15 Business Lessons From Jeff Bezos

Hello Aluxers, welcome back. The king of Amazon and the richest man in the world gets a bad rap but his business approach is pretty rock solid. There are definitely some good takeaways from the business life of Jeff Bezos that we can learn from. He's best known for founding Amazon back in 1994 when on a cross-country road trip to Seattle from New York. What started as a meager online bookstore has become the world's largest online sales company and the largest internet company by revenue. But there's a lot more to Jeff Bezos. Amazon has grown into a megalith and the offshoot businesses offer revolutionary innovation to the consumer market with just a few clicks. Welcome to ALUX.com! The place where future billionaires come to get inspired. If you're not subscribed yet, you're missing out. For now, let's look at the 15 greatest business lessons we can learn from Jeff Bezos. When designing his business model, Bezos boiled down internet shopping into the basics. He realized it wasn't a business of what you're selling, but rather providing a service of selling. He explains, but it's become about making people's lives easier. There's an entire market segment dedicated to helping customers make complex decisions, like which leaf blower to buy. Peer reviews on sites like Amazon help buyers cut through the marketing noise and make that decision. We bet you never thought of Amazon like that before, have you?! One thing Bezos can't be accused of is stalling. He can change direction on a dime and this has been the strength of Amazon and what's led to his market domination. How he's achieved that is with a business management structure that is decentralized. Cutting out the red tape has allowed the experts and innovators to harness a company's passion for pioneering, inventive and customer-obsessed culture. According to Bezos, This decentralized distribution of invention throughout the company, not limited to the company's senior leaders, is the only way to get robust, high-thought-out innovation. Bezos certainly wouldn't be where he is today if he were worried about what meals are served in the Amazon canteen or what color to make the Easter specials website banner. He believes in the policy of, Don't sweat the small stuff, and in this fast-paced world, decisions need to be made quickly. Bezos has a policy of not deliberating needlessly on decisions that are reversible. This frees up him and top management to make big decisions that matter, with methodical, careful research and plenty of consultation. However, irreversible decisions are few and far between according to Bezos, who sees most decisions as two-way doors. As he explains, these decisions can and should be made quickly by high-judgment individuals or small groups. Bezos commends the character trait of stubbornness in the entrepreneurial spirit. He credits it for what leads to innovation success. Innovation takes a lot of experimentation, and experimentation requires a decent helping of stubbornness to see it through. Without it, innovators would simply give up too soon. But with this stubborn superpower, there needs to be a balance of flexibility according to Bezos. That's the difference between true visionary breakthroughs and doing the same thing again and again out of stubbornness. A flexible mindset will help you achieve this, but figuring out when to be which is definitely the hardest part. Bezos has clearly struck the balance of stubborn and flexible in his own ventures, with a personal fortune of 1.8 billion dollars. He has more money to experiment with than any other person on the planet, yet his fortune keeps on growing. It's better to create a new product that wipes out your old product than to let your competitors do it for you. Bezos doesn't plan on resting on his laurels, instead he's constantly in pursuit of how to move with the market. It's his passion to push innovation that's allowed Amazon to stay on top. When customers' Amazon deliveries were being stolen from their porches, he didn't just let traditional brick-and-mortar stores take back their territory, he innovated and created in-home delivery with the Amazon Key device. This allows delivery staff access to your house to place your packages inside your front door. When Amazon created Kindle e-readers, they weren't concerned about taking away from paper book sales, their competitor would, and then they would lose both paper book sales E-readers were inevitable, who would be the market leader and profit from them was anyone's game, and Jeff Bezos made sure Amazon was top of the log. On the flip side, a company like Kodak were the first to launch a digital camera, but Kodak were scared of cannibalizing film sales, so they stalled mass rollouts of digital cameras, but their competitors jumped on the digital camera market gap and Kodak today is virtually bankrupt. Number 6. Build where there is improving infrastructure When Bezos founded Amazon and began selling books online in the early dot-com era, internet was slow, home computer saturation was low, and online payments were complicated. But he knew that all the infrastructure platforms would improve on their own, and he could plug into their growth. And in 1999, he was actually quoted predicting this growth. Further improvements will lead to always-on access, which I expect will be a strong boost to online shopping at home as opposed to the office, and we'll see significant growth in non-PC devices and wireless access. We have a market size unconstrained by opportunity in an area where the underlying foundational technology we employ improves every day. That is not normal. Number 7. Self-service is the mother of invention If you want to allow true innovation according to Bezos, you need to remove the gatekeepers that slow innovation. His platform is robust, but in no way is it militant in its approach to buyers or sellers. The seller field is as important as having a ripe consumer. Allowing sellers to innovate through the self-service nature of the platform has allowed even improbable ideas to be tried, at little or no cost to Amazon. The feedback for users is immediate and this allows for further insight into the user needs for Amazon. Number 8. Experiment and then experiment again Bezos has a strong ethos of experimentation. In fact, he counts it as imperative to Amazon's business model. According to Bezos, if you double the number of experiments you do per year, you're going to double your inventiveness. He doesn't see it as something to do because all the top-notch tech companies do it. He sees it as integral to business success. Number 9. Cash is king In a world of equity and bitcoin, it's easy to forget the value of lowly cash. But according to Bezos, cash flow is the greatest indicator of a company's stock price over the long term. Bezos focused on the importance of cash early on and so usually had access to In 2001, he took a bold first step toward achieving a pro-forma operating profit. He got everyone on board in the company to see the vision through. So forget operating profits and get to terms with your company's net profits if you want to make the big money. Number 10. Share values of your shareholders From early on in the days of Amazon, Bezos was aware that a clear set of values defined his business and guided his approach. His emphasis on long-term growth helped make decisions that have resulted in Amazon's current success. The most important measurement of their success is customer and revenue growth. To amass such great success, however, is a result of leveraging this customer base to remain repeat buyers and continue to bring in new customers on board. Shareholders who understand this clearly defined focus on customers will assist by not standing in the way of Bezos' talent for achieving his long-term vision. His talent can be defined by the success of Amazon's $1 trillion market cap. Amazon is only the second company in the world to ever reach this figure. Number 11. Find your profit in your fixed costs You would think that a business like Amazon would be fixated on its variable cost, but Bezos believes in building businesses based on fixed costs. Variable costs are costs associated with sales, so in Amazon's case, this is delivery costs, labor packing costs, or transactional costs. Fixed costs are items like software, office rentals, insurance, and interest. Amazon can offer higher customer service by focusing on fixed costs like software development. A better website experience will increase customer satisfaction, whereas brick-and-mortar stores have to add variable costs like more sales staff, or building upgrades to boost sales, although this is not a sure-fire return on investment. Amazon's variable costs are mostly linked to a sale that is already made, such as shipping or labor costs associated with packing. Number 12. A new race for space is underway and Bezos is hoping to win It's no surprise that Bezos has gravitated towards space exploration. By now, maybe he feels like being the richest man on earth is somewhat limiting. His need to expand beyond the current frontier is being realized through his space travel company Blue Origin. His aim is manufactured worlds, rotating to create artificial gravity with centrifugal force. To put it simply, giant floating glass tanks of fabricated worlds with colonies of people living and working inside of them. It's a race he's trying to win and he's neck and neck with Elon Musk. Musk has his eye on Mars as the end goal for a second earth civilization, but the two men certainly share a perchand for business and vision for shaking up any industry they enter into. And Aluxers, if Jeff Bezos is inspiring you, why not watch our video on business lessons from Elon Musk by clicking or tapping in the top right corner. Number 13. When it comes to the numbers, think long term When Bezos considers the numbers, he thinks long term. If it's a decision that might seem daring at first, but he believes his customer or shareholder will learn to love it or at least stomach it later, then he signs up for the long run. In his words, math-based decisions command wide agreement, whereas judgment-based decisions are rightly debated and often controversial, at least until put into practice and demonstrated. And then when it comes to the numbers that multiply, we trust Bezos' advice and don't sweat the short term, after all, the numbers don't lie. Number 14. Work backwards from your customer's needs Amazon is modeled around the customer's needs. In fact, sometimes they seem to know what we need before we do. We didn't realize we needed same-day delivery until we had it, and now it's indispensable. Kind of like the way we didn't realize we needed the marvelous Mrs. Maisel, but thanks to Amazon Prime, here we are. The opposite of the approach of starting with the customer's needs and working backwards is a skills-forward approach. In the market where customers can easily move along, planning your business offering around being good at X, so that's what you offer your clients, is a one-dimensional approach. It could easily leave you redundant and never drive you to And Aluxers, keep on watching for the bonus of this video, when we reveal how Bezos stays on top of his customers' ever-rising expectations. Number 15. Don't wait for a crisis to improve Jeff Bezos is certainly humble in his approach to his customers. He realizes that they're loyal only until a better service is on offer. He understands that it's a great privilege they are loyal thus far, and feels a great obligation to continue to serve them as best as he can. It is this ethos that drives Amazon to not wait until their sales dip before improving their services. They're constantly in pursuit of ways to add value, features and benefits as they improve their service offerings to customers. Bezos has said, We invent before we have to. And Aluxers, that's all for today's video. Now that you understand the man behind the brand, what are your experiences of Amazon services? Do you see these business values coming through in your Amazon experience? And as always, for sticking with us until the end, what could that mean? Your bonus of course! Here it is. So how does the king of Amazon stay on top of the ever-rising customer expectations of the click culture we live in? According to Jeff, it's not one single thing. He demands a culture of high personal standards in his company. This plays a large role in making sure everyone at Amazon is driven to push the limits and offer clients more. He is honest though, saying, We've had some successes over the years in our quest to meet the high expectations of customers, but we've also had billions of dollars worth of failures along the way. It's good to know that even Jeff Bezos can make a mistake sometimes. Thank you for spending some time with us Aluxers. Make sure to like and subscribe so you never miss another video. We also handpicked these videos which we recommend you watch next. 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