Amazon Unbounded

Amazon Unbounded by Brad Stone recounts the recent history of Amazon and is a follow-up to his previous book The Everything Store. The book details the meteoric rise in the valuation of the company, the many new services offered, and the demanding management style of Jeff Bezos and colleagues. The outsider perspective is critical but fair, curious and critical. A light read that will leave you more informed about what goes on inside the everything store.

Read: 1x | First: July 2021

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Summary Review of Amazon Unbounded

Part I: Innovation

The first part of the book describes the rise of Amazon starting in 2010. It is crazy, from our vantage point now, to think that about 10 years ago Amazon was worth around $80 billion, less than 5% of the current $1.7 trillion it’s worth now. The same goes for the number of employees, which has risen from 33k to 950k (1 in 153 employees in the US are working for Amazon). If nothing else, this book is a story about how to scale a business through constant innovation.

‘Do more with less’ and ‘think big’ are two of Amazon’s leadership principles. Amazon is constantly trying to reinvent products that the customer wants and doing this at a scale and pace that others are not trying it at. What stood out from these pages is that even though a product fails (e.g. the Fire Phone), the lessons and technology from the product production are taken into account.

Innovation is still a hard thing to pull off. The company has had many misses and for several projects, the pay-off is years away. The intuition that Jeff Bezos has developed over the years (coupled with data) is what sometimes has moved unprofitable projects forward that in the end might turn out to be winners (e.g. cashier-less shops). The same can be said for the development of Alexa, which took many iterations before it became a product that did its job well enough.

Being a strong leader did have its downsides, as many in the Fire Phone group had their doubts about the viability but didn’t dare speak up to Bezos. Thus a balance between vision (top-down) and ground-level feedback (bottom-up) was possibly skewed too much in favour of the former.

The focus on customers is what has made Amazon successful. Throughout this book, you will see that this principle supersedes other concerns such as the quality of life of employees (using a ranked-firing/stack-ranking system such as Netflix also has) or the sellers on Amazon marketplace. The former did possibly improve, for white-collar workers that is, as the forced firing was abandoned later on.

Jeff Bezos personally buys the Washington Post and through instilling some good lessons from Amazon turns the paper profitable. It seems that the move is both altruistic (preserving good reporting) and in the end a great business decision. Later chapters do point out how the association of him and the paper, and the battle with Donald Trump, might have had negative externalities. A government contract that was awarded to Microsoft (worth more than $10 billion) might have been theirs be it not for the feud between Bezos and Trump (but who knows, this is a counterfactual after all).

Amazon Studios tried to be as scientific (data-driven) as the engineers at Amazon had been, but soon they would find out that the creativity needed to make hits didn’t match their formulas. Going with experienced script/plot-writers did solve this later on. Though, now that I’m writing this, I do remember that House of Cards was something that Netflix had conceived based on a lot of data from what customers wanted/liked. So I guess both ways can work.

“The biggest needle movers will be things that customers don’t know to ask for” – Jeff Bezos, in a letter to shareholders

Mini notes

• Minimum lovable product – as an alternative to minimable viable product
• Single-threaded leader – each team needs to have someone who is responsible for this task, and this task only
  • For a start-up (as I’m running) this does ring true, but I think also needs to be adjusted to you yourself having one task/hat on for a period of time and then switching task/thread/hat for another part of the day
  • Chapter four also mentions that Prime day needs to mean one thing, something I have to remind myself of a lot of times, you can only be one thing in the minds of customers
• Start with the needs of the customers and work backwards from that – e.g. people don’t want to wait in line at the supermarket so remove the checkout part (through cameras that track what you take of the shelves)
• “Stubborn on vision, flexible on details” – Jeff Bezos
• Amazon spent more than $22 billion on R&D in 2017, eclipsing Google and the other tech companies (and cleverly, but I would say justifiable, the tax system)
• “Keep trying things” – Jeff Bezos, on their India expansion, and the need to go fast and try, try again
• Two-way door decisions – a mental model of decisions that they could make that were reverseable (vs one-way doors), making it (mentally) easier to make a choice to do something as it could still be reversed later on
• Amazon was very secretive about their financials and hid the profits they made from AWS for a long time to not give competitors ideas

Part II: Leverage

Amazon’s flywheel (also see Turning the Flywheel) is the virtuous cycle that guides their business. It consists of offering lower prices, which lead to the loyalty of (Prime) customers, which leads to more sales, which leads to more sellers, that offer lower prices (or better quality products/wider selection), repeat. Whilst growing, Amazon also had a focus on growing the revenue faster than the expenses. The question they have repeatedly asked themselves is as follows: “How could they reduce costs in their operations while maintaining sales growth?” (note that this excludes R&D costs, which are a huge part of the business).

The company has been accused of using profits from some parts of the business (AWS) to fund other parts of the empire (Amazon marketplace). And in a way this is true, and possibly anti-competitive. At the same time, the S-team and Bezos, in particular, were aware that every part of the business should carry itself. One example is that when advertising showed to be hugely profitable on their website, they still hammered that the marketplace should be profitable without this part. Automating many pieces of the business is what marked this era of Amazon.

ROBOTS

Mini notes:

• Many changes at this time led to disgruntled sellers, who were being outsmarted by other sellers with fake reviews and knock-off products
• Amazon expanded into unprofitable, but staple, products (CRaP) to become even a bigger part of someones life/shopping habits

Part III: Invincibility

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Managing Oneself

Managing Oneself by Peter Drucker is a short booklet (monograph I think) on how to live a good and productive life. It provides some ways of thinking about how to manage your own life (vs being lived/going with the Flow).

Read: 1x | First: February 2021

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Finding Your Strength

We are often clueless about what our strengths are. Drucker advises to write down what you expected to happen at a key decision, and then to review that. Or in other words, to make a prediction and see which predictions came true, finding your strengths.

From this feedback analysis, he finds several implications:

1. Concentrate on your strengths, where they can produce results
2. Work on improving your strengths, fill the gaps in your knowledge
3. Find where you’re ignorant, and work on this to enable your strength to really shine

Applied: I do monthly and quarterly OKRs (Measure What Matters) where I also make predictions on what I will do. Although this has less to do with decisions, it allows me to plan what to work on and identify what needs to change to realize it.

The last point also made me think about your personality/skills as described in the Early Retirement Extreme. Here, from memory, I think the author described your personality to be a T-shape (or inverted T-shape). One where you are ok in many skills (vs being bad) and very good at only one skill.

This is not to say that you should focus your energy everywhere (or nowhere as there is limited time). No, you should work only on those things that help you improve your strength. 1) execute your strengths, 2) improve them, 3) remove blockages.

What Environment Allows me to Perform Well

So, how do I perform? Is the next question in the booklet. Here Drucker proposes a few different ways of working. The first is ‘reader vs listener’. How do you ingest knowledge to make decisions? The second is the way you learn (e.g. writing, speaking, sketching). The third is your style/level of cooperation, do you work well together or prefer to work alone? The fourth is a distinction between advising and leading/making decisions.

Why ask these questions? Because you’re unlikely to change yourself, but you can choose the environment you’re working in. To find an environment where you thrive, not one where you have to go against your instincts all the time.

Applied: I’m definitely a reader and in work thrive by reading something and then (slowly) exploring those ideas (vs directly responding). And I’m a writer, learning by trying to explain something (meta: as I’m doing here). I like to work together, at a distance, and cooperate with many people whilst having long stretches of time to work on my own. In those relationships, I like to be the leader/decision-maker. And I like to work in small organizations (start-ups) in a somewhat structured environment.

Your Values

“What kind of person do I want to see in the mirror in the morning?” This is what Drucker has dubbed the mirror test, and it shows you something about your values.

This part of the booklet goes deeper into the values or worldview that you bring into work. This can be a long-term vision vs short-term profits, or values around work-life balance that you have.

Your values and strengths don’t always align. For Drucker this resulted in him leaving his financial job (during the Great Depression) and started building his consulting business.

Applied: I value understanding above most other things. Money is something that can enable this, but isn’t a goal in itself. Transparency, honesty, speed of execution, trust, using thinking tools, being critical, are some of the other values/words that come to mind. In time, I should have more on this on the ‘Me‘ page.

Where to take your Strengths, Performance, and Values?

Drucker posits that not many gifted people know where they belong before their late twenties. By knowing what you’re good at, you can become better at knowing where you don’t belong. And it allows you to better say no to opportunities that look good on paper, but don’t match with you specifically.

Applied: I know that my skills won’t do (that) well within large organizations. I love my freedom (to spend my time where I want it) too much. I also wouldn’t do well if I had to work on something that doesn’t have much value to add to the world (e.g. improving the flavour of biscuit X).

What Should I Contribute?

The answer to this question should address three elements.

1. What does the situation/environment require?
2. Given my strengths/performance/values how can I add the most? (unique contribution)
3. What results have to be achieved to make a difference?

Drucker further specifies that the results you plan for can only be 18 months into the future, should be hard to achieve (stretch goals), but still within reach. The results should be meaningful, make a difference, visible, and measurable. Or, to put it in 21st-century lingo, to be SMART goals.

Applied: Currently my goals are related to building out Blossom. Here my competitive advantage is my ability to build something from nothing. And to execute on that vision and build. I have recruited a small team which I will expand, as I will do with the resources. I know that I’m not the best at promotion and should find someone else to help with that part. The results that need to be achieved are the completion of the database and then to add new features. This then needs to be used by everyone from researchers to legislators and help them move the field forward faster.

Building Responsible Relationships

You’re almost never working alone. The first thing about working with others is that you should know they are different (values, strengths, etc). The second lesson is that you should ask them what they are doing and how they do their work (i.e. communication). Or as I have learned from running a study association to my personal life (where, of course, it’s the most difficult) to over-communicate.

“Even people who understand the importance of taking responsibility for relationships often do not communicate sufficiently with their associates.”

By telling others how you work (and asking them how they work), you gain valuable information and learn how to better work together. I think this is the strength of tools like the MBTI, learning that other people are different.

Building responsible relationships is about building trust (The Speed of Trust). Knowing who you are and how others think, helps build that trust.

Applied: When starting to work together with others, it could be good to ask them about their values and ways of working. Currently I don’t have a framework for this, but based on this book and other tools like the MBTI could develop something that we could use as a guideline for a conversation.

A Second Career

Drucker thinks that the midlife crisis of 45 year old executives is caused by boredom. He proposes three ways of starting a second career:

1. Start in a new field (to challenge yourself again)
2. Develop a parallel career (e.g. help at church)
3. Become a social entrepreneur (start a non-profit)

“You must begin long before you enter [your second career].”

Developing a second career is also a good way to shield yourself from a setback. If things at work don’t progress, you can find challenge and joy in your volunteer work for instance.

Applied: In a way, I’m already working on the second career, second start-up. But as meant in the booklet, I think that I would want to become a social entrepreneur in the field of psychedelics for mental health improvements. But let’s first see how the field develops.

Hell Yeah or No

Hell Yeah or No by Derek Sivers is a great little book with life advice from a man who has figured out some good things about life. The thinking is clear, concise, and evergreen. Definitely a book to re-read/listen to (parts of) again every year or so.

First/key idea in this blog post. And great supplement here.

“Use this rule if you’re often over-committed or too scattered. If you’re not saying “HELL YEAH!” about something, say “no”. When deciding whether to do something, if you feel anything less than “Wow! That would be amazing! Absolutely! Hell yeah!” — then say “no.” When you say no to most things, you leave room in your life to really throw yourself completely into that rare thing that makes you say “HELL YEAH!” Every event you get invited to. Every request to start a new project. If you’re not saying “HELL YEAH!” about it, say “no.” We’re all busy. We’ve all taken on too much. Saying yes to less is the way out.”

And another great idea is one about being now or future focussed.

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Also see this review (selected experts) by Josh Spector.

Measure What Matters

Measure What Matters by John Doerr is the management book around goal setting as a company. From legendary investor John Doerr and influenced by Bill Campell (executive coach), and full of examples from Google and the like.

The core of the book should also be possible to be applied to oneself. So let’s dive in.

Too much to read? Watch John Doerr’s TED Talk about OKRs (11min)

OKRs

“Ideas are easy. Execution is everything.”

Objective: what is to be achieved

• significant, concrete, action-oriented, and (ideally) inspirational
• e.g. organize the world’s information
• e.g. make psychedelics more accessible

Key Results: how we get to the objective

• specific and time-bound (month/quarter), aggressive yet realistic
• measurable and verifiable
• e.g. grow revenue of Youtube by 30% this quarter
• e.g. make an overview of all psychedelics companies this quarter

Goals can be harmful, people can only work towards them and ignore opportunities and ‘goal-hack’. But don’t be mistaken, goals are necessary (insert Yogi Berra quote 😉 ).

Goals create alignment, clarity, and job satisfaction.

The rest of the book dives deeper into the ‘superpowers’ of OKRs:

• Focus and Commitment to Priorities
• Align and Connect for Teamwork
• Track for Accountability
• Stretch for Amazing

and the applications and implications

• Conversation, Feedback, Recognition
• Continuous Improvement
• The Importance of Culture

OKR Hygiene

• Less is more
  • it signals what to say yes to and no to
  • three to five OKRs per cycle
• Set goals from the bottom up
• No dictating
• Stay flexible
  • modify or abandon mid-cycle if needed
• Dare to fail
  • aim higher than where you are now
  • ‘train harder than last time’
• A tool, not a weapon
  • OKRs and bonuses are best kept separate
• Be patient; be resolute
  • it takes some time to get used to them

Focus and Commitment to Priorities

chapters 4, 5, and 6

“What is most important for the next three (or six, or twelve) months?”

Many people can’t name the priorities of their companies (or themselves for that matter).

• You will need to repeat the OKRs until you (leadership) become tired of repeating it, then people will know them

“… nothing moves us forward like a deadline.”

Quarterly OKRs are advised.

You need to pair OKRs to measure both effect and counter-effect. This means quality and quantity. Or speed and robustness. Only measuring one can lead to goal-hacking.

OKRs also mean that you don’t work on other things. These are the projects that need to get done, you can only work on another project if you update your OKRs.

“The art of management lies in the capacity to select from the many activities of seemingly comparable significance the one or two or three that provide leverage well beyond the others and concentrate on them.”

“Put more wood behind fewer arrows.”

Chapters 5 and 6 are examples from two companies that implemented OKRs.

“Instead of reacting to external events on the fly, we’re acting purposefully on our plans for each quarter.”

Align and Connect for Teamwork

chapters 7, 8, and 9

OKRs lead to alignment because you know what everyone/the company is working on (and only 7 percent of employees fully understand the goal of a company).

Chapter 7 has an example of OKRs for a football team, some good, some bad.

OKRs should work towards the greater goal, but also can/should come from bottom-up. At that level, people know best what to do to achieve the goals. Doerr says 50-50 is a good mix.

OKRs may be internal (do X) or external (get Y revenue). Depending on the phase of a company and how much you know of the environment, you can finetune this.

One good (alignment) question to ask is: Will this thing work towards our North Star?

Track for Accountability

chapters 10 and 11

OKRs can be tracked, and revised or adapted as circumstances dictate.

Cloud-based software could help with:

• Making goals visible to everyone
• Drive engagement
• Promote internal networking
• Save time, money, frustration

Track the goals for yourself (weekly, monthly, or whatever frequency works best). Preference of Doerr is weekly.

Then you can choose the following:

• continue
• update
• start (new one)
• stop (do let everyone who is dependent on this OKR know)

Scoring (at Google) is done as follows. A bit objective with subjective ‘did I put in the effort’ mixed in:

• 0.7 to 1.0 = green
• 0.4 to 0.6 = yellow (progress, but not there)
• 0.0 to 0.3 = red (fail)

Always reflect on the progress made, as also to inform making new OKRs.

Possible questions:

• Did I accomplish all of my objectives?
  • If so, what contributed to my success?
  • If not, what obstacles did I encounter?
• If I were to rewrite a goal achieved in full, what would I change?
• What have I learned that might alter my approach to the next cycle’s OKRs?

After this feedback, take a breath to savour your progress.

Stretch for Amazing

chapters 12, 13, and 14

“If companies don’t continue to innovate, they’re going to die – and I didn’t say iterate, I said innovate.” – Bill Campbell

Google divides their OKRs into two buckets

1. Committed goals: related to metrics, aim is to get a 1.0
2. Stretch/aspirational goals: bigger-picture, aim to get 0.7
   1. Google fails 40% of these

Stretch goals should be fine-tuned to an organisation. You should have some, but not all. And they shouldn’t be ‘fly to Mars next year’, but ‘build a working rocket next year’ (difficult, but remotely possible).

(fun fact: it was Susan Wojciki’s garage where Google started, she was employee nr 16 and YouTube’s 10x’er)

OKRs can also be seen as the ‘big rocks’ (Stephen Covey). Do those first, then add smaller and smaller pebbles and sand (to fill a jar).

Conversation, Feedback, Recognition

chapters 15 and 16

“A manager’s first role is the personal one. It’s the relationship with people, the development of mutual confidence … the creation of a community.” – Peter Drucker

This is in response to not everything being able to be captured by numbers, by OKRs.

The idea is that OKRs get coupled to continuous performance management in the form of:

• Conversations: manager and contributor
• Feedback: bidirectional and between peers
• Recognition: expression of appreciation

What is noted again is to decouple OKRs from compensation (otherwise the goals will be too low/high/goal-hacked). Feedback from the team and context is more important for compensation. (see graph p182)

Conversations

The conversations are driven by the subordinate. It’s about goal setting/adjusting, update on progress (what works/doesn’t work), coaching both ways, career growth, mini-performance review.

Feedback

Specific feedback to gauge if you’re doing well, what others need from you, etc. Also, feedback on the company.

Recognition

Continuous, peer-based, objective, sharing stories, tied to company goals and strategies.

Continuous Improvement

chapter 17

Story about Zume, but alas OKRs didn’t help them in the end.

The Importance of Culture

chapters 18, 19, and 20

“Culture eats strategy for breakfast” – saying/John Doerr.

Culture is the parts that include someone that champions the goals (OKRs) and others that help others and motivate (CFRs).

This part is a bit more vague, but it comes down to having a culture where people are going in the same direction, OKRs can help with getting that so.

“If you want to cut a man’s hair, is it better if he is in the room?” – Senegalese saying

“Ideas are easy; execution is everything.” – John Doerr

OKRs checklist

Objective

• Concrete
• Significant
• Action-oriented
• Inspirational
• 3-5 Objectives

Key Results

• Specific
• Time-bound
• Aggressive but attainable
  • Either aim for complete (1.0)
  • Or aim out there with 10x projects (0.7)
• Qualitative and quantitative (prevent goal-hacking)
• 2-5 Key Results per Objective

Review

• Weekly or per month
• Change goals if ‘ladder is on the wrong building’
• Rate (at end) from 1.0 (complete/full effort), <0.7 (progress), <0.4 (fail)
• What contributed to the success?
• What obstacles were there?
  • How should it be rewritten?
• What changes for the next cycle?
• Take a break

How to Make Millions with Your Ideas

How to Make Millions with Your Ideas by Dan Kennedy is one of the marketing books that one supposedly should have read. I found it somewhat informative, but mostly because I projected my own experience and ideas on what is being said.

It does a good job of presenting different ideas, but a lot of them are of that time (mail order business). That doesn’t mean that some of the lessons or inspiration isn’t valid.

One good nugget from the book is the lesson that starting with an idea, and making that come to fruition, may be harder than selling something (in a specific area) that is already successful somewhere else.

I’ve made some more notes in Obsidian.

The 22 Immutable Laws of Marketing

The 22 Immutable Laws of Marketing by Al Ries and Jack Trout is a great book that I thought I had already summarized here, but apparently not.

It lays the groundwork of what marketing is, positioning. Find a space in the market, nee, in the mind of the consumer.

There are ways to modify this, but only a few ways. You can’t be better and hope/believe that you’re going to win the market. You have to position yourself as the challenger brand, make a new submarket, and some other variations are possible.

But even the same product, in a different market (cars and beers are often used as examples) don’t fair well when introduced somewhere else.

The curse of line extension is one that I think I/Queal should be most wary of, be good at doing one thing, but don’t try and broaden it too much. The consumer will only remember you for doing one thing (quick drinkable meals vs providing all quick meals?)

Ok, enough rambling. I will, one day, do a more structured summary. Probably when I have crystallized my ideas around the new business enough that I can say I’ve followed the guidelines here.

Founders at Work

DRAFT – taken from Evernote 26/02/15

Startups create value
Start with a sprint, then slow down the least!
Don’t look productive (e.g. suits, business meetings), be productive instead
Founders were unsure that they were onto something big
Perseverence / determination is factor nr 1
Adaptable nr 2 – never lose sight of what the users want
Have a good co-founder
Tips: 1) write a business plan, 2) don’t expect users to change behavior too much
Learn what makes you valuable
Every time you save on part you save on complexity (queal makkelijker)
Best things came from 1) not having money, 2) not having done it before

Eckart’s Notes

Eckart’s Notes is a Dutch book by Eckart Wintzen. He was an inspiring entrepreneur to many. His core idea was that you could run a company by having many autonomous cells. I think it could compare to an ant colony, your body, or many other bottom-up systems.

In the book, he argues for independence mixed with strict guidelines from the holding (queen bee, your cognition). This allows for independent and creative thought from the cells, with a uniform representation and way of doing things.

Some things are very strict, like what font to use and the size of plants in the office. But a cell is responsible for its own acquisition, making a profit, etc.

This system prevents many back-office processes from starting/growing. Because the cell has to do it themselves (and of course don’t want to do it, but have to).

There are many more ideas in the book and it reminded me of ReWork quite a bit.

Not everything might apply to your organisation, but I can recommend most entrepreneurs (especially with (the ambition to grow beyond) 20 people or more).