💰 15 Lessons from Jeff Bezos

💰 BILLION DOLLAR STRATEGIES

15 LESSONS FROM JEFF BEZOS

Lesson 1:
It’s all about the long term

When you think in the long term, you have a BIG advantage compared to those who don’t.

Lesson 2:
A competitive advantage is essential

Online selling is a scalable business characterized by high fixed costs and relatively low variable costs.

Lesson 3:
Be OBSESSED about your customers

Customer obsession is the core of Amazon’s success.

Lesson 4: 
Focus on organic revenue growth

Topline growth is the most preferred source of growth.

Lesson 5:
Good investing and good business are synonymous

When you invest in good businesses, great investment results will follow eventually.

Lesson 6:
Free cash flow is king

Earnings don’t determine the value of a company, the present value of future cash flows does.

Lesson 7:
Advertising is the price you pay for an unremarkable product or service

When you have a great company, the product will sell itself.

Lesson 8:
Culture is everything

In the short term, valuation is the most important mover for the stock price.

Lesson 9:
Be cash-favored and capital efficient

A low capital intensity is key for quality companies as this allows them to grow exponentially when they reinvest in themselves.

Lesson 10:
Improve every single day

In every annual letter, Bezos mentions it’s still Day 1 for Amazon.

Lesson 11:
Focus on Return on Invested Capital (ROIC)

The ROIC is THE most important metric for quality investors. The higher, the better.

Lesson 12: 
Don’t focus on the stock price

Bezos stated that they don’t celebrate a 10% increase in the stock price as much as they celebrate excellent customer experience.

Lesson 13:
Secular trends are your friend

Treat external trends as your friend.

Lesson 14: 
Don’t be afraid to fail

Failures are crucial to become successful.

Lesson 15:
Invest in durable companies

A great business has four characteristics: customers love it, it can grow to very large size, it has strong returns on capital and it’s durable in time with the potential to endure for decades.

All the Amazon shareholder letters from Jeff back to 1997

🎙️ JEFF BEZOS with LEX FRIDMAN

Lex Fridman started his podcast in 2018 and it has a huge following among the tech elite. Last month he spoke with Jeff Bezos.

Guests have included Elon Musk, Joe Rogan, Sam Altman, Mr Beast, Kanye West, Mark Zuckerberg, and more.

• Early Influences: Jeff Bezos recounts his formative years working on his grandfather's ranch, learning from hard work and developing a deep respect for self-reliance and problem solving.

• Philosophy on Decision Making: He emphasizes the importance of high-quality, high-velocity decision making, avoiding a one-size-fits-all approach, and the dangers of compromise over accurate measurement and judgment.

• Innovation and Risk: He reflects on the balance between taking calculated risks and safety, especially in the context of space tourism, and the significance of building a culture where failure is an acceptable part of innovating.

👀 FOCAL POINT MATTERS in BUNDLE IMAGES

Nick Kolenda, a marketing psychologist, says you should always place a focal product on the left side of bundles.

Turns out, customers prefer bundles in which the best product is toward the left.

But why does it influence purchases?

You evaluate bundles by imagining yourself consuming each item. If you read from left to right, you start imagining the leftmost item.

Hmm, not appealing? You feel lackluster emotions, discouraging you from evaluating the subsequent items.

• Distinguish the Focal Item. Position isn't everything. Customers simply need to look at the best product first. Make it bigger. Make it brighter. Do something.

• Stronger with Variety Bundles. Maybe you sell different versions of a product - size, flavor, color, etc. The effect is most prominent in this scenario. Without a default product, customers place more weight on the first item they evaluate.

• Strongest with 2 Items. Researchers analyzed bundles of 2 items. But with 3+ items, people might follow the central fixation bias (viewing middle options first).

📱 TIKTOK CREATIVE CENTER TEARDOWNS

In TikTok’s Creative Center, you can get a breakdown of some of the most successful videos on it platform.

They show you click through rates, comments on why the video worked, where the conversions occurred in the video, and a lot more.

It’s a great place to learn what is working for others and model your own creative content after the ones that make sense for you.

A MediaScience study showed that 50% of the impact from a TikTok ad occurs within two seconds. So, forcing viewers to watch isn’t likely to convince them to click.

🧮 HOW to CALCULATE YEAR END INVENTORY

It’s tax season, and one of the line items you have to know for your return is your year ending and year starting inventory value.

Inventory is the items you have that are not sold. They are assets to the company on the balance sheet.  When inventory is sold, then it is moved to the income statement as cost of goods sold.  Buying more inventory at year end does not lower your profit and taxes.  Only when it is sold.

The formula for Cost of Goods Sold is:
 Opening Inventory + Purchases – Ending Inventory

You need these to get your ending inventory number correct:

1. Inventory at your house or at a 3PL or other location.

2. Inventory you have paid for and is on the way.

3. Inventory stored at Amazon.

In 2023, Amazon started using what they call the Inventory Ledger.

In Seller Central, you can find it under Reports > Fulfillment.

Here are two detailed explanations to help you get this right from some certified accountants specializing in Amazon:

1. Jones & Cosman

2. Capforge

💲 SAVE $300.00 TODAY on MDS INSPIRE in LAS VEGAS

MDS Inspire is back for its second year right before the Prosper Show in Las Vegas.

The show is put on by the prestigious Million Dollar Sellers community.

Usually their events are only for members, but they host one public event a year to show other sellers what MDS is all about.

Attendance is mostly 7 & 8 figure sellers.

I went last year (and will be there again this year). The event features high quality networking, tactical learning presentations and damn good food.

It’s taking place in Las Vegas March 3-5, conveniently overlapping with the Prosper Show.

Attendee tickets are for sellers only and MDS does vet all registrations to make sure you are a full time seller.

Use this link to register and save $300.00 off the regular price (offer valid only by the end of today - January 15).

Want to be featured in this section? Use your referral link in this email to refer at least 10 active subscribers to get your event, course, webinar or tool “Shouted-Out” free to 6,800+ subscribers.

🧐 BAD AI POLLUTING AMAZON LISTINGS

First Amazon’s site was polluted with fake reviews, now it’s AI generated reviews, including many Vine reviews that are no longer written by humans.

As this story points out, there are a lot of messed up listings all over Amazon now too due to AI (some are from sellers, some are Amazon’s own screw ups).

Sellers are in some case putting in the bare minimum — if any — care into their listings and are using AI chatbots and flat file imports to automate the process of writing product names and descriptions.

In response to the story at the link above, Amazon said in a statement: "We work hard to provide a trustworthy shopping experience for customers, including requiring third-party sellers to provide accurate, informative product listings."

"We have removed the listings in question and are further enhancing our systems."

✌🏼 Remember, money never sleeps.

See you again on Thursday …

The answer to today’s STUMP BEZOS is
$571,000