Jeff Bezos's Bizarre Octopus-Based Investing Strategy

Whether it’s billionaires Warren Buffett, Bill Gates or Jeff Bezos, everyone has their own investing and business-building ideologies. But Bezos may have one of the most bizarre. 

In 2014, Amazon.com Inc. was continuing to ramp up and acquired a company called Woot.com for over $100 million. But when Bezos invited Woot Founder Matt Rutledge to spend the day with him — including breakfast — something bizarre happened.

Bezos, founder and then-CEO of Amazon, ordered something different than what most would expect for breakfast: octopus. At first, this wasn’t a talking point, but when Rutledge asked Bezos why he decided to acquire Woot, that changed. 

After a brief pause, Bezos reportedly said, "You're the octopus that I'm having for breakfast. When I look at the menu, you're the thing I don't understand, the thing I've never had. I must have the breakfast octopus."

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This cryptic message might not seem like much at first, but there is an important embedded lesson. When building a startup or business, it’s vital to create something nobody else has and make it difficult to replicate. This doesn’t necessarily mean patents or hard intellectual property (IP). It could be people, culture, data or a strong community. If you’re doing the exact same thing as everyone else, but what you’re doing is working, people want to know why. A daily deals site like Woot wasn’t revolutionary, but it had a formula that worked and scaled.

Investors should also take note of this. There are thousands of businesses, and your money is limited. It’s vital to look at what a company's moat is so if it gets acquired by Amazon, it doesn’t get the Amazon Basics treatment. Amazon is notorious for finding easy-to-copy items, making a cheap knock-off and selling it under the Amazon Basics brand. 

One great example of this is Amazon’s recent acquisition of iRobot. While Amazon could easily compete with the technology, many have speculated the real reason behind the acquisition is the company’s data. Roomba creates a map of your house as it cleans so it doesn’t run into walls. Many have speculated Amazon doesn’t care about the robots at all — just the millions of layouts of American homes iRobot possesses.

A few years ago, the average investor likely wouldn’t have to worry about many of these concepts, or startup investing in general. But as startup investing platforms like StartEngine grow in prominence, startup investing is becoming a regular part of the everyday investor's portfolio. And often times in the world of startup investing, investors see a return when they’re acquired by these trillion-dollar companies like Amazon. So knowing why they were acquired can help investors invest more intelligently in these startups.

See more on startup investing from Benzinga.

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