I like getting smarter. I think self-improvement is on my top five lists of imperatives.
However, it's awfully hard to find teachers and mentors at my age. So when I come across them, I holler to the rooftops about how much I have learned and how much I hope you can learn, too.
That's why I am hollering Jeff Bezos' name today because his shareholder letter taught more about business since my first days at Goldman Sachs 37 years ago.
First, before I go into my demand that you read this letter, which is ridiculously tuition free, let me say that I want to stick it to all of those who think that Bezos has lost focus because of whatever issues he may have in his personal life, issues that, candidly are of no issue whatsoever except the brave stand he took against the notion that his life should be unfairly torn asunder to sell papers.
This man is so insanely focused that I pity anyone who has to compete against him. But I don't want to pity them too much because the beginning of the letter is about how he gives third-party sellers the run of the joint, allowing them to use Amazon Web Services, with all of its amazing analytics, plus lightning quick fulfillment and the right to be in the Prime membership program. Anyone who is thinking of trying to bust up Amazon (AMZN) because it is too powerful will have to think twice because Amazon Web Services would not be as successful or as inexpensive on its own.
Independent third-party resellers -- most of which are small and medium sized businesses -- now represent 58% of all the merchandise sold on Amazon, Bezos tells us. How many of those would be able to afford an Amazon Web Services like offering on its own?
Now let's get some wisdom. Here's some I gleaned.
First, some of the best businesses are businesses that no one asked for, businesses like Web Services. "No one asked for AWS, no one," he writes about a multi-billion dollar business that grows at 47% and is run by the brilliant Andy Jassy, whose chief goal is to offer far more for much less, constantly creating new offerings while cutting price. "Turns out the world was in fact ready and hungry for an offering like AWS but didn't know it." Why did they do it? A hunch. Follow your hunches, he says. Go the curious road, take the financial risks "and begin building - reworking experimenting and iterating countless times."
Amazon encourages builders, people who like to explore and wander. It's not random, he says, but it's "wandering is an essential counterbalance to efficiency. You need to employ both. The outsized discoveries - the non-linear ones -are highly likely to require wandering." I have never in all my years of working ever been urged to wander. That's wrong. I regret that.
Next, you must fail. It is integral that you fail and fail big, fail to scale. Failing can create some amazing ideas. Get this: "Development of the Fire phone and Echo was started around the same time. While the Fire phone was a failure we were able to take our learnings (as well as the developers) and accelerate our efforts building Echo and Alexa," which by the way were inspired by the Star Trek computer.
If you didn't know any better you would think that he's bat poop crazy. But how far is that from genius? Listen to this: "No customer was asking for Echo. This was definitely wandering. Market research doesn't help. If you had gone to a customer in 2013 and said 'would you like a black, always-on cylinder in your kitchen about the size of a Pringles can that you can talk to and ask questions that also turns on your lights, and plays music? I guarantee you they'd have looked at you strangely and said 'no thank you.'" Instead they have sold 100 million Alexa-inspired devices.
Bezos points out that he pays a $15 an hour and offers all sorts of benefits because you want to keep your people happy. Takeaway: pay your people more than the other guy. He's competitive about it: " Today I challenge our top retail competitors ( you know who you are) to match our employee benefits and our $15 minimum wage. DO it! Better yet go to $16 and throw the gauntlet back at us." Dan Bartlett, spokesperson for Walmart (WMT) , quickly tweeted "the vast majority of our warehouse associates have been making more than $15 for a long time. And they still get quarterly performance benefits." Bartlett's feisty: "Hey retailers out there (you know who you are) how about paying your taxes" and he links to an article about how Amazon pays zero on $11.2 billion in profit, to which I say, you know what, you save us more than the government does for us with that tax money. Plus, you teach us. I think, in the end, Bezos and Amazon are the greatest bargains for the customer on earth.