Jeff Bezos says to align yourself with your customer

By March 3, 2015Amazon

I just saw this quote from Jeff Bezos on A Founder’s Notebook:

Another thing that we [Amazon] believe is pretty fundamental is that the world is getting increasingly transparent—that information perfection is on the rise. If you believe that, it becomes strategically smart to align yourself with the customer. You think about marketing differently. If in the old world you devoted 30% of your attention to building a great service and 70% of your attention to shouting about it, in the new world that inverts.

Just about everything I read from Bezos is on the money and this is no exception. The big driver of increasing transparency and information perfection is social media. Everyone has a printing press these days and it’s no longer possible for companies to control the message. Hence it makes sense to invest more in product and correspondingly less in sales.

This is doubly true for startups for whom it is increasingly true that there is no other strategy than to win by having the best product, and often the best product by a mile. When competing with large incumbents the rule of thumb is that winning requires having a 10x better product.

Finally, think of product as encompassing the whole user experience, from sales and marketing through delivery to after sales care.

  • Lawrence J Encinias I

    Thank you very much for responding and resolving my issue concerning the defective bluetooth earbuds in a timely manner! This kind of customer service is greatly appreciated and launches Amazon to astronomical alignment with your customers that propels Amazon to Superior quality customer service and sets you way above your competitors for an excellent customer experience without the BS usually experienced when returning defective products!
    Sincerely,
    Lawrence J Encinias I
    PS. From #1 Hot Air Balloon City Albuqerque Worldwide! !
    TO THE TOP! !!

  • James Penman

    Agree with this but with a company like Expedia shoeing $2.8 billion into marketing, for example, surely one has first to identify a market in which it’s actually possible to build a product that could be ten times better than existing products? Or do you believe there’s still space in all markets to build 10x better product?

  • http://www.theequitykicker.com brisbourne

    No, I don’t think that all markets are open for 10x better products. Competitive dynamics are a key part of our due diligence on ideas and companies and should be a factor in an entrepreneur’s decision on whether to start any given company.

  • Nathan Schor

    Nic,

    Thanks for the heads up on Bezos’ book. I especially noted this:

    ‘it becomes strategically smart to align yourself with the customer. You think about marketing differently … in the new world that inverts.’

    which reminded me of a similar point Doc Searls – ‘Businesses today tend to herd customers as if they were cattle, but a revolution in personal empowerment is under way—and buying will never be the same again.’ – (The Customer as a God – WSJ) .

    Searls is an pioneer in taking a customer centric approach whose benefits he pointed out in a seminal book The Intention Economy: When Customers Take Charge by Doc Searls .

    Since empowering customers implies a way for them to manage the vendors with whom they transact, this initiative is also known as VRM (Vendor Relationship Management), thus distinguishing it from the conventional approach, CRM, where companies run the
    show.

    ‘Among the goals of the VRM — Vendor Relationship Management — movement
    are preserving Internet freedom and opportunity, changing the economic power
    structure, and turning the tables on privacy-violating business models and
    practices.’

    (More on the VRM movement here http://cyber.law.harvard.edu/projectvrm/Main_Page)

    Also for those interested and in San Francisco next month, a well-regarded conference is coming up http://www.internetidentityworkshop.com which focuses on the issues of customer empowerment that both Bezos and Searls address.

  • http://www.theequitykicker.com brisbourne

    Thanks Nathan.

    Doc’s work on VRM is super interesting. The challenge is finding a way to make it real. I’ve looked at lots of companies trying, but haven’t found one that I felt comfortable backing.

  • Nathan Schor

    ‘The challenge is finding a way to make it real.’ – ‘making it real’ in a commercially viable way is exactly what’s missing. But, we’re getting close as there’s an impressive and growing community of developers committed to providing the missing commercial link.

    For example, here: http://cyber.law.harvard.edu/projectvrm/VRM_Development_Work

    Many of those developer attend the conference I mentioned
    above http://www.internetidentityworkshop.com.

    It includes an investor panel, so if you’re in this side of
    the pond during April 6 – 9, you have an open invitation to participate.

  • http://www.theequitykicker.com brisbourne

    Thanks Nathan. Unfortunately I need to be here in April.

    Someone will crack it one day though. I agree with you on that.

  • Rmicals

    Bezos remarkably often comes up with great insights and he combines this insightfulness with an extremely healthy appetite for taking risk, postponing profit for a better long game. Startups are out to break every oligopoly and extra undeserved margin they can find so yes product is where it’s at. Nic I was just wondering what you think of pulling out of Pocket Shop now with Instacart valued at $2bn. Still feel it’s a good decision and that the instacart model is not for the UK market or have you changed your opinion?

  • http://www.theequitykicker.com brisbourne

    When I look back that decision was the right one to take. That doesn’t mean that Instacart can’t work in the UK.

  • Rmicals

    I found it interesting as the traction figures for Pocket Shop (as reported by FT) seemed good for the catchment area. I was wondering whether it was a case of simply not being comfortable capitalising such an aggressive model as you need to be operating at scale to make it work. It made me think whether the risk appetite to rival the valley is there or whether vcs are just looking for low risk tech/software opportunities and hoping they spend a bit a bit and see some traction…

  • http://www.theequitykicker.com brisbourne

    I understand your curiosuity, but it wouldn’t be appropriate for me to comment in detail. We’re not risk averse though.

  • Rmicals

    Sure I guess another broader question would be with your sort of formula for backing ideas ie of having a 30k first tranch to test with a max cap of 300k in the following tranches aren’t you limiting yourselves to only certain kinds of models with low barriers? Don’t you think that the capital requirement for every idea is different rather than having a one size fits all approach? Can it be said that maybe significant upside is being sacrificed for the sake of investment discipline?

  • http://www.theequitykicker.com brisbourne

    There are definitely ideas that don’t fit with our funding structure – e.g. investments in deep tech or network infrastructure – but lots do, and that number is increasing as capital efficiency improves.

    So we will miss out on some deals, but the expertise and reputation we are building in our niche make the trade off worth it. At least that’s what I think now. We won’t know for sure until the returns of our fund come in though.

    For the ecosystem overall we are net positive if we help a good number of entrepreneurs to build great companies, but I hope somebody else funds the companies that don’t fit our model. Otherwise we have a gap.

  • http://www.tradiio.com Aziz Morsly

    Phil Libin (Evernote) has a similar approach -> build a great product and focus on it. Customer support is essential to align properly with the users’ needs. Every startup should start with a process to analysis and integrate feedbacks. Recently I’ve noticed a very tailored user care by the Dojo team. This is unusual and refreshing. This keeps engagement high and improve virality at the same time.

  • Michal

    I’m slightly allergic to this buzzword of 10x better product. Who is quantifying this? Who says that e.g. transferwise is 10x better than banks? Previously, I simply logged into my bank account, did a transfer to a Euro account and paid for it. Then came transferwise and made the process well designed and cut down on cost. So they offered a better, cheaper product. Great. I use them. Why do we have to constantly wallow in overblown hyperbole?

  • http://www.theequitykicker.com brisbourne

    Hi Michal,

    Sorry for the slow reply to this. I was on the ICE ski trip when it came through and I’m still catching up.

    “10x better” is a simple way of communicating much better. I find it useful because lots of startups are better than the competition but not better enough to drive success. Saying 10x better gets round difficult discussions about whether or not a small difference is significant enough to build a business on.

    Hope that helps.