What I learned from Jeff Bezos after reading every Amazon shareholder letter
In every Amazon annual report, Jeff Bezos publishes a shareholder letter where he provides a broad overview of the company’s operations throughout the year. His letters are incredibly thought-provoking and are a must-read for anyone working in tech or interested in business. Here are a few key takeaways from reading through it.
It’s all about the long-term…
Jeff Bezos’ 1997 shareholder letter laid out his approach to business and running Amazon
- He pledged that decisions would be made with a long term lens and with a focus on market leadership
- This is important for a company that drives growth through innovation
- Allows for experimentation and an acceptance of short-term failures
- Reduces the impact of stock price fluctuations on decision-making
- Aligns customer and shareholder interests
Customer centricity as a north star
Customers are fickle; they are loyal to a company until a competitor offers a better service. Amazon designed its core value proposition around keeping customers happy by constantly offering more selection, better convenience, and lower prices.
- A low-cost structure leads to lower prices, which combined with a large range of products leads to a better customer experience.
Raise the bar on hiring… again and again
During the interview process, Amazon asks each interviewer to consider three questions before making a hiring decision: Will you admire this person? Will this person raise the average level of effectiveness of the group they’re entering? Along what dimension will this person be a superstar?
High-quality, high-velocity decision-making
Speed matters in business and slow decision making is de-energizing and a competitive disadvantage
- Guidelines for making decisions at high velocity
- Understand that decisions can be reversed
- Disagree and commit
- Recognize when an agreement isn’t achievable
- A quick escalation in these scenarios is better than constant argument
Final thoughts
In the 20 years since Amazon’s IPO, the company has grown from $148 million in revenue to over $136 billion
- Jeff Bezos takes the time each year to share his knowledge with the world in these shareholder letters
- As an investor, Jeff Bezos’ shareholder letters are a must-read for anyone interested in business
Put effort into inputs, not financial outputs
100% of Amazon’s time is focused on inputs – these inputs are controllable and are the most effective way to maximize financial outputs.
- For example, if Amazon wants to increase its stock price, they must work backward until they find something that is able to be inputted into the equation.
Build a disciplined, patient, and nurturing culture
One of Amazon’s competitive advantages is its culture which is supportive of small businesses with large potential.
- In 1996, Amazon crossed $10 million in book sales, a monumental feat for the company at the time. Today, a new business crosses that threshold would increase the company’s overall sales from $136 billion to $136.01 billion.