“In some large companies, it might be difficult to grow new businesses from tiny seeds because of the patience and nurturing required. In my view, Amazon’s culture is unusually supportive of small businesses with big potential, and I believe that’s a source of competitive advantage.”
New business lines start out as seedlings. Often, they won’t meaningfully contribute to revenue for many years. But if you have the patience to nurture those seedlings, you can end up with powerful new revenue lines.
Making long-term investments in small internal businesses can be difficult in a fast-paced corporate environment.
Large corporations are good at executing on predetermined strategies, but they struggle to slow down and give new business lines time to develop.
Public markets judge performance on a quarterly basis, and salaries, promotions, and layoffs also based on these figures. It is difficult to go against the grain and accept projects that might not see returns for some time (or at all).
While you need concrete insights and metrics to bet on a new idea, you also need patience and nurturing to make it thrive.
At Amazon, Bezos emphasizes that even if a new business enjoys runaway success, it will only begin to contribute meaningfully to company economics in three to seven years. Accepting that kind of time-frame as normal is the first step to building new innovative businesses inside your company.
Fulfillment by Amazon AWS and Amazon Advertising services , for example — now major winners for Amazon — began as seed investments.
Jeff Bezos letter to shareholders
Jeff Bezos has been writing a letter to shareholders since 1997 and looking at all if them gives an insight to the organisation and a masterclass in leadership. This is a series of short blogs that gives you a snap shot / key takes outs of each letter, along with links to them all.
link to all letters to shareholders
- 1997: Bring on shareholders who align with your values
- 1998: Stay terrified of your customers
- 1999: Build on top of infrastructure that’s improving on its own
- 2000: In lean times, build a cash moat
- 2001: Measure your company by your free cash flow
- 2002: Build your business on your fixed costs
- 2003: Long-term thinking is rooted in ownership
- 2004: Free cash flow enables more innovation
- 2005: Don’t get fixated on short-term numbers
- 2006: Nurture your seedlings to build big lines of business
- 2007: Missionaries build better products
- 2008: Work backwards from customer needs to know what to build next
- 2009: Focus on inputs — the outputs will take care of themselves
- 2010: R&D should pervade every department
- 2011: Self-service platforms unlock innovation
- 2012: Surprise and delight your customers to build long-term trust
- 2013: Decentralize decision-making to generate innovation
- 2014: Bet on ideas that have unlimited upside
- 2015: Don’t deliberate over easily reversible decisions
- 2016: Move fast and focus on outcomes
- 2017: Build high standards into company culture
- 2018: Wandering is an essential counterbalance to efficiency