Invent and Wander: The Collected Writings of Jeff Bezos

by Jeff Bezos

His childhood business heroes were Thomas Edison and Walt Disney. “I’ve always been interested in inventors and invention,” he says. Even though Edison was the more prolific inventor, Bezos came to admire Disney more because of the audacity of his vision. “It seemed to me that he had this incredible capability to create a vision that he could get a large number of people to share,” he says. “Things that Disney invented, like Disneyland, the theme parks, they were such big visions that no single individual could ever pull them off, unlike a lot of the things that Edison worked on. Walt Disney really was able to get a big team of people working in a concerted direction.”

While working at the hedge fund in 1994, Bezos came across the statistic that the web had been growing by more than 2,300 percent each year. He decided that he wanted to get aboard that rocket, and he came up with the idea of opening a retail store online, sort of a Sears catalogue for the digital age. Realizing that it was prudent to start with one product, he chose books—partly because he liked them and also because they were not perishable, were a commodity, and could be bought from two big wholesale distributors. And there were more than three million titles in print—far more than a bricks-and-mortar store could possibly keep on display.

Jeff and MacKenzie initially set up the company in the two-bedroom home they rented near Seattle. “They converted the garage into a work space and brought in three Sun workstations,” Josh Quittner later wrote in Time. “Extension cords snaked from every available outlet in the house to the garage, and a black hole gaped through the ceiling—this was where a potbellied stove had been ripped out to make more room. To save money, Bezos went to Home Depot and bought three wooden doors. Using angle brackets and 2-by-4s, he hammered together three desks, at a cost of $60 each.” Amazon.com went live on July 16, 1995.

Amazon and Bezos were able to survive the bust. “As I watched the stock fall from 113 to 6, I was also watching all of our internal business metrics: number of customers, profit per unit,” he says. “Every single thing about the business was getting better and fast. It’s a fixed-cost business. And so, what I could see is that, from the internal metrics, is that at a certain volume level that we would cover our fixed costs and the company would be profitable.”

At one point during the dot.com meltdown, he and a few other internet entrepreneurs were on an NBC Nightly News special with Tom Brokaw. “Mr. Bezos, can you even spell ‘profit’?” Brokaw asked, highlighting the fact that Amazon was hemorrhaging money as it grew. “Sure,” Bezos replied, “P-R-O-P-H-E-T.” And by 2019 Amazon stock would be at $2,000 a share, and the company would have $233 billion in revenues and 647,000 employees worldwide.

“We completely reinvented the way that companies buy computation,” Bezos says. “Traditionally, if you were a company and needed computation, you would build a data center, and you’d fill that data center with servers, and you’d have to upgrade the operating systems of those servers and keep everything running, and so on. None of that added any value to what the business was doing. It was kind of price-of-admission, undifferentiated heavy lifting.” Bezos realized that this process was also holding back various groups of innovators within Amazon itself. The company’s applications developers had been in a constant struggle with the hardware teams, but Bezos made them develop some standard application programming interfaces (APIs) and access to computing resources. “As soon as we did that, it was immediately obvious that every company in the world was going to want this,” he says. For a while a miracle happened: for a few years no other companies got into the space as competitors. Bezos’s vision was far ahead of everyone else’s. “It was the greatest piece of business luck in the history of business, so far as I know,” he says.

When he meets with the founder or chief executive of a company that Amazon is thinking of buying, Bezos tries to assess whether he or she is in it merely to make money or because of a true passion for serving customers. “I’m always trying to figure out one thing first and foremost: Is that person a missionary or a mercenary?” Bezos says. “The mercenaries are trying to flip their stock. The missionaries love their product or their service and love their customers and are trying to build a great service. By the way, the great paradox here is that it’s usually the missionaries who make more money.”

Bezos approaches his space endeavors as a missionary rather than a mercenary. “This is the most important work I’m doing, and I have great conviction about that,” he says. Earth is finite, and energy usage has grown so much that it will soon, he thinks, strain the resources of our small planet. That will leave us with a choice: accept static growth for humanity or explore and expand to places beyond Earth. “I want my grandchildren’s grandchildren to be using way more energy per capita than I am,” he says. “And I would like to see us not have a population cap. I wish there were a trillion humans in the solar system; then there would be a thousand Einsteins and a thousand Mozarts.” But within a century, he fears, the Earth will not be able to sustain this growth of population and energy use. “So, what will that lead to? It will lead to stasis. I don’t even think stasis is compatible with liberty.” That prompted him to believe we should now begin thinking about new frontiers. “We can fix that problem,” he says, by lowering the cost of access to space and using in-space resources.

Bezos’s own politics and philosophy, which he does not impose on the Post, comprise a mix of social liberalism—he donated to the campaign to legalize gay marriage—and economic views that stress individual liberty. It is an attitude he shares with his father, who fled Castro’s Cuba. “A free market economy, which by necessity involves a lot of liberty, just happens to work well in terms of allocating resources,” he says. But the merit of the free market arises not merely from its efficiency but also from the moral value it accords to individuals, he believes.

As Elon Musk pushed his own competing space program forward with very public fits and starts, Bezos advised his team, “Be the tortoise and not the hare.” Blue Origin’s company shield has a Latin motto, Gradatim Ferociter: “Step by Step, Ferociously.”

At his Texas ranch Bezos has begun construction of a ten-thousand-year “clock of the long now,” designed by the futurist Danny Hillis, which has a century hand that advances every hundred years and a cuckoo that comes out every millennium. “It’s a special clock, designed to be a symbol, an icon for long-term thinking,” he says.

An example of keeping the focus on customers was his policy of allowing negative reviews of products to appear on Amazon. An investor complained that Bezos was forgetting that Amazon only makes money when it sells things, so negative reviews hurt the business. “When I read that letter, I thought, we don’t make money when we sell things,” Bezos says. “We make money when we help customers make purchase decisions.”

Avoid PowerPoint and slide presentations. This is a maxim that Steve Jobs also followed. Bezos’s belief in the power of storytelling means that he thinks that his colleagues should be able to create a readable narrative when they pitch an idea. “We don’t do PowerPoint (or any other slide-oriented) presentations at Amazon,” he wrote in a recent shareholder letter. “Instead, we write narratively structured six-page memos. We silently read one at the beginning of each meeting in a kind of study hall.”

He divides the decisions that have to be made into those that can be walked back and those that are irrevocable. The latter require a lot more caution. In the case of the former, he tries to decentralize the process. At Amazon he created what he calls “multiple paths to yes.” In other organizations, he points out, a proposal can be killed by supervisors at many levels, and it needs to pass through all those gates in order to be approved. At Amazon, employees can shop their ideas around to any of the hundreds of executives who are empowered to get to yes.

Because of our emphasis on the long term, we may make decisions and weigh trade-offs differently than some companies. Accordingly, we want to share with you our fundamental management and decision-making approach so that you, our shareholders, may confirm that it is consistent with your investment philosophy: We will continue to focus relentlessly on our customers. We will continue to make investment decisions in light of long-term market leadership considerations rather than short-term profitability considerations or short-term Wall Street reactions. We will continue to measure our programs and the effectiveness of our investments analytically, to jettison those that do not provide acceptable returns, and to step up our investment in those that work best. We will continue to learn from both our successes and our failures. We will make bold rather than timid investment decisions where we see a sufficient probability of gaining market leadership advantages. Some of these investments will pay off, others will not, and we will have learned another valuable lesson in either case. When forced to choose between optimizing the appearance of our GAAP accounting and maximizing the present value of future cash flows, we’ll take the cash flows. We will share our strategic thought processes with you when we make bold choices (to the extent competitive pressures allow), so that you may evaluate for yourselves whether we are making rational long-term leadership investments. We will work...