Amazon's Jeff Bezos on profits, failure, succession, big bets

http://uk.businessinsider.com/amazons-jeff-bezos-on-profits-failure-succession-big-bets-2014-12

by davidw • 12 years ago

176 38 12 years ago

uk.businessinsider.com

dalke• 12 years ago

This was posted a couple of days ago at https://news.ycombinator.com/item?id=8746111 , though with the given title of "I Asked Jeff Bezos About The Tough Questions"

davidw3• 12 years ago

Bezos doesn't give many interviews, so this was interesting to see. I also recommend the book about him and Amazon that came out earlier this year:

http://blog.liberwriter.com/2014/06/04/review-the-everything...

In some ways, Amazon is the most unusual of the big tech companies; at least it seems that way to me. Microsoft, Apple, Google, and even newer companies like Facebook seem to have a lot more in common with one another than with Amazon.

sumedh2• 12 years ago

Amazon is the most unusual of the big tech companies

I believe Amazon is the only company which includes the CEO's message from its first annual report(1997) where Bezos says that its all about the long term.

rahimnathwani• 12 years ago

https://investor.google.com/corporate/2004/ipo-founders-lett...

"As a private company, we have concentrated on the long term, and this has served us well. As a public company, we will do the same."

santacluster• 12 years ago

The Kindle is trying to reduce friction for reading a whole book. It’s working.

Yes, yes it does. At least it does for me. I haven't read as much and bought as many books in decades. A considerable part of my media consumption time has shifted away from series, movies and internet back to books. Mostly because it's so damn easy to get the next book. And the next. Etc.

ntaso• 12 years ago

I got a Kindle when I was traveling around the world for 6 months. Buying a book, carrying it around and selling it for a fraction of its price 3 days later got very tiresome very soon. So I bought a Kindle, which weighs the same no matter how many books are on it.

Since then, I read way more than before (about 25 books per year, fiction and non-fiction, sometimes 2-3 in a week, sometimes nothing for a month). I also feel like I read faster.

I mostly read in English, although my native language is German, because translation is so damn easy (just point your cursor in front of a word), because English books are often way cheaper on the Kindle and there's simply a bigger selection, and because I enjoy reading English books in their original language.

jared314• 12 years ago

which weighs the same no matter how many books are on it

Fun fact: a fully loaded kindle weighs more than an empty kindle, by about 10^-18 grams. So, at a maximum of 50mb per book, each book would come in below 12.5 zeptograms (normally below 0.25 zeptograms).

http://www.nytimes.com/2011/10/25/science/25qna.html

mark_l_watson• 12 years ago

I agree - way more reading now. I have also got hooked on Amazon's Audible audio book offering. What I really like are combo books that I can go from reading or listening to - all with good sync across my devices.

sumedh2• 12 years ago

I didnt know that Bezos's invested in Google. Does he still hold the stock?

ignoramous• 12 years ago

I wouldn't know anything about that. But Bezos did buy a startup (junglee.com) whose founders went on to invest in Google (and become billionaires, and hold board positions there and then challenge Amazon's core business which is e-commerce).

michaelochurch3• 12 years ago

These aren't really "tough questions". Still, Bezos gives a good interview and makes Amazon sound like a good place to work. He's right-on with this:

What really matters is, companies that don’t continue to experiment, companies that don’t embrace failure, they eventually get in a desperate position where the only thing they can do is a Hail Mary bet at the very end of their corporate existence.

I've seen that first hand. It's ugly, especially because the best people leave companies where they don't get to innovate and own new things, so you're doing that "Hail Mary pass" with a lot of deadwood in your ranks.

That said, I'm having a hard time reconciling his pro-innovation stance with Amazon's use of stack-ranking, which causes divisions to ossify and halts innovation. It seems hard, after a point, to innovate if you don't trust your own people. You'll have a core in-crowd that will toss you ideas for a while, but eventually they run out and lose the ability to keep pace.

That's the question that I would want to see asked: how do you reconcile your ideals (which are admirable) with the reality of a company known to use stack ranking?

davidw3• 12 years ago

The balance of what I've read does not make it out to be that great a place to work, but who knows. I'm not interested in working at large companies in general these days.

In any event, I think it's a very interesting company and one I wish I knew more about.

mabbo• 12 years ago

Stack ranking may, in a sense, exist at Amazon. But as a developer here, it's invisible to me. I write my reviews of some of my colleagues (I choose which), they write reviews of me. All reviews of me go directly to my manager, who will compile them together with his review of me and my review of myself to build a full year-end review of my performance.

Those yearly reviews will factor somehow into my pay, bonuses, etc, but I only see the final result of it. Was I stack ranked?

davidw3• 12 years ago

Do people who otherwise did an acceptable job get canned just because they ranked at the bottom? That's the concern about the practice, I think.

westernmostcoy• 12 years ago

Stack ranking is very present and very real at Amazon, but if you have a politically capable manager you will find yourself (as non-manager) able to ignore it.

That doesn't mean that you or your manager are necessarily doing a great job though, or that other people aren't being hurt by the system.

discodave• 12 years ago

It totally depends on your manager. My first manager encouraged me to do good work and make sure I got customer feedback for it. My new manager starts every one-on-one meeting with phrases like "not everybody gets promoted" or "the reality is that you will be compared to your peers"...

You can guess which one I prefer.

googler271828• 12 years ago

(posting under new account because I don't think anyone can talk freely about their employer under a real name)

Stack ranking is not a well defined term. It can mean any of

1. The result of the review process is that people in a team are ranked, the top X% are rewarded and bottom Y% are punished.

2. Reviewers are asked to rank people they review (possibly not all in the same team) and this information is part of the input to the review process.

3. When making decisions, all the people in consideration (possibly not in the same team) are ranked.

Case 1. is a problem because we can't expect the law of large numbers to hold within a small team, and because it gives people bad incentives.

Case 2. is less of a problem for incentives because people being compared can be from different teams. This also provides comparisons across teams that let people be judged relative to the company rather than their teams, and so the law of large numbers does hold.

Case 3. is not really relevant to anything, since when deciding the outcomes for N people, you obviously want the best outcomes to go to the best people. Stack ranking is just an aide to turning subjective impressions into numbers. I've seen it used in essay grading, and also assigning final grades in classes (ranks are based on individual test scores and not altered, then cutoffs for letter grades are determined).

megablast• 12 years ago

Still, Bezos gives a good interview and makes Amazon sound like a good place to work.

Unless you work in a warehouse.

kyllo2• 12 years ago

If he were really honest, I think he would say that the innovative ideas come from the trusted core in-crowd, while everyone else is interchangeable. Amazon has a tough culture that chews people up and spits them out. I frequently hear from Amazon employees here in Seattle that their average tenure is just one year. The high turnover is not a bug, it's a feature.

philwelch• 12 years ago

The average tenure is a year because the company is growing so fast, not because the average employee leaves after a year.

michaelochurch3• 12 years ago

I think he would say that the innovative ideas come from the trusted core in-crowd, while everyone else is interchangeable. Amazon has a tough culture that chews people up and spits them out. I frequently hear from Amazon employees here in Seattle that their average tenure is just one year.

So, the question is: how does one get into the "trusted core in-crowd"? Is this something that one can pre-select in the hiring process? I wouldn't work for Amazon unless I were fast-tracked into that set and I imagine that the odds are very long.

The high turnover is not a bug, it's a feature.

We need a third case between "bug" and "feature" for "that which works as designed, but does a harmful thing". In the short term, the "Real <X>" phenomenon (i.e. "Real Amazoners" get to work on the cool stuff and innovate, and the peasants do the shit work and burn out after a year) motivates people. In the long term, it's bad on both sides of the divide. The losers hate it (that's obvious) and begin to underperform and sabotage the organization, to the point where you get an unreliable "Swiss cheese" organization. However, it also leads the winners toward complacency and entitlement, as well as obsession over relative status, which leaves the company ill-equipped to compete on absolute terms and keep relevant. These degeneracies can be slowed down to the point of happening over 15 years instead of 6 months, but they are inevitable.

dntrkv• 12 years ago

Here is the full interview on YouTube. Bezos is actually a very interesting person to listen to.

https://www.youtube.com/watch?v=Xx92bUw7WX8

curiously• 12 years ago

What I don't get with Amazon is that they continue to spend whatever they make to capture market share but at what point will they start reaping what they sowed? What happens when there is suddenly no capital around to help this growth but competitors have plenty of cash in their vaults?

thetrb• 12 years ago

They positioned themselves very well in certain critical areas and I doubt that they will be easily replaced by competitors. For example in the ebook reader space most competitors already went our of business and Amazon is now close to being a monopoly in this space. At this point they should be set up pretty well to increase their margins. I don't know how much percent of each ebook sale they take but similar to Apple's App Store I'm sure this is a nice cash cow.

adventured• 12 years ago

What happens when there is no capital around?

I'm not sure in what scenario that would happen. Amazon is funding its other growth with cash from its core business, which continues to expand. Your scenario would require that Amazon's core retail business die.

known• 12 years ago

"You'll buy anything/unwanted you think the store is losing money on" --eCommerce business model

Amazon's Jeff Bezos on profits, failure, succession, big bets

Related Stories