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If you want to build a successful, sustainable business, don’t ask yourself what could change in the next ten years that could affect your company.
Instead, ask yourself what won’t change, and then put all your energy and effort into those things.
That’s the advice of Amazon CEO Jeff Bezos, highlighted in an interesting post about Uber’s big ambitions by venture capitalist Bill Gurley.
Bezos suggests that you should build a business strategy around the things you know are stable in time — like that customers will always prefer lower prices — and then invest heavily in ensuring you are providing those things and improving your delivery of them all the time.
“When you have something that you know is true, even over the long term, you can afford to put a lot of energy into it,” Bezos says.
To help it achieve lower prices, Uber has poured time and money into the back-end routing algorithms of its app and an intelligence system for demand prediction, congestion prediction, supply matching, supply positioning, smart dispatch, and dynamic pricing, Gurley points out. It has launched UberPool — a ride-sharing option that Gurley argues has become one of the company’s defining initiatives.
As Uber hustles away on making UberPool a success, it is perfectly achieving Bezos’ strategy. It is making a big investment in something that will never change (people wanting to pay less for transportation).
The things Bezos predicted would always be true for Amazon customers is that they’d always want lower prices and speedy shipping. So, the company has spent the last 11 years investing in those things— often forgoing profits to do so.
To work towards those things, Amazon has spent billions on building fulfillment and sortation centers all over the US and the world, a topic which came up on its fourth quarter earnings call on Thursday.
“What’s happened over the course of last several years, with all the fulfillment centers that we have added, is we have actually gotten selection closer to customers,” CFO Tom Szkutak said. “And so that’s helped us from a delivery speed standpoint. And it’s helped us from a cost standpoint too —in terms of transportation cost — because of being closer to our customers.”
It’s been a long, un-ending effort, but worth-it, since customers will always value Amazon’s fast delivery options.
Here’s the full Bezos quote, via Bill Gurley:
“I very frequently get the question: ‘What’s going to change in the next 10 years?’ And that is a very interesting question; it’s a very common one. I almost never get the question: ‘What’s not going to change in the next 10 years?’ And I submit to you that that second question is actually the more important of the two — because you can build a business strategy around the things that are stable in time. … [I]n our retail business, we know that customers want low prices, and I know that’s going to be true 10 years from now. They want fast delivery; they want vast selection. It’s impossible to imagine a future 10 years from now where a customer comes up and says, ‘Jeff I love Amazon; I just wish the prices were a little higher,’ [or] ‘I love Amazon; I just wish you’d deliver a little more slowly.’ Impossible. And so the effort we put into those things, spinning those things up, we know the energy we put into it today will still be paying off dividends for our customers 10 years from now. When you have something that you know is true, even over the long term, you can afford to put a lot of energy into it.”
Read the rest of Gurley’s piece here.
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