Warren Buffett's annual letter to shareholders is considered by many in the investing world (myself included) as an annual must-read. As he weaves his wisdom with funny anecdotes and examples all the way through, one can't help but feel like they've actually just finished talking to the man himself.
Another excellent letter to shareholders that doesn't garner the same amount of press as Buffett's is Jeff Bezos' letter to Amazon.com (NASDAQ:AMZN) shareholders. Since 1997, he has published these missives, and while they aren't as lengthy as Buffett's letters, they are chock-full of hints and clues as to how Bezos thinks and where his priorities lie.
I consider Bezos to be one of the great forward-thinkers of our time, and to call him a risk-taker is an understatement. I truly enjoy reading and rereading these letters and have compiled 10 quotes that have stood out to me through the years. I hope you enjoy.
From 1997: "We will continue to make investment decisions in light of long-term market leadership considerations rather than short-term profitability considerations or short-term Wall Street reactions."
From 2012: "We want to make money when people use our devices -- not when people buy our devices. We think this aligns us better with customers. For example, we don't need our customers to be on the upgrade treadmill. We can be very happy to see people still using four-year-old Kindles!"
From 1998: "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."
From 2000: "As the famed investor Benjamin Graham said, 'In the short term, the stock market is a voting machine; in the long term, it's a weighing machine.' Clearly there was a lot of voting going on in the boom year of '99 -- and much less weighing. We're a company that wants to be weighed, and over time, we will be -- over the long term, all companies are. In the meantime, we have our heads down working to build a heavier and heavier company."
From 2011: "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."
From 2004: "Our ultimate financial measure, and the one we most want to drive over the long-term, is free cash flow per share."
From 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.""
From 2009: "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."
From 1997: "We will make bold rather than timid investment decisions where we see a sufficient probability of gaining market leadership advantages. Some of these investments will pay off, others will not, and we will have learned another valuable lesson in either case"
From 1999: "In closing, consider this 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. Increased bandwidth will result in faster page views and richer content. Further improvements will lead to "always-on access" (which I expect will be a strong boost to online shopping at home, as opposed to the office) and we'll see significant growth in non-PC devices and wireless access. 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."