Bezos' One Profound Insight That Made Amazon a Trillion Dollar Company

0:00Do you want to know about that Jeff Bezos$1 trillion framework? work? Yes. Okay. So Jeff Bezos, because this is related to what we're talking about. Jeff Bezos early in his Amazon's day, he had a VP that called him out. This VP was like, Jeff, your ideas are going, you have enough ideas to destroy Amazon. And then Jeff was like, what do you mean? Direct feedback, right? Directly to the CEO. And this guy was like fairly new as a VP. And Jeff Bezos said, this is a shocking idea. He's like, as a founder, I had a great luxury of always being able to hire my tutors. I would hire these experienced senior executives and I'll listen to them.

0:30And what this guy said, this is a VP. Wait, did you say they don't listen to him or he does? He would listen to them. Okay. Yeah. And so this VP said, Jeff Wilk, I believe you have to release the work at the right rate so that the organization can accept it. Right. So again, I'm going to repeat that. You have to release the work at the right rate so that the organization can accept it. So this is releasing the work framework. And so basically Jeff Bezos, there's two Jeffs in this case. Bezos says, every time I released an idea, I was creating a backlog of work and process. And because it was just stacking up, it was adding no value.

1:06In fact, it was creating distraction. This sounds so obvious, but it was not obvious to me at the time. And this was a profound insight for me. So I started prioritizing the ideas better, keeping lists of them and keeping ideas to myself until the organization was ready for the ideas. And entrepreneurs, you and me have this problem. I have a boatload of ideas. You have a boatload of ideas. But the problem is it overwhelms the team. And that's why we talk about barrels and ammunition. You need to have as many barrels as possible to push these ideas forward. If you only have one barrel, you can only do one big idea at a time.

1:37And that's like when you're starting the company, maybe you're the only barrel. But that's the point here. I think it's this whole concept of releasing the work. And you guys saw earlier, like Amazon tried a bunch of different things. But as he didn't realize that he needed to build the right team around him to make sure that these things move forward and that they have the right infrastructure to make sure that they can push these things through. Because it doesn't matter how many ideas you have if you can't execute on them. Totally agree. And if you have too many ideas and they start working on a little bit of all of them, then all that's going to happen is you're releasing nothing and you're seeing no results, but you're spending a ton of time.

2:08And it stresses out the team. Yeah. And you and I have both seen this. I think I've been guilty of this many times and so have you earlier in your career for sure. Dude, this is why I introduced you to an agency that potentially wanted to sell a month ago, a month and a half, maybe two months ago. Yeah. uh they ended up doing a transaction oh they did yeah i got a text message from him and then he introduced me to another or a company that i could buy right and when he hit me up with another organization their revenue is decent call it a few million bucks but the moment he sent it to me and their numbers yeah and i was just like it's growing at you know a decent clip not a great clip.

2:55The profitability isn't great, but we talked it over with our team. You know, we spent maybe an hour on it max and going over the pros and cons. And it's the same thing. I looked at it and I was like, this is a distraction. Meaning the transaction he did? No, no, no. Okay. So he did a transaction. I congratulated him because he texted me. He opened my email last week. Okay. Yeah. He emailed or he texted me saying he did a transaction. and I gave him a credit. He's like, by the way, I want to introduce you to X, you know, XYZ, some person. And he's like, they have a company that could be a good fit for you.

3:35So I was texting back and forth because he had us to a text thread. I talked to him on the phone really quickly, talked to my team, but I was like, do I really want to do, have my team do all this work for a few million bucks in revenue? Meaning it would be a distraction for you. It would be a distraction for us. Okay, got it. Even though it's in our space, they do something that we could do a little bit better at. And they have a unique angle. I'm like, we'll get there naturally. And it'll take my team, you know, six months of time. Maybe like three months I can wrap it up. But even if it was free, let's say they just don't want the company anymore.

4:16It would still cost me at least a half a million dollars of internal resources, time and legal and all this stuff. and accounting to buy a company when it's not gonna make really any difference to the business five years from now. So it's like, we have so much on our plate. Do I really want another distraction? And I was like, it's not worth it. But on the flip side, if it was, there was a company that I would have loved to buy that I didn't know about until the transaction happened. Do you remember Huge, Huge Inc? Yeah. the big design and kind of digital transformation or design creative shop like they do the mcdonald's kiosk you know the digital ones so they do some really cool stuff yeah they weren't doing well i believe it was like omnicom or ipg or one of them that owned it spun out it was another digital transformation shop that acquired them my guess is they were losing money i would have loved to buy that business and i would have paid for it and i would have spent the time because i don't know what they do now, but it was a nine figure agency, probably still maybe low nine figures in revenue.

5:26Amazing clients, amazing logos, amazing talent and work. They just need time to fix and repair and heal up. And I would have given them the money and I would have been able to, I would have been willing to do it because they do something we don't. And it would have been a perfect cross sell for their customers to ours and ours to theirs. Yeah. So by the way, I mean, it would be fun if you did that one. But I'm going to, with this transaction, by the way, so it's interesting because I sent him this guy. We're not going to name names here, but he opened. No, his email doesn't show up on camera, right?

5:59Oh, yeah, yeah, yeah, yeah. All right, you're good. Keep going. He basically, when Neil introduced me to this guy, and I asked him some very specific questions here. So those of you that are trying to negotiate to do a deal here, expect these questions. Who would you say are the star players on the team? who would you not want to lose under any circumstance and why? This person has a heavier salary. What is she tasked with delivering monthly? What's the most repeatable, scalable channel you've found beyond word of mouth? If you stepped away, who would own sales and top of funnel growth? Keep in mind, this is a smaller company.

6:28Do you have numbers for your assets such as newsletters, subscribers, community, audience, podcast downloads, et cetera? And then also, what would you need to change for gross margins to be 55, 60 % instead of 20 %? That's a tougher question, right? And then do you have any liabilities not visible in the P &L? Can I see the last three years P &Ls as well as a balance sheet? And then basically these questions, right? And so this guy opened my email, it looks like 15 times here, and every week he was opening it. So I mean, he was considering it heavily. But the thing that considering negotiation too, is that my best alternative to a negotiated agreement, my BATNA is, I don't need to do this deal, right?

7:06Like it's BATNA. BATNA is a best alternative to a negotiated agreement. So if you and I are negotiating, right? if you want leverage, the biggest leverage is you don't need to do the deal, right? Yes. The one who cares less has the leverage. And this was for context. When Eric's asking these questions, there's many more questions he would have asked as he got the information. So it wouldn't have stopped there. He would have looked at churn and retention and all that kind of stuff. But this was a distressed deal to give people context, which is why some of his questions at the beginning were these kind of questions.

7:37Correct. Yep. Yeah. So I think, look, there's great books on negotiation. I think it's Power Secrets Negotiation. That's the best one that I've read. And then there's a Chris Voss book on negotiating. So check it out. Obviously, you need to get there. The book's not going to help you. You need to actually get in the trenches. Yeah. Yeah. Anyway, by the way, we were just touching on Amazon. So I saw this post from Matt Diggity. This can be the last thing we talk about with Amazon here. But a small brand just showed up next to Amazon and ChatGPT shopping results. So zero ad spend, pure organic traffic, direct buy buttons.

8:08After 16 years in SEO, this is Matt. I've never seen an opportunity this big get ignored by so many people. So basically what he's saying here is when someone searches like best wooden jigsaw puzzles in ChatGPT, here's what happens. ChatGPT searches Bing for product recommendations. It analyzes multiple review sites and comparison articles. It aggregates the most recommended products. It searches exact product names on Bing again, and then it displays a product grid with buy buttons. And so right now, small brands are appearing alongside Amazon and Walmart. Zero ads been required. So he just says, look, you got to master the keyword layer, optimize for being structured product.

8:40I mean, this is like traditional SEO stuff. Yeah. But he's just saying like implement product schema markup, still traditional SEO, build review and comparison content, still traditional SEO. AI shopping isn't coming. It's here. So this is just a reinforcement guys that look, we can talk all we want about AI, SEO, GEO, AEO, whatever. Traditional SEO, still useful. Traditional SEO is still very useful. but yeah and you and I are on the same page chat GPT has been getting a lot of press I see more press about their NVIDIA deals and AMD deals and not that many people in the marketing community talking about how they have the Etsy integration the Shopify integration, Stripe integration and they're just like okay but that's a huge untapped opportunity and I don't know why people aren't leveraging it more you know what we should talk about too So I want to talk about this new distribution channel with 800 million users.

9:35So you want to know what it is? ChatGPT? Yes. So what's interesting to me, this could be completely off. We can debate this, right? My take on this one is that open question today is ChatGPT just came out with its apps, right? And so you think about iOS when it first launched its app store, there were 6 million users. ChatGPT has 800 million. Now, some people are saying like, look, this is just as important as Steve Jobs announcing the App Store in March of 2008. What I'll say is this, this could be a complete flop, but in my opinion, the risk reward ratio, if you don't at least try this a little bit, and then what happens?

10:11The first apps on the App Store, what happened? They started gaining a ton of traction. Yeah. And they held that ranking for a while. It's almost like the old days of SEO, right? Correct. Now a lot of those are disappeared, but yes. Correct. Yeah. But in my mind, I'm like, dude, if we can hit this quickly. So I was talking to my CTO about this. I was like, okay, let's just play around with this. Right. And then we, we started floating this to clients as well. Like, why don't we do this? Cause we're trying to embed ourselves more with the clients and they're down to talk about it. Um, so my point is if the risk is like, you're, you might spend a couple of weeks building this and if it's a flop, it's a flop.

10:41Okay. Maybe you lose that time, but if it's a complete hit, then you're going to gain for, for a little bit, like a year or two years. Yeah. What's your take? Um, I, I think it's a huge opportunity. Uh, I was talking to my team about this earlier, uh, uh, this week, I think I think it was actually yesterday. It was this week, yeah. I think it was yesterday that I was talking to my team, so not earlier this week about it. But they were showing us some of the stuff they ended up doing. But they were telling me something like they're not approving apps until the end of the year or something like that.

11:11We might as well get ahead of it. Yeah, we're already ahead of it. The problem is we just have to wait until the end of the year. But for you guys, obviously, there's all the integrations you can do with Ubersuggest, Answer to Public. You pull the data. By the way, all the data visualization stuff you have, how do you just integrate that in there, right? And then, you know what's fascinating to me too? With Sora too, did you see that there's one creator that generated 1 billion views in six days? If you've ever built a website, you know how tough it can be to keep a strong design while ensuring site performance is fast.

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13:17Shopify lets you easily create email and social media campaigns to reach customers wherever they are, whether they're scrolling or strolling. If you're ready to sell, you're ready for Shopify. Turn your big business idea into with Shopify on your side. Sign up for your$1 per month trial and start selling today at shopify.com slash marketing school. Go to shopify.com slash marketing school. Shopify.com slash marketing school. is soro 2 the app like instagram yeah you can see other people's ai yeah i haven't actually used oh so so get this so before i talk about the one creator that got one billion views mark cuban right so mark cuban has a cost plus drugs right so whenever you use his likeness he he always inserts an ad for a cost plus drugs at the end whatever you use it for it's like cost plus drugs cost plus drugs right and he's getting a lot of impressions but um jake paul so jake paul got a billion views already in six days because everyone's using his likeness.

14:12So imagine if you put it with your Neil Patel likeness, like even like the people that love you or the people that hate you as well, the SEO space, right? Imagine how much like that to be like good. Does it have to get approved to use the likeness? No, I mean, you just log into it. And like, I have my own Eric O'Sue likeness. You should just do it today for fun of it. And like people are going to make funny things for sure. Yeah. Yeah. So I just, I think this could be interesting for people. Like you look at college football, the NIL, the name, image, likeness type of stuff, I think this is going to come into play here.

14:43And for me, dude, if you can get a billion views, that's insanity. I'm shocked they haven't gotten sued yet for it. Well, I think they approved this. So you remember Jeffrey? Jeffrey, who's partnered the Asian guy that was at my event in Miami. Remember that guy? He's partnered with Jake Paul. So Jake Paul tweets... The VC. Uh-huh. So he's like, I'm a proud open... So Jake Paul tweets this. I'm an open AI investor with anti-fun with jeffrey woo and i've been advising he's been advising the sora team and so um that's why they got a bunch of these celebrity nil cameo users and i think this is going to get a lot bigger and i think definitely we should push our cameos a lot more yeah yeah it's i get what you're saying i just don't care for the views because in b2b enterprise it's not going to be that useful to get a billion views on this kind of stuff i get the mark cuban thing because if you're using Mark Cuban, you say cost plus drugs.

15:37Yeah, he's consumer. Consumer, and almost everyone in this world eventually takes some sort of drug, whether it's Tylenol or Advil, or some people get vaccines, some people don't, but you get what I mean. People use medicine and they need it. I think I'm more - So it's applicable, but - The way I look at this is you're probably more, remember I had the conversation with Gary V, you're more on the data side, and then he's more on the creative side, right? But he has, so you have like, we look at it as two parties like you have a red party and a blue party right but i look at it as it's purple so i'm probably more in the middle side i'm like my take is like i would like to have more views anyway right and so that's not to say i don't care about conversions i definitely care more about conversions i think for him it's just like as many views as possible mine's like you know i'll take some more shots like for example i saw one of your shorts yesterday on youtube um you're telling a story about uh steve balmer and bill gates on like how um you know bomber Bill Gates should have been worth a lot more like Trillionaire right but like these stories are interesting right so like by the way like you listen to the you don't listen to this podcast because you don't listen to podcasts but the Founders Podcast top 10 podcast and all he talks about is like just business people and I'm like for someone like me I know you love stories like this what type of people listen to these podcasts like the um even Ivanka Trump was talking about how like she she listens to the Founders Podcast all these people like Michael Dell listens to it, right?

16:57So I'm just like, how do you capture the ears of really smart people? Well, on that one, you just advertise. Huh? For that podcast, just advertise. Well, no, you can't because the invests, like the best network, Patrick O'Shaughnessy, I don't think, he just pushes his own stuff. He's like portfolio companies. So he owns that attention. Got it. Anyway, you can pick one, because I have so many here. I'm curious on this one, and you have it in as, Google is a Berkshire Hathaway of tech. Yeah. Okay. So this one is interesting to me because Berkshire Hathaway, just for people that don't know, that's Warren Buffett and Charlie Munger's, that's their investing company, right?

17:40So they've invested in like Geico, for example, Apple, like their Buffett's known as like the Oracle, one of the best investors of our lifetime, right? So Google is the Berkshire of tech. They own 14 % of Anthropics of Claude. They own 8 % of SpaceX. They acquired DoubleClick for 3.1. They own 8 % of SpaceX. I didn't know that. They acquired, I think, Google Ventures or whatever you call it. Acquired DoubleClick for 3.1 billion. That's a backbone of Google Ads. Most people don't know that, right? You and I know that. Acquired YouTube for 1.6 billion in 2006, worth hundreds of billions today. They do more revenue than Netflix, okay?

18:13Acquired Android in 2005 for 50 million, now the world's most widely used OS. Acquired DeepMind in 2014 for$500 million. Huge AI lab with almost soda models. I don't know what that means. And great research team. We do like, guys, just FYI, DeepMind was ahead of OpenAI. OpenAI just pushed the consumer faster. They run X, which is the Moonshot Factory, incubator of radical ideas. Waymo, we see Waymo all over here, right? I made you sit in a Waymo with me in SF. It was good. Yeah, Wing Drones. And through capital G has invested in Stripe, UiPath, Airbnb, Lyft, Databricks, CrowdStrike, Duolingo, Robinhood, and more.

18:49And then they bought a lot of companies. But I don't know if Google is like the Berkshire Hathaway of tech. I would say most of the large tech companies are like the Berkshire Hathaway because Amazon has done a ton of acquisitions. Just like Google, some of them work, some of them don't. And so is Microsoft. And Microsoft's also been an investor in a lot of companies. Think about their Apple shares. Think about their Facebook shares. Of their OpenAI shares. The amount of companies Microsoft has bought. Same with Apple doesn't actually buy as much, but they do buy. Amazon's bought a lot of companies over the years.

19:27But a lot of these tech organizations have so much money, they just buy. These acquisitions are some of the best here. Okay, so I actually think we should look at Microsoft and Google. And Facebook, Instagram, WhatsApp, two amazing acquisitions as well. What else do they buy? Oculus. VR, Oculus. I don't know. We'll see if that pans out. We'll see if it pans out. Okay, but look at these acquisitions, okay? We forgot to mention Wiz, security juggernaut, the Israeli company, right? 30-something million, I believe. Yep. Waze, right? Waze was used quite a bit in the past. It still is. You're talking about the navigation.

19:59Yeah, I think it's plugged into Google Maps now. Yeah, it's back on other technology. Look, Acquired DeepMind, Acquired Android. These are huge. Acquired YouTube, right? Acquired DoubleClick. Urchin with Google Analytics. Yeah, it serves. The TAM is like everybody, basically, right? Wiz, security. You got to have security. Waze is like, you know, that's for everybody as well. So is Google number one in this area? Like you look at Microsoft now, what did they buy? They bought Skype. They bought, did they buy Minecraft? They bought Minecraft. I have no idea, but I know they've bought a lot of successful companies like GitHub.

20:34That was a huge win for them. Yep. Microsoft top acquisitions. Yeah, I was about to Google it. I'm grokking it.

20:46Let's see.

20:52acquisitions alright let's see LinkedIn that was a great one Activision Blizzard that was really good that's a good one yeah

21:03ZeniMax I didn't know they paid 7.5 billion dollars I don't know what that is it's a gaming publisher Mojang developer of Minecraft yeah so they bought Minecraft yeah yeah Hotmail I think that was really amazing that was good yeah back in the day Hotmail was like a quantive that was the double click style it was their version of it yeah uh nokia devices and services 2013 they probably made an roi from patents just on that one um but yeah they had a lot of acquisitions over the years yeah anyway i think the point here is that we're maybe trying to make here is that um you know in a lot of these cases you know facebook as well sometimes it's better to buy than build.

21:45Yammer? Oh yeah, from David Sacks. Team Slack or whatnot. Back in the day. So anyway, sometimes it's better to sometimes you can build, sometimes you can buy. But in a lot of situations, when they need these capabilities, they're going to buy. Dude, I'm going through a list on Wikipedia of acquisitions. It stopped counting. Oh.

22:14276 acquisitions that they made for microsoft yeah i believe it um anyway so and and then there's a whole slew of stakes like investments dude this list just keeps going on forever yeah you know what i'll say you know i've noticed smaller companies for example they talk about like let's say they're doing maybe beginning eight figures. They're talking about starting a venture arm and all these things. I think at that level, it's too early to start making all these bets. I think if you're doing billions or hundreds of millions, I think you can start to make these bets. I think people get distracted again too early because it's like, oh, you hear all these people talking about it, it becomes exciting.

23:01I was certainly very distractible in the past. So, yes. But speaking of acquisitions, you know, people say private equity is dying. Was it Chamath who said that? And I don't know the stats or the data. I'm not as smart as he is when it comes to investing or anything. I actually have some graphs I can show you. But I still think acquisitions is a great way to grow a business. And I know a lot of people in private equity who still make money hand over fist, and they probably will. It's easier when you're dealing with smaller sums of money. And it's easier when you're doing smaller tuck-ins that you don't have that service or that product, but all your customers want it and you can cross sell and you can cross sell their products to your customers and your services to their customers.

23:52I still see it working really well. I think it's hard when you're managing like$100 billion, $200 billion of returns just go down because of the - Law of large numbers. Yes. Yeah. So I have, dude, I clearly bookmarked too many things on X. This is, but - I'll pull it up in a second. You can pick the next topic while I pull it up. Oh, and on a side note, Microsoft, you know, Expedia? Yeah. They sold their shares in, according to Wikipedia, for more than a billion dollars. So they've had a lot of, I would say, successful outcomes. That is it for today, and we'll see you tomorrow.