Amazon.com is the second largest private employer and the most valuable retailer in the United States. Despite having a market cap of $766 billion with 2017 revenue of $177.86 billion and making a profit of $3 billion per year (source: wikipedia), Amazon is known for being frugal since its inception.
Jeff Bezos started Amazon.com in 1994 with $10,000. 24 years later (2018), Jeff Bezos became the richest man on the earth with $130 billion in net worth.
Jeff Bezos builds Amazon with the laser focus on customers. Being frugal is one of the main ingredients in the culture of the richest man on the earth and his company:
Frugality: We try not to spend money on things that don’t matter to customers. Frugality breeds resourcefulness, self-sufficiency, and invention. There are no extra points for headcount, budget size, or fixed expense.
Following are some of ways that Amazon and Jeff Bezos show the culture of being frugal:
- Nobody flew first class.
- Everybody stayed in budget hotels.
- The company did not pay for anyone’s cell phone bill.
- No extra point is rewarded for headcount or budget size.
- Nobody has an office with big desks.
- No free Amazon Prime subscription for employees
- All light bulb was taken out of the cafeteria vending machine in 2009.
- No free soda.
- The parking fee of $220 per month is only reimbursed for $180.
- Conference room tables are a collection of blond-wood door desks shoved together side by side.
- The vending machine takes credit cards.
- Food in the cafeteria is not subsidized.
- Employees are asked to returned all equipment including the backpack when they resign.
- A coffee stand on the first floor of the Pac Med building handed out loyalty cards so customers can get a free drink after 10th purchase. Jeff Bezos often stood in line and had his card punched.
- Jeff Bezos himself keeps his salary at $81,840.
- Jeff drives a little Honda for years since founded Amazon.
- When Amazon first had a $5000 day, his employees wanted to throw a party and Jeff turned it down: “There are a lot of milestones coming and that’s not the way I want to run things.”
- In its early day, Amazon held business meetings at a local coffee shop (as they had no conference room nor wanted to rent one). All printing or copying was done at a nearby printing shop.
- When Amazon went public in 1997, employees were handed inexpensive local beers and were told not to overcelebrate over its stock price.
- In 2003, Jeff Bezos removed all new installed TVs in conference rooms as it’s an extravagant expenditure.
- Jeff Bezos was mad when he found out someone shipped the company’s symbols to Europe.
Jeff Bezos took Sam Walton’s principles of building Walmart to heart. Bezos sticks to one goal: Being everyday’s lowest price retailer. He’s deliberate about cost. Jeff Bezos believes strongly that frugality drives innovation:
One of the only ways to get out of a tight box is to invent your way out.
To Jeff Bezos, everyday is just day 1.
If you want to build a start-up successfully or want to figure out how to stay on top of the competition, learn how this giant built and runs: being frugal. And really start with the penny.