After reading Jeff Bezos' letter to shareholders, so many thoughts consumed my mind I felt it was appropriate to expel them in this format.
There are three things I want to talk about after reading the letter to shareholders: failure, invention, and "customer obsession rather than competitor obsession." It's interesting to see how each of these things relates to the next more than you realize.
Failure
If you've done your due diligence, I'm talking about researching what it takes to become a successful entrepreneur, there is NO WAY you haven't stumbled upon this idea of failing your way to success. After your first or second try as an aspiring entrepreneur, it puts all of the reading in context. Bezos talk about the multitude of failed products that Amazon has launched and explains it's that culture of failure that has allowed them to progress.
"Given a ten percent chance of a 100 times payoff, you should take that bet every time. But you’re still going to be wrong nine times out of ten." The letter continues, " [In baseball] When you swing, no matter how well you connect with the ball, the most runs you can get is four. In business, every once in a while, when you step up to the plate, you can score 1,000 runs. This long-tailed distribution of returns is why it’s important to be bold. Big winners pay for so many experiments."
I'd like to add that in business, when you fail you always learn something new (or at least you should). I have this idea that failure is inevitable, so it's better to fail early. If your first business is a success, you're essentially prolonging the imminent and stand to lose more. That information you get from failing serves as reference for the future and builds a company's foundation.
Invention
To invent or innovate, failure is inescapable! It just goes back to this idea of swinging for the fences and connecting a few times.
Looking at Amazon, one might get a sense that they've jumped from success to success. The truth is, Amazon has failed at so much, but in the process were able to push the boundaries. Even though many of these products aren't around, those failures have led to and significantly impacted Amazon today.
My favorite theme is that great companies are often those that people think are stupid and impossible. If you're not getting any resistance--if your idea is lauded by everyone around you, that could be a sign that it's not really that innovative. I think about companies like Uber and Airbnb that sounded stupid to most people, but once people saw the beta it clicked.
I do want to say there are some businesses out there that are simple and solving real problems. I don't like the idea of innovating for the sake of innovating. Just think of unique ways to address problems. I once heard that as an entrepreneur you need to be scrappy. This didn't really resonate until a few months ago. I Googled how to do XYZ, and for the life of me I couldn't find an answer. This just reinforced the notion that an entrepreneur will have to develop unique solutions for problems they encounter.
Customers vs. Competition
I think this is a trend that is taking root in the startup world. Traditional business models focus significantly on what the competition is doing, but we are seeing more and more companies putting that energy into their customers.
I don't think we should completely neglect what the competition is doing because sometimes this can motivate us to do better. However, the real problem starts if your focus is on beating the competition over providing the best product/service to your customer. Again, they say wise people learn from the mistakes of others, so do your homework and find out what the competition has done to save you some stress, but be more in tune with your customers than your competition.
These are just the rants of a young founder, but I'd love to hear about your thoughts on this article and the letter to shareholders.