Jeff Bezos is the founder of Amazon and Blue Origin, owner of The Washington Post and one of the world’s richest people. As an extraordinarily successful entrepreneur, Bezos has some lessons that he applies in his businesses which can also benefit those in the middle class who are trying the build wealth.
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Here are five wealth-building lessons the middle class can learn from Bezos.
Look at the Long Term
“Long-term thinking levers our existing abilities and lets us do new things we couldn’t otherwise contemplate. It supports the failure and iteration required for invention and it frees us to pioneer in unexplored spaces. Seek instant gratification — or the elusive promise of it — and chances are you’ll find a crowd there ahead of you,” Bezos said in his book, “Invent and Wander: The Collected Writings of Jeff Bezos.”
At first glance, this may seem like advice that is intended for entrepreneurs and inventors, rather than middle-class investors. But the general meaning holds true for everyone. Look beyond a short-term fix or flash-in-the-pan investment to consider those things that will support your goals over the long term.
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Risk and Failure Are Your Friends
“Failure and invention are inseparable twins,” Bezos is often quoted as saying, per Business Insider. And for all of Amazon’s successes, there have been failures along the way. Nobody remembers the Amazon Fire Phone, for example, a short-lived foray by Amazon into the smartphone market.
Risk and failure as an entrepreneur are different from risk and failure as an investor, but there are some important similarities. One is the emotional reaction to failure. Bezos cautioned against becoming emotionally attached and this is true for inventing and investing.
Think Big — Really Big
Bezos started Amazon in 1994 in his garage. It began as an online bookstore, but Bezos didn’t see it as just that. The company’s initial tag line was, “Earth’s biggest bookstore,” an early indication of Bezos’ ability to think big. While he may not have imagined that he would head a company that included grocery stores, cloud computing and even space exploration, it’s clear he had big plans for the company from the beginning
“I think it’s generally human nature to overestimate risk and underestimate opportunity,” Bezos said at The New York Times DealBook Summit. “And so I think entrepreneurs in general would be well-advised to try and bias against that piece of human nature. The risk is probably not as big as you perceive and the opportunities may be bigger than you perceive. Thinking small is a self-fulfilling prophecy.”
Create Value
Bezos has said that he believes that businesses should create more value than they consume. For middle-class investors, this is akin to living below your means so that you can save and invest for the future. Creating long-term, generational wealth means that you must consume less so that you can invest and create value for your future and for future generations.
Cash Flow Is King
This is another maxim that, on the surface, appears to be more relevant to businesses than to individuals. Bezos said that the most important metric for a business is free cash flow. But understanding how much you have coming in and how much you have going out is critical for middle-class investors, too. Understanding your cash flow during your working years and planning for your cash flow in retirement is critical to reaching your goals.
Most middle-class investors will not have the success Bezos has had, but applying his lessons for building wealth can surely enhance their position.
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This article originally appeared on GOBankingRates.com: 5 Wealth-Building Lessons the Middle Class Should Learn From Jeff Bezos
