Jeff Bezos

Want to listen instead? This is episode 044 of my podcast, Mike’s Notes.

Well, I  liked The Everything Store by Brad Stone. In my monthly newsletter about books I noted that while this book is about a popular subject (Bezos/Amazon) it’s not perishable. The Amazon juggernaut is here to stay and this book had enough background to get anyone caught up on how we got to now.

I took so many notes on Bezos that he inspired this post about mercenaries, missionaries, and maniacs and I’m digging deeper into the theory of disruption for another written piece. This post will be everything else I learned. All unattributed quotes are from Stone.

1. Second level thinking with a small change.
2. You’ll never be ready.
3. Argue well.
4. Luck.
5. Decentralized command.
6. Always be learning.

1/ Second level thinking (via finer print). 

This is my favorite riddle:

“As I was going to St. Ives, I met a man with seven wives. Every wife had seven sacks, every sack had seven cats, every cat had seven kitts. Kitts, cats, sacks, wives, how many were going to St. Ives?”

Before you open a tab for some calculations (or Google the answer), let me rephrase it:

"As I was going to St. Ives, I met a man with seven wives. Every wife had seven sacks, every sack had seven cats, every cat had seven kitts. Kitts, cats, sacks, wives, how many were going to St. Ives?"

Better?

Theories about information processing suggest that the second presentation will lead to more correct answers. The reasoning goes that because the font is more difficult to read, it nudges us into a mode of closer attention.

In The Success Equation Michael Mauboussin gives us another example (p102):

Jack is looking at Anne, but Anne is looking at George. Jack is married, but George is not. Is a married person looking at an unmarried person?

(A) Yes

(B) No

(C) Cannot be determined.

When I read the book I skipped right over this entire setup, ready for the payout. Why did I do this? Because I knew Mauboussin would tell me the answer. I didn’t need to do any heavy lifting. Then, in the very next paragraph Mauboussin writes:

“The natural tendency when solving problems is to rely on cognitive mechanisms that are fast, low in computational power, and require little concentration…”

Which is exactly what I did in reading rather than thinking.

What does this have to do with Bezos? At Amazon employees don’t use PowerPoint, they have to “write six-page narratives laying out their points in prose, because Bezos believes doing so fosters critical thinking.” Jeff Holder, who worked with Bezos at D. E. Shaw told Stone, “PowerPoint is a very imprecise communication mechanism. It is fantastically easy to hide between bullet points.”

Different fonts to think better seems a bit Gladwell-ian. Here’s this funky little finding from psychology, extrapolate as needed, ad infinitum, caveat emptor. 

Of course we should use a bit of trepidation.

The introduction of Stone’s book includes a warning too. When he approached Bezos, Bezos asked about the narrative fallacy (Antifragile  is one of Bezos’s favorite books, “which all Amazon senior executives had to read”).  Thinking more deeply about something can help us make better choices but it’s not a silver bullet. It’s one of many things that solve black box problems.

2/ Never ready. “By the first weeks of 1996, revenues were growing 30 to 40 percent  a month, a frenzied rate that undermined attempts at planning and required such a dizzying pace that employees later found gaps in their memory when they tried to recall this formative time. No one had any idea how to deal with that kind of growth, so they all made it up as they went along.”

This is starting to seem like a late-night-glass-of-wine confession. If you catch people in an honest and reflective state they’ll admit they had no idea what they were doing in the moment. You can prepare, but a lot of it seems to be like treading water.

Michael Lombardi said that football is this way. You never really get a chance to get ahead, to be ready. It’s more like a just-in-time manufacturing system.

Angela Duckworth wrote, “As anyone who has started an organization from scratch can tell you, there are a million tasks, big and small, and no instruction manual for any of them.”

When Gene Kranz showed up to shoot rockets, he was picked up by a test pilot, in his own car. Kranz wrote “without knowing much about anything, I was telling people how to do everything, writing the rules for the control team that would support the Mercury-Redstone launch….Since there were no books written on the actual methodology of space flight, we had to write them as we went along.”

Phil Knight recalls the early days of Nike and sending his chief retail person to run a factory. The guys said that he didn’t think he could do it, that he was in over his head. “Over your head?” Knight recalls saying, “We’re all in over our heads, way over.”

If you can’t be ready what can you do? Take the course that Andy Grove suggests, prepare like firemen prepare for fire.  Bezos uses a different analogy but the same effect. “(Bezos) was looking for versatile managers – he called them ‘athletes’ – who could move fast and get big things done.”

3/ Argue well. Good organizations and the people within the organization argue well. No one person knows everything and ideas need sharpened. “Amazon’s culture is notoriously confrontational, and it begins with Bezos, who believes that truth springs forth when ideas and perspectives are banged against each other, sometimes violently.”

Credit is a power law distribution. Jobs, Wozniak, Cook. Jordan, Pippen, Horry. Buffett, Munger, and, umm, err, – well that proves the point.

Laurie Woolever was on the Salt of the Earth podcast to talk about her career working with people like Mario Batali and Anthony Bourdain. Woolever carefully noted that those high wattage people work hard, but that there are a lot of people behind the scenes. Even the cookbook she wrote with Bourdain took some back and forth before it emerged.

One example at Amazon was Joy Covey, an early CFO, who, “became an intellectual foil to Bezos and a key architect of Amazon’s early expansion.”

I didn’t get the idea that Bezos was combative for the sake of being combative, but for the sake of the truth. As Amazon grew larger Bezos added the position of Technical Advisor and his first appointee was Andy Jassy, who:

“would define the shadow role as a quasi chief of staff, and today the position of Bezos’s shadow, now formally know as technical adviser, is highly coveted and has broad visibility within the company. For Bezos, having an accomplished assistant on hand to discuss important matters with and ensure that people follow up on certain tasks is another way to extend his reach.”

Bezos wanted someone who could think like him, but not completely. This is true of a lot of partnerships. The Warren Buffett and Charlie Munger duo is like this. Ditto for Marc Andreessen and Ben Horowitz. Bill Belichick and Ernie Adams have this too.

You have to argue well to find the truth. Stephen King writes that the truth of a fiction story is like a fossil. The story is there, it just needs exhumed. It means flyting like geniuses,  and constructive confrontation.

4/ Luck. Amazon fits the two-jar model. There were high skill draws; Bezos is smart and relentless. There were also high luck draws. For example, Amazon wrapped up funding in 2000. “While other dot-coms merged or perished, Amazon survived through a combination of conviction, improvisation, and luck.”

Their luck wasn’t done there. Amazon Web Services was a bit of luck too. Bezos said, “Developers are alchemists and our job is to do everything we can to get them to do their alchemy.” He could have used another analogy; builders, creators, dreamers, but he chose alchemy. Something great could come out, but he didn’t know what.

Even the chief Amazon product – the Kindle – benefitted from a bit of luck. “In a sense, Amazon got lucky. A technology (e-ink) perfectly suit for long-form reading on a device (and terrible for everything else) just happened to be maturing after a decade of development.”

As an individual Bezos was lucky.

“At age eight, Bezos scored highly on a standardized test, and his parents enrolled him in the Vanguard program at River Oaks Elementary School, a half-hour drive from their home…(where) A local company donated the excess capacity on its mainframe computer to the school, and the young Bezos led a group of friends in connecting to the mainframe via a Teletype machine that sat in the school hallway.”

Bezos’s story could be the brother to the one Malcolm Gladwell tells in Outliers about Bill Gates:

And Bezos’s mother?

“Jackie Bezos prevailed on the local school officials to let her son into the middle school’s gifted program despite the fact that the program had a strict one-year waiting period….’You want to account for Jeff’s success, look at Jackie,’ says Bezos’s childhood friend Joshua Weinstein. ‘She’s the toughest lady you’ll ever meet and also the sweetest and most loyal.'”

Parenting isn’t all luck though. Seneca has this advice:

Control the things you can as best you can. We don’t get to choose parents that accidentally or on purpose, get us hands-on experience in an industry that changes the world. But we do get to choose who we learn from.

5/ Decentralized command. Bezos said:

“A hierarchy isn’t responsive enough to change, I’m still trying to get people to do occasionally what I ask. And if I was successful, maybe we wouldn’t have the right kind of company.”

Stone clarifies:

“Bezos’s counterintuitive point was that coordination among employees wasted time, and that the people closest to the problems were usually in the best position to solve them.”

The solution to this was Amazon’s “two-pizza teams.” The idea that if a group is working late on a problem, there shouldn’t be more people than what two pizzas can feed.

Neil Roseman put it this way, “Autonomous working units are good. Things to manage working units are bad.”

Decentralized command works really well in complex adaptive systems where things are always changing. CEO’s like Tom Murphy said to “Hire the best people you can and leave them alone.” Warren Buffett suggested to “hire well, manage little.”

There’s only so much arguing well (#3) that Bezos can do. Eventually he needed to let other people make the right decisions. Andy Grove said that it’s hard to weigh how much to trust people, but they know things out there with the “winds in their face.”

6/ Always be learning. What surprised me in the book was how many other people were mentioned. Newton attributed his work by standing on the shoulders of giants. Bezos, it seems, fully internalized this.

Anything successful Bezos tried. He met with Jim Sinegal, the founder of Costco who told him, “you can fill Safeco Field with the people that don’t want to sell to us.” The lesson was that some people won’t like what you’re doing. That’s a good thing. As John Boyd told his accomplices, “So you got your reward; you got kicked in the teeth. That means you were doing good work. Getting kicked in the teeth is the reward for good work.”

Sinegal also told Bezos that customer loyalty was key. Amazon has emphasized that too.

Bezos wanted AWS to be like building blocks, an idea he got from a book, a book he read during a Think Week (an idea he may have picked up from Bill Gates).

Books are a great source for this, and are often recommended. Read a lot like Bezos, Gates, Munger. Also, do. Munger said, “If we hadn’t bought See’s (candy), we wouldn’t have bought Coke.” They had to do that to learn. Bezos, of course, would learn by doing too.

“I didn’t know Jeff Bezos,” said Stephen Graves, a consultant hired to help get fulfillment operations optimized, “but I just remember being blown away by the fact that he was there with his sleeves rolled up, climbing around the conveyors with all of us. We were thinking critically and throwing around some crazy ideas of how we can do this better.”

Thanks for reading, I’m @mikedariano on Twitter.

Anecdotal data point: A watch I bought on Amazon stopped keeping time after six weeks. Every few days it would reset to 1/1/12. I emailed them about it. They told me it was beyond the 30 day return period but because I was a valued customer they would refund my money, AND I didn’t have to go through the process of shipping the watch back.  It was this last part that made me feel “valued.”