2000 – Assurance after the deluge

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. This is the fourth letter in the series.

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

The dotcom crash brought the Internet party down from the heavens to the earth bore a hole and settled in the seventh level of hell. At this point, Jeff did all good leaders did at that point.

Reiterate on the long-term vision. Talk about improving financials. Assure everyone that Amazon is not like the rest.

He starts off the letter reeling out a stream of statistics. But one statistic caught my eye. Amazon achieved a score of 84 on the American Customer satisfaction Index. That’s the higher score ever recorded in history for a service company until that point. This brings me to my first learning:

Learning #1: Customer obsession pays during the good times and assures you during the bad times

Intrestingly, the only reason Amazon lost money was because they had invested in Pets.com and living.com

Learning #2: It’s better to lose boldly than win timidly

These were some bold bets which failed, but enough of the bold bets won to create the behemoth Amazon is today.

It’s here that Jeff made a bold prediction. He believed that 15% of retail will move online. It happened in 2020. 20 years later.

Learning #3: Technology should drive innovation not cost optimization

There are two ways to look at technology. Either you can use technology to reduce costs or you can use tech to drive customer adoption and revenue. I liked this point. You can make good money in both. But only one of those thought processes will take you to the path to market leadership.

Learning #4: Cashflow matters

At the end of the Amazon survived because they had good cashflows. It’s easy to build a business, but as the dot-com bust showed it’s difficult to build sustainable cashflows