Is Jeff Bezos the Best Investor of All Time?

1. BGBen Gilbert0:00

   Make something people want. This is the YC slogan, but this is exactly what Amazon did. I think Microsoft and Google both wanted to build something that they thought would be an amazing business model and something that was very clever to them as technologists. And what Amazon decided to do is figure out what startups wanted to build on, figure out what IT managers wanted to lift and shift to, and just build that. And it's boring, but it comes through in all these keynotes. I mean, every single thing has a customer use case attached to it, a customer use case that drove them to develop it. And it's funny how they refuse to do things like, for the longest time, people were like, "Why aren't you doing anything in blockchain?" And Andy Jassy's comment on stage is, he's like, "We don't really understand the customer use case yet." And this was in like twenty fifteen or sixteen. This is six years before the recent buzz around Web3 use cases, and I just think they're so focused on that as the very first question you have to ask before investing a single dollar of engineering resources. It's just very impressive.

2. DRDavid Rosenthal0:59

   Whereas in that same timeframe, didn't Microsoft have those ads with Common? "Blockchain in the cloud on Microsoft."

3. BGBen Gilbert1:07

   Ugh.

4. DRDavid Rosenthal1:07

   You know, and IBM was doing like a corporate blockchain.

5. BGBen Gilbert1:10

   Yeah. So they eventually did roll something out that was like, "This isn't a blockchain, but we think it accomplishes the same thing that you people who are asking for blockchain-based enterprise infrastructure are asking for."

6. DRDavid Rosenthal1:24

   Interesting.

7. BGBen Gilbert1:25

   Okay, my next one is about asymmetric upside, and this is another Bezos letter that I'm gonna quote from twenty fifteen where he says, "Given a ten percent chance of a hundred times payoff, you should make that bet every time. But you're still gonna be wrong nine times out of ten. We all know that if you swing for the fences, you're gonna strike out a lot, but you're also gonna hit some home runs. The difference between baseball and business, however, is that a baseball has a truncated outcome distribution. When you swing, no matter how well you connect with the ball, the most runs you can ever get is four. In business, every once in a while, when you step up to the plate, you can score a thousand runs. This long tail distribution of returns is why it's important to be bold. Big winners pay for so many experiments."

8. DRDavid Rosenthal2:12

   Market size unconstrained.

9. BGBen Gilbert2:14

   Market size unconstrained.

10. DRDavid Rosenthal2:17

    I think that's gotta be like a catchphrase on Acquired that we should incorporate.

11. BGBen Gilbert2:20

    Oh, for sure. Let's print it on some merch. [laughs]

12. DRDavid Rosenthal2:24

    Yeah. [laughs]

13. BGBen Gilbert2:24

    But yeah, th-this is the year after he makes the market size unconstrained comment about AWS. I just think it's such a perfect illustration. A lot of people make fun of certain venture capital investments, and I'm kind of only interested in the ones people are making fun of, 'cause that's the whole point of venture capital, is seeking these crazy asymmetric long tail returns. And I think Jeff Bezos got that better than most VCs do. He's a phenomenal high beta capital allocator. And so in running a company, I mean, he was also a very good operational CEO and also like an actual genius. So like all of these things, I mean, there's lots to say about Jeff Bezos. He's absolutely a genius. He's absolutely a brilliant operator. But maybe even more than these things, he just gets capital allocation, and that's why I think Amazon is effectively the highest performing venture returns in history. AWS is a venture bet in their portfolio that they own one hundred percent of.

14. DRDavid Rosenthal3:23

    Also that quote, what did he say, uh, in baseball you have truncated returns?

15. BGBen Gilbert3:28

    A truncated outcome distribution.

16. DRDavid Rosenthal3:29

    Truncated outcome distribution. That's the most Jeff Bezos thing ever.

17. BGBen Gilbert3:33

    [laughs] Right.

18. DRDavid Rosenthal3:35

    I'm sure that Aaron Judge is thinking that when he goes to the plate. He's like, "Ugh, if only I didn't have a truncated outcome distribution."

19. BGBen Gilbert3:42

    [laughs]

20. DRDavid Rosenthal3:43

    Ah, so great.

21. SPSpeaker3:45

    [singing] Who got the truth? Hmm. Is it you? Is it you? Is it you? Sit me down. Say it straight. Another story on the way. Who got the truth? Who got the truth now? Hmm.

Episode duration: 4:05