Transcript
Introduction
It's all about the long-term. Jeff Bezos' first shareholder letter in 1997. "This is day one for the internet and if we execute well, for Amazon. Today, online commerce saves customers money and precious time. Tomorrow, through personalization, online commerce will accelerate the very process of discovery. Amazon uses the internet to create real value for its customers. And by doing so, hopes to create an enduring franchise even in established and large markets."
"We have a window of opportunity as larger players marshal the resources to pursue the online opportunity and as customers new to purchasing online are receptive to forming new relationships. Our goal is to move quickly to solidify and extend our current position while we begin to pursue the online commerce opportunities in other areas. We see substantial opportunity in the large markets that we are targeting. This strategy is not without risk. It requires serious investment and crisp execution against established leaders."
"We believe that a fundamental measure of our success will be the shareholder value we create over the long-term. The stronger our market leadership, the more powerful our economic model. Market leadership can translate directly to higher revenue, higher profitability, greater capital velocity, and correspondingly stronger returns on invested capital. We have invested and will continue to invest aggressively to expand and leverage our customer base, brand, and infrastructure as we move to establish an enduring franchise." There's that word again. We're right in the being and he's already said the -- used the word enduring twice. "Because of our emphasis on the long-term, we may make decisions and weigh trade-offs differently than some companies."
"We want to share with you our fundamental management and decision-making approach so that you, our shareholders, may confirm that it's consistent with your investment philosophy. We will continue to focus relentlessly on our customers. We will make bold rather than timid investment decisions where we see a sufficient probability of gaining market leadership advantages. Some of these investments will pay off. Others will not, and we will have learned another valuable lesson in either case. When forced to choose between optimizing the appearance of our GAAP accounting and maximizing the present value of future cash flows, we'll take the cash flows. We will work hard to spend wisely and maintain our lean culture."
"We understand the importance of continually reinforcing a cost-conscious culture. We will obsess over customers. From the beginning, our focus has been on offering our customers compelling value. We set out to offer customers something they simply could not get any other way and began serving them with books We brought them much more selection than what was possible in a physical store and presented it in a useful, easy to search, and easy to browse format in a store that's opened 365 days a year, 24 hours a day. We maintained a dogged focus on improving the shopping experience. We dramatically lowered prices, further increasing customer value."
"Word of mouth remains the most powerful customer acquisition tool that we have. I take great pride in being part of this team. Setting the bar high in our approach to hiring has been and will continue to be the single most important element of Amazon's success. It is not easy to work here. We are working to build something important, something that matters to our customers. Something that we can tell our grandchildren about. Such things aren’t meant to be easy. We are still in the early stages of learning how to bring new value to our customers through internet commerce. We know vastly more about online commerce than when Amazon was founded, but we still have so much to learn. Though we are optimistic we must remain vigilant and maintain a sense of urgency."
That was an excerpt from Jeff Bezos' very first shareholder letter. So this is the third time that I've read Jeff Bezos' shareholder letters. I plan on rereading them many times in the future. The first time I made a podcast about his shareholder letters was all the way back on episode 71. And if you look at episode 71, the tagline and description for that episode I actually got from a fantastic business e-mail newsletter called CB Insights. And they had a post about Jeff's shareholder letters, and I think they put it the best way. Like why would you want to spend so much time reading them and learning from them. And they said to read Bezos' shareholder letters is to get a crash course in running a high-growth internet business from someone who mastered it before any of the playbooks were written.