Taking risks

kindle.jpg

If someone asked me which CEO I have the most respect for, my answer would be Jeff Bezos from Amazon.com.  He founded the company in 1994, took it public in 1997, turned first profits in 2002, and now resides over a business with 14,000 employees and $1 billion a month in sales.  Very few people have the broad set of skills (or the stamina) required to be successful at all stages of a company’s growth.  Listen to him talk and you quickly realize that Bezos is a high-horsepower (and somewhat quirky) guy. 

But the thing I respect most about Bezos is his focus on innovation and willingness to take big risks.  In the past few years, he has rolled out a number of new products aimed at making Amazon.com much more than just an online retailer.  His most recent gamble is Kindle, a wireless device that allows you to download and read books (and magazines and other things).  It’s small, lightweight, and has an “electronic paper” display that is supposed to be really easy to read and, unlike traditional displays, works well in sunlight.

The electronic book concept has been tried several times over the years and each time it has failed miserably.  So what makes Bezos think that Amazon.com can succeed where others have failed?  After all, Amazon.com is a retailer, not a hardware manufacturer.   

Well, for starters Amazon has over 50 million customers, the bulk of whom have purchased a book.  If Amazon can put a Kindle in the hands of a few million of these folks, then they have the ability to distribute content directly to consumers.  This cuts a major middleman — the book publisher — from the value chain.

Kindle sells for $399 (a non-starter for most consumers) but you can download best sellers for about $10, which is less than half of what you’d pay for a hardcover.  So if you’re a bookworm, you can cost justify it.  Over time I’d expect that the cost will come down significantly.

I watched the demo video and it’s clear that the device is well thought out and elegantly designed.  I’m still not 100% sold on the e-book concept (there’s just something about holding a printed book — no buttons, no batteries) but as Bezos says, “we are patient”. 

Whether or not Kindle is ultimately successful, it’s impressive to me that Bezos has been able to roll out several major new products like Kindle, S3, EC2, Mechanical Turk, and others while continuing to be the best Internet retailer.  These products — especially Kindle — are big investments in terms of both money and precious human resources.  I work in a high growth company and I know first hand how hard it is to make big investments in the future while dealing with all the challenges of growing your core business.  But like Bezos, I believe that the cost of not innovating is higher.

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2 thoughts on “Taking risks

  1. I knew you were going to blog about this, the minute I watched the demo on amazon.com last night. I think this looks like a really neatproduct. I’m especially curious to see the paper-like screen. Maybe if the price drops just a little, I will buy one :-)

  2. Pingback: Amazon does it again « Finding Balance

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