1 – Believe in the future. From Jeff’s point of view, we are living in primitive times. There is much more life-changing technology to be discovered. Jeff considers himself an explorer, inventor, and pioneer. This outlook has shaped Amazon from the beginning and has become its DNA.
It’s not about crushing the competition, although many have accused Amazon of this very thing. Instead, it’s about inventing the future. A better future. Everything can be changed and improved. Even revolutionized. Nothing is safe or sacred. To some this is scary, to others this is the very heart and soul of progress.
Amazon creates products that are actually ideas and systems instead of things you can hold in your hand. A new system disrupts the old. For example, Kindle Direct Publishing. You can’t hold it in your hand, but it’s a product and system that has completely changed the publishing world and empowered authors to become their own masters.
2 – Suffer for the customer. Yes, suffer. Listen to Jeff sum up what he’s learned about listening to customers and adapting to their needs: “My body is completely covered in scar tissue.” It’s not about your success, it’s about making your customers successful. Amazon listens, supports, and even invents for customers. What does this lead to? TRUST.
Amazon is a golden brand because of the almost family-like trust that they have built over the years. One small example: Buying via Amazon’s one click. How many other companies do you feel this comfortable with? This trust allows Amazon to think long term and take risks. It all works out because these risks are customer driven.
3 – Be frugal, be Spartan. Amazon is a lean, mean, fighting machine. And that discipline allows them to give their customers the lowest possible prices. Kindle is sold at near break-even. Amazon has a tiny 1.4% operating margin and 0.1% net margin. Compare that to Apple’s OM at 35% and their NM at 26%.
And it all goes back to extreme customer focus and the trust that has created. You can afford to walk the tight rope when everyone is rooting for you. This kind of customer focused frugality is very rare in big organizations. And it makes Amazon nearly indestructible.
Now let’s go back to point one: Believe in the future. Jeff’s belief in the future combined with his customer obsession has created a new type of business model: Customer Driven Austerity. People want more for less. This planet has far more bargain hunters than billionaires. Amazon may have discovered the business model of the future.