Think Like Jeff Bezos
Mental tools of the richest man on Earth. Think Like a Genius: Part 1 of Episode 2
Jeff Bezos’ net worth increased by 1000% in the last decade — from $18 Billion to $187 Billion.
Amazon’s market cap increased from $114Bn in Q4 2012 to $1.57Tn as of Feb 2022.
Their share price during the IPO was $1.5; today, it’s around $3000. That means $1000 invested in Amazon’s IPO would have been 2.34 million dollars in 2021.
Amazon now owns more than four billion-dollar companies, including the giant Whole Foods Market, and the futuristic startup Zoox that is developing autonomous vehicles.
Amazon is a giant, and Bezos is a genius for creating such a monopolistic global empire. It doesn’t matter if you think he is evil; he is rich, and that’s it.
From being born to a teenage mother to building a trillion-dollar conglomerate, it is a hell of a journey. It takes sharp intellect and a bold personality to achieve what he did.
Let’s take a small tour of Bezos’ life, the journey of a curious and inventive boy becoming a business shark.
LESSONS FROM BEZOS’ LIFE
Jeff Bezos had a quite unordinary childhood than the rest of us. Being born to a teenage mother, life wasn’t easy for them.
Though his biological parents got married, his father wasn’t there for long. His parents got divorced a year after their marriage in 1965. Three years after the divorce, his mother married a Cuban immigrant, Mike Bezos1.
1. Strength of Self-reliance
When he was a young kid, filled with insatiable curiosity, Bezos spent more than a dozen summers on his grandfather’s wide-open ranches in Texas.2
He credits the time he spent with his grandfather on the ranch for making him self-reliant and resourceful.
When a bulldozer broke, he and his grandfather built a crane to lift out the gears and fix them.
Together they castrated the cattle, built windmills, laid pipe, and had long conversations about the frontiers of space and technology3.
— An excerpt from the super-awesome book by Walter Isaacson: Invent and Wander
His grandfather would even make his own needles and take up tasks that he didn’t know and then learn to them anyhow. Bezos shared some interesting insights about his grandfather and how his influence made him conscientious in this interview:
Later in his life, when he started Amazon in his garage, he’d use his grandfather’s lessons to build tables for his team.
Bezos went to Home Depot and bought three wooden doors to save money. Using angle brackets and 2-by-4s, he hammered together three desks at the cost of $60 each.
2. Inventive Mindset
We all had that nerd friend who was obsessed with science projects, who’d use electronic waste to make marvelous little gadgets. Bezos was kind of like that friend, but a lot more interesting and fun.
His mother encouraged his passion for electronics and mechanics by letting him turn the family garage into a science project lab. She would also drive him to Radioshack multiple times a day.
“I was constantly booby-trapping the house with various kinds of alarms and some of them were not just audible sounds, but actually like physical booby traps.” — Jeff Bezos
Probably this inventive mindset led him to launch so many hardware products after the success of Amazon and AWS.
3. Be The Tortoise
Bezos was stubborn as a kid. He had infinite persistence for things the tasks he took upon. Fast-forward to his professional life; it took years of persistence for all his startups and ventures to become profitable.
Amazon was founded in 1994, and its first profitable year was 2001. Before that, they were burning cash while Bezos was getting everywhere in the industry.
At one point during the dot.com meltdown, he was on NBC Nightly News (i) special with Tom Brokaw.
“Mr. Bezos, can you even spell ‘profit’?” Brokaw asked.
“Sure,” Bezos replied, “P-R-O-P-H-E-T.”
“The teacher complained to my mother that I was too task focused and that she couldn’t get me to switch tasks, so she would have to just pick up my chair and move me.”
“And by the way, if you ask the people who work with me, that’s still probably true today.”
Bezos used to advise his team — “Be the tortoise and not the hare.”
4. Trifecta of Wisdom
In the introduction of Invent and Wander, Walter Isaacson mentioned a few common traits he has observed in all the Geniuses of history.
One such trait was curiosity. From Steve Jobs to da Vinci and Benjamin Franklin, he found it in all of them.
One final trait shared by all my subjects is that they retained a childlike sense of wonder. At a certain point in life most of us quit puzzling over everyday phenomena.
Our teachers and parents becoming impatient, tell us to stop asking so many silly questions. We might savor the beauty of a blue sky, but we no longer bother to wonder why it is that color.
Walter believes that the trifecta of humanities, business, and technology is what made Bezos successful.
5. Regret Minimisation Framework
After completing his graduation, Bezos went to New York to work for the hedge fund of David Shaw. While working there in 1994, Jeff came across the statistic that the web had been growing by more than 2300% per year.
He decided to get aboard that rocket and came up with the idea to start an online retail store. However, it made more sense to start with one product: books.
When he told David that he wanted to leave the hedge fund, David tried to convince him otherwise.
“I think you are onto a good idea here, but this would be a better idea for somebody who didn’t already have a good job,” he said on a two-hour-long walk with Bezos.
To make the decision, Bezos used a mental exercise that became a famous tool for his risk-calculation process. He called it a “regret minimization framework.”
He would imagine what he would feel when he turned eighty and thought back to the decision. His goal was to minimize the number of regrets he’d have on his deathbed.
“I want to have minimized the number of regrets I have,” he explains. “I knew that when I was eighty, I was not going to regret having tried this. I was not going to regret trying to participate in this thing called the internet that I thought was going to be a really big deal. I knew that if I failed, I wouldn’t regret that, but I knew the one thing I might regret is not ever having tried. I knew that that would haunt me every day.”
6. Mental Model of One-way & Two-way Doors
Certain decisions in business and life are more complex to deal with than others, primarily because the former choices are irreversible or the friction to reverse is too high.
Bezos used the allegory of one-way doors and two-way doors to explain the concept of irreversible and reversible decisions.4
If you walk through a one-way door decision and don’t like what you see on the other side, you can’t get back to where you were before. He said that these decisions must be made methodically, carefully, slowly, with great deliberation and consultation.
However, he believed:
…most decisions aren’t like that—they are changeable, reversible—they’re two way doors. If you’ve made a bad two-way door decision, you don’t have to live with the consequences for that long.
You can reopen the door and go back through.
7. Lindy Effect
The Lindy Effect is the idea that the older something is, the longer it’s likely to be around in the future. Taleb also talks about it in his book Antifragile.
“If a book has been in print for forty years, I can expect it to be in print for another forty years. But, and that is the main difference, if it survives another decade, then it will be expected to be in print another fifty years.”
Bezos believes in something similar but with his unique spin on it. He usually gets asked about big changes the world might experience in the next ten years. It’s an interesting question, but Bezos believes that asking the opposite question helps you discover untapped opportunities.
“What’s going to change in the next 10 years?” That is a very interesting question; it’s a very common one. I almost never get the question: ‘What’s not going to change in the next 10 years?’
And I submit to you that that second question is actually the more important of the two — because you can build a business strategy around the things that are stable in time.
In our retail business, we know that customers want low prices, and I know that’s going to be true 10 years from now. They want fast delivery; they want vast selection. It’s impossible to imagine a future 10 years from now where a customer comes up and says, “Jeff I love Amazon, I just wish the prices were a little higher.”
Or, “I love Amazon, I just wish you’d deliver a little slower.” Impossible. So we know the energy we put into these things today will still be paying off dividends for our customers 10 years from now. When you have something that you know is true, even over the longterm, you can afford to put a lot of energy into it.
Appreciate your patience for reading this long essay. I am glad that you made it to the end. Hope you learned something useful from the Genius of Jeff Bezos. Part 2 of this essay will be shared soon
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Jeff Bezos was born Jeff Preston Jorgenson. Shortly after the wedding, Mike Bezos adopted four-year-old Jeffrey, whose surname was then legally changed from Jorgensen to Bezos.
Bezos later bought this ranch and expanded it from 25,000 acres to 300,000 acres.
One thing that I have observed about the childhood of many successful people is that they had an intellectually rich influence from someone close.
One-way door: doors through which you can only enter, but cannot exit
Two-way door: doors through which you can enter and exit as well
Great article!