Invention. The gospel according to Jeff
And Andy. A careful rereading of Amazon's shareholder letters
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What can we learn from Amazon’s 28 shareholder letters? An easy answer is: nothing. The letters are freely available and widely read, thus their contents are already reflected in the stock price. Worse, the letters are performative, IR drivel, offered only as insufficient compensation for SEC filings that lack disclosure. So would argue the efficient markets cynic and the quantitative analyst. I agree with the cynic, and the quant, on all counts—except one: widely read. One of the few things I have learned in the game of investing is that very little is widely read. Besides social media. The letters are IR drivel, published by the company, for their shareholders. Freely available, indeed. Leaving performative—Bezos chose carefully what he shared in every letter—every year.
Every year, but not across years. And that’s what allows us to answer the question: what can we learn Amazon’s 28 shareholder letters? Through a careful rereading we can see how Bezos views Amazon and how that view changes over time. That’s the first of a few threads I’ll pull on in this post. In 2021, readers of the letters are introduced to a new author, Andy Jassy, Amazon’s current CEO. Jassy’s letters clarify Bezos’ image of Amazon and offer a new—or at least, renewed vision.
The Stage: Financial summaries
The Performance: The Eras Tour, Jeff’s Edition
The Rebuke: Survivorship bias and other bets
The Encore: References
The Review: Answer(s)
The Curtain Call: Closing thoughts
The Stage. Before we get into the letters, I start with some financial analysis to serve as context for all of Amazon’s conquests and side quests we hear about along the way. I talk through earnings power—both GAAP and cash, investments and acquisitions and end with cash on cash returns.
The Performance. The main event, Amazon’s first 24 letters, all written by Bezos. I rely on the letters themselves—mostly—to show Bezos’ distinct visions of Amazon, first, an e-commerce business, then a platform and then, what?
The Rebuke. Did Amazon learn the wrong lesson after hitting it out of the park with AWS? is a fair question to ask. Trying to answer it lets us examine a few of Amazon’s current big bets.
The Encore. Jassy’s four letters are distinct from Bezos’ in style, more dense and more on task, like how I imagine the famed internal memos, which Jassy surely has written many, read. Jassy’s letters serve as a reference—both for readers of the letters, and as echoes of prior letters.
The Review. Now we can reflect on Bezos’ and Jassy’s performances. Do I believe in Amazon’s vision(s) of itself? Did Amazon learn the wrong lesson from AWS? Are Amazon’s shareholder letter’s valuable? If yes, why? How much? And to whom?
The Curtain Call. Closing thoughts: how Amazon aligns with my investing philosophy and fits into my portfolio.
Before getting into it, let’s get started with a selection from Jassy’s 2024 shareholder letter, Amazon’s most recent, numbering mine,
Operate like a startup (in our case, the world’s largest startup)
…Companies can get off track prioritizing technology because they’re excited about the technology. Great startups are on a mission to change what’s possible for customers
…we have a disproportionate need for builders…inventors…people constantly dissecting customers experiences….and (who) never feel like the job is done
…we want owners…owners feel accountable. They care deeply about the quality and effectiveness of what they own, and view the company’s mission as their mission
…Speed disproportionately matters for every business, in every industry, at all times. It’s a false binary to argue that you can move fast or delivery high standards…Speed is a leadership decision…speed does not happen unless the entire company and culture embrace it…Another way to gain speed is to eliminate bureaucracy
…you have to be scrappy…Our best leaders get the most done with the least resources
…you have to be willing to take risks…you can’t achieve something extraordinary…by playing ‘not to lose’
- A Why Culture, Andy Jassy’s 2024 shareholder letter
1. The Stage.
First, let’s set the stage with financial summaries, of which I offer four, (1) GAAP earnings powers, (2) cash earnings powers, (3) investments and acquisitions and (4) cash on cash returns.
An aside, Amazon’s early history is interesting, for sure. But not enough to include here. Instead, let’s start at 2014, 11 years ago and one year before Amazon began disclosing AWS results in their financial statements.