Why Jeff Bezos Said Amazon Is The Best Place In The World To Fail

Most companies want them and their employees to succeed, and go to great lengths to makes sure it happens, but one of the most valuable companies in the world takes pride in being the world’s best place to fail.

In his letter to shareholders in 2015, Amazon CEO Jeff Bezos had said that Amazon is the world’s best place to fail. “One area where I think we are especially distinctive is failure. I believe we are the best place in the world to fail (we have plenty of practice!)” he wrote.

But Bezos didn’t just want his employees to fail for the sake of it — it served a calculated purpose. “Failure and invention are inseparable twins,” he Bezos said. “To invent you have to experiment. If you know in advance that it’s going to work, it’s not an experiment. Most large organizations embrace the idea of invention, but are not willing to suffer the string of failed experiments necessary to get there,” he continued.

Bezos said that big successes only came if people experimented. “Outsized returns often come from betting against conventional wisdom, and conventional wisdom is usually right. Given a ten percent chance of a 100 times payoff, you should take that bet every time. But you’re still
going to be wrong nine times out of ten. We all know that if you swing for the fences, you’re going to strike out a lot, but you’re also going to hit some home runs. The difference between baseball and business, however, is that
baseball has a truncated outcome distribution. When you swing, no matter how well you connect with the ball, the most runs you can get is four. In business, every once in a while, when you step up to the plate, you can score 1,000 runs. This long-tailed distribution of returns is why it’s important to be bold. Big winners pay for so many experiments,” he wrote.

And Bezos should know what he’s talking about. Amazon has had its share of spectacular failures — its Fire phone crashed and burned, and its Amazon Go stores haven’t yet gone anywhere. But Amazon has also had its share of spectacular wins, including AWS, which had started off as an internal project, the Kindle, which redefined e-readers, and its own brand, and its core e-commerce business, which is a behemoth that straddles the globe. None of these would’ve been possible if Amazon hadn’t been willing to experiment — and fail — in many others.