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And now for something completely different.
This week, I listened to this episode of the Founders podcast, which discusses the book ‘Working Backwards: Insights, Stories and Secrets from Inside Amazon’.
It was gold dust for founders, especially the story of how the Kindle was created.
Today I’m sharing Bezos’ Ten Commandments, the principles that led to Amazon’s first popular hardware product, one which almost single-handedly took e-readers mainstream.
It all started when Jeff met Steve.
How Amazon created the Kindle
1. Learn from others
In 2003, Amazon’s leadership team travelled to the Apple Campus in Cupertino, California to meet Steve Jobs.
Jobs was in classic Jobs mode. After he showed off the new iTunes for Windows, he bluntly informed Bezos that Amazon’s CD business would soon be toast, taking a chunk of Amazon’s revenue with it.
Bezos knew he didn’t have all the answers and was committed to learning from the best. Even if they were difficult to deal with.
2. Who, not what
Many CEOs would have taken the bait: hurried home, called an emergency all-hands, and kicked off a race to build a digital music service to rival iTunes. (‘iTunes? I thought you said this was the story of the Kindle?’ It is, bear with me!)
Instead of thinking ‘product’, Bezos thought ‘people’. He recognised that with an opportunity and challenge as big as this one, the most critical decision wasn’t ‘what’ or ‘how’, it was ‘who’. He signaled how important this was by appointing one of Amazon’s most senior and capable leaders.
As startups grow, founders need to ditch the DIY mentality and become CEOs. It’s no longer your job to do it, it’s your job to find the right people to do it.
3. Single-threaded leadership
As with all Amazon projects, it was owned by a single person whose sole focus was that project and that project alone. They were fully accountable for its success or failure and had no distractions.
Peter Theil said ‘The best thing I did as a manager at PayPal was to make every person in the company responsible for doing just one thing. Every employee's one thing was unique, and everyone knew I would evaluate him only on that one thing.’
‘The best way to fail at inventing something is by making it somebody's part-time job.’
4. Innovate, don’t imitate
Despite pressure to copy Apple’s approach, Bezos believed Amazon couldn’t out-Apple Apple. That’s what Warren Buffett meant when he said ‘How do you beat Bobby Fischer? You play him at any game but chess.’
Bezos believed companies could succeed in two ways: by copying their competitors quickly, or by creating new and compelling experiences. He had no desire to make another iTunes or iPod; he wanted Amazon to be an innovator.
Fast copycats include Facebook who made an original product but have since copied many competitors successfully; Stories, Threads, Reels were all created by other companies first.
5. Differentiate or die
Bezos understood what most didn’t: the emerging digital media retail business didn’t work the same way as Amazon’s physical retail business. Their competitive advantage in physical retail was offering the largest selection of items on a single website. That advantage doesn’t exist in digital goods, where data and pixels can be reproduced infinitely with zero marginal costs. Bezos knew Amazon needed to compete elsewhere in the value chain, which meant focusing on the apps and devices customers used to consume content.
Bezos realised Amazon couldn’t build a differentiated music product. Instead, they focused on the e-book market which aligned with their strengths as a bookseller and would allow them to offer a unique product in a less competitive space. (See, this really is about the Kindle!)
Without differentiation, it’s a race to the bottom. Bye-bye juicy margins, hello unsustainable customer acquisition spend.
6. Work backwards
Most companies develop a product by, well, thinking of a product they want to create. Amazon starts differently; they begin with the desired customer experience and work backwards until they know what to build, using a written process called a PR/FAQ (Press Release/Frequently Asked Questions).
Before we dig into that, let’s explore how Amazon came to use this method.
Sometimes constraints are useful: necessity is the mother of invention, after all. But when you limit yourself to thinking ‘what can we create with what we’ve got?’ you shut yourself off to a world of possibilities.
7. Leaders are readers
Amazon used to rely on Powerpoints, until Bezos read an essay called ‘The Cognitive Style of Powerpoint’ by Edward Tufte, who proposed replacing slides with paper handouts with more words.
Bezos believed memos were better than a presentation because a written narrative forces clarity of thought, an understanding of what’s most important, and how factors are related. Half-baked thinking is harder to disguise in written form than in PowerPoint slides.
Bezos sent an email to his senior leadership team with the subject line: ‘no PowerPoint presentations from now on’.
When something is critically important, don’t be afraid to say ‘I understand your concerns, but this is what we’re doing’. Don’t pull rank too often though, or you’ll erode agency, ownership and trust.
8. Writing is thinking
Back to the PR/FAQ now. Amazon begins the product development process by stepping into the customers’ shoes and writing a press release for a product that doesn’t yet exist. They write it as if it were ready to launch tomorrow and prepare an FAQ anticipating the tough questions and work backwards from that. Length is capped to one page for the Press Release and five pages for the FAQ, as brevity forces clarity and precision.
The authors explain:
‘When we were working forward, we were trying to invent a product that would be good for Amazon, the company, not the customer. When we wrote a Kindle press release and started working backwards, everything changed. We focused instead on what would be great for customers, an excellent screen for a great reading experience, an ordering process that would make buying and downloading books easy. A huge selection of books, low prices. We would never have had the breakthrough necessary to achieve that customer experience were it not for the press release process’.
This process led to someone proposing an e-book reader that would use new e-ink screen technology. That became the Kindle, the e-book equivalent of the iTunes-iPod experience: a mobile device that offered customers an incredible range of digital media for a low price that they could buy, download and consume in seconds.
Don’t obsess over features you think are cool. Write down what the customer wants. If it doesn’t help the customer, should it be there?
9. Be careful what you outsource
Nowadays Amazon makes all sorts of hardware, but back then everything they sold was made by other companies. Let’s not understate this: going from selling third party goods to making your own is a massive shift, which requires different skill sets, resources, and thinking.
Amazon had two options: outsource the design and manufacture of the Kindle, or learn how to build it themselves. The former would be faster and cheaper, but would deprive them of the flexibility to innovate and differentiate, leaving them with a solution that could be copied easily by others. The latter would be harder in every way: it would be more expensive, require more labour and attention, and take far longer to get to market.
But Bezos realised if Amazon learnt how to make a great hardware product, they would gain important skills that would allow them to do it over and over again with other products, and that would make the company more valuable in the long run if they got it right (which was by no means a foregone conclusion).
Think carefully about which capabilities you need to build as a company. It’s easy to fall into the trap of thinking you’ll outsource this now and hire internally later. Before you know it, years have passed and you’ve kicked the can down the road.
10. Long-term thinking
One of the reasons Bezos believed Amazon could succeed in hardware was they thought in longer timescales than their competitors:
‘Long-term thinking…lets us do new things we couldn't otherwise contemplate. If we can identify a customer need and if we can further develop conviction that the need is meaningful and durable, our approach permits us to work patiently for multiple years to deliver a solution. The key word here is patiently. Many companies will give up on an initiative if it does not produce the kind of returns they are looking for within a handful of years. Amazon will stick with it. Patience and carefully managed investment over many years can pay off greatly.’
The infamous meeting with Steve Jobs that ultimately led to the Kindle happened in 2003. The Kindle didn’t go on sale until late 2007.
It retailed for $399, held 200 e-books and sold out in six hours.
How do you balance long-term thinking with short-term survival as a startup? I believe that in the early stages, focus should be on short-term survival through rapid experimentation (e.g. using MVPs to get to PMF as quickly as possible). The longer you survive, the longer-term you should think. Amazon’s long-term thinking would’ve counted for nothing if they hadn’t initially focused on survival (making something people want).
And that’s how a meeting with Steve Jobs led Amazon to develop the Kindle.
From potential music software that would have probably sucked compared to iTunes, to a category-defining hardware product, all because Bezos followed these Ten Commandments.
You may realise their importance, but it can be a struggle to apply them successfully when you’re heads-down in the day to day of startup life.
It can be hard to see the wood for the trees, but that’s why I’m here.
Book a call with me and get help from a former founder who can act as an outsider, share what’s working for other startups, and help you find a better path.
Speak soon,
Nelson
Former founder and startup consultant
