Amazon’s secret sauce: the flywheel model

Amazon’s flywheel of growth. From Andreessen Horowitz’s blog post

After finishing The Everything Store recently, I wanted to share an interesting framework that Bezos used when founding Amazon. The book, by the way, is a phenomenal read and gives great insight into Bezos’s character and how he has led an innovative Amazon. Ambition, persistence, spontaneity, and being neurotic/obsessive are some of the most common traits of the successful people I’ve read about so far, and he certainly embodies all of them.

Bezos thought about Amazon’s business model as a “flywheel” in the early days, and claimed that this was their secret sauce. Without going into what an actual flywheel is, this was another way of saying that the business model possessed a positive reinforcement loop that grew stronger if you fed any part of it. To quote the book:

… Bezos and his lieutenants sketched their own virtuous cycle, which they believed powered their business. It went something like this: lower prices led to more customer visits. More customers increased the volume of sales and attracted more commission-paying third-party sellers to the site. That allowed Amazon to get more out of fixed costs like the fulfillment centers and the servers needed to run the website. This greater efficiency then enabled it to lower prices further. Feed any part of this flywheel, they reasoned, and it should accelerate the loop.

Starting up the flywheel can be difficult, but once results accumulate, momentum builds and business accelerates. In the flywheel model, all incentives are aligned in the same direction. Some strategic and managerial conclusions:

  1. Design for success: the flywheel model is just another example of how leaders can design for the successful operation of their company before any real rubber hits the road. All planning and no action is bad, but having some sort of goal and a plan before doing any serious execution, in principle, works a lot more efficiently than trying things haphazardly and seeing what works.
  2. Design for alignment: a business model is least impeded when the result of anyone’s actions promote everyone’s desires and best interests, especially when that cycle is self-reinforcing.
  3. Do everything to start, protect, and build that initial momentum

Fun fact: during the 1999 holiday season, a lost box of stuffed Jigglypuffs wreaked havoc on a few Amazon distribution centers (they weren’t called fulfillment centers back then). Bezos ordered staff to pull all-nighters looking for the bundle of Pokemon–customers always came first.

What trying to blog somewhat regularly does for me

A young Benjamin Franklin. I’m currently reading Isaacson’s biography of him: it’s brilliant, and Franklin was a baller. More to come later…

I have not been at all regular with my blog. I also have a bunch of draft posts on various topics just sitting there, partially written, mostly because I started writing and got stuck, or distracted, or ran out of time. Noticing that has made me want to write this, a short blog post about blogging (meta-blogging?).

Trying to blog somewhat regularly forces me to structure my thoughts, to come up with a cohesive, brief story that allows me to get my point across and hopefully get others thinking. This is something that I haven’t mastered yet–as evidenced by my collection of half-written draft posts–but I guess that’s the process of becoming a better writer, and where editing comes in. I wonder: do all the best bloggers edit their blog posts? Because I remember editing and revising essays for school over and over again, a process that took a lot of time. Some of the best bloggers that I follow seem to write off the cuff while maintaining brevity and an easy to follow structure in their posts.

The process of regularly structuring my point of view for writing also leads to the discovery of both holes in my thinking and also areas of opportunity that I can do more research on. Blogging also acts as a sort of accountability tactic: if I blog about doing something, then I feel even more compelled to do it. It certainly is a learning experience for me, and hopefully others can learn (about blogging, and about whatever else I talk about and share) along with me.

Warren Buffett: insights into his character, obsession with OPM

Buffett’s house in Omaha, Nebraska. He bought it in 1957 and still lives in it today.

I tend to idolize Warren Buffett a little, something rekindled after recently reading Making of An American Capitalist.

He’s brilliant, humble, focused, self-confident, and frugal. He started his own “golf ball” business as a kid, employing an army of friends to fish out golf balls from ponds in local golf courses,  and then to clean, organize, and resell them. During his short time at Penn, Buffett joined a fraternity. He would spend parties at his frat house sitting on the ledge by a window, expounding on investing, the gold standard, and other economic concepts–a throng of guys and gals would always gather on the floor in front of him, hanging on his every word. In the early days of running his first fund, Buffett was insanely secretive about his investments, working from his home like a hermit, only wearing t-shirts and underwear, and refused to compromise on his fund’s 6 month lock-up period and $50,000 minimum investment (a lot at the time), even for celebrity investors. Those are just some of the captivating insights into Buffett’s character.

Buffett’s vast amount of wealth does not necessarily intrigue me that much–it is about how he build it: with self-reliance, focus, discipline, and authenticity.

He is also obsessed with “other people’s money”, or OPM, and OPM is essentially how he was able to build such a great fortune. One of Buffett’s first outright purchases of a company was an insurance company–he owns the well known GEICO today–and he used the float to fund his investments. That early purchase is said to be worth half of Berkshire Hathaway’s value today–this insightful post by Noh-Joon on Quora explains that, as well as how Buffett is able to essentially turn a 5% increase in actual investment appreciation into a 15% return (hint: leverage and effectively negative interest rates from insurance underwriting discipline). Not to mention, he’s a great stock picker.

Some books I’m reading, and why

Ever since I got my Kindle 3 years ago, I’ve been reading more. A lot more: before my Kindle, I’d probably average less than one book a year (not including those required for school). For me, it seems that the convenience of reading was a big factor.

Why do I read? As Newton said, to “stand on the shoulder of giants”. So much of mankind’s history, so far, has been recorded in physical writing–not online. Books are still the best way to see into the minds of the greatest scientists, philosophers, leaders, businessmen, etc. of all time.

It’s a balance of course, between actually taking action, and sitting down to spend time learning. The two behaviors are not mutually exclusive: one does learn from taking action, usually skills. Experience–success and especially failure–can teach very important lessons. One can’t meet new people by reading books all the time either. Sometimes though, one can discover brand new ideas and ways of thinking by reading books, ideas that are only talked about in-depth through text, by those in our history who have made a big impact. It is a different way of broadening horizons and gaining perspective.

Onto a few of the favorite books that I am reading, or have read recently, and a short reason why:

  • Buffett: The Making of an American Capitalist, Roger Lowenstein
    • The first/original biography on Warren Buffett. Intriguing insight into who he was–and is–as a person, and what characteristics of his personality and events in his life made him so successful, walking the reader from early childhood through the rescue of the Salomon Brothers
  • Mindset, Carol Dweck
    • A book backed by lots of research studies on what the “growth mindset”  is, how it’s so related to success in life, and how to develop it. A good balance of theory and practicality.
  • One World Schoolhouse, Sal Khan
    • Khan, the founder of the successful and impactful Khan Academy, makes convincing arguments for school reform, and talks about his project and how Khan Academy is the start of an educational revolution. He also talks a little bit about his childhood and subsequent path to the founding of Khan Academy. Inspirational and informative.
  • Hooked, Nir Eyal
    • A very practical and impactful book on building habit forming products, products that have fiercely loyal customers who come back to use the product day after day, from someone who has lots of experience doing so. I’ve heard this one recommended a lot by my start-up friends, and it’s one that I often recommend as well, to entrepreneurs looking for a more practical, “business” book.
  • Power of Habit, Charles Duhigg
    • Basically, the science behind Hooked. I believe habits are one of the greatest “force multipliers” in life (definitely a post for another time), and in his book Duhigg presents the science behind them so we can better understand and utilize the power of habits.

You can see I prefer non-fiction, the reason why is pretty utilitarian.

Free flashcards for the fantastic book on Customer Development, The Mom Test

I made this set of flashcards for the excellent book on Customer Development, The Mom Test, since the process and questions in the book are quite important and worth memorizing. Learn what the pain points are by talking to customers first, before building. Feedback on the flashcards welcome! Enjoy 🙂

How our talented team won $2500 at the TechCrunch Disrupt NYC Hackathon


We had an absolutely amazing and talented team at the TechCrunch Disrupt NYC 2014 Hackathon! Shout outs to our awesome front end designers Amanda Gobaud and Michelle Lee, and our tireless devs, Amine Tourki, Andrew Furman, and Teddy Ku. Here are the lessons that I learned from building a web application that won the $2500 Concur Technologies API first place prize.

  • Our app, CorpSquare (Concur + Foursquare), solved a problem. Several of the team members (me included) used Concur in the companies we worked for. So we had experience with problems or cool and practical use cases that an app designed around the Concur API could do. Even the  Concur VP of Platform Marketing told us afterwards that he had seen many with the problem we were trying to solve.
  • But, we also played the game strategically. Concur is a business expense tracking platform; most of their clients are big businesses. We felt that a business expense API wouldn’t seem as “exciting” or “sexy” as some of the other consumer-facing start-up APIs (Evernote, Weather Underground, to name a few). Since the different companies who sponsored the hackathon had API specific rewards for teams that used their API in the coolest way, this implied that there might be less competition for the Concur API reward. We made a “value” bet of sorts, as value investors would say–the strategy seems to have paid off.
  • Our team’s skills were complementarybut not too much so. A good hackathon team probably needs both design and dev skills, and different people should specialize in one or the other to make things most efficient. But, everyone should be well versed enough in non-specialty skills (like designers in dev, devs in design) to be able to communicate efficiently. For example, our designers were comfortable with both UI/UX design as well front end development like CSS. Several of our developers were full-stack, implementing the back end but also helping out with the front end. We used technologies (frameworks, languages) that we were all comfortable with, which, perhaps out of coincidence for us, was also an advantage.
  • Presentation matters, a lot. Our two wonderful front end designers spearheaded the movement to make our web application beautiful. With the help of everyone, beautiful it was. For the actual 60 second demo, we also selected the most energetic and enthusiastic speakers to present. First impressions matter, but when you’re being explicitly judged in comparison to at least 250 other people, and 60 seconds of talking and app visuals is all you’ve got, first impressions really matter.

Hindsight is 20/20, of course. Causally linking our tactics and strategies to our success is fuzzy at best. But learning never stops; whatever happens, success or failure, there is always something to take away and improve yourself, and others, with.

Spreed – the exciting journey so far, and lessons learned


Spreed, the speed reading Chrome extension I developed last year to scratch my own itch, recently took off in popularity. People wrote about it in a few different places, and our installs in Chrome went up dramatically. The journey has just begun, but I’ve already learned some lessons that I wanted to share.

Lessons learned

  • Piggybacking on buzz can be an effective technique to increase awareness
    • We piggybacked (not deliberately) on the buzz created by the launch of Spritz, the speed reading startup. People wanted to learn more about speed reading, and came across our Chrome extension when they searched for it. We could have done better if we had optimized our web presence for the keyword “Spritz” after the launch, but my excitement at going from 2k installs to 20k installs in less than 5 days blinded me. Which leads me to my next lesson…
  • Be aware of emotions, instead of letting them take control
    • My excitement at our growth caused me to naively focus on vanity metrics like installs and visits, which blinded me to the SEO opportunity mentioned above.
    • Another example: I recently almost made a grossly sub-optimal decision regarding the outsourcing of development. Again, I let excitement and optimism tempt me to “forget” to use a disciplined decision making approach. The particular one I like to use is called the WRAP technique (pdf), which I learned from the fantastic book Decisive, by the Heath brothers.
  • To quote Steve Jobs: “A lot of times, people don’t know what they want until you show it to them”
    • We’ve not only developed the features that our users have said would be most helpful to them, we’ve developed (and are developing) game changing features that  we anticipate users will find immensely helpful. We test our hypotheses by collecting feedback from users and doing small tests/experiments. The lesson here, I think applicable to all of life, and not just product development: be proactive instead of just reactive.

What has been most exciting has been working with our users to make Spreed the most helpful it can be. Building things that help people, having those people reach out to thank you, and then having conversations with them to make the product even better has been extremely meaningful. Some excerpts from our most enthusiastic and dedicated users:

“Your chrome app is phenomenal. I have been using it for 4 days now, and still find it hard to believe that such a basic app can change one’s life so much.”

“Thank you so much, this has revolutionized my life.”

“I am a dyslexic and I have always had difficulty reading with full comprehension.  I can’t believe how this has changed this for me.  I can read at 350 words with great comprehension.  What happens for dyslexics is the words flow together sometimes forming new words that aren’t there.  With this app I see only the word!  It is going to be a life changer for me.”

There’s still a lot more to do, but I’m looking forward to the future. Learn by doing and building, strive to help others, and the journey will be an exciting one.

Shout out to Ryan Ma for the beautiful redesign of the Spreed Chrome extension!


Weekend hack: AngelList Alumni Bot


Ok, it’s more of a scraper than a “bot”. But the reason I developed it was because I was looking through NYC startups on AngelList, and wanted to find founders who had graduated from my alma mater, the University of Pennsylvania. I didn’t want to click through the AngelList startup pages one by one and then click on every founder. There  was no easy way of doing what I wanted, and I also wanted to get to know the AngelList API a little better.

The AngelList Alumni Bot basically gets all startups given an input city (e.g. NYC), grabs the founder’s name, and checks AngelList or LinkedIn to see if they are a graduate of an input school (e.g. University of Pennsylvania).

There are a lot of areas for improvement (e.g. it’s not a web app, it’s really slow, it currently only supports two cities/locations NYC and SV and one school UPenn, it only grabs one founder for each start-up in a very hacky way by exploiting AngelList page meta tags). You can make contributions to the source code at

Everything was done in Python. I used and extended, this AngelList API Python wrapper: my extended version is at

My first webapp built on a framework: wtfconverter

wtfconverter converts between common units of measurement (e.g. liters, seconds, etc) and silly units (e.g. butts, barns, etc.).

It was the first web application that I had developed using a web framework, in this case the webapp2 framework, on Google App Engine. This was two and a half years ago. Before that, I had developed everything from scratch, using PHP and MySQL for the backend.

This introduction to web frameworks intrigued me, and is what jump-started my journey into Ruby on Rails. Pushing local code to the Google App Engine production server and just having the site work blew my mind. Templating (the GAE tutorial taught how to use jinja2) was like magic, creating and managing dynamic content was so much easier.

I started out by following the GAE Python tutorial word for word, which walked the user through actually building a site. Then I developed my own little webapp that was a little more useful and wasn’t much more complicated than what I had learned in the tutorial. This is exactly how I learned Ruby on Rails too: I walked through the Rails tutorial, building a microblogging app along with the author. Then I built my own web app, Pomos the Pomodoro Technique timer, using what I learned from the tutorial. Pomos has since been deprecated, but here’s a screenshot:



Anyways, I learned a lot from following these tutorials where I actually developed something concrete, and then branching off to do my own thing. This is the heart of experiential learning, and what Sal Khan, founder of Khan Academy, talks about in his book One World Schoolhouse; when the student has ownership of his education by actually applying it, e.g. by building something, he is much more likely to enjoy learning new knowledge and skills. But reforming the current state education is a topic for another post.

My holiday break project: quarterly earnings snapshot webapp



Problem: I just wanted to find out how much a company’s current quarterly earnings grew compared to their earnings for the same quarter last year (called year-over-year). I wanted this info for companies that just released their quarterly earnings recently (e.g. within the past few days), so I could generate new investment ideas. “I see AEHR released earnings recently, on December 23. How did its 2013 Q4 earnings grow from 2012 Q4 earnings?”

There’s no easy way to do this. The current options are:

  1. go to an earnings calendar site like Bloomberg’s, then look up the symbol and find quarterly earnings on a site like Morningstar, calculate the growth % number yourself OR manually find and sift through press releases to find earnings growth %
  2. pay a ton for data that tells you, through an API or web interface that isn’t at all user friendly

Solution: Quarterly Earnings Snapshot is a webapp that scrapes an earnings calendar and then scrapes SEC EDGAR filings for companies’ recently released, and historical, quarterly earnings numbers. It displays earnings per share (EPS) and year-over-year (same quarter) EPS growth in an easy to read format so I can get the relevant numbers I need at a glance.

After being in development for only a couple days, the webapp has already helped me generate new stock investing ideas quickly. For example, a few days ago, i checked the site and saw that KBH (KB Home) had released earnings a week or two ago on Dec 19, and that earnings per share had grown a whopping 671% (see below screenshot).


This prompted me to do more research on KBH, as well as its competitors in the home-building industry, an industry that seems to be rebounding from a bottom. Some homebuilder stocks have already risen a lot, others are still undervalued, and  so present potential investment opportunities.

Feedback and comments are always welcome! I know there are many different features I could add, many different directions i could take this. My short term goal over the holidays was just to build something simple in both design and usage, and to share it.

Thanks for reading. Happy holidays and happy new year!

PS: the site is Ruby on Rails + Heroku. Extremely grateful, rapidly prototyping webapps for free/cheap would not be possible without them.