Bezos' last shareholder letter: The universe wants you to be ordinary, don't let it be

Original Source: Wall Street Insights (Zeng Xinyi, Cao Zexi)

On Thursday, April 15, Amazon founder Bezos stated in his last letter to shareholders of his CEO tenure that Amazon will continue to create value for shareholders, employees, and the company Will do a better job of taking care of the staff. Bezos announced in February that he would step down as CEO in the third quarter and become executive chairman.

In addition, Bei Zos said that Amazon will work hard to curb climate change and encourage employees to try not to be "ordinary people" and to respect people's originality and uniqueness.

in the letter , Bezos said:

-I know some shareholders use the funds obtained by investing in Amazon For college, for emergencies, rent, vacations, starting a business, charity, etc. I'm proud of the wealth we've created for our shareholders. It matters, this wealth improves their lives. But I also know one thing: this is not the largest part of the value we create.

- If you want to be successful in your business (and indeed in life), you have to create more than you consume. Your goal should be to create value for everyone you touch. Any business that fails to create value for the people it touches, even if it appears to be successful on the surface, will not have a long future. It is on the way to being eliminated.

- Remember, stock prices have nothing to do with the past. They are projections of future cash flows discounted back to the present. The stock market has its own expectations.

- If you read some of the news reports, you might think we don't care about our employees. In these reports, our employees are sometimes accused of being hopeless souls and treated like robots. This is not accurate. They are mature and thoughtful individuals who can choose where to work. When we surveyed fulfillment center employees, 94% said they would recommend a friend to work at Amazon.

- The truth is, the huge team of thousands of people who lead Amazon's operations has always cared deeply about our hourly workers, and we take pride in the work environment we have created. We're also proud that Amazon is creating jobs not just for computer scientists and those with advanced degrees, but for those who never had that edge.

- When we set a $15 minimum wage for hourly workers two and a half years ago, we did it because we wanted to lead in wages, not Go with the flow because we think it's the right thing to do.

- We now know better that smart action on climate change will not only stop bad things from happening, but will also increase the efficiency of our economy and help drive Technological change reduces risk. Taken together, these lead to more and better jobs, healthier and happier children, more productive workers, and a more prosperous future.

- We all know that uniqueness (originality) is extremely valuable. We've all been taught to "be yourself." What I'm really asking you to do is embrace and be realistic about how much energy it takes to maintain that uniqueness. The universe wants you to be normal, and in every way it can to attract you, don't make it happen.

- You have to pay for being different and it's worth it. The fairytale version of "being yourself" is that once you let your uniqueness shine through, all the pain goes away. Of course, this statement is misleading. Being yourself is worth it, but don't expect it to be easy or free. You have to constantly put energy into it.

- To all of you: be kind, be unique, create more than you consume, never let the universe blend you into your surroundings . It's still Day 1.

The following is the full text of Bezos’ letter to shareholders:

To Amazon Shareholders:

In Amazon’s first letter to shareholders in 1997 In it, I talked about my desire to build an "enduring franchise" that would redefine what it means to "serve customers" by unleashing the power of the Internet. I mentioned at the time that Amazon had grown from 158 employees to 614 employees, and we had over 1.5 million user accounts. We just went public at $1.50 a share on a split-adjusted basis. I wrote: That was day one.

Since then We've come a long way since then, and we're working harder than ever to serve and delight our users. We hired 500,000 people last year and now have 1.3 million employees worldwide. We have over 200 million Prime members worldwide. More than 1.9 million small and medium businesses sell on Amazon, accounting for nearly 60% of our total sales. Users have connected more than 100 million smart home devices to Alexa. Cloud services (Amazon Web Services, AWS) serve millions of users and have an annual revenue run rate of $5 million as of 2020. In 1997, we hadn't invented Prime, Marketplace, Alexa, or AWS. No one thought about these at all, and their birth was not a matter of fate. For each product, we have taken a lot of risks and paid a lot of wisdom and sweat.

along the way , we have created $1.6 trillion in wealth for shareholders. who are they? Of course, my Amazon stake has made me rich. But more than seven-eighths of the shares, or $1.4 trillion in wealth, are owned by others. who are they? It's the pension fund, the university, the 401(k) plan, and Mary and Larry who accidentally sent me this letter as I sat down to write this shareholder letter:

I hear stories like this all the time. I know shareholders who use the money they get from investing in Amazon to go to college, and others to use it for emergencies, rent, vacations, startups, charity, etc. I'm proud of the wealth we've created for our shareholders. It matters, this wealth improves their lives. But I also know one thing: this is not the largest part of the value we create.

Create more than consume

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If you want to be successful in business (and indeed in life), you have to create more than you consume. Your goal should be to create value for everyone you touch. Any business that fails to create value for the people it touches, even if it appears to be successful on the surface, will not have a long future. It is on the way to being eliminated.

Remember, Stock prices have nothing to do with the past. They are projections of future cash flows discounted back to the present. The stock market has its own expectations. I'm going to change the subject a little bit and talk about the past. How much value have we created for shareholders in 2020? This is a relatively easy question to answer because accounting systems are designed to answer it. In 2020, Amazon's net income was $21.3 billion. If instead of being a public company with thousands of shareholders, Amazon was a sole proprietorship owned by one person, that's about as much money a single owner would make in 2020.

What about the staff ? This is also an easy value creation question to answer because we can focus on compensation expenses. The company's expenditure is the employee's income. In 2020, Amazon employees earned $80 billion, plus $11 billion including benefits and various payroll taxes, for a total of $91 billion.

Third-party sellers Woolen cloth? Our in-house team (Selling Partner Partnership Services) is here to answer that question. They estimate that third-party sellers will make between $25 billion and $39 billion in profits from selling on Amazon in 2020. To be conservative, I'll use $25 billion.

Customer side, We have to separate it into consumer customers and AWS customers.

Let’s talk about consumption first or customers. We offer low prices, a wide selection, and fast shipping, but let's say we ignore all of the above for the sake of this prospect, and focus on one thing: We save our customers time.

on Amazon , customers complete 28% of purchases in 3 minutes or less, and half of purchases are completed within 15 minutes. Going to a brick-and-mortar store involves driving, parking, looking for items on shelves, waiting in line to check out, finding your car, and driving home. Research shows that a trip to a brick-and-mortar store typically takes about an hour. Assuming a typical Amazon purchase takes only 15 minutes, and it also saves customers a few trips to brick-and-mortar stores a week, that’s more than 75 hours saved over the course of a year. This is very important. It's the early 21st century and everyone is busy.

Thus, We can get a number. Start by conservatively valuing the time savings23 at $10 per hour. Multiply the 75 hours by $10/hour and subtract the cost of Prime, and that’s $630 in value per Prime member. We have 200 million Prime members, equivalent to $126 billion in value created in 2020.

For AWS customers Estimates are difficult because each client's workload is very different. However, let's do the calculation, but the error may be relatively large. The direct cost improvement from operating in the cloud versus on-premises varies, but a reasonable estimate is 30%. Of AWS' full-year 2020 revenue of $45 billion, this 30% represents $19 billion in customer value created. The difficulty with this assessment exercise is that direct cost reductions are the smallest part of the customer benefits of moving to the cloud. An even bigger benefit is the increased speed of software development, which can significantly improve a client's competitiveness and revenue. We have no reasonable way of estimating this portion of customer value other than to say that it is almost certainly greater than the immediate cost savings. To be conservative, I'd say it's the same, and count AWS's $38 billion in customer value creation last year.

Align AWS and Taken together, customers will be worth $164 billion in 2020.

To sum up:

21 billion shareholders US$

$91 billion employees

3rd party sellers $25 billion

customers $164 billion

$301 billion in total

If each group has a profit and loss statement representing their interactions with Amazon, then the number above is the "bottom line" of those profit and loss statements (bottom line, referring to net profit). These numbers can explain why people work for us, why sellers sell through us, and why customers buy from us. So we create value for them. This kind of value creation is not a "zero-sum game". It's not just about transferring money from one pocket to another. Invention and creation are the roots of all real value creation, and the value created is the measure of innovation.

Of course, we The relationship with these collectives, and the value we create, is not just dollars and cents. Money doesn't tell the whole story. For example, our relationship with our shareholders is relatively simple. They invest and hold stocks for a period of their choice. We also provide guidance to shareholders on matters such as annual meetings and proper voting procedures. Even so, they could ignore those instructions and simply abstain from voting.

Our relationship with employees The relationship of is a very different example. We have processes that they need to follow, and standards that they need to meet. We need training and various certifications. Employees must report to work at the agreed time. We interact a lot with our employees. It's not just about salary and benefits, it's about every other detail of the relationship between the two parties.

About this time Union elections, I think we also need to do better for our employees. While the vote is in our favor and our direct relationship with our employees is strong, it is clear to me that we need a better vision to deliver value to our employees, a vision to successfully deliver value to our employees.

If you see Given some press coverage, you might think we don't care about our employees. In these reports, our employees are sometimes accused of being hopeless souls and treated like robots. This is not accurate. They are mature and thoughtful individuals who can choose where to work. When we surveyed fulfillment center employees, 94% said they would recommend a friend to work at Amazon.

our employees During shifts, informal breaks can be used to stretch, fetch water, use the restroom, or chat with a manager, all without compromising their performance. These informal breaks are in addition to their normal schedule of 30 minutes for lunch and 30 minutes for a break.

We did not set Set unreasonable performance goals. Instead, we set achievable performance goals that take tenure and actual employee performance data into account. Performance is measured over a long period of time because we know that in any given week, day or hour, various factors affect performance. If employees fail to meet performance goals for a period of time, their managers talk to them and provide coaching.

Training also extended To those employees who perform well and can take on more responsibilities. In fact, 82% of coaching sessions are positive, provided to employees who meet or exceed expected performance standards. We have fired less than 2.6% of our employees because they were unable to perform their duties (in 2020, due to the impact of COVID-19, the percentage was even lower).

Earth's Best Employer & Earth's Safest Workplace

The truth is, the huge team of thousands of people who lead Amazon’s operations has always cared deeply about our hourly workers, and we Take pride in the work environment you have created. We're also proud that Amazon is creating jobs not just for computer scientists and those with advanced degrees, but for those who never had that edge.

Although we have Achievements have been made, but it is clear to me that we need a better vision in order for our people to be successful. We've always wanted to be the "most customer-centric" company on earth, and we won't change that goal, which is why we've gotten to this point. But I promise we will add one more, we will be the best employer on earth and the safest place to work on earth.

In my upcoming In my new role as Executive Chairman, I will focus on new initiatives. I'm an inventor, it's what I love most, it's what I do best, and it's where I create the most value. I'm excited to work with the large and passionate team in our operations to help invent in this arena of "Earth's Best Employer and Earth's Safest Workplace." We at Amazon have always been flexible when it comes to details, but we are stubborn and ruthless when it comes to vision. When we set our minds to something, we never fail, and we don't fail at this point.

Let's dive in Let's talk about security. For example, about 40% of work-related injuries at Amazon are related to musculoskeletal disorders (MSDs), which are conditions such as sprains or strains that can be caused by repeated movement. MSDs are common in the kind of work we do, and are more likely to occur in the first six months of an employee's employment. We need to invent solutions to reduce MSDs for new employees, many of whom may be doing manual work for the first time.

Working Well is One such program, which we rolled out in 2020 to 859,000 employees across 350 locations in North America and Europe. There we train a small group of employees on body mechanics, proactive health and safety. In addition to reducing work-related injuries, these concepts also have a positive impact on activities outside of daily work.

We are still working on Development of new automated staffing schedules that use complex algorithms to rotate employees between jobs using different tendon groups to reduce repetitive motion and help protect employees from MSD risk. This new technology is at the heart of our job rotation program that will be rolling out in 2021.

Our MSD Greater attention to early prevention has paid off. From 2019 to 2020, overall MSDs decreased by 32%, and MSDs due to outside working hours were more than halved.

We are at Amazon Employed 6,200 security professionals. They use security science to solve complex problems and establish new industry best practices. In 2021, we will invest more than $300 million in safety programs, including an initial $66 million to create technologies that help prevent forklift and other types of industrial vehicle crashes.

When we lead , others will follow. When we set a $15 minimum wage for hourly workers two and a half years ago, we did it because we wanted to lead in wages, not follow the herd because we thought it was the right thing to do. A recent paper by economists at UC Berkeley and Brandeis University analyzes the impact of our decision to raise the minimum starting wage to $15 an hour. Their assessments are consistent with what we've heard from our employees, their families and the communities in which they live.

We have improved Starting pay, which benefits not only our own employees, but also other workers in the same community, boosts local economies across the United States. Research shows that our raises lead to a 4.7% increase in average hourly wages for other employers in the same labor market.

Our Leadership The work is not limited to this. If we want to be the best employer on earth, we shouldn’t be satisfied with 94% of employees saying they would recommend a friend to work at Amazon, we have to aim for 100%. We'll do that over time by continuing to lead in wages, benefits, upskilling opportunities and more.

If any shareholder Worry that the best employer on earth and the safest workplace on earth may dilute our focus on the "most customer-centric" company on earth, so rest assured. Think of it this way, if we can run consumer e-commerce and AWS as two separate businesses and operate them at the highest standard, we can certainly do both. In fact, I believe they will also reinforce each other.

Climate Pledge

In an early draft of this letter, on the climate part, I first made my point and gave some examples. These arguments and examples aim to demonstrate that human-caused climate change is real. But, frankly, I don't think we need to say that now. Because, you don't have to say that photosynthesis is real, or that gravity is real, or that water boils at 100 degrees Celsius at sea level. These things are totally real, and so is the reality of climate change.

Not long ago, Most people think fighting climate change is a good thing; but they also think it will be costly and threaten jobs, competitiveness and economic growth. We now know better that smart action on climate change will not only prevent bad things from happening, but will also increase the efficiency of our economy, help drive technological change, and reduce risk. Taken together, these lead to more and better jobs, healthier and happier children, more productive workers, and a more prosperous future. Of course, that doesn't mean it's going to be easy, it certainly won't be. The next decade will be a defining one, and the economy of 2030 will need to be very different from what it is today, and Amazon plans to be at the center of that change. We launched The Climate Pledge with Global Optimism in September 2019 because we want to help drive this positive revolution. We need to be part of a growing corporate team that understands the urgency and opportunity of the 21st century.

Nowadays, no Two years later, 53 companies representing nearly every sector of the economy have signed the Climate Pledge. Best Buy, IBM, Infosys, Mercedes-Benz, Microsoft, Siemens and Verizon have all signed up to commit their global operations to net-zero carbon by 2040, 10 years ahead of the Paris Agreement. The commitment also requires them to regularly measure and report greenhouse gas emissions; implement decarbonization strategies through real business change and innovation; and neutralize any remaining emissions through additional, quantifiable, real, permanent and socially beneficial offsets emissions. Credible, high-quality offsets are valuable, and we should preserve them for economic activity for which low-carbon alternatives do not exist.

The Climate Pledge Signatories are making meaningful, tangible and ambitious commitments. Uber aims to become a zero-emissions platform in Canada, Europe and the US by 2030, and Henkel plans to use 100% renewable energy to generate electricity. Amazon is making progress toward our own goal of using 100 percent renewable energy by 2025, five years ahead of our original 2030 goal. Amazon is the world's largest corporate buyer of renewable energy. We have 62 utility-scale wind and solar projects and 125 solar rooftop fulfillment and sorting centers around the world. These projects have a generating capacity of more than 6.9 gigawatts and provide more than 20 million megawatt-hours of energy annually.

Shipping is Amazon An essential part of running a business, and the toughest part of our plan to achieve net zero carbon by 2040. To help drive the rapid growth of the electric vehicle technology market and help all companies transition to greener technologies, we invested more than $1 billion in Rivian and ordered 100,000 electric delivery vehicles. We also have partnerships with Mahindra in India and Mercedes-Benz in Europe.

These are from Rivian The company's custom electric delivery vehicles are already in operation and hit the roads in Los Angeles for the first time in February. 10,000 new cars will be on the road as early as next year, and all 100,000 cars will be on the road by 2030, saving millions of tonnes of carbon emissions. An important reason why we want companies to join the "Climate Pledge" is to send a signal to the market that companies should start inventing and developing new technologies that are conducive to improving climate change. Our purchase of 100,000 Rivian electric vans is a great example.

In order to further speed up To invest in the new technologies needed to build a zero-carbon economy, we launched the Climate Pledge Fund last June. Starting with $2 billion, the investment program invests in forward-thinking companies aimed at facilitating the transition to a low-carbon economy. We have invested in innovative technology companies such as CarbonCure Technologies, Pachama, Redwood Materials, Rivian, Turntide Technologies, ZeroAvia and Infinium.

In addition, I Individuals have also allocated $10 billion to help drive the systemic changes we need over the next decade. We will support leading scientists, activists, NGOs, environmental justice groups and others working to fight climate change and protect the natural world. Late last year, I awarded my first round of grants to 16 organizations working on innovation and mobility solutions. It will take collective action from companies big and small, global organizations and individuals, and I am excited to be part of this journey and optimistic that humanity can come together to solve this challenge.

Differentiation is survival, the universe wants you to be an ordinary person

This is my last annual shareholder letter as Amazon CEO, and I think there is one last extremely important thing I have to tell everyone that I hope all Amazonians take this to heart.

The following is Richard A passage from The Blind Watch Maker, published by Dawkins. This is a basic fact about biology.

Avoiding death is something you have to work on. Left to its own devices—this is what it looks like after death—the body tends to return to a state of equilibrium with its environment. If you measure something like temperature, acidity, moisture, or electrical potential inside a living organism, you'll usually find that it's very different from the corresponding measurement in the surrounding environment. For example, our bodies are generally hotter than our surroundings, and in cold climates they have to work hard to maintain this difference. When we die, the body stops functioning, the temperature difference starts to disappear, and eventually we are at the same temperature as our surroundings. Not all animals work so hard to avoid equilibrating with the temperature of their surroundings, but all do something similar. For example, in arid places, animals and plants work hard to maintain the fluid content of their cells, contrary to the natural tendency of water to flow from the cells to the dry outside world. If they fail, they die. More broadly, if organisms don't actively prevent it, they eventually blend into their surroundings and cease to exist as organisms. That's what happens when they die.

Although this passage is not a metaphor, it is still a wonderful article, Very relevant to Amazon. I would argue that it's relevant to every company, every institution, and every single one of our lives. In what ways is the universe trying to pull you in to make you normal? How much work does it take to keep your uniqueness?

I know a Happy couple with a joke in their relationship. The husband will often look at his wife in mock pain and say to her, "Can't you be normal?" They all smile and laugh, and of course, the deep truth is that he likes her uniqueness. But, at the same time, it's also true that things tend to get easier if we're a little more normal.

This phenomenon happens on many levels.

We all know Uniqueness (originality) is extremely valuable. We've all been taught to "be yourself." What I'm really asking you to do is embrace and be realistic about how much energy it takes to maintain that uniqueness. This universe wants you to be normal, and tries to attract you in every possible way. Don't let it become a reality.

You must be You pay for being different, and it's worth it. The fairytale version of "being yourself" is that once you let your uniqueness shine through, all the pain goes away. Of course, this statement is misleading. Being yourself is worth it, but don't expect it to be easy or free. You have to constantly put energy into it.

This universe always It's an attempt to make the Amazon more typical and bring us into balance with our environment. It will take sustained effort, but we can and must do better.

Here, As always, I attach our 1997 shareholder letter. The letter concluded by saying, “We at Amazon thank our customers for their business and trust, each other for our hard work, and our shareholders for their support and encouragement.” Nothing has changed. I would like to especially thank Andy Jassy for agreeing to serve as CEO. It's a tough job with a lot of responsibility. Andy is talented and has the highest standards. I promise you, Andy won't let the universe turn us into normal people. He will gather the energies needed for the life that makes us unique. It's not easy, but it's crucial. I also predict that it will be satisfying and often entertaining. Thank you Andy.

To all of you People: Be kind, be unique, create more than you consume, and never let the universe blend you into your surroundings. It's still Day 1.

Jeff · Bezos

Amazon founder and CEO

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