Jeff Bezos, Amazon’s founder and CEO, took the stage at the company’s re: Invent developer conference for a wide-ranging discussion with the company’s CTO Werner Vogels about Amazon’s web service and retail business, as well as his view about entrepreneurship and his personal projects, such as the 10,000 year clock and the Blue Origin space program.
Amazon Web Services, Bezos argued, is similar to the company’s Kindle Device business in that “we make money when people use the Kindle, not when they buy it.” AWS, too, is a pay-as-you-go service after all, and just like owners of an early Kindle can still use it to read books, AWS has helped businesses to get off the “upgrade treadmill.” Most importantly, though, Amazon’s interests in both its retail and AWS business, have to be aligned with its customers, he said.
Bezos also noted that he is often asked about what’s going to change in the next 10 years, but the more important questions, he thinks, are about what’s not going to change in the next 10 years. For the most part, you build a business around what’s stable. “Retail customers,” he said, “want cheap prices and fast delivery” and AWS customers want reliability and speed. “The effort that we put into those things will continue to pay dividends in the long term. It’s impossible to imagine that people would say: I love AWS, but I wish it were a little less reliable.”
All of these big ideas, Bezos acknowledged, are often very obvious, but for many businesses, “it’s hard to retain a firm grasp of what’s obvious over time.”
Asked about his thoughts about innovation, Bezos said that one of the most important factors that allow a company to stay innovative is to find the right employees – the kind of people that want to improve things. Innovators, he also said, “have to be willing to fail and to be misunderstood.” Your critics may want the best outcome, but they may also be afraid of change or have a vested interested in sticking with the old traditional ways. “If you never want to be criticized, for goodness’ sake, don’t do anything new.”
If you are willing to fail, though, you will also be able to ramp up your rate of innovation, and AWS has allowed many businesses to do just that, as Vogels pointed out, by allowing companies to ramp up the rate at which they experiment.
Being an entrepreneur, he argued, is often about eliminating risk at the beginning. To be successful, you need luck and you need to eliminate risk. Later on, as a company grows, you can take risks again. Founders, however, should never try to “chase the hot thing. You’ll never catch the wave that way, but you have to position yourself so you can catch it.” Founders also have to be passionate about their ideas. “I’d pick a missionary over a mercenary every day.”
One of the most interesting anecdotes from the conversation was Bezos’ account of a customer training session he participated in a few years ago. A smart company, in his view, manages to reduce waste wherever possible, and that often means preventing defects from moving downstream.
Bezos’ trainer in this training session already knew that when a customer called the service center after buying a particular table, chances were that customer was going to return that table because they always arrived scratched. The customer service agents knew this, but had no way to relay this information to the rest of the company. Today, however, every Amazon service agent can pull a product of the website if there are problems.
In a low-margin business like Amazon’s, reducing this kind of waste is very important, but Bezos noted that “it takes a certain point of view to do things this way.” The further downstream a problem moves, however, the harder and more expensive it becomes to fix.
“I sometimes have waking dreams that one day I may operate a high-margin business,” he said, but if you have high margins, “it’s hard to be efficient – because you don’t need to be.”
Toward the end of the chat, Vogels also asked Bezos about two of his personal projects: the 10,000 Year Clock and his Blue Origin space venture. Bezos, for the most part, did not have anything new to announce here, but he did stress the engineering challenges of the clock project and argued that a reusable space ship like Blue Origin has a number of advantages over more traditional, fixed-wing shuttles that some of the project’s competitors are working on. Sadly, though, he also said that “Amazon Prime shipping to Mars is still a ways out.”
Amazon.com, Inc. (AMZN), is a leading global Internet company and one of the most trafficked Internet retail destinations worldwide. Amazon is one of the first companies to sell products deep into the long tail by housing them in numerous warehouses and distributing products from many partner companies. Amazon directly sells or acts as a platform for the sale of a broad range of products. These include books, music, videos, consumer electronics, clothing and household products. The majority of Amazon’s...