I really believe that studying people gives better rewards than just reading books.

The best way to get better at a subject or skill, once you have the basics down, is to talk to people who are good at that skill. The internet helps you learn from the best, the very top.

What better way to learn business than to learn from founders who have done it themselves.

I've focused on old interviews here because as businesses grow, founders tend to speak less of what they think, and more of what people would like to hear. True knowledge gets gobbled up in PR platitudes.

What's up next is a series of mental models extracted from Jeff Bezos' interviews and talks ranging from 1997 to 2002.

Decision-Making Framework

At age 80, you wanna minimize the number of regrets you have. He calls this the Regret Minimization Framework.

When deciding whether to start Amazon, Bezos' Wall Street boss told him that Amazon sounds like a great idea for someone who does not already have a great job. He had to decide whether to stay or quit.

"Most regrets are acts of omission, not commission."

So he decided to quit a stable high paying job at the age of 30 and started Amazon.

You need to be able to look back at your life from an 80-year-old you's perspective and think long term on whether or not you'd regret the action you're about to take.

Ideation, Starting and Failing

Bezos' selling-stuff-online idea was backed by data. While working at a Wall Street firm, he saw that Web usage was rising 2300% per year. He knew he had to do something in that space.

Start simple. Write a business plan, it won't survive the realities of the world, but it will help you think through some of the issues and to get mentally comfortable in the space.

The reason why he chose to sell books initially was not by chance or personal liking. There were more items in the book category than there were in any other category, seconded by music.

This goes against how most people ideate for businesses. You need to spot a growing market, do your analysis on which niche to pick and only then take the plunge into building a business.

Jeff says, don't worry about failing in a startup, worry about failing later. Failing is the most likely outcome initially.

But as you go bigger, your company gets stable, if you fail then, then there's no one to blame but yourself. This is because later stage companies have more control on their destiny.

"We're at a point now, where we have all the things we need to build an important and lasting company, and if we don't, it will be shame on us" [2001]

Jeff had immense confidence in what they were building at Amazon, after a point, it's really up to you to make your business a success.

Obsessive Focus on Customer Experience

We've all heard this everywhere. Focus on your customer's problems, needs, desires. Help them get to where they want. That's the way to succeed.

More people talk the CX talk than walk it. Amazon, I think, is one of the few companies that has had an insane customer focus right from when they started.

Source: MIT Lecture

An interviewer asked Jeff if they're really a pure internet company, since they have millions of square feet in real estate. Here's his response:

"If there's one thing that amazon [dot] com is about, it's obsessive attention to the customer experience, end to end. It doesn't matter to me whether we're a pure internet play. What matters to me is to provide the best customer experience. Internet-Schminternet. That doesn't matter."

Don't fall into the trap of obsessing over the technology you're using, obsess over what value you're providing for your target audience.

Best form of Marketing

Word of Mouth. The first year of amazon was mainly WoM marketing. No paid ads.

Giving customers the best experience possible makes them talk about you. But there's a flipside to this which most don't consider.

If you give them a good experience, they tell 5 of their friends. If you give them a bad experience, they tell 500.

Make it easy for people to tell other people. Optimize every small thing for this. Amazon was initially called "Cadabra", but Jeff later changed it to Amazon after he saw that people were having trouble pronouncing it.

"Capturing mindshare on the internet is extremely difficult. Attention is the scarce commodity of the late 20th century.", Jeff is quoted saying in 1997.

In 2020, this is more true than ever before. How do you capture attention?

"Do something new and innovative for the first time that actually has real value for the customer."

This is what Amazon did. Jeff says this is a hard thing to do, but once done, everyone talks about you. You get a huge WoM fan-out. He credits their laser focus on customer experience as reason for their success.

Importance of Testing

Once they had the WoM going, Amazon did banner ads on the bottom of the front page of the New York Times. But only for a little while.

The reason they stopped it was because it's difficult to track. Amazon moved on to advertising on the internet because it's easy to track. It's easy to know how each creative performs and the revenue it helps generate.

You need to know how many dollars you get back per dollar you put in.

That is a marketer's nirvana in a certain sense.

Importance of Good People

This flows in from the last point. As you build, you need to know that you can't do everything on your own.

Jeff hired Shell Kaphan as the VP of engineering to build out the initial software for Amazon. It's not a one man show.

All of Amazon's early employees worked really hard. They'd spend the day coding and maintaining the site, and the night shipping orders out from their Seattle basement office.

Dealing with Stress

"Stress primarily comes from not taking action over something that you can have control over"

Identify and address the situation, even if it is not solved immediately, it will reduce your stress.

Stress doesn't come from hard work. Stress comes from not addressing things that must be addressed.

Advice for young people

Don't be afraid to pivot: Jeff started off as a Physics undergrad at Princeton. He realised he's never going to be a great physicist. He also had a flair for programming, and realised that the computer is a great tool. So he pivoted and graduated with an EECS degree.

One of the things very hard to believe when you're 22 or 23 is that you don't already know everything. People learn more and more as they grow old, but you seem to know less and less as you go by.

What to work on: Do something you're very passionate about. Don't chase the hot passion of the day. That does not work, even if it does, it leaves you unsatisfied.

Don't join hype waves. Do interesting things that place you in a position to benefit from these waves. Let the waves catch you. Don't be the doctor that left his practice to go build an internet company during the dotcom bubble.

Where to work: Pick a place to work where your learning per unit time is very high. A's hire A's. B's hire C's. C's hire D's. Be an A.

How to Innovate

Once you grow and become a large organisation, it becomes difficult to keep innovating.

Amazon tackles this by having a Let's Try It mentality.

Whenever someone has an idea, respond with "Let's try it, and few hours later we'll know if it makes things better". No harm in doing this, yet very few large companies do it.

Reduce the cost of doing experiments. This is the best way to build an innovative culture. Because if experimentation cost is high, then very few people get to do experiments, and you don't innovate much.

If you read all the way down, thanks! I think I am going to spend more time researching and understanding great businessmen's mental models and understanding how they think.

I think that is the key to maximising success as a future startup founder.

Not just that, most of these models and great to apply in general too.

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