The Four: The Hidden DNA of Amazon, Apple, Facebook, and Google

by Scott Galloway

Bezos, like any great leader, has the ability to explain a crazy idea in a way that makes it seem not just less crazy, but practical. Wait, that’s obvious—how did we not think of that? The really crazy shit isn’t stupid, it’s “bold.” Yeah, a floating warehouse sounds crazy the first time you hear of it. Now, ponder the cost of leasing and running a traditional terrestrial warehouse. What are its biggest expenses? Proximity and rent, respectively. Now, think again about a floating warehouse. Not so crazy, right? Bezos’s perpetual message is that it’s Amazon’s nature to swing for the fences on a regular basis. But the analogy is wrong: in baseball, a grand slam only scores four runs. By comparison, the home runs of Amazon Prime and AWS produced several thousand runs when the Seattle firm connected with the ball. As Bezos wrote in Amazon’s first annual letter, in 1997, “Given a 10 percent chance of a hundred times payout, you should take that bet every time.”53 Needless to say, most CEOs don’t think this way. Most won’t even take risks that have less than a 50 percent chance of success—no matter how big the potential payoff. This is a big reason why old-economy firms are leaking value to new-economy firms. Today’s successful companies may have the assets, cash flow, and brand equity, but they approach risk differently than many tech firms that have seen their death. They live for today and acknowledge that great success only comes with significant, even existential, risk.

and there you have it