After growing Amazon into a trillion-dollar empire, Jeff Bezos is stepping down as CEO next week.
In Prime Day spirit, let's look back on what made Amazon so successful - as shared by Bezos himself.
We read every shareholder letter since 1997. Here's 1 key insight from each 🧵
In Prime Day spirit, let's look back on what made Amazon so successful - as shared by Bezos himself.
We read every shareholder letter since 1997. Here's 1 key insight from each 🧵
1997
It's all about the long term.
Make investments with an eye toward long-term market leadership rather than short-term profitability considerations.
Be bold with your investment decisions. Some of these will pay off, others will not. You'll learn a lesson either way.
It's all about the long term.
Make investments with an eye toward long-term market leadership rather than short-term profitability considerations.
Be bold with your investment decisions. Some of these will pay off, others will not. You'll learn a lesson either way.
1998
Ask these three questions before hiring a person:
1. Do you admire this person?
2. Will this person raise the average level of effectiveness of the group they're entering?
3. Along what dimensions might this person be a superstar?
Ask these three questions before hiring a person:
1. Do you admire this person?
2. Will this person raise the average level of effectiveness of the group they're entering?
3. Along what dimensions might this person be a superstar?
1999
Operational excellence implies two things:
i) delivering continuous improvement in customer experience and
ii) driving productivity, margin, efficiency, and asset velocity across all your businesses.
Often, the best way to drive one of these is to deliver the other.
Operational excellence implies two things:
i) delivering continuous improvement in customer experience and
ii) driving productivity, margin, efficiency, and asset velocity across all your businesses.
Often, the best way to drive one of these is to deliver the other.
2000
As Ben Graham used to say: in the short term, the stock market is a voting machine; in the long term, it’s a weighing machine.
Be a company that wants to be weighed. Over the long term, all companies are.
Meanwhile, heads down keep building a heavier and heavier company.
As Ben Graham used to say: in the short term, the stock market is a voting machine; in the long term, it’s a weighing machine.
Be a company that wants to be weighed. Over the long term, all companies are.
Meanwhile, heads down keep building a heavier and heavier company.
2001
Eliminating the root causes of errors saves you money and saves customers time.
One of the most important things to improve customer experience also happens to reduce a huge area of variable cost:
eliminating mistakes and errors at their root.
Eliminating the root causes of errors saves you money and saves customers time.
One of the most important things to improve customer experience also happens to reduce a huge area of variable cost:
eliminating mistakes and errors at their root.
2002
What's good for customers is good for shareholders.
What's good for customers is good for shareholders.
2003
Long-term thinking is both a requirement and an outcome of true ownership.
Owners ≠ tenants!
Many investors are short-term tenants, they're just renting your stock for quick profits.
As you design your customer experience, do so with long-term owners in mind.
Long-term thinking is both a requirement and an outcome of true ownership.
Owners ≠ tenants!
Many investors are short-term tenants, they're just renting your stock for quick profits.
As you design your customer experience, do so with long-term owners in mind.
2004
Drive free cash flow vs earnings per share.
A company can actually impair shareholder value in some circumstances by growing earnings.
This happens when the capital investments required for growth exceed the present value of the cash flow derived from those investments.
Drive free cash flow vs earnings per share.
A company can actually impair shareholder value in some circumstances by growing earnings.
This happens when the capital investments required for growth exceed the present value of the cash flow derived from those investments.
2005
Combine a strong analytical culture with a willingness to make bold decisions.
Math-based decisions command wide agreement, judgment-based decisions are debated + often controversial.
Any institution unwilling to endure that limits innovation and long-term value creation.
Combine a strong analytical culture with a willingness to make bold decisions.
Math-based decisions command wide agreement, judgment-based decisions are debated + often controversial.
Any institution unwilling to endure that limits innovation and long-term value creation.
2006
Have a culture that is unusually supportive of small endeavors with big potential.
In large companies, tiny seeds require patience and nurturing.
These projects need to be innovative and differentiated but they don't need to be large on the day they are born.
Have a culture that is unusually supportive of small endeavors with big potential.
In large companies, tiny seeds require patience and nurturing.
These projects need to be innovative and differentiated but they don't need to be large on the day they are born.
2007
Seek shareowners not shareholders.
Side-note: 2007 was the first time Bezos addressed his annual letter to "shareowners" instead of "shareholders."
Seek shareowners not shareholders.
Side-note: 2007 was the first time Bezos addressed his annual letter to "shareowners" instead of "shareholders."
2008
Long-term thinking levers your abilities and lets you do things you couldn’t otherwise contemplate.
It supports the failure + iteration required for invention. It frees you to pioneer in unexplored spaces.
Seek instant gratification and you’ll find a crowd ahead of you.
Long-term thinking levers your abilities and lets you do things you couldn’t otherwise contemplate.
It supports the failure + iteration required for invention. It frees you to pioneer in unexplored spaces.
Seek instant gratification and you’ll find a crowd ahead of you.
2009
Start with customers and work backwards.
Listen to customers, but don’t "just" listen to customers – invent on their behalf.
Working backwards from customer needs often demands that you acquire new competencies, never mind how uncomfortable those first steps might be.
Start with customers and work backwards.
Listen to customers, but don’t "just" listen to customers – invent on their behalf.
Working backwards from customer needs often demands that you acquire new competencies, never mind how uncomfortable those first steps might be.
2010
Technology is a fundamental tool you can wield to evolve and improve every aspect of the experience you provide your customers.
Let technology infuse all of your teams, all of your processes, your decision-making, and your approach to innovation in each of your businesses.
Technology is a fundamental tool you can wield to evolve and improve every aspect of the experience you provide your customers.
Let technology infuse all of your teams, all of your processes, your decision-making, and your approach to innovation in each of your businesses.
2011
The most radical and transformative of inventions are often those that empower others to unleash their creativity – to pursue their dreams.
When a platform is self-service, even the improbable ideas can get tried since there’s no gatekeeper ready to say it will never work.
The most radical and transformative of inventions are often those that empower others to unleash their creativity – to pursue their dreams.
When a platform is self-service, even the improbable ideas can get tried since there’s no gatekeeper ready to say it will never work.
2012
Don’t wait for external pressures. Be internally driven to improve your services, adding benefits and features before you have to.
Increase value for customers before you have to. Invent before you have to.
Be motivated by customer focus, not by reaction to competition.
Don’t wait for external pressures. Be internally driven to improve your services, adding benefits and features before you have to.
Increase value for customers before you have to. Invent before you have to.
Be motivated by customer focus, not by reaction to competition.
2013
Failure comes part and parcel with invention. It’s not optional.
Fail early and iterate until you get it right.
Strive for failures to be small in size, and when you hit on something that is really working for customers, double-down on it to grow it, quickly.
Failure comes part and parcel with invention. It’s not optional.
Fail early and iterate until you get it right.
Strive for failures to be small in size, and when you hit on something that is really working for customers, double-down on it to grow it, quickly.
2014
A dreamy business has at least 4 qualities:
1. customers love it
2. it can grow to very large size
3. it has strong returns on capital
4. it’s durable in time - with the potential to endure for decades.
"When you find one of these, don’t just swipe right, get married."
A dreamy business has at least 4 qualities:
1. customers love it
2. it can grow to very large size
3. it has strong returns on capital
4. it’s durable in time - with the potential to endure for decades.
"When you find one of these, don’t just swipe right, get married."
2015
Corporate cultures are enduring, stable, hard to change.
Culture is created slowly over time by the people and stories of past success and failure that become a deep part of the company lore.
If it’s a distinctive culture, it'll fit some people like a custom-made glove.
Corporate cultures are enduring, stable, hard to change.
Culture is created slowly over time by the people and stories of past success and failure that become a deep part of the company lore.
If it’s a distinctive culture, it'll fit some people like a custom-made glove.
2016
Always have a Day 1 mentality.
Day 2 is stasis. Followed by irrelevance. Followed by excruciating, painful decline. Followed by death.
The Day 1 defense: customer obsession, a skeptical view of proxies, eager adoption of external trends and high-velocity decision making.
Always have a Day 1 mentality.
Day 2 is stasis. Followed by irrelevance. Followed by excruciating, painful decline. Followed by death.
The Day 1 defense: customer obsession, a skeptical view of proxies, eager adoption of external trends and high-velocity decision making.
2017
High standards are teachable.
High standards are contagious. Bring a new person onto a high standards team and they’ll quickly adapt.
The opposite is also true. If low standards prevail, those too will quickly spread.
High standards are teachable.
High standards are contagious. Bring a new person onto a high standards team and they’ll quickly adapt.
The opposite is also true. If low standards prevail, those too will quickly spread.
2018
Failure needs to scale too.
As a company grows everything needs to scale, including the size of failed experiments.
If your failures aren’t scaling, you’re not inventing at a size that can move the needle.
One big winning bet can more than cover the cost of many losers.
Failure needs to scale too.
As a company grows everything needs to scale, including the size of failed experiments.
If your failures aren’t scaling, you’re not inventing at a size that can move the needle.
One big winning bet can more than cover the cost of many losers.
2019
Leverage scale for good.
With scale and your ability to innovate quickly, make a positive impact in the world.
Be an organizing force for progress.
Leverage scale for good.
With scale and your ability to innovate quickly, make a positive impact in the world.
Be an organizing force for progress.
2020
Create more than you consume.
Your goal should be to create value for everyone you interact with.
Any business that doesn’t create value for those it touches, even if it appears successful on the surface, isn’t long for this world. It’s on the way out.
Create more than you consume.
Your goal should be to create value for everyone you interact with.
Any business that doesn’t create value for those it touches, even if it appears successful on the surface, isn’t long for this world. It’s on the way out.
If you enjoyed this thread, give our recent interview with @BradStone a listen!
Thanks to @Austen for compiling all letters into one doc and shoutout to @businessbarista and @SahilBloom for inspiring us to take a closer look at the shareholder letters.
acquired.fm/episodes/speci…
Thanks to @Austen for compiling all letters into one doc and shoutout to @businessbarista and @SahilBloom for inspiring us to take a closer look at the shareholder letters.
acquired.fm/episodes/speci…
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