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I will be in New York City on May 27 doing a live show. I will be interviewed by my friend Patrick o' Shaughnessy at RAMPS Headquarters. The event is free to attend. I will leave a link down below so you can register. I'll be doing several live events at RAMPS Headquarters over the next 12 to 24 months. So even if you can't make this one, make sure you register so you'll be notified on the next one. This event isn't reserved for RAMPS customers, but future events will be because space is limited. So if you aren't already running your business on Ramp, you really should be. I run my business on Ramp. Most of the top CEOs and founders that I know do so as well. And I actually think there's an idea from Jeff Bezos shareholder Letters that I think is related to this and really just good advice for anyone in business. And it's Jeff's idea on the importance of heavily investing in introductions to new customers. As you're about to hear. Jeff was very clear from the start that he was going to build an enduring, long lasting business. He was not interested at all in in building an undifferentiated commodity business. He wanted to build something to deliver value to customers more than anyone else in the world. And he believed he could succeed at that goal better than anyone else. And as you hear on this episode that if you believed what Jeff believed, then you too would do what Jeff was doing. He believed he was building a winning system. And if you're doing that, then it makes a lot of sense to say this. This is what Jeff wrote in one of his very first shareholder letters. We will continue to invest heavily in introductions to new customers. These are the early days of category formation where many customers are forming relationships for the first time. We must work hard to grow the number of customers who shop with us. So he saw that people who started using Amazon tended to stick around because of the value that they received from Amazon. I was one of those people that Jeff was trying to introduce Amazon to. I have been a customer of his for 21 straight years. If you believe you have the best product, then you should do everything you can to get more people into your winning system. Ramp is doing the same thing today and I have a mind blowing stat that demonstrates their right to believe they have built a product that delivers more value to their customers than anyone else in the world. Last year, 12,059 businesses signed up to use the Ramp corporate card and only 8 of the 12,059 businesses decided ramp wasn't for them, that is a success rate of 99.9334%. If you have not yet started running your business on ramp, go to ramp.com today to learn how they can help your business save time and money. I hope to see you in New York and I hope you enjoy this episode. This is the fourth or the fifth time that I've read through all of Jeff Bezos shareholder letters. I think it's something I should do every year and then make a new episode every year because I think they're so important. In fact, the best description of these letters I've ever read was this description. It says, to read Jeff Bezos's shareholder letters is to get a crash course in running a high growth Internet business from someone who mastered it before any of the playbooks were written. So he titles, Jeff titles every single shareholder letter. We want to start right beginning in 1997, he titles this. It's all about the long term. This is the most important shareholder letter. And you can see this because Jeff attaches it to every single subsequent shareholder letter all the way up till the end. His last one that he wrote 23 years later in 2020, from day one, when you study Bezos and he just lays it out here on shareholders, it was very obvious that his goal, he wanted to create a durable, long lasting business, something that creates something valuable, differentiated and enduring, something he repeats over and over again. So he says this is day one for the Internet. And if we execute well for Amazon.com today, online commerce saves customers money and precious time. Tomorrow, through personalization, online commerce will accelerate the very process of discovery. Amazon.com uses the Internet to create real value for its customers and by doing so hopes to create an enduring franchise. That you'll hear that he'll repeat that word, enduring, over and over again. So he hopes to create enduring franchise even in established and large markets. Starting obviously in retail, which is a massive, an ancient business, we have a window of opportunity as larger players marshal the resources to pursue the online opportunity and as customers new to purchasing online are receptive to forming new relationships. And so that was one of the most interesting ideas that he'll talk about is the fact, the way I summarize this is in a maximum get big fast. Somebody asked me one time who I think and all the people that studied on the podcast so far, who I think is the best strategist. And without hesitation I answered Rockefeller and Bezos. And a lot of the strategy that Bezos utilized, he just lays it out in very plain, easy to understand language in his shareholder letters. And one of that is that on the Internet you need to be really, really tiny or really, really large. And obviously he wanted to build a giant enduring business. So we're going to get big very fast and we're going to invest heavily in introductions to new customers. So this idea, hey, this is a very, this a technological shift. It's a phenomenon. People are, you know, 10 years ago, they were terrified at the time he's writing this of buying things online. They're starting to become more and more receptive to this now. We want to form relationships, enduring, long lasting relationships. I think I went back and looked. I think I've been a customer of Amazon now for 21 years. I was one of the people that he's writing about. Our goal is to move quickly to solidify and extend our current position while we begin to pursue the online commerce opportunities in other areas we see substantial opportunity in the large market community are targeting. This strategy is not without risk. It requires serious investment and crisp execution against established franchise leaders. And then he gets into the main theme of this shareholder letter. He had another session called it's all about the long term. We believe that a fundamental measure of our success will be the shareholder value that we create over the long term. And you italicize long term. 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. We have invested and will continue to invest aggressively to expand and leverage our customer base, our brand and infrastructure as we move to establish an enduring franchise. We are on, you know, the second page, maybe five paragraphs into this and he's already used that the word enduring twice because of our emphasis on the long term. He's probably said long term, I don't know, five, ten times already. We may make decisions and weigh trade offs differently than some other companies. We want to share with you our fundamental management and decision making approach so that you, our shareholders, may confirm that it's consistent with your investment philosophy. And so if you read the first two pages of this, it's obvious the first shareholder letter is setting the tone and he's talking about we're going to focus on the long term, we're going to focus on cash flow, we're going to invent and we're going to be bold. These are things that he repeats for the next 23 years. This is, we will continue to focus relentlessly on, on our customers. There's a, a funny story I Think most people know by now, but I love the idea that briefly, Jeff flirted with the idea of naming Amazon Relentless. In fact, when you go to relentless.com to this day, he still owns the domain and it, and it forwards to Amazon. I just love that we will continue to focus relentlessly on our customers. We will make bold rather than timid investment decisions where we see a sufficient probability of gaining market leadership and advantages. Some of these investments will pay off, others will not. And we will have learned another valuable lesson in either case. I'll share with you later. But he also has a idea that not many people express explicitly, that your failures have to. If you want to make an impact, your failures have to scale as well. And you talked about, you know, if you. We're, we're making a lot of experiments. We might invest $10 million at the very beginning when we don't have a lot of assets, Maybe to invest $10 million in an idea that's not going to work well, later on, we might invest $10 billion in an idea that will not work. We'll get to there. So he says, when forced to choose between optimizing the appearance of our GAAP counting and maximizing the present value of future cash flows, we'll take the cash flows. We work hard to spend wisely and maintain our lean culture. So this is where he talks about the importance of getting big fast, the importance of being frugal while you do so. So if you read the Everything Store, the biography of Jeff Bezos that Brad Stone wrote, in fact, somebody asked me recently, they're like, out of everybody that's still alive, who hasn't written an autobiography, who's the number one person that you want to read an autobiography on? And my answer was Jeff, because his life, his biography's only been documented by other people. And I'm very curious to how he tells his own story and what's interesting to him. But in that Brad Stone book, it was very fascinating where he would like, run around with copies, Jeff Wood, copies of Sam Walton's autobiography, Made in America. And he'd highlight specific parts and underline specific parts and then go and give those books with his own annotations to early readers in Amazon. And there's a lot that's when you've read both and, you know, I've read, I think I read Tim Walton's autobiography at least three times. I've read another biography twice. But you just see a lot of the echoes of a lot of the ideas at the very beginning. Ramazan. So, hey, we're spend wisely, maintain our lean culture. We understand the importance of continually reinforcing a cost conscious culture. That sounds like molten to me. We will balance our focus on growth with emphasis on long term profitability and capital management. At this stage we choose to prioritize growth because we believe that scale is central to achieving the potential of our business model. So summarize on one paragraph. Get big fast. We aren't so bold as to claim that the above is the right investment philosophy, but it's ours. And we would be remiss if we weren't clear in the approach we have we have taken and will continue to take. And so that's why my philosophy may be different than what you're normally investing in. I'm going to tell you up front so I get the shareholders that are perfectly aligned with our long term mission. The next section he calls it upstairs over customers. My friend told me this one time and he observed something that thought was interesting. Amazon has this list and you can find it online of 14 company principles. And my friend read through the list. He's like, oh, if you really think about it, it's like they have one single organizing principle of their entire organization is obsessed over customers. So Jeff gets into that. From the beginning our focus has been an offer on offering our customers compelling value. We realize that the web was and still is the worldwide Wait, actually I'm going to pause here and I'll get to this later. But when Jeff is around 37 years old, he has a life changing meeting with Jim Sinegol, the founder of Costco, who's you know, probably two decades older than Jeff. I went back and read Jeff's interpretation of the meeting and how it changed the trajectory of Amazon, but I had forgotten. There's a quote from Jim Sinogel in there that was excellent where he says his belief was that value trumps everything. And we see they haven't even met yet, but we see that he said, hey, we're going to build a business that offers compelling value. And when he analyzes businesses that he wants to implement later on, what is the you have to love the offering as the person making the product or service. You can love what you're doing for the customers. That's how you know it has a compelling value. So he says right now it's not really the worldwide wed, it's the worldwide wait. Therefore we set out to offer customers something we simply could not get any other way and began serving them with books. We brought them much more selection than was possible in A physical store. And so even at this point, he points out in his, in this letter, he said, hey, if you stored all our inventory in a bookstore, the bookstore would be over six football fields long. Probably not a bookstore on the planet. Now, I go to bookstores in every single city I ever go to. I love hanging out in bookstores. I don't think I've ever come across one that is as large as six football fields. Although Texas has some, some big, some big bookstore. We brought them much more selection than was possible in a physical store and presented in a useful, easy to search and easy to browse format in a store that's open365, five days a year, 24 hours a day. We maintained a dogged focus on improving the shopping experience. We dramatically lowered prices, further increasing customer value. Word. And why are they doing this? Because, he said, word of mouth remains the most powerful customer acquisition tool that we have. And so it's very fascinating when you read his shareholder letters, when you study him, he is one of these people I felt were completely unstoppable and undeniable. People were. I can't believe Amazon survived when all these other companies died. Yeah, but they didn't have Jeffrey Bezos. This guy's not normal. In fact, one of my favorite things, one of the, one of my favorite things I ever heard is I got to ask Charlie Munger what he thought of Jeff Bezos. And he. Charlie had the greatest subscription I ever heard of him. He says he is ferociously intelligent. The reason I think about this is because he's saying, hey, in the shareholder letter, we're establishing all these long term partnerships with very important strategic partners on the Internet in 97. Who's he talking about? American Online, Yahoo. Excite, Netscape, Geocities, altavista At Home and Prodigy. Every single one of these is gone. I think Yahoo kind of exists. I know Apollo still owns it, but really they're just gone. They didn't have a Jeffrey. Jeffrey Bezos. Another thing I love that he says setting the bar high in our approach to hiring has been and will continue to be the single most important element of Amazon.com's success. It is not easy to work here. This is one of my favorite things he's ever said. I never forgot it. We are working to build something important, something that matters to our customers, something that we can all tell our grandchildren about. Such things are meant to be easy. And then he ends the first letter with really good advice in the beginning, good advice forever. We're still in early stages of Learning how to bring new value to our customers through Internet commerce. We know vastly more about online commerce than when Amazon was founded. But we still have so much to learn. Though we are optimistic, we must remain vigilant and maintain a sense of urgency. So the very next year he decides to title second shareholder as obsessions. And this is, I think is really important, something you and I talk about over and over again that I feel is obvious when you read a lot of biographies and it's not present or it doesn't reoccur really in present day reputation, repetition is persuasive. When you study somebody who had a career that could succeed and thrive and survive for two decades, three decades, four decades, you will see they have, they identify a handful of principles and they just repeat them over and over and over again. And many people are unable to do that. They jump around to the next new idea over and over again. So it says we're working to build a place where 10, 10 tens of millions of customers can come and find and discover anything they might want to buy online. It is truly day one for the Internet. And if we execute our own business plan well, it remains day one for Amazon. 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 be turned. Some will turn out to be mistakes. Head down focus on customers helped us make substantial progress last year. So Then he says 1998 is all about obsessions. We intend to build the world's most customer centric company. But there's 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're the ones with whom we have a relationship and they're 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. So when I read that paragraph, I immediately think of this line that Sam Walton has in his autobiography where he says, there's only one boss and it's the customer and he could buy us anytime he wants by spending his money elsewhere. It's the exact same idea behind what Jeff is writing in the show letter. We must be committed to constant improvement, experimentation and innovation in every initiative. 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. We're proud of the differentiation we built. New, constant innovation and relentless focus on customer experience. 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 is not supposed to be easy repetition. And well, we're finding that things are as they supposed to are as they are supposed to be. Setting the bond, the bar high in our approach to hiring has been and will continue to be the single most important element of Amazon success. Here's a line that in the last trailer, it may be, it's the same message, it might be the exact same words setting them. A higher approach to hiring has been and will continue to be the single most important element in our success during our hiring meeting. So if he's giving advice, I'm like, okay, everybody says, you know, work with the very best people. I think every single episode I've ever done, the founder is like, you really pays to work with the best people. It's so it's like simple advice that's almost impossible to actually implement. And you see that because almost no one actually implements it. And so he's giving Jeff is giving some advice. It's like, okay, well here's some questions that we ask ourselves before we make a decision to hire this person. Number one, will you admire this person? I always tried hard to work only with people I admire. Life is definitely too short to do otherwise. Another question, will this person raise the average level of effectiveness of the group that they're entering? We want to fight entropy. The bar has to continually go up and then third, he looks for unusual talent. The way this is described to me is like you're hiring for spikes along what dimension might this person be a superstar? They might be one of the best, if not the best in the world at this specific trait. Usually those kind of people come with a lot of variants. They're very difficult to work with. One of my favorite examples is Nolan Bushnell hires a 19 founder of Atari hires a 19 year old Steve Jobs. People that work with Steve the Pound complain that he's barefoot, that he smells and that he wants to sleep in the office. Well, he also comes with remarkable talent. So that's, that's another example of that. As you look forward, we believe that the overall E commerce opportunity is enormous. Although Amazon has established a strong leadership position, it is certain that competition will further accelerate. We plan to invest aggressively to build the formation for a multi billion dollar revenue company serving tens of Millions of customers with operational excellence and high efficiency. So that's another thing that he'll repeat over and over again. He's really shooting for operational excellence. He talks about later on in life. So you can read these shareholder letters to Frameline. I'm working out of a book called Invent and the Collected Writings of Jeff Bezos. The second half of this book is actually transcripts of some great speeches that Jeff has given over the years. And he talks about this in interviews where he didn't understand what operational excellence was. He had to learn, he had to teach himself what that was. He certainly didn't know what it was or what or how to do it when he started Amazon. But it was very, very important to him. More about the repetition, making sure the right people, both on an employer level and an investor level, self select into Amazon. The most important thing I could say in this letter was said in last year's letter which detailed our long term investment approach. Because we have so many new shareholders, we've appended last year's letter immediately after this year's. I invite you to please read the section titled it is all about the Long Term. You might want to read it twice to make sure that we're the kind of company you want to be invested in. As it says there, we do not claim it's the right philosophy, we just claim that it's ours. The next letter is titled Building for the Long Term. For the long term, we can be uniquely positioned to serve new customers best and benefit as a result. And how do we do this? We relentlessly focus on customers, stay relentlessly focused on the customer. I wonder if Jeff has that tattooed somewhere. We just don't see it. He's going to repeat this again. That building a valuable company is going to be difficult and you have to invest heavily. If you think that you have something that's much better than anybody else can make and that's what he was certainly trying to do, then you certainly should be investing heavily, heavily in getting more customers into your business because they say they're on. I don't remember how I found out about Amazon. Maybe it was from an ad, maybe it was from a friend. All I know is like what is the value of that one customer, you know, that had been with him for 21 years. This is just very smart. So it starts out he's giving this talk at Stanford. I thought this was part was interesting. At a recent event in Stanford, a young woman came to the microphone and asked me a great question. I have 100 shares of Amazon. What do I own? You want a piece of the leading e commerce platform? We believe we have reached a tipping point where this platform allows us to launch new e commerce businesses, not products. He didn't say new products. He said new 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. If he truly believed what he was offering, what he was building, one is better than anybody else, better than any other offering current and he's going to be able to build something that other people cannot. So that's. This is the reason I bring this up. This is everything that Jeff describes. It all ties to each other. So if you believe that, then what is the next logical step? Invest heavily, heavily in getting more customers into your winning system. Our vision is to use this platform to build earth's most customer centric company. And it's 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. We will continue to invest heavily, heavily in introductions to new customers. Though it's sometimes hard to imagine with all that has happened in the last five years. This remains day one for E commerce and these are the early days of category formation where many customers. He nailed this. Listen to this. This remains day one for E commerce and these are the early days of category formation where many customers are forming relationships for the first time. We must work hard to grow the numbers of customers who shop with. Why? Because if I wait to somewhere else I probably just ensure inertia. I think a lot of people overestimate severely like how like once a customer finds a product they like I'm not really even now I'm not even looking around like is there somebody serving me better or not? Oh, this is good. I'm comfortable here. I'm just gonna stay here. We have busy lives, we're building businesses, we have our family, we have friends, we have health, we have hobbies. I'm not looking around for other products. It's so important. He just nailed this. Excellent. And I love this idea because it's not in this Cheryl letter obviously or not in any of his Chevrolet but at this time if you go back and this is the 1999 Chevrolet, right? If you go back in the time the way the media would describe him, he said oh like he's just a bookseller. Why are you buying Shares. He's just a bookseller. He didn't get it. You didn't even know what you were looking at. And then he's going to go into operational excellence. He'd already peed this multiple times, so I'm going to read you my note before I read you. These three paragraphs that Jeff writes are excellent. He sees how everything connects and feeds into his overall plan for Amazon. He is unapologetically extreme. He sets a very high bar. He'll use words like world class, experience, excellence, dogged determination, highly focused, bold. He wanted to be the very best, and this is obvious. He'll. He'll talk about it. He had to read between the lines. To us, operational excellence implies two things. Delivering continuous improvement in customer experience and driving productivity, margin, efficiency and asset velocity across all of our businesses. Often this is key. Often the best way to drive one of these is to deliver the other. So he is defining, he's learning on the job, so he's figuring out what is operational excellence. Operational excellence applies two things. Delivering continuous improvement in customer experience and driving productivity, margin, efficiency and asset velocity across all of our businesses. Often the best way to drive one of these is to deliver the other. For instance, more efficient distribution yields faster delivery times, which in turn lowers contacts per order and customer service costs. These in turn improve customer experience and build brand, which in turn decreases customer acquisition and retention costs. Our whole company is highly focused on driving operational excellence in each area of our business. Being world class in both customer experience and operations will allow us to grow faster and deliver even higher service levels. And this relentlessness with which he pursues this opportunity makes perfect sense. If you understand how he views that opportunity, consider the most important point. The current online shopping experience is the worst it will ever be. It's good enough today to attract 17 million customers, but it will get so much better. We are doubly blessed. We have a market size, unconstrained opportunity in an area where the underlying foundational technology we employ improves every day. Then the next time we hear from Jeff, a year later, his stock is down 80%. He starts this letter with a 12 word sentence. Ouch. It's been a brutal year for many in the capital markets and certainly for Amazon's shareholders. As of writing this writing, our shares are down more than 80% from when I wrote the last letter. Nevertheless, by almost any measure, Amazon the company is in a stronger position now than at any other time in the past. And so there's. This is also in Jeff's biographies. And it's Also, he's talked about it later in life in interviews that everyone else was focused on the share price and Jeff was focused on the internal metrics of his business. And he hints at that. He's like, well, but by any measure the company is in much stronger and better position than any time in the past. Therefore, like I'm going to be able to just endure this. So he continues pushing forward and he talks about the fact that he told you in the very first letter, he's going to be bold, he's going to be relentless. And that's not going to we're going to keep inventing, we're going to keep experimenting, we're keep taking risks. Many of you heard me talk about the bold bets that we as a company have made and continue to make. Our decision to invest in smaller e commerce companies like Living.com and Pets.com, both of which shut down operations last year, lost a significant amount of money for us. We made these investments because we knew we wouldn't ourselves be entering these particular categories anytime soon. And we believe passionately in the land rush metaphor for the Internet. Indeed, that metaphor was an extraordinary useful decision aid for for several years starting in 1994. But we now believe that useful usefulness largely faded over the last couple years. In retrospect, we significantly underestimated how much time would be available to enter these categories and underestimated how difficult it would be for a single category e commerce company to achieve the scale necessary to succeed. So what he's talking about there is get big fast online selling relative to traditional. He's explaining his thinking here. 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 like a pets.com and this is something he's mentioned in other places that on the Internet you can be either really really small or really really big. But the Internet tends to destroy the middle. Why should you be optimistic about the future of Amazon.com industry growth and new customer adoption will be driven over the coming years by relentless improvements in the customer experience of online shopping. These improvements in customer experience will be driven by innovations made possible by dramatic increases in available bandwidth, disp space and processing power, all of which are getting cheek fast. So he gives an example. Amazon will be able to use 60 times as much bandwidth per customer five years from now, while holding our bandwidth costs per customer constant. Similarly, processing power will allow us to do ever more and better real time personalization of our Website. I think that's an important point that Jeff's making. I talked to my friend Kareem, who's the founder and CTO of Ramp, where just like what Jeff saying about where going to have 60 times as much power and pay the same, and so our costs go down and we're more profitable. But Jeff's now making the second point, which is also what my friend Kareem says about it. It's like, yeah, it can reduce your cost, but the more important part is that it's actually allowed you to invent new products and serve your customers better. Which is exactly what Basil is about to say here. 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. He just started talking about that. It's. We're gonna, we're gonna be able to have 60 times the same, 60 times as much bandwidth per customer. But the second part is more important. We too will use technology, reduce costs, but the bigger effect is what Bezos telling us, but the bigger effect will be using technology to drive adoption and revenue. Amazon is a unique asset. We have the brand, the customer relationships, the technology, the fulfillment infrastructure, the financial strength, the people and the determination to extend our leadership in this infant industry and to build an important and lasting company. He said, he said lasting that time, not enduring. Do you know that's what he meant? And we will do so by keeping the customer first. You just see how he tied all of the, all the strategy and all of his thoughts back into what he says over and over again. Well, my friend said they all have 14 principles. They have one obsessed over customers and you do so by keeping the customer first. He talks about over and over again. We will invent on behalf of our customer. Goes back to very Sam Walton esque strategy here. Focus on cost improvement makes it possible for us to afford lower prices, which drives growth. Growth spreads fixed costs across more sales, reducing costs per unit, which makes possible more price reductions. Customers like this, and it's good for shareholders. Please expect us to repeat this leap now on the very next page, another headline, obsess over customers. Until July, Amazon had been primarily built on two pillars of customer experience, selection and convenience. We added a third customer experience pillar, relentlessly lowering prices. So when I got to this section, this is, I'm pretty sure this is the result of Jeff's meeting with Jim Sinegal. Jeff was 37 at the time. I already mentioned this earlier. I asked Sage, which is my own personal AI, that's trained on all my notes, highlights and transcripts about this to remind me what I'm going to read to you here. I just asked Sage what did Jeff Bezos learn from Drip Senegal? One of the most important lessons came when Bezos visited Senegal to understand the Costco model. During the meet their meeting, Senegal explained that Costco's entire business was built around customer loyalty. He taught Bezos that the membership fee was a one time paying but reinforce value every time the customer walks in and sees 47 inch televisions that are $200 less than any place else. This concept later inspired Amazon Prime. Senegal emphasized to Bezos that value must always come first, stating quote my approach has always been that value trumps everything. He explained how Costco maintaining extremely low markups standard across the board, around 14% across all products, never wavering from this principle even when it could charge more. This commitment to consistent value impressed Bezos deeply. The impact of this conversation was immediate and profound. That Monday, after meeting with Senegal, Bezos opened an S team meeting declaring that Amazon's pricing strategy was incoherent. He announced that Amazon should adopt an everyday low prices approach like Walmart and Costco. That July, Amazon cut prices on books, music and videos by 20 to 30% with Bezos declaring there are two kinds of retailers. There are those folks who try to figure out how to charge more and more and there are those companies who work to figure out how to charge less and we are going to be the second full stock. What's particularly interesting is that Senegal, when he was asked later on, did not regret educating an entrepreneur who would later become a competitor. Both men shared similar values. Both have rejected rejected acquisition offers over the years and focus on building for the long term rather than short term profits. This exchange demonstrates how business ideas can transfer between great entrepreneurs, which is the entire now we tie all this together, which is the entire point of this podcast. Transferring ideas from one great entrepreneur to another. Going back to this, I'll just point out that one of the most important things we've done to improve convenience and experience for customers also happens to be a huge driver of variable cost productivity. Eliminating mistakes and errors at their root. Eliminating the root cause of errors saves us money and saves customers time. This is something that Jeff is going to repeat in subsequent shareholder letters. Our consumer franchise is the most valuable asset and we will nourish it with innovation and hard work. I want to jump ahead to the next year's shareholder letter which he titles what's good for customers is good for shareholders. I think it's related to what he's saying. Hey, there's two type of retailers figure out how to charge more and other ones and figure how to charge less. We're going to be the second one, full stop. One of our most exciting peculiarities is poorly understood. People see that we are determined to offer both world leading customer experience and the lowest possible prices. But to some this dual goal seems paradoxical. So if you went back and studied Henry Ford, I've done a bunch of episodes. I think episode 266 monkey the best place to start. I re, I should, every few years I reread Ford's autobiography, which I think is excellent, and do another episode on it. But what Bezos is saying here, and it's kind of like what Ford, Ford definitely did, he's like, I don't want to make a low quality cheap product. I want to make a high quality inexpensive product. And the way that you could summarize Henry Ford's operating philosophy down to five words, which is maximum service and minimum cost. And it's very similar to what he said. It's like, well, we're actually committed to offering both world leading customer experience and the lowest prices possible. Our pricing objective is not to discount a small number of products for a limited period of time, but to offer low prices every day and apply them broadly across our entire product range. The next shareholder is called Long Term Thinking. I'm not making this up. You could see this online anytime you want. He just uses that word over and over again. Long Term Thinking, this is very fascinating. His idea is like, if I'm going to be, I want to build an enduring franchise. I want to be around forever. So therefore the logic of working backwards now is like, you should design your customer experience with the long term benefit of the customer in mind, not the money that you make in the short term because you're going to make way more money in the long term. Just looked at what the value of Amazon was in 2003 compared to present day. Look at how many, how much the revenue, how much your cash flow was compared to president, completely different company. As we design our customer experience, we do so with long term owners in mind. The point he made in the last shareholder letter, right, which is the fact that people find it paradoxical. It's like, no, we're going to do what's best for the customers and if we do what's best for customers over long term, that is what's best for shareholders. Because the customers will reward you with long term loyalty. They're like, why are you putting up reviews? Like, don't you know what business you're in? Your goal is to sell products because you make money as you sell products, but then you have reviews that discourage people to not buy a crappy product and just like, yeah, that makes perfect sense to me. Any expenses they can hear. We received complaints from a few vendors, basically wondering if we understood our business. You make money when you sell things. Why would you allow negative reviews on your website? Speaking as a focus group of one, I know I've sometimes changed my mind before making purchases on Amazon as a result of negative or lukewarm customer reviews. Though negative reviews cost us some sales in the short term, helping customers make better purchase decisions ultimately pays off for the company. Meaning the long term interest of the customer is going to pay off for the long term to the owners, the long term owners of the company. Again, Bezos is not hiding what he believes in, what's important to him. He's repeating his beliefs that it's all about the long term and the interests of the owners and the customers are aligned over the long term. And then we see how he ends his shareholder letter. Ridiculously high standards this guy has. Ridiculous. He says your standards should be so high it makes people around you uncomfortable. He is already the best. What he's about to reference here and he still wants to be better. The widely followed American Customer Satisfaction Index gave Amazon a score of 88, the highest customer satisfaction score ever recorded in any service industry. A representative of the ACSI was quoted as saying, if they go any higher they will get a nosebleed. We are working on that. It's hard to say for sure, but I think this part is my favorite idea that he expresses in throughout any of his shareholders. Support is actually incredible. It's on the need for good judgment and why data may lead you to make the wrong decision. Not all of our important decisions can be made in a math based way. Sometimes we have little or no historical data to guide us and and proactive experimentation is impossible. The prime ingredient in these decisions is judgment. 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. He adds a footnote on this page which is not common in the shareholders. And he's talking about this paper that he read called the structure of unstructured decision processes. This is what Jeff says before we get back to his shareholder. Among other gems you will find in this paper is this. He quotes from the paper now, excessive attention by management scientists to operating decisions may well cause organizations to pursue inappropriate courses of action more efficiently. In other words, you're going in the wrong direction faster. This is what you're talking about. You're the need for good judgment and why data may actually lead you to make the wrong decision. So let's go back to the shareholder. 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 which says that the smart move is to raise prices. We have significant data related to price elasticity. With rare exceptions, the volume increases in the short term is never enough to pay for the price decrease. However, our quantitative understanding of elasticity is short term. This is so, so good. We can estimate what a price reduction will do this, 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. Or judgment, any italicized judgment. Our judgment is that relentlessly returning efficiency improvements and scale economies to customers in the form of lower prices create 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 Amazon. Math based decisions command wide agreement. Judgment based decisions are rightly debated and often controversial. We will start with the customer and work backward in our judgment. This is the best way to create shareholder value. That is excellent. That is in the 2005 shareholder letter. In case you want to pull that up and read that entire letter, I highly recommend doing it. All right. 2006 is all about growing new businesses. So Bezos is going to answer, when are you going to open physical stores? Remember, this is in 2006. And really the way I would summarize Bezos's approach, he's really put this on. He has no interest in building an undifferentiated commodity business. I often get asked, when are you going to open physical stores? The potential size of a network of physical stores is exciting. Physical world retailing is caging and ancient, but it's a business that's already well served. And we don't have any ideas for how to build physical world store experiences that are meaningful, meaningfully differentiated for our customers. When you do see us enter new businesses, it's because we do believe that the above tests have been passed, which is can we get a good return and are we building a meaningfully differentiated experience for our customers. And so if you can give some examples, remember this is, you know, almost 20 years ago. 20 years ago I guess of these new like rather smallish businesses that they started that they might grow into big businesses and they fulfill these requirements that at this point in time going into physical world retailing did not. And this is fba owned by Amazon and aws. Amazon Web Services Fulfillment by Amazon is a set of APIs that turn our 12 million square foot fulfillment center network into a gigantic and sophisticated computer peripheral. Pay us $0.45 per month per cubic foot and you can stow your products in our network. You can make web service calls to alert us to expect inventory to arrive, tell us to pick and pack one of more items and tell us where to ship those items. You never have to talk to us. He loves. He talks about the importance of self service platforms over and over again. You never have to talk to us. It's differentiated, can be large and passes our returns bar. Amazon web service is another example. With AWS we're building a new business focused on a new customer set. Software developers. We're targeting broad needs universally faced by developers. We have deep expertise in this from scaling Amazon.com over the last 12 years. It's highly differentiated and it can be significantly financially attractive business over time. In some large companies it might be difficult to grow new businesses from tiny seeds because of the patience and nurturing required. But if you really think about just Amazon, just a business that builds businesses, it is a company that builds companies. Amazon's culture is unusually supportive of small businesses with big potential. And I believe that's a source of competitive advantage. We have many people at our company who have watched multiple $10 million seeds turn into billion dollar franchises. That firsthand experience and the culture that has grown up around these successes is a big part of why we can start businesses from scratch. He summarizes this beautifully in the last sentence here. The culture demands that these new businesses be high potential and then they be innovative and differentiated. But it does not demand that they be large on the day that they are born. The next shareholder letter is titled Team of Missionaries. It's short of sharehold letter. It is about the invention of Kindle. I put this in here selfishly because I'm obsessed with reading. He says we are missionaries for reading. I feel the same as a way. And he talked about why it's so important. I remember saying this in 2007. This is getting real creepy. You think about the world we live in present day, about the importance of like making sure that we're nurturing our and keeping our attention pants along I feel is a losing battle. Unfortunately, we humans co evolve with our tools. We change our tools and then our tools change us. Writing invented thousands of years ago is a grand whopper of a tool. I have no doubt that it changed us dramatically 500 years ago. Gutenberg and his invention led to a significant step change in the cost of books. Physical books ushered in a new way of collaborating and learning. Lately, network tools such as desktop computers, laptops and cell phones have changed us too. They've shifted us towards more information snacking and I would argue towards shorter attention spans. That's 100% sure. If our tools make information snacking easier, we will shift more towards information snacking and away from long form reading. Kindle is purpose built for long form reading. We hope Kindle may gradually and incrementally move us over the 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 towards the missionary and I can assure you it's heartfelt. I'm glad about that because missionaries build better products. Missionaries build better products. I had somebody ask me one time, they're like, have you ever thought, because you might not know this, but Founders is like a complete one man, one person operation. I do all the reading and do all the researching, I pick the topics, I do the editing, just everything. And you know, people have said like, why don't you hire a researcher? Or like, have you ever thought of having somebody else read the books for you? It's like you don't understand why I'm, I'm not doing it for that. I'm not doing it for that. I'm doing it because I have a pure unadulterated love of reading. And as you could see from most of the videos that I make about these podcasts now, usual I'm reading physical books. This is not efficient, much more efficient to read digitally. But I fell in love as a child with physical books. This is a missionary, this is love. This is not, you know, trying to be efficient. I, I was watching this video one time, I think this guy goes around and he visits. I think it was like the best bookstores in the world. It might have been the best libraries. I'm pretty sure it's the best bookstores in the world. But there was like this like 80 year old lady in the video and she said something that was fascinating about, you know, why she had this local reading and she said that reading is forced meditation. You know the idea, like if you read the book in my hand from front to back, it's 270 pages and so there's multiple, multiple hours. Like I'm gonna be forced to meditate and only think about the words in this book for 10, 15, 20 hours at a time. It's forced meditation. I love this idea. My tongue here to tends towards the missionary and I can assure you it's heartfelt. I'm glad about that because missionaries make build better products. It's really funny. Back then I bought the first Kindle. This is a giant, like huge. Have like these three buttons on the side. Looks completely different than it does now. But I was an early adopter to that. All right, Working Backwards is the title for 2008. If you think about this, I got to meet several founders that are still running their businesses. Normally it's like family owned businesses and they're in their 70s. They've told me the same thing, that if you are truly long term oriented, as the years go by, you'll have fewer and fewer competitors. Like by endurance we conquer. And part of this is because of human nature. If you seek instant gratification, you're going to find it proud in this turbulent global economy. Remember this 2008, our fundamental approach remains the same. Stay head down, focused on the long term and obsess over customers. Long term thinking levers our existing abilities and lets us do new things that we couldn't otherwise contemplate. It supports the failure and iteration required for invention and it frees us to pioneer in unexplored spaces. Seek instant gratification and chances are you'll find a crowd there ahead of you. Long term. Long term orientation interacts well with customer obsession. If we can identify a customer need and if we can further develop conviction that that need is meaningful and durable, our approach permits us to work patiently for multiple years to deliver a solution. Working backwards from the customer needs can be contrasted with a skills forward approach where your existing skills and competencies are used to drive business opportunities. This is where you just get the sense that he's thought all on about this very clear thinking. You see this ferocious intelligence that he has about this. Not only are we designing, you can design better experiences for your work. Back to the customer, right? But I've never heard anybody else contrast this with what most people do. Most people say, hey, what am I good at? Skills forward. And then where can I take the existing skills I have and just let me apply that to this business? And he Talks about why this is so valuable. The skills forward approach says we're really good at X. What else can we do with X? If used exclusively, the company employing it will never be driven to develop fresh skills. Eventually the existing skills will become outmoded. Working backward for the customer needs often demands they reacquire new competencies and exercise new muscles. Never mind how uncomfortable and awkward feeling those first steps might be. So he gives an example of working backwards and with the invention of the Kindle. Kindle is a good example of our fundamental approach. More than four years ago, we began with a long term vision. Every book ever printed in any language, all available in less than 60 seconds. The customer experience we envisioned didn't allow for any hard lines of demarcation between Kindle the device and Kindle the service. The two had to blend together seamlessly. Amazon had never designed or built a hardware device. But rather than change the vision to accommodate our then existing skills, we hired a number of talented and missionary hardware engineers and got started learning a new institutional skill. One that we needed to better serve readers in the future. In other words, if you're working backwards from the customer needs, this will make you. It'll force you to be a more skilled operator over time. So then Bezos gets into the importance of frugality. The fact that the benefit of eliminating waste actually compounds. So he says the customer experience path we've chosen requires us to have an efficient cost structure. The good news for share owners is that we see much opportunity for improvement in that regard. Everywhere we look, we we find what experienced Japanese manufacturers would call muda translates to waste. However we look, we find 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 and more flexible capital expenditures. There's a great story in one of the books I read on Jeff where one of his employees came to him one time and he said, retelling, he's like I would tell Jeff about a problem in our business and he'd get excited and this is the exact reason he's like oh, this is finds incredibly energizing. Jeff adds, at a fulfillment center recently, one of our Kaizen experts asked me I'm in favor of a cleaning fulfillment center. But why are you cleaning? Why don't you eliminate the source of the dirt? And Jeff said, and he said that to him that I felt like Karate kid. So then Amazon had an incredible result for 2009. And he makes the point here. He says the financial results for 2009 actually reflect the cumulative effect of, of 15 years of customer experience improvements. Again, something I repeat over and over again. That's in the book 01 for Peter Thiel. He focused on near term growth above all else. You missed the most important question you should be asking. Will this business still be around a decade from now? You can even add, will it be around two, three decades now? I just did this episode on Ken Griffin talked about, you know, Citadel I think is the most successful hedge fund now three decades into that and his most, most financial success he's had actually came within the last four, four years. So 20, you know, six years into the company. If you focus on near term growth above all else, you'll miss the most important question you should be asking. Will this be. This will be around a decade or two or three decades from now. We believe that focusing our energy on the controllable inputs of our business is the most effective way to maximize financial outputs over time. Our fundamental approach will always be start with the customer and work backwards. The beast is constantly setting down that Amazon's going to lead, they're going to invent, they're not going to follow, they're going to keep experimenting, they're going to be bold. When you hear Bezos speaking, he considers himself an inventor. That's how he describes himself. Many of the problems we face have no textbook solutions. So we happily invent new approaches. He's given examples, did not do AWS before that, didn't have the Kindle. All of these new businesses like, well we're just going to learn the skills to do what we want to do. All the effort we put into technology might not matter that much if we kept technology off to the side in some sort of R&D department. But we do not take that approach. Technology infuses all of our teams, all of our processes, our decision making and our approach to innovation in each of our businesses. It is deeply integrated into everything we do. Invention. 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. And so when he talks about building these new businesses, he heavily is biased towards the self serve, like building ones that are self served. You don't have to talk to us. You can use fba, aws, their ad business now. And so he says, I'm emphasizing the self service nature of these platforms because it's important for a reason I think is somewhat non obvious. Even well meaning gatekeepers slow innovation when a platform is self service. Even though improbable ideas can get tried because there's no expert gatekeeper ready to say that'll never work. And guess what? Many of those improbable ideas do work, and society is the beneficiary of that diversity. Another year he has an entire letter dedicated to the importance of Being Internally driven Our energy at Amazon comes from the desire to impress customers rather than the zeal to best our competitors. One advantage 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 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 a reaction to competitors. Bezos has a great example of this. We built automated systems that look for occasions be provided a customer experience that isn't up to our standards, and those systems then proactively refund customers. One industry observer recently received an automated email from us that said, we noticed that you experienced poor video playback while watching a rental on Amazon Video on Demand. We're sorry for that inconvenience and have issued a refund for the following amount. So three bucks it cost you to rent the video. We didn't like that it was buffering. It issued a refund without you even asking for it. We hope to see you again soon. Surprised by the proactive refund, he ended up writing about the experience. Amazon noticed that I experienced poor video playback and they decided to give me a refund because of that. Wow. Talk about putting customers first. I love this idea and how Jeff describes it. These are characteristics of a business that you should never sell. A dreamy business offering has at least four characteristics. Number one, customers love it. Number two, it can grow to a very large size. Number three, it has strong returns on capital. Number four, it is durable in time with the potential to endure for decades. When you find one of these get married. We are now happily wed to what I believe are three such partners, Marketplace prime and aws. And then a little later he talks about from the outside a lot of people are confused. Amazon, the retail company e commerce platform, AWS like these businesses don't seem to have much in common. He's like, oh no, they actually do. Says there's a connection between these two businesses. They share a distinctive organizational culture that cares deeply about and acts with conviction on a small number of principles. This is what I mentioned earlier. It's very obvious when you read about Jeff, he identified a handful of principles and then just repeated that for 23 years and even a few years before that, before he went public. They share a distinctive organization culture that cares deeply about and acts with a conviction on a small number of principles. I'm talking about customer obsession, where rather than competitor obsession, eagerness to invent and pioneer, willingness to fail, the patience to think long term, and the taking of professional pride in operational excellence. Through that lens, AWS and Amazon Retail are very similar indeed. This is so important to remember. This is one of I think this is one of his most famous quotes that you see posted online. A bunch is excellent and it's on that Big Winners Pay for many, many expenses Experiments Outsized returns often come from betting against conventional wisdom. And conventional wisdom is usually right. Given a 10% chance of 100 times payoff, you should take that bet every single 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 1000 runs. This long tailed distribution of returns is why it's important to be bold Bid winners pay for so many experiments. You know, I end every episode always saying there's always 1,000 books to go. Pretty sure I got that idea from this section right here because it's my version of Bezos's idea of it's always Day One. The title of this shareholder letter is Fending off Day Two. What does Day two look like? That's a question I just got at our most recent All Hands meeting. I've been reminding people it's day one for a couple of decades. I work in an Amazon building named Day One, and when I moved buildings I took the name with me. I spend time thinking about this topic. Day two is stasis followed by irrelevance, followed by excruciating painful decline followed by death. And that is why it is always day one. To be sure, this kind of decline would happen in extreme slow motion. An established company might harvest day two for decades, but the final result would still come. I'm interested in the question, how do you fend off day two? What are the techniques and tactics? How do you Keep the vitality of Day one Even inside a large organization, such a question cannot have a simple answer. There will be many elements, multiple paths, and many traps. I don't know the whole answer, but I know bits of it. Here's a starter pack of essentials for day one Defense Customer obsession, a skeptical view of proxies, the eager adoption of external trends, and high velocity decision making. So I think we got the customer obsession part down, but this content so let's go right to resisting proxies. Very interesting idea you don't hear repeat in many other places. As companies get larger and more complex, there's a tendency to manage to proxies. This comes in many shapes and sizes and it's dangerous, subtle and Day two A common example is process as proxy. Good process serves you so you can serve customers, but if you're not watchful, the process can become the thing. This can happen very easily in large organizations. The process becomes the proxy for the result you want. You stop looking at outcomes and just make sure you're doing the process right. Gulp. It's not that rare to hear a junior leader defend a bad outcome with something like, well, we followed the process. A more experienced leader will use it as an opportunity to investigate and improve the process. The process is not the same Good Inventors and Designers There's a One of my Two of my these are two of my favorite paragraphs in this book. Good inventors and designers deeply understand their customer. They spend tremendous energy developing that intuition. They study and understand many anecdotes rather than only the averages you find on surveys. They live with their design. I am not against beta testing or survey surveys. But you, the product or service owner, must understand the customer. You must have a vision, and you must love the offering. A remarkable customer experience starts with heart, intuition, curiosity, play, guts, and taste. You will not find it in a survey. And another way to stave off day two is to embrace external trends. He's saying this in 2016. The outside world can push into day two if you can't or won'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. Remember when he's saying it's2016. We're in the middle of an obvious one right now. Machine Learning and Artificial Intelligence Another idea in Save Off Day Two, you have to make high velocity decision making day two Companies make high quality decisions, but they make high quality decisions slowly. You have to somehow make high quality, high velocity decisions. Amazon is determined to keep our decision making velocity high because speed matters in business. So I don't think it's in this. I think this is in another book by him. But he talks about the importance of this. I think it might even be in one of the speeches he gives in the back of the book where if you make your decision slowly, you're just going to drive away talented people because tons of people are like, hey, I like the mission, but I can't build anything here because you guys make your decisions. Tune. Goddamn slut. So he says Amazon is determined to keep our decision making velocity high speed matters in business. And he's been talking about, well, you know, obvious, make decisions, high quality decisions as fast as you can. So why don't people do this? And he makes a lot of sense. First, never use a one size fits all decision making process. Many decisions are reversible. Two way doors. I think he was the one popularized this idea. One way door decision. You take a lot of time because once you go through that door, you can now reverse course easily. But mo most decisions you're making your business are two way doors. You go in, oh, it's not working out, jump back out of the door. So he says most decisions should probably made with somewhere around 70% of the information you wish you had. If you wait for 90% of the information that you want, in most cases you're probably being slow. Plus, either way, you, you need to get 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. And so one way he speeds up decisions is because he believes in using the phrase inside your company that you disagree and commit. I disagree and commit all the time. We recently greenlit a particular Amazon Studios original. I told the team that in my view it was debatable whether it'd be interesting enough complicated to produce. And the business terms are not that good and we have a lot of other opportunities. They had a completely different opinion and wanted to go ahead. I wrote back right away. I disagree and commit and I hope it becomes the most watched thing we've ever made. Consider how much slower the decision cycle would have been if the team hadn't actually convinced me rather than simply getting my commitment. And here's another one of Jeff's Great ideas that high standards are contagious and that you have to make sure you eliminate unrealistic beliefs on scope. So he says, I believe high standards are domain specific and that you have to learn high standards separately in every area of interest. Understanding this point is important because it keeps you humble. You can consider yourself a person of high standards in general and still have debilitating blind spots. There could be whole arenas of endeavors where you may not even know that your standards are low or non existent and certainly not world class. It is critical to be open to that likelihood. And so he gives an example of this by using this metaphor of his friend that decided she wanted to learn how to do a perfect free hand, freestanding handstand. You know, you can't hit her, you can't lean against the wall. It's not just for a few seconds, like you can literally just do a handstand and with no assistance. And she was having trouble do this. And so she hired a coach. And Jeff was shocked that there's even a coach for such a thing. But he thought the coach says something was fascinating. This is what the coach said. Most people think that if they work hard, they should be able to master a handstand in about two weeks. The reality is that it takes about six months of daily practice. If you think you should be able to do this in two weeks, you're just going to end up quitting. Unrealistic notes of Jeff writing Unrealistic beliefs on scope are often hidden and undiscussed and they kill high standards. Amazon doesn't do PowerPoints. Going to do six page memos at the beginning of every meeting. You know people, oh, I can write a six page memo easy. Do it a few hours. No, you can't. Your, your 6 page is going to suck if you do that. 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 that a high standard six page memo can be written in one or two days or even a few hours when it really 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 rewritten, shared with a colleague who, who's asked to improve the work set aside for a couple of days and then edited again with a fresh mind. They simply cannot be done in a day or two. The key point here is that if you is that you can improve results through the simple act of teaching scope that a great memo should probably take a week or more. Another one of Jeff's idea is the importance on wandering. Sometimes in business you do know where you're going and when you do, you can be efficient, put in place a plan and execute. In contrast, wandering in business is not efficient, but it's also not random. It's guided by hunch, gut, intuition, curiosity, and powered by by a deep conviction that the prize for customers is big enough that it's worth being a little messy and tangential to find our way there. Wandering is an essential counterbalance to efficiency. The outsized discoveries, the nonlinear ones, are highly likely to require wandering. AW itself is an example. No one asked for aws. No one. Turns out the world was in fact ready and hungry for an offering like aws, but it didn't know it yet. We had a hunch, followed our curiosity, took the necessary financial risks and began building, reworking, experimenting and iterating countless times as we proceeded anything. Wandering is also related to Jeff's idea that your failures need to scale as well. As the company grows. Everything needs to scale, including the size of your failed experiments. If the size of your failures isn't growing, you're not going to be inventing at a size that can actually move the needle. Amazon will be experimenting at the right scale for a company of our size. If we occasionally have multi billion dollar failures, this kind of large scale risk taking is part of the service we as a large company can provide to our customers and and to society. The good news for shareholders is that a single bid winning bet can more than cover the cost of many losers. Development of the Fire Phone and Echo was started around the same time. While the Fire Phone was a failure, we will we were able to take our learnings as well as our developers and accelerate our efforts building Echo and Alexa. No customer was asking for the Echo. This was definitely us wandering. Market research doesn't help. If you had gone to a customer in 2013 and said would you like a black always on cylinder in your kitchen about the size of a Pringles can that you can talk to and ask questions that also turns on your lights and plays music, I guarantee you they would have looked at you strangely and said no thank you. And then since then Amazon has sold couple hundred million. I think last time I looked it was something like 500 million of those devices. And then he ends his very last shareholder letter with one of the most important lessons that he taught over the 23 years that he's writing them. He titles it Differentiation and survival. And the universe wants you to be typical. This is my last shareholder letter, CEO of Amazon. And I have one last thing of utmost importance. I feel compelled to teach. So he's going to quote from this book called the Blind Watchmaker and talking about this basic fact of biology, and he's going to tie this into what he wants to teach you. And I'm going to read the entire excerpt because he got it important enough to put in here. This is from the Blind Watchmaker. Staving off death is a thing that you have to work at. Left to itself, the body tends to revert to a state of equilibrium with its environment. If you measure some quantity, such as temperature, in a living body, you will find that it is markedly different from the corresponding measure in its surroundings. Our bodies, for instance, are usually hotter than our surroundings. And in cold climates they have to work hard to maintain that differential. When we die, the work stops, the temperature difference starts to disappear, and we end up the same temperature as our surroundings. Not all animals work so hard to avoid coming into equilibrium with the surrounding temperature. But all animals do some comparable work. For instance, in. In a dry country, animals and plants work to maintain the fluid content of their cells, work against a natural tendency for water to flow from them into the dry outside world. If they fail, they die. More generally, if living beings didn't work actively to prevent it, they would eventually merge into their surroundings and cease to exist as autonomous beings. This is what happens when they die. That is the end of the excerpt that Jeff picks up. In what ways does the world pull at you in an attempt to make you normal? How much does it take to maintain your distinctiveness, to keep alive the things that make you special? We all know that distinctiveness, originality is valuable. We are all taught to be yourself. What I'm really asking you to do is to embrace and be realistic about how much energy it takes to maintain that distinctiveness. The world wants you to be typical in a thousand ways it pulls at you. Don't let it happen. You have to pay a price for your distinctiveness, and it's worth it. The fairy tale version of Be Yourself is that all the pain stops as soon as you allow your distinctiveness to shine. That version is misleading. Being yourself is worth it, but do not expect it to be easy or free. You have to put energy into it continuously. And then he leaves us. Excellent parting advice to all of you. Be kind, be original, create more than you consume, and never, never, never let the universe smooth you into your surroundings. It remains day one, and that is where I'll leave it. Highly recommend reading all the shareholder letters. You can read them for free online. I'll put the link down below. Also highly recommend buying the book that I was working from, Invent and Wanderer, the collective writing subject. Buy the book using the link that's in the show notes on your podcast player. Also available podcast@founders podcast.com you'll be supporting podcasts at the same time. That is 388 books down, 1,000 to go, and I'll talk to you again soon.