Amazon is the world's 5th most valuable company in the world with a market cap of $1.07T as of April 20, 2023. It has come a long way from being an online bookseller that started in July 1994 at the garage of founder Jeff Bezos in Washington.

In his interviews and writings, Bezos explained his thought process in risk taking and decision making using "doors" as analogy.

Decisions that have big consequences and are difficult to undo are the one-way doors or what he also calls Type 1 decisions. Now most decisions are not like these - they are easy to change or reverse - two way doors or Type 2 decisions. If you don't like what you see after making these decisions, he says you can always go back.

The problem according to Bezos is that many companies, especially once they become large, use Type 1 decision making for Type 2 decisions. This leads to less speed, risk taking, experimentation and innovation.

When companies get to this point, they become at risk of being disrupted by other companies who are more nimble and who take on more risks to find the next successful business venture.

But if companies have a culture that allows experimentation and risk taking on two-way door opportunities, they put themselves in the position to stumble upon the next important business or product.

Bezos explains this mindset of his with another analogy - baseball:

Given a ten percent chance of a 100 times payoff, you should take that bet every time. But you’re still going to be wrong nine times out of ten. We all know that if you swing for the fences, you’re going to strike out a lot, but you’re also going to hit some home runs. The difference between baseball and business, however, is that baseball has a truncated outcome distribution. When you swing, no matter how well you connect with the ball, the most runs you can get is four. In business, every once in a while, when you step up to the plate, you can score 1,000 runs.

Amazon has lost millions of money in failed ventures like the Fire Phone, Pets.com and Amazon Auctions.

But these failures have been paid off many times over by runaway in-house experiment successes - Amazon Prime, Kindle, Echo and others. The biggest thus far is Amazon Web Services which contributed in 2022 18% of company sales at $80B and 63% of operating income at $13.5B.