What hobbies have started billion dollar companies?

The great plan of Jeff Bezos

He reached the minimum weight for inclusion in the football team with difficulty. “I didn't expect him to prevail there,” remembers his mother Jackie. Only two weeks later he was already the team captain. Not because he ran particularly fast or threw more precisely than his teammates. But because he was the only one who could remember the routes of the various moves. Not only are their own paths, but also those of all players.

The football player from then is now 52 years old. Physically still a lightweight, but economically he is highly successful as the head of what is probably the most dynamic company in the world: Jeff Bezos, the tireless founder of the online retailer Amazon, has a fortune of around 65 billion dollars, but has also trimmed his company for 22 years daily after the foundation to new top performance. He now has his own robots, airplanes and soon also drones transport his goods to his 300 million customers, invests many millions of dollars in artificial intelligence and the Internet of Things, produces his own television series and, in between, also expands to Australia. And when other corporate executives in his class play golf or climb mountains in their little free time, Bezos shoots rockets into space, invests in internet companies and saves a traditional newspaper at the same time.

His recipe for success sounds pretty simple: He's following a plan. Often over many years, sometimes decades, he works meticulously towards his goals and does not allow anyone to disturb him. “I've found that it takes five to seven years for a seed to bring significant financial benefits to our company. I don't know any reason why it should be like this, but most of the time it is, ”explains Bezos. During this time he will not let anything or anyone dissuade him from his plan. Least of all by the stockbrokers, who first criticized his strategy of cheap financing with the help of retained earnings and later did not understand his entry into cloud computing.

Today, exactly these two decisions form the backbone of the group: Amazon has a world market share of 45 percent in the cloud business, will generate around ten billion dollars in sales this year and is also highly profitable. Bezos sees the business still at the beginning, because the next big growth area, the Internet of Things, is already firmly in his sights. The Google / Alphabet subsidiary Nest uses AWS and Tata Motors monitors 2500 trucks on the roads in India in real time with the help of the Amazon cloud. “The entire Industrial Internet of Things is exploding right now. Every manufacturer links their machines to the Internet. We see enormous efficiency advantages, ”said Cloud boss Werner Vogels.

Great opportunities in the Internet of Things

Bezos invests the profit that Vogels generates in the expansion of his trading business in order to further outrun the competition. Because he is far from the end of his plans. Bezos is building one logistics center after another. In the USA it can now supply almost half the population within half an hour.

In Germany, one of the most important foreign markets, the construction of three new logistics centers has just been announced - in addition to the nine existing warehouses. The loop is tightening because the goal is the same everywhere: same day delivery, if possible within an hour. Customers don't even have to order on the computer anymore. Amazon Echo is the name of the device that will be in the living room in the future and that will convert voice commands such as “Buy coffee” directly into an order.

World champion of testing

Bezos is considered the world champion of testing: the website or mobile app is changed thousands of times every day in order to get better results. Research shows that the systematic use of experiments of this kind often distinguishes innovators from their less successful competitors. Bezos recognized this early on. “We tried to cut the cost of the experiments so we could do more of them. But if you do thousands and not just a hundred experiments every day, you can increase the number of innovations dramatically, ”says Bezos, revealing one of his secrets to success.

However, experiments often go wrong. Like the Fire Phone that nobody wanted. No problem for Bezos; Setbacks are part of it. “I wasted billions of dollars on Amazon. But my job is to encourage people to be bold. And when you make bold bets, it leads to experimentation. Experiments are inherent in failure, ”explains the father of four, who is married to the award-winning writer MacKenzie Bezos.

"Will I regret not having been there when the internet went off?"

That he likes risks became apparent as early as 1994 when he founded Amazon. At the time, at the age of 30, he had worked his way up to a management position as an investment banker on Wall Street. At the time he read an article that predicted the Internet would grow by 2300 percent a year. Bezos couldn't let go of the number. “When I'm 80,” he asked himself, “will I regret leaving Wall Street? No. But will I regret not having been there when the internet went off? Yes". So he wrote down a list of 20 products that could potentially be sold on the Internet.

In the end, the choice fell on books, mainly because there were so many of them. No bookstore could have all of the books in its inventory. But that's not a problem on the Internet. He set up the database in a garage in Seattle; ironically, he negotiated with suppliers in the nearby bookstore owned by Barnes & Nobles, one of its main competitors. In July 1995, the self-proclaimed “Biggest Bookstore in the World” went live. The goal was later expanded to become the “largest department store in the world”. He has achieved the first goal; it is not far from the second. Even the dot-com crash in 2001 or a helicopter crash in 2003 couldn't stop him.

65,000 external retailers on the Amazon platform in Germany

To fill this "long tail" was his goal from the start. And to this day it is one of the guarantees of success in online trading: the customer gets everything online; There are no limits. For this purpose, Amazon also lets other retailers sell on its marketplace. With great success: last year, the turnover of these 65,000 or so external retailers in Germany was for the first time greater than Amazon's own business. No problem for Bezos: "If the commission we get from the dealers corresponds to our profit margin, that's okay," he said in 2008.

The competition is left behind: the Amazon platform already accounts for around half of online retail sales. Most online shoppers no longer look for a supplier at all, but instead start looking for a product directly on Amazon - even if in most cases Amazon is no longer the cheapest supplier. Price comparison sites usually bring out cheaper providers, but that doesn't matter to loyal Amazon customers today.

This is where an important part of Bezos' philosophy lies: if a company manages to make its customers happy, it will ultimately benefit the most. So Amazon should become the most customer-friendly company in the world, with low prices, a large selection, fast delivery, accommodating exchanges and good service. Bezos subordinates everything else to these goals. Even if it hurts sometimes. What his employees also had to experience painfully at times When complaints rained down during Christmas sales that the hotlines were not staffed enough, Bezos asked the manager in charge how long a customer had to wait. A minute at most, said the man. So Bezos dared the test call - and had to wait several minutes. The manager was soon no longer working for Amazon. Bezos is not too squeamish with his people. If you don't consistently follow your line, you'll be kicked out pretty quickly. There are also always disputes with the unions, who like to strike Amazon especially in Germany and often.

Robots are 20 percent more productive than humans

What the Amazon customers hardly notice, however: the network of logistics centers in Europe has long been so tight that German customers can be supplied from the surrounding countries without any significant delay. In any case, striking warehouse workers are only a temporary phenomenon for Bezos: tens of thousands of robots are now driving through the Amazon warehouse and transporting the entire shelves with the desired products. Machines are already around 20 percent more productive than people - and will continue to expand their lead. In a few years' time, people in the logistics centers will primarily be needed to monitor the machines, is the vision. Until then, there will be a strong strike.

Bezos, however, does not allow itself to be impressed at all - and to be expanded, in all directions. Horizontal, vertical and regional.

  • Horizontal:More and more products are added. The latest growth area is called Amazon Business and includes products for businesses such as office supplies. Amazon is already selling a billion dollars for these products. Groceries under the “Amazon Fresh” brand could become the next big growth market. And Bezos is already involved in the future market of 3D printing: The company has a patent for a 3D printer on a truck that prints products that are urgently needed right on the customer's doorstep. Since data flows faster than goods, 3D printers are regarded as the production technology of the future.
  • Regional: So far, Amazon is only represented in eleven countries. South America, Africa, Australia, Russia are (still) Amazon-free zones. The further expansion to Australia has been announced; Southeast Asia will soon follow suit. However, the Chinese retailer Alibaba and the German Rocket Internet of the Samwer brothers are already active there. So far, the three competitors have not entered into direct competition in any country.
  • Vertical: Amazon takes over larger parts of the value chain, i.e. mainly by expanding the logistics chain. With its own fleet of aircraft and container ships in operation, Amazon could soon handle all logistics from the manufacturer to the customer completely by hand. That would be a challenge to logisticians like DHL or UPS, because Amazon has often set up its own systems and then made them available to other companies. The likelihood that Amazon will one day not only be the largest department store, the largest cloud and the largest library, but also the largest transport company in the world, is already giving its competitors stomach ache. Because even on the so-called last mile to the customer, Bezos relies on its own delivery services or drones.

Only the physicists were smarter

But the world is not enough for him. In his private company "Blue Origin" he develops reusable rockets for space tourism. But a few minutes of weightlessness is just the beginning. “I would like to see millions of people live and work in space,” he reveals his dream, which he has had since childhood - and can now afford to tackle the goal. And as a hobby he bought the Washington Post, the newspaper whose reporters exposed the Watergate scandal at the time. Bezos wants to keep this institution of the American Democrats and invests millions in new editors, but above all new technology to make the newspaper fit for the digital age. The first results show: Even those who are used to success could succeed.

His last defeat was a long time ago anyway. At the university he had initially enrolled in physics. "I looked around the room and I knew that there were three people sitting there who were much, much smarter than me and whose brains were wired differently than mine." Bezos then switched to computer science. So it is not infallible. His competitors can still hope. Anyway, something.