I was working at a financial firm in New York City with a bunch of very smart people, and I had a brilliant boss who I much admired. I went to my boss and told him I wanted to start a company selling books on the Internet. He took me on a long walk in Central Park, listened carefully to me, and finally said, “That sounds like a really good idea, but it would be an even better idea for someone who didn’t already have a good job.” That logic made some sense to me, and he convinced me to think about it for forty-eight hours before making a final decision. Seen in that light, it really was a difficult choice, but ultimately I decided I had to give it a shot. I didn’t think I’d regret trying and failing. And I suspected I would always be haunted by a decision to not try at all. After much consideration, I took the less safe path to follow my passion, and I’m proud of that choice.

  Tomorrow, in a very real sense, your life—the life you author from scratch on your own—begins.

  How will you use your gifts? What choices will you make?

  Will inertia be your guide, or will you follow your passions?

  Will you follow dogma, or will you be original?

  Will you choose a life of ease, or a life of service and adventure?

  Will you wilt under criticism, or will you follow your convictions?

  Will you bluff it out when you’re wrong, or will you apologize?

  Will you guard your heart against rejection, or will you act when you fall in love?

  Will you play it safe, or will you be a little bit swashbuckling?

  When it’s tough, will you give up, or will you be relentless?

  Will you be a cynic, or will you be a builder?

  Will you be clever at the expense of others, or will you be kind?

  I will hazard a prediction. When you are eighty years old and, in a quiet moment of reflection, narrating for only yourself the most personal version of your life story, the telling that will be most compact and meaningful will be the series of choices you have made. In the end, we are our choices. Build yourself a great story. Thank you, and good luck!

  Resourcefulness

  MY BROTHER AND I had a very fortunate childhood. We got to spend a lot of time with our grandparents. You learn different things from grandparents than you do from parents. It’s just a very different relationship. I spent all my summers from ages four to sixteen on my grandfather’s ranch. He was incredibly self-reliant. If you’re in the middle of nowhere, in a rural area, you don’t pick up the phone and call somebody when something breaks. You fix it yourself. As a kid, I got to see him solve all these problems himself.

  My grandfather once bought a used D6 Caterpillar for $5,000. It was an enormous bargain; it should have cost way more but was so cheap because it was completely broken. The transmission was stripped. The hydraulics didn’t work. And so we spent basically a whole summer repairing it. Giant gears would arrive by mail order from Caterpillar. We couldn’t even move the gears. The first thing my grandfather did was build a crane to move them. That’s self-reliance and resourcefulness.

  He was a careful, conservative, quiet, and introverted sort of person, not prone to crazy acts. One day he was all by himself at the main gate of the ranch. And he forgot to put the car in park. When he got to the gate, he noticed the car was slowly rolling down to the gate. He thought, “This is fantastic. I have just enough time to unlatch the gate, throw the gate open, and the car is going to drive right through, and it’ll be wonderful.” He almost got the gate unlatched when the car hit the gate and caught his thumb between the gate and the fence post, stripping all the flesh off his thumb. It was hanging there by a tiny little thread.

  He was so angry at himself that he ripped that piece of flesh off and threw it in the brush, got back in the car, and drove himself to the emergency room in Dilley, Texas, sixteen miles away. And when he got there, they said, “This is great. We can reattach that thumb. Where is it?” He said, “Oh, I threw it in the brush.” They drove back with the nurses and everybody. And they looked for hours for the thumb, and they never found that piece of flesh—something had probably eaten it. They took him back to the emergency room and said, “Look, you are going to have a skin graft for that. We can sew your thumb to your stomach and leave it there for six weeks. That’s the best way to do it. Or we can just cut a skin graft from your butt and suture it on, and it won’t ever be as good, but the advantage is your thumb won’t be sewn to your stomach for six weeks.” And he said, “I’ll take option two. Just do the skin graft from my butt.” That’s what they did. It was very successful, and his thumb worked fine. But the funniest thing about this story is that I have incredibly vivid memories—we all do—of him, and definitely his mornings were completely ritualized. He would wake up, eat breakfast cereal, read the newspaper, and shave with an electric razor for a really long time. For like fifteen minutes. When he was done shaving his face with that razor, he would take two quick passes over his thumb because his thumb grew butt hair. Which, by the way, did not bother him at all.

  The whole point of moving things forward is that you run into problems, failures, things that don’t work. You need to back up and try again. Each one of those times when you have a setback, you get back up and try again. You’re using resourcefulness; you’re using self-reliance; you’re trying to invent your way out of a box. We have tons of examples at Amazon where we’ve had to do this. We’ve failed so many times—I think of this as a great place to fail. We’re good at it. We’ve had so much practice.

  To give you one example: Many years ago we wanted a third-party selling business because we knew we could add selection to the store. We started Amazon Auctions. Nobody came. Then we opened this thing called zShops, which was fixed-price auctions, and again nobody came. Each one of these failures was like a year or a year and a half long. We finally came across this idea of putting the third-party selection on the same product-detail pages as our own retail inventory. We called this Marketplace, and it started working right away. That resourcefulness of trying new things, figuring things out—what do customers really want?—pays off in everything. It pays off even in your daily life. How do you help your children? What’s the right thing?

  Even when our kids were four, we would let them use sharp knives, and when they were seven or eight, we would let them use certain power tools. My wife, much to her credit, has this great saying: “I would much rather have a kid with nine fingers than a resourceless kid,” which is a great attitude about life.

  Why I Went from a Hedge Fund to Selling Books

  AFTER GRADUATING FROM Princeton, I went to New York City and ended up working at a quantitative hedge fund, D. E. Shaw and Co., run by David Shaw. There were only thirty people at the company when I started and about three hundred when I left. David is one of the most brilliant people I’ve ever met. I learned so much from him and used a lot of his ideas and principles on things like HR and recruiting and what kind of people to hire when I started Amazon.

  In 1994 very, very few people had heard of the internet. It was used at that time mostly by scientists and physicists. We used it a little bit at D. E. Shaw for some things but not much, and I came across the fact that the web—the World Wide Web—was growing at something like 2,300 percent a year. Anything growing that fast, even if it’s baseline usage today is tiny, is going to be big. I concluded that I should come up with a business idea based on the internet and then let the internet grow around it and keep working to improve it. So I made a list of products I might sell online. I started ranking them, and I picked books because books are super unusual in one respect: there are more items in the book category than in any other category. There are three million different books in print around the world at any given time. The biggest bookstores had only 150,000 titles. So the founding idea of Amazon was to build a universal selection of books in print. That’s what I did: I hired a small team, and we built the software. I moved to Seattle because the largest book warehouse in the world at that time was nearby in a town called Roseberg, Oregon, and also because of the recruiting pool available from Microsoft.

  When I told my boss, David Shaw, that I was going to do this thing, I went on a long walk with him in Central Park, and he said finally, after a lot of listening, “You know what, Jeff, this is a really good idea. I think you’re onto a good idea here, but this would be a better idea for somebody who didn’t already have a good job.” That actually made so much sense to me, and he convinced me to think about it for two days before making a final decision. It was one of those decisions that I made with my heart and not my head, not wanting to pass up a great opportunity. When I’m eighty, I want to have minimized the number of regrets that I have in my life, and most of our regrets are acts of omission, things we didn’t try, the path untraveled. Those are the things that haunt us.

  At first I had to go deliver the books to the post office myself. I don’t still deliver, but I was doing that for years. In the first month I was packing boxes on my hands and knees on the hard cement floors. I said to the person kneeling next to me, “You know, we need kneepads because this is killing my knees,” and he said, “What we need are packing tables”—the most brilliant idea I’d ever heard. The next day I went and bought packing tables and doubled our productivity.

  The name Amazon comes from Earth’s biggest river, a reference to “Earth’s biggest selection.” The first name was Cadabra. When I was driving to Seattle, I wanted to hit the ground running. I wanted to have a company incorporated and have a bank account set up. I called a friend, and he recommended his lawyer, who was actually his divorce attorney. But he incorporated the company for me, set up bank accounts, and said, “I need to know what name you want the company to have for the incorporation papers.” Over the phone I said, “Cadabra”—like “abracadabra.” And he responded, “Cadaver?” And I said, “Okay, that’s not going to work, but go ahead with Cadabra for now and I’ll change it.” And so, around three months later, I changed it to Amazon.

  After books we started selling music and then videos. Then I got smart and emailed a thousand randomly selected customers and asked them, besides the things we already sold, what would they like to see us sell. And that answer came back incredibly long-tailed. They answered the question with whatever they were looking for at that moment. So I remember one of the answers was “I wish you sold windshield wiper blades because I really need windshield wiper blades.” I thought to myself, “We can sell anything this way.” So then we launched electronics and toys and, over time, many other categories.

  At the pinnacle of the internet bubble our stock peaked somewhere around $113, and then after the internet bubble burst, in less than a year our stock went down to $6. My annual shareholder letter for 2000, as noted in Part I, starts with a one-word sentence: “Ouch.”

  That whole period is very interesting because the stock is not the company, and the company is not the stock, and so, as I watched the stock fall from $113 to $6, I was also watching all of our internal business metrics—number of customers, profit per unit, defects—everything you can imagine (see the 2000 letter for details). Every single thing about the business was getting better and fast. And so, as the stock price was going the wrong way, everything inside the company was going the right way, and we didn’t need to go back to the capital markets. We already had the money we needed, so we just needed to continue to progress.

  During that era I was on television with Tom Brokaw. He pulled together half a dozen internet entrepreneurs from that era and was interviewing all of us. Tom is now one of my good friends, but at the time he turned to me and said, “Mr. Bezos, can you even spell profit?” And I said, “Sure, P-R-O-P-H-E-T,” and he burst out laughing. People always accused us of selling dollar bills for ninety cents, and I said, “Look, anybody can do that and grow revenues.” That’s not what we were doing. We always had positive gross margins. It’s a fixed-cost business, and so I could see from the internal metrics that, at a certain volume level, we would cover our fixed costs, and the company would be profitable.

  Finding the Root Cause

  I’M A CUSTOMER of Amazon and sometimes have problems with an order. I treat these problems the same way I treat a problem that I hear about from a customer—as an opportunity to improve. My email address, jeff@amazon.com, is well known. I keep that address and read my emails, though I don’t see every single one anymore because I get too many. But I see a lot of them, and I use my curiosity to pick out certain emails. For example, I’ll get one from a customer about a defect. We’ve done something wrong. That’s usually why people are writing us—not always, but usually they’re writing us because we’ve screwed up their order somehow. So I’m looking at an email, and for some reason something may seem a little odd about it. So I’ll ask the Amazon team to do a case study and find the real root cause or causes—and then do real root fixes. So then, when you fix it, you’re not just fixing it for that one customer. You’re fixing it for every customer, and that process is a gigantic part of what we do. So if I have a failed order or a bad customer experience, I treat it just like that.

  Creating Wealth

  IT’S SOMETHING PEOPLE are naturally curious about, but I have never sought the title of “world’s richest man.” I was fine being the second-wealthiest person in the world. I would much rather be known as inventor Jeff Bezos or entrepreneur Jeff Bezos or father Jeff Bezos. Those kinds of things are much more meaningful to me, and it’s an output measure. If you look at the financial success of Amazon and the stock, I own 16 percent of Amazon. Amazon’s worth roughly $1 trillion.* That means that over twenty years we have built $840 billion of wealth for other people, and that’s really what we’ve done from a financial point of view. We’ve built $840 billion of wealth for other people, and that’s great. That’s how it should be. You know, I believe so powerfully in the ability of entrepreneurial capitalism and free markets to solve so many of the world’s problems. Not all of them, but so many of them.

  *As of September 13, 2018. Amazon’s value, as of this writing (July 6, 2020), is now $1.44 trillion, of which I own 11 percent.

  The Idea for Prime

  MOST OF THE inventing we do at Amazon goes like this: somebody has an idea, other people improve the idea, other people come up with objections for why it can never work, and then we solve those objections. It’s a very fun process. We were always wondering what a loyalty program could be, and then a junior software engineer came up with the idea that we could offer people a kind of all-you-can-eat buffet of fast, free shipping.

  When the finance team modeled that idea, the results were horrifying. Shipping is expensive, but customers love free shipping.

  You have to use heart and intuition. There has to be risk taking. You have to have instinct. All the good decisions have to be made that way. You do it with a group. You do it with great humility because, by the way, getting it wrong isn’t that bad. That’s the other thing. We’ve made mistakes, doozies like the Fire Phone and many other things that just didn’t work out. I won’t list all of our failed experiments, but the big winners pay for thousands of failed experiments.

  So we tried Prime, and it was very expensive at the beginning. It cost us a lot of money because what happens when you offer a free all-you-can-eat buffet? Who shows up to the buffet first? The heavy eaters. It’s scary. It’s like, oh my god, did I really say as many prawns as you can eat? And so that is what happened, but we could see the trend lines. We could see all kinds of customers were coming, and they appreciated that service, so that’s what led to the success of Prime.

  Thinking Three Years Out

  I LIKE TO PUTTER in the morning. I get up early. I go to bed early. I like to read the newspaper. I like to have coffee. I like to have breakfast with my kids before they go to school. So my puttering time is very important to me. That’s why I set my first meeting for ten o’clock. I like to do my high-IQ meetings before lunch. Anything that’s going to be really mentally challenging is a ten o’clock meeting because by 5 P.M., I’m, like, I can’t think more about this issue today. Let’s try this again tomorrow at 10 A.M. Then on to eight hours of sleep. I prioritize sleep unless I’m traveling in different time zones. Sometimes getting eight hours is impossible, but I am very focused on it, and I need eight hours. I think better. I have more energy. My mood is better. And think about it: As a senior executive, what do you really get paid to do? You get paid to make a small number of high-quality decisions. Your job is not to make thousands of decisions every day. So let’s say I slept six hours a day, or let’s go really crazy and say I slept four hours a day. I’d get four so-called productive hours back. So if before I had, say, twelve hours of productive time during any waking day, now all of a sudden I have twelve plus four—I have sixteen productive hours. So I have 33 percent more time to make decisions. If I was going to make, say, one hundred decisions, I can now make thirty-three more. Is that really worth it if the quality of those decisions might be lower because you’re tired or grouchy or any number of things? Now, it’s different if the company is a start-up. When Amazon was a hundred people, it was a different story, but Amazon’s not a start-up company, and all of our senior executives operate the same way I do. They work in the future. They live in the future. None of the people who report to me should really be focused on the current quarter. When I have a good quarterly conference call with Wall Street, people will stop me and say, “Congratulations on your quarter,” and I say, “Thank you,” but what I’m really thinking is that quarter was baked three years ago. Right now I’m working on a quarter that’s going to reveal itself in 2023 sometime, and that’s what you need to be doing. You need to be thinking two or three years in advance, and if you are, then why do I need to make a hundred decisions today? If I make, like, three good decisions a day, that’s enough, and they should just be as high quality as I can make them. Warren Buffet says he’s good if he makes three good decisions a year, and I really believe that.