Episode 3: Amazon's Business and a Quiz

Nick Dimitrov

Nick Dimitrov

November 29, 2018 · 22 min read

Episode 3: Amazon's Business and a Quiz

Amazon is in the business of building flywheel businesses. A flywheel business, as Amazon defines it, is one that provides so much value and delight to customers that after a certain inflection point, the flywheel business reaches sufficient critical mass and starts accelerating..


Amazon’s Business Quiz

Please, email your responses to: [email protected].

Question 1: What is Amazon’s mission statement?

Question 2: What are the three structural elements that fuel Amazon’s flywheel businesses?

Question 3: What are Amazon’s four customer segment types?

Question 4: What are some of Amazon’s products and services that target the Enterprise customer segment?

Question 5: Where does Amazon rank in the LinkedIn Top Companies List in 2018?

Episode Transcript

Amazon is in the business of building flywheel businesses. A flywheel business, as Amazon defines it, is one that provides so much value and delight to customers that after a certain inflection point, the flywheel business reaches sufficient critical mass and starts accelerating faster and faster, under its own momentum.

Amazon has created five such flywheel businesses since it became a public company 21 years ago. I will share with you what these five flywheel businesses are, in this third episode of our Amazon Bound podcast.

I’m Nick Dimitrov, welcome. You are listening to Episode 3 of the Amazon Bound podcast.

In this episode, we will start our journey to help prepare you to interview well with Amazon. In this episode and the following two episodes, we will cover three different sections with contextual Amazon knowledge and will dedicate a separate episode to each section. The three sections are: 1) Amazon’s Business; 2) Amazon’s Culture; and 3) Amazon’s Interview Process.

I will start each section with a brief overview of the contents we will cover, like a roadmap of sorts. Most importantly, I will outline how each individual section will contribute to one of the main goals of our podcast, which is to prepare you to interview effectively with Amazon.

So, we are starting out with Section 1 - Amazon’s Business. This section will include a discussion of Amazon’s mission statement and business strategy. We will also talk about Amazon’s customer experience basics, we will go over the four Amazon customer types and, will touch on Amazon’s business success. Lastly, we will end the episode with a quiz.

You can find the full quiz on our website and then email us your responses to: [email protected] Then, in the beginning of each following episode, we will announce five listeners who have submitted correct answers to the quiz and have won a free lifetime access to “The Essential Package: The Essential Course to Prepare for the Amazon Interview,” which is normally valued at $197.

Alright, let’s keep going. How will this section, dedicated to Amazon’s Business, contribute to our overall goal: to help prepare you for the Amazon interview and teach you how to answer actual Amazon interview questions: The answer is that this episode will start immersing you in the Amazon business and culture. This episode will start giving you the contextual knowledge on top of which, later on, you would build your tactical, written preparation for the Amazon interview. That’s it.

OK, now we are ready to start with Section 1: Amazon’s Business. In this section, we will cover five specific topics: 1) Amazon’s Mission and Strategy; 2) Amazon’s Customer Experience Basics; 3) Amazon’s customers; 4) Amazon’s business success; and 5) Our first quiz. Let’s get going.

Starting with Topic One: Amazon’s Mission and Strategy

Amazon's mission is to be "Earth's most customer-centric company.” It's very important to pay attention to the specific words in the mission statement. Words matter at Amazon. Amazon's mission statement is to be "Earth's most customer centric company.” The mission statement isn’t "The planet's most customer-centric company" or "The world's most customer-centric company.” The specific choice of the word Earth, is important because there are multiple planets. Maybe there are other worlds, too. There's only one Earth and Amazon is intent on communicating with extreme precision that they aim to be the most customer-centric company on this one planet: Earth. That is how Amazon communicates, both internally and externally, starting from how they articulate their mission statement and then permeating through everything else the company does.

While still staying on topic one, let’s shift gears and briefly discuss Amazon’s strategy. You could summarize Amazon’s strategy by saying that Amazon is first and foremost, a customer-obsessed company. Other companies could define their strategy by benchmarking themselves against their competitors; these companies are competitor-obsessed. A third type of companies could benchmark themselves against technology and be technology-obsessed.

Amazon is customer-obsessed and anything they do starts and ends with the customer. What this means is, whenever Amazon wants to build a new service or a new product, instead of deciding what technology to use first, or what team, or what product management to follow, Amazon starts with the customer and writes a press release. They write a fictitious press release, where they imagine announcing the new product to customers, as the new product is released in the future. This is a completely fictitious press release, a number of years in the future, that articulates the benefits that this product is going to deliver to customers. The press release includes interviews with customers, it also includes interviews with Amazon VPs or third-party partners involved in bringing the service to market. Once written, the press release is reviewed by Amazon’s leadership, and only after everyone on the team is convinced that the press release outlines tangible value for the customer, Amazon moves forward with building the product itself.

Therefore, Amazon would refuse to launch any new service or build any new product, unless there is a specific and easily-understood benefit to the end customer. This is what Amazon means, when they say that they constantly attempt to innovate on behalf of customers.

There are two types of innovation at Amazon: the continuous step-by-step innovation, which they're very good for. And the clean-sheet innovation, which Jeff Bezos has gone on record by saying: "We are willing to be misunderstood over the long run and innovate on behalf of customers. We do the things that we believe are going to pay off in the long run for our customers.” That is a key Amazonian cultural trait and a typical Amazon way of thinking.

OK – this covers Topic 1: Amazon’s Mission and Strategy.

Let’s move on to Topic 2: Amazon’s Customer Experience Basics

Like we discussed just now, Amazon is obsessed with customers. Customer-obsession is the number one fabric which defines Amazon’s corporate culture. Amazon loves how divinely discontent customers are and tries to look around corners to anticipate the customers’ evolving needs. But more importantly, in addition to trying to anticipate how customer needs would change, Amazon also defines the customer experience elements that are not going to change, in the future. What are those elements, what are those foundational pieces that are always going to be the same no matter what?

Bezos describes the notion of these unchanging customer experience basics by saying: "I can't imagine that ten years from now, customers are going to say: 'I really love Amazon but I wish their prices were a little higher’."

Therefore, in addition to trying to stay ahead of things and to constantly innovate on behalf of customers, Amazon remains laser-focused on what are the critical customer components that are not going to change.

And by staying true to those persistent, atomic-level components, Amazon is building what they call flywheel businesses. A flywheel business, as Amazon defines it, is a business that provides so much value and delight to customers that after a certain inflection point, the business reaches enough critical mass and starts accelerating faster and faster, under its own momentum.

In a way, Amazon is in the business of building flywheel businesses, and has created five such flywheel businesses since it became a public company 21 years ago. I will tell you what these five flywheel businesses are in a moment, but first let me take a quick detour to talk about the letters to Amazon’s shareholders which Jeff Bezos writes, and which letters are related to the flywheel concept we’ve been discussing.

Throughout Amazon's existence, Jeff Bezos has deliberately engaged in the leadership practice of writing letters to Amazon's shareholders. He writes one letter annually and includes it in Amazon's annual report. In each of these letters, Bezos discusses his business beliefs, learnings, and overall philosophy in running Amazon. He also educates shareholders about why these business beliefs are important to the future success of the company. These letters provide a remarkable insight into Jeff Bezos's vision, which has, in turn, defined the very essence of Amazon's culture, over the years.

Bezos's wisdom and ahead-of-its-time vision are on remarkable display in these letters. Therefore, I think that most business leaders, from the entrepreneur to the CEO, would benefit from reading Bezos's time-tested lessons. These letters are also a must-read for anyone who wants to work for Amazon or learn about the company in general.

OK, now let’s go back to our five flywheel businesses. Bezos explained the flywheel concept for the first time in his 2014 shareholder letter, and announced that Amazon, at the time, had developed three flywheel businesses: Amazon Marketplace, Amazon Prime, and AWS. You should read the 2014 shareholder letter for a deeper perspective on these three businesses.

Since 2014, Amazon has developed two additional flywheels. These two flywheels are Alexa and Amazon Business. Most everyone knows about Amazon’s Alexa technology, so I am not going to spend much time talking about it. But I should briefly touch on what is Amazon Business. Amazon Business is Amazon’s marketplace that sells products and services to businesses of any size.

OK, so far we have learned about Amazon’s flywheel concept and what are Amazon’s five flywheel businesses. Now, let’s briefly discuss how Amazon would recommend to build a flywheel business. Amazon has identified three discrete mechanisms that they believe, fuel their flywheel business concept. These three mechanisms are: Low Prices; Large Selection; and Fast Shipping. Each of Amazon’s five flywheel businesses are powered by these three basic mechanisms.

I know – this sounds super straightforward and almost mundane. These mechanisms sound like almost elementary concepts, but that is really how Amazon thinks of its customer experience. And that is how Amazon goes about delighting and obsessing over customers, every single day.

OK – this covers Topic 2: Amazon’s Customer Experience Basics.

Let’s move on to Topic 3: Amazon’s Customers

Amazon divides its customers in four specific segments: Consumers; Sellers; Content creators; and Enterprises. We're going to spend a short amount of time discussing each.

Consumers. These are people like you and I, and Amazon has a number of product offerings for that customer type. A number of examples here would include: Amazon Echo - that is Amazon’s cylindrical voice assistant. Alexa is the voice platform that powers the Echo experience and other voice-embedded experiences in cars and smart devices. Another Amazon consumer product is Kindle. Kindle is Amazon’s e-reader. A different example is Amazon Fresh – the delivery of fresh groceries to customers, which was boosted by the Whole Foods acquisition, a couple of years ago. Another example is Amazon Go. Amazon Go is the service where customers scan their phones when they enter a physical store, then pick any product they like, and walk out of the store with it, without having to checkout at a checkout facility. There are certainly other examples of products and services with which Amazon targets consumers.

The second Amazon customer segment is sellers. The key piece for this group is that Amazon is enabling its sellers to sell side-by-side with Amazon's own labels and first-party inventory. Fulfillment by Amazon or FBA is the program where Amazon sells other sellers’ products through its warehouses, and through the Prime program, for example. More than 50% of the physical and digital products on Amazon’s site are owned by third parties and merely fulfilled by Amazon. Therefore, Amazon is a marketplace, not just an individual seller of its own first-party goods.

The third Amazon customer segment is Content creators - these are the writers or film-makers or music creators or comic-book artists or any other content creators, out there.

For these customers, Kindle Direct Publishing or KDP is the platform that enables writers to publish their books without the need of an agent or an editor. You can just post your electronic book, to the Amazon store. Amazon will audit your work for trademark issues and plagiarism; If everything checks out OK, then they ingest your book on their Kindle marketplace within 24 hours and you will become a self-published author that easily. CreateSpace is the KDP service that lets writers produce a print copy of their book from the book’s digital version. Again, CreateSpace makes this process very easy. There is no need to print a large amount of paperback inventories. With KDP and CreateSpace, you can manufacture a paper book in just one or two copies if you'd like.

Amazon Studios is another service provider for content creators. Amazon Studios is the team that produces exclusive TV and film content on Prime Video. Or they could help release a third-party video product on Amazon’s content platforms on a non-exclusive basis.

Twitch is yet another service. Twitch is the platform that enables gamers to stream the games they play so that other gamers can watch and learn or spectate esports events, et cetera.

And of course, there are other examples of Amazon services that target the content-creators' space.

The fourth and final Amazon customer segment is Enterprises: This is the place where Amazon Web Services reigns supreme. Amazon Web Services are Amazon's online cloud services that let companies use Amazon's computing storage and other vertical cloud functions instead of the companies having to invest in data centers and server infrastructure themselves.

So, for example EC2 which stands for Elastic Compute Cloud is the AWS vertical that focuses on computing. If you are a company that wants to run a large number of transactions or lots of parallel processes, instead of building the infrastructure to do so yourself, you can rent EC2 and pay Amazon based on your cloud usage in second-by-second increments.

Another example is S3, which stands for Simple Storage Service. S3 is the AWS vertical that lets companies store their data on Amazon’s servers.

Another example of an enterprise service is AWS marketplace, which is an online marketplace where companies can shop for various AWS vertical services, which are certified by Amazon and all work in conjunction with AWS.

In total, more than one million active Enterprise customers, from Airbnb to GE that use AWS as their cloud solutions provider. And one more interesting point here is that AWS is growing at a faster rate than the rest of Amazon, which is quite an accomplishment, as well.

OK – this covers Topic 3: Amazon’s Customers.

Let’s move on to Topic 4: Amazon is Rising

Amazon is rising. All of this combined prominence in Amazon's business practices, Amazon’s focus on the customer, their flywheel businesses and their mission statement have all led to Amazon repeatedly winning important customer satisfaction awards.

Amazon has been ranked as the number one company in the US Customer Satisfaction Index for eight years in a row. Amazon is also the number one company in the UK Customer Satisfaction index for five years in row. Also, in 2018, they ranked as the number one company in the Harris Poll Reputation Quotient. Lastly, again in 2018, LinkedIn ranked Amazon as the number one company in the LinkedIn Top Companies List.

This is strong positive recognition for Amazon’s business, but the point I’d like to emphasize here is that Amazon needs quality talent, like you, in order to continue accelerating their growth and delighting customers. Amazon needs that infusion of talent to continue building on their successes, in the future. Therefore, you should look at their accolades from the following different perspective: not only would you benefit by working for Amazon (if you want to work there, of course), but Amazon would also greatly benefit from hiring someone like you, because they need your particular know-how to meet a great need that they might have, and to continue with their excellent execution. In other words, you are more valuable than, maybe, you give yourself credit for. Don’t forget that.

OK – this covers Topic 4: Amazon is Rising.

Let’s move on to our final Topic, Topic 5: The Amazon Business Quiz

We have published the full quiz on our website https://amazonbound.today/podcast, go check it out and email us your responses to: [email protected] I am not going to read through every single quiz-question here, on the podcast, but I will read the first question, to give you a taste. The first question in the quiz is: “What is Amazon’s Mission Statement?”

Our first quiz has five total questions. Please, go to the website to find out what they are, email us with your responses, and then, at the beginning of our next episode, we will award five listeners who have submitted the five best responses, with a free lifetime access to “The Essential Course to Prepare for the Amazon Interview,” which is a $200 value for you guys. We look forward to receiving your responses.

Alright, this covers Topic Five: “The Amazon Business Quiz.”

And, this also wraps up this episode of our podcast. As always, I hope this has been informative and helpful for you. And, as always, you can find the full transcript of this episode on our website.

That’s all for our Third Episode – I am Nick Dimitrov, your host.

Thanks for listening. Please, subscribe to our podcast and, if you have a second, please give us a rating and a review, wherever you get your podcasts. See you next time.

Koalanda LLC d/b/a Amazon Bound and any products or services offered by Amazon Bound and its affiliates do not belong to, and are not affiliated with, Amazon.com, Inc. or any of its subsidiaries or affiliates (collectively "Amazon") in any way. Amazon does not endorse Amazon Bound or our products or services in any way.