26 Aug How Jeff Bezos does $10,000/hour work
On June 11, 2018 you lost $20. And didn’t even realize it.
Say what? How’d that happen?
Amazon Prime increased its price from $99 to $119 a year.
Big deal, right?
Well, if you’re Amazon, yes. With an estimated 100 million Prime subscribers, that provided an immediate $2 billion boost to the company’s revenue. And since Bezos owns ~10%, that’s a cool $200 million for him.
Jeff Bezos knows a thing or two about $10,000/hour work. You don’t become the the world’s richest man without developing unique skills that can be leveraged.
And whether it’s bucking convention on EPS profitability (“Your margin is my opportunity”), vertically integrating your cost centers (turning your biggest cost center into a profitable “side” business called AWS), and head-scratching but awesome acquisitions (Twitch!) Bezos is truly playing in his own league.
But thankfully he’s left us some breadcrumbs in our personal quests for $10,000/hour work. LFG!
1. He made a very risky career pivot
Did you know that Jeff Bezos used to work at a hedge fund? And not just any hedge fund, D.E. Shaw. (For the uninitiated, they’re basically the Amazon of Hedge Funds.)
In his late 20s, Bezos became one of D.E. Shaw’s first SVPs before he became infatuated with an emerging technology called “the world wide web.” He ultimately left to go sell books. (Had he stayed, he’d probably be a billionaire today.)
What put him over the edge was what’s now commonly known as his “regret minimization framework.” Bezos elaborated during a recent interview:
You know when I am 80, I am not going to remember any of this. But If I don’t try, I will definitely regret not having tried. Even if I fail, I would not have any regrets.
Bezos also felt confident in his backup plan, that if it failed he’d be “an extremely happy software programmer somewhere.”
So what were the $10,000/hour skills at play? A keen eye on emerging technologies, ambitious personal goal planning, playing the long-game and having mental fortitude in his back up plan.
2. He understands pricing
If you want to increase your profits by $2 billion, you have two options: sell more widgets or increase your prices. Guess which one is both high skill and high leverage?
So what should we take away from this? Whether it’s pricing your startup’s SaaS product, determining your hourly consulting rate, or asking for a raise to get you to market value (do you know what that is, btw?) it’s a high-leverage skill that is rarely taught. (This tweet has some good starting resources.)
3. He’s an effective communicator
Bezos is not known for his Steve Jobs-ian approach to theatrical flair. (Come to think of it, I can’t even recall ever seeing Bezos speak.) But Bezos is a brilliant communicator within organizations, particularly sprawling ones like Amazon.
Eugene Wei, an early Amazon employee (and one of my favorite bloggers) wrote an entire essay on this high-leverage, high value skill. Wei first paints the challenge of growing organizations:
Anyone who is lucky enough to lead a successful company very quickly senses the impossibility of scaling one’s own time to all corners of the organization, but Jeff was laser focused on the more serious problem that presented, that of maintaining consistent strategy in all important decisions, many of which were made outside his purview each day. At scale, maintaining strategic alignment feels like an organizational design problem, but much of the impact of organizational design is centered around how it impacts information flow.
Wei describes how Bezos used a simple trick: compression. Yup, using alliterations (ahem, RadReads) and acronyms Bezos was able “to encode the most important strategies for Amazon in very concise and memorable forms.”
You’ve probably heard of “Day 1.” Bezos has said the phrase so often (both internally and in his shareholder letters, which themselves have become pop culture “must reads”) that it’s defined by what happens after: Day 2. So what happens Day 2?
Day 2 is stasis. Followed by irrelevance. Followed by excruciating, painful decline. Followed by death. And that is why it is always Day 1.
In two simple words, Bezos is able to communicate urgency and innovation through the veins of the organization. (Amazon even has a building called Day 1!)
The imprint of scaled communication is all over Amazon, whether it’s naming each year based on a company goal, the 2 Pizza Rule (for meeting size) and starting meetings with 30 minutes of quiet reading. And as a product manager, indie maker or lawyer – effective communication is a powerful skill, one that’s rich with leverage.
4. He plays the long game
You only need to see one chart:
The hockey stick line is revenue. The flat line, net income (or profits).
Now the flat line was by choice. Instead of paying his shareholders (and himself) via profits, he reinvested it back into the business.
Admittedly, the link here to $10,000/hour work here becomes a bit tenuous. But know this: if you’re able to be a tiny bit better, each day, time is the ultimate leverage. Whether it’s investing in a 529 plan before your kids are born, an hour of reading a day (a la Bill Gates) or sharpening your pricing, negotiation or communication skills – the passage of time will surely translate into hockey stick growth.
You just gotta be patient.