Jeff Bezos warns Amazon will have ‘multibillion-dollar failures’

RT: Jeff Bezos Economic Club of Washington DC 180913
Jeff Bezos, president and CEO of Amazon and owner of The Washington Post, speaks at the Economic Club of Washington DC’s “Milestone Celebration Dinner” in Washington, September 13, 2018.Joshua Roberts | Reuters

Amazon CEO Jeff Bezos warned on Thursday that the company will have large, failed experiments.

“Amazon will be experimenting at the right scale for a company of our size if we occasionally have multibillion-dollar failures,” Bezos said in his annual shareholder letter. “We will work hard to make them good bets, but not all good bets will ultimately pay out.”

As the company grows, he said, it only makes sense for their failures to grow at a larger scale. Bezos mentioned the creation of the Amazon Fire phone and Echo, which developed around the same time.

The former, he said, was a “failure.” Amazon discontinued the phone in 2015 and took a $170 million write-off.

”(We) were able to take our learnings (as well as the developers) and accelerate our efforts building Echo and Alexa,” Bezos said.

The annual letter has been published since 1997 and is often looked at for glimpses into the company’s long-term plans. This year’s focus was on the growth of third-party sellers, up 4% from last year in comparison to the company’s first-party sales.

“We could not foresee with certainty what those programs would eventually look like, let alone whether they would succeed, but they were pushed forward with intuition and heart, and nourished with optimism,” Bezos said.

Amazon’s new brick-and-mortar stores were mentioned too, as Bezos wrote the company had to “imagine the impossible.”

The stores, which allow customers to walk in, pick items and leave without checking out in a line, has paid off so far, he said, adding customers have called the current 10 stores “magical.”

Bezos also challenged other retailers to increase their minimum wage to $15 per hour.

You can read the full letter here.

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