He needs no introduction, so let’s get straight to the chase and find out how Jeff Bezos got filthy rich.
Don’t worry if you don’t feel like reading, you can enjoy the video below or watch it on YouTube:
1
Customers have the money, not the competition
Many people worry about the competition, but Bezos says you should only worry about your customers, since they are the ones who have the money.
As long as you give your people the best products, it doesn’t matter what your competitors do.
It’s also hard to get them to trust you. It’s simple to lose and hard to gain.
You do it by making the hard things well and predictable over time. By creating high expectations and also delivering.
At the same time, in every business and every industry, customers will be forever dissatisfied.
They don’t know exactly what they want. They just know they want it better.
In one letter to shareholders, Bezos said that no one had asked for Amazon Prime, but everyone loved it when it came out.
You have to figure out how to meet your customers’ never-ending demands for a better offering. It’s also hard to get good at perception.
This is like what Steve Jobs said about how no one knew they wanted an iPod, but once they got one, they all loved it.
It’s hard to guess what your customers will want, but you need to do it if you want worldwide success.
In conclusion, if you want to get rich and make obscene amounts of money, Jeff Bezos recommends you look at what the customers need, not at what the competition is doing.
2
Build around things that won’t change
People often ask what will change in the next 10 years, but no one asks what won’t change in the next 10 years.
And for Bezos, that’s the more important question, because it means you can build a business around something that will likely still be here in the future.
This predictability allows you to deploy your full focus.
If you think about it, there are some needs that will always be there, no matter what.
The need for everyday things delivered fast to your door, for example, will forever be present.
This is why Amazon was built around it and every decision they made was made with this need in mind.
In fact, we had the same thing in mind when we built the Alux app: the need for education will be around forever. So we built around this idea and focused on creating the best delivery system for the highest quality of education.
We streamlined the process so efficiently that you only need to use it for 12 minutes every day to start seeing improvements in your life. Download the app and try it out for yourself, it’s free!
3
The 4 key attributes of a “dreamy business”
According to Jeff Bezos, the perfect business has four very distinct key attributes
1. The customers love it
The first sign of a strong business is how it’s perceived by its customers.
If they love it, you are doing a great job.
If they hate it, it means they simply don’t have another option yet, which is an opportunity for someone else to make it better.
2. It can grow to a very large size
For Bezos, the second sign of a strong business is its scalability.
If you can make a great product, but you can only make it once or serve very few people, you will ultimately fail because you simply cannot grow past a certain point.
3. It has strong returns on capital
At the end of the day, profit is king.
A sinking ship is a sinking ship, no matter how great the destination.
4. It’s durable over time.
This is what we talked about at the previous point.
The final sign of a strong business is if it’s built around a need that will still be here for years to come.
4
Stubborn on the vision, flexible on the details
When it comes to getting rich, Jeff Bezos argues that today’s entrepreneurs need to be stubborn and flexible at the same time.
And the way to do that is to be really stubborn about your vision, or your desired outcome, and figure out how to get there on the go.
If you keep moving the goalpost or changing your vision, you’ll lack clarity and consistency.
You can’t make something happen if it keeps changing every six months.
So you must be really stubborn in that case.
But at the same time, you need to be flexible in how you get there because, ultimately, life is unpredictable and things change.
New technologies emerge, and new trends start to shape behavior.
Old solutions won’t work for new problems.
In fact, as long as you have a really fixed vision and a clear idea of where you want to be, you will eventually figure it out.
5
It’s easier to invent the future than to predict it
As we mentioned earlier, Jeff Bezos says you need predictability to get rich. In that case he argues that the only way to predict what’s about to happen next is if you make it happen yourself.
Nobody can predict the future besides those who actively build it.
You see, in hindsight, things seem obvious.
In Amazon’s case, it seems obvious now that online purchases will dominate the market.
But another way to look at it is this: online purchases ended up dominating the market because companies like Amazon made it possible.
And if it wasn’t for Amazon, probably another company would have made it possible.
This is a mentality shift. Can you make something possible for other people?
6
Advertising is the price you pay for a bad product
A good product will sell itself through word of mouth.
This is a golden rule that will always be true.
If you build something so great that people really love to use it, they will tell their friends to.
But if you have to spend millions of dollars to convince people to try your product, well, you have a bad product to start with.
That’s not to say you can’t be profitable with this approach. However, it’s smarter to invest in a great product rather than in marketing for a bad one.
Bezos is in the camp of reinvesting everything you have in making your product better and leaving your product to speak for itself.
If you think about it, most of the time you try something new, it’s because someone you trust told you about it. Not because you saw an ad for it.
Word of mouth is the most powerful form of marketing if you have a high-quality product that solves a real need.
7
Make little money on a lot of people
When you think about it, there are two ways to make money:
Either you sell something really expensive a couple of times or you sell something really cheap to as many people as possible.
In the first scenario, your advantages are scarcity and exclusivity.
That’s why you can’t just go into a Rolex shop and buy whatever watch you want. There’s a waiting list.
On the other hand, in the era of infinite scalability, Bezos argues that the second model is how you get filthy rich.
It’s a customer-centric approach, where your focus is on delivering the best solution possible, to as many people as possible.
8
Figure out needs and work backward
Most people start with a product and then find people to sell it to.
Jeff Bezos argues that, in order to be successful and get rich, you have to start with a need and figure out the product afterward.
Bezos has always said that the focus should be on the customer and their needs.
In fact, you always start with that and have it at the core of your business.
And once you really understand what those needs are, then building a product becomes much easier.
9
Embrace external trends
In Jeff Bezos’ eyes, if you fight trends, you essentially fight the future.
Or, like the saying goes “adapt or die”.
This builds upon the idea of being flexible with the details, which we mentioned earlier.
When things change, you need to change with them while keeping your vision fixed.
If the future is drones, then your product is “delivery by drone”, while keeping the same vision of cheap and fast online purchases. See how it all ties together?
Trends will boost your business if you incorporate them smartly, or make it irrelevant if you ignore them.
10
The two types of decisions
In Bezos’s world, important and impactful decisions are being made constantly.
And to keep moving forward at a steady pace, you need to first recognize what kind of decision you’re faced with.
He noted that there are two types of decisions.
He actually calls them type 1 and type 2 decisions.
Type 1 decisions are the ones that are irreversible and with long-term impact.
Like one-way doors. Once you go through, you can’t go back.
These decisions must be made slowly and methodically, with great deliberation and consultation.
Moreover, you must have all the information and gather all the data before you can make the call. However, most decisions are not like that. They are reversible.
You can go through the door, and if you don’t like what you see, you can go back and try another door.
Bezos calls these Type 2 decisions, and he argues you should first recognize them and secondly, learn how to take them swiftly.
In actuality, he notes that most decisions are type 2, and they probably should be made with somewhere around 70% of the information you wish you had.
And on top of that, he argues that you need to learn how to disagree but support a proposal, just to keep things moving.
For example, he said he greenlit an Amazon Studios original even though he told the team that he didn’t find it interesting enough. He thought it’s complicated to produce, and the business terms aren’t that good.
But the team had a completely different opinion and wanted to go ahead.
He disagreed, committed, and told the team, “I hope it becomes the most watched thing we ever made. “
So why is this so important?
You see, big returns come from betting against conventional wisdom, and conventional wisdom is usually right.
9 out of 10 times, your bet will be wrong. But that one time you are right will make up for the rest of it.
In fact, Bezos justified that decision because the team already brought home 11 Emmys, 6 Golden Globes, and 3 Oscars.
If they were to spend time convincing him to agree, there was a high chance the new project would have never been done.
And that’s it for today’s class. We hope you enjoyed it and if you’d like to read the more from this series, check out this, this, and this. They’re loaded value bombs for anyone on their way to becoming rich!
In conclusion, Jeff Bezos didn’t become this rich by accident. As you can see, there’s a lot of highly useful lessons on business as a whole approach. I’ll leave you with your notebook now, have fun!
