Even billionaires make expensive mistakes. Jeff Bezos, founder of Amazon and one of the world’s richest people, has lost literal billions of dollars on failed ventures throughout his career. But what separates successful entrepreneurs from everyone else isn’t avoiding failure — it’s learning from it and turning those lessons into future wins.
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“I’ve made billions of dollars of failures at Amazon.com,” Bezos admitted during a 2014 Business Insider conference. “Literally, billions of dollars in failures. None of those things are fun. But they also don’t matter.”
His approach to failure offers valuable lessons for anyone building wealth or managing money. Here are Bezos’ five biggest money mistakes and the wisdom he gained from each costly error.
The $170 Million Fire Phone Disaster That Led To Alexa
In 2014, Amazon launched the Fire Phone with grand ambitions to compete directly with the iPhone. The device featured novel technology like “Dynamic Perspective” that created 3D effects using head-tracking sensors. Originally priced at $199 with a contract, the phone was supposed to make buying from Amazon easier while generating hardware profits.
The mistake: The Fire Phone sold only tens of thousands of units in its first weeks. Within months, Amazon had to slash the price to 99 cents and eventually took a $170 million write-down on unsold inventory.
What went wrong: Bezos was intimately involved in the design process, with team members noting that “even the very smallest decisions needed to go through him.” The company focused on Amazon-centric features rather than what smartphone users actually wanted. Reviewers called the device “gimmicky” and criticized its expensive price point for limited functionality.
The lesson learned: Instead of dwelling on the failure, Bezos saw opportunity. The Fire Phone’s voice recognition technology became the foundation for Alexa and the Echo smart speaker. “You can’t, for one minute, feel bad about the Fire Phone. Promise me you won’t lose a minute of sleep,” Bezos told the project leader.
The payoff: Amazon Echo and Alexa devices have sold hundreds of millions of units worldwide, generating far more revenue than the Fire Phone ever could have. This taught Bezos that failed experiments often contain the seeds of future successes.
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The Kindle Book Deletion Fiasco That Taught Crisis Management
In 2009, Amazon discovered that copies of George Orwell’s “1984” and “Animal Farm” had been sold on Kindle by an unauthorized publisher. Instead of working with customers to resolve the issue, Amazon remotely deleted the books from users’ devices without warning.
The mistake: The deletion sparked massive outrage over censorship concerns and Amazon’s heavy-handed approach to customer service. The irony of deleting “1984” — a book about authoritarian control — wasn’t lost on critics.
What went wrong: Amazon prioritized legal compliance over customer experience, making a unilateral decision that violated user trust. The company failed to communicate with customers or offer alternatives before taking action.
The lesson learned: Bezos quickly issued a public apology, calling the decision “stupid, thoughtless and painfully out of line with our principles.” He promised to use “the scar tissue from this painful mistake to help make better decisions going forward.”
The payoff: This crisis taught Amazon the importance of customer-first thinking even when dealing with legal issues. The company now has better protocols for handling similar situations while maintaining customer trust.
Amazon Wallet’s 6-Month Life Span
In July 2014, Amazon launched Amazon Wallet as a way to store and organize gift cards and loyalty cards. The digital wallet was meant to compete with emerging mobile payment solutions and increase customer engagement with Amazon’s ecosystem.
The mistake: Amazon Wallet lasted just six months before being discontinued in December 2014. The service failed to gain traction because it didn’t allow users to store credit or debit cards — the main feature people wanted from a digital wallet.
What went wrong: Amazon built a wallet that solved problems customers didn’t have while ignoring the functionality they actually wanted. The company was too focused on its own business needs rather than genuine customer pain points.
The lesson learned: Bezos frequently emphasizes that “failure and invention are inseparable twins.” This failure reinforced the importance of understanding customer needs before building solutions.
The payoff: The experience helped Amazon better understand mobile payments, eventually leading to more successful payment innovations and a deeper appreciation for customer research.
Amazon Local Register’s Failed Payment Processing
Also launched in 2014, Amazon Local Register was designed as a small-business payment processing solution to compete with Square. The service allowed small businesses to accept credit card payments using mobile devices.
The mistake: Despite Amazon’s massive resources and customer base, Local Register failed to gain significant market share and was eventually discontinued.
What went wrong: Amazon entered a market where Square had already established strong relationships with small businesses. The company underestimated the importance of being first to market and the switching costs for established merchants.
The lesson learned: Even with unlimited resources, timing and market positioning matter enormously. Being late to a market requires either superior technology or significantly better value proposition.
The payoff: This failure taught Amazon to be more strategic about market entry timing and to focus resources on areas where they could build sustainable competitive advantages rather than just following competitors.
The Crucible Gaming Disaster
In May 2020, Amazon launched Crucible, its first major attempt at creating a AAA video game. The free-to-play team-based shooter was designed to compete with popular games like Fortnite and compete in the growing esports market.
The mistake: Just one month after launch, Amazon moved Crucible back to closed beta testing due to poor player reception and low engagement. By October 2020, development was permanently cancelled.
What went wrong: Amazon treated game development like other software projects, not understanding that successful games require different development approaches, community building and player engagement strategies. The company relied too heavily on data and analytics rather than understanding gaming culture.
The lesson learned: “When we are developing a new product or service or experimenting in some way, and it doesn’t work, that’s okay. That’s great failure,” Bezos has said about distinguishing between acceptable experimental failures and operational mistakes.
The payoff: The Crucible failure helped Amazon understand the unique challenges of game development and led to more realistic expectations for future gaming ventures.
The Wealth-Building Wisdom Behind the Failures
Bezos’ approach to these expensive mistakes offers several key lessons for building and managing wealth:
Scale your risk-taking with your resources: As Bezos puts it, “the size of your mistakes needs to grow along with [the company].” When you have more money to work with, you can afford bigger experiments that could yield proportionally larger returns.
Distinguish between good and bad failures: Bezos identifies two types of failure — experimental failures when trying something new (which should be celebrated) and operational failures in areas you should already understand (which shouldn’t happen).
Use the venture capital model: “A small number of winners pay for dozens, hundreds of failures,” Bezos explains. This approach works for personal investing too — a few great investments can offset many mediocre ones.
Don’t be emotional about losses: When the Fire Phone failed, Bezos told his team not to “lose a minute of sleep” over it. Emotional attachment to losing investments or failed business ventures can prevent you from making rational decisions about future opportunities.
Extract lessons from every failure: Each failed venture taught Amazon something valuable that contributed to later successes. Bezos views failures as expensive education rather than pure losses.
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This article originally appeared on GOBankingRates.com: Jeff Bezos’ Top 5 Money Mistakes (And What He Learned From Them)
