Working Backwards: Insights, Stories, and Secrets from Inside Amazon

by Colin Bryar

Jeff described Amazon this way: “Our culture is four things: customer obsession instead of competitor obsession; willingness to think long term, with a longer investment horizon than most of our peers; eagerness to invent, which of course goes hand in hand with failure; and then, finally, taking professional pride in operational excellence.”

today Amazon does make some computer hardware to power its data centers. That’s because this special-purpose hardware designed for AWS’s data centers reduces costs and increases reliability in a nontrivial way. These benefits can be passed on to AWS customers in the form of meaningful price decreases and services that offer higher reliability.

Fire Phone launched in June 2014. In August 2015, it was discontinued.

Second, the phone sold at a premium price. One of Amazon’s guiding principles is Frugality, and we had demonstrated to the world that we were the cost-effective,

Finally, the Fire Phone came late to market and with only a single carrier, AT&T.

Indeed, the failure of the Fire Phone did not cause Jeff to question the process that created it. “We all know that if you swing for the fences,” he wrote, “you’re going to strike out a lot, but you’re also going to hit some home runs.” Unlike baseball, where a home run can bring in no more than four runs, a big business hit can score an almost infinite number of runs. What’s crucial to understand is that a small number of very big winners can pay for a large number of experiments that fail or succeed only modestly.

In the same 2015 shareholder letter, Jeff wrote, “Some decisions are consequential and irreversible or nearly irreversible—one-way doors—and these decisions must be made methodically, carefully, slowly, with great deliberation and consultation. If you walk through and don’t like what you see on the other side, you can’t get back to where you were before.

At that time, the Amazon digital media business consisted of our newly launched Search Inside the Book feature plus the e-books team (roughly five people), all buried deep in Steve’s organization and generating a few million dollars in annual revenue—and based on the e-book market at that time, there didn’t seem to be any real prospects for growth.

Jeff, Steve told me, had decided that Amazon was at an important crossroads, and now was the time to act. Though the physical media business was growing, we all understood that over time it would decline in popularity and importance as the media business shifted to digital.

That year, 2004, Apple sold 1.3 million iPods—almost four times more than the prior year—and the proliferation of shared digital music files online had already prompted a decline in sales of music CDs. It seemed only a matter of time before sales of physical books and DVDs would decline as well, replaced by digital downloads.