I was in high school when Steve Jobs died. Being in Silicon Valley, some of the people around me acted as if Jesus had just been crucified for the second time. But the feelings of sadness weren’t just limited to the techies. Even normal people seemed to recognize that something big had happened. Everyone had an iPod or an iPhone, and now the same guy who got on stage and introduced those products to the world was gone.
Jeff Bezos stepping down from Amazon might just be as big of a deal as Steve Jobs stepping down from Apple. After all, Amazon has just as much impact on people’s lives as Apple does. Millions of Americans shop on Amazon Prime and visit sites like Netflix that are powered by Amazon’s AWS on a daily basis.
Still, Bezos is not going to be celebrated by the masses the way that Steve Jobs was. Bezos’s legacy is going to be debated for years to come. Some may call him the modern-day John D. Rockefeller, a robber baron who made billions while his workers suffered. Others might focus on the thousands of independent bookstores that closed because they couldn’t compete with Amazon.
Look, I’m going to do some deep-dive into the morality of Amazon’s business practices - this isn’t some ethics newsletter that your philosophy professor asked you to subscribe to for extra credit. Instead, I want to talk about one aspect of the Bezos legacy we can all celebrate: his capacity for YOLOing. Let’s talk about some of Jeff Bezos’s boldest moves and break down the lessons they can teach us.
Jeff Bezos’s 1997 letter to shareholders
Jeff Bezos set the tone for what kind of company Amazon would be in his famous 1997 letter to shareholders. In it, he talked about how his biggest priority was moving fast and making Amazon the leading online retailer while the Internet was still young and the opportunity was still there.
He also emphasized the company’s commitment to making big bets to reach this goal:
“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.”
For most companies, this type of language is just PR bullshit. Even CEOs of companies like Intel talk about being “bold”, while their products can’t keep up with the times and they fall hopelessly behind the competition. But Jeff Bezos wasn’t all talk. Being bold was a way of life for Amazon.
Jeff’s biggest W: Amazon Prime
In 2005, Jeff Bezos announced what may have been his biggest YOLO: Amazon Prime. For just $79 a year, customers could have unlimited 2-day shipping.
It seems like an obvious idea now, but back then, even Amazon employees thought Jeff Bezos was literally insane. Some critics believed the only customers who were going to sign up for Amazon Prime were people who already made a ton of purchases online. They would then just abuse the free shipping until Amazon went bankrupt.
Amazon didn’t end up going bankrupt. Instead, Amazon Prime helped it become the #1 choice for online shopping. Amazon Prime customers had zero reasons to look at sites like eBay to compare prices - they knew Amazon was going to give them the best deal.
Bezos made a bold move and it paid off in a big way. Now, it’s estimated that Amazon Prime has 126 million subscribers in the US alone. The company gets a recurring revenue stream from the majority of American households, which it can use to make even more bold bets.
Jeff’s biggest L: the Fire Phone
Of course, not all of Jeff Bezos’s YOLOs have worked out. Back in 2014, he probably had one of his biggest failures ever (other than having his nudes leak): the Fire Phone.
The Fire Phone was Amazon’s attempt to get into the luxury smartphone market. It was priced at $650, the same price as the iPhone 6, which also released that same year.
Amazon really never had that much of a chance. By that point, everyone had pretty much decided whether they preferred iPhones or Androids and didn’t really want to try out a new phone. Plus, the Fire Phone had its own problems. It was filled with gimmicky features that nobody was really asking for. Since it was new, it didn’t have nearly as many apps as iPhones or Android devices.
The Fire Phone wasn’t a serious threat to the iPhone at all. Apple got 4 million pre-orders for the iPhone 6 within 24 hours. On the other hand, the Fire Phone didn’t even sell 35,000 units in 2 months. Eventually, Amazon was forced to sell the phones off at just 99 cents.
Even though Amazon lost really big with the Fire Phone, the whole episode might have been a good thing for the company overall. Amazon admitted its failure almost immediately and took a tax write-off for the cost of making the devices. Many of the employees who worked on the Fire Phone team took what they learned and applied it to Amazon’s next big product: the Echo.
Amazon might have lost embarrassingly badly to Apple when it came to smartphones, but they won big when it came to voice-activated devices. Right now, the Amazon Echo dominates the market, while the Apple HomePod is way behind.
What the YOLOs mean for Amazon
For most big companies, it’s hard to stay innovative. Once a company reaches a certain size, it gets wrapped up in rules and bureaucracy and is more focused on preserving its current revenue streams than building for the future.
But Amazon is different. Jeff Bezos once said, “If you have a 10% chance of a 100x return, you should take that bet every time even if it’s going to feel bad 9 out of 10 times.” Some of his bets worked incredibly well, like Amazon Prime. Some of them failed incredibly hard, like the Fire Phone.
Overall though, Amazon’s strategy of making big bets has paid off. The successes like Amazon Prime, AWS, the Kindle, and the Amazon Marketplace made up for the failures. This past year, Amazon saw 44% year-over-year revenue growth, which is pretty much unheard of for companies that are that big.
What Jeff Bezos can teach us about YOLOs
Look, I’m not telling you this just to show how awesome Jeff Bezos is. There’s a good lesson that we can all learn here about the importance of making bold bets.
One of the best financial decisions I ever made was investing in Tesla back in the summer of 2019. Back then, the company was taking some serious heat from the business press. Tesla was missing its sales targets and people were wondering whether the pressure was getting to Elon’s head.
Betting on Tesla was kind of a YOLO decision for me. Even though Elon’s tweets kind of worried me, I love the product and I strongly believe that electric cars are the future. I didn’t put down my entire life savings because I knew there was some risk, but I made an investment. Through insane luck and zero skill, I’ve made a 1717% return so far. I’m happy I took the bet, and it’s paid off for me in a big way.
Look, I’m not trying to tell you to risk everything you have through badly-thought out YOLOs. Nine bad bets can leave you broke if you’re not careful. Remember: Amazon didn’t bet all of its money on the Fire Phone, the company was going to be fine either way because of the profits it makes from Amazon Prime and AWS. It’s important to take calculated risks.
In conclusion
Whether you think that Jeff Bezos is the greatest innovator of our time or just some dude who should pay more taxes, there’s a lot we can learn from how he ran Amazon. No matter how you feel about its founder, there’s a reason why the company’s become an essential part of the lives of millions of Americans.
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