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February 15, 2005

Experimentation and Failure

Last weekend I attend the Stanford Entrepreneurial Conference.  The lead keynote speaker was Jeff Bezos of Amazon and he did a terrific job.  He talked about historical innovations and innovators.  Some of his examples were:

  1. The guy who invented toilet paper
  2. The woman who invented windshield wipers - prior to her invention people just stopped every mile or so and wiped the windshield
  3. The woman who invented "white out" - she was an executive assistant who made a lot of mistakes while typing and was annoyed there was no quick way of correcting her mistakes.  By the way "white out" was nothing but white paint - just shows you don't have to always invent cutting edge stuff to be successful

Then he talked about Amazon and how he tries to instill a culture of "innovation' within Amazon.  He said the two important factors that help drive innovation at Amazon are:

  • Cost of Experimentation is low - its easy to run experiments in an online business and check to see effectiveness.  Amazon runs experiments all the time and evaluates which of his innovations are more effective
  • Cost of failure is low - again another terrific element of online businesses is that the cost of failure can be controlled since you can run these experiments without a significant cost if it fails.

The combination of these two factors also result in an open non-hierarchical organizational culture at Amazon.  Even front-line folks can run a experiment since the cost of doing and the cost of failure is low.  These two factors are not unique to Amazon, they apply to all online businesses and good online businesses take advantage of them - the folks at Plaxo (full disclosure:  portfolio company) are masters of this.  Rikk, Todd, and Cameron and the other engineering folks constantly experiment, test and iterate on their new feature set before releasing it.  No wonder they are at 5 million users. 

Posted by Venky Ganesan at 10:11 PM in software, technology, ventures | Permalink


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