Bezos’s genius: Amazon.com has a unicorn within a unicorn … [+]
Jeff Bezos built Amazon.com from an idea into one of the world’s most successful companies. An excellent article delves into the pivotal role of Amazon Web Services (AWS) in Amazon’s meteoric rise. AWS’s operational income was about 3x the operational income of the rest of the company.
The ascent of AWS and the birth of Amazon as an industry giant spark curiosity about Bezos’s strategies. Here are 9 valuable principles that aspiring entrepreneurs can glean from Bezos’s playbook.
#1. Get in on an emerging industry.
Both Amazon.com and AWS were started on emerging industries. Bezos’s genius lies in his knack for spotting nascent trends, a common thread among billion-dollar entrepreneurs.
#2. Build the infrastructure to grow.
Amazon’s evolution necessitated streamlined scalability. AWS emerged as the hub, consolidating services for seamless growth, enabling the integration of new features and offerings with ease.
#3. Develop a synergistic platform for high gross margins.
AWS forged alliances with external sites, empowering them to peddle complementary products via Amazon. This symbiotic relationship, with vendors earning commissions, solidified mutual growth. In addition, Bezos cut margins on Amazon.com to gain market share. But he was able to do this because AWS had great margins, which is the key reason for the high contributions from AWS (as noted above). VCs like ventures that add value and can generate high gross margins. So did Bezos.
#4. Elevate Quality over Simplicity.
Amazon’s strategic shift from rudimentary tools to developer-focused empowerment showcased the value of sophisticated solutions, manifesting in boosted sales and developer satisfaction.
#5. Cultivate your Internal Vision.
While the world saw Amazon as a seller of goods, Amazon saw itself as a user of tools. Bezos’s visionary perception of Amazon as a tool user rather than just a goods merchant was pivotal. This introspective vision facilitated Amazon’s organic transition from bookseller to internet backbone provider.
#6. Create Myths to Shape Culture.
Amazon’s adoption of the “6-page summary” meeting format and the “2-pizza rule” exemplified the nurturing of innovation through practical, bootstrapping methods.
#7. Don’t expect immediate applause.
Amazon did a few things that confused analysts and observers. They wondered about the link between books, which started Amazon, and links for software developers to sell other people’s products. Bezos persisted in providing a platform for everyone. 12,000 developers signed up on the first day when Amazon launched its storage services allowing anyone to use Amazon’s infrastructure for the cloud. Amazon was surprised when its potential competitors did not respond immediately.
#8. Challenge outdated truths.
The unexpected triumph of AWS underscores the challenge of startup forecasting. Amazon encourages employees to challenge accepted wisdom, fostering adaptability.
#9. Most importantly, ride the waves of trends.
Emerging trends have created more unicorns than any other single factor. Amazon’s success hinges on its pursuit of customer satisfaction through nimble adaptation to evolving trends, distinct from mere evolutionary extensions. But this is a luxury of Founder-CEO companies where the leader who built the company gets a lot of leeway to change the rules. Professional CEOs do not have the skills to start new ventures and build them into unicorns since they have never done it, and often do not get the freedom either. So how will Amazon fare under a Professional CEO?
MY TAKE: Billion-dollar entrepreneurs used many common strategies to build their unicorn. As an entrepreneur, it can help you if you know these common methods. Then learn how to improvise in your venture because no one stands in the same stream twice – your technologies, markets, and competitors are unique and so are your skills.
