The Institutional Benefits and Challenges of Preserving Day 1

One of Jeff Bezos’ and Amazon’s core beliefs is the fact that day 1 should last, and be preserved. But what does it mean to “preserve day 1”?

Have you ever started a project which you have wanted to work on for a long time, and had a burst of energy and excitement to carry your work forwards? That is what day 1 is like. It is the work ethic where everyone is completely invested, hyped to get shit done, and hungry to grow.

When day 1 passes by, you get into day 2. Day 2 is where stagnation starts. It is a slow, disregarded and quiet death. It is the point where the ultimate goal is to get your baseline job done, the point where everything is so routine, no significant progress is being made.

So Why Preserve Day 1?

Why is Day 1 Important?

If it isn’t day one, you literally cannot survive. Take nature as a frame of reference.

Evolution is what brings day 1. Organisms are constantly evolving and changing. Natural selection triggers the fast-paced growth and adaptations of organisms in order to survive against the competition of resources.

Extinction is the event where a species cannot evolve fast enough to keep up with the change of the environment. If a species were to stop evolving, their growth rate would be zero whereas the environment would be growing at a pace of say, 5.

• Any pace below 5, and you would be good as dead since the habitat would eventually overwhelm your abilities to stay alive. This would be the event in which you are deep into day 2.
• If your pace is exactly 5, you are in the brink of day 2. Your growth is enough to keep up with the rest of the environment, but you aren’t making any progress compared to the others. You are the status quo.
• If your pace is greater than 5, you are in day 1. You are growing faster than the rest of the competition…basically thriving.

Day 1 in Entrepreneurial Industry

It’s easy to see how this applies to the entrepreneurial world. Small startups with the right plan hit an exponential growth path, since they were previously in Day 1 as expected… after all, they were newly born. As they grow larger, it becomes difficult to make quick and smart moves since you could be talking hundreds of thousands of employees. When you are a giant, other startups are able to make quick moves, and grow faster than you. Eventually, you fall behind and fade into the history books. Let me give you some context on companies in day 2.

Although stock price by no means represents the total well being of a company, it is an okay indicator of what the performance is like.

Above, we have the all-time chart of IBM’s stock prices. It is quite easy to tell when they were in day 1, and when they have been in day 2.

The green parts represent day 1 mentality, and the red parts represent day 2 mentality. Remember, with big corporations, it isn’t difficult to have all of the executives on day 1. After all, they should be the ones always on their feet, excited to lead a company to success. However, it is really difficult to have the whole company on day 1. In order to understand the problems institutions face to stay on day 1, we need to understand the requirements of day 1.

Institutional Requirements of Day 1

• Quick Decision Making
• Risk Taking
• High momentum
• Innovation

Quick decisions are an essential part of moving forward quickly. If it takes a week for a company to make a decision, that could completely trash the momentum and slow down the progress of the company a whole lot. You need to be able to make quick decisions to make quick progress.

Making a new product requires risk taking. You will have to make decisions that seem dangerous, but have a high success award. If these risks are played smart, they can lead to huge benefits.

High momentum is achieved when everyone in the company is hard at work and excited to build something. Momentum only increases as more work is done, and you can eventually achieve things nobody has achieved before. It is one of the keys to dominating the competition.

Innovation is the challenging of the status quo, the hard work that went into creating a better alternative. Startups can only become big if they make a groundbreaking innovation which transforms society to the better. This is the key ingredient to 10x growth.

Keeping all of these qualities in check for a startup is much simpler to do so when compared to a larger company.

Difficulties For Larger Corporations

Decision making in a larger company requires consent from different hierarchies, and even different branches/modules. In order to get information from another compartment of a company, you would need to schedule a meeting, email etc. which all slow down the decision making process. This is why it is so difficult to make decisions quickly within big companies.

Risk taking is relatively simpler compared to decision making. It is more of an executive centered trait, however there have been companies who just continue what they are doing since everyone involved has a stable income. Growth requires innovation. Innovation requires risk taking. Trying to resist this fact is a creative method of dementing reality, and ignoring the correct and hard moves, but choosing the easy and wrong ones. Not taking risks leads to slow decay, a day 2 type of event.

Like I said, momentum is made when everyone is fully invested in their work in creating something new. This is easy with 5 people in a basement since it is a smaller sum of people to keep in check. However, when you are talking 1000’s of employees, it is not worth the investment to go around and check if everyone is hard at work, excited, and building.

Innovation breeds change. This is a fact that needs to be understood for success. For big companies, this means that none of their branches are permanent. Take Amazon for an example. They have branches of amazon.com, AWS and Alexa. These are all innovative sectors, which all deliver resources and results. However, the world is constantly changing. This means that Amazon has to invest in totally different ideas which could possibly turn out to be huge, so that the company can thrive in the future. This also means that sectors which make a lot of money right now might not in 5, 10, 15 years. There has to be fluidity in building sectors, and killing old and useless ones. I like to think of it as an ant climbing a tree. An ant has legs, which it chooses where to place. If it keeps all of its legs in the same spot, it will never move forward. It has to move some legs forward, some of which will not grasp well, some of which will be a huge help to move up. It has to also lift its back legs and move those ahead since the ant can’t keep legs which are behind and just grow new legs.

Closing Thoughts

Stay Hungry. Stay Foolish — Steve Jobs

This also applies to big companies. Stay Hungry. Stay innovative. Stay ambitious as if nothing has been accomplished yet. Stay in day 1. Companies have to take risks and grow to thrive and help society.

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