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Book: Invent & Wander The Collected Writings of Jeff Bezos

Vikrant Duggal
Vikrant Duggal
• 43 min read

As I continue dive deeper in this decade into the world of early-stage venture capital what better place to dig than into the mind of one of the greatest entrepreneurs of my time: Jeff Bezos.

In 2015, Amazon became the fastest company to hit $100 billion in sales. Many of my readers work for Amazon. I picked up the book because I wanted to read Walter Isaacson's introduction and then felt compelled to each of Bezos' annual shareholder letters from 1997 to 2020 and the speeches and interviews.

What struck me the most in the reading was Bezos' consistent and relentless focus on the customer, free cash flow, and focus on first principle thinking.

I also thinking many of today's founders can gleam a lot from the writing:

  • I've written on in the past on vision and Bezos makes it clear that you must build a vision that a large number of people share, and that gets them to work in a concerted way.
  • Planning, and the discipline of writing a detailed plan will help you understand the situation.
  • Everything is about the long-term so focus relentessly on what is in the best interest of the customers and shareholders.
  • In a fixed cost business, market leadership is critical
  • Big winners pay for many experiments
  • Decision quality and velocity are both REALLY important

You can pick up the book here on Amazon.

Like last week, I've included all 200+ of the Kindle highlights I made while reading the book.

I AM OFTEN ASKED who, of the people living today, I would consider to be in the same league as those I have written about as a biographer: Leonardo da Vinci, Benjamin Franklin, Ada Lovelace, Steve Jobs, and Albert Einstein. All were very smart. But that’s not what made them special. Smart people are a dime a dozen and often don’t amount to much. What counts is being creative and imaginative. That’s what makes someone a true innovator. And that’s why my answer to the question is Jeff Bezos. (Location 77)

what are the ingredients of creativity and imagination, (Location 81)

The first is to be curious, passionately curious. (Location 83)

obsessively curious. (Location 88)

“I have no special talent,” Einstein once said. “I am only passionately curious.” (Location 88)

he said, “Curiosity is more important than knowledge.” (Location 89)

A second key trait is to love and to connect the arts and sciences. (Location 90)

In fact, it helps to be excited by all disciplines. Leonardo da Vinci and Benjamin Franklin wanted to know everything you could possibly know about everything that was knowable. (Location 97)

Another characteristic of truly innovative and creative people is that they have a reality-distortion field, (Location 103)

Jeff Bezos embodies these traits. He has never outgrown his wonder years. He retains an insatiable, childlike, and joyful curiosity about almost everything. His interest in narrative and storytelling not only comes from Amazon’s roots in the bookselling business; it is also a personal passion. As a kid, Bezos read dozens of science fiction novels each summer at a local library, and he now hosts an annual retreat for writers and moviemakers. Likewise, although his interest in robotics and artificial intelligence was sparked because of Amazon, these fields have grown to become intellectual passions, and he now hosts another gathering each year that brings together experts interested in machine learning, automation, robotics, and space. He collects historical artifacts from great moments in science, exploration, and discovery. And he connects this love of the humanities and his passion for technology to his instinct for business. (Location 119)

That trifecta—humanities, technology, business—is what has made him one of our era’s most successful and influential innovators. (Location 126)

When Jeff Bezos was a young kid—big eared, with a booming laugh and insatiable curiosity—he spent his summers on the sprawling South Texas ranch of his maternal grandfather, Lawrence Gise, an upright but loving naval commander who had helped develop the hydrogen bomb as an assistant director of the Atomic Energy Commission. There Jeff learned self-reliance. When a bulldozer broke, he and his grandfather built a crane to lift out the gears and fix them. Together they castrated the cattle, built windmills, laid pipe, and had long conversations about the frontiers of science, technology, and space travel. “He did all his own veterinary work,” Bezos recalls. “He would make his own needles to suture up the cattle with. He would take a piece of wire, use a blowtorch to heat it up, pound it flat, sharpen it, drill a hole through it—make a needle. Some of the cattle even survived.” (Location 138)

Jeff was a voracious reader (Location 144)

His self-reliance and adventurous spirit were also instilled by Jeff’s mother, Jackie, who was just as tenacious and sharp as her father and son. She became pregnant with Jeff when she was only seventeen. (Location 147)

Jeff’s biological father ran a bicycle store and performed in a circus unicycle troupe. (Location 154)

Her second husband was a better match, a person who also taught Jeff the value of grit and determination: Miguel Bezos, known as Mike. He, too, was self-reliant and adventurous. He had come to the United States at age sixteen as a refugee from Fidel Castro’s Cuba, traveling on his own and wearing a jacket his mother had sewed for him out of household rags. After he married Jackie, he adopted her lively son, who took his last name and forever after considered him his real father. (Location 155)

At his Montessori preschool Bezos was already fanatically focused. “The teacher complained to my mother that I was too task focused and that she couldn’t get me to switch tasks, so she would have to just pick up my chair and move me,” he recalls. “And by the way, if you ask the people who work with me, that’s still probably true today.” (Location 163)

His mother encouraged his love of electronics and mechanics by shuttling him to and from RadioShack and letting him turn the family garage into a science project lab. She even indulged his penchant for creating ingenious booby traps to frighten his younger brother and sister. “I was constantly booby-trapping the house with various kinds of alarms and some of them were not just audible sounds, but actually like physical booby traps,” he says. “My mom is a saint, because she would drive me to RadioShack multiple times a day.” (Location 173)

His childhood business heroes were Thomas Edison and Walt Disney. (Location 177)

By the time he was in high school, his family had moved to Miami. Bezos was a straight-A student, somewhat nerdy, and still completely obsessed with space exploration. He was chosen as the valedictorian of his class, and his speech was about space: how to colonize planets, build space hotels, and save our fragile planet by finding other places to do manufacturing. “Space, the final frontier, meet me there!” he concluded. He went to Princeton with the goal of studying physics. (Location 183)

After graduation Bezos went to New York to apply his computer skills to the financial industry. He ended up at a hedge fund run by David E. Shaw, (Location 192)

While working at the hedge fund in 1994, Bezos came across the statistic that the web had been growing by more than 2,300 percent each year. (Location 196)

He called it a “regret minimization framework.” He would imagine what he would feel when he turned eighty and thought back to the decision. “I want to have minimized the number of regrets I have,” he explains. “I knew that when I was eighty, I was not going to regret having tried this. I was not going to regret trying to participate in this thing called the internet that I thought was going to be a really big deal. I knew that if I failed, I wouldn’t regret that, but I knew the one thing I might regret is not ever having tried. I knew that that would haunt me every day.” (Location 206)

Bezos’s goal soon became to create an “everything store.” His next steps were to branch out to music and videos. Keeping his focus on the customer, he emailed one thousand of them to see what else they would like to be able to buy. The answers helped him understand better the concept of “the long tail,” which means being able to offer items that are not everyday bestsellers and, thus, don’t command shelf space at most retailers. (Location 257)

Its stock was at $106 a share in December 1999 when our Person of the Year issue came out. A month later it was down 40 percent. Within two years it had fallen to as low as $6 a share. (Location 283)

But Don Logan was right. Amazon and Bezos were able to survive the bust. “As I watched the stock fall from 113 to 6, I was also watching all of our internal business metrics: number of customers, profit per unit,” he says. “Every single thing about the business was getting better and fast. It’s a fixed-cost business. And so, what I could see is that, from the internal metrics, is that at a certain volume level that we would cover our fixed costs and the company would be profitable.” (Location 286)

An example of how Bezos innovates and operates was the launch of Amazon Prime, which transformed the way Americans think about how quickly and cheaply they can be gratified by ordering online. One of his board members had been suggesting that Amazon create a loyalty program, similar to what the airlines have with their frequent-flyer programs. Separately, an Amazon engineer suggested that the company offer free shipping to its most loyal customers. Bezos put the two ideas together and asked his finance team to assess the costs and benefits. “The results were horrifying,” Bezos says with his laugh. But Bezos had a rule, which was to use his heart and his intuition as well as empirical data in making a big decision. “There has to be risk taking. You have to have instinct. All the good decisions have to be made that way,” he says. “You do it with a group. You do it with great humility.” (Location 295)

When he meets with the founder or chief executive of a company that Amazon is thinking of buying, Bezos tries to assess whether he or she is in it merely to make money or because of a true passion for serving customers. (Location 343)

“I’m always trying to figure out one thing first and foremost: Is that person a missionary or a mercenary?” Bezos says. “The mercenaries are trying to flip their stock. The missionaries love their product or their service and love their customers and are trying to build a great service. By the way, the great paradox here is that it’s usually the missionaries who make more money.” Mackey struck him as a missionary, and his passion infused the Whole Foods ethos. “It’s a missionary company, and he’s a missionary guy.” (Location 344)

Bezos’s own politics and philosophy, which he does not impose on the Post, comprise a mix of social liberalism—he donated to the campaign to legalize gay marriage—and economic views that stress individual liberty. (Location 393)

  1. Focus on the long term. “It’s All About the Long Term,” he said in the italicized initial headline in his first shareholder letter in 1997. (Location 406)

long-term thinking permits innovation. “We like to invent and do new things,” he says, “and I know for sure that long-term orientation is essential for invention because you’re going to have a lot of failures along the way.” (Location 410)

At his Texas ranch Bezos has begun construction of a ten-thousand-year “clock of the long now,” designed by the futurist Danny Hillis, which has a century hand that advances every hundred years and a cuckoo that comes out every millennium. “It’s a special clock, designed to be a symbol, an icon for long-term thinking,” he says. (Location 418)

Focus relentlessly and passionately on the customer. As he put it in his 1997 letter, “Obsess over Customers.” Each annual letter reinforces that mantra. “We intend to build the world’s most customer-centric company,” he wrote the following year. “We hold as axiomatic that customers are perceptive and smart.… But there is no rest for the weary. I constantly remind our employees to be afraid, to wake up every morning terrified. Not of our competition, but of our customers.” (Location 421)

Focus on the big decisions. “As a senior executive, what do you really get paid to do?” he asks. “You get paid to make a small number of high-quality decisions. Your job is not to make thousands of decisions every day.” (Location 441)

Hire the right people. “We will continue to focus on hiring and retaining versatile and talented employees,” he wrote in an early shareholder letter. (Location 448)

When Bezos interviews people, he warns them, “You can work long, hard, or smart, but at you can’t choose two out of three.” Bezos makes no apologies. “We are working to build something important, something that matters to our customers, something that we can all tell our grandchildren about,” he says. “Such things aren’t meant to be easy. We are incredibly fortunate to have this group of dedicated employees whose sacrifices and passion build” (Location 453)

It’s All About the Long Term 1997 AMAZON.COM PASSED MANY milestones in 1997: by year-end, we had served more than 1.5 million customers, yielding 838 percent revenue growth to $147.8 million, and extended our market leadership despite aggressive competitive entry. (Location 519)

Our decisions have consistently reflected this focus. We first measure ourselves in terms of the metrics most indicative of our market leadership: customer and revenue growth, the degree to which our customers continue to purchase from us on a repeat basis, and the strength of our brand. (Location 536)

From the beginning, our focus has been on offering our customers compelling value. (Location 563)

We maintained a dogged focus on improving the shopping experience, (Location 566)

Word of mouth remains the most powerful customer acquisition tool we have, and we are grateful for the trust our customers have placed in us. (Location 569)

We now know vastly more about online commerce than when was founded, but we still have so much to learn. Though we are optimistic, we must remain vigilant and maintain a sense of urgency. (Location 599)

The challenges and hurdles we will face to make our long-term vision for a reality are several: aggressive, capable, well-funded competition; considerable growth challenges and execution risk; the risks of product and geographic expansion; and the need for large continuing investments to meet an expanding market opportunity. However, as we’ve long said, online bookselling, and online commerce in general, should prove to be a very large market, and it’s likely that a number of companies will see significant benefit. (Location 601)

Obsessions 1998 THE LAST THREE and a half years have been exciting. We’ve served a cumulative 6.2 million customers, exited 1998 with a $1 billion revenue run rate, (Location 609)

It is truly Day 1 for the Internet and, if we execute our business plan well, it remains Day 1 for (Location 614)

Given what’s happened, it may be difficult to conceive, but we think the opportunities and risks ahead of us are even greater than those behind us. We will have to make many conscious and deliberate choices, some of which will be bold and unconventional. Hopefully, some will turn out to be winners. Certainly, some will turn out to be mistakes. (Location 615)

We’re fortunate to benefit from a business model that is cash-favored and capital efficient. As we do not need to build physical stores or stock those stores with inventory, our centralized distribution model has allowed us to build our business to a billion-dollar sales rate with just $30 million in inventory and $30 million in net plant and equipment. (Location 642)

We intend to build the world’s most customer-centric company. We hold as axiomatic that customers are perceptive and smart, and that brand image follows reality and not the other way around. Our customers tell us that they choose and tell their friends about us because of the selection, ease-of-use, low prices, and service that we deliver. (Location 646)

But there is no rest for the weary. I constantly remind our employees to be afraid, to wake up every morning terrified. Not of our competition, but of our customers. Our customers have made our business what it is, they are the ones with whom we have a relationship, and they are the ones to whom we owe a great obligation. And we consider them to be loyal to us—right up until the second that someone else offers them a better service. (Location 649)

We must be committed to constant improvement, experimentation, and innovation in every initiative. (Location 653)

We love to be pioneers, it’s in the DNA of the company, and it’s a good thing, too, because we’ll need that pioneering spirit to succeed. (Location 654)

It would be impossible to produce results in an environment as dynamic as the Internet without extraordinary people. Working to create a little bit of history isn’t supposed to be easy, and, well, we’re finding that things are as they’re supposed to be! We now have a team of twenty-one hundred smart, hard-working, passionate folks who put customers first. Setting the bar high in our approach to hiring has been, and will continue to be, the single most important element of’s success. (Location 658)

During our hiring meetings, we ask people to consider three questions before making a decision: (Location 661)

Will you admire this person? (Location 662)

Will this person raise the average level of effectiveness of the group they’re entering? (Location 665)

Along what dimension might this person be a superstar? (Location 668)

Building for the Long Term 1999 THE FIRST FOUR and a half years of our journey have yielded some amazing results: we’ve now served over seventeen million customers in over 150 countries and built the leading global e-commerce brand and platform. (Location 705)

In the coming years we expect to benefit from the continued adoption of online commerce around the world as millions of new consumers connect to the Internet for the first time. (Location 708)

During 1999, our relentless focus on customers worked: (Location 712)

Only two years ago,’s US book business represented 100 percent of our sales. Today, despite strong growth in US books, other areas account for more than half our sales. Major 1999 initiatives included Auctions, zShops, Toys, Consumer Electronics, Home Improvement, Software, Video Games, Payments, and our wireless initiative, Amazon Anywhere. (Location 718)

I’m incredibly proud of everyone at for their tireless efforts to deliver what has become the standard-setting, customer experience while simultaneously handling such extraordinary growth rates. (Location 731)

What Do You Own? At a recent event at the Stanford University campus, a young woman came to the microphone and asked me a great question: “I have one hundred shares of What do I own?” I was surprised I hadn’t heard it before, at least not so simply put. What do you own? You own a piece of the leading e-commerce platform. The platform is comprised of brand, customers, technology, distribution capability, deep e-commerce expertise, and a great team with a passion for innovation and a passion for serving customers well. We begin the year 2000 with seventeen million customers, a worldwide reputation for customer focus, the best e-commerce software systems, and purpose-built distribution and customer service infrastructure. We believe we have reached a “tipping point,” where this platform allows us to launch new ecommerce businesses faster, with a higher quality of customer experience, a lower incremental cost, a higher chance of success, and a faster path to scale and profitability than any other company. Our vision is to use this platform to build Earth’s most customer-centric company, a place where customers can come to find and discover anything and everything they might want to buy online. We won’t do so alone but together with what will be thousands of partners of all sizes. We’ll listen to customers, invent on their behalf, and personalize the store for each of them, all while working hard to continue to earn their trust. As is probably clear, this platform affords an unusually large-scale opportunity, one that should prove very valuable for both customers and shareholders if we can make the most of it. Despite the many risks and complexities, we are deeply committed to doing so. (Location 738)

Goals for 2000 In the year 2000, has six major goals: growth in both the number of our customers and the strength of the relationship we have with each of them; continued rapid expansion of the products and services we offer; driving operational excellence in all areas of the company; international expansion; expanding our partnership programs; and last, importantly, driving toward profitability in each and every business we are in. I’ll spend a moment on each goal. (Location 753)

One point worth emphasizing: the quality of customer experience a partner delivers is the single most important criteria in our selection process—we simply won’t build a partnership with any company that does not share our passion for serving customers. (Location 783)

We love these kinds of partnerships because they please customers, please our partners, and are financially attractive, pleasing our shareholders: you and us. (Location 785)

Moreover, it’s great to be participating in what is a multi-trillion-dollar global market, in which we are so very, very tiny. We are doubly blessed. We have a market-size unconstrained opportunity in an area where the underlying foundational technology we employ improves every day. That is not normal. (Location 798)

Taking the Long View 2000 OUCH. IT’S BEEN a brutal year for many in the capital markets and certainly for shareholders. As of this writing, our shares are down more than 80 percent from when I wrote you last year. Nevertheless, by almost any measure, the company is in a stronger position now than at any time in its past. (Location 804)

And, most importantly, our heads-down focus on the customer was reflected in a score of eighty-four on the American Customer Satisfaction Index. We are told this is the highest score ever recorded for a service company in any industry. (Location 819)

Many of you have heard me talk about the “bold bets” that we as a company have made and will continue to make—these bold bets have included everything from our investment in digital and wireless technologies, to our decision to invest in smaller e-commerce companies, including and, both of which shut down operations in 2000. We were significant shareholders in both and lost a significant amount of money on both. (Location 826)

Note: Explanation of poor investments.

Online selling (relative to traditional retailing) is a scale business characterized by high fixed costs and relatively low variable costs. This makes it difficult to be a medium-sized e-commerce company. With a long enough financing runway, and may have been able to acquire enough customers to achieve the needed scale. But when the capital markets closed the door on financing Internet companies, these companies simply had no choice but to close their doors. As painful as that was, the alternative—investing more of our own capital in these companies to keep them afloat—would have been an even bigger mistake. (Location 834)

In the physical world, retailers will continue to use technology to reduce costs, but not to transform the customer experience. We too will use technology to reduce costs, but the bigger effect will be using technology to drive adoption and revenue. We still believe that some 15 percent of retail commerce may ultimately move online. (Location 848)

The year 2001 will be an important one in our development. Like 2000, this year will be a year of focus and execution. As a first step, we’ve set the goal of achieving a pro forma operating profit in the fourth quarter. While we have a tremendous amount of work to do and there can be no guarantees, we have a plan to get there, it’s our top priority, and every person in this company is committed to helping with that goal. I look forward to reporting to you our progress in the coming year. (Location 854)

Note: Relentless focus andx repetition on focus continues in these letters.

The Customer Franchise Is Our Most Valuable Asset 2001 IN JULY OF last year, reached an important way station. After four years of single-minded focus on growth, and then just under two years spent almost exclusively on lowering costs, we reached a point where we could afford to balance growth and cost improvement, dedicating resources and staffed projects to both. Our major price reduction in July, moving to discount books over $20 by 30 percent off list, marked this change. (Location 861)

Focus on cost improvement makes it possible for us to afford to lower prices, which drives growth. Growth spreads fixed costs across more sales, reducing cost per unit, which makes possible more price reductions. Customers like this, and it’s good for shareholders. Please expect us to repeat this loop. (Location 869)

Obsess over Customers: Our Commitment Continues Until July, had been primarily built on two pillars of customer experience: selection and convenience. In July, as I already discussed, we added a third customer experience pillar: relentlessly lowering prices. You should know that our commitment to the first two pillars remains as strong as ever. (Location 886)

Our consumer franchise is our most valuable asset, and we will nourish it with innovation and hard work. (Location 904)

In every annual letter (including this one), we attach a copy of our original 1997 letter to shareholders to help investors decide if is the right kind of investment for them, and to help us determine if we have remained true to our original goals and values. (Location 906)

In that 1997 letter, we wrote, “When forced to choose between optimizing the appearance of our GAAP accounting and maximizing the present value of future cash flows, we’ll take the cash flows.” (Location 909)

Why focus on cash flows? Because a share of stock is a share of a company’s future cash flows, and, as a result, cash flows more than any other single variable seem to do the best job of explaining a company’s stock price over the long term. (Location 910)

Ultimately, your determination of cash flow per share will be a strong indicator of the price you might be willing to pay for a share of ownership in any company. (Location 918)

Limiting share count means more cash flow per share and more long-term value for owners. (Location 924)

Relentless Commitment to Long-Term Shareholder Value As I’ve discussed many times before, we are firm believers that the long-term interests of shareholders are tightly linked to the interests of our customers: if we do our jobs right, today’s customers will buy more tomorrow, we’ll add more customers in the process, and it will all add up to more cash flow and more long-term value for our shareholders. (Location 927)

As we kick off 2002, I am happy to report that I am as enthusiastic as ever about this business. There is more innovation ahead of us than behind us, we are close to demonstrating the operating leverage of our business model, and I get to work with this amazing team of Amazonians all over the world. I am lucky and grateful. (Location 932)

What’s Good for Customers Is Good for Shareholders 2002 IN MANY WAYS, is not a normal store. We have deep selection that is unconstrained by shelf space. We turn our inventory nineteen times in a year. We personalize the store for each and every customer. We trade real estate for technology (which gets cheaper and more capable every year). We display customer reviews critical of our products. You can make a purchase with a few seconds and one click. We put used products next to new ones so you can choose. We share our prime real estate—our product detail pages—with third parties, and, if they can offer better value, we let them. (Location 937)

People see that we’re determined to offer both world-leading customer experience and the lowest possible prices, but to some this dual goal seems paradoxical if not downright quixotic. (Location 944)

Note: How is this possible?

The answer is that we transform much of customer experience—such as unmatched selection, extensive product information, personalized recommendations, and other new software features—into largely a fixed expense. With customer experience costs largely fixed (more like a publishing model than a retailing model), our costs as a percentage of sales can shrink rapidly as we grow our business. Moreover, customer experience costs that remain variable—such as the variable portion of fulfillment costs—improve in our model as we reduce defects. Eliminating defects improves costs and leads to better customer experience. 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. (Location 947)

Free cash flow—our most important financial measure—reached $135 million, a $305 million improvement over the prior year. (Location 986)

In short, what’s good for customers is good for shareholders. (Location 988)

Once again this year, I attach a copy of our original 1997 letter and encourage current and prospective shareowners to take a look at it. Given how much we’ve grown and how much the Internet has evolved, it’s notable that the fundamentals of how we do business remain the same. (Location 989)

Long-Term Thinking 2003 LONG-TERM THINKING IS both a requirement and an outcome of true ownership. Owners are different from tenants. I know of a couple who rented out their house, and the family who moved in nailed their Christmas tree to the hardwood floors instead of using a tree stand. Expedient, I suppose, and admittedly these were particularly bad tenants, but no owner would be so short-sighted. Similarly, many investors are effectively short-term tenants, turning their portfolios so quickly they are really just renting the stocks that they temporarily “own.” (Location 996)

As we design our customer experience, we do so with long-term owners in mind. We try to make all of our customer experience decisions—big and small—in that framework. (Location 1007)

Among the most expensive customer experience improvements we’re focused on are our everyday free shipping offers and our ongoing product price reductions. Eliminating defects, improving productivity, and passing the resulting cost savings back to customers in the form of lower prices is a long-term decision. (Location 1017)

To give one small example, engineering a feature like Instant Order Update for use by forty million customers costs nowhere near forty times what it would cost to do the same for one million customers. (Location 1022)

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. (Location 1024)

We have a strong team of hard-working, innovative folks building They are focused on the customer and focused on the long term. On that time scale, the interests of shareowners and customers are aligned. (Location 1027)

P.S. Again this year, the widely followed American Customer Satisfaction Index gave a score of eighty-eight—the highest customer satisfaction score ever recorded in any service industry, online or off. A representative of the ACSI was quoted as saying, “If they go any higher, they will get a nosebleed.” We’re working on that. (Location 1029)

Thinking About Finance 2004 OUR ULTIMATE FINANCIAL measure, and the one we most want to drive over the long-term, is free cash flow per share. (Location 1034)

Why not focus first and foremost, as many do, on earnings, earnings per share or earnings growth? The simple answer is that earnings don’t directly translate into cash flows, and shares are worth only the present value of their future cash flows, not the present value of their future earnings. Future earnings are a component—but not the only important component—of future cash flow per share. Working capital and capital expenditures are also important, as is future share dilution. (Location 1036)

Note: Gives a great example of a transportation company.

Cash flow statements often don’t receive as much attention as they deserve. Discerning investors don’t stop with the income statement. (Location 1131)

Our Most Important Financial Measure: Free Cash Flow per Share’s financial focus is on long-term growth in free cash flow per share. (Location 1133)

We have a cash generative operating cycle* because we turn our inventory quickly, collecting payments from our customers before payments are due to suppliers. Our high inventory turnover means we maintain relatively low levels of investment in inventory—$480 million at year end on a sales base of nearly $7 billion. (Location 1137)

Efficiently managing share count means more cash flow per share and more long-term value for owners. (Location 1148)

This focus on free cash flow isn’t new for We made it clear in our 1997 letter to shareholders—our first as a public company—that when “forced to choose between optimizing GAAP accounting and maximizing the present value of future cash flows, we’ll take the cash flows.” (Location 1149)

Making Decisions 2005 MANY OF THE important decisions we make at can be made with data. There is a right answer or a wrong answer, a better answer or a worse answer, and math tells us which is which. These are our favorite kinds of decisions. (Location 1161)

As you would expect, however, not all of our important decisions can be made in this enviable, math-based way. Sometimes we have little or no historical data to guide us and proactive experimentation is impossible, impractical, or tantamount to a decision to proceed. Though data, analysis, and math play a role, the prime ingredient in these decisions is judgment.* (Location 1178)

As our shareholders know, we have made a decision to continuously and significantly lower prices for customers year after year as our efficiency and scale make it possible. This is an example of a very important decision that cannot be made in a math-based way. In fact, when we lower prices, we go against the math that we can do, which always says that the smart move is to raise prices. We have significant data related to price elasticity. With fair accuracy, we can predict that a price reduction of a certain percentage will result in an increase in units sold of a certain percentage. With rare exceptions, the volume increase in the short term is never enough to pay for the price decrease. However, our quantitative understanding of elasticity is short-term. We can estimate what a price reduction will do this week and this quarter. But we cannot numerically estimate the effect that consistently lowering prices will have on our business over five years or ten years or more. Our judgment is that relentlessly returning efficiency improvements and scale economies to customers in the form of lower prices creates a virtuous cycle that leads over the long term to a much larger dollar amount of free cash flow, and thereby to a much more valuable We’ve made similar judgments around Free Super Saver Shipping and Amazon Prime, both of which are expensive in the short term and—we believe—important and valuable in the long term. (Location 1181)

Math-based decisions command wide agreement, whereas judgment-based decisions are rightly debated and often controversial, at least until put into practice and demonstrated. Any institution unwilling to endure controversy must limit itself to decisions of the first type. In our view, doing so would not only limit controversy—it would also significantly limit innovation and long-term value creation. (Location 1200)

The foundation of our decision-making philosophy was laid out in our 1997 letter to shareholders, a copy of which is attached: We will continue to focus relentlessly on our customers. (Location 1203)

You can count on us to combine a strong quantitative and analytical culture with a willingness to make bold decisions. As we do so, we’ll start with the customer and work backward. In our judgment, that is the best way to create shareholder value. (Location 1211)

“The Structure of ‘Unstructured’ Decision Processes” is a fascinating 1976 paper by Henry Mintzberg, Duru Raisinghani, and Andre Theoret. They look at how institutions make strategic, “unstructured” decisions as opposed to more quantifiable “operating” decisions. Among other gems you will find in the paper is this: “Excessive attention by management scientists to operating decisions may well cause organizations to pursue inappropriate courses of action more efficiently.” They are not debating the importance of rigorous and quantitative analysis, but only noting that it gets a lopsided amount of study and attention, probably because of the very fact that it is more quantifiable. The whole paper is available at (Location 1214)

Growing New Businesses 2006 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. (Location 1222)

Before we invest our shareholders’ money in a new business, we must convince ourselves that the new opportunity can generate the returns on capital our investors expected when they invested in Amazon. (Location 1227)

Furthermore, we must believe that the opportunity is currently underserved and that we have the capabilities needed to bring strong customer-facing differentiation to the marketplace. Without that, it’s unlikely we’d get to scale in that new business. (Location 1230)

Fulfillment by Amazon is a set of web services APIs that turns our twelve million square foot fulfillment center network into a gigantic and sophisticated computer peripheral. (Location 1240)

Note: Gives Insight into a new business

Amazon Web Services is another example. With AWS, we’re building a new business focused on a new customer set: software developers. (Location 1244)

Note: Gives US insight into a new business

In some large companies, it might be difficult to grow new businesses from tiny seeds because of the patience and nurturing required. In my view, Amazon’s culture is unusually supportive of small businesses with big potential, and I believe that’s a source of competitive advantage. (Location 1249)

We have many people at our company who have watched multiple $10 million seeds turn into billion-dollar businesses. That firsthand experience and the culture that has grown up around those successes is, in my opinion, a big part of why we can start businesses from scratch. The culture demands that these new businesses be high potential and that they be innovative and differentiated, but it does not demand that they be large on the day that they are born. (Location 1253)

I remember how excited we were in 1996 as we crossed $10 million in book sales. It wasn’t hard to be excited—we had grown to $10 million from zero. Today, when a new business inside Amazon grows to $10 million, the overall company is growing from $10 billion to $10.01 billion. It would be easy for the senior executives who run our established billion-dollar businesses to scoff. But they don’t. They watch the growth rates of the emerging businesses and send emails of congratulations. That’s pretty cool, and we’re proud it’s a part of our culture. (Location 1256)

But we will be choosy, and we will work hard and patiently. (Location 1267)

A Team of Missionaries 2007 NOVEMBER 19, 2007, was a special day. After three years of work, we introduced Amazon Kindle to our customers. (Location 1270)

Lately, networked tools such as desktop computers, laptops, cell phones and PDAs have changed us too. They’ve shifted us more toward information snacking, and I would argue toward shorter attention spans. I value my BlackBerry—I’m convinced it makes me more productive—but I don’t want to read a three-hundred-page document on it. Nor do I want to read something hundreds of pages long on my desktop computer or my laptop. As I’ve already mentioned in this letter, people do more of what’s convenient and friction-free. If our tools make information snacking easier, we’ll shift more toward information snacking and away from long-form reading. Kindle is purpose-built for long-form reading. We hope Kindle and its successors may gradually and incrementally move us over years into a world with longer spans of attention, providing a counterbalance to the recent proliferation of info-snacking tools. I realize my tone here tends toward the missionary, and I can assure you it’s heartfelt. It’s also not unique to me but is shared by a large group of folks here. I’m glad about that because missionaries build better products. I’ll also point out that, while I’m convinced books are on the verge of being improved upon, Amazon has no sinecure as that agent. It will happen, but if we don’t execute well, it will be done by others. (Location 1308)

Your team of missionaries here is fervent about driving free cash flow per share and returns on capital. We know we can do that by putting customers first. (Location 1318)

Kindle exemplifies our philosophy and long-term investment approach discussed in our first letter to shareholders in 1997. (Location 1321)

Working Backward 2008 IN THIS TURBULENT global economy, our fundamental approach remains the same. Stay heads down, focused on the long term and obsessed over customers. Long-term thinking levers our existing abilities and lets us do new things we couldn’t otherwise contemplate. (Location 1324)

We’ve received thousands of feedback emails from customers about Kindle, and—remarkably—26 percent of them contain the word “love.” (Location 1344)

Note: Kindle Review

Customer Experience Pillars In our retail business, we have strong conviction that customers value low prices, vast selection, and fast, convenient delivery and that these needs will remain stable over time. It is difficult for us to imagine that ten years from now, customers will want higher prices, less selection, or slower delivery. (Location 1346)

Prudent Spending The customer-experience path we’ve chosen requires us to have an efficient cost structure. The good news for shareowners is that we see much opportunity for improvement in that regard. Everywhere we look (and we all look), we find what experienced Japanese manufacturers would call muda, or waste.† I find this incredibly energizing. I see it as potential—years and years of variable and fixed productivity gains and more efficient, higher velocity, more flexible capital expenditures. (Location 1365)

†At a fulfillment center recently, one of our Kaizen experts asked me, “I’m in favor of a clean fulfillment center, but why are you cleaning? Why don’t you eliminate the source of dirt?” I felt like the Karate Kid. (Location 1379)

Setting Goals 2009 THE FINANCIAL RESULTS for 2009 reflect the cumulative effect of fifteen years of customer experience improvements: increasing selection, speeding delivery, reducing cost structure so we can afford to offer customers ever-lower prices, and many others. (Location 1383)

Senior leaders that are new to Amazon are often surprised by how little time we spend discussing actual financial results or debating projected financial outputs. To be clear, we take these financial outputs seriously, but we believe that focusing our energy on the controllable inputs to our business is the most effective way to maximize financial outputs over time. Our annual goal setting process begins in the fall and concludes early in the new year after we’ve completed our peak holiday quarter. Our goal setting sessions are lengthy, spirited, and detail oriented. We have a high bar for the experience our customers deserve and a sense of urgency to improve that experience. (Location 1412)

For 2010, we have 452 detailed goals with owners, deliverables, and targeted completion dates. (Location 1418)

Taken as a whole, the set of goals is indicative of our fundamental approach. Start with customers and work backward. Listen to customers, but don’t just listen to customers—also invent on their behalf. We can’t assure you that we’ll meet all of this year’s goals. We haven’t in past years. However, we can assure you that we’ll continue to obsess over customers. We have strong conviction that that approach—in the long term—is every bit as good for owners as it is for customers. It’s still Day 1. (Location 1425)

Fundamental Tools 2010 RANDOM FORESTS, NAIVE Bayesian estimators, RESTful services, gossip protocols, eventual consistency, data sharding, antientropy, Byzantine quorum, erasure coding, vector clocks: walk into certain Amazon meetings, and you may momentarily think you’ve stumbled into a computer science lecture. (Location 1432)

Many of the problems we face have no textbook solutions, and so we—happily—invent new approaches. (Location 1440)

We live in an era of extraordinary increases in available bandwidth, disk space, and processing power, all of which continue to get cheap fast. We have on our team some of the most sophisticated technologists in the world—helping to solve challenges that are right on the edge of what’s possible today. As I’ve discussed many times before, we have unshakeable conviction that the long-term interests of shareowners are perfectly aligned with the interests of customers. (Location 1480)

And we like it that way. 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. We still have a lot to learn, and I expect and hope we’ll continue to have so much fun learning it. I take great pride in being part of this team. It’s still Day 1. (Location 1484)

The Power of Invention 2011 “TO US, THE value of Amazon Web Services is undeniable—in twenty seconds, we can double our server capacity. In a high-growth environment like ours and with a small team of developers, it’s very important for us to trust that we have the best support to give to the music community around the world. Five years ago, we would have crashed and been down without knowing when we would be back. Now, because of Amazon’s continued innovation, we can provide the best technology and continue to grow.” That’s Christopher Tholen, the chief technology officer of BandPage. His comments about how AWS helps with the critical need to scale compute capacity quickly and reliably are not hypothetical: BandPage now helps five hundred thousand bands and artists connect with tens of millions of fans. (Location 1488)

Invention comes in many forms and at many scales. The most radical and transformative of inventions are often those that empower others to unleash their creativity—to pursue their dreams. That’s a big part of what’s going on with Amazon Web Services, Fulfillment by Amazon, and Kindle Direct Publishing. With AWS, FBA, and KDP, we are creating powerful self-service platforms that allow thousands of people to boldly experiment and accomplish things that would otherwise be impossible or impractical. 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. (Location 1541)

Amazonians are leaning into the future, with radical and transformational innovations that create value for thousands of authors, entrepreneurs, and developers. Invention has become second nature at Amazon, and in my view the team’s pace of innovation is even accelerating—I can assure you it’s very energizing. I’m extremely proud of the whole team and feel lucky to have a front row seat. It’s still Day 1! (Location 1572)

Internally Driven 2012 AS REGULAR READERS of this letter will know, our energy at Amazon comes from the desire to impress customers rather than the zeal to best competitors. (Location 1578)

Most customers are too busy themselves to monitor the price of an item after they preorder it, and our policy could be to require the customer to contact us and ask for the refund. Doing it proactively is more expensive for us, but it also surprises, delights, and earns trust. (Location 1605)

As I write this, our recent stock performance has been positive, but we constantly remind ourselves of an important point—as I frequently quote famed investor Benjamin Graham in our employee all-hands meetings—“In the short run, the market is a voting machine but in the long run, it is a weighing machine.” We don’t celebrate a 10 percent increase in the stock price like we celebrate excellent customer experience. We aren’t 10 percent smarter when that happens and conversely aren’t 10 percent dumber when the stock goes the other way. We want to be weighed, and we’re always working to build a heavier company. (Location 1630)

“Wow” 2013 I’M SO PROUD of what all the teams here at Amazon have accomplished on behalf of customers this past year. Amazonians around the world are polishing products and services to a degree that is beyond what’s expected or required, taking the long view, reinventing normal, and getting customers to say “Wow.” (Location 1641)

Prime Customers love Prime. (Location 1650)

Readers and Authors We’re investing heavily on behalf of readers. (Location 1657)

Prime Instant Video Prime Instant Video is experiencing tremendous growth across all metrics—including new customers, repeat usage, and total number of streams. (Location 1667)

Fire TV Just this past week, after two years of hard work, our hardware team launched Fire TV. (Location 1678)

Amazon Game Studios It’s early in the twenty-second century and Earth is threatened by an alien species, the Ne’ahtu. The aliens infected Earth’s energy grid with a computer virus to disable the planet’s defenses. Before they could strike, computer science prodigy Amy Ramanujan neutralized the alien virus and saved the planet. Now, the Ne’ahtu are back and Dr. Ramanujan must prevent them from launching an all-out invasion on Earth. She needs your help. That’s how Sev Zero, the first Fire TV exclusive from Amazon Game Studios, begins. (Location 1688)

Amazon Appstore The Amazon Appstore now serves customers in almost two hundred countries. (Location 1699)

Spoken Word Audio 2013 was a landmark year for Audible, the world’s largest seller and producer of audiobooks. (Location 1708)

Fresh Grocery After trialing the service for five years in Seattle (no one accuses us of a lack of patience), we expanded Amazon Fresh to Los Angeles and San Francisco. (Location 1717)

Amazon Web Services AWS is eight years old, and the team’s pace of innovation is actually accelerating. (Location 1723)

Employee Empowerment We challenge ourselves to not only invent outward facing features, but also to find better ways to do things internally—things that will both make us more effective and benefit our thousands of employees around the world. (Location 1732)

Veteran Hiring We seek leaders who can invent, think big, have a bias for action, and deliver results on behalf of customers. (Location 1749)

Fulfillment Innovation Nineteen years ago, I drove the Amazon packages to the post office every evening in the back of my Chevy Blazer. (Location 1758)

Urban Campus In 2013, we added 420,000 square feet of new headquarters space in Seattle and broke ground on what will become four city blocks and several million square feet of new construction. (Location 1769)

Fast Delivery In partnership with the United States Postal Service, we’ve begun for the first time to offer Sunday delivery to select cities. (Location 1776)

Experiments and More Experiments We have our own internal experimentation platform called “Weblab” that we use to evaluate improvements to our websites and products. (Location 1783)

Apparel and Shoes Amazon Fashion is booming. (Location 1791)

Frustration-Free Packaging Our battle against annoying wire ties and plastic clamshells rages on. (Location 1797)

Fulfillment by Amazon The number of sellers using Fulfillment by Amazon grew more than 65 percent last year. (Location 1806)

Login and Pay with Amazon For several years we’ve enabled Amazon customers to pay on other sites, such as Kickstarter, SmugMug, and Gogo Inflight, using the credit cards and shipping addresses already stored in their Amazon account. (Location 1822)

Amazon Smile In 2013 we launched Amazon Smile—a simple way for customers to support their favorite charitable organizations every time they shop. (Location 1829)

The Mayday Button “Not only is the device awesome but the Mayday feature is absolutely FANTASTIC!!!!! The Kindle team has hit it out of the park with this one.” “Just tried the mayday button on my hdx. 15 second response time … amazon has done it again. Thoroughly impressed.” Nothing gives us more pleasure at Amazon than “reinventing normal”—creating inventions that customers love and resetting their expectations for what normal should be. Mayday reimagines and revolutionizes the idea of on-device tech support. (Location 1835)

Three Big Ideas 2014 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. (Location 1866)

What customers really want in this arena is “better and faster,” and if “better and faster” can come with a side dish of cost savings, terrific. But the cost savings is the gravy, not the steak. (Location 1963)

Big Winners Pay for Many Experiments 2015 THIS YEAR, AMAZON became the fastest company ever to reach $100 billion in annual sales. Also this year, Amazon Web Services is reaching $10 billion in annual sales—doing so at a pace even faster than Amazon achieved that milestone. (Location 2030)

Luck plays an outsized role in every endeavor, and I can assure you we’ve had a bountiful supply. (Location 2037)

A word about corporate cultures: for better or for worse, they are enduring, stable, hard to change. They can be a source of advantage or disadvantage. You can write down your corporate culture, but when you do so, you’re discovering it, uncovering it—not creating it. It is created slowly over time by the people and by events—by the stories of past success and failure that become a deep part of the company lore. (Location 2042)

Given a ten percent chance of a one hundred times payoff, you should take that bet every time. But you’re still going to be wrong nine times out of ten. We all know that if you swing for the fences, you’re going to strike out a lot, but you’re also going to hit some home runs. The difference between baseball and business, however, is that baseball has a truncated outcome distribution. When you swing, no matter how well you connect with the ball, the most runs you can get is four. In business, every once in a while, when you step up to the plate, you can score one thousand runs. This long-tailed distribution of returns is why it’s important to be bold. Big winners pay for so many experiments. (Location 2053)

Note: Important

AWS, Marketplace, and Prime (Location 2058)

Note: Where amz business mostly comes from.

Prime We want Prime to be such a good value that you’d be irresponsible not to be a member. (Location 2066)

These shows are great for customers, and they feed the Prime flywheel—Prime members who watch Prime Video are more likely to convert from a free trial to a paid membership, and more likely to renew their annual subscriptions. (Location 2084)

Marketplace We took two big swings and missed—with Auctions and zShops—before we launched Marketplace over fifteen years ago. (Location 2092)

The opposite situation is less interesting and there is undoubtedly some survivorship bias. Any companies that habitually use the light-weight Type 2 decision-making process to make Type 1 decisions go extinct before they get large. (Location 2228)

Fending Off Day 2 2016 “JEFF, WHAT DOES Day 2 look like?” That’s a question I just got at our most recent all-hands meeting. I’ve been reminding people that it’s Day 1 for a couple of decades. I work in an Amazon building named Day 1, and when I moved buildings, I took the name with me. I spend time thinking about this topic. (Location 2231)

“Day 2 is stasis. Followed by irrelevance. Followed by excruciating, painful decline. Followed by death. And that is why it is always Day 1.” (Location 2236)

Such a question can’t have a simple answer. There will be many elements, multiple paths, and many traps. I don’t know the whole answer, but I may know bits of it. Here’s a starter pack of essentials for Day 1 defense: customer obsession, a skeptical view of proxies, the eager adoption of (Location 2240)

True Customer Obsession (Location 2244)

Embrace External Trends The outside world can push you into Day 2 if you won’t or can’t embrace powerful trends quickly. If you fight them, you’re probably fighting the future. Embrace them and you have a tailwind. These big trends are not that hard to spot (they get talked and written about a lot), but they can be strangely hard for large organizations to embrace. We’re in the middle of an obvious one right now: machine learning and artificial intelligence. (Location 2268)

Over the past decades, computers have broadly automated tasks that programmers could describe with clear rules and algorithms. Modern machine learning techniques now allow us to do the same for tasks where describing the precise rules is much harder. (Location 2273)

High-Velocity Decision Making Day 2 companies make high-quality decisions, but they make high-quality decisions slowly. To keep the energy and dynamism of Day 1, you have to somehow make high-quality, high-velocity decisions. Easy for start-ups and very challenging for large organizations. The senior team at Amazon is determined to keep our decision-making velocity high. Speed matters in business—plus a high-velocity decision-making environment is more fun too. We don’t know all the answers, but here are some thoughts. First, never use a one-size-fits-all decision-making process. Many decisions are reversible, two-way doors. Those decisions can use a light-weight process. For those, so what if you’re wrong? I wrote about this in more detail in last year’s letter. (Location 2289)

Second, most decisions should probably be made with somewhere around 70 percent of the information you wish you had. If you wait for 90 percent, in most cases, you’re probably being slow. Plus, either way, you need to be good at quickly recognizing and correcting bad decisions. If you’re good at course correcting, being wrong may be less costly than you think, whereas being slow is going to be expensive for sure. Third, use the phrase “disagree and commit.” This phrase will save a lot of time. If you have conviction on a particular direction even though there’s no consensus, it’s helpful to say, “Look, I know we disagree on this, but will you gamble with me on it? Disagree and commit?” By the time you’re at this point, no one can know the answer for sure, and you’ll probably get a quick yes. (Location 2296)

Fourth, recognize true misalignment issues early and escalate them immediately. Sometimes teams have different objectives and fundamentally different views. They are not aligned. No amount of discussion, no number of meetings will resolve that deep misalignment. Without escalation, the default dispute resolution mechanism for this scenario is exhaustion. Whoever has more stamina carries the decision. (Location 2311)

So, have you settled only for decision quality, or are you mindful of decision velocity too? Are the world’s trends tailwinds for you? Are you falling prey to proxies, or do they serve you? And most important of all, are you delighting customers? We can have the scope and capabilities of a large company and the spirit and heart of a small one. But we have to choose it. (Location 2318)

Building a Culture of High Standards 2017 (Location 2328)

How do you stay ahead of ever-rising customer expectations? There’s no single way to do it—it’s a combination of many things. But high standards (widely deployed and at all levels of detail) are certainly a big part of it. We’ve had some successes over the years in our quest to meet the high expectations of customers. (Location 2346)

Six-Page Narratives We don’t do PowerPoint (or any other slide-oriented) presentations at Amazon. Instead, we write narratively structured six-page memos. We silently read one at the beginning of each meeting in a kind of “study hall.” Not surprisingly, the quality of these memos varies widely. Some have the clarity of angels singing. They are brilliant and thoughtful and set up the meeting for high-quality discussion. Sometimes they come in at the other end of the spectrum. (Location 2380)

The writing example is very different. The difference between a great memo and an average one is much squishier. It would be extremely hard to write down the detailed requirements that make up a great memo. Nevertheless, I find that much of the time, readers react to great memos very similarly. They know it when they see it. The standard is there, and it is real, even if it’s not easily describable. (Location 2386)

Here’s what we’ve figured out. Often, when a memo isn’t great, it’s not the writer’s inability to recognize the high standard, but instead a wrong expectation on scope: they mistakenly believe a high-standards, six-page memo can be written in one or two days or even a few hours, when really it might take a week or more! They’re trying to perfect a handstand in just two weeks, and we’re not coaching them right. The great memos are written and re-written, shared with colleagues who are asked to improve the work, set aside for a couple of days, and then edited again with a fresh mind. They simply can’t be done in a day or two. The key point here is that you can improve results through the simple act of teaching scope—that a great memo probably should take a week or more. (Location 2389)

Skill Beyond recognizing the standard and having realistic expectations on scope, how about skill? Surely to write a world-class memo, you have to be an extremely skilled writer. Is it another required element? In my view, not so much, at least not for the individual in the context of teams. (Location 2395)

Even in the example of writing a six-page memo, that’s teamwork. Someone on the team needs to have the skill, but it doesn’t have to be you. (Location 2399)

Perhaps a little less obvious: people are drawn to high standards—they help with recruiting and retention. (Location 2403)

And finally, high standards are fun! Once you’ve tasted high standards, there’s no going back. (Location 2407)

So, the four elements of high standards as we see it: they are teachable, they are domain specific, you must recognize them, and you must explicitly coach realistic scope. For us, these work at all levels of detail. Everything from writing memos to whole new, clean-sheet business initiatives. (Location 2408)

Insist on the Highest Standards Leaders have relentlessly high standards—many people may think these standards are unreasonably high. —from the Amazon Leadership Principles (Location 2411)

Recent Milestones (Location 2415)

Prime: Thirteen years post-launch, we have exceeded one hundred million paid Prime members globally. (Location 2418)

AWS: It’s exciting to see Amazon Web Services, a $20 billion revenue run rate business, accelerate its already healthy growth. (Location 2424)

Marketplace: In 2017, for the first time in our history, more than half of the units sold on Amazon worldwide were from our third-party sellers, including small and medium-sized businesses (SMBs). (Location 2431)

Alexa: Customer embrace of Alexa continues, with Alexa-enabled devices among the best-selling items across all of Amazon. (Location 2437)

Amazon devices: 2017 was our best year yet for hardware sales. Customers bought tens of millions of Echo devices, and Echo Dot and Fire TV Stick with Alexa were the best-selling products across all of Amazon—across all categories and all manufacturers. (Location 2448)

Prime Video: Prime Video continues to drive Prime member adoption and retention. (Location 2455)

Amazon Music: Amazon Music continues to grow fast and now has tens of millions of paid customers. (Location 2469)

Fashion: Amazon has become the destination for tens of millions of customers to shop for fashion. (Location 2471)

Whole Foods: When we closed our acquisition of Whole Foods Market last year, we announced our commitment to making high-quality, natural and organic food available for everyone, then immediately lowered prices on a selection of best-selling grocery staples, including avocados, organic brown eggs, and responsibly farmed salmon. (Location 2478)

Amazon Go: Amazon Go, a new kind of store with no checkout required, opened to the public in January in Seattle. (Location 2488)

Treasure Truck: Treasure Truck expanded from a single truck in Seattle to a fleet of thirty-five trucks across twenty-five US cities and twelve UK cities. (Location 2493)

India: is the fastest growing marketplace in India, and the most visited site on both desktop and mobile, according to comScore and SimilarWeb. (Location 2499)

Sustainability: We are committed to minimizing carbon emissions by optimizing our transportation network, improving product packaging, and enhancing energy efficiency in our operations, and we have a long-term goal to power our global infrastructure using 100 percent renewable energy. (Location 2503)

Empowering small business: Millions of small and medium-sized businesses worldwide now sell their products through Amazon to reach new customers around the globe. (Location 2514)

Investment and job creation: Since 2011, we have invested over $150 billion worldwide in our fulfillment networks, transportation capabilities, and technology infrastructure, including AWS data centers. (Location 2518)

Career Choice: One employee program we’re particularly proud of is Amazon Career Choice. For hourly associates with more than one year of tenure, we prepay 95 percent of tuition, fees, and textbooks (up to $12,000) for certificates and associate degrees in high-demand occupations such as aircraft mechanics, computer-aided design, machine tool technologies, medical lab technologies, and nursing. (Location 2524)

Path Ahead This year marks the twentieth anniversary of our first shareholder letter, and our core values and approach remain unchanged. We continue to aspire to be Earth’s most customer-centric company, and we recognize this to be no small or easy challenge. (Location 2535)

Intuition, Curiosity, and the Power of Wandering 2018 (Location 2542)

The percentages represent the share of physical gross merchandise sales sold on Amazon by independent third-party sellers—mostly small and medium-sized businesses—as opposed to Amazon retail’s own first party sales. Third-party sales have grown from 3 percent of the total to 58 percent. To put it bluntly: Third-party sellers are kicking our first-party butt. Badly. (Location 2559)

We helped independent sellers compete against our first-party business by investing in and offering them the very best selling tools we could imagine and build. (Location 2568)

Intuition, Curiosity, and the Power of Wandering From very early on in Amazon’s life, we knew we wanted to create a culture of builders—people who are curious, explorers. They like to invent. Even when they’re experts, they are “fresh” with a beginner’s mind. (Location 2577)

Note:maybe write an essay on the beginner mind

Imagining the Impossible Amazon today remains a small player in global retail. We represent a low single-digit percentage of the retail market, and there are much larger retailers in every country where we operate. And that’s largely because nearly 90 percent of retail remains offline, in brick and mortar stores. For many years, we considered how we might serve customers in physical stores, but felt we needed first to invent something that would really delight customers in that environment. With Amazon Go, we had a clear vision. Get rid of the worst thing about physical retail: checkout lines. No one likes to wait in line. Instead, we imagined a store where you could walk in, pick up what you wanted, and leave. (Location 2619)