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 14 11 Lessons for Entrepreneurs From Jeff Bezos's Tremendous Success - (continued from page 4)
  6 Focus on the long term
In 1997, Amazon was still a relatively small company. It served some 1.5 million customers. Bezos's shareholder letter that year sent a signal to Wall Street that he didn't care about quarterly earnings, a trait the company would willingly demonstrate for years.
"We believe that a fundamental measure of our success will be the shareholder value we create over the long term," Bezos wrote. "This value will be a direct result of our ability to extend and solidify our current market leadership position."
Prime is a great example. When launched in 2005, it cost $79 a year and offered free, two-day shipping. Bezos would later write: "We want Prime to be such a good value that you'd be irresponsible not to be a member."
Acquiring all of those members at that relatively modest price was expensive. Those willing to pay that much money were likely to be repeat customers who bought a lot of stuff, meaning shipping costs could quickly exceed the price of the membership. That was the point. The leaps in sales, even if it meant losing money in the short term, would feed the bigger plan. And they did. For a long time, Amazon reinvested almost everything back into the business, favoring growth over profits. Wall Street com- plained. Bezos didn't care.
7. Feed the flywheel
Books were always going to be just the beginning. To attract more customers, Bezos planned on having a large selection of products, at low prices and with great customer service. Increasing the number of customers would attract third-party sellers to the platform, which would increase the selection of products, which would attract even more customers, and so on. The more prod- ucts Amazon sold, the more efficient its processes and systems became. The higher the sales volume, the better the prices it could get from suppliers, and the better it could devote those lower costs to growth. Amazon didn't invent the flywheel--Walmart has also used it as an operating principle--but Bezos & Co. certainly made it spin faster.
8. Hire for intensity
Do you want missionaries or mercenaries? That's the question. "How do you hire great people and keep them from leaving?" Bezos asks. "By giving them, first of all, a great mission--something that has real purpose, that has meaning."
9. Protect your culture
Amazon's cutthroat corporate culture is no secret. There are stories of endless hours, brutal working conditions, and an environment that pushes people beyond their limits. "Nearly everyone I worked with I saw cry at their desk," a former employee told The New York Times for a 2015 exposé. At the same time, Amazon continues to attract talented people who have built products and services that have had an enormous impact on the world.
"We never claim that our approach is the right one--just that it's ours--and over the last two decades, we've collected a large group of like-minded people," Bezos wrote to investors in 2016.
For any criticism you might make about Amazon's intense culture, Bezos is right when he says that culture is "created slowly over time by the people and by events--by the stories of past success and failure that become a deep part of the company lore." The important thing is to recognize that history, and to guard it careful- ly.
10. Know what kind of decision you're making
Amazon breaks down the decisions it needs to make into two types. "There are decisions that are irreversible and highly consequential; we call them one-way doors, or Type 2 decisions," Bezos explains in Invent & Wander, a collection of his writings.
Bezos has described his role as the "chief slowdown officer," and in Type 2 cases, he always looks for more information, since the decision is very important and once it's made, there's no going back. Most decisions, Bezos says, are two-way doors, or Type 1 decisions. These are less consequential. Make the wrong choice and you can go back. The problem, he says, is confusing the two, and taking too long to make Type 1 decisions.
"Is it a one-way door or a two-way door?" Bezos asks. "If it's a two-way door, make the decision with a small team or even one high-judgment individual. Make the deci- sion." Confusing the two types of decisions is something every entrepreneur should avoid.
11. Listen to your critics--but not too much.
People who are on a mission expect criticism. "If you can't afford to be misunderstood, don't do anything new or innovative," Bezos says. He also offers some insight on handling criticism. "First, look in a mirror and decide if your critics are right," Bezos says. "If they're right, change."
Sometimes Amazon does. Vilified over pay rates in ware- houses, it set a $15/hour minimum wage in 2018. A smaller example: In 2009, Amazon had illegally distribut- ed copies of George Orwell's 1984. When notified about the issue, the company remotely deleted copies from users' Kindles. Amazon eventually made it right by offer- ing customers a new copy of the book, or $30, along with a mea culpa. "This is an apology for the way we previous- ly handled illegally sold copies of 1984 and other novels on Kindle," Bezos told customers. "Our 'solution' to the problem was stupid, thoughtless, and painfully out of line with our principles. It is wholly self-inflicted, and we deserve the criticism we've received."

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