TIP 011 : Billionaire Jeff Bezos - The Secrets to his Success (Investing Podcast)

**Preston Pysh** (0:00)
This is episode 11 of The Investor's Podcast.

**SPEAKER_2** (0:04)
Broadcasting from Bel Air, Maryland.

**Preston Pysh** (0:06)
This is The Investor's Podcast. They'll read the books and summarize the lessons.

**SPEAKER_2** (0:14)
They'll test the waters and tell you when it's cold.

**Preston Pysh** (0:17)
They'll give you actionable investing strategies.

**SPEAKER_2** (0:21)
Your host, Preston Pysh and Stig Brodersen.

**Preston Pysh** (0:27)
All right, how's everybody doing out there? This is Preston Pysh and as usual, I am accompanied by my co-host, Stig Brodersen.
And today we're doing another book.
This book is by Brad Stone and it's called The Everything Store. Since Hari Ramachandra spends a lot of time out in Silicon Valley, because he lives there, and he also read this book. We brought him back on the show and he is from bitsbusiness.com. And so we're gonna be going through this book and we're gonna be picking it apart. We could probably spend about five episodes on this book, but we're gonna just narrow it down to this one and try to pick out the highlights and the high points for you.
So let's start off. The book is really primarily about Jeff Bezos, who's the CEO and founder of Amazon.
Jeff Bezos' net worth is $30.3 billion here in November, the middle of November, 2014
The thing that I really took away from the book initially was just the intelligence level of Jeff Bezos. This is an extremely intelligent individual. And this is a person like most billionaires that thinks about things in a different perspective and typically sees things from the inverse that the rest of the world sees things. So the primary point and the highlight that I really wanna bring out of the book initially, the biggest thing that I took away was this focus that Jeff Bezos has on the customer and not necessarily the shareholders or the employees or anything else. He is totally focused on the customers of Amazon. So whenever I typically talk to people that are in a leadership position or a CEO of a business, the biggest challenge that these CEOs, these managers have is it's a big balancing act. And it's really a balancing act on three different levels. They have a balancing act where they've got to please their customers, they've got to please their employees and they've got to please their owners or their shareholders. And if you think about that three prong approach to leadership within an organization, you can almost think of it like a tripod. And if one of those legs in that tripod is not strong or it's weak, the whole thing is gonna be out of balance and out of whack and it's probably gonna lead to unstable results within the business. And so when you read this book and you study Jeff Bezos, like Brad Stone had done, who's the author of this book, it was really interesting to me because this is a tripod and whenever you see a good solid business, it's always really well balanced among those three prongs, the customers, the employees and the owners. The way Jeff Bezos looked at things is he just totally flipped this around and said, you know what, I don't really care what the owners think. I'm not gonna really be too concerned about the profit margins. I'm not really too concerned about working my employees too hard and giving them big bonuses like some of these companies like Goldman Sachs and whatever. He says, no, all I'm gonna do is I'm gonna put laser focus on my customer. If my customer's happy, everything else is gonna work out. And so that's the thing that I just saw throughout this entire book is how laser focus Jeff Bezos is on his customer. So the thing that for Stig and myself, we have this website that talks about accounting. So for me, I initially go into the income statement, the balance sheet, cashflow statement for Amazon and start picking this thing apart. And so for me, I'm really interested in how a business can continue to grow its revenues at the rate that Amazon has done, but yet they don't have a bottom line that's really kind of feeding things that they can tap into in order to continue to grow their asset base. And so whenever we look at Amazon's income statement, let's just pull this up and look at this. So last year, one year ago, Amazon's revenues were $17 billion for that quarter. That's just one quarter.
This past quarter here in 2014, they've continued to grow those revenues to $20.5 billion in revenues, okay? Now, that really sounds like a lot of money, and it is a lot of money. But the interesting part with Amazon is, what's their profit on that $20.5 billion in revenues? And so whenever we look at the bottom line of their income statement, we see that they had a loss. They actually lost money to the tune of $437 million last quarter.