• A second key trait is to love and to connect the arts and sciences. Whenever Steve Jobs launched a new product such as the iPod or iPhone, his presentation ended with street signs that showed an intersection of Liberal Arts Street and Technology Street. “It’s in Apple’s DNA that technology alone is not enough,” he said at one of these presentations. “We believe that it’s technology married with the humanities that yields us the result that makes our heart sing.”

• In fact, it helps to be excited by all disciplines. Leonardo da Vinci and Benjamin Franklin wanted to know everything you could possibly know about everything that was knowable. They studied anatomy and botany and music and art and weaponry and water engineering and everything in between.

• People who love all fields of knowledge are the ones who can best spot the patterns that exist across nature.

• That trifecta—humanities, technology, business—is what has made him one of our era’s most successful and influential innovators.

• He went to Princeton with the goal of studying physics. It sounded like a smart plan until he smashed into a course on quantum mechanics. One day he and his roommate were trying to solve a particularly difficult partial differential equation, and they went to the room of another person in the class for help. He stared at it for a moment, then gave them the answer. Bezos was amazed that the student had done the calculation—which took three pages of detailed algebra to explain—in his head. “That was the very moment when I realized I was never going to be a great theoretical physicist,” Bezos says.

• “I saw the writing on the wall, and I changed my major very quickly to electrical engineering and computer science.” It was a difficult realization. His heart had been set on becoming a physicist, but finally he had confronted his own limits.

• When he told David Shaw that he wanted to leave the hedge fund to pursue this idea, Shaw took him on a two-hour walk through Central Park. “You know what, Jeff, this is a really good idea. I think you’re onto a good idea here but this would be a better idea for somebody who didn’t already have a good job.” He convinced Bezos to think about it for a couple of days before making a decision. Bezos then consulted his wife, MacKenzie, whom he had met at the hedge fund and married the year before. “You know you can count me in 100 percent, whatever you want to do,” she said.

• To make the decision, Bezos used a mental exercise that would become a famous part of his risk-calculation process. He called it a “regret minimization framework.” He would imagine what he would feel when he turned eighty and thought back to the decision. “I want to have minimized the number of regrets I have,” he explains. “I knew that when I was eighty, I was not going to regret having tried this. I was not going to regret trying to participate in this thing called the internet that I thought was going to be a really big deal. I knew that if I failed, I wouldn’t regret that, but I knew the one thing I might regret is not ever having tried. I knew that that would haunt me every day.”

• “You know the business plan won’t survive its first encounters with reality,” he says. “But the discipline of writing the plan forces you to think through some of the issues and to get sort of mentally comfortable in the space. Then you start to understand, if you push on this knob, this will move over here and so on. So, that’s the first step.”

• Mike Bezos admitted that he never understood either the concept or the business plan. “He was making a bet on his son, as was my mother,” Jeff says. “I told them that I thought there was a 70 percent chance that they would lose their whole investment.… I thought I was giving myself triple the normal odds, because really, if you look at the odds of a start-up company succeeding at all, it’s only about 10 percent. Here I was, giving myself a 30 percent chance.” As his mother, Jackie, later said, “We didn’t invest in Amazon, we invested in Jeff.” They eventually put in more money, ended up owning 6 percent of the company, and used their wealth to become very active and creative philanthropists focused on providing early-childhood learning opportunities for all children.

• Bezos came to pitch his idea. “He was short, with an uncomfortable smile, thinning hair, and a somehow febrile affect,” Stoltz later wrote in a blog post. Totally unimpressed, Stoltz blew him off and declined to write a story about the idea. Years later, long after Stoltz left the paper, Bezos would end up buying it.

• In the first month, with no real marketing or publicity plan other than asking friends to spread the word, Amazon scored sales in all fifty states and in forty-five countries. “Within the first few days, I knew this was going to be huge,” Bezos told Time. “It was obvious that we were onto something much bigger than we ever dared to hope.”

• The fact that Amazon grew so quickly meant that Bezos and his colleagues were unprepared for many of the challenges. But he sees a silver lining in the way they had to hustle. “It formed a culture of customer service in every department of the company,” he says. “Every single person in the company, because we had to work with our hands so close to the customers, making sure those orders went out, really set up a culture that served us well, and that is our goal, to be Earth’s most customer-centric company.”

• Ferry owner Cornelius Vanderbilt jumped ship when he saw the railroads coming.

• For a while a miracle happened: for a few years no other companies got into the space as competitors. Bezos’s vision was far ahead of everyone else’s. “It was the greatest piece of business luck in the history of business, so far as I know,” he says.

• “No customer was asking for Echo,” Bezos says. “Market research doesn’t help. If you had gone to a customer in 2013 and said, ‘Would you like a black, always-on cylinder in your kitchen about the size of a Pringles can that you can talk to and ask questions, that also turns on your lights and plays music?’ I guarantee you they’d have looked at you strangely and said ‘No, thank you.’” In a sweet irony, Bezos was able to trounce Apple in creating such a home device and then make its components—voice recognition and machine learning—work better than competing devices from both Google and, later, Apple.

• “The mercenaries are trying to flip their stock. The missionaries love their product or their service and love their customers and are trying to build a great service. By the way, the great paradox here is that it’s usually the missionaries who make more money.”

• Among his many strengths is his ability to keep his eye on that distant horizon, as he has done at Amazon. In the mission statement for his space company, he wrote, “Blue Origin will pursue this long-term objective patiently, step by step.” As Elon Musk pushed his own competing space program forward with very public fits and starts, Bezos advised his team, “Be the tortoise and not the hare.” Blue Origin’s company shield has a Latin motto, Gradatim Ferociter: “Step by Step, Ferociously.”

• “We don’t do PowerPoint (or any other slide-oriented) presentations at Amazon,” he wrote in a recent shareholder letter. “Instead, we write narratively structured six-page memos. We silently read one at the beginning of each meeting in a kind of study hall.”

• Focus on the big decisions. “As a senior executive, what do you really get paid to do?” he asks. “You get paid to make a small number of high-quality decisions. Your job is not to make thousands of decisions every day.”

• But there is no rest for the weary. I constantly remind our employees to be afraid, to wake up every morning terrified. Not of our competition, but of our customers. Our customers have made our business what it is, they are the ones with whom we have a relationship, and they are the ones to whom we owe a great obligation. And we consider them to be loyal to us—right up until the second that someone else offers them a better service.

• In 1999, we continued to benefit from a business model that is inherently capital efficient. We don’t need to build physical stores or stock those stores with inventory, and our centralized distribution model has allowed us to build a business with over $2 billion in annualized sales but requiring just $220 million in inventory and $318 million in fixed assets. Over the last five years, we’ve cumulatively used just $62 million in operating cash.

• Though it’s sometimes hard to imagine with all that has happened in the last five years, this remains Day 1 for e-commerce, and these are the early days of category formation where many customers are forming relationships for the first time.

• So in a way, driving profitability is the foundation underlying all of these goals.

• It’s All About the Long Term In closing, consider this most important point: the current online shopping experience is the worst it will ever be.

• We are doubly blessed. We have a market-size unconstrained opportunity in an area where the underlying foundational technology we employ improves every day. That is not normal.

• As the famed investor Benjamin Graham said, “In the short term, the stock market is a voting machine; in the long term, it’s a weighing machine.” Clearly there was a lot of voting going on in the boom year of ’99—and much less weighing. We’re a company that wants to be weighed, and over time, we will be—over the long term, all companies are. In the meantime, we have our heads down working to build a heavier and heavier company.

• Online selling (relative to traditional retailing) is a scale business characterized by high fixed costs and relatively low variable costs.

• Until July, Amazon.com had been primarily built on two pillars of customer experience: selection and convenience. In July, as I already discussed, we added a third customer experience pillar: relentlessly lowering prices. You should know that our commitment to the first two pillars remains as strong as ever.

• In that 1997 letter, we wrote, “When forced to choose between optimizing the appearance of our GAAP accounting and maximizing the present value of future cash flows, we’ll take the cash flows.” Why focus on cash flows? Because a share of stock is a share of a company’s future cash flows, and, as a result, cash flows more than any other single variable seem to do the best job of explaining a company’s stock price over the long term.

• If you could know for certain just two things—a company’s future cash flows and its future number of shares outstanding—you would have an excellent idea of the fair value of a share of that company’s stock today. (You’d also need to know appropriate discount rates, but if you knew the future cash flows for certain, it would also be reasonably easy to know which discount rates to use.)

• Similarly, many investors are effectively short-term tenants, turning their portfolios so quickly they are really just renting the stocks that they temporarily “own.”

• At Amazon.com, we use the term customer experience broadly. It includes every customer-facing aspect of our business—from our product prices to our selection, from our website’s user interface to how we package and ship items.

• Another example is our Instant Order Update feature, which reminds you that you’ve already bought a particular item. Customers lead busy lives and cannot always remember if they’ve already purchased a particular item, say a DVD or CD they bought a year earlier. When we launched Instant Order Update, we were able to measure with statistical significance that the feature slightly reduced sales. Good for customers? Definitely. Good for shareowners? Yes, in the long run.

• OUR ULTIMATE FINANCIAL measure, and the one we most want to drive over the long-term, is free cash flow per share.

• MANY OF THE important decisions we make at Amazon.com can be made with data. There is a right answer or a wrong answer, a better answer or a worse answer, and math tells us which is which. These are our favorite kinds of decisions.

• Math-based decisions command wide agreement, whereas judgment-based decisions are rightly debated and often controversial, at least until put into practice and demonstrated. Any institution unwilling to endure controversy must limit itself to decisions of the first type. In our view, doing so would not only limit controversy—it would also significantly limit innovation and long-term value creation.

• 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.

• At the beginning of our design process, we identified what we believe is the book’s most important feature. It disappears. When you read a book, you don’t notice the paper and the ink and the glue and the stitching. All of that dissolves, and what remains is the author’s world.

• IN THIS TURBULENT global economy, our fundamental approach remains the same. Stay heads down, focused on the long term and obsessed over customers.

• Seek instant gratification—or the elusive promise of it—and chances are you’ll find a crowd there ahead of you. Long-term orientation interacts well with customer obsession. If we can identify a customer need and if we can further develop conviction that that need is meaningful and durable, our approach permits us to work patiently for multiple years to deliver a solution.

• Our pricing objective is to earn customer trust, not to optimize short-term profit dollars. We take it as an article of faith that pricing in this manner is the best way to grow our aggregate profit dollars over the long term.

• Start with customers and work backward. Listen to customers, but don’t just listen to customers—also invent on their behalf.

• Our technologies are almost exclusively implemented as services: bits of logic that encapsulate the data they operate on and provide hardened interfaces as the only way to access their functionality. This approach reduces side effects and allows services to evolve at their own pace without impacting the other components of the overall system. Service-oriented architecture—or SOA—is the fundamental building abstraction for Amazon technologies.

• To paraphrase Arthur C. Clarke, like any sufficiently advanced technology, it’s indistinguishable from magic.

• Doing it proactively is more expensive for us, but it also surprises, delights, and earns trust.

• Take a long-term view, and the interests of customers and shareholders align.

• As I write this, our recent stock performance has been positive, but we constantly remind ourselves of an important point—as I frequently quote famed investor Benjamin Graham in our employee all-hands meetings—“In the short run, the market is a voting machine but in the long run, it is a weighing machine.” We don’t celebrate a 10 percent increase in the stock price like we celebrate excellent customer experience. We aren’t 10 percent smarter when that happens and conversely aren’t 10 percent dumber when the stock goes the other way. We want to be weighed, and we’re always working to build a heavier company.

• Prime Instant Video is experiencing tremendous growth across all metrics—including new customers, repeat usage, and total number of streams. These are output metrics and they suggest we are on a good path, focusing on the right inputs.

• Well, I’m pleased to report that Amazon hasn’t been monogamous in this regard. After two decades of risk taking and teamwork, and with generous helpings of good fortune all along the way, we are now happily wed to what I believe are three such life partners: Marketplace, Prime, and AWS.

• Maintaining a firm grasp of the obvious is more difficult than one would think it should be. But it’s useful to try. If you ask, what do sellers want? The correct (and obvious) answer is: they want more sales. So, what happens when sellers join FBA and their items become Prime eligible? They get more sales. Notice also what happens from a Prime member’s point of view. Every time a seller joins FBA, Prime members get more Prime eligible selection. The value of membership goes up. This is powerful for our flywheel. FBA completes the circle: Marketplace pumps energy into Prime, and Prime pumps energy into Marketplace.

• To invent you have to experiment, and if you know in advance that it’s going to work, it’s not an experiment.

• Outsized returns often come from betting against conventional wisdom, and conventional wisdom is usually right.

• We all know that if you swing for the fences, you’re going to strike out a lot, but you’re also going to hit some home runs. The difference between baseball and business, however, is that baseball has a truncated outcome distribution. When you swing, no matter how well you connect with the ball, the most runs you can get is four. In business, every once in a while, when you step up to the plate, you can score one thousand runs. This long-tailed distribution of returns is why it’s important to be bold. Big winners pay for so many experiments.

• We want Prime to be such a good value that you’d be irresponsible not to be a member.

• There’s a good chance you’re already one of them, but if you’re not—please be responsible—join Prime.

• Frustration-Free Packaging is a customer delighter because the packages are easier to open. It’s good for the planet because it creates less waste. And it’s good for shareholders because, with tighter packaging, we ship less “air” and save on transportation costs.

• There are many ways to center a business. You can be competitor focused, you can be product focused, you can be technology focused, you can be business model focused, and there are more. But in my view, obsessive customer focus is by far the most protective of Day 1 vitality.

• No customer ever asked Amazon to create the Prime membership program, but it sure turns out they wanted it, and I could give you many such examples.

• Second, most decisions should probably be made with somewhere around 70 percent of the information you wish you had. If you wait for 90 percent, in most cases, you’re probably being slow. Plus, either way, you need to be good at quickly recognizing and correcting bad decisions. If you’re good at course correcting, being wrong may be less costly than you think, whereas being slow is going to be expensive for sure.

• One thing I love about customers is that they are divinely discontent. Their expectations are never static—they go up. It’s human nature. We didn’t ascend from our hunter-gatherer days by being satisfied. People have a voracious appetite for a better way, and yesterday’s “wow” quickly becomes today’s “ordinary.” I see that cycle of improvement happening at a faster rate than ever before.

• Understanding this point is important because it keeps you humble. You can consider yourself a person of high standards in general and still have debilitating blind spots. There can be whole arenas of endeavor where you may not even know that your standards are low or nonexistent, and certainly not world class. It’s critical to be open to that likelihood.

• What do you need to achieve high standards in a particular domain area? First, you have to be able to recognize what good looks like in that domain. Second, you must have realistic expectations for how hard it should be (how much work it will take) to achieve that result—the scope.

• Unrealistic beliefs on scope—often hidden and undiscussed—kill high standards. To achieve high standards yourself or as part of a team, you need to form and proactively communicate realistic beliefs about how hard something is going to be—something this coach understood well.

• We don’t do PowerPoint (or any other slide-oriented) presentations at Amazon. Instead, we write narratively structured six-page memos. We silently read one at the beginning of each meeting in a kind of “study hall.” Not surprisingly, the quality of these memos varies widely. Some have the clarity of angels singing. They are brilliant and thoughtful and set up the meeting for high-quality discussion. Sometimes they come in at the other end of the spectrum.

• Beyond recognizing the standard and having realistic expectations on scope, how about skill? Surely to write a world-class memo, you have to be an extremely skilled writer. Is it another required element? In my view, not so much, at least not for the individual in the context of teams. The football coach doesn’t need to be able to throw, and a film director doesn’t need to be able to act. But they both do need to recognize high standards for those things and teach realistic expectations on scope. Even in the example of writing a six-page memo, that’s teamwork. Someone on the team needs to have the skill, but it doesn’t have to be you. (As a side note, by tradition at Amazon, authors’ names never appear on the memos—the memo is from the whole team.)