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Feb. 26, 2021

How To Pattern Your Success After Amazon With Steve Anderson

How To Pattern Your Success After Amazon With Steve Anderson

In this episode, Andy interviews Steve Anderson, author of The Bezos Letters - 14 Principles to Grow Your Business Like Amazon.

Listen as Steve shares the 14 Principles that have driven Amazon to becoming the fastest company ever to reach $100 billion in sales. Learn and discover how you can apply these same principles to supercharge your own growth.

In addition, discover what lessons Andy Splichal took from reading the book with insights geared toward eCommerce businesses including why it is essential to obsess on your customers.

Steve Anderson is a sought-after speaker and influencer. He is the author of the bestselling book, The Bezos Letters where he reveals 14 principles for business growth based on the ideas and patterns that emerged when he examined Jeff Bezos’ 21 annual letters to Amazon shareowners.

Episode Action Items:

You can reach Steve through his website www.thebezosletter.com and request a free assessment to see if you are on the path to grow your business like Amazon!

ABOUT THE HOST:

Andy Splichal - Make Each Click Count PodcastAndy Splichal is the World's Foremost Expert on Ecommerce Growth Strategies. He is the acclaimed author of the Make Each Click Count Book Series, the Founder & Managing Partner of True Online Presence and the Founder of Make Each Click Count University. Andy was named to The Best of Los Angeles Award's Most Fascinating 100 List in both 2020 and 2021.

New episodes of the Make Each Click Count Podcast, are released each Friday and can be found on Apple Podcast, iHeart Radio, iTunes, Spotify, Stitcher, Amazon Music, Google Podcasts and www.makeeachclickcount.com.

Transcript

Andy Splichal  0:02  

Welcome to the Make Each Click Count Podcast. This is your host Andy Splichal. And today I'm being joined by a special guest who has written a very insightful book. This guest has spent over 35 years shaping the insurance industry through a deeper understanding of emerging technologies and how businesses today can be best integrated and leverage them. He is a sought after speaker and influencer. He is the author of the best selling book The Bezos Letters, where he reveals 14 principles for the business growth based on the ideas and patterns that emerged when he examined Jeff Bezos' 21 annual letters to Amazon to shareholders. A big welcome to Steve Anderson. Hi, Steve.

 

Steve Anderson  1:36  

Andy. Hello, thanks so much for having me on.

 

Andy Splichal  1:39  

You're welcome. Now, before we dive into today's topic, which is how to pattern your success after Amazon, Let's first hear your backstory. And what ultimately led you to doing what you're doing now? 

 

Steve Anderson  1:51  

Sure. So I've spent my career working with the insurance industry early on selling insurance to commercial clients, businesses, and through that really developed a real interest in technology, and specifically, how can we use to streamline operations and increase sales 25 years ago, I started my own business focusing full time on that in research, writing, speaking and consulting in that arena. And I think it's that that kind of started me on this path of really examining with the continued rapid development of technology. I started asking the question is the biggest risk businesses face actually not taking enough risk? And so I started researching that question, looking at companies who had not done it. Well, some names probably familiar. Blackberry, Blockbuster, Kodak, Sears, lots of examples there. And companies who had done it well, and that's where I came across Amazon, obviously knew of them and Bezos but became very intrigued with his writing and and what he talked about in his shareholder letters.

 

Andy Splichal  3:16  

That's great. Ya know, that's, that's very interesting as far as where companies fail, because it didn't take risk. I think  Blockbuster like you had mentioned probably is maybe the poster child, maybe that your sequel?

 

Steve Anderson  3:29  

Yeah, that might be exactly what happened, right? Yeah.

 

Andy Splichal  3:33  

So you explain where you got the idea for the basil sweaters. But I mean, correct me if I'm wrong, you've never worked at Amazon, right?

 

Steve Anderson  3:41  

I have not. No, spend a lot of money with them, but never never got money from them. So 

 

Andy Splichal  3:47  

I think we always all spend money and a lot of money with Amazon. Do you? Do you ever get the question from people? I mean, I think it would be common, where they might ask what what makes you qualified to write a book on Amazon if you don't have it?

 

Steve Anderson  4:02  

Absolutely and, and, you know, as as the idea of Amazon and what Bezos talked about, and you know, what I came out with or develop the growth principles. I couple things one is my perspective from a risk taking perspective, I think was unique, I think to is there were an are a several really good books from insiders talking about Amazon from 2013. I think Bradstone kind of the history of Amazon and how it grew. I think there's a different perspective, looking from the outside in and really analyzing what Bezos has written and I did certainly the letters were the core piece of that, but I, I believe if I looked at read, watched pretty much every interview I could find, with Bezos talking about it and then was able to distill that into what eventually be came the book that was published.

 

Andy Splichal  5:07  

Okay, now, was it purely from the writings and different public interviews, books from people from Amazon? Or did you interview anybody here? 

 

Steve Anderson  5:17  

Yeah, I interviewed a few people. And, you know, I think my perspective, it became, you know, what can any business owner who doesn't have that inside track learned from Amazon, you know, are there things there that they can apply to their own business? And that's sort of the lens or the perspective that I decided to go with, you know, certainly, like many I could have gone through the trying to get interviews and all of that. But I felt there was something different about looking at really just generally available information about Amazon, and then extracting, or putting that into a format that any business owner could use.

 

Andy Splichal  6:02  

A great, now I see you have a best seller mark here, what has been the response?

 

Steve Anderson  6:08  

Well, actually really surprising to me. This was I mean, I'm not, you know, huge author or anything like that. But we were fortunate to be able to hit both the Wall Street Journal and USA to bestseller lists. And perhaps, you know, that's great, right, I certainly won't take anything away from that. But what's also really interesting to me is that the book is being translated into 17 different languages. There's been significant overseas interest around this topic. And I think that was even more surprises than the Wall Street Journal and USA.

 

Andy Splichal  6:50  

Great. So I just finished the book over the weekend here. And let me tell you, I mean, I thought it was fantastic. 

 

Steve Anderson  6:58  

Oh, thank you. 

 

Andy Splichal  6:59  

It was some great insights that I could apply to my company. I think that anybody who reads it could quickly have applicable lessons to their company. Let me tell you real quick what I got out of the book. 

 

Steve Anderson  7:12  

Sure.

 

Andy Splichal  7:14  

I got number one, the most important is obsess of your customers. Number two is create a flywheel. And number three is always remain in a day one attitude. Now, obviously, you know obsessing on your customer, not obviously, but it's easy to understand, obsessing on your customer. But can you explain that idea of creating a flywheel?

 

Steve Anderson  7:39  

I can. And what happened is Jim Collins, so the idea of the flywheel in business comes from his book that was published in the fall of 2001, I believe, or either 2000 or 2001. And he has a chapter in that chapter eight, which is called the doom loop the flywheel in the doom loop, where he goes into this analysis of businesses, right, that have gone from good to great, what made them able to do that, and what prevented businesses from making that transition. And it was the flywheel. And the idea here is that, you know, businesses when they understand their core, search for the right word and want to use their core purpose, or their core that they want to do. And then they look at all the inputs they have to put into their business to make that flywheel. Continue to spin. And again, the idea of the flywheel is is really hard to get going in the beginning. But once you get momentum there, it's easier and easier to keep it going. Well, how Amazon comes into the picture is that Bezos invited Jim Collins to a one day off site retreat with their senior leadership team and spent the whole day talking about the flywheel, and really helped Bezos and his team actually sketch out and there's a graphic that they find the Amazon site, etc. of, you know, what is Amazon's flywheel? And Bezos thought it was so important that he didn't want anybody to talk about Amazon's flywheel. And it was probably three, four or five, six years before people started talking about it. But for let me explain kind of how for Amazon this works. In the in the center of that flywheel is growth. And Bezos has been focused on growing Amazon. You know, from the day he was on his hands and knees, putting books in packages and driving them to the post office, you know, literally up until today. So that was the that was the key. So what drives growth at Amazon? Well, the first thing is customers He needed to get customers to the website and have them buy and have them have a great experience with that process. So they would tell their friends and others about it, which would bring more customers in. So that's one piece. The next piece is with more customers, he would have more leverage with manufacturers to get better pricing, more customers more sales, better deals, which then would lower the cost and attract more customers. So there you have two pieces to that. And then you add it in there in the early 2000s, the marketplace where they added third party sellers, on Amazon's, you know, very valuable real estate to sell that brought in more customers, because there was a wider selection, that also then obviously brought in more leverage and did lower prices and brought more customers because they could find what they wanted. And so the core of Amazon's flywheel is that even today? And so the question for any businesses, do you understand what the inputs you need to keep focusing on in order to get the results that you want out of your business? And I would say of the 14 principles, this is perhaps the most important one, but also the hardest to understand and implement, and keep going. Because the problem with a flywheel if any one of those spokes, or those pieces don't work well, that the flywheel suffers. And so it's hard. And there's no question about that.

 

Andy Splichal  11:49  

Now, I think you had a great analogy in your book comparing a flywheel to a revolving door.

 

Steve Anderson  11:55  

Yep. In a in a building, right that that door. Yeah. And again, you know how hard it is to get it going. But once it gets going, then you know, people can eat more easily come in and out. Absolutely.

 

Andy Splichal  12:06  

Now, I read your book on Amazon. And I ordered Jim Collins book, and I ordered it off of Amazon. Is that a mini flywheel?

 

Steve Anderson  12:19  

That maybe? Yeah, maybe. And I also should say, a Collins in 2019 actually published what he calls a monograph, just specifically on the flywheel and give some, it's only like 45 or 50 pages long. But get some excellent examples of how different types of organizations have used that flywheel concept in order to accomplish their goals. One of the more interesting ones to me is a elementary school principal. And I won't go into the full story there. But that's also a great resource to help people understand. Okay, what is it? And how can I use it my business?

 

Andy Splichal  13:00  

Well, that's great, I will have to check that out as well. The other piece that I really found informative, not sure if that's the right word instructional, on growing your company, I guess would be would be better. But is the philosophy of always remaining in day one.

 

Steve Anderson  13:21  

 Yeah. 

 

Andy Splichal  13:21  

Can you explain that? 

 

Steve Anderson  13:23  

Yeah, I can. And again, its core in terms of Bezos thinking. And in fact, you know, in his original letters of 1997, Amazon went public. And the first letter about 1997 came out in the spring of 1998. And that that's been typical for all the letters. And one of those concepts he talks about is that it's day one for the internet, and also for Amazon, if we execute well. And that day, one concept is, you know, is not a date. It's a mindset, it is walking into Amazon, or into your business every single day with the idea of, hey, this is the first day we opened. This is still startup. In fact, it's sort of hard to get your head around, but I believe Bezos and and the leadership, certainly at Amazon, believe that Amazon is still a startup. And they they try and act that way. Because they recognize that without that mindset, then you you start moving into that slow slide like Blockbuster into irrelevance. And so, he talks about this a lot in the 2016 letter, and he talks about a question he got from a employee at a All hands to be meeting so that employees can ask him questions, and he'll be on stage and answering those questions. And so the question was, Jeff, what is day to look like? And he goes on to quote, You know what, what he says, you know, it's something I've thought about. But he answers that question. With this, Day two is stasis followed by irrelevance, followed by excruciatingly painful decline, followed by death. And that is why it's always day one. And again, some of those Kodak's and Blockbusters as Blackberry, I think we can maybe see some of that progression. He goes on to say, it could take 20 years, it's not something that necessarily will happen right away. But once you start down that slide, it's really difficult to reverse course. But he also goes on to say, and I think this is really insightful, that he says, I'm interested in the question, how do you fend off day two? So how do you stay day one. And what he identifies is four items or essentials for day one defense, they are customer obsession, skeptical view of proxies. So again, brief explanation, their proxy for Bezos is a procedure or something you do in your business. That becomes the the overriding rule, not a guide to how we operate. And so, you know, many of us may have had the experience with customer service, or procedures don't allow that right adjustment or a problem or something to be fixed. So that's a skeptical view of proxies. Third is eager adoption of external trends. And I think, again, back to my technology view, that's so important today, because there are so many things impacting how businesses operate. And certainly, we've seen that over the last year and 2020, with the pandemic. And there are all kinds of trends that were already in play, they already had started. But last year, so many of those trends were accelerated significantly. So eager adoptions of those trends, not, oh, we can't do that. And then number four, is high velocity decision making. And again, he talks a lot I one of my principles is generate high velocity decisions. Because at Amazon, that's, again, a key for them in terms of their ability to be agile and adjust on the fly. And again, we saw that last year, certainly a year ago, almost now, you know, when the pandemic hit, that they weren't caught, surprised as everybody else was. And their ability to make decisions quickly, was one of the reasons they were able to recover quickly. Also, you know, delivery and of crush of orders, right, all those kinds of things, but they were able to respond.

 

Andy Splichal  18:15  

Sure, yeah. No, I mean, all those are just great points for any company wanting to grow. You know, another piece or reason why I really enjoyed your book and why I think listeners can really take a lot out of it is the way you kind of intertwine stories about Amazon into the different principles of Amazon. And one of the stories that really stuck with me and you had mentioned a second ago was when Jeff Bezos was packing letters on earn packages on his hands and knees. And he said, you know, why don't we get kneepads?

 

Steve Anderson  18:52  

 Yeah, my knees are killing me. We need kneepads.

 

Andy Splichal  18:53  

And then one of his employees said, what was let's get acpking tables?

 

Steve Anderson  19:02  

Yeah, we know we need packing tables, you don't need kneepads, we need to get off our knees and stand up and get Packing Tables. And he said, that's the most brilliant thing I've heard. And he, again, he went out to, you know, a home improvement home improvement store. And, again, that startup mindset not spending money we don't need to spend, he realized he could buy a solid core door and put four four by fours and some brackets and create a table. And that was his desk, and I believe still is his desk today called a door desk. And again, that's, you know, in the, in the, in the principle where I talked about maintain your culture that's communicates a lot of Amazon employees that those door deaths are still something at Amazon as a reminder of where they came from.

 

Andy Splichal  19:56  

Right. Yeah, no great story. Now at this point in the show, typically I like to play a game with my with my guest. Are you up for that? 

 

Steve Anderson  20:05  

I am. 

 

Andy Splichal  20:06  

Okay, well, the game goes like this, I say a word and you respond right away with the first word that pops in your head. So it is a word association game. But the question Do you want to answer Steve? Or would you like to try to answer is you think Jeff Bezos would he answer based on your book?

 

Steve Anderson  20:25  

Oh, that's interesting. That's an interesting one. Let me try. Let me try answering as I think Bezos might.

 

Andy Splichal  20:33  

Okay, let's do it. Now we'll do a baseline just three. And then we'll go into more business oriented terms. Are you ready? 

 

Steve Anderson  20:39  

I am. Alright. 

 

Andy Splichal  20:41  

Number one, run.

 

Steve Anderson  20:47  

Action, one of the leadership principles is default to action. 

 

Andy Splichal  20:52  

Stop

 

Steve Anderson  21:00  

This might not make sense for type one decisions. 

 

Andy Splichal  21:04  

So fun, fun.

 

Steve Anderson  21:06  

Fun. And I'm not doing one word I've realized that so that's part of what's hard. Great. One of his comments and his 97 letter was we're building something great. Something we can tell our grandchildren about.

 

Andy Splichal  21:29  

Now let's go a few business terms. Business 

 

Steve Anderson  21:34  

Exciting 

 

Andy Splichal  21:35  

Success

 

Steve Anderson  21:39  

Byproduct

 

Andy Splichal  21:41  

Family 

 

Steve Anderson  21:43  

Key 

 

Andy Splichal  21:44  

Email

 

Steve Anderson  21:51  

Important is the word that came to mind. Writing Writing is essential in Bezos world.

 

Andy Splichal  21:58  

 Promote 

 

Steve Anderson  22:08  

That's a harder harder one for me give me a second what would basis think

 

Andy Splichal  22:15  

You can pass if you'd like. 

 

Steve Anderson  22:16  

Actually no I won't, constant.

 

Andy Splichal  22:20  

Gratitude

 

Steve Anderson  22:25  

Essential

 

Andy Splichal  22:26  

Wealth

 

Steve Anderson  22:31  

Lottery. He he's talked about his quote, lottery winnings from Amazon.

 

Andy Splichal  22:38  

Clarity

 

Steve Anderson  22:49  

Decisions

 

Andy Splichal  22:51  

Growth

 

Steve Anderson  22:59  

I want to say key, but it's a bit more than that it you know, growth at Amazon allows them to obsess over customers.

 

Andy Splichal  23:13  

And finally, innovation.

 

Steve Anderson  23:18  

Secondary to invention.

 

Andy Splichal  23:21  

Quick question. Where do you foresee Amazon going from here in your opinion?

 

Steve Anderson  23:26  

Well, certainly is the news of Bezos stepping into a new role as executive chair and Andy Jassy, the current CEO of Amazon Web Services, going coming in to the CEO of Amazon overall, I think we'll see a lot of the same. But Jassy is not Bezos, but he's been there forever. And I think Jassy will continue a lot. And I think we'll see a lot more interesting, exciting things coming out of Bezos, when he has the time to focus, and where he likes to focus, which is three 5 10 years out and plan for that. So I think Amazon, there's some really interesting days ahead.

 

Andy Splichal  24:15  

What would you do if your phone rang one day and said, Steve, Hey, it's Jeff Bezos?

 

Steve Anderson  24:22  

Well, I probably

 

Andy Splichal  24:24  

How do you think the  converation would go?

 

Steve Anderson  24:25  

I probably would sit down and then you know, I, I'd love to I, There are a handful of questions that I would like to ask him if he's certainly open to that. I think the first one I would ask is you know, tell me about the process of writing the letters. So I'm convinced having studied the letters, having read them having read all of that kind of stuff that he he may not have done first drafts he may have dictate it. And that certainly could have changed over the years. But the final draft, I think, was him, I would say the exception to that is the 2019 letter, which seemed off to me in terms of tone, and typically what I would expect out of the letter, so And it'll be interesting to see, you know, what the 2020 letter will be like, as he transitions out of that CEO role. And I have to say, so, I share a love of space with Bezos. So I would actually really like to just chat with him about Blue Origin and, and what he what he sees as the future there for humans and space.

 

Andy Splichal  25:51  

And for the listeners that might not know can you explain quickly with Blue Origin is?

 

Steve Anderson  25:56  

Sure, be glad to in 2000, Bezos created a company called Blue Origin. And so if you know SpaceX and you know, Elon Musk, SpaceX with Elon Musk, Blue Origin was Jeff Bezos and Virgin Galactic with Richard Branson are, are the three are called The Space Barons, and they are creating a way to reduce the cost of getting into space. So that more and more in Bezos mind more and more manufacturing and those kinds of things can be done in space. And in Elon Musk mind, he wants to go to Mars. And Bezos doesn't agree with that. He says the Earth is the best planet we have, we need to protect it, and move some of these things into space.

 

Andy Splichal  26:44  

And let's talk about the free tool you offer at thebezosletters.com/growth.

 

Steve Anderson  26:52  

So what we did was create an assessment to help, you know, say, okay, the 14 principles they're in for cycles, tests build accelerated scale. But then what really question is 14 is a lot. So where should a business start? So the assessment is designed to help gauge your risk tolerance, and give you an indication based on that, what principles might work best for you first, so you can start somewhere and not be overwhelmed. It's free, and you get results from it. And hopefully, it's another way to not just read the book, but actually take action on some of the thoughts and concepts in the book.

 

Andy Splichal  27:39  

A great, where is the best place to order your book? And again, the book is The Bezos Letters.

 

Steve Anderson  27:45  

Yep, the Bezos Letters - 14 Principles to Grow Your Business Like Amazon, and obviously on Amazon. Frankly, it's available at your favorite bookseller, wherever that might be.

 

Andy Splichal  27:56  

Okay, and just again, a shout out. I thought your book was excellent. I would give it absolutely five stars and encourage anybody who wants growth in their business. To to read it. It's a fairly quick read. It's very entertaining. It's yeah, it goes quick and extremely informative.

 

Steve Anderson  28:15  

Good. Thank you. I appreciate that. 

 

Andy Splichal  28:16  

Now, 

 

Steve Anderson  28:17  

And you know that we've got over 300 reviews on Amazon and an average of 4.6 out of five.

 

Andy Splichal  28:23  

Yeah, no wonder Yeah, no, it's very good. Now, let's talk about if somebody wants to learn more about you as a speaker, or just your contact with you in general. 

 

Steve Anderson  28:34  

Yeah. So you mentioned the the assessment on the website. There's lots of other information there, including some material to help you workbook and a few things like that, again, tools to help you take just what you've read and actually incorporate it, but that's thebezosletters and letters is plural .com. And you can contact me from there and get more information.

 

Andy Splichal  29:02  

Fantastic. That's all the questions I had for you today. Is there anything that I might have omitted that you would like to add before we wrap it up?

 

Steve Anderson  29:11  

Yeah, just a couple couple minutes. I do want to go back to obsess over customers. Because I think you're right. At one level, it's obvious and the business says no, they need to take care of customers. But the word obsess is Bezos word. And he used it the 97 letter, original letter, and it's just a different level or different different emphasis or different focus. And one of the things Bezos talks a lot about and kind of back to my comment about innovation and invention, but he talks a lot about inventing on behalf of the customer. And that all comes from really thinking customer first and everything that they do, so just don't assume Um, you've got that concept, but think about what would you do if you're obsessed over your customer?

 

Andy Splichal  30:07  

You know, thank you for throwing that in. That's definitely, probably I would think maybe the number one point of your book is to obsess over the customers and have grow. 

 

Steve Anderson  30:18  

Yep, I agree. 

 

Andy Splichal  30:20  

Well, great. Well, that is it for today. Remember, if you liked this episode, please go to Apple podcast and leave an honest review. And if you are looking for more information regarding Steve Anderson and his book, The Bezos Letters, you can contact Steve through his website, thebezosletters.com/growth. I will also put that into the show notes. And addition for those of you out there using Google ads, I just released my newest book make each click count using retargeting. You can go to www.makeeachclickcount.com to access all my books, and to check out my podcast library archive. In the meantime, remember to stay safe keep healthy and happy marketing and I will talk to you in the next episode.