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November 1, 2013 06:36 pm GMT
In early 1998, Amazon founder Jeff Bezos and CFO Joy Covey co-authored a letter to shareholders discussing the previous years accomplishments. That letter has become holy writ inside the company, and is re-published every year in its annual report. The letter and its contents struck me as incredibly prescient, or perhaps simply potent, as I read through Brad Stones excellent The Everything Store: Jeff Bezos and the age of Amazon. Its no surprise that the letter has continued to be viewed as a touchstone for the company and its employees. The tenets set out in it are clearly represented by the way that the company develops and releases products, and the view that it takes to every day business. One of the most commonly discussed aspects of Amazons business is its attitude towards profit margins. The company famously makes a ton of money every year and manages to spend most of it, ending up with slim or no profits shown on its quarterly balance books. For some folks, obsessed with the way numbers look in a column, this is endlessly frustrating. How can a company that makes so much money, and continues to be such a darling of the stock market, end up with so little profit to show for it? The letter holds the answer, and makes Amazons, and Bezos, views incredibly clear. Heres the relevant passage: We believe that a fundamental measure of our success will be the shareholder value we create over the long term. This value will be a direct result of our ability to extend and solidify our current market leadership position. The stronger our market leadership, the more powerful our economic model. Market leadership can translate directly to higher revenue, higher profitability, greater capital velocity, and correspondingly stronger returns on invested capital. 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. We have invested and will continue to invest aggressively to expand and leverage our customer base, brand, and infrastructure as we move to establish an enduring franchise. The letter follows that up with a nine-point layout that describes Amazons decision making approach. You can view the letter here to read the points, but if you
Original Link: http://feedproxy.google.com/~r/Techcrunch/~3/7JT3qVcP6vE/
Bezos, Amazon And Refusing To Act Your Age
In early 1998, Amazon founder Jeff Bezos and CFO Joy Covey co-authored a letter to shareholders discussing the previous years accomplishments. That letter has become holy writ inside the company, and is re-published every year in its annual report. The letter and its contents struck me as incredibly prescient, or perhaps simply potent, as I read through Brad Stones excellent The Everything Store: Jeff Bezos and the age of Amazon. Its no surprise that the letter has continued to be viewed as a touchstone for the company and its employees. The tenets set out in it are clearly represented by the way that the company develops and releases products, and the view that it takes to every day business. One of the most commonly discussed aspects of Amazons business is its attitude towards profit margins. The company famously makes a ton of money every year and manages to spend most of it, ending up with slim or no profits shown on its quarterly balance books. For some folks, obsessed with the way numbers look in a column, this is endlessly frustrating. How can a company that makes so much money, and continues to be such a darling of the stock market, end up with so little profit to show for it? The letter holds the answer, and makes Amazons, and Bezos, views incredibly clear. Heres the relevant passage: We believe that a fundamental measure of our success will be the shareholder value we create over the long term. This value will be a direct result of our ability to extend and solidify our current market leadership position. The stronger our market leadership, the more powerful our economic model. Market leadership can translate directly to higher revenue, higher profitability, greater capital velocity, and correspondingly stronger returns on invested capital. 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. We have invested and will continue to invest aggressively to expand and leverage our customer base, brand, and infrastructure as we move to establish an enduring franchise. The letter follows that up with a nine-point layout that describes Amazons decision making approach. You can view the letter here to read the points, but if youOriginal Link: http://feedproxy.google.com/~r/Techcrunch/~3/7JT3qVcP6vE/
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