1997 – Let’s build Rome – Jeff’s First letter

I have always been intrigued by the letters sent to shareholders by both Warren Buffet and Jeff Bezos. They are inspiring and for wannabes like yours truly a source of motivation and hope. So I am creating a series of articles on what learnings I took away from the letters of Jeff Bezos.

You can check out the complete series here: https://alphonserajdavid.com/category/book-reviews/non-fiction/jeff-bezos-stakeholder-letters/

Life doesn’t go according to our plan. But the plan sure does Rhyme with our life. That’s the feeling I had when I read this letter.

Jeff Bezos laid out a path for the future. At that point in time the foundation for Amazon was laid but the way he eloquently shares his path for a grandiose future while still keeping the dream and the path firmly rooted in numbers and growth data

The first sentence which resonated with me in the letter was this “Amazon.com 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”

Learning #1: Use the Internet to create real value for your customer

Learning #2: Always keep your focus on the end goal ( Here the end goal was the established and large markets)

Also further along in the letter he talks about how their goal is to quickly move and solidify their current position as they pursue new areas.

Learning #3: Consolidate existing strengths while pursuing new experiments

The main measure of success is all about the shareholder value you create over the long term. While the term shareholder value takes a lot of flak right now for being too focused on the investors and does not include the best interests of employees, vendors, suppliers etc. The meaning withinit is something I’ll take along with me.

Learning #4: Always focus on long term value creation

In this letter he talks about the main metrics he measures his team by; In addition to usual metrics of customer and revenue growth, he talks about understanding the importance of repeat customers and brand. Sounds taken for granted in today’s SaaS world but it’s funny how many companies still cant seem to get it right.

I have always believed that in an continually changing world, the best businesses are those which have unchanging value systems.

Some of the value systems I fell in love with include

Learning #5: Focus relentlessly on the customer

Learning #6: Create, Measure and jettisen Investment ideas based on Data and metrics

Learning #7: Be bold while making bets on the market

Learning #8: Cashflow is king

Learning #9: Spend Wisely

Learning #10: Focus on hiring and retaining versatile and talented employees

I really liked the part where he spoke about tying the compensation to stock options rather than cash. Only when the employee hinks like an owner can the firm succeed.

As I said earlier the whole letter would have sounded like someone building a castle in the air but the way he presented the story by backing it up with data like 838% increase in sales and 738% in customer base is actually just awesome.

Also, towards the end he makes this statement “You can work long, hard or smart, but at Amazon, you can’t choose two out of the three”. I am unsure how this statement will be taken in today’s world where mental health and work life balance conversations have become the norm.

The last sentence with which I’ll end my learnings is this “Though we are optimistic, we must be vigilant and maintain a sense of urgency”.

Always maintain a sense of urgency. Intresting….