Amazon’s Jeff Bezos promises more spectacular failures

“If you think that’s a big failure, we’re working on much bigger failures right now,” Amazon.com CEO Jeff Bezos recently enthused to Marty Baron, executive editor of the Washington Post. Baron, who runs the news organization Bezos bought two years ago, was interviewing Bezos at a public forum on Wednesday and asked his boss what he had learned from failure. Baron specifically offered up Amazon’s disastrous Fire smartphone as an example. Bezos took the tough question as a compliment. “I am not kidding,” Bezos insisted. “And some of them” — the bigger, badder, future failures — “are going to make the Fire Phone look like a tiny little blip.” “It is our job, if we want to be innovative and pioneering, to make mistakes. And as the company has gotten big — we have a hundred billion plus in annual sales, we have 250,000 plus people — the size of your mistakes needs to grow along with that. If it doesn’t, you’re not going to be inventing at a scale that can move the needle . . . You need to be making big, noticeable failures . . . When you take this approach, a small number of winners pay for dozens, hundreds of failures.” One of those apparent winners is the new Echo, a quirky cylindrical computer whose voice-activated personality known as Alexa acts as a household assistant. When it was released about a year ago, most wrote off Echo as another sure-Fire flop. But Amazon has now sold three million of them, and Alphabet is racing to catch up with its own version known as Google Home. A decade ago, Amazon launched another laughable loser of an idea. It’s difficult to remember now, but at the time, some people thought it was literally a joke. That attempted failure is known as Amazon Web Services, or AWS. Why in the world, many smart people asked in 2006, would an online bookseller get into the remote data storage business? It was a small market for a commodity service. In the first quarter of 2016, however, AWS, which now supplies more than 70 cloud computing services to more than a million customers, had sales of $2.57 billion, or more than $10 billion on an annual rate. The AWS division, moreover, now generates more operating income ($604 million in the last quarter) than the rest of Amazon combined, even though the rest of Amazon has 10 times more revenue. Cloud computing, which supercharges Moore’s law and supplies cheap and unimaginably abundant computing and storage power to the world’s largest companies and smallest start-ups, has in turn spurred thousands of new firms and products (and more than a few failures) across the industrial spectrum. The Kindle was another experiment gone right, transforming the publishing industry and very idea of books, although it admittedly was closer to Amazon’s original core business. How about something more speculative than overturning a 500-year-old industry? OK. In the interview, Bezos also gives a several hundred year vision of space exploration, colonization, and industrialization, the early foundations of which his company Blue Origin is today attempting to build. Finally, Bezos reminded the audience why it is so important that as much activity as possible takes place in the private, free-enterprise sector. “This is another reason it’s easier for businesses to do this than for political organizations or government bureaucracies . . . they really get crucified if they fail.” We can’t wait to laugh at — and celebrate — more of Bezos’s “failures”.

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