When you hear “X shareholder letter” you might be tempted to think it is an amalgamation of some boring platitudes on how the company made Y revenues last year across different products/verticals. This is not the case for Amazon.com.
Jeff Bezos’ shareholder letters are lauded as some of the most clear, concise pieces of writing on how to run a successful business, and I can confirm that they are indeed very, very good.
I especially like how he does not spend much time (if any) on the numbers. Those are accessible on the financials (income statement, balance sheet). In fact, in a lot of his letters he doesn’t talk about the numbers at all. Instead, he spends page real estate talking about the company’s vision, areas of expansion/doubling-down and anecdotes on internal management, on customer obsession, on product reception and much more.
The 1997 letter is the bedrock for all the letters that follow, and Jeff lays out his long term vision for the company in clear language, which he abides by all the way through. This letter is referenced numerous times in his succeeding letters, and the thesis outlined here remains consistent to this day. It is very surprising (and impressive) to see Jeff talk about the very thing the company still prides themselves on today, more than 25 years ago. Talk about vision!
Jeff captures what running a company is all about in this excerpt here:
“It’s All About the Long Term
We believe that a fundamental measure of our success will be the shareholder value we create over the long term. This value will be a direct result of our ability to extend and solidify our current market leadership position. 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.”
What surprises me the most about Jeff is his ability to spot all these trends so early (internet usage growth, Moore’s Law and AWS, the rise of FBA, free cash flow is king), and to accurately predict how it was going to affect Amazon, in line with his goals for the business (e.g. improved customer experience)
These shareholder letters are a treasure for all founders who are out to build generational companies.
I have attached a copy of my annotated/highlighted notes. It is still Day 1!