Amazon Unbound: Jeff Bezos and the Invention of a Global Empire

by Brad Stone

It’s a tale that describes a period in business history when the old laws no longer seemed to apply to the world’s most dominant companies.

If Bezos took one leadership principle most to heart—which would also come to define the next half decade at Amazon—it was principal #8, “think big”: Thinking small is a self-fulfilling prophecy. Leaders create and communicate a bold direction that inspires results. They think differently and look around corners for ways to serve customers. In 2010, Amazon was a successful online retailer, a nascent cloud provider, and a pioneer in digital reading. But Bezos envisioned it as much more. His shareholder letter that year was a paean to the esoteric computer science disciplines of artificial intelligence and machine learning that Amazon was just beginning to explore. It opened by citing a list of impossibly obscure terms such as “naïve Bayesian estimators,” “gossip protocols,” and “data sharding.” Bezos wrote: “Invention is in our DNA and technology is the fundamental tool we wield to evolve and improve every aspect of the experience we provide our customers.”

“If you were a venture capitalist, this just did not make sense anymore,” said another executive privy to the decision-making. But Bezos wanted to forge ahead. “Jeff is master of ‘this isn’t working today, but could work tomorrow.’ If customers like it, he’s got the cash flow to fund it,” this exec said. In 2017, Amazon spent $22.6 billion on R&D, compared to Alphabet ($16.6 billion), Intel ($13.1 billion), and Microsoft ($12.3 billion). The tax-savvy CEO likely understood that these significant R&D expenses for projects like the Go store and Alexa were not only helping to secure Amazon’s future but could generate tax credits or be written off, lowering Amazon’s overall tax bill.

We all know that if you swing for the fences, you’re going to strike out a lot, but you’re also going to hit some home runs. The difference between baseball and business, however, is that baseball has a truncated outcome distribution. When you swing, no matter how well you connect with the ball, the most runs you can get is four. In business, every once in a while, when you step up to the plate, you can score 1,000 runs. This long-tailed distribution of returns is why it’s important to be bold.