I've read all of Jeff Bezos's 23 years of Amazon shareholder letters twice now.

It's an MBA of its own.

Here's what I learned about startups, entrepreneurship, investing and more:
Your customers are loyal to you right up until the second that someone else offers them a better service.
Listen to customers, but don't just listen
to customers also invent on their behalf.
Here's Jeff Bezos on coming up with the Amazon Kindle:

We set ourselves the incredibly audacious goal of improving upon the physical book.

So don't be afraid to set big goals.

And remember that if you don't execute well, it will be done by someone else.
Many of the problems you'll face will have no textbook solutions, and so you should happily invent new approaches.
Find the real root cause or causes of a problem — and do real root fixes.

So then, when you fix it, you’re not just fixing it for one customer. You’re fixing it for every customer.
Risk aversion limits innovation and long-term value creation.
The path to success isn't straight.

Success often comes through iteration: invent, launch, reinvent, relaunch, start over, rinse, repeat, again and again.

Remember that failure is part invention.

So better to fail early and iterate until you get it right.
How to achieve outsized returns:

Outsized returns come from betting against conventional wisdom.

Given a ten percent chance of a one hundred times payoff, you should take that bet every time.

But you're still going to be wrong nine times out of ten.
Big winners pay for many experiments.

1/2

Let's talk about baseball.

If you swing for the fences, you're going to strike out a lot, but you're also going to hit some home runs. It's as true for business as it is for baseball.

However, there's just one difference.
2/2

Baseball has a truncated outcome
distribution: No matter how well you connect, the most you can get is 4.

In business, every once in a while, when you step up to the plate, you can score one thousand runs.

This long-tailed distribution of returns is why you should be bold.
Here's Bezos talking about the Echo:

1/2

If you had asked a customer "Would you like a black, always-on cylinder in your kitchen about the size of a Pringles-can that you can talk to and ask questions, that also turns on your lights and plays music?"

They would've said no.
2/2

No customer was asking for Echo. This was definitely Amazon wandering.

Wandering is an essential counterbalance to efficiency.

You need to employ both.

The outsized discoveries require wandering.
How to think long-term?

Think it's good enough today, but it will get so much better.
Be an owner 💎🙌

Many investors are short-term tenants, they turn their portfolios so quickly that they are really just renting the stocks they temporarily "own."

Owners aren't so short-sighted.

Long-term thinking is both a requirement and an outcome of true ownership.
Invest in long-term market leadership rather than short-term profitability, or short-term market reactions.
"In the short run, the market is a voting machine but in the long run, it is a weighing machine."

— Benjamin Graham

You aren't 10% smarter with a 10% increase in stock price and conversely aren't 10% dumber when it goes down.

Always want to be weighed.
It's impossible to produce extraordinary results without extraordinary people.

3 questions to consider before hiring:

1. Will you admire this person?

2. Will they raise the average level of effectiveness of the group?

3. Along what dimension might this person be a superstar?
Pay to Quit.

Once a year, Amazon offers to pay its employees to quit.

While the headline says "Please Don't Take This Offer." The goal is to make them rethink their priorities.

An employee staying somewhere they don't want to be isn't healthy for the employee or the company.
"Leaders have relentlessly high standards — many people may think they are unreasonably high."

(Amazon leadership principles)
How to achieve high standards:

1/2

First, you have to be able to recognize what good looks like in that domain.

Second, you must have realistic expectations for how hard it should be to achieve that result — the scope.
2/2

Just one example / perfect headstands

Most people think that if they work hard, they can master a handstand in about two weeks.

In reality, it takes about six months of daily practice.

If you think you can do it in two weeks, you're just going to end up quitting.
Most decisions should be made with around 70% of the information you wish you had.

Wait for 90, and you're being slow.

Plus, if you're good at course correcting, which you should be, then being wrong will be less costly than being slow.
"Disagree and commit."

If you have conviction without consensus, it's helpful to say,

"Look, I know we disagree on this, but will you gamble with me on it?"

No one can know the answer for sure, and you'll probably get a quick yes.
Finally, it's always Day 1.

Day 2 is stasis. Followed by irrelevance. Followed by excruciating, painful decline. Followed by death.

And that is why it is always Day 1.
If you enjoyed this thread, consider getting the ebook version.

At 15 mins, it's slightly bigger — enough to share the ideas more freely. It's $9, so, maybe, show your support!

Regardless, retweet, and follow me @sumitgrrg for more of these.

Thanks!

amazon.com/dp/B08WJ3SPDN/…
Love the support people!

Although, I just realized that the above link doesn't redirect you to the Amazon store of your choice.

Please use this one instead:

mybook.to/thefifteenminu…

Alternatively, show your support with an amount of your choice here: buymeacoffee.com/grrg
Jeff Bezos just sent out his final annual shareholder letter as Amazon's CEO.

And, sure, you can count on me to finish what I started. Here's letter number #24
Create more than you consume.

1/2

If you want to be successful in business, and in life, create value for everyone you interact with.

Any business that doesn’t do it, even if it appears successful on the surface, isn’t long for this world. It’s on the way out.
2/2

Value creation is not a zero-sum game.
It is not just moving money from one pocket to another.

Draw the box big around all of society, and you’ll find that invention is the root of all real value creation.

And value created is best thought of as a metric for innovation.
The world wants you to be typical — don't let it happen.

1/3

In what ways does the world pull at you in an attempt to make you normal? How much work does it take to maintain your distinctiveness? To keep alive the thing or things that make you special?
2/3

We all know that distinctiveness — originality — is valuable.

We are all taught to "be yourself."

What you should really do is to embrace and be realistic about how much energy it takes to maintain that distinctiveness.
3/3

There's a price for it and it’s worth it.

The fairy tale version of “be yourself” is that all the pain stops as soon as you allow your distinctiveness to shine.

It's misleading.

Being yourself is worth it, but it's not easy or free.

It will take continuous effort.

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More from @sumitgrrg

18 Jun
I've read more than a million words in the last six months alone.

I want to read books for a living.

I'm not kidding. Help me figure it out.

Here's what I've been reading:
I read and re-read about Steve Jobs, my most favorite creative business person.
I read about Jeff Bezos and Elon Musk. And also Sam Walton and Henry Ford.

So I learned a couple of interesting facts about Amazon and Tesla and how they do things now. And I also learned about how Walmart and Ford did it before them.
Read 16 tweets
15 Jun
Five common logical fallacies

1. False dilemma
2. Circular reasoning
3. Tu quoque
4. Ad hominem
5. Sunk cost

Recognizing them is a competitive advantage. Here's a short guide:
False dilemma:

An argument where only two choices are presented yet more exist.

Example:

Would you rather hate your job for the rest of your life or follow your passion?
Circular argument:

Starting from an assumption and using it as a means to justify the conclusion.

Example:

Aliens exist, but we haven't found them because their tech is so advanced.
Read 7 tweets
14 Jun
Robert Iger was the 6th CEO of Disney.

He negotiated with the likes of Steve Jobs to acquire businesses such as:

1. Pixar — $7.4 Billion
2. Marvel — $4 B
3. Lucasfilm — $4.05 B
4. 21st Century Fox — $71.3 B

Here are 9 startup and leadership lessons I've learned from Iger:
Long shots aren’t really that long.

"People sometimes shy away from big swings because they build a case against trying something before they even step up to the plate."

"Boldness has magic in it." — Goethe
Good enough is not good enough.

"Don’t be in the business of playing it safe. Be in the business of creating possibilities for greatness."

Perfection is not accepting mediocrity.
Read 11 tweets
6 Jun
Five valuable mental models

1. Gates' Law
2. Parkinson’s Law
3. The Paradox of Choice
4. Hanlon's Razor
5. Leverage

On startups, business, finance, investing, career, life and whatnot.

Here's a quick guide/refresher:
@BillGates' Law.

We overestimate what we can do in a year and underestimate what we can do in ten years.

It's the classic instant gratification versus long term mindset.

A ten year timeline will set you free.
Parkinson’s Law.

Work expands to fill the time available for its completion.

"How can you achieve your 10 year plan in the next 6 months?" — Peter Thiel

Forgive me for putting it right after Gates' Law. But why not?
Read 7 tweets
27 May
Out of 242 investors, 217 refused to back Howard Schultz on Starbucks.

Startups are f*cking hard.

Today, Starbucks has a $130 billion-plus market cap and literally stands for world-class coffee.

Thread: lessons on business and life:
Customers don't know what they want.

"People didn’t know they needed a safe, comfortable, neighborhood gathering place. They didn’t know they would like Italian espresso drinks."
Fill your own need.

After reaching a peak in 1961, coffee consumption in America had begun to decline, which lasted till late 1980s.

But the founders of Starbucks were not studying market trends.

They were filling a need — their own need — for quality coffee.
Read 28 tweets
2 May
THREAD: Elon Musk wants to make life multiplanetary.

I believe it's one of the most audacious goals in the history of audacious goals.

Here are the five biggest lessons I've learned from him, be it startups or life:
Do or die.

"My mentality is that of a samurai. I would rather commit seppuku than fail.”

Seppuku, or hara-kiri, is when a samurai passes a sword through their belly as an honourable alternative to disgrace.
Do not make the best product in a niche.

Make the best product.

"The Model S by Tesla was not just the best electric car; it was best car, period, and the car people desired."
Read 8 tweets

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