What the difference is between $10 and $10,000/hr work - as illustrated by Amazon

What the difference is between $10 and $10,000/hr work - as illustrated by Amazon

If you are currently employed, try to think about how much you get paid per hour.

That's only the cost of your labour.

Typically however, salaries form only part of a companies budget. This means that whatever you are paid in hour, you should deliver some multiple of that in value in order for the business make sense.

For example - if you get paid $10 per hour, and the typical company has ~30% of the companies budget devoted to payroll and salary, then you're likely offering ~$30/hr in value.

This is helpful because it means if you want to increase your hourly pay, you need to know that at a bare minimum, you need to deliver 3-5x your hourly pay in value in order to justify your command.

But what does that mean? I think the best way to illustrate this is to show this through the different stages of Amazon's CEO, Jeff Bezos journey in entrepreneurship.

What does $10/hr work look like? Packing Boxes

In the early days of Amazon, Jeff was known to participate in the packing of the boxes himself. Much like many early stage entrepreneurs, he didn't have the resources to hire packing teams.

This is a $10/hr task. It's not a task that is delivering a lot of value - most customers wouldn't really think about. But it needs to get done.

Customers can live with the boxes not being taped 100% perfectly every time. But they will notice if the tape is peeling. Or if they don't get the box at all!

$10/hr is low impact. But it must be done, and very rarely can be avoided, especially in the early stages of any project.

What does $100/hr work look like? General Meetings

How about $100/hr work?

In the early stages of Amazon, Jeff likely sat in on a lot of meetings, especially as it relates to the different early divisions of the company. Likely it was meetings where Bezos was involved in the decision making across all major parts of the company.

Questions like:

  1. Is our selection of toiletries adequate.
  2. How are our delivery times faring in Alaska?
  3. What is the speed of our website?

Unlike packing boxes, this is a relatively high value activity that employees at every level need to commit some % of their time for. This is a core component of operational excellence - that is, understanding and devoting time to executing on the core priorities of a company.

For mid-level managers, this may take up >50% of their time. As they progress up the management ladder, the % of their total work decreases that is in this bucket.

What does $1,000/hr work look like? High Level Recruiting and Fundraising

Welcome to $1,000/hr work. Now you are delivering the value of a round-trip to Europe on an hourly basis.

At this stage, you're likely not involved in the operational day to day of the company. Most of the work you are doing is very abstract, and likely very far removed from the operational engine of the company.

But just because it's not very close to the day to day of the company, doesn't mean that it is not important. On an hour by hour level, the value of this work is an order of magnitude higher.

Generally for Bezos, this work fell into two major buckets.

The first is recruiting. Every senior level hire Bezos managed to convince to come on board was another force multiplier. Senior level hires would help build teams, lead operational projects and drive results.

It also leaves room for the leadership to focus on bigger projects.

The second is fundraising. Every hour spent on fundraising is an hour that helps open up the possibility of increased capital for the company. This increased capital is another force multiplier as it can open up everything from new projects, new endeavours and hiring more people.

Welcome to 10,000/hr work

Most of us can't even envision what $10,000/hr work looks like.

To imagine what it looks like, envision delivering the value an average salary, but during an hour.

Think of your average office worker, sitting 40 hours a week, 50 weeks a year.

Answering to emails, writing reports, and completing busy work.

Imagine what kind of value needs to be done in an hour by someone to beat what the average worker does in one year.

At this scale, very few activities are at this level. The only things that are capable of driving this type of value at this level are decisions.

Should we invest in A or B.

Should we buy A or B.

Should we sell A or B.

For Jeff Bezos, this could mean "Should we purchase Whole Foods", or "Should Amazon enter the health space".

What does this mean?

No matter what your level, you will always have the choice to work on projects and tasks that can contribute to different levels of value.

But remember that if you want to drive bigger and higher levels of wealth and size to your business and/or your life, you will need to emphasize work and projects that are in the higher levels.

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