Slow and Steady Wins the Race
When Time magazine named Amazon.com founder and CEO Jeff Bezos “Person of the Year” in 1999, his company had yet to turn a profit.
Amazon had issued an initial public offering of stock on May 15th, 1997, but the company’s unusual “slow” growth model rankled shareholders who wondered, “Where's the money?” Bezos was a star—he had helped usher in the age of electronic commerce—but Amazon investors and financial forecasters were growing impatient.
From the beginning, Bezos had predicted that Amazon would be in the red for four or five years, maybe more. He was right. And while Bezos enjoyed his newfound celebrity, shareholders were left, well, holding their breath.
“We watch our competitors, learn from them, see the things that they are doing for customers and copy those things as much as we can.”
Then, in early 2000, the dot-com bubble burst. Megawatt companies and media darlings (remember AOL?) went out of business, or watched the price of their shares plummet.
Meanwhile, Amazon.com endured, with Bezos’s steady hand at the wheel. In the fourth quarter of 2001, the company turned a profit for the first time: $5 million dollars, or about a penny per share.
Where Amazon Is Now
Today, Amazon.com generates revenue in excess of $45 billion per year. Bezos, who started Amazon out of his home, has a personal net worth of 20 billion dollars.
Starting small, growing slowly, letting the results speak for themselves, that was the Bezos business model. And the success of Amazon.com taught a generation of entrepreneurs to believe in their vision, and to stick to their guns.
And those early shareholders? The stock they purchased for $18 per share in '97 has split three times since the IPO. As of August, 2012, individual shares are now worth about $250. That means the value of a single share of Amazon’s initial public offering has increased 1,700% in less than 15 years.
More Lessons From Bezos and Amazon
- Imitate, then Innovate:
Every business owner wants to stand out. In order for a company or brand to find a foothold in the market, they need to make a splash in order to get the attention of consumers.
But it’s better to put a unique twist on a proven model, rather than building a new system from scratch. Bezos has said, “We watch our competitors, learn from them, see the things that they are doing for customers and copy those things as much as we can.”
By keeping tabs on your competitors and copying the things that they do well, you can build a strong foundation for your business. Then, when your big idea arrives, you will be prepared to make a tremendous leap ahead.
Amazon has continued to grow because Bezos is dedicated to innovation. When Bezos started Amazon, the company sold only books. Today, Amazon sells everything from groceries to televisions, and the company offers a line of original products, including the popular Kindle e-book reader.
- Think Long-Term:
Before he founded Amazon, Bezos had a lucrative job with a securities firm on Wall Street. Why did he decide to quit his job and risk his savings on a start-up? Here is Bezos’s own account:
“The framework I found which made the decision incredibly easy was what I called—which only a nerd would call—a ‘regret minimization framework.’ So I wanted to project myself forward to age 80 and say, ‘Okay, now I’m looking back on my life. I want to have minimized the number of regrets I have.’”
Bezos had his eyes on the big picture. And this big-picture perspective has helped shape Amazon from the beginning. The company has sacrificed short-term gains for even bigger profits in the long run.
Bezos has shown a willingness to lower prices, thus reducing Amazon’s quarterly or annual revenue, whenever he believes that a lower price point will improve the company’s relationship with its customers. By steering toward long-term goals, Bezos has been able to ensure that Amazon has a future to look forward to.
Not everyone can be a Bezos, but every business owner, freelancer, and contractor can learn from Bezos to become a more successful solopreneur.