Bezos a Wall Street insider
Jeff Bezos' first job, after graduating cum laude in Computer Science from Princeton in 1986, was on Wall Street, where he worked for various financial firms until 1994. One of these was DE Shaw & Co. which Brad Stone, in his book on Amazon, defines a "quant house" precisely because, already at the beginning of the 90s, he began to use the computing power of computers and algorithms to decide investments on the stock market.
DE Shaw & Co has churned out an impressive lineup of billionaires: Elon Musk (Tesla), Reid Hoffman (Linkedin), Peter Thiel (PayPal), John Overdeck (Two Sigma) and, finally, Bezos himself, who right in the offices of New York met his wife Mackenzie, also a Princeton graduate but in English literature. Bezos would soon become DE Shaw's youngest vice president.
Therefore, the link with Wall Street of the founder of Amazon is very strong and one can certainly, even today, consider him an insider of that world. Another Amazon top manager, Russel Grandinetti, with Bezos since 1998, comes from Princeton and he too worked on Wall Street for a few years as a financial analyst before reluctantly moving from Brooklyn to Seattle.
Despite these precedents, Amazon's relationship with Wall Street hasn't been the easiest and only for a couple of years has it resolved itself into a kind of comedy with a happy ending à la Frank Capra whose conclusion is not in sight. Bezos has always been very frank about Amazon's growth strategies and vision of the future and, like Steve Jobs, he paid little attention to the recurring stomach aches of shareholders in seeing such a colossal business produce tiny profits and even operate in loss. Today we know: it was Bezos who was right.
An outstanding document
Parsa Saljoughian, an investor who works in Silicon Valley and who periodically contributes to "Medium", has found on the net a document, in my opinion, exceptional. It is a 66-page pdf that collects the annual letters written by Bezos to shareholders from 1997, the year of Amazon's listing, to 2017. These materials, as Parsa Saljoughian also observes, show Bezos' ability to communicate with Wall Street . The clear, concise and logical structure of the presentation, the direct style of writing and the extreme transparency on Amazon's results and objectives make it a sort of classic of effective financial communication.
These letters are very interesting and should be read by anyone working in the fields of technology, communications or marketing, Saljoughian continues. We will deal with these materials in a future post, trying to outline what have been, over time, the pivots on which Bezos hinged Amazon's extraordinary strategy. Now we want to offer our readers the text of the 2007 letter to shareholders in which Bezos outlines the meaning and rationale of the launch of the Kindle platform which took place precisely in November of that year. The translation of this text adds to and completes the content of a recently released book, Amazon vs Apple. A brief history of new publishing 10 years after the Kindle, which reconstructs in detail the impact of the introduction of the Kindle and the Amazon platform on the entire book ecosystem and the production and distribution of content through new media. A colossal impact that started on the day mentioned by Bezos at the beginning of his letter to shareholders.
“To our shareholders,
November 19, 2007 was a special day. After three years of work, we have introduced the Kindle to our customers. Many of you already know a lot about the Kindle — we've been lucky and we're also grateful to those who have written and talked about it extensively. Briefly, the Kindle is our attempt to build a reading device with a built-in wireless connection and direct access to 110 books, blogs, magazines and newspapers. The wireless connection is not of the Wi-Fi type, but uses the same telephone network used by the latest generation smartphones. Which means it works wherever a mobile phone works, i.e. at home in the bedroom, outdoors and in any situation of mobility. Wherever he takes a phone, he takes the Kindle.
A book can be purchased directly from the device and the entire content is immediately downloaded to its memory so that it can be read in less than 60 seconds. There's no plan to subscribe to, no annual contract to commit to, and no bills to pay at the end of the month. The bill is paid by Amazon. The Kindle has an electronic ink screen that allows you to read even in bright daylight. People who have gotten their hands on the Kindle have had a double positive impression. The device is thinner and lighter than a paperback even though it can hold 200 books. Take a look at the Kindle page on the Amazon website and read what users write. In a very short time, the Kindle has been reviewed more than 2 times.
As you can easily imagine after three years of work, we had expectations about the positive reception of the Kindle, but we didn't imagine the level of consensus and the demand that finally materialized. The device sold out within five and a half hours of its introduction and our supply chain and manufacturing team had to jump through hoops to keep up with orders and to ramp up production capacity.
Like a book, but more than a book
We have set ourselves the ambitious goal of improving the reading experience of a physical book. We have not chosen this aim lightly. Something that has endured and been perpetuated for half a century in almost the same form, like the book, does not lend itself to innovation so easily. Already at the beginning of our design work we tried to identify what we think is the main peculiarity of the book. A book dissolves once it has been read, its materiality no longer matters. The paper, the ink, the glue, the binding, all of this evaporates with the last page and only the author's world in which we are immersed remains.
We knew that the Kindle would meet the same fate as the physical book: readers would immerse themselves in words and forget the electronic device they were reading on. We also knew that we could not reproduce all the peculiarities of the book; we could never build a book. So we decided to add new features that would never have been feasible with the traditional medium. Something similar happened in the early days of Amazon. It was tempting to believe that an online bookstore couldn't have any different features than a traditional bookstore. About one of these, I've been asked dozens of times: "How does an electronic bookstore organize the author's signing of copies." Thirteen years later we still don't have the answer to this question! And we probably never will.
So, rather than creating a duplicate of the physical library, we let ourselves be inspired by it and worked to find things that we could do with this new medium that couldn't happen with the traditional one. We cannot have copies electronically signed and similarly we cannot provide our customers with a comfortable space in which to sip a coffee or sit down to relax. However, we can offer an assortment of millions of books, help purchase decisions through the reviews of other readers, offer services such as "whoever bought this article also bought this...". The list of what we can do with this new medium is quite long.
The Kindle, a tool suitable for books
Now I want to focus on the specific features of the Kindle that allow you to do what you can't do with a book. On your Kindle, if you come across a word you don't know the meaning of, you can easily get it. You can search for any book in Amazon's inventory. Margin notes and highlights entered on your Kindle are stored on the server in our cloud, a place where they cannot be lost. The Kindle automatically keeps in-sight for the different books you are currently reading. Reopening them takes you to where you left off. If your eyes are tired, you can increase the font size and also the font. But the most important feature is the ability to search for a book and start reading it in 60 seconds.
Our vision for the Kindle is for any printed book in any language to be available in less than 60 seconds. Publishers, including the larger ones, have eagerly embraced the Kindle, and for that we are grateful. From a publisher's perspective, there are a ton of benefits with the Kindle. Books never go out of print or out of stock. There are no copies to be pulped. And most important of all: The Kindle makes a reader buy more books. If the purchase is simple and effortless, then the reader will want more. We humans evolve together with our tools. We change tools and these tools change us. Writing, invented thousands of years ago, is a colossal tool and I have no hesitation in thinking that it will radically transform us. 500 years ago Gutenberg's invention led to a significant breakthrough in the cost and time to produce a book.
Printed books ushered in a new era of knowledge and the transmission of knowledge. In the last period, connection tools such as desktop computers, laptops, cell phones and PDAs have changed our habits. They have pushed us more and more towards trivial information and, I would even say — alas!, towards less concentration and more limited attention to the content. My BlackBerry makes me more productive, but I don't want you to read a 300-page document. Nor do I intend to read hundreds of pages on my desktop computer or laptop. As I said above, people are increasingly looking for simplicity and responsiveness. If our tools make trivial information easier to consume and more responsive, people will tend to prefer it over books and extended content reading. Well, the Kindle was designed and built for reading books and extended content.
Amazon as an agent of change
We hope that the Kindle and its successors can gradually and progressively bring us back to a world where concentration and attention have the space they deserve, so as to be a counterweight to the recent proliferation of tools for the quick and superficial consumption of content and information . I understand that here my speech tends to take on messianic tones, but I can assure you that it is sincere. I am also sure that this speech is widely shared by you and I am happy because missionaries build great things. I also want to emphasize that while I am certain that the world of books is about to change, I am equally sure that Amazon will not derive any particular privileges as an agent of this change. If we don't do it right, someone else will do it for us and we'll have to chase.
Our team of "missionaries" is strongly committed to creating value for shareholders and return on invested capital. We know we can only do this if we put the consumer first. I can assure you that there is more innovation ahead of us than there is behind us. We do not expect it to be an easy path. However, we are confident and optimistic that the Kindle, as its name suggests, "starts a fire" that can improve the world of reading. As always, I enclose the 1997 shareholder letter. You will see that the Kindle embodies our long-term philosophy and approach as set forth in that letter. Happy reading and many thanks”.
