Thread by @borrowed_ideas

1/ Thread: $AMZN 2020 Shareholder Letter

This is Bezos' last letter as CEO of Amazon. I have been saying this for a while: Buffett and Bezos are two best business writers of our time.

It truly is a fitting letter to end Bezos' tenure. Here are my highlights.

2/ "...more than 7/8ths of the shares, representing $1.4 trillion of wealth creation, are owned by others. Who are they? ...they’re Mary and Larry, who sent me this note out of the blue just as I was sitting down to write this shareholder letter"

3/ One of the best arguments in favor of capitalism is this opportunity for Mary and Larry to participate in the wealth creation machine by an inventive, ambitious, and motivated strangers.

It's not just family office and hedge funds. Let's not forget the "Mary and Larry".

4/ Bezos taught a masterclass how to objectively think about stakeholders and walked us through actual numbers instead of some "feel good" words.

Beyond the shareholders, how did employees, customers, and sellers benefit from the rise of Amazon?

5/ Employees:

"In 2020, employees earned $80 billion, plus another $11 billion to include benefits and various payroll taxes, for a total of $91 billion."

6/ Third-party sellers:

"...in 2020, third-party seller profits from selling on Amazon were between $25 billion and $39 billion, and to be conservative here I’ll go with $25 billion."

7/ Customers: Customers save ~75 hours/year by shopping on AMZN. At $10/hour, that's $630/yr.

At ~200 mn Prime member, AMZN created $126 Bn value for its customers.

8/ AWS: By moving to cloud, direct cost improvements vs on-prem is ~30%. By that assumption, it created $19 Bn value.

When you consider the speed of software development and resultant impact on topline, the total value creation is ~2x the direct cost improvement.

9/ So here's what the tally is for value creation just in *2020*

Shareholders: $21 B
Employees: $91 B
3P Sellers: $25 B
Customers: $164 B

Total: $301 B

10/ “Amazon, as far as I can tell, is a charitable organization being run by elements of the investment community for the benefit of consumers”

That famous quote is true after all. Thankfully, it's NOT a zero-sum game.

11/ Amazon has expanded its focus from being Earth's most customer centric company to "Earth's Best Employer and Earth's Safest Place to Work".

"I’m an inventor. It’s what I enjoy the most and what I do best. It’s where I create the most value."

12/ Should shareholders be concerned about this expanded focus?

Bezos believes it reinforces each other.

13/ Bezos wore the philosopher hat here:

"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?"

14/ "Democracies are not normal. Tyranny is the historical norm. If we stopped doing all of the continuous hard work that is needed to maintain our distinctiveness in that regard, we would quickly come into equilibrium with tyranny."

15/ "We are all taught to “be yourself.” What I’m really asking you to do is to embrace and be realistic about how much energy it takes to maintain that distinctiveness. The world wants you to be typical – in a thousand ways, it pulls at you. Don’t let it happen."

16/ "The fairy tale version of “be yourself” is that all the pain stops as soon as you allow your distinctiveness to shine. That version is misleading. Being yourself is worth it, but don’t expect it to be easy or free."

End/ "To all of you: be kind, be original, create more than you consume, and never, never, never let the universe smooth you into your surroundings. It remains Day 1."

Thank you, @JeffBezos.

Full letter: s2.q4cdn.com/299287126/file…

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