Creating Value and Leaving a Mark: Insights from Jeff Bezos' Final Shareholder Letter
The Amazon epic may just be beginning, but a significant chapter is coming to an end. Jeff Bezos founded Amazon in 1994 and has since grown it into the e-commerce and cloud computing monster it is today. What began as an online bookstore is now a company that impacts many lives, every day. Waking up to an Alexa alarm, receiving a grocery delivery from Whole Foods, and utilizing many applications that rely on Amazon’s AWS service, the reach of Amazon is undeniable. That growth doesn't happen without a visionary leader.
Mr. Bezos recently announced that he’d be stepping down as CEO of Amazon, citing the need for “time and energy I need to focus on the Day 1 Fund, the Bezos Earth Fund, Blue Origin, The Washington Post, and my other passions.” He’ll remain Executive Chair of the Board but pass the reigns as CEO to Andy Jassy, of AWS fame. In his final letter to shareholders, Bezos laid out a broad vision of the future of Amazon, tackled employee care, and reinforced the company’s steadfast commitment to pleasing customers. Here are my favorite parts of his latest letter:
Size
If you don’t know large Amazon has become, Bezos gives a nice breakdown: “(We) directly employ 1.3 million people around the world. We have more than 200 million Prime members worldwide. More than 1.9 million small and medium-sized businesses sell in our store, and they make up close to 60% of our retail sales. Customers have connected more than 100 million smart home devices to Alexa. Amazon Web Services serves millions of customers and ended 2020 with a $50 billion annualized run rate.”
Success
“If you want to be successful in business (in life, actually), you have to create more than you consume. Your goal should be to create value for everyone you interact with.” Nailed it! This advice was made multitudes better by the parenthetical phrase because good business advice is often translatable to life and vice-versa. Bezos is frequently portrayed as greedy and lacking empathy, but a deeper dive into his philosophy paints a different picture, and this advice rings true.
Stock Price
“Remember that stock prices are not about the past. They are a prediction of future cash flows discounted back to the present. The stock market anticipates.” This is why VPW stresses the importance of innovation and technology in long-term investment portfolios. Investors must remember that investing is about the future, not the past or even the present, and Bezos correctly reminds Amazon shareholders of that reality.
Employees
Warehouse workers in Alabama recently voted no to unionization in a highly publicized battle. The media coverage of the vote brought negative attention to the Amazon-employee relationship, but the vast majority of workers voted not to unionize. Bezos addressed some of the complaints by saying, “If you read some of the news reports, you might think we have no care for employees. In those reports, our employees are sometimes accused of being desperate souls and treated like robots. That’s not accurate. They’re sophisticated and thoughtful people who have options for where to work. When we survey fulfillment center employees, 94% say they would recommend Amazon to a friend as a place to work.” While he adamantly rebutted the poor treatment of workers, Bezos went on to declare “it’s clear to me that we need a better vision for our employees’ success. We have always wanted to be Earth’s Most Customer-Centric Company. We won’t change that. It’s what got us here. But I am committing us to an addition. We are going to be Earth’s Best Employer and Earth’s Safest Place to Work.”
Vision
“On the details, we at Amazon are always flexible, but on matters of vision we are stubborn and relentless.” That mentality is the key to Amazon’s meteoric rise. The devotion to flexibility and creativity while committing to a long-term vision served them well and is at the crux of innovation.
Climate Change
CEOs often play in the gray area when it comes to politicized issues to avoid upsetting politicians, supporters, customers, or others that could take offense to their comments. Still, Bezos didn’t beat around the bush on climate. “In an earlier draft of this letter, I started this section with arguments and examples designed to demonstrate that human-induced climate change is real. But, bluntly, I think we can stop saying that now. You don’t have to say that photosynthesis is real, or make the case that gravity is real, or that water boils at 100 degrees Celsius at sea level. These things are simply true, as is the reality of climate change.” Mr. Bezos goes on to reaffirm the company’s commitment to the environment and his excitement about humanity's efforts to solve the climate problem.
Distinction
The letter is to Amazon shareholders, but Bezos knows he’s speaking to society at large, and he uses the last portion of his letter to plea to the masses. “The world wants you to be typical — in a thousand ways, it pulls at you. Don’t let it happen.” He’s right. Being typical leads to stagnation. Stagnation of ideas. Stagnation of progress. Stagnation of solutions. We’re all different, and that’s the greatest gift we have as humans.
This won’t be the last we hear of Jeff Bezos. He likes the limelight too much and has too much to offer to slip away into the quiet comfort of his billions. This letter, like the others, is chock-full of advice to anyone who reads it, not just Amazon shareholders. I look forward to seeing the results of Bezos’ time reallocation and observing how Amazon continues without its founder-leader at the helm.
Disclaimer: This article is provided for general information and illustration purposes only. Nothing contained in the material constitutes tax advice, a recommendation for purchase or sale of any security, or investment advisory services. I encourage you to consult a financial planner, accountant, and/or legal counsel for advice specific to your situation. Reproduction of this material is prohibited without written permission from James Vermillion, and all rights are reserved.
