Amazon’s 1997 shareholder letter is a free MBA lesson on leadership — these are 4 tips from former CEO Jeff Bezos

Lesson 1: Choose your words carefully

The shareholder letter is 1,617 words long. The word ‘customer’ occurs 25 times in it.

That word brought focus to Bezos and the people below him. Bezos knew Amazon’s mission was simple, but executing it nearly impossible.

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To succeed, the company’s mission must be unmistakable. Everything in this letter points back to the customer.

Lesson 2: Have conviction

Every great entrepreneur has one thing in common: conviction.

It’s about having a deep-seated (probably contrarian) belief in an opportunity. An opportunity that is untapped and undervalued.

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Jeff Bezos wanted to show conviction in the early days of Amazon. He saw the internet as a tidal wave and knew that Amazon would become huge if it was in the best position to catch that wave.

Lesson 3: Always Acknowledge Compromise

You cannot be a clear thinker without being honest about the trade-offs of a decision. Every decision has it. Despite his confidence, Bezos saw great risk in Amazon’s plan.

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The former CEO identified two risks:

  • Other large, public companies, like him, saw opportunities in the Internet.
  • It is a market determined by network effects. Finishing second was not an option.

This meant that there was a need for speed and substantial investments.

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Lesson 4: Set expectations early

The number 1 mistake of managers is the inability to set expectations. Sometimes it’s out of fear. Other times it is an inability to communicate. But it is crucial to build a business for the long term.

Jeff Bezos does this masterfully. From day one, he has made it clear to shareholders that investing in Amazon is an opt-in. If you expect quarterly business performance… don’t invest. If you expect long-term business performance… get involved.

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Author: Jobly