Why Jeff Bezos of Amazon Is About to Become The Richest Man in The World

A Tinkering Mindset

One consistent quality that can be found in almost any self made person is the inveterate urge to tinker. As a child Jeff had a strong interest in science and technology. Once he built and installed an electric security alarm on his bedroom door to keep his younger siblings out of his room.

Growing up Jeff would spend his summers fixing windmills and repairing equipment on his grandparents’ Texas ranch. Today Jeff credits these summers of learning to repair ranch equipment for teaching him to experiment and learn how things work. His drive to create systems that push the boundaries of what’s possible has propelled Amazon to its place as the world’s preeminent Internet retailer.

In an interview for The Innovators’ DNA, Jeff said:

“Experiments are key to innovation because they rarely turn out as you expect and you learn so much. We’ve tried to reduce the cost of doing experiments so that we can do more of them. If you can increase the number of experiments you try from a hundred to a thousand, you dramatically increase the number of innovations you produce.”

One of the secrets to the self-made, successful mindset is that people like Jeff see the entire world as one big laboratory. They are always thinking and wondering and asking “What if…?” The Innovators’ DNA, in their study of high performing leaders, has found that experimentation, the tinkering mindset, is what sets apart innovators from non-innovators. They are constantly approaching the world with a hypothesis and then a way of proving whether their hypothesis is right or wrong.

Minecraft creator Notch Persson liked to take apart and reassemble alarm clocks when he was a kid, fascinated to see how many springs he could leave out of the reassembly and keep the clock working. Steve Jobs didn’t pay much attention in his computer class in college, but was engrossed by learning typography in his calligraphy class. Bezos wasn’t thinking about starting Amazon when he took apart his grandfather’s Caterpillar tractor and put it back together, but he was cultivating a mindset that would lead him to the frontier of developing human civilization.

In 1994 when the Internet was still a “fad,” Jeff read somewhere that the fledgling network was growing 2,300% every year. His curiosity to understand how things work led him to rethink retail sales, inventory management, and distribution from the bottom up and see just how he could ride the wave of unprecedented interconnectedness and low entry costs to create a new kind of retail business.

A Long Time Horizon

When Amazon was still new, Jeff told potential investors that the company was going to be a long way off from turning a profit, and that he was planning it that way on purpose. In 1997 he told Inc. “We’re going to be unprofitable for a long time. And that’s our strategy.” The new retailer was going fast throughout the 1990s and burning through money as it developed an overarching plan to shoot for the moon and win it all. It wasn’t until 2003 that the company made its first annual profit.

His plan was to get really, really good at one thing, reinvesting every cent of revenue and hordes of investor cash into becoming the best retailer in the world, into completely reinventing the retail game altogether. Customer service would be a cornerstone of his strategy. He knew that Amazon would be selling products that customers could buy anywhere else. And he knew that competitive pricing would not be a factor in a market as open and competitive as the world opening up online before his very eyes. To this day Amazon ranks unusually high in customer satisfaction ratings.

Once Amazon had refined its customer service strategy and warehousing and distribution model to a point of revolutionary perfection, phase two would be taking the lessons learned and expanding into everything Amazon could. The retailer started off selling books. Now it sells books, movies, electronics, tools, jewelry, camping equipment, lawn furniture, clothes, groceries, everything. It’s getting into the media production sector. Its ability to dominate is terrifying all kinds of businesses. At the moment it appears no major online business is safe from losing market share to Amazon. Hold, consolidate, diversify, Hold, consolidate, diversify, goes the multi-billion dollar Amazon steam roller.

What’s your time horizon like? Is it this weekend? Next month? Next year? Jeff Bezos’ has been gazing decades into the future and imagining what’s possible, with an unshakeable sense of manifest destiny.

Taking Risks and Regretting Nothing

When Jeff Bezos started Amazon, there was no certainty at all that it would be a success. There wasn’t even any certainty that the Internet would be a success. He was taking a huge risk. At the time he was a very successful VP at a big investment firm. He sacrificed a stable, comfortable, and certain life and wagered everything to go for something even bigger. He had a far off time horizon and an even wider horizon of possibilities for his life. He was fearless. Or perhaps the only thing that he was afraid of, would be looking back on his life and regretting that he didn’t try to do something more audacious and seek after greater rewards.

The investment company he was working for was D.E. Shaw & Co. It manages $40 billion in assets for its clients, and he was just working for it, not in charge of it. Every year Amazon manages over $100 billion in revenue and he founded it. That looks like an obvious choice now, but back then Amazon wasn’t anything. It was just an idea. Jeff left behind a powerful, financial secure position for a dream. He even left in the middle of the year, walking away from his big annual bonus to go start Amazon. He couldn’t wait. He wouldn’t procrastinate on pursuing his destiny over some money.

He says what allowed him to take such an enormous risk with no guarantee of success was what he calls his “regret minimization framework,” something he laughingly acknowledges that only a nerd would call it. How’s this for a long time horizon: When Jeff’s boss tried to talk him out of leaving the firm, and convinced him to at least think it over for two days before he made a final decision, Jeff went to working thinking and created a “regret minimization framework” to help himself solve the problem of how to act. He imagined himself decades in the future at the age of 80 looking back on his life, and decided the best course of action would be the one with no regrets. Most people are averse to risk, because risk is the shadowy monster that faces them now. Jeff could see far off into the future, and trembled at the sight of being swallowed by the much bleaker monster of regret.

“I knew that if I didn’t try this,” Jeff once told Time magazine, “I would regret it. And that would be inescapable.” Facing down his regret helped Jeff to face down the risk of trying something new, of striving for something greater. Without that Jeff Bezos would not have become the self made richest man in the world.