Hey everybody and happy Sunday! Hooray: Wednesday marks the first official day of summer ☀️

Monday is Juneteenth, the federal holiday first recognized in 2021, commemorating the emancipation of enslaved African Americans. It’s celebrated on the anniversary of the order proclaiming freedom for slaves in Texas on June 19, 1865, shortly after the Confederate Army surrendered to the Union.

Today, we'll discuss something a little more modern: Lessons from the remarkable foundation of Amazon, which started as a tiny online bookshop in the garage of some hot-shot named Jeff Bezos.

All this, and more, in just 5 minutes to read.

— Matthew

QUOTE OF THE DAY

"We’ve had three big ideas at Amazon that we’ve stuck with for 18 years, and they’re the reason we’re successful: Put the customer first. Invent. And be patient.

We are comfortable planting seeds and waiting for them to grow into trees.”

— Jeff Bezos

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WHAT ELSE WE’RE INTO

📺 WATCH: Cathie Wood on the strength of Nvidia

👂 LISTEN: Ramit Sethi on financial literacy and building your ‘rich life’

📖 READ: How people are re-thinking their relationship with time

KNOWLEDGE TEST

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It’s that satisfying. Ace the quiz.

EARLY STORIES OF AMAZON

Customer-centric

At 30, Jeff Bezos bet on himself. As the internet caught on, he abandoned a successful Wall Street career to start his own business.

In 1994, he stepped down from his well-paying job as senior vice president of the investment firm DE Show and moved to Seattle. He’d been thinking of an online bookstore that would sell a wide selection of books with quick, affordable shipping. He decided that he’d probably regret not starting the venture more than he would if he tried it and failed to build something meaningful.

Here’s Bezos:

“I knew when I was 80 that I would never, for example, think about why I walked away from my 1994 Wall Street bonus right in the middle of the year at the worst possible time. That kind of thing just isn’t something you worry about when you’re 80 years old.”

Adding, “At the same time, I knew that I might sincerely regret not having participated in this thing called the Internet that I thought was going to be a revolutionizing event. When I thought about it that way … it was incredibly easy to make the decision.”

From the beginning, Bezos defined his company by its almost singular emphasis on the customer, not his shareholders or employees.

“We are genuinely customer-centric,” Bezos has said. “We are genuinely long-term oriented, and we genuinely like to invent. Most companies are not those things. They’re focused on the competitor rather than the customer.”

Here are a few early Amazon stories demonstrating Bezos’ vision and how Amazon became one of the world’s most valuable companies, a household name many Americans say they can’t live without. Even its cloud business, not necessarily the first thing the average consumer thinks of about Amazon, has grown drastically since the mid-2000s.

$10,000 down

Bezos and his then-wife, MacKenzie, opened the online bookstore in Seattle because of the city’s growing 1990s tech industry and because Washington’s relatively small population meant they wouldn’t have to charge sales tax to local customers.

Bezos received a helpful initial investment from his parents, but he also financed the company with $10,000 from his own pocket. (Not a bad investment for a company whose market valuation is well over $1 trillion.) Early employees started by working in his garage, a classic origin story, using desks made out of doors from Home Depot.

Why books?

Today, Amazon sells so much more than books that it’s almost startling when people first hear it began as a little bookstore.

But Bezos consciously focused on books, which he sees as “pure commodities.” A book copy in one store is the same as in another store across the country. Buyers know what they’re getting.

More important, though: There were several million book titles in print worldwide, many more than a Barnes & Noble or Borders could ever stock. The other lesson here: Focus. Bezos wanted to hyper-focus on books and dominate that market before selling everything else, from diapers to household gadgets, toothpaste, and clothes.

Lessons from Costco

Bezos took a page out of Costco’s playbook.

In the early innings of Amazon’s story, Bezos asked to meet with Jim Sinegal, founder and then-CEO of Costco. They met at a Starbucks in Seattle, where Costco is also headquartered.

Sinegal told Bezos that Costco’s success was rooted in customer loyalty.

“Though the selection of products in individual categories is limited, there are copious quantities of everything there – and it is all dirt cheap,” Bezos recalled Sinegal telling him. “Costco buys in bulk and marks up everything at a standard, across-the-the-board 14%, even when it could charge more. It doesn’t advertise at all, and earns most of its gross profit from annual membership fees.”

Sinegal observed, “The membership fee is a one-time pain, but it’s reinforced every time customers walk in and see forty-seven-inch televisions that are two hundred dollars less than anyplace else. It reinforces the value of the concept. Customers know they will find really cheap stuff at Costco.”

“My approach has always been that value trumps everything. The reason people are prepared to come to our strange places to shop is that we have value. We deliver on that value constantly. There are no annuities in this business.”

The Monday after that meeting, Bezos met with his senior leaders to tell them Amazon would cut prices of books, music, and videos by more than 20%. Bezos later said: “There are two kinds of retailers: there are those folks who work to figure how to charge more, and there are companies that work to figure out how to charge less, and we are going to be the second, full-stop.”

Amazon leadership examples

Have Backbone; Disagree and Commit: Leaders are obligated to respectfully challenge decisions when they disagree, even when doing so is uncomfortable or exhausting. Leaders have conviction and are tenacious. They do not compromise for the sake of social cohesion. Once a decision is determined, they commit wholly.

Vocally Self-Critical: Leaders do not believe their or their team’s body odor smells of perfume. Leaders come forward with problems or information, even when doing so is awkward or embarrassing. Leaders benchmark themselves and their teams against the best.

Think Big: Thinking small is a self-fulfilling prophecy. Leaders create and communicate a bold direction that inspires results. They think differently and look around corners for ways to serve customers.

Bias for Action: Speed matters in business. Many decisions and actions are reversible and do not need extensive study. Value calculated risk-taking.

Dive deeper

Check out one of our favorite books, Brad Stone’s The Everything Store: Jezz Bezos and the Age of Amazon.

See you next time!

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