A book that was needed
A book that collects the speeches from 1997 to today by one of the global leaders of our time, Jeff Bezos, has been available in English for a few days.
The book Invent and Wander, the collected writing of Jeff Bezos, published by Harvard Business Review Press, has a hearty and inspired introduction by Walter Isaacson, the biographer of Leonardo da Vinci, Benjamin Franklin, Ada Lovelace, Steve Jobs, and Albert Einstein.
Isaacson writes:
“I often wonder who, among the people alive, could be on a par with those whose biographies I have written. All very intelligent people. But it wasn't intelligence that made them special. What really matters is being creative and inventive. This is the trait that makes someone a true innovator. And that's why the answer to my initial question was Jeff Bezos."
After Isaacson's introduction, the book is divided into two parts. The first collects Bezos' annual letters to investors, documents drawn up with great care by Bezos himself on the state of the business and on Amazon's strategies.
In the second, Life & Work, (not coincidentally linked by the ampersand), excerpts from interviews and public speeches by Jeff Bezos trace the fundamental stages of his life and career, from his adolescence up to the last adventure of conquering the space.
It is a very important book for understanding the personality, thought and action of a usually reserved leader at the helm of one of the companies that is changing the structure of entire industries such as commerce, logistics and the media.
Here is the Italian translation of Bezos' first letter to investors dating back to 1997. The strategies and philosophy that led Amazon to what it is today are already outlined in this very first document.
It's all about the long run
Many goals achieved
In 1997, Amazon.com accomplished many things: it served more than 838 million customers, with revenue growth of 147,8% to $XNUMX million.
It has also consolidated its market leadership despite the entry of very determined competition. But we are still on day one of the Internet and, if we work well, there is a great future for Amazon.com.
The power of e-commerce
Online commerce today saves customers valuable time and money. Tomorrow, through personalization, online commerce will accelerate the very process of discovering new products. Amazon.com uses the Internet to create real value for its customers, and by doing so, it hopes to build a lasting brand, even in large, established markets.
We have a myriad of opportunities, the big operators are investing more and more resources to pursue the online opportunity and customers, new to online purchases, are receptive to this experience. The competitive landscape has continued to evolve at a rapid pace.
Many large operators have moved online with attractive offers and have devoted considerable energy and resources to build awareness, traffic and sales.
Our goal is to move quickly to consolidate and extend our current position as a leader. We are evaluating online commerce opportunities in other areas. We see significant opportunities in the large markets we serve. This strategy is not risk-free: it requires serious investment and fast execution to deal with incumbents.
A long-term perspective
We believe that a key measure of our success is the shareholder value we are able to create over the long term. This value will be a direct result of our ability to extend and solidify Amazon.com's current position as a market leader.
The stronger our position as market leader is, the stronger our economic model will be. Market leadership can translate directly into higher revenues. We believe that a key measure of our success is the value we create for shareholders through increased profitability, faster capital velocity and, consequently, higher returns on invested capital.
Consolidate market leadership
Our decisions have always reflected this goal. First, we measure ourselves on the most indicative metrics of our being a market leader: customer and revenue growth, the continuity with which our customers continue to buy from us and the strength of our brand.
We have invested and will continue to invest significantly to expand and leverage the potential of our customer base, brand and infrastructure as we work to establish an established brand.
Given our emphasis on the long term, we may make decisions and weigh trade-offs differently than other companies. As a result, we want to share our fundamental management and decision-making approach with you so that you, our shareholders, can evaluate whether it is consistent with your investment philosophy: We will continue to focus relentlessly on our clients.
What will we do for our customers
We will continue to make investment decisions based on long-term market leadership considerations rather than short-term profitability considerations or Wall Street reactions.
We will continue to analytically measure our programs and the effectiveness of our investments, eliminate those that do not provide acceptable returns, and increase our investments in those that perform better.
We will continue to learn from both our successes and our failures. We will make bold rather than prudent investment decisions. Decisions in which we see advantages in terms of market leadership.
Investment focus
Some of these investments will pay off, some won't, and in both cases we will have learned another valuable lesson. When we are forced to choose between optimizing current cash flows and maximizing future cash flows, we will choose the latter option.
We'll share with you the strategic value of bold choices (to the extent that competitive pressure permits), so you can assess for yourself whether we're making investments in the direction of long-term leadership.
We will work hard to spend wisely and keep our culture lean and frugal. We understand the importance of continually reinforcing a cost-conscious culture, especially in a loss producing company.
Scale is key
At this stage, we choose to prioritize growth because we believe scale is critical to realizing the full potential of our business model.
We will continue to be careful in recruiting talented and versatile employees and will continue to evaluate their compensation in terms of stock options rather than salary. We know that our success will be determined in large part by our ability to attract and retain a base of motivated employees, each of whom must think and act as if they were an owner.
We are not arrogant enough to believe that this is the 'right' investment philosophy, but it is ours, and we would be remiss if we were not clear on the approach we have taken and will continue to take.
With this approach, we would like to review our business focus, progress in 1997 and our prospects for the future.
Customer obsession
Since day one
Our goal has been to offer our customers compelling value. We realized that the web was, and still is, the World Wide Wait. Because of this, we decided to offer customers something they couldn't get any other way and started serving them with books.
We have given them far more selection than was possible in a physical store (our store would now take up six football pitches). We have built a simple, easy to use and navigate way in a shop open 365 days a year, twenty four hours a day.
We have kept a constant focus on improving the shopping experience and, in 1997, we improved our store a lot.
Obsession with customer value
We now offer customers gift cards, 1-Click shopping, more reviews, content, browsing options and buying recommendations. We have drastically lowered prices, further increasing customer value.
Word of mouth remains the most powerful customer acquisition tool, and we are grateful for the trust our customers have placed in us. Repeat purchases and word of mouth are factors that have made Amazon.com the market leader in online bookselling
Amazon.com came a long way in 1997: Sales grew from $15,7 million in 1996 to $147,8 million, an 838% increase. Overall customers increased from 180.000 to 1.510.000, an increase of 738%.
The repeat customer order rate increased from over 46 percent in the fourth quarter of 1996 to over 58 percent in the same period of 1997.
In terms of audience reached, for Media Metrix, our website has gone from the ninetieth place in the ranking to being in the top twenty.
We have established long-term relationships with many key strategic partners, including America Online, Yahoo!, Excite, Netscape, GeoCities, AltaVista, @Home and Prodigy.
Infrastructure
Throughout 1997, we worked hard to expand our business infrastructure in order to support the new levels of traffic, sales and services, which have increased significantly in the meantime.
Amazon.com's employee base has grown from 158 to 614, and we have significantly strengthened our management team.
Distribution center capacity grew from 4700 sq m to 27 sq m, including a 70% expansion of our Seattle facilities and the launch of our second distribution center in Delaware in November.
Inventory increased to over XNUMX titles at the end of the year, allowing us to improve choice for our customers.
Year-end cash balance and investments were $125 million due to our initial public offering in May 1997 and $75 million borrowing, which allowed us significant strategic flexibility.
The employees
Last year's success is the result of a capable, intelligent and close-knit work group. I am very proud to be part of this team. Our approach to hiring has been, and will continue to be, the single most important factor in Amazon.com's success.
It's not easy to work here (when I interview a candidate I tell him: “You have to work long, hard and smart, but at Amazon.com you can't choose to pursue only two options out of the three”). We are working hard to build something important, something that is meaningful to our customers, something that we can all tell our grandchildren about.
These things are not easy. We are incredibly fortunate to have this group of dedicated employees whose sacrifices and passion are the backbone of Amazon.com.
Objectives for 1998
We are still learning the best ways to bring new value to our customers through Internet commerce and merchandising. Our goal remains to continue to consolidate and expand the reach of our brand and customer base.
This requires massive investments in systems and infrastructure to drive convenience, supply and customer service. We are thinking about adding music to our commercial proposal, and over time we believe that some products can be sustainable investments.
We also believe there are significant opportunities to better serve our overseas customers through shorter delivery times and better personalization of the shopping experience.
Investment priority
A large part of the challenge is not finding new ways to grow the business, but in prioritizing our investments. We now know a lot more about online commerce than we did when we started, but we still have a lot to learn.
Even if we are optimistic, we must remain vigilant and maintain a sense of urgency. The challenges and obstacles we will face in realizing Amazon.com's long-term vision are many: aggressive, capable, and well-funded competition; significant growth challenges and execution risks; geographic and product expansion risks; need for large continuous investments in order not to lose the opportunities of an expanding market.
However, as we have said extensively, online bookselling, and online commerce in general, should prove to be a very large market and it is likely that a number of companies will benefit significantly from it.
We are satisfied with what we have done and even more enthusiastic about what we want to do. 1997 was truly an incredible year. We at Amazon.com are grateful to our customers for their business and their trust in our hard work and to our shareholders for their support and encouragement.
