What I Learned from Reading Every Amazon Shareholders Letter(medium.com)
medium.com
What I Learned from Reading Every Amazon Shareholders Letter
https://medium.com/@gsvpioneer/what-i-learned-from-reading-every-amazon-shareholders-letter-cdc35f309e8b
46 comments
> Don't try to build the rocket yourself (that's a gamble that practically never ends well); let someone else do it and try to hitch a ride.
But what if everyone’s building shitty rocket ships, that have all sorts of practical (not technical) limitations, and no one’s trying to build what I have in mind, which I’ve identified as a superior rocket ship?
If you, yourself, can convince investors that it’s a good idea, is there an advantage to hitching a ride instead?
But what if everyone’s building shitty rocket ships, that have all sorts of practical (not technical) limitations, and no one’s trying to build what I have in mind, which I’ve identified as a superior rocket ship?
If you, yourself, can convince investors that it’s a good idea, is there an advantage to hitching a ride instead?
OP says that hitching a ride is the SAFEST by far. Maybe starting something is not for everyone and I think most people on HN would encourage someone to 'go for it' if they think they have it in them.
But the reason that I wanted to respond is to point out the difference between convincing investors to invest and building a rocketship yourself. These are completely different things. Convincing an investor buys a little time for a company to form and a product to develop. The company needs to prove, prove, prove to get to a rocketship stage.
But the reason that I wanted to respond is to point out the difference between convincing investors to invest and building a rocketship yourself. These are completely different things. Convincing an investor buys a little time for a company to form and a product to develop. The company needs to prove, prove, prove to get to a rocketship stage.
My observation, at least at my level, is that the engineers who do best get seats on rocket ships that have already made it to orbit. Established companies give out bonuses on good years that look like the payouts I've seen engineers get during realistic exits.
I mean, sure, if you shoot the moon in your selection of startups, that's going to go pretty well for you, but I think on average you are best off, assuming you are an engineer, getting a very well compensated job at a top company and then putting the resulting money in a whole-market index fund.
I mean, sure, if you shoot the moon in your selection of startups, that's going to go pretty well for you, but I think on average you are best off, assuming you are an engineer, getting a very well compensated job at a top company and then putting the resulting money in a whole-market index fund.
It's also a bit of nice self serving advice for rocket ship captains who are trying to hire lots of cheap labor. People like Eric Schmidt do the exact opposite of this advice and carefully calculate every move they make.
It’s funny. I’ve heard the “Disagree but commit” from a lot of managers lately; usually used to shut peons up. Ironic that it’s original usage (at least where these managers heard it from) speaks to the opposite direction: leadership should trust their teams.
Even internally to Amazon, it's misunderstood.
The point is to gather all the facts, make a decision as a team or group, then have everyone commit to the decision and not whine about how they should have done what I said we should do. You disagree, but you commit to the decision of the group for cohesion and productivity.
It's also a means to prevent groupthink. No one should be thought poorly of for disagreeing, so everyone should be giving all their thoughts, even ones that contradict what the group is thinking. Just so long as they get those points out before the decision is made, of course.
The point is to gather all the facts, make a decision as a team or group, then have everyone commit to the decision and not whine about how they should have done what I said we should do. You disagree, but you commit to the decision of the group for cohesion and productivity.
It's also a means to prevent groupthink. No one should be thought poorly of for disagreeing, so everyone should be giving all their thoughts, even ones that contradict what the group is thinking. Just so long as they get those points out before the decision is made, of course.
Exactly. No matter how good an idea is, if people in the team are sabotaging it because they don't like it you'll have a bad time. A variation on Patton's quote: A mediocre plan executed well is better than a great plan executed poorly.
That particular phrasing may be specific to Amazon, but I've heard the same concept used in other management training classes. "If you agree 80%, then commit 100%" was another way I've heard it said.
I thought it was more along the lines of “if you’re in the minority and you aren’t convincing people then don’t invest energy into it and go with the flow”.
It’s that too; the advantage of a 3 word maxim: it means what you want it to mean. My managers want the peons to follow the directions from on high. Bezos wanted to trust the people he hired to do the right thing, even if he disagreed. I, an employee, tend to go with your interpretation.
You’re right, I like your breakdown of the issue.
The “mantra” should be a reminder of the cultural value. ie: you learn the value by seeing it in interactions between people first. The mantra then orients you toward the cultural value.
Instead some people are taking the mantra and twisting it to create a culture that is useful to them.
Haha, it kind of reminds me of religion. :S
The “mantra” should be a reminder of the cultural value. ie: you learn the value by seeing it in interactions between people first. The mantra then orients you toward the cultural value.
Instead some people are taking the mantra and twisting it to create a culture that is useful to them.
Haha, it kind of reminds me of religion. :S
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Ugh, that phrase is so grim. I kinda wish people in this industry would just tell each other to “shut up and deal with it” if that’s what they effectively mean.
What I thought was interesting, while I haven't read the shareholder's letters, is that the OP says Bezos applies this to himself when evaluating ideas from his own teams
He does. He specifically mentions at least one example where he didn't want to do something (I think make a new TV show) but everyone on the team thought it was a good idea so he committed to it despite not agreeing it was a good idea.
When leadership trusts their teams, they're trusting the manager. Combining these uses means that the manager has support from above and below to execute their projects.
Is it safe in this thread to bring up the human cost of Amazon's (and likely by extension Bezo's) almost sociopathic pursuit of success? I wouldn't deny Amazon is a successful company, but how many horror stories from employees being ground to dust under their management have crossed HN's front page? How many companies are now refusing to do business with Amazon because of the iron-fisted requirements enforcement on their suppliers? How many sales on Amazon are of shit quality, ripoff products no better than you'd find on the streets of Hong Kong?
I mean eschewing any and all corporate, social, and ethical responsibility will definitely make you a truck load of money, but I wouldn't call it exactly a net gain for all involved.
I mean eschewing any and all corporate, social, and ethical responsibility will definitely make you a truck load of money, but I wouldn't call it exactly a net gain for all involved.
I had a roommate who worked in the Amazon warehouse. He said it was very chill and easy work. Mind that he was someone who was a day-laborer, worked in filthy factories, and so on, so it's possible contrast principals are at play here.
As for the quality of the products, there are many 3rd party sellers on Amazon who are selling garbage. This is unfortunate, but that's a tough battle for Amazon or the competing sellers to lock down.
I'm not sure why you'd defend the suppliers who refuse to sell due to iron fisted policies, yet complain about the quality of the products sold. Amazon had / has to do something to clean up the mess. Hopefully it will be beneficial to the buying experience on Amazon.
As for the quality of the products, there are many 3rd party sellers on Amazon who are selling garbage. This is unfortunate, but that's a tough battle for Amazon or the competing sellers to lock down.
I'm not sure why you'd defend the suppliers who refuse to sell due to iron fisted policies, yet complain about the quality of the products sold. Amazon had / has to do something to clean up the mess. Hopefully it will be beneficial to the buying experience on Amazon.
In my experience working in an Amazon warehouse (albeit only one,) it depends. I could barely walk for two months after I started, just because I wasn't physically prepared to stand or do repetitive movements for ten hours a day - and I work in one of the biggest FC's in the network so it was a six or seven minute struggle across the building and down two flights of stairs to get to the car sometimes. I don't blame Amazon for that, though. I do blame them for complaining about the cost of providing us with aspirin, then simply deciding not to provide it anymore.
The work is tedious and exploitative, and it's very apparent working there that Amazon considers you little more than a meat machine there to run an algorithm, despite the lip service otherwise, and often your job depends on metrics you're not even allowed to see, and the pay is terrible. But, some people don't mind it. Some people actually like it. Others have to be carted off in an ambulance because they worked themselves into heat exhaustion.
The work is tedious and exploitative, and it's very apparent working there that Amazon considers you little more than a meat machine there to run an algorithm, despite the lip service otherwise, and often your job depends on metrics you're not even allowed to see, and the pay is terrible. But, some people don't mind it. Some people actually like it. Others have to be carted off in an ambulance because they worked themselves into heat exhaustion.
> I had a roommate who worked in the Amazon warehouse. He said it was very chill and easy work. Mind that he was someone who was a day-laborer, worked in filthy factories, and so on, so it's possible contrast principals are at play here.
Having worked at a Fedex hub for a number of years, I can tell you numerous things I've heard about Amazon's warehouses sounded familiar. It's awful work and it destroys your body, and it sounds like they don't even pay as much as Fedex did.
> As for the quality of the products, there are many 3rd party sellers on Amazon who are selling garbage. This is unfortunate, but that's a tough battle for Amazon or the competing sellers to lock down.
There are many ways that Amazon could lock itself down that would hinder the speed at which they are attempting to operate. It's obvious looking at their current methods that they don't see it as enough of a problem to change their core business, and that's the issue. They're ok with selling shite on the side likely because many don't bother to return and because traffic is traffic when it comes to getting people on the site.
> I'm not sure why you'd defend the suppliers who refuse to sell due to iron fisted policies, yet complain about the quality of the products sold. Amazon had / has to do something to clean up the mess. Hopefully it will be beneficial to the buying experience on Amazon.
I'm referring to small businesses and individual operators, not Shenzhen factory castoff resellers. There's a difference between a seller who has a hard time meeting Amazon's policy which largely boils down to "Ship it, right f*ing now" and a seller who is just incompetent or whatever the case may be who can't get packages out in a timely fashion. And more to the point, it's about Amazon's total lack of any flexibility regarding ship times; they expect small business to react with the same sort of frantic pace as they do, with a massive warehouse and drop-shipment infrastructure, and its dumb.
Having worked at a Fedex hub for a number of years, I can tell you numerous things I've heard about Amazon's warehouses sounded familiar. It's awful work and it destroys your body, and it sounds like they don't even pay as much as Fedex did.
> As for the quality of the products, there are many 3rd party sellers on Amazon who are selling garbage. This is unfortunate, but that's a tough battle for Amazon or the competing sellers to lock down.
There are many ways that Amazon could lock itself down that would hinder the speed at which they are attempting to operate. It's obvious looking at their current methods that they don't see it as enough of a problem to change their core business, and that's the issue. They're ok with selling shite on the side likely because many don't bother to return and because traffic is traffic when it comes to getting people on the site.
> I'm not sure why you'd defend the suppliers who refuse to sell due to iron fisted policies, yet complain about the quality of the products sold. Amazon had / has to do something to clean up the mess. Hopefully it will be beneficial to the buying experience on Amazon.
I'm referring to small businesses and individual operators, not Shenzhen factory castoff resellers. There's a difference between a seller who has a hard time meeting Amazon's policy which largely boils down to "Ship it, right f*ing now" and a seller who is just incompetent or whatever the case may be who can't get packages out in a timely fashion. And more to the point, it's about Amazon's total lack of any flexibility regarding ship times; they expect small business to react with the same sort of frantic pace as they do, with a massive warehouse and drop-shipment infrastructure, and its dumb.
It's a very interesting read, and I can't help the feeling that lately Jeff Bezos is taking the place of Steve Jobs as the superhuman CEO (deservedly, it seems!).
Then you haven't been an Amazon supplier dangling at the end of a rope as Bezos tries to wring blood from a stone.
That sounds a bit familiar to how Apple dealt with their suppliers.
So true... the universe of selling on Amazon and buying on Amazon couldn't be more separate.
The universe of buying and selling clothing at the mall, food at the grocery store, goods at Walmart have the same level of separation in most cases.
Not quite what I mean. The difference between the costomer-facing section of Amazon and the seller-facing section is worlds apart.
Selling on Walmart, eBay, etc., are very different platforms with their own unique rules. Amazon is an entirely different level.
Selling on Walmart, eBay, etc., are very different platforms with their own unique rules. Amazon is an entirely different level.
And the common denominator with all of these is majority of customers are ignorant to all of this. They are more concerned with the price tag and their wallet than they are about the supply chain.
Would that contradict the point?
Well, yeah, Amazon is more the new WalMart than the new Apple.
Tell us more. I am not familiar with this side of Amazon.
I used to work for a publishing company. No other platform or vendor made us bend over backwards like Amazon. We had to give them the usual non-competitive list pricing that other vendors demand, but we also had to give them a massive, absolutely disproportional cut of the sale price, regardless of profit margin. There were launch date rights they demanded, massive periods of exclusivity for audiobooks in order not to be a second class citizen, total refusal to negotiate terms, etc.
We were not a small publishing house, top 10% by volume nationwide, and (mostly) not paperback trash either. You've probably seen our cookbooks. Didn't matter. They treated us exactly the same as they would an amateur author writing unedited self-pub romance novels. No regard for quality, rating, volume, or any other metric, all must bow before Bezos. Amazon takes such a chunk out of the publishing industry, it actually has a bit of a chilling effect, because you can't afford risk a flop with the tight margins Amazon affords, and you probably need Amazon.
We were not a small publishing house, top 10% by volume nationwide, and (mostly) not paperback trash either. You've probably seen our cookbooks. Didn't matter. They treated us exactly the same as they would an amateur author writing unedited self-pub romance novels. No regard for quality, rating, volume, or any other metric, all must bow before Bezos. Amazon takes such a chunk out of the publishing industry, it actually has a bit of a chilling effect, because you can't afford risk a flop with the tight margins Amazon affords, and you probably need Amazon.
Amazon shareholder letters seem to be becoming the new Berkshire shareholder letters [0]. They are friendly, engaging, and most importantly, written by an author who steadfastly holds by principles that haven't changed in decades.
If you haven't read any of the berkshire letters you really should.
http://www.berkshirehathaway.com/letters/letters.html
If you haven't read any of the berkshire letters you really should.
http://www.berkshirehathaway.com/letters/letters.html
It's still amazing to me that an online book store is now the #1 seller of server infrastructure.
Many people were selling things online when Amazon was just a book store. Amazon was the best of them all.
To me, it doesn't sound so strange that the #1 online store grew to be a strong competitor in other online businesses as well.
To me, it doesn't sound so strange that the #1 online store grew to be a strong competitor in other online businesses as well.
My recollection is that he started with books because that would be easiest, but the goal was to be all-encompassing from the start.
Too abstract. Amazon businesses outside of North America get steamrolled by Alibaba one after another, yet people laud their "innovative business model," when it isn't (sell web hosting, and stuff over internet, something a gazillion other companies do)
That's nonsense. It's only true for China (for obvious reasons). Amazon is more successful in India, UK, Germany, France, Japan, and the list goes on.
See, they are in the business of selling fancy trinkets from China as it is what 9 out of 10 consumer goods are. No mater what they do, a Chinese company will be having an edge over them no matter what they will do.
Sell web hosting, ha. You mean the one that is 10x bigger than its next 14 competitors combined? (2015)
If the profit margin is so high, be prepared for hungry competitors.
Your margin my opportunity sort of thing :)
My current org builds all infrastructure to run in multiple cloud providers, and we spend over a million a month on cloud services.
Your margin my opportunity sort of thing :)
My current org builds all infrastructure to run in multiple cloud providers, and we spend over a million a month on cloud services.
The services will be the lock-in. and sucsessful software businesses usually have high margins, that's the nature of the beast.
Links or examples for those of us who arent familiar and to back you your statement.
I believe this is from Eric Schmidt. It's probably the single most important principle that you have to follow if you want to have a successful career. Especially if you're an engineer.
Most fast growing tech companies are founded by random dumb kids in their garages. Don't try to build the rocket yourself (that's a gamble that practically never ends well); let someone else do it and try to hitch a ride. That is the safest way by far.
It's much easier to identify a good rocket ship than to build it yourself.