How to Become a Retail Legend: Recognize That “Selling” Isn’t the Whole Story

Actions speak louder than words, or so they say. But if you're trying to understand what makes a person tick, letting them explain their actions isn't so bad a method. For this Rule Breaker Investing episode, host David Gardner is delivering his tenth "Great Quotes" themed show, and he leads it off with an unusually long quote from a businessman whose name he thinks you'll be able to figure out. And the topic is why he chose to do something that -- back when his company was young -- might have driven some customers (and suppliers) away. Said one irritated supplier, "Maybe you don't understand your business. You make money when you sell things." Not exactly, said our hero. Allow him to elaborate, and then Gardner will dig into the lesson this anecdote reinforces.

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This video was recorded on June 12, 2019.

David Gardner: Great quote No. 1. For great quote No. 1, I'm going to hold off telling you who this came from. I'll just give you the quote and let you guess who might have said this. This is not going to be in any great book of quotations. This is just a line I pulled from an article about this person once, something that this person said. You won't find this in Bartlett's or The Penguin Book of Quotations, at least not yet. I quote,

I bet you've guessed by now, it's Jeff Bezos, the founder of Amazon. Bezos goes on, "I thought to myself, we don't make money when we sell things. We make money when we help customers make purchase decisions."

I love that line! Why do I love that line? Because what's underneath that is this concept of reframing, which is one of my favorite things to do in business, investing, and life. When the world's looking at something one way, and you flip it and show that you're looking at it in a different way. I'll give a couple of more examples in a second. Bezos right there is reframing what Amazon is about. He's being lectured by book publishers who are getting fewer sales, in some cases, because of bad reviews. "Hey, your job is to sell things." And Jeff said back, "No, we make money when we help customers make purchase decisions." And it is that customer-centric viewpoint that has led to a great business and one of the great 20-plus-year runs on the stock market that you will ever see. So, reframing.

Here's another example. Maybe you know this joke about monks, smoking, and praying. This is a perfectly illustrative example of reframing. The monk approaches the abbot at the monastery. The monk says, "Is it OK if I smoke when I'm praying?" And the answer is, "Of course it is not OK to smoke while you're praying!" So he tells one of his monk friends this, and the monk friend goes back up to the abbot himself and says, "Is it OK if I pray while I'm smoking?" And the answer comes back from the abbot, "Of course it's OK. That's a wonderful thing, to pray while you're smoking." Reframing.

I see this done in business. Conscious capitalism is a wonderful reframing of capitalism in a world that previously thought that the purpose of business was to maximize shareholder value. That was, in the 20th century, the reason for the corporation, the raison d'être, to "maximize" shareholder value. But conscious capital came along and said, "No, it's not about a single stakeholder and just maximizing that stakeholder's value. Enterprises exists for all of their stakeholders." To create wins for not just your shareholders, but of course, for your customers. That's, after all, why most businesses exist in the first place, creating products, services, solutions, for customers.

You're also there, another key stakeholder, you see them every day, with your employees. And then of course, you've got your partners and your suppliers. You might have the community, if you're a local community business. Maybe you have the environment in your mind. The environment might care about your business. There are a lot of stakeholders that surround enterprises. The mental picture I have is that they're all joined hands, and in the middle is this corporation, and they're trying to lift it up and say, "Create a win for all of us." That is capitalism done right. That's that stakeholder orientation, the second principle of conscious capitalism. There are four. If you don't know them, you can just google it. But that's No. 2. It's my favorite.

And that is a reframing how to think about capitalism and about businesses. The ones that get it, that solved for all their stakeholders, not just arbitrarily one of them, to max it out for that one group, the ones that do it for all, are much more successful, and you are typically invested in them. They're the Rule Breaker stock picks that I make in Rule Breakers and Stock Advisor. Not every company is perfect, and not every company that does this is a real exemplar. But the best ones really are. Reframing.

Before we go to our next quote, Rule Breaker Investing in a lot of ways is a reframing of how people thought about investing in the past. Here's a good example. Sometimes I think, in a world that was trying to find a great valuation, I decided, "Let's find great businesses." You have a lot of people walking around looking for the right P/E ratio or the right balance sheet item that they're using a screening tool to screen the market for. They're looking for valuation metrics. That, for a lot of them, was what traditionally, from Benjamin Graham going forward, what they cared about, what they were searching for most of all. "Just give me a good valuation, and I'll buy any business," goes that line of thinking.

But I've done really well, and I hope you have, too, if you're listening and following me, we've done really well by finding not great valuations but great businesses. After all, valuations are pretty temporary. They change from one month or quarter to the next. Great businesses do not. In particular, if you and I are going to buy these companies to hold them for at least three years, if not three decades, you're really buying a business, aren't you? Far more than a valuation? So, reframing. In a world where people were looking for great valuations, we've been looking for great businesses.

Thank you, Jeff Bezos, with great quote No. 1, for teaching and illustrating how to reframe and the value that comes from that. In a world where people thought you were making money selling things, you were actually making money by helping customers make their purchase decisions. The power of online reviews, from the earliest days.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. David Gardner owns shares of Amazon. The Motley Fool owns shares of and recommends Amazon. The Motley Fool has a disclosure policy.