Jeff Bezos: I Got Rich When I Understood This
Written by
Caitlyn Moorhead
Edited by
Sean Fisher
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Jeff Bezos, founder of Amazon and one of the world’s richest people with a net worth around $240 billion, attributes his monumental success to a powerful decision-making framework: the regret minimization model.
According to Bezos, this unique decision-making approach was instrumental in his journey to unparalleled wealth. But what exactly is it, and could his long-term approach to success and personal finance work for you? Let’s explore below, and you can also check out some of his other advice that has stood the test of time here.
The Regret Minimization Framework
Bezos recounts a period in his life when he was employed in a lucrative role at a financial firm in New York City. Despite the appeal of his position, the idea of selling books on the internet ignited a spark within him. It was a risky proposition that his well-respected boss thought was better suited for someone without a good job.
Confronted with a life-altering decision, Bezos employed the regret minimization model, a mental framework that simplifies complex choices by focusing on the potential for future regret. The key question he asked himself was: “In X number of years, will I regret not doing this?”
This mental model called for Bezos to project himself into the future and evaluate the decision from that vantage point. Here are the simple steps of this decision-making strategy:
- Step 1: Imagine yourself in the future.
- Step 2: Look back at your current decision.
- Step 3: Ask yourself which option would cause you the least regret.
How Bezos Applied Regret Minimization To Get Rich
Bezos envisioned himself at the age of 80, contemplating whether he would regret not launching an internet bookstore in the nascent days of the internet in 1994. He concluded that he would have more regret from not trying at all, despite the possibility of failure. This crucial mindset switch of investing in himself would prove to be more valuable than anything he would have put in the stock market at the time.
Utilizing this model shifts the decision-making process from the constraints of the present to the potentialities of the future. It widens the perspective by considering the larger context of time and focusing on aspirations and possibilities. It forces a comparison between the potential regret of trying and failing and the potential regret of never trying.
In an interview, Bezos revealed that he believed there was a 30% chance of success when he started Amazon. Yet, he was comfortable with those odds, underscoring the importance of the regret minimization model.
An anecdote shared by an early investor Bezos approached illustrates his unwavering faith in his vision. He confidently proclaimed his ambition to become the world’s richest man, and despite the incredulity it elicited, he pursued his dream relentlessly.
Before becoming an entrepreneur, Bezos was the youngest senior vice president at D.E. Shaw & Co., a successful quantitative hedge fund on Wall Street. His transition from this stable position to running a startup out of his garage in Seattle was propelled by his fascination with the rapid growth of the internet.
Amazon, which began as an online bookstore, quickly scaled into a warehouse operation and eventually emerged as the most successful e-commerce site globally. Bezos’ wealth was built predominantly from the appreciation of his substantial holdings in Amazon stock.
His journey to becoming a billionaire was a testament to the power of innovation, a strategic initial public offering, and maintaining a significant equity stake in a company that grew to become one of the largest corporations globally. Bezos’ story serves as a potent example of not only how to get your money working for you, but also of the leverage that equity ownership in a publicly traded company can offer to investors willing to embrace risk and innovation.
Get Rich Like Bezos
The bottom line here is best said in Bezos’ own words: “Do something you’re very passionate about and don’t try to chase what is kind of the hot passion of the day.”
His success is a result of his understanding of the regret minimization model and his determination to follow his passion despite the odds. Indeed, as he puts it, he got rich when he understood this.
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