In the early 1990s, while working as a senior vice president in a hedge fund firm, Jeff Bezos read about the Internet and how it had grown 2,300 percent in one year. He decided to be a part of this revolutionizing event, and chose to sell books online. Thus, Amazon.com was born in 1994 in a garage in Seattle, Washington. Since then, the company has gone beyond books and is now also selling appliances, clothing, cloud computing services, and more. Amazon now has a market capital of over $900 billion, employs over 560,000 worldwide, and Jeff Bezos is considered the richest person in modern history.
1998 Shareholder Letter
In its first month, Amazon was able to sell books to people in all 50 states in the US, as well as in 45 countries. It went public in 1997 and was able to raise $54 million during its IPO. In 1998, Jeff Bezos wrote a letter to his shareholders, employees, and customers. Among many other things, he told shareholders that customer accounts grew from 1.5 million to 6.2 million in one year. Also, sales grew from $148 million to $610 million. According to him, revenue and customer growth were dependent on their customer focus as well as their expansion, which included growing the employee base from 600 to over 2100.
Jeff Bezos described his employees as smart, hard-working, and passionate people who put customers first. In growing the employee base, they were able to significantly strengthened the management team, who in turn set the bar high in their approach to hiring. He explained that during their hiring meeting, he asked people to consider 3 questions before deciding to make a job offer.
Q1: Will you admire this person?
Jeff explained that he personally has always tried hard to work only with people he admires. People that we admired in our life are usually the people we have been able to learn from, or take an example from, he stated. So, he encourages his managers to be as equally demanding when choosing people to work with. For him, life is just too short to spend working with people that we would not admire.
Q2: Will this person raise the average level of effectiveness of the group they’re entering?
He believes that the bar has to continuously go up. He suggested an exercise where people visualize the company 5 years in the future. And when they look around at that point, all they can say is that they are glad that they got in when they did, since the standards will be so high by that time. Jeff Bezos believes this is the only way to fight against entropy, or any kind of decline. And just as he said, Amazon posted its first ever full-year profit in 2003, 5 years after he wrote the letter.
Q3: Along what dimension might this person be a superstar?
Jeff values uniqueness in people, which he believes can enrich the work environment for the rest of the company. Therefore, it is important to hire candidates with unique skills, interests, and perspectives. And it does not even matter if those are related to their jobs. As an example, he mentioned an employee to happens to be a Spelling Bee champion. That credential might not be important to her work, but occasionally giving her a spelling challenge makes working more fun for the rest of the company.
Work Hard, Have Fun, Make History
Jeff Bezos encouraged his co-workers to remain committed to constant improvement, experimentation, and innovation in all their initiatives. And they are able to produce results in an environment as dynamic as the Internet only because of extraordinary people. Thus, setting the bar high in their approach to hiring will continue to be the single most important element of the company’s success.