Working Backwards

In an interview after the Fire Phone was withdrawn, Jeff was asked about its failure and answered, "If you think that's a big fail-ure, we're working on much bigger failures right now and I am not kidding." The magnitude of your inventions, and therefore your mistakes, needs to grow in lockstep with the growth of your organization. If it doesn't, your inventions will likely not be big enough to move the needle.

Consumer Needs and Total Addressable Market (TAM) questions: • How many consumers have this need or problem? • How big is the need? • For how many consumers is this problem big enough that they are willing to spend money to do something about it? • If so, how much money would they be willing to spend? • How many of these consumers have the characteristics/ capabilities/constraints necessary to make use of the product?

a simple and useful tip that I have not forgotten: he assumes each sentence he reads is wrong until he can prove otherwise. He's challenging the content of the sentence, not the motive of the writer. Jeff, by the way, was usually among the last to finish reading.

In an interview after the Fire Phone was withdrawn, Jeff was asked about its failure and answered, "If you think that's a big fail-ure, we're working on much bigger failures right now and I am not kidding." The magnitude of your inventions, and therefore your mistakes, needs to grow in lockstep with the growth of your organization. If it doesn't, your inventions will likely not be big enough to move the needle.

Amazon Music and Prime Video are examples of how we kept our investment manageable for many years by being frugal: keeping the team small, staying focused on improving the customer experience, limiting our marketing spend, and managing the P&L carefully. Once we had a clear product plan and vision for how these products could become billion-dollar businesses that would delight tens, even hundreds of millions of customers, we invested big.

With a sizable existing business, if you only pay attention to the output metric "revenue," you typically won't see the effects of new customer deceleration for quite some time. However, if you look at input metrics instead--things like "new customers," "new customer revenue," and "existing customer revenue"_ you will detect the signal much earlier, and with a much clearer call to action.

The Flywheel input metric: • Better customer experience leads to more traffic. • More traffic attracts more sellers seeking those buyers. • More sellers lead to wider selection. • Wider selection enhances customer experience, completing the circle. • The cycle drives growth, which in turn lowers cost structure. • Lower costs lead to lower prices, improving customer experi-ence, and the flywheel spins faster.

Consumer Needs and Total Addressable Market (TAM) questions: • How many consumers have this need or problem? • How big is the need? • For how many consumers is this problem big enough that they are willing to spend money to do something about it? • If so, how much money would they be willing to spend? • How many of these consumers have the characteristics/ capabilities/constraints necessary to make use of the product?