The story of Amazon and it’s founder Jeff Bezos sometimes sounds unreal or at times exaggerated. To imagine that a person can start a business and dominate an industry in under twenty years is just crazy. You can understand this journey better by reading the Jeff Bezos shareholder letters.
Dominating an industry is exactly what Jeff Bezos has done in the retail industry, and then some more.
Reading 20 years of Bezos’s letters shows that becoming a top performer isn’t rooted in special tactics. Instead, it’s rooted in simple principles.
The year is 1997 and Amazon is going public. At the time of this event, many investors and people viewed the company as a joke.
Another big event at that time was the first of what has now been 23 annual letters from Jeff Bezos.
The letters mostly garner attention from people due to highly impressive financial numbers, such as the letter disclosing 100 million paid Prime members globally and various leadership principles.
However, there is much more wisdom and many success principles in these letters.
I spent time over the past weekend reading all of Jeff Bezos shareholder letters and here are some of the most valuable lessons that you can use to become a top performer.
7 Top Tips from Jeff Bezos Shareholder Letters
Here are the top seven tips and lessons you will get from Jeff Bezos shareholder letters;
- Do not be complacent.
- Focus on customers.
- Make decisions fast.
- Embrace failures.
- Maintain high standards.
- Create a distinct culture.
- Think long term.
You should take keen interest in these lessons as they will help you understand how Jeff Bezos runs his company. It is one of the things you can apply to your entrepreneurial journey.
7 Lessons from Jeff Bezos Shareholder Letters
I will admit here that I do admire Jeff Bezos, and have followed his story for a while. Infact, I regularly watch documentaries about Amazon, not just because I like them, but to learn what and how Jeff Bezos has done it.
As an entrepreneur, you have been told how to stay focused and think long-term while still being customer-oriented.
Amazon is not a love at first sight for most people.
In fact, Amazon is a slow burn to your heart and wallet where you eventually succumb to their low prices, convenience and vast amount of availability.
I have read Jeff Bezos’s shareholder letters religiously since I found out about them a few years ago.
His letters outline Amazon’s long-term mission, culture and values along with progress reports on current products or projects). It’s the stuff of legends.
Here is a summary of the top seven key lessons from his annual letters, dating back to the first one in 1997.
Do not be complacent.
This is an idea that forms the mantra of ensuring that you do not become complacent.
Jeff promotes the idea that ‘it’s always day 1’ which helps the company to continue the vitality, curiosity and focus of when they started in 1997.
It is important to ensure that processes do not become the goal in themselves, as such would impact your business negatively.
You will learn that Jeff Bezos shareholder letters advise you to look outside the company and embrace emerging trends in your industry too.
In today’s world, you should be keen to observe hpw doing business is changing or how supply chains are being disrupted by current global lockdowns.
A lot of innovation will or is coming out of current crisis.
Focus on customer.
The common mantra is that the customer is always right. This is a line many business leaders and entrepreneurs use. However, sometimes that is not reflected on their goods or services.
Your clients are always dissatisfied. This is true even when they report being happy and your service is great.
Customer expectation is a continuum. It is a moving target that is going higher and higher.
Now, the question is, how do you keep up with your customer’s expectations?
Create a culture of customer obsession as opposed to one that is focused on the competition
Experiment patiently and double down with you see customer delight.
Make decisions fast.
Despite the fact that Amazon is now a huge company with hundreds of thousands of employees, they are not slow to act. Making high quality, high velocity decisions are key their business.
Never use a one-size-fits-all decision-making process.
Most decisions are reversible, make them quickly
It is very important for you to learn how to make decisions fast. The idea is that most decisions should be made with 70% of the information
This means that even if you do not have consensus, disagree and commit to the decision.
Just do not waste time trying to get the perfect decision. It will never happen.
As you read Jeff Bezos shareholder letter, you will quickly understand that Amazon embraces failure as part of the invention process.
Jeff Bezos argues that failure and invention are inseparable twins.
It is common to find that companies welcome experimentation or invention. However, many business leaders or entrepreneurs shy away from making mistakes.
Make bold bets as outsized returns often come from betting against conventional wisdom.
You are going to fail most of the time, but when you win, it is a game changing win.
Maintain high standards.
Having high standards is how you stay ahead of ever increasing customer expectations. Are high standards intrinsic to people or can they be taught?
Bezos says that they are teachable and you should teach your people to recognize these high standards.
It was very clear from Jeff Bezos shareholder letters that high standards are teachable and also domain specific.
You do not need to master the skill, per se, but be able to recognize it.
It takes a while to develop high standards, so you also need to set realistic expectations on how difficult it is going to be.
Create a distinct culture
It is very common to hear a company talking about culture. The sad truth is some do not even understand their own culture.
Many people confuse culture with a document. You can write down your corporate culture, but that will not help you much if you don’t practice it in reality.
You should focus on creating a distinct culture.
Culture is created slowly over time by people and events.
If it’s a distinctive culture, it will fit certain people like a custom-made glove.
Culture is stable because like-minded people self select to become part of your company’s culture.
Think long term
Perhaps the biggest differentiator that sets apart Jeff Bezos from other business leaders is his commitment to the long term. This is one of the things I learned from Jeff Bezos shareholder letters.
The definition of “long term” may mean 5 to 10 years for most businesses, but in Bezos’ mind, it’s probably closer to 50 years.
Make investment decisions in light of long-term market leadership considerations rather than short-term profitability considerations or short-term Wall Street reactions
Measure programs and the effectiveness of investments analytically, and double down on the ones that work
Stay lean and cost conscious.
In conclusion, Jeff Bezos shareholder letters provide great insights not just in the performance of Amazon, but also on how you can provide leadership in your own business.
Since jeff Bezos founded Amazon, he has run his company based on some unconventional set of core principles. These include;
- Do not worry about competition.
- Focus on the long term.
- Obsess about customer experience.
- Do not be worried about stock price.
If you are to think about these core ideas, they are deep.
Bezos broke all the rules when he built Amazon. In doing so, he carved out a unique way of looking at the world, at companies, and at tech in general.
And nowhere is Bezos’ philosophy of business, technology, and leadership better articulated than in the annual shareholder letters, which he has written every year since the company’s IPO in 1997.
I do believe that reading Jeff Bezos shareholder letters is like getting a crash course on how to run a high-growth online business. The beauty is you are learning from someone who has mastered doing it before.
You should think about this and find time to read the Amazon shareholder letters.