LMSM 24 | Age Of Amazon

 

We’re suckers for a good “rags to riches” origin story of a scrappy founder stepping out into the abyss. What makes the story of Jeff Bezos and Amazon so intriguing is how comfortable Bezos had it when he went all-in on this company. In this first part of two episodes, Frank and Ian work through the early days of Amazon and find dozens of parallel lessons for any ambitious person looking to build a career.

“The Everything Store” is a fascinating look into an American business icon and we break down every juicy bit in this two-part series.

Watch the episode here:

Listen to the podcast here:

“The Everything Store – Jeff Bezos And The Age of Amazon” – Part 1

To all of our hundreds and hundreds of handsome and gorgeous fans and the three ugly ones, we’d like to say thank you for reading The Everything Store, which is a fantastic book about the story of how Jeff Bezos built Amazon. This is part one. We talked about this so damn long that we had to cut it into two episodes. This is the beginning of Amazon. We appreciate all of you as subscribers. If you’ve not subscribed, please hit that subscribe button. If you like our show, please help us share it. Get the word out.

Frankie, we are talking about Amazon. What better topic to talk about? We are experts in Amazon because we have eleven boxes on our porch every day when we come home from work or that makes us experts. Jeff Bezos announced that he is stepping down as CEO and taking an executive chair position to focus more of his time on philanthropy and also on big initiatives for the company. Jassy, who currently runs AWS. Sixty percent of their net income is coming from their AWS division, which is basically outsourcing your cloud to Amazon, which to me, seems pretty dangerous. Regardless, that’s where a lot of their profit comes from. Jeff Bezos is out and one of our favorite books that we’ve talked about many times is The Everything Store, which is a biography on Jeff Bezos but it’s the story of how Amazon was created. It’s an influential book to say the least.

LMSM 24 | Age Of Amazon

The Everything Store: Jeff Bezos and the Age of Amazon

There’re a few things I think are relevant to talk about with this book. In addition to that, Ian put the outline together and then I went through the book. I was double-checking what I had highlighted versus what he thought was podcast-worthy. There’s about 80% overlap. A lot of the things that you thought were relevant, I thought were relevant and worth sharing, or were impactful to me as a business owner.

The other thing of this is how slowly both of us read this book. This book took me six weeks. It’s 300 pages. I can get through a 300-page book if I’m really focused in a weekend. A Stephen King book you can devour on an airline flight. This is a similar length. This book is getting an exposé into a great coach and you want to listen to how did Belichick do it or how did Saban do it? It’s someone who’s at the pinnacle who’s reached a place that very few people have reached. Because of that, you take everyone very seriously.

There’s some level of stealing. You’re getting inside the brain. This is an unauthorized biography if well written but Bezos didn’t sit down in front of a microphone and record this. This was someone going and scraping it out of other people’s heads and putting it together. It’s done an elicit look but it’s close to that of being inside someone’s brain who has dominated business in the 21st century. It’s serious. It’s not something that’s flipping that you just fly through. It can be a roadmap if you want it to be. You and I both looked at it from that perspective. This is pretty cool but it’s also heavy.

What we’d like to do with this episode and it’s probably going to end up being a couple of parts. The hard part for me in putting an outline together of The Everything Store is it almost would become an audiobook. I read the whole book.

A nine-hour audiobook.

There are a few pages that aren’t impactful to me. I could only read about 10 to 15 pages of this at a time, maybe 30 to 45 minutes because it was so heavy. I found myself underlining half of what I was reading and taking pictures and snapshots of things everywhere. It’s like an MBA course slapped into 300 pages. It’s a blueprint of how to start out of your garage and become the richest man on the planet. It’s really wild.

The only place I didn’t do tons of underlining is want to talk about his dad, the unicycle-riding juggler. I found that fascinating, but I didn’t know how that was applicable to my life.

Probably wasn’t.

If you ever met me at being on a unicycle is not my best look.

It makes you feel even more worthless that you and I had pretty hard working and good examples of dads who were always around and this guy had a unicycler dad who left him when he was a kid, and he still did better than us. It’s embarrassing. We had every advantage over Bezos and we let him off the hook. For me, another reason why I found myself very engaged in The Everything Store is I’m involved in a tech startup. I’m an equity investor as you are, and David, the CEO, and I were building a product and our number one competitor is going to be Ring who is owned by Amazon.

I found this book an opportunity to dive into the dealings because they get into a lot of how they compete with people. They are ruthless, cutthroat organization, negotiate hard, and tough on people. I learned a lot. It was hard for me not to take pictures of pages and send them to David who’s pounding key and say, “Check this out, we need to think about this.” It started a lot of good conversations with us. Part of the reason why I’m so focused on this is they are about to become a very big competitor of mine.

One of the things we did that was cool is we sat in my house. I ordered some food, we had coffee, and drinks and I have my leadership team watch The Men Who Built America. On the show, in 150 years is going to have Jeff Bezos in it because it’s going to build the next America. Bezos is not too dissimilar from a Carnegie, a Rockefeller, or a Vanderbilt dominated. When the movie The Social Network came out, it said, “You can’t have 500 million friends without making a few enemies.” Do you remember that when that movie came out?

Yes.

That’s part of this. It’s a cool business story but they put their foot on competitors’ necks and they crushed them. What I think is interesting is as harsh, unforgiving, and unrelenting as they were towards competitors. They were equally compassionate towards customers and as excited about doing the right thing for a customer. I’ve spent $30,000 in one sitting on Amazon. I bought a bunch of tech. Literally, sit down and your cart is $30,000, and you hit the button. That’s a huge order.

Without ever meeting anyone or talking to another human.

Doing all of it over a computer interface. If someone would transport here from the ‘50s, they would think you’re absolutely nuts. It showed up two days later and everything was perfect. It’s unfathomable what they’ve been able to do. Being so competitive but also being so good to your customer is that weird juxtaposition that sets them apart.

Frank, this is a sidebar because you brought it up. They get into the early days of the internet in the early ‘90s. Do you remember the first time you put your credit card in online and how stressed you were? I don’t remember what I bought but I remember how many people I talked to say, “Are you sure? My credit cards not going to get millions of hands around the world? I don’t have any money.” I was so scared to put my credit card online. Now, you wouldn’t think twice. If anyone asks, you give it.

I don’t have that exact memory but I have this memory. Remember, Marty McFly ends up in 1955 and can’t figure out how to open a coke bottle? Everything is no longer the world he’s used to being in. I remember I came home from work and Nicole had sent me a CD. It was a CD from Metallica and it was at my doorstep with a note. I remember sitting there and pondering what happened. I’m like, “Ian and Nicole are my least tech-forward friend in the first place.” Secondarily, this thing shows up with a note at my doorstep. It’s 1998 or ’99 and I’m like, “What the hell just happened?” I remember thinking like, “This is fundamentally very different than anything else.” I looked at it and I was like, “How did Jeff pull this off?” I gave him such incredible credit because it was something so different than what life was like then.

When you think about the technology that changed, I remember one of the craziest moments for me. The first person I ever received a picture on a phone from was Neal. These were the old flip phones and they were probably Nokia’s or Motorola’s. The flips that you had to pull the antenna out. My phone had the ability to send it, but I didn’t know how it worked because it was hard back then. I got a random image of Neal chugging a beer. He sent it to me and I remember being like, “What alchemy is this?” “How did you pull it off?” “This is nuts.” I remember thinking to myself like, “This changes so many things. We can send pictures and videos to each other.” It changed communication in my eyes.

Let’s get back to The Everything Store. Number one, the outline early in the book, they talk about this, and you said it. It’s in the whole book. You can’t get away from how nuts Bezos is about the customer. A great quote that he has early in there, one of his Jeffisms is, “If you want to get to the truth about what makes Amazon different, it’s this, we are genuinely customer-centric. We are genuinely long-term oriented and we genuinely like to invent. Most companies are not those things. They’re focused on the competitor rather than the customer.” It’s an awesome quote. He goes on to say very few companies have all of these elements that think long term, that likes to invent, and are customer-centric have all three. Throughout the entire book, he proves over and over again that he will ruffle any feathers he needs to like employees, suppliers, competitors, and industries to focus on all three of those things.

Be long-term oriented and invent! Click To Tweet

My notes were incredibly similar to what you said. They were effing relentless with the competition but they were so unbelievably wound up making sure the customer believed them. You used the word alchemy. If you ever look at a Steve Jobs movie or biography, he’s always like, “We’re changing the world.” I always thought that was so arrogant like, “You put a computer on your desk.” I didn’t understand how to use an Apple product when it was changing the world to a degree. To me, it was an expensive paperweight or like a crappy green screen. I didn’t get it as a little kid but as a 20-something-year-old adult, I realized with Amazon that they are changing the world and they physically have.

I was having a conversation with somebody and they were talking about how incredible Amazon is. After COVID, you didn’t have to go to the grocery store. Everything showed up at your doorstep. In a world where we needed to be locked in houses, if we didn’t have Amazon, we would have all come to hell in a handbasket. Instead, these magical little packages will show up a couple of times a day with all your necessities in them. You’d go outside with your bleach, pick it up, walk inside, and then all your sustenance was there. It magically showed up but creating that magic takes a lot of work.

It makes sense for everyone to say, “Why can’t you be more customer-centric like Amazon?” In most companies where you work, you’re not going to find anywhere near that level of customer focus. The reason is Bezos went a decade without making any money. Not even just not making money but losing extraordinary amounts of money. It’s incredible but I don’t know if there’s another decade where he could have started it and done as well because there was so much easy money.

Multiple times in the book, they talk about how Jeff was so focused that you would get chastised if you called the company Amazon in the ‘90s. You had to say Amazon.com because that’s the only way he could keep drumming up new money and getting people to invest in the stock or getting new investors. Anything that said dot-com in the ‘90s, people threw money at. I don’t know if in nowadays world, you can lose money that long by saying dot-com and get away with it. He got away with it because they were a bubble company. He knew what he wanted ten years but I don’t know if you could get away with people giving you as much money as he needed to create what he created, to be that customer-focused, and lose money that long.

There’re three incredible things here. Comparing myself to Amazon or my business to Amazon is fool-hearted but I’ll draw parallels. Customer-centric is a huge thing where the customer is always right. In my business, we try and do that. We build houses and we serve as houses. We are trying to be customer-centric. Genuinely long-term oriented. We, in my business, have constantly not taken a profit now to realize that profit later. What does that look like? We hold houses we can easily wholesale and we keep them as rentals.

We make a fraction of that money annually but the beauty is years later, I’ve got a ton of assets that I’m holding on to that have changed the course of my life and my business’ future because we were long-term oriented. Not nearly on the scale of what Amazon did. Where we diverge is genuinely liking to invent. This is one of the themes for me throughout this. If you look at the men who built America in the 21st century, I think Bezos, Elon Musk, and Mark Zuckerberg. Those are the names that come to mind quickly for me. When that television program comes out 100 years from now, they’ll be the ones on it. Steve Jobs too to a degree and Bill Gates but what I think is unique is I get a great performance out of my people. I have awesome employees who give me incredible effort and work hard.

What I am struck by with these types of business books and business stories is that when people are bending the spacetime continuum and they’re changing the world the way Apple did in the ‘80s, ‘90s, and 2000s, the way Amazon, and Facebook did, people put in different levels of effort because they realize they’re committed. There’s a huge upside but there’s something to it. I can’t relate to that because my business provides shelter. What he does is he invents and changes. I reaped the benefits of that. All of us reap the benefits of those inventions, but I think you can do different things with people when you’re inventing, and you’re literally changing the course of history. It gets a different performance out of people.

There’s a different sense of mission if you’re creating the first sustainable electric battery car company. Look at the people Musk is hiring in his SpaceX. Look at the brains he’s hiring. The intelligence surrounding everyone and what they’re trying to solve. If you haven’t done it, go YouTube, where Musk walks you around the SpaceX plant. It’s unreal he created it from scratch. When you talk about pushing people, though, because of that sense of mission Musk did a conference call on Clubhouse. Someone was asking him about his health because the guy had multiple mental breakdowns. He pushes himself so hard. They were asking him, “Where do you sleep? You’re famous for sleeping in the shop all the time. Do you have a conference room that you set up?”

He’s like, “No, I don’t want to be comfortable. When I sleep at the factory, I go out on the floor so everyone can see me sleeping on the floor like a bum. I want them to know I’m suffering because I know I’m pushing you hard. I don’t want you to think I got some cushy setup.” He’s dead serious about this. If you ask people from other companies like, “Sleep here tonight.” They’d be like, “Go to hell, we’re selling real estate,” but there’s a mission. We’re in a race to change history that people get caught up in and they get excited. Over and over, you hear that and in The Everything Store. He’s able to ask more people because of how revolutionary the mission is.

I want to ground how revolutionary this mission is. I can’t think of a stodgier, slower-moving, less adaptive branch of government than the post office. Is there one that stodgier, slower-moving, or less adaptive?

No.

Speaking of non-customer-centric, when was the last time you’re either at the DMV or the post office? Talk about a waste of an afternoon. We’re going to talk about this through negotiation. Somehow, Amazon convinced the post office to deliver not only Amazon packages, but I’ve had a post office truck pull up to my door on Sundays. I have no idea what negotiation that is, but they got the post office, at least the vehicles, to drive through your neighborhood and drop off a package on a Sunday. For those of you that are young that don’t remember that, it’s taking everything you’re absolutely certain of and changing it.

One thing that I love about books like this is following the journey and seeing at what point in their journey did they diverge from mine. Bezos was a good and smart student. He’s well recognized, but he wasn’t Beethoven. He was smart and he was recognized as higher average intelligence but there are millions of kids like that. He was smart and did get a great job at a hedge fund, was paid really well, performed well, got promoted quickly, and was seen as someone with a lot of potentials. When I’m reading a book like this, I’m like, “I could have done that. I could have got a job at a hedge fund. I probably would have got promoted pretty quick. I might even be faster at that point,” but there’s always a point in these books where I go, “No, I wouldn’t have done that. There’s no way.” I’m always interested in where the divergence happens. I’m also fascinated by how the first five years of your career form so much of who you are for the rest of your life. Warren Buffett always goes back to his internship with Graham. He always talks about it.

The paper route and then Graham.

After a few hours in the office, he couldn’t even get a full-time job there because he wasn’t Jewish. The guy wouldn’t give him a job. It was like an internship. He comes back to that all the time because when you’re young, everything you learn is so important. You feel like that first sale you make with a customer, you climbed a mountain. Everything you do feel is more important than it is.

I’ll have some fun with this first at my own expense. Biographies or autobiographies that I read where I have an immediate divergence. The history of Guns and Roses or a book about huge rock stars, the lavish parties, the heavy drug use, the incredible women like, “I am out. They’re not talking about me anymore. That’s a completely different thing.” Tiger Woods is hitting golf balls in his garage until midnight when he was four years old. These are things that I never did. Larry Bird being out in the rain, shooting free throws for hours. There’s a lot of that but the foundational skills are so important. I talk all the time about my high school football coach, Outback Steakhouse, and I don’t talk about the last seven years at NVR. I usually talk about the first 5 or 6 because those are the things that set the frame for the rest of my life.

LMSM 24 | Age Of Amazon

Age Of Amazon: You can’t have half a billion friends without making a few enemies.

 

You and I have talked about this many times, “I am much more GE than I am NVR.” GE in 5.5 years made 80% of the impact of who I am as a manager, a leader, and a business person than NVR ever did. That’s not to rip on NVR. I liked the culture of NVR. I was who I was by the time I got to NVR and I didn’t change a lot. I changed in little ways but not big ones. It’s hilarious when you bring that up. I can remember sitting with my son on a couch and he’s a little guy. I remember watching a 30 for 30 on Wayne Gretzky. A documentary around Wayne Gretzky and he’s getting interviewed and he’s like, “When I was three, I’d get up, I’d play hockey for two hours before school, and then we played until the sun went down.”

I remember listening to that and being like, “I can’t be Wayne Gretzky. He’s already so behind.” I already don’t recognize who Wayne Gretzky is. Some people, when they’re four years old, start reading the biography and you’re like, “They passed me at four. They’re already better than me at four.” Bezos at 30 is not ahead of me at 30 or maybe 27, 28, but quickly after that, he surpasses where I’m at. This time he spent on the hedge fund, his interview process, and focused on finding talent. It’s where he started asking a lot of crazy questions.

He would ask people how many fax machines are there in the United States when he was at the hedge fund and he brought that out to the West Coast to the tech industry. By and large, I hate those stupid questions. “If you were shrunk down to miniature size and thrown in a blender, how would you get out?” “Why are tennis balls fuzzy?” “How many fax machines are there?” My opinion is, that’s an interviewer trying to show you how smart they are and not trying to learn anything. I don’t know if you do use any of those dumb ask questions, Frank, because if you do, I’m sorry if I offended you.

I’m a big Zappos fanboy. I met Tony Hsieh in 2009 and it’s relevant here because Amazon buys Zappos. One of the things that they talked about was that they asked some inane, dumb ass question about manhole covers. Maybe one of the themes that’s in this book is they’re doing dumb shit. This is dumb shit that becomes a reality. Because they’re doing that, maybe it lines up for them. It’s part of their culture. It makes sense. For me, it doesn’t. I don’t believe in that question. I think it’s dumb, but they’re all smarter and richer than us, so there’s something to it, but culturally it doesn’t fit me and my business. It doesn’t fit what we do. We avoid those things.

“Because Amazon did it, we’re all going to do it,” but did it really help Amazon or is it some throwaway thing? There’s a number of those things we’re going to get into that are urban legends about Amazon that the book undresses and says, “Let’s talk about that.”

The other part of it is this. You can mimic who Amazon is and you’re going to fail because you’re not Amazon, and you aren’t Jeff Bezos but you can look at what they’ve done and you can morph it to yourself. I think the mission and theme besides letting us have fun with our show is tare Talking about the things that have impacted us in a way that allows us to get somewhere. At the same time, the things that you look at like, “That’s not relevant for me.” We’ve been talking a lot about the Jerry Seinfeld podcast because it’s incredible. What you realize is how he takes a lot of the noise, pushes it to the side, and figures out how to make sure he’s taking care of the things that work for him.

What I want to go into and talk about is that the manhole cover or the fax machine questions are dumb. If it’s smart, call me up and tell me why. I don’t understand it but this is what I think is incredible. When he was at the hedge fund, he saw an opportunity for an everything store. He saw commodities and understood them and realize that books are a commodity. Did he want to be an online bookstore? No. The reason he chose to be an online bookstore is because it was a commodity that had an inefficient distribution. He knew that he could change the distribution. He saw that while he worked at the hedge fund. He left the hedge fund to chase after something because he saw a huge item in everyday life with massive inefficiency. Let’s talk about that.

Let’s talk about being somewhere, seeing something, and capitalizing on it. We’ve talked about this multiple times. You worked at GE, they grind you into the ground, but you learn six different business segments. You got an opportunity with a company that doesn’t work people as hard that needed you to learn a new business segment, and then basically do what you did 5, 6 times at GE in a new place. You stood out because of it. For me, I looked at an inefficient business with a bunch of people that run their business on the back of a truck and I said, “I’m getting into this space. I have a little bit of cash. I can do a lot of what these people do but I could do it better.” That, to me, is the magic sauce. It’s not fax machines. It’s seeing what you’ve done, giving you a distinct advantage over others, and how you can take advantage of that.

The skill you learned in NVR was scaling. How to grow, how to hire people, how to build a team that can get things done, and how to delegate. That’s a skill that 99% of people in the residential real estate market can’t do, so most of them cap out at how much impact they can make because they can’t scale. There are only so many hours they can work in a day where you’re very talented at building teams and getting things done through other people.

One of my absolute favorite things that I took out of this book and impacted me was how Bezos thought about his decision to leave a high-paying job. For the record, when he told his stepdad, who was a petroleum engineer for Exxon, “I’m leaving my job with a hedge fund.” His dad’s exact quote was, “What do you mean you’re going to sell books over the internet?” He saw this as a tremendous risk he should not take because his stepdad had been an engineer for 30 years at Exxon. The same company, stable benefits. What worked for him should work for Jeff.

I don’t know about your parents but when I told my parents, I did it after I left NVR. When I told my parents I left, they weren’t upset but the look on their faces was one of fear. I told them I left and they knew how much I made it NVR. They knew how much money I had. They knew how much authority I had. They knew everything. When I said, “I’m leaving, and I’m not sure what I’m doing next,” it made my dad sick to his stomach. He couldn’t imagine a 41-year-old stopping without something else and knowing what. I was confident I’ll figure it out, but it freaked my dad out. Bezos’ stepdad had the same exact reaction.

I remember when I quit. I did the same thing you did. I quit a couple of days before my birthday. My mom called to wish me a happy birthday and that’s when I told her I quit my job. I remember the phone went quiet and she was a bit scared. She asked me the same question you asked me. “Are you okay?” “Can you afford to live?” I assured her, “I’ve been thinking about this for a long time, it happened suddenly but I’m done. It’s the right move.”

There’s a reason why people who are good at writing things write commercials. There was a commercial when I was a kid and it was an American Express commercial. Like any American Express commercial, the older parents with graying hair have a son who wants to become a musician. This was a product where they allow you to save money or build for your retirement or whatever. The kid wants to be a musician and the mom asked the dad, “Isn’t this why we made these decisions in the first place?” The kid could take a chance. They had the money to support the kid and help the kid go out and do something crazy. What I think of with this is, of course, the parents question it, but to me, what good parenting looks like is instilling confidence in the children that the children can take that chance.

Our parents couldn’t take that chance because they did other things and made other sacrifices for us so we can make the chance. That’s the thing I thought of here. His dad would ask that question but as predictable as it is that his dad would ask that question, it was that predictable that Jeff will leave because he was given the tools and foundation to do it. We’re going to talk about who his first bankers were. They were his parents.

The thing is after his mom and dad got over that initial fear of, “You left a high-paying hedge fund job.” They were the first investors on Amazon.com. They were also the second investors. The first two rounds ever were funded by Jeff’s parents. What’s interesting is, as scared as your mom was, as scared as my dad was, who invested in some of our first real estate deals? In my second commercial real estate deal, my parents were like, “We’re in.” They wanted to get in on the deal to support me. Jenny’s parents wanted to get in on a deal because they wanted to be a part of it. Your dad has invested in multiple deals of yours, especially early with you.

We closed out that big 75-unit portfolio and I wrote handwritten cards to all of the people who invested. I wrote a card to my brother and one of the things I wrote in there was, “You and dad were there with me from the beginning.” Years ago, when I wasn’t positive that they were going to get paid back, they invested. It’s the other reason that I never went to people outside of the family. I wasn’t completely sure. I knew no matter what, I was going to be his son and his brother. I could overcome a loss. It’s a lot easier to overcome a loss than it is with a friend but that’s it. There are these things that happen in life. Good raising, a good environment, and stable people produce people who go out and do huge things. There’s another thing in here that comes up a little later about people who influence you. Your parents and the huge influences give you the crucible in which to grow.

In making that decision, parents aside, the way he looked at it, he calls it the regret minimization framework and I love this. His quote is, “When you are stuck in the thick of things, you can get confused by the small stuff. I knew when I was 80 that I would never think about why I walked away from my 1994 Wall Street bonus right in the middle of the year at the worst possible time. That kind of thing just isn’t something you worry about when you’re 80 years old. At the same time, I knew that I might sincerely regret not having participated in this thing called the internet that I thought was going to be a revolutionizing event.” It’s an awesome quote.

When you're young, everything you learn is so important. Click To Tweet

One of the greatest joys in my life was giving a toast at my sister’s wedding. Usually, the brother of the bride doesn’t make a toast but I blame it on the fact that they held their wedding on a Thursday. I used it as an asterisk in the toast, “I didn’t know if you knew this but the oldest brother of the bride makes a toast on a Thursday.” Everybody was pissed that the wedding was on a Thursday and they had to cut their week short. It was a funny thing.

One of the things I talked about is that someday, when I’m dying, if I’m fortunate enough, I’ll have one of these lightbulbs go off and think about things. For me, one of them is clearly around the relationship I have with my sister because she’s fourteen years younger than me, I didn’t have to have that relationship. I’m so thrilled that I do. Back to business, some of the other light bulbs that will go off for me all come into the fact that I quit something secure and build something of my own. That’s what he’s talking about here.

Steve Jobs had a different way of articulating this but in his biography written by Walter Isaacson, he talked a lot about this. It wasn’t a regret minimization. Warren Buffett uses the term the bathtub drain. You pull the bathtub drain and it goes down. He remembers all the good stuff and all the bad stuff goes away. We talked about Seinfeld, whatever it is, if you accomplish something of magnitude, there’s always sacrifice and you’re missing out on something. If you focus on the missing out part, you’re never going to get where you need to get because you’re going to get pulled in the wrong direction. You have to have blinders on, at least to some degree.

I have some regrets about businesses that I could have invested in that I didn’t. I look back and I think I should have done that. At that time, what was I spending my money on? What was I doing in business? Truthfully, when you work for a big company, I don’t know about you, but every year blends together. I can’t remember what years I hit my number, what the number was, what we actually accomplished. When you’re in the middle of it and you’re with your team, everyone thinks you’re doing something huge, but I look back, I don’t remember anything. What numbers I hit, what I did, but you do remember the risks you took.

I remember I’m glad that I don’t have to regret that I didn’t try something. If I stayed at GE for 30 years and never left, I would have had regret. I remember thinking that when I went out to DC that the money was so different. The opportunity to make money was so different. I remember having those thoughts, that regret minimization framework of, “Are you going to regret that you didn’t and you were scared. You wouldn’t be uncomfortable for a while to go see what you’re made of in another company.” “Take all of what you learned and go get it. Go take what you think you can go get out of that company.” I felt strongly this regret minimization of, “If I look back in 30 years, I will regret I didn’t take the job in DC and I stayed in safe General Electric where I was.”

We don’t need to rush through this bullet point. Let’s spend some time on it. Can you explain and can you recall what it was about leaving GE and moving to DC that caused you fear or caused potential regret? Let’s get into it. Let’s talk about it.

The regret I was scared of that when I look back in twenty years and say, “You left all your friends.” My parents lived in Michigan. They were a five-hour drive away. Jenny’s parents lived in Chicago. All kinds of family in the Midwest, all of our friends. We knew no one on the East Coast. We had no kids. We were young. We were having a lot of fun. It was less about the company and more about, “Are you going to regret moving away from all the people that you love and missing those prime years they go through?”

That’s been a challenge for Jenny and me many different times. You’ve left Florida, I left Detroit, then Jenny left Chicago. That’s a challenge. The opportunity wasn’t there for me in Chicago and Michigan. The opportunity was in DC. Opportunities I had in front of me don’t come around all the time and they don’t come around in the city that you want it to come in. You could wait a long time and not get anything close to it. My worry about the regret would be personally and not the regret the decade I lost with loved ones.

We’re going to get into the repercussions of that, but let’s get them all on the table. You had the moving away part. What else did you look at that could potentially be a regret if you took this opportunity?

Sunk cost. I got 5.5 years, I built a name, I have a strong brand, and I’m 27. I’ve already been promoted 3 or 4 times. They took good care of me. I’ve got to an executive-level ten years younger than most people and I’m going to go throw away all of that currency that I had. There was a part of me that was thinking, you’ve stacked a big stack of poker chips here and you’re just going to get up and walk away and go start playing craps. You’re going to quit playing the game.

I had learned this industrial world inside and out. I had learned our products inside out. Engineered technical, mechanical products, and I was leaving for a totally different industry and area. No network whatsoever. I knew no one in the company. To me, that was something. I was like, “Are you going to regret that you threw away all of that currency that you had built up within an organization and personal brand within the company?”

We had friends and family moving away from security. We have a sunken cost which is real. What were other potential regrets that you went through in your head? You moved to DC in 2006 or 2005?

February 2005 is when I started but we moved there in late 2004.

In 2005, I was 30. You were 28, 29 years old?

Twenty eight.

As a 44-year-old, you’ve got a lot of time behind you to let these memories and some of the pain fade. What else? Friends and family, the sunk cost, what were other things you thought that could be regrets?

One that worried me was I had an engineering degree from Purdue. That is not easy to get. I worked my ass off just to pass those classes and not switch majors halfway through. I sacrificed a lot towards the end of at least the second half of college, I bared down not as much early. A part of me was like, “You put all that time and effort in and no matter what happens, you’re going to be labeled a mortgage person.”

You don’t need a college degree to be in mortgage. When you’re going out to be a realtor, with what you do, you don’t need a college degree. The other part of me is, “You’ve worked hard to get into a great company, you have an engineering degree, you are an executive. Now, you’re going to put on your resume that you are a mortgage person.” Wrong, writer, or indifferent, in my mind, that’s not far away from saying you want to sell used cars. It’s not something that requires much of a background. It’s not an impressive thing to say to people.

I can tell you, for thirteen years, I never once told anyone I’m in a mortgage. If you asked what I did, I would say I’m a manager at a large home builder. That’s all I ever said. I would not say mortgage to save my life. My mom barely knew I was in mortgage. I did not talk about exactly what I did. A part of me was, “Are you going to regret being labeled a mortgage person after this because that’s not who you are?”

Friends and family were one, sunk cost was two. Not using your degree is three. What other things did you have to deal with?

Those are the three big ones.

This is what I like to do if you’re cool with this. I’d like to go back and deal with each one of those three. I want to ask two questions about each one of the three. Question one, how do you feel now about that? Question two, leaving friends and family. I’ll tell you what I mean because I don’t know how to ask it in a way that makes a lot of sense but I’ll explain it and then I want to talk about the callus you develop. The callus you develop is the skill. Calluses are not given. They’re given as blisters, calluses are earned. It’s a repetitive movement or repetitive skill that you deal with.

I’m going to use this as an example to get at the question I want you to talk about is this. In my life, I graduate from college with a degree in construction management and everybody goes into commercial construction like 99% of people go to commercial. The reason they don’t go to residential is I looked at as bullcrap. It’s not construction. Everything about it isn’t construction. I had a moment when I was 22 and 23 years old, about ready to graduate from college, where I’m like, “I don’t want to build structures. I want to build knowledge in basic business. I want to understand.” I then went to NVR, which was against the grain from all my friends, and I felt like an outcast. Professors made fun of me.

I was in construction and I did well on construction. I stopped what I was doing and I went into estimating. I lost all that forward momentum and I learned to like, “I’m going to go from being good at construction, I’m going to go in estimating.” Ninety days go by, you’re not as good as you were at construction and you still suck at estimating because you’re new to the job. I felt worthless for a period of time because I wasn’t good at that job. Nine months go by and not only I did well on that job, I also distinguished myself, and I get moved backward. My salary goes down to no base. I get into sales but I rise up again. I build the belief in myself that this is the third iteration of my career. I can move back and start over as a manager in construction. I do it again in sales.

For me, the callus is stopping something with forward momentum in your career, deciding against the grain, stopping what you’re doing, and forward momentum and looking at it from the standpoint of, “I may temporarily go backward to go forward.” As a sales manager, I made less base salary than I made as a sales rep because the bonus structure was different. In a year or two, I could make more but I knew I had to have a temporary sacrifice to catapult forward. The question I want you to answer is, have you used this skill or callus again? For me, that’s the callus. Let’s go through it, friends and family, question one, how do you feel now?

With the friends piece, it was hard for a few years. What happens is everyone else gets married. We were one of the first ones to get married then they have kids. All of our good friends moved out to different suburbs. It’s not like they all live on the same block and hang out every night. I see people and they’ll joke. I’ll ask, “How’s Edward doing. How’s Robin doing?” I’ll see some people and they’ll say, “I’ve seen you more this year than I saw them.” Once you have a couple of kids, you get into different circles. Those circles have to do with your kid’s friends’ parents.

The friends thing, once you get to a certain age is largely overblown. The family thing is hard for me. I wish I saw my parents more. I wish I saw Jenny’s parents more. We love our families. We try to vacation as much as we can and see each other as much as we can. It’s not quite the same. That’s always a bit of a pole for us. If we ever moved anywhere, it would not be to a warmer climate, it would be back to Chicago near our family to be around them.

I want to interject this. It was my birthday and was I spending time with my dad. My dad left his family. He moved from New England to Florida. In that move, he did it when I was five. He had regret. He missed some of those things. For me, I found that fascinating because one of the things I was most happy within my life is that I grew up in South Florida and not in New England because of the friends I made, the opportunities that I had, and I ended up going to the University of Florida. It was different. His regret became my springboard. For you, it’s how do you feel now and then have you used that skill or callus again, leaving something that was important to you, friends, and family, and move into something else?

It gave me a tremendous amount of confidence going from college grad to immediately kicking ass at GE. Within a year, I was like, “I’m good at this. I can sell.” I knew it. The confidence I built the GE, I never understood the product the way I should have. Everyone was an electrical engineer. I’m not an electrical engineer. I took a few EE classes. I hardly understood how our products worked and I was still outselling people that could build the product themselves. I barely knew about it.

I knew in my head, “This is a skill that you need to ride throughout your whole career as being persuasive in selling and marketing.” That gave me confidence. I then got confidence by, “You did that, but you did it in an area that you got your degree in. Can you go to an industry you’ve never seen before like real estate and home building, and go make a huge impact?” Once I did that, within a year, I was making a big impact on NVR. It was the same confidence of, “The skills you learn at GE, you can replicate anywhere.”

For me, to leave NVR, that callus, I knew I would be fine. I knew a number of things in my head. I knew no matter what happens, if I ever need to find a job, I can find a job and I’ll kick ass somewhere. I felt confident. I know how to go into a big Fortune 500 and turn a team around. I can do that over and over. Did I know I’d be successful with commercial real estate? Did I know I’d be successful with 514 Group, writing, or anything else I’m doing? I wasn’t sure.

When you talk about a callus, I wasn’t scared. When I left, I wasn’t scared. The regret of having mortgage on your background forever was overblown. Maybe a few people from the old company might look at me and say, “Mortgage guy,” but I’ve done enough now since I’ve left and since I did before where I don’t have some stigma that I’m any one industry. My mindset is I can be whatever the hell I want to be and do whatever I want to do.

LMSM 24 | Age Of Amazon

Age Of Amazon: The truth about what makes Amazon different is this: we are genuinely customer-centric.

 

Our goal with this thing is to talk and have fun, but it’s also to hopefully educate or tell stories about things that we had to overcome. Hopefully, you can relate to them if you’re reading. What I think is relevant about this particular theme was I was embarrassed to go build these crappy little Ryan Homes but I learned 12 or 24 months later, people have forgotten where I’d gone to work in the first place. They don’t care about me and they care about themselves. One of the things you and I talked about, and we’re having fun shooting the crap was you were never a mortgage guy. Even though you’re dealing with mortgages, mortgage guys didn’t get invited to the annual meetings. Nobody cared what they had to say. Mortgage was a dead part of the business. Ian was this guy who was working in mortgage who was so much more than mortgage.

What I think is important if you’re reading this is this. We all have fears. We all have things we’re afraid of. We all have things that we think, “This could be the biggest regret in my life.” What happens is, a little bit of time goes by and circumstances change anyways. You got to be a little bit selfish to pick what’s best for you. Everybody makes that decision. That’s why things drift apart. The friends and family thing is real, especially with the family part, especially as your parents start to get older.

I would argue, if you were in the wrong job, you wouldn’t have the flexibility you have to spend 7 or 10 days with your in-laws or with your parents the way you could now. You can do things and create memories like going to the World Series with your dad that with the wrong job, you couldn’t have created that. You created these incredible things that they’re different. You’re not at the house every Sunday but you’ve created these incredible flashbulb moments by making these sacrifices.

That’s why I wanted to stop on this for a minute. Anybody who does anything of note or significance, or anybody who looks back on their life and doesn’t have regret is fearful that you’re going to have this regret hurdle. If you don’t get over it, that’s where the real regret is. The real regret is staying on the other side and not jumping over it because when you jump over it, it’s something you jumped over. It’s in your rearview mirror and you’re doing other things.

I want to pivot it back to Bezos because that’s what we’re here for to talk about with Amazon. He learned early, “I had to let things go and move on.” His callus came from the fact that he learned that. People aren’t doing great, I’m going to cut them. Segments of business aren’t doing great, “I’m going to cut it. We’re doing incredible, I’m going to self-cannibalize us to get into something else,” because he didn’t want to have the regret or not have the opportunity. That’s what it comes from. To me, I don’t know him. I read a book but if I looked at it, that was the first move. Leave something comfortable and do something uncomfortable. He constantly did things uncomfortable. That’s why he’ll probably die the richest man in the world because of the fact that he did something uncomfortable and embrace it. He didn’t do it once, he built a callus and did it many times.

There’s one thing that I’ll add to and it comes back to parents and some of the things that we’ve talked about. To have success, you can talk to people but you said it and I said it too. We both left NBR without telling our parents. We notified them that we did that. Jenny knew I was close but when I did it, I made that decision myself. I told her I was close. She knew it was coming. One day I came home and said, “I’m out. Here’s how it went down.” She was like, “What?” I’m like, “We’re going to be fine.” Jeff Bezos was in rooms with his S-team people saying, “That won’t work. We can’t do that. We can’t go digital books right now. We can’t create a bunch of server farms and start AWS right now. That’s not possible. You can’t make a digital book that weighs less than a pound and can download songs that the technology is not been invented yet.”

He was always in rooms with people saying he couldn’t do something. You have to have a conviction to make those decisions yourself and you have to believe in yourself. If you think you can ask enough people and the answer materializes, at some point, you got to have the guts to make a decision. I know that’s how it’s been for you and your life. It’s certainly been that way for me that the big decisions I made, I made them on my own and without counsel. I said, “I believe in this. I’m going to do it.”

I finished reading the biography of Arnold Schwarzenegger and it’s incredible. One of the things that was so cool about that book is he grew up in the public eye. If you look at business success or money, Bezos clearly on a different level than even someone like Schwarzenegger. It’s worth a couple of hundred million. What’s cool with it is it was huge dreams. It was the same pattern and got absolutely famous weightlifting. Weightlifting back then was bought as popular as Frisbee throwing is now. We take it for granted. He built an industry around himself. He got into movies and he can’t even speak English. He marries into American family royalty.

I’m stealing some of this from Bill Burr. He gets into politics. He did four incredibly different things. He was in politics in a state he couldn’t even pronounce. It’s fascinating. You look at all those little things, no successes in those huge leaps, and all comes from everyone has the fear. They got to get over that hurdle. You have to have self-belief. You got to do it. If anybody you look at and any biography read, the reason that biography was written is because that person looked at regret, straight in the face, and said, “I’m going to do this in spite of it. I’m going to get better because of it and I got on the other side of it.”

There are a number of scenes in the book early where they talk about the creativity of startups out of necessity. One of my favorites early on is Amazon wasn’t big enough and they didn’t have the volume. Bezos very much wanted anyone to go to Amazon, pick any book ever written, and Amazon ship it to you. In the early days, they didn’t have distribution centers so they didn’t even have these books. They would take the order, then they would place the order with a retailer who would then ship it. It took a while and they had to eat a lot. The reason why Amazon didn’t make money forever is they didn’t have distribution. The way they’d get around this, retailers required that you ordered ten books at a time.

Amazon didn’t do that. Amazon would get an order for a book and what they would do is they would go to the retailer. They would order that book but then they would order nine copies of some obscure book. The one they used before is one of our liaisons. The retailer would send the one book with a note saying, “We’re out of the other book you ordered nine of,” and then they would get their money back for that. They played that game for a couple of years to be able to stay afloat. It’s making me think of a couple of things that happened with our little technology startup. We’re trying to figure out some splash moments.

When you're inventing, you're literally changing the course of history. Click To Tweet

How do we get some press? How do we get some attention in the funnel? Gary Vaynerchuk is a guy that Frank and I both follow. If you’re in social media at all, he’s impossible not to see. He’s omnipresent. He’s everywhere. He has his own VaynerMedia as a media marketing company. We can’t exactly afford him yet but we did a bunch of research and he does this little two-day marketing event. He calls it 4Ds. David and I signed up for this long before we raised any money. It’s $12,000 per seat. We spent $24,000 on this. We went and hired a film crew that was going to come to film us talking because Gary comes for an hour.

We were going to get the launch. We wanted to be able to put a device in his hand at launch and get it. The pandemic came and all the in-person stuff got canceled. They’ve had our money for a year. We been chilling because we’re like, “We’re going to get Gary Vee talking about our device. We’re making this happen.” I’ve been weaseling around so as David and we’ve got to know a whole bunch of people in Sasha Media and VaynerMedia. We have convinced them that, “You can keep our money, we’ll do the digital format which is only $4,000, but we want time with Gary Vee and we want to be able to record it.” We had a call with them and we have them agreeing that Gary Vee is going to install our car alarm in his car. He gets car service. It’s going to be after dinner time and fifteen-minute recorded Zoom call. After he uses our device, he’s going to give his thoughts, opinions, and how he would go market the product. It’s expensive but it’s not a Hail Mary. Even if it’s only 15 or 20 minutes of good video of Gary Vee, it’s, get close to the sun. Try to be creative because Gary Vee costs $100,000 to hire as a consultant. It’s our way of getting him in the mix.

The other story I have is about David. He has donated to the boys and girls club of Atlanta multiple times. He found out late in the game of auction that had been going on for two weeks. He found out 72 hours before it was closing that Shaq was one of the people you could bid on to get an hour with. He put a little bid-in $1,500 early and sent it to me. He was like, “What do you think of this?” I’m like, “Our tech company is a car alarm. Shaq is the most famous police officer in America.” He’s an off duty police officer. I’m like, “For millions of reasons, we need to win this bid.” Dave is like, “When you say whatever it takes, what number?” I’m like, “I would go up to $10,000. This was when we were $1,500.”

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