6 Takeaways from Reading Every Amazon Shareholder Letter since 1997

Mehek Mohan
8 min readMay 29, 2021
Source: https://www.rathboneresults.com/resources/are-you-a-day-1-or-day-2-company

Many people look at Jeff Bezos and see the world’s richest man. With a net worth of over $200B, it’s easy to marvel. How did he do it?

In 2018 when he earned this status and became a household name, many saw this as the moment he “made it.” I would argue that that viewpoint is limiting for two reasons:

  1. This implies that there is no higher one can go.

It was never Bezos’ goal to be the world’s richest man; rather he was laser focused on doing meaningful things. If you focus on doing rather than being, there is no ceiling.

2. This isolates “success” to one moment and adorns it with disproportionally weighted importance.

Bezos started Amazon in 1995 as an online book selling platform. For the 23 years in which he was not the world’s richest man, he remained steadfast in his principles and determination to provide value to the world. Crossing the threshold to this level of wealth was the culmination of every single time he lifted one foot and put it in front of the other.

In other words, the delayed return of his investment in consistency was a process rather than a singular endpoint.

This bodes the question, what are Bezos’ principles and how does he instill them into every fiber of Amazon’s being?

In reading his annual shareholder letters since Amazon’s IPO in 1997, I uncovered a trove of frameworks, mantras, and values that can be cross-functionally applied across industries.

Here are 6 key takeaways:

1. Maintain a “Day 1” Attitude

The spirit of this motto rejects complacency and instead galvanizes the company to continually reinvent itself — to keep setting the bar higher.

Being “Day 1” has four pillars associated with it:

  • Customer Obsession:

Invent on customers’ behalf because as Bezos puts it, “customers are divinely discontent.” This is a good thing because humans crave novelty. After all, no one asked for AWS or Echo and look where we are now.

This principle is a common thread across many successful innovators. Steve Jobs famously said “People don’t know what they want until you show it to them” and Henry Ford said “If I had asked people what they wanted, they would have said faster horses.”

Bezos, in his own dialect, urges Amazonians to continually “re-invent normal” for customers.

  • Skeptical View of Proxies

This second pillar is all about agility. Bezos writes “do we want the process to own us or do we want to own the process?”

This is fundamental in avoiding the hamster wheel trap of nested hierarchies, frameworks for frameworks and death by meeting.

If there is a more efficient way to keep the ball rolling, pursue it.

  • Eager Adoption of External Trends

Every new technology causes entropy — it causes a sense of disorder as our current world view is shaken up and molded into one with this new element baked in.

This seems stressful and overwhelming but at its principle, the laws of physics state that the “system” is more stable the higher the entropy — or the higher the random disorder.

Therefore, in this pillar, Bezos reminds us to embrace change, take bold risks, be early adopters — to paddle hard so we can ride the wave rather than be left tumbling in its wake.

  • High Velocity Decision Making

Finally, the last pillar is about efficiency. Bezos never uses a one-size-fits-all model and instead follows a “Type 1 vs Type 2” model. The former type of decision is generally one-way — it’s much harder to reverse. The latter is reversible and has lower stakes.

Bezos argues that confusing when to implement Type 1 vs Type 2 is detrimental to large businesses.

Therefore, he has strategies to clarify the decision tree. First, “decisions should be made with 70% of the information at hand; if you wait for 90%, you’re late.”

Next, he abides by the “disagree and commit” rule of thumb. If one person/team has high enough conviction in pursuing an opportunity and someone else is not fully convinced, instead of batting around in purgatory for another 6 months, the skeptics have the opportunity to voice that they disagree but will commit to moving forward for the purpose of efficiency.

2. Create More Than You Consume

In a world of “information snacking,” as Bezos coined, we lose track of how much content we consume. We desire novelty, the element of surprise — at the end of the day, what we really crave is a change of state from bored to entertained.

So it’s easy to fall into the path of least resistance. It’s easy to consume.

But not at Amazon.

In order to fight the homeostasis of our environment and continually challenge the status quo, it is essential for creation to be greater than consumption.

“The most radical and transformative of inventions are often those that empower others to unleash their creativity — to pursue their dreams.” — Bezos

Therefore, he firmly believes in SOA: service-oriented architecture that can evolve at its own pace and interfere minimally with the consumer. Ease of use.

That’s why the Kindle was created — because the best part of a book is not the paper pages, the glue or the bindings, it’s the ink that makes up the words.

So the Kindle took the best aspect of the book and melted away every other extraneous detail that would get in the way of the reader and the story.

3. Stay Long

At Amazon, “long-term thinking is both a requirement and an outcome of true ownership.” — Bezos

Early on in evolution, our brains were wired for “instant return” as James Clear writes in Atomic Habits. We were focused only on finding the next source of food and not dying.

In other words, our feedback loops were tightly coupled with every action.

Only recently have we evolved to assign weight to “delayed return.” If we invest in our health now, sometime in the future we might be safeguarding against disease and premature death.

We aren’t really wired for delayed return so quick wins and ephemeral pleasures generally win out.

So then how do we stay long?

In this principle of patience, the goal is to invest slowly and consistently so that down the road, the compound returns are worth the wait.

By adding an element of ownership, we have more skin in the game.

And what happens when we have more skin in the game? Human loss aversion kicks in and suddenly we have something to lose if we don’t put in the work, effort, and care.

4. Have the Scope and Capabilities of a Large Company but the Heart and Spirit of a Small One

Bezos defines success as the constant cycling between inventing, launching, reinventing, relaunching etc…

This loop is made possible by leveraging the resources and infrastructure of a large company while maintaining the speed and grittiness of a small one.

But at the end of the day, it all comes down to balance.

If where you are is 0 and where you want to be is 1, you need to know a) how hard that journey will be and b) you need to be able to articulate what makes 1 look different from 0.9.

Bezos postulates that you can teach this:

He argues that scope boils down to expectation setting and skill. As long as the skills are distributed across the team, you have diversified effectively and mitigated risk.

The whole is the sum of its individual parts.

Instead of focusing on one’s faults, the team is empowered to spend that energy investing in their strengths and learning dynamically.

With the brain of large company, you know where to find the magic beans. With the heart of a small one, you have the tenacity to climb up the beanstalk (and yes, for all you Amazon nerds, this is a nod to the AWS resource, Elastic Beanstalk).

5. Get to Scale

“Find a market-size unconstrained opportunity in an area where the underlying foundational technology we employ is improving every day.” — Bezos

In this principle, we are urged to find opportunities that are underserved and to make bets on ones that will provide great returns given sufficient differentiation.

The beauty of this quote is that you are always redefining your baseline. With every improvement comes the opportunity for the next.

Bezos reinforces this with “the current product/service is the worst it will ever be — it will only get better from here.”

This is a fabulous principle to apply in life. The next time you lift weights at the gym use your last rep as a comparison to make your next that much better. The next time you present at work, use your last presentation as a benchmark to improve upon.

By creating room for reflection, you are ensuring a positive growth trend across your life’s data points. Of course there will be fluctuations but the key here is to one-up from the last time enough times that the trend is positive.

These marginal and consistent improvements sum to the stark changes you might see between version 1 and version 2 of a product.

The other element of this concept is that it does not have to be limited in application toward productivity. Leverage it for your experiences and your relationships.

The next time you engage in conversation with a friend, interrupt 1 less time, smile 1 more time, hold eye contact for 1 more second. It’s all about the effort you put in to consciously be a teeny bit better.

6. Hire Spectacular People

This last value cannot be understated. The people we work with can make us love or hate our jobs.

We mirror the energy we are surrounded by so it is of utmost importance to engineer an environment that projects a kaleidoscope of unique perspectives.

Reed Hastings, founder of Netflix, is an outspoken advocate of “hiring stunning candidates” that elevate the entire company.

Similarly, in Bezos’ quest to attract the best of the best, he asks three questions during evaluation:

  • Will you admire this person?

Bezos urges little flexibility on this. When we admire people, we both consciously and subconsciously try to integrate elements of their personalities into ours. Therefore, this person should inspire growth in you.

  • Will this person raise the average level of effectiveness of the group they are entering?

Here, we must fight inertia and strive to evolve. This question creates a culture that self-selects for excellence.

  • Along what dimension might this person be a superstar?

Diversity of perspectives and lived experiences is what makes the best innovations catch fire. So, look for people who can enrich the environment— look for the four-leaf clovers.

Final Thoughts

The beauty of these shareholder letters transcends the content itself. A time capsule of progress and hard work, these documents reveal a telling part of Bezos’ ethos.

A man dedicated to improving his craft, setting the bar high, and never taking his eyes off the customer, it’s incredible to witness the applicability and simplicity of these values across industries and life.

To end with a takeaway from the last shareholder letter before Bezos stepped out of the CEO role in 2020: it’s hard to be different. Biologically, we are encouraged to be in equilibrium with our environment.

It takes energy to be unique — never stop trying to increase the differential between normal and distinct.

“The world wants you to be typical — in a thousand ways, it pulls at you. Don’t let it happen.” — Bezos, 2020 Shareholder Letter

Note: All quotes and content are based on the Amazon shareholder letters which can be found on Amazon.com and are nicely compiled here on Medium.

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Mehek Mohan

Creative writer interested in personal development and growth hacking.