Amazon's shareholder letters - A must-read for Product Managers

It’s All About the Long Term

Multiple articles and videos pointed about ‘Amazon’s shareholder’s letters’ and this has been on my reading list for some time now. People called it gold and I wanted to know what it’s all about – And it’ a real gold, man!

Here is a PDF with past 20 years (1997-2017) of Amazon’s shareholder letters if you wish to read. A long read of around 75 pages. A must read if you are an entrepreneur or product manager or startups or business person who want to know key success factors for business. My goal here is to provoke you to read all letters.

Below are key observations and quotes from shareholders letters which are must read. These are the core of what Amazon does.

Jeff Bezos’s Shareholder letters do not just consist of the numbers and business growth, they are all guiding principles for Amazon’s growth that can be leveraged by any company. So without any further delay here you go.

Key Observations

Relentless focus on customer & customer-service
It’s all about the long-term
Hard on execution – Heads down, work hard model
Innovate & build on customers need and not what competitors do
Making bold and unconventional decisions
“Free cash flow” as profit measurement criteria
Hiring the right team, formulating right processes, training and continuous improvement

Below are quotes from Amazon’s shareholder’s letters that gives insight into high-standards set by Jeff at Amazon

On strategy –

It’s All About the Long Term

Our business approach is to sell premium hardware at roughly breakeven prices. We want to make money when people use our devices – not when people buy our devices. We think this aligns us better with customers.

I think long-term thinking squares the circle

On Product pricing –

We believe our ability to lower prices and simultaneously drive customer experience is a big deal, and this past year offers evidence that the strategy is working

Our pricing objective is not to discount a small number of products for a limited period of time, but to offer low prices everyday and apply them broadly across our entire product range

Our pricing strategy does not attempt to maximize margin percentages, but instead seeks to drive maximum value for customers and thereby create a much larger bottom line—in the long term

Our pricing objective is to earn customer trust, not to optimize short-term profit dollars. We may make less per item, but by consistently earning trust we will sell many more items.

On measuring financial success

Our ultimate financial measure, and the one we most want to drive over the long-term, is free cash flow per share.

On investing in new businesses

Invention is in our DNA and technology is the fundamental tool we wield to evolve and improve every aspect of the experience we provide our customers.

At Amazon’s current scale, planting seeds that will grow into meaningful new businesses takes some discipline, a bit of patience, and a nurturing culture.

Failure comes part and parcel with invention. It’s not optional. We understand that and believe in failing early and iterating until we get it right. When this process works, it means our failures are relatively small in size(most experiments can start small), and when we hit on something that is really working for customers, we double-down on it with hopes to turn it into an even bigger success. However, it’s not always as clean as that. Inventing is messy, and over time, it’s certain that we’ll fail at some big bets too.

Most large organizations embrace the idea of invention, but are not willing to suffer the string of failed experiments necessary to get there

On managing the business at difficult times

In this turbulent global economy, our fundamental approach remains the same. Stay heads down, focused on the long term and obsessed over customers

A dreamy business offering has at least four characteristics. Customers love it, it can grow to very large size, it has strong returns on capital, and it’s durable in time – with the potential to endure for decades. When you find one of these, don’t just swipe right, get married.

We want to be a large company that’s also an invention machine. We want to combine the extraordinary customer-serving capabilities that are enabled by size with the speed of movement, nimbleness, and risk-acceptance mentality normally associated with entrepreneurial start-ups.

On building the eco-system

AWS, Kindle Publishing, Fullfilment by Amazon – These innovative, large-scale platforms are not zero-sum – they create win-win situations and create significant value for developers, entrepreneurs, customers, authors, and readers.

On customer-centric focus

We want Amazon Prime to be such a good value, you’d be irresponsible not to be a member

We do work to pay attention to competitors and be inspired by them, but it is a fact that the customer-centric way is at this point a defining element of our culture.

One advantage – perhaps a somewhat subtle one – of a customer-driven focus is that it aids a certain type of proactivity. When we’re at our best, we don’t wait for external pressures. We are internally driven to improve our services, adding benefits and features, before we have to. We lower prices and increase value for customers before we have to. We invent before we have to. These investments are motivated by customer focus rather than by reaction to competition. We think this approach earns more trust with customers and drives rapid improvements in customer experience – importantly – even in those areas where we are already the leader.

AWS is customer obsessed, inventive and experimental, long-term oriented, and cares deeply about operational excellence

Many companies describe themselves as customer-focused, but few walk the walk. Most big technology companies are competitor focused.

People have a voracious appetite for a better way, and yesterday’s ‘wow’ quickly becomes today’s ‘ordinary’.

On High-standards –

And finally, high standards are fun! Once you’ve tasted high standards, there’s no going back

Insist on the Highest Standards Leaders have relentlessly high standards – many people may think these standards are unreasonably high.

On Hiring –

“You can work long, hard, or smart, but at Amazon.com you can’t choose two out of three”

Here is a PDF with past 20 years(1997-2017) of Amazon’s shareholder letters if you wish to read. A long read of around 75 pages. A must read if you are an entrepreneur or product manager or startups or business person who wish key success factors for business. My goal here is to provoke you to read all letters.