff Bezos’ annual letter.
- Create obsession about customers (tenants).
- Simplify and automate processes to scale your business faster.
- Commit to higher standards – and push to achieve them.Communicate your vision, invest the time to succeed, create accountability and inspect the results.
- Experiment more through small investments – Test concepts and don’t be afraid to make mistakes. They are key to eventually winning big.