In the early 1990’s Jeff Bezos had an epiphany: the internet was going to dramatically change the way people purchased everything, and he wanted to participate in that transformation. The idea of Amazon.com hatched shortly thereafter. At the time, Bezos was making very good money at a large hedge fund in New York City. The decision to leave his enviable job and invest every last dime he had into a risky new business venture was not to be taken lightly. Bezos recalls how the decision was much easier to make after he employed the use of what he refers to as a Regret Minimization Framework.
The Regret Minimization Framework is a simple but powerful way to make big decisions. It works like this: Imagine yourself at age 80 looking back at your present situation within the context of your entire life. Of the various decisions you could make today, which one would cause you the least amount of regret when viewed from the perspective of yourself at age 80? When Bezos did this he came to the realization that he might regret quitting his job and attempting to participate in the internet phenomenon—especially if he failed. However, what would be even more regrettable would be to not try at all.
What makes the Regret Minimization Framework effective is its ability to help you move beyond short-term thinking and the confusion of day-to-day events to a long-term perspective. It’s the difference between a rat bumbling its way through a maze and someone using the stars to navigate across the ocean. Bezos left his job halfway through the year, which at a Wall Street firm meant forgoing a big year-end bonus. From the perspective of a person thinking in the short-term, it was stupid. But from the perspective of an 80-year-old imagined version of himself, it was the right thing to do. Had Bezos gotten his start even 6 months later than he did, there’s a good chance that Amazon.com would not have become what it is today, and it may not have survived at all.
What’s really interesting about the Regret Minimization Framework is how not only did it impact Bezos’ own life, but it also permeated into the culture and strategic direction of his company. Amazon.com is well known for the long time horizon of its strategy and growth. The company is perfectly willing to endure quarter after quarter of losses or low profitability in order to achieve its long-term vision. In fact, Bezos’ initial business plan did not even project any sort of profitability for the first 5 years of the company. This is refreshing in an age where executives and shareholders are often only thinking about the next quarter’s numbers instead of where the company will be a year, or even a decade from now.