Invent and Wander: The Collected Writings of Jeff Bezos

By Jeff Bezos, with introduction by Walter Isaacson, Nov/2020(288p.)


While Bezos’ Letters to Shareholders are all available on Google for free, as are some excellent interviews with him, including by his brother in 2017 and by David Rubenstein in 2018, this book was still worth its price due to Walter Isaacson’s introduction and the added-value of having all of the writings in a single source.

As is often the case with outstanding corporate leaders, Jeff Bezos is very consistent in the way he communicates with investors.  Every year he attaches the original 1997 letter to the annual report, as a reminder of his priorities and purpose.  Over time, as we know, his steadfast approach worked wonders!  And while many other companies have been able to achieve similar feats in terms of convincing investors to pay up today for a much better, yet distant future, Bezos is the king of this practice.  “We’ve appended last year’s letter immediately after this year’s,” he wrote for the first time in his 1998 letter.  “I invite you to please read the section entitled It’s All About the Long Term. You might want to read it twice to make sure we’re the kind of company you want to be invested in. As it says there, we don’t claim it’s the right philosophy, we just claim it’s ours!”

It’s unlikely that Jeff Bezos’ capacity to invent can be replicated – but that’s not his only skill that we can learn from.  As Brad Stone’s 2013 book The Everything Store profiled in detail, the early years of Amazon were hard and required unusual courage and fortitude to underwrite – yet Bezos never blinked.  But perhaps most powerful and influential has been his forward-looking mindset, which inspired a generation of over-confident entrepreneurs and tech CEOs that temporarily command similar respect, even when they lack the skills.  Isaacson emphasizes Bezos’ impressive capacity to invent & wander – but what impresses me even more is his ability to find out what works, then scaling it with incredible confidence.  This precious skill of scaling up the winners, which was behind the launch of Prime, Amazon Web Services, Kindle, Alexa, and most other Amazon breakthroughs, applies just as well to portfolio management as it does to business strategy – suggesting Bezos would have made a fine hedge fund manager had he stuck with it.  As his mom once said: “We didn’t invest in Amazon, we invested in Jeff.”

As he reminisces in the introduction, renowned biographer Walter Isaacson was also the editor of Time magazine when Bezos was named Person of the Year in December 1999 – just before the dot-com bubble burst and Amazon stock lost 90% of its value.  “We made a somewhat offbeat decision to make Bezos our Person of the Year, even though he wasn’t a famous world leader or statesman,” he explains. “I worried— correctly— that internet stocks, such as Amazon, would start to collapse. So I asked the CEO of Time Inc., the very wise Don Logan, whether I was making a mistake by choosing Bezos and would look silly in years to come if the internet economy deflated. No, Don told me. Stick with your choice. Jeff Bezos is not in the internet business. He’s in the customer-service business.”  While Time’s poor timing was indeed ridiculed for many years, their observation that Amazon would flourish because it was in the customer service business has proven prophetic.

Source:  Bloomberg

A recurring theme in Bezos’ letters refers to the importance of rapid decision-making.  In the 2015 letter, which the book titled Big Winners Pay for Many Experiments, Bezos classifies decisions into two types: Some decisions are consequential and irreversible or nearly irreversible— one-way doors — and these decisions must be made methodically, carefully, slowly, with great deliberation and consultation. If you walk through and don’t like what you see on the other side, you can’t get back to where you were before. We can call these Type 1 decisions. But most decisions aren’t like that — they are changeable, reversible — they’re two-way doors. If you’ve made a suboptimal Type 2 decision, you don’t have to live with the consequences for that long. You can reopen the door and go back through. Type 2 decisions can and should be made quickly by high judgment individuals or small groups. As organizations get larger, there seems to be a tendency to use the heavy-weight Type 1 decision-making process on most decisions, including many Type 2 decisions. The end result of this is slowness, unthoughtful risk aversion, failure to experiment sufficiently, and consequently diminished invention.”  Then in the 2016 letter, titled Fending off Day 2, Bezos elaborates on the idea of high-velocity decision making and the importance of being able to deal gracefully with disagreements: “Use the phrase ‘disagree and commit’. This phrase will save a lot of time. If you have conviction on a particular direction even though there’s no consensus, it’s helpful to say, “Look, I know we disagree on this, but will you gamble with me on it? Disagree and commit?” By the time you’re at this point, no one can know the answer for sure, and you’ll probably get a quick yes. This isn’t one way. If you’re the boss, you should do this too. I disagree and commit all the time.”

In closing, to anyone who hasn’t kept up with Jeff Bezos’ writings, this book is a gem.  And while it doesn’t really offer much that is new, I would still recommend it to a well-informed Amazon stakeholder. Investors often read annual shareholder letters in sequence to contextualize change, but as Jeff Bezos teaches us, it is more interesting to focus on what doesn’t change.  “When you have something that you know is true, even over the long term,” he explains, “you can afford to put a lot of energy into it.”  So while Amazon has certainly changed over the last 23 years – it continues to bet on what doesn’t – and with tremendous success.

Best regards,


Highlighted Passages:

Introduction by Walter Isaacson

Smart people are a dime a dozen and often don’t amount to much. What counts is being creative and imaginative.

One final trait shared by all my subjects is that they retained a childlike sense of wonder. At a certain point in life most of us quit puzzling over everyday phenomena. Our teachers and parents, becoming impatient, tell us to stop asking so many silly questions. We might savor the beauty of a blue sky, but we no longer bother to wonder why it is that color. Leonardo did. So did Einstein, who wrote to another friend, “You and I never cease to stand like curious children before the great mystery into which we were born.” We should be careful to never outgrow our wonder years— or to let our children do so.

Jeff was a voracious reader with an adventurous mind. His grandfather would take him to the library, which had a huge collection of science fiction books. Over the summers Jeff worked his way through the shelves, reading hundreds of them. Isaac Asimov and Robert Heinlein became his favorites, and later in life he would not only quote them but also occasionally invoke their rules, lessons, and lingo.

At his Montessori preschool Bezos was already fanatically focused. “The teacher complained to my mother that I was too task focused and that she couldn’t get me to switch tasks, so she would have to just pick up my chair and move me,” he recalls. “And by the way, if you ask the people who work with me, that’s still probably true today.”

By the time he was in high school, his family had moved to Miami. Bezos was a straight- A student, somewhat nerdy, and still completely obsessed with space exploration. He was chosen as the valedictorian of his class, and his speech was about space: how to colonize planets, build space hotels, and save our fragile planet by finding other places to do manufacturing. “Space, the final frontier, meet me there!” he concluded.

He went to Princeton with the goal of studying physics. It sounded like a smart plan until he smashed into a course on quantum mechanics. One day he and his roommate were trying to solve a particularly difficult partial differential equation, and they went to the room of another person in the class for help. He stared at it for a moment, then gave them the answer. Bezos was amazed that the student had done the calculation— which took three pages of detailed algebra to explain— in his head. “That was the very moment when I realized I was never going to be a great theoretical physicist,” Bezos says. “I saw the writing on the wall, and I changed my major very quickly to electrical engineering and computer science.” It was a difficult realization. His heart had been set on becoming a physicist, but finally he had confronted his own limits.

Bezos then consulted his wife, MacKenzie, whom he had met at the hedge fund and married the year before. “You know you can count me in 100 percent, whatever you want to do,” she said.

To make the decision, Bezos used a mental exercise that would become a famous part of his risk- calculation process. He called it a “regret minimization framework.” He would imagine what he would feel when he turned eighty and thought back to the decision. “I want to have minimized the number of regrets I have,” he explains. “I knew that when I was eighty, I was not going to regret having tried this. I was not going to regret trying to participate in this thing called the internet that I thought was going to be a really big deal. I knew that if I failed, I wouldn’t regret that, but I knew the one thing I might regret is not ever having tried. I knew that that would haunt me every day.”

As his mother, Jackie, later said, “We didn’t invest in Amazon, we invested in Jeff.”

“Within the first few days, I knew this was going to be huge,” Bezos told Time. “It was obvious that we were onto something much bigger than we ever dared to hope.”

At the end of 1999 I was the editor of Time, and we made a somewhat offbeat decision to make Bezos our Person of the Year, even though he wasn’t a famous world leader or statesman. I had the theory that the people who affect our lives the most are often the people in business and technology who, at least early in their careers, aren’t often found on the front pages. For example, we had made Andy Grove of Intel the Person of the Year at the end of 1997 because I felt the explosion of the microchip was changing our society more than any prime minister or president or treasury secretary. But as the publication date of our Bezos issue neared in December 1999, the air was starting to go out of the bubble. I was worried— correctly— that internet stocks, such as Amazon, would start to collapse. So I asked the CEO of Time Inc., the very wise Don Logan, whether I was making a mistake by choosing Bezos and would look silly in years to come if the internet economy deflated. No, Don told me. “Stick with your choice. Jeff Bezos is not in the internet business. He’s in the customer- service business. He will be around for decades to come, well after people have forgotten all the dot.coms that are going to go bust.”

Joshua Cooper Ramo, one of our savviest young editors, wrote the overview story that put Bezos in historical perspective: Every time a seismic shift takes place in our economy, there are people who feel the vibrations long before the rest of us do, vibrations so strong they demand action— action that can seem rash, even stupid. Ferry owner Cornelius Vanderbilt jumped ship when he saw the railroads coming. Thomas Watson Jr., overwhelmed by his sense that computers would be everywhere even when they were nowhere, bet his father’s office- machine company on it: IBM. Jeffrey Preston Bezos had that same experience when he first peered into the maze of connected computers called the World Wide Web and realized that the future of retailing was glowing back at him.… Bezos’ vision of the online retailing universe was so complete, his site so elegant and appealing, that it became from Day One the point of reference for anyone who had anything to sell online. And that, it turns out, is everyone.

At one point during the meltdown, he and a few other internet entrepreneurs were on an NBC Nightly News special with Tom Brokaw. “Mr. Bezos, can you even spell ‘profit’?” Brokaw asked, highlighting the fact that Amazon was hemorrhaging money as it grew. “Sure,” Bezos replied, “P- R- O- P- H- E- T.” And by 2019 Amazon stock would be at $ 2,000 a share, and the company would have $ 233 billion in revenues and 647,000 employees worldwide.

But Bezos had a rule, which was to use his heart and his intuition as well as empirical data in making a big decision. “There has to be risk taking. You have to have instinct. All the good decisions have to be made that way,” he says. “You do it with a group. You do it with great humility.”

We completely reinvented the way that companies buy computation,” Bezos says. “Traditionally, if you were a company and needed computation, you would build a data center, and you’d fill that data center with servers, and you’d have to upgrade the operating systems of those servers and keep everything running, and so on. None of that added any value to what the business was doing. It was kind of price- of- admission, undifferentiated heavy lifting.” Bezos realized that this process was also holding back various groups of innovators within Amazon itself. The company’s applications developers had been in a constant struggle with the hardware teams, but Bezos made them develop some standard application programming interfaces (APIs) and access to computing resources. “As soon as we did that, it was immediately obvious that every company in the world was going to want this,” he says.

No customer was asking for Echo,” Bezos says. “Market research doesn’t help. If you had gone to a customer in 2013 and said, ‘Would you like a black, always- on cylinder in your kitchen about the size of a Pringles can that you can talk to and ask questions, that also turns on your lights and plays music?’ I guarantee you they’d have looked at you strangely and said ‘No, thank you.’” In a sweet irony, Bezos was able to trounce Apple in creating such a home device and then make its components— voice recognition and machine learning— work better than competing devices from both Google and, later, Apple.

“I’m always trying to figure out one thing first and foremost: Is that person a missionary or a mercenary?” Bezos says. “The mercenaries are trying to flip their stock. The missionaries love their product or their service and love their customers and are trying to build a great service. By the way, the great paradox here is that it’s usually the missionaries who make more money.” Mackey struck him as a missionary, and his passion infused the Whole Foods ethos. “It’s a missionary company, and he’s a missionary guy.”

When reporter and Bezos biographer Brad Stone discovered the existence of Blue Origin, he emailed Bezos, asking for comment. Bezos wasn’t ready to talk about it, but he did go on the record to push back against Stone’s notion that he had founded the company because he thought that the government- run NASA program had become too risk averse and sluggish. “NASA is a national treasure, and it’s total bull that anyone should be frustrated by NASA,” Bezos wrote Stone. “The only reason I’m interested in space is because [NASA] inspired me when I was five years old. How many government agencies can you think of that inspire five- year- olds? The work NASA does is technically super- demanding and inherently risky, and they continue to do an outstanding job. The ONLY reason any of these small space companies have a chance of doing ANYTHING is because they get to stand on the shoulders of NASA’s accomplishments and ingenuity.”

And I would like to see us not have a population cap. I wish there were a trillion humans in the solar system; then there would be a thousand Einsteins and a thousand Mozarts.”

Imagine a world where some incredibly artificially intelligent computer could actually do a better job than the invisible hand of allocating resources, and were to say, “There shouldn’t be this many chickens, there should be this many chickens,” just a few more or a few less. Well, that might even lead to more aggregate wealth. So, it might be a society that if you give up liberty, everybody could be a little wealthier. Now, the question that I would pose is, if that turned out to be the world, “Is that a good trade?” Personally, I don’t think so. Personally I think it would be a terrible trade. I think the American Dream is about liberty.

Blue Origin’s company shield has a Latin motto, Gradatim Ferociter: “Step by Step, Ferociously.”

Focus relentlessly and passionately on the customer.

An example of keeping the focus on customers was his policy of allowing negative reviews of products to appear on Amazon. An investor complained that Bezos was forgetting that Amazon only makes money when it sells things, so negative reviews hurt the business. “When I read that letter, I thought, we don’t make money when we sell things,” Bezos says. “We make money when we help customers make purchase decisions.”

At Amazon he created what he calls “multiple paths to yes.” In other organizations, he points out, a proposal can be killed by supervisors at many levels, and it needs to pass through all those gates in order to be approved. At Amazon, employees can shop their ideas around to any of the hundreds of executives who are empowered to get to yes.

“Still, with all of our faults and problems, the rest of the world would love even the tiniest sip of the elixir we have here in the US… It’s still Day One for this country.”


PART 1: The Shareholder Letters

1997 Letter:  It’s All About the Long Term

When I interview people I tell them, “You can work long, hard, or smart, but at you can’t choose two out of three.

1998 Letter:  Obsessions

In 1998, we generated $ 31 million in operating cash flow which more than offset net fixed asset additions of $ 28 million.

Working to create a little bit of history isn’t supposed to be easy, and, well, we’re finding that things are as they’re supposed to be!

I invite you to please read the section titled “It’s All About the Long Term.” You might want to read it twice to make sure we’re the kind of company you want to be invested in. As it says there, we don’t claim it’s the right philosophy, we just claim it’s ours!

1999 Letter:  Building for the Long Term

During 1999, our relentless focus on customers worked: Sales grew from $ 610 million in 1998 to $ 1.64 billion— a 169 percent increase. We added 10.7 million new customers, increasing cumulative customer accounts from 6.2 million to 16.9 million. The percentage of orders placed by repeat customers grew from over 64 percent in the fourth quarter of 1998 to greater than 73 percent in the same period in 1999.

In part because of this infrastructure, we were able to grow revenues 90 percent in just three months, while shipping well over 99 percent of our holiday orders in time for the holidays. As far as we can determine, no other company has ever grown 90 percent in three months on a sales base of over $ 1 billion.

In 1999, we continued to benefit from a business model that is inherently capital efficient. We don’t need to build physical stores or stock those stores with inventory, and our centralized distribution model has allowed us to build a business with over $ 2 billion in annualized sales but requiring just $ 220 million in inventory and $ 318 million in fixed assets. Over the last five years, we’ve cumulatively used just $ 62 million in operating cash.

We begin the year 2000 with seventeen million customers, a worldwide reputation for customer focus, the best e- commerce software systems, and purpose- built distribution and customer service infrastructure. We believe we have reached a “tipping point,” where this platform allows us to launch new ecommerce businesses faster, with a higher quality of customer experience, a lower incremental cost, a higher chance of success, and a faster path to scale and profitability than any other company.

Through our platform, we are able to bring tremendous value to our partners, such as

Moreover, it’s great to be participating in what is a multi- trillion-dollar global market, in which we are so very, very tiny. We are doubly blessed. We have a market-size unconstrained opportunity in an area where the underlying foundational technology we employ improves every day. That is not normal.

2000 Letter: Taking the Long View

OUCH. IT’S BEEN a brutal year for many in the capital markets and certainly for shareholders. As of this writing, our shares are down more than 80 percent from when I wrote you last year. Nevertheless, by almost any measure, the company is in a stronger position now than at any time in its past. We served twenty million customers in 2000, up from fourteen million in 1999. Sales grew to $ 2.76 billion in 2000 from $ 1.64 billion in 1999. Pro forma operating loss shrank to 6 percent of sales in Q4 2000, from 26 percent of sales in Q4 1999. Pro forma operating loss in the United States shrank to 2 percent of sales in Q4 2000, from 24 percent of sales in Q4 1999.

So, if the company is better positioned today than it was a year ago, why is the stock price so much lower than it was a year ago? As the famed investor Benjamin Graham said, “In the short term, the stock market is a voting machine; in the long term, it’s a weighing machine.” Clearly there was a lot of voting going on in the boom year of ’99— and much less weighing. We’re a company that wants to be weighed, and over time, we will be— over the long term, all companies are. In the meantime, we have our heads down working to build a heavier and heavier company.

We still believe that some 15 percent of retail commerce may ultimately move online.

2001 Letter: The Customer Franchise Is Our Most Valuable Asset

Growth spreads fixed costs across more sales, reducing cost per unit, which makes possible more price reductions. Customers like this, and it’s good for shareholders. Please expect us to repeat this loop.

Sales grew 13 percent from $ 2.76 billion in 2000 to $ 3.12 billion in 2001; we achieved our first billion- dollar quarter on reaccelerated sales and 23 percent year- over- year unit growth in Q4. We served twenty- five million customer accounts in 2001, compared to twenty million in 2000 and fourteen million in 1999. International sales grew 74 percent in 2001, and more than one- quarter of sales came from outside the United States. The United Kingdom and Germany, our largest international markets, had a combined pro forma operating profit for the first time in Q4. Open only a year, Japan grew to a $ 100 million annual run rate in Q4.

In every annual letter (including this one), we attach a copy of our original 1997 letter to shareholders to help investors decide if is the right kind of investment for them, and to help us determine if we have remained true to our original goals and values. I think we have. In that 1997 letter, we wrote, “When forced to choose between optimizing the appearance of our GAAP accounting and maximizing the present value of future cash flows, we’ll take the cash flows.” Why focus on cash flows? Because a share of stock is a share of a company’s future cash flows, and, as a result, cash flows more than any other single variable seem to do the best job of explaining a company’s stock price over the long term.

2002 Letter: What’s Good for Customers Is Good for Shareholders

Our Apparel and Accessories store has more than five hundred top clothing brands, and in its first sixty days, customers bought 153,000 shirts, 106,000 pairs of pants, and 31,000 pairs of underwear.

In this year’s American Customer Satisfaction Index, the most authoritative study of customer satisfaction, scored an eighty- eight, the highest score ever recorded— not just online, not just in retailing— but the highest score ever recorded in any service industry.

Our pricing objective is not to discount a small number of products for a limited period of time, but to offer low prices every day and apply them broadly across our entire product range. To illustrate this point, we recently did a price comparison versus a major well- known chain of book superstores. We did not hand pick a choice group of books against which we wanted to compare. Instead, we used their published list of their one hundred bestsellers for 2002. It was a good representation of the kinds of books people buy most, consisting of forty- five hardcover titles and fifty- five paperbacks across many different categories, including Literature, Romance, Mystery and Thrillers, Nonfiction, Children’s, Self- Help, and so on. We priced all one hundred titles by visiting their superstores in both Seattle and New York City. It took us six hours in four of their different superstores to find all one hundred books on their list. When we added up everything we spent, we discovered that: At their stores, these one hundred bestselling books cost $ 1,561. At, the same books cost $ 1,195 for a total savings of $ 366, or 23 percent. For seventy- two of the one hundred books, our price was cheaper. On twenty- five of the books, our price was the same. On three of the one hundred, their prices were better (we subsequently reduced our prices on these three books). In these physical- world superstores, only fifteen of their one hundred titles were discounted— they were selling the other eighty- five at full list price. At, seventy- six of the one hundred were discounted, and twenty- four were sold at list price. To be sure, you may find reasons to shop in the physical world— for instance, if you need something immediately— but, if you do so, you’ll be paying a premium. If you want to save money and time, you’ll do better by shopping at

Once again this year, I attach a copy of our original 1997 letter and encourage current and prospective shareowners to take a look at it. Given how much we’ve grown and how much the Internet has evolved, it’s notable that the fundamentals of how we do business remain the same.

2003 Letter:  Long-Term Thinking

Similarly, many investors are effectively short- term tenants, turning their portfolios so quickly they are really just renting the stocks that they temporarily “own.”

To give one small example, engineering a feature like Instant Order Update for use by forty million customers costs nowhere near forty times what it would cost to do the same for one million customers.

For example, we’re targeting gross margins on our jewelry sales to be substantially lower than industry norms because we believe over time— customers figure these things out— this approach will produce more value for shareholders.

2004 Letter: Thinking About Finance

Notice, too, that a focus on EBITDA (earnings before interest, taxes, depreciation, and amortization) would lead to the same faulty conclusion about the health of the business. Sequential annual EBITDA would have been $ 50, $ 100, $ 200 and $ 400 million— 100 percent growth for three straight years. But without taking into account the $ 1.28 billion in capital expenditures necessary to generate this “cash flow,” we’re getting only part of the story— EBITDA isn’t cash flow.

2005 Letter: Making Decisions

Our judgment is that relentlessly returning efficiency improvements and scale economies to customers in the form of lower prices creates a virtuous cycle that leads over the long term to a much larger dollar amount of free cash flow, and thereby to a much more valuable

Well-meaning people internally and externally worried it would cannibalize Amazon’s retail business, and— as is often the case with consumer- focused innovations— there was no way to prove in advance that it would work. Our buyers pointed out that inviting third parties onto would make inventory forecasting more difficult and that we could get “stuck” with excess inventory if we “lost the detail page” to one of our third- party sellers. However, our judgment was simple. If a third party could offer a better price or better availability on a particular item, then we wanted our customer to get easy access to that offer. Over time, third- party sales have become a successful and significant part of our business. Third- party units have grown from 6 percent of total units sold in 2000 to 28 percent in 2005, even as retail revenues have grown threefold.

2006 Letter: Growing New Businesses

Amazon Web Services is another example. With AWS, we’re building a new business focused on a new customer set: software developers. We currently offer ten different web services and have built a community of over 240,000 registered developers. We’re targeting broad needs universally faced by developers, such as storage and compute capacity— areas in which developers have asked for help, and in which we have deep expertise from scaling over the last twelve years. We’re well positioned to do it, it’s highly differentiated, and it can be a significant, financially attractive business over time.

In our experience, if a new business enjoys runaway success, it can only begin to be meaningful to the overall company economics in something like three to seven years. We’ve seen those time frames with our international businesses, our earlier nonmedia businesses, and our third- party seller businesses. Today, international is 45 percent of sales, nonmedia is 34 percent of sales, and our third- party seller businesses account for 28 percent of our units sold. We will be happy indeed if some of the new seeds we’re planting enjoy similar successes.

2007 Letter: A Team of Missionaries

I’ll also point out that, while I’m convinced books are on the verge of being improved upon, Amazon has no sinecure as that agent. It will happen, but if we don’t execute well, it will be done by others.

We’re hopeful, and I’d even say optimistic, that Kindle, true to its name, will “start a fire” and improve the world of reading. Kindle exemplifies our philosophy and long- term investment approach discussed in our first letter to shareholders in 1997.

2008 Letter: Working Backward

Seek instant gratification— or the elusive promise of it— and chances are you’ll find a crowd there ahead of you.

It is difficult for us to imagine that ten years from now, customers will want higher prices, less selection, or slower delivery.

In 2005, we launched Amazon Prime. For $ 79 per year,* Prime members get unlimited express two- day shipping for free and upgrades to one- day delivery for just $ 3.99.

We are investing heartily in Amazon Web Services, in tools for third- party sellers, in digital media, in China, and in new product categories. And we make these investments with the belief that they can be of meaningful scale and can clear our high bar for returns.

2009 Letter: Setting Goals

Net sales increased 28 percent year- over- year to $ 24.51 billion in 2009. This is fifteen times higher than net sales ten years ago when they were $ 1.64 billion in 1999. Free cash flow increased 114 percent year- over- year to $ 2.92 billion in 2009. More customers are taking advantage of Amazon Prime, with worldwide memberships up significantly over last year. The number of different items available for immediate shipment grew more than 50 percent in 2009. We added twenty- one new product categories around the world in 2009, including Automotive in Japan, Baby in France, and Shoes and Apparel in China. It was a busy year for our shoes business. In November we acquired Zappos, a leader in online apparel and footwear sales that strives to provide shoppers with the best possible service and selection. Zappos is a terrific addition to our Endless, Javari, Amazon, and Shopbop selection.

We’ve been using this same annual process for many years. For 2010, we have 452 detailed goals with owners, deliverables, and targeted completion dates. These are not the only goals our teams set for themselves, but they are the ones we feel are most important to monitor. None of these goals are easy and many will not be achieved without invention. We review the status of each of these goals several times per year among our senior leadership team and add, remove, and modify goals as we proceed. A review of our current goals reveals some interesting statistics: 360 of the 452 goals will have a direct impact on customer experience. The word revenue is used eight times and free cash flow is used only four times. In the 452 goals, the terms net income, gross profit or margin, and operating profit are not used once. Taken as a whole, the set of goals is indicative of our fundamental approach. Start with customers and work backward. Listen to customers, but don’t just listen to customers— also invent on their behalf. We can’t assure you that we’ll meet all of this year’s goals. We haven’t in past years. However, we can assure you that we’ll continue to obsess over customers. We have strong conviction that that approach— in the long term— is every bit as good for owners as it is for customers. It’s still Day 1.

2010 Letter:  Fundamental Tools

Invention is in our DNA and technology is the fundamental tool we wield to evolve and improve every aspect of the experience we provide our customers. We still have a lot to learn, and I expect and hope we’ll continue to have so much fun learning it. I take great pride in being part of this team. It’s still Day 1.

2011 Letter: The Power of Invention

All AWS services are pay- as- you- go and radically transform capital expense into a variable cost. AWS is self- service: you don’t need to negotiate a contract or engage with a salesperson— you can just read the online documentation and get started. AWS services are elastic— they easily scale up and easily scale down.

2012 Letter: Internally Driven

One advantage— perhaps a somewhat subtle one— of a customer- driven focus is that it aids a certain type of proactivity. When we’re at our best, we don’t wait for external pressures. We are internally driven to improve our services, adding benefits and features, before we have to. We lower prices and increase value for customers before we have to. We invent before we have to.

We want to make money when people use our devices— not when people buy our devices. We think this aligns us better with customers. For example, we don’t need our customers to be on the upgrade treadmill. We can be very happy to see people still using four- year- old Kindles!

Our heavy investments in Prime, AWS, Kindle, digital media, and customer experience in general strike some as too generous, shareholder indifferent, or even at odds with being a for- profit company. “Amazon, as far as I can tell, is a charitable organization being run by elements of the investment community for the benefit of consumers,” writes one outside observer. But I don’t think so. To me, trying to dole out improvements in a just- in- time fashion would be too clever by half. It would be risky in a world as fast- moving as the one we all live in. More fundamentally, I think long- term thinking squares the circle. Proactively delighting customers earns trust, which earns more business from those customers, even in new business arenas. Take a long- term view, and the interests of customers and shareholders align.

As I write this, our recent stock performance has been positive, but we constantly remind ourselves of an important point— as I frequently quote famed investor Benjamin Graham in our employee all- hands meetings—“ In the short run, the market is a voting machine but in the long run, it is a weighing machine.” We don’t celebrate a 10 percent increase in the stock price like we celebrate excellent customer experience. We aren’t 10 percent smarter when that happens and conversely aren’t 10 percent dumber when the stock goes the other way. We want to be weighed, and we’re always working to build a heavier company.

2013 Letter:  “Wow”

Prime Customers love Prime. More than one million customers joined Prime in the third week of December alone, and there are now tens of millions of Prime members worldwide. On a per customer basis, Prime members are ordering more items, across more categories, than ever before. Even internally, it’s easy for us to forget that Prime was a new, unproven (some even said foolhardy) concept when we launched it nine years ago: all- you- can- eat, two- day shipping for a flat annual fee. At that time, we had one million eligible Prime products. This year, we passed twenty million eligible products, and we continue to add more. We’ve made Prime better in other ways too, adding new digital benefits— including the Kindle Owners’ Lending Library and Prime Instant Video. And we’re not done. We have many ideas for how to make Prime even better.

Career Choice is a program where we prepay 95 percent of tuition for our employees to take courses for in- demand fields, such as airplane mechanic or nursing, regardless of whether the skills are relevant to a career at Amazon. The goal is to enable choice. We know that for some of our fulfillment center employees, Amazon will be a career. For others, Amazon might be a stepping- stone on the way to a job somewhere else— a job that may require new skills. If the right training can make the difference, we want to help. The second program is called Pay to Quit. It was invented by the clever people at Zappos, and the Amazon fulfillment centers have been iterating on it. Pay to Quit is pretty simple. Once a year, we offer to pay our associates to quit. The first year the offer is made, it’s for $ 2,000. Then it goes up $ 1,000 a year until it reaches $ 5,000. The headline on the offer is “Please Don’t Take This Offer.” We hope they don’t take the offer; we want them to stay. Why do we make this offer? The goal is to encourage folks to take a moment and think about what they really want. In the long run, an employee staying somewhere they don’t want to be isn’t healthy for the employee or the company.

The number of sellers using Fulfillment by Amazon grew more than 65 percent last year. Growth like that at such large scale is unusual. FBA is unique in many ways. It’s not often you get to delight two customer sets with one program. With FBA, sellers can store their products in our fulfillment centers, and we pick, pack, ship, and provide customer service for these products.

By a slim margin, Pizza Hut wins customer preference over Domino’s.

We’ll approach the job with our usual tools: customer obsession rather than competitor focus, heartfelt passion for invention, commitment to operational excellence, and a willingness to think long- term. With good execution and a bit of continuing good luck, Marketplace, Prime, and AWS can be serving customers and earning financial returns for many years to come.

2014 Letter:  Three Big Ideas

Marketplace’s early days were not easy. First, we launched Amazon Auctions. I think seven people came, if you count my parents and siblings. Auctions transformed into zShops, which was basically a fixed price version of Auctions. Again, no customers. But then we morphed zShops into Marketplace. Internally, Marketplace was known as SDP for Single Detail Page. The idea was to take our most valuable retail real estate— our product detail pages— and let third- party sellers compete against our own retail category managers. It was more convenient for customers, and within a year, it accounted for 5 percent of units. Today, more than 40 percent of our units are sold by more than two million third- party sellers worldwide. Customers ordered more than two billion units from sellers in 2014.

Amazon Robotics, which began with our acquisition of Kiva in 2012, has now deployed more than fifteen thousand robots to support the stowing and retrieval of products at a higher density and lower cost than ever before.

These are the main reasons AWS is growing so quickly. IT departments are recognizing that when they adopt AWS, they get more done. They spend less time on low value- add activities like managing datacenters, networking, operating system patches, capacity planning, database scaling, and so on and so on. Just as important, they get access to powerful APIs and tools that dramatically simplify building scalable, secure, robust, high- performance systems. And those APIs and tools are continuously and seamlessly upgraded behind the scenes, without customer effort.

AWS usage grew by approximately 90 percent in the fourth quarter of 2014 versus the prior year.

2015 Letter:  Big Winners Pay for Many Experiments

Big Winners Pay for Many Experiments 2015 THIS YEAR, AMAZON became the fastest company ever to reach $ 100 billion in annual sales. Also this year, Amazon Web Services is reaching $ 10 billion in annual sales— doing so at a pace even faster than Amazon achieved that milestone. What’s going on here? Both were planted as tiny seeds and both have grown organically without significant acquisitions into meaningful and large businesses, quickly. Superficially, the two could hardly be more different. One serves consumers and the other serves enterprises. One is famous for brown boxes and the other for APIs. Is it only a coincidence that two such dissimilar offerings grew so quickly under one roof? Luck plays an outsized role in every endeavor, and I can assure you we’ve had a bountiful supply. But beyond that, there is a connection between these two businesses. Under the surface, the two are not so different after all. They share a distinctive organizational culture that cares deeply about and acts with conviction on a small number of principles. I’m talking about customer obsession rather than competitor obsession, eagerness to invent and pioneer, willingness to fail, the patience to think long- term, and the taking of professional pride in operational excellence. Through that lens, AWS and Amazon retail are very similar indeed.

One area where I think we are especially distinctive is failure. I believe we are the best place in the world to fail (we have plenty of practice!), and failure and invention are inseparable twins. To invent you have to experiment, and if you know in advance that it’s going to work, it’s not an experiment. Most large organizations embrace the idea of invention but are not willing to suffer the string of failed experiments necessary to get there. Outsized returns often come from betting against conventional wisdom, and conventional wisdom is usually right. Given a ten percent chance of a one hundred times payoff, you should take that bet every time. But you’re still going to be wrong nine times out of ten. We all know that if you swing for the fences, you’re going to strike out a lot, but you’re also going to hit some home runs. The difference between baseball and business, however, is that baseball has a truncated outcome distribution. When you swing, no matter how well you connect with the ball, the most runs you can get is four. In business, every once in a while, when you step up to the plate, you can score one thousand runs. This long- tailed distribution of returns is why it’s important to be bold. Big winners pay for so many experiments.

As I meet with teams across Amazon, I am continually amazed at the passion, intelligence, and creativity on display. Our teams accomplished a lot in the last year, and I’d like to share a few of the highlights of our efforts to nourish and globalize our three big offerings— Prime, Marketplace, and AWS. And while I’ll focus on those three, I assure you that we also remain hard at work on finding a fourth.

Prime has become an all- you- can- eat, physical- digital hybrid that members love. Membership grew 51 percent last year— including 47 percent growth in the United States and even faster internationally— and there are now tens of millions of members worldwide. There’s a good chance you’re already one of them, but if you’re not— please be responsible— join Prime.

We took two big swings and missed— with Auctions and zShops— before we launched Marketplace over fifteen years ago. We learned from our failures and stayed stubborn on the vision, and today close to 50 percent of units sold on Amazon are sold by third- party sellers. Marketplace is great for customers because it adds unique selection, and it’s great for sellers— there are over seventy thousand entrepreneurs with sales of more than $ 100,000 a year selling on Amazon, and they’ve created over six hundred thousand new jobs. With FBA, that flywheel spins faster because sellers’ inventory becomes Prime- eligible— Prime becomes more valuable for members, and sellers sell more.

Just over ten years ago, AWS started in the United States with its first major service, a simple storage service. Today, AWS offers more than seventy services for compute, storage, databases, analytics, mobile, Internet of Things, and enterprise applications. We also offer thirty- three availability zones across twelve geographic regions worldwide, with another five regions and eleven availability zones in Canada, China, India, the United States, and the United Kingdom to be available in the coming year. AWS started with developers and start- ups, and now is used by more than a million customers from organizations of every size across nearly every industry— companies like Pinterest, Airbnb, GE, Enel, Capital One, Intuit, Johnson & Johnson, Philips, Hess, Adobe, McDonald’s, and Time Inc. AWS is bigger than was at ten years old, growing at a faster rate, and— most noteworthy in my view— the pace of innovation continues to accelerate— we announced 722 significant new features and services in 2015, a 40 percent increase over 2014. Many characterized AWS as a bold— and unusual— bet when we started. “What does this have to do with selling books?” We could have stuck to the knitting. I’m glad we didn’t. Or did we? Maybe the knitting has as much to do with our approach as the arena. AWS is customer obsessed, inventive and experimental, long- term oriented, and cares deeply about operational excellence.

About seven years ago, Netflix announced that they were going to move all their applications to the cloud. Netflix chose AWS because it provided them with the greatest scale and the broadest set of services and features. Netflix recently completed their cloud migration, and stories like theirs are becoming increasingly common as companies like Infor, Intuit, and Time Inc. have made plans to move all of their applications to AWS.

Some decisions are consequential and irreversible or nearly irreversible— one- way doors— and these decisions must be made methodically, carefully, slowly, with great deliberation and consultation. If you walk through and don’t like what you see on the other side, you can’t get back to where you were before. We can call these Type 1 decisions. But most decisions aren’t like that— they are changeable, reversible— they’re two- way doors. If you’ve made a suboptimal Type 2 decision, you don’t have to live with the consequences for that long. You can reopen the door and go back through. Type 2 decisions can and should be made quickly by high judgment individuals or small groups. As organizations get larger, there seems to be a tendency to use the heavy- weight Type 1 decision- making process on most decisions, including many Type 2 decisions. The end result of this is slowness, unthoughtful risk aversion, failure to experiment sufficiently, and consequently diminished invention.* We’ll have to figure out how to fight that tendency. And one- size- fits- all thinking will turn out to be only one of the pitfalls. We’ll work hard to avoid it— and any other large organization maladies we can identify.

*The opposite situation is less interesting and there is undoubtedly some survivorship bias. Any companies that habitually use the light- weight Type 2 decision- making process to make Type 1 decisions go extinct before they get large.

2016 Letter:  Fending Off Day 2

“JEFF, WHAT DOES Day 2 look like?” That’s a question I just got at our most recent all- hands meeting. I’ve been reminding people that it’s Day 1 for a couple of decades. I work in an Amazon building named Day 1, and when I moved buildings, I took the name with me. I spend time thinking about this topic. “Day 2 is stasis. Followed by irrelevance. Followed by excruciating, painful decline. Followed by death. And that is why it is always Day 1.” To be sure, this kind of decline would happen in extreme slow motion. An established company might harvest Day 2 for decades, but the final result would still come. I’m interested in the question “How do you fend off Day 2?” What are the techniques and tactics? How do you keep the vitality of Day 1, even inside a large organization? Such a question can’t have a simple answer. There will be many elements, multiple paths, and many traps. I don’t know the whole answer, but I may know bits of it. Here’s a starter pack of essentials for Day 1 defense: customer obsession, a skeptical view of proxies, the eager adoption of external trends, and high- velocity decision making.

Resist Proxies As companies get larger and more complex, there’s a tendency to manage to proxies. This comes in many shapes and sizes, and it’s dangerous, subtle, and very Day 2.

It’s not that rare to hear a junior leader defend a bad outcome with something like, “Well, we followed the process.” A more experienced leader will use it as an opportunity to investigate and improve the process. The process is not the thing. It’s always worth asking, do we own the process or does the process own us? In a Day 2 company, you might find it’s the second.

These big trends are not that hard to spot (they get talked and written about a lot), but they can be strangely hard for large organizations to embrace. We’re in the middle of an obvious one right now: machine learning and artificial intelligence.

High-Velocity Decision Making

Day 2 companies make high-quality decisions, but they make high-quality decisions slowly. To keep the energy and dynamism of Day 1, you have to somehow make high-quality, high-velocity decisions. Easy for start-ups and very challenging for large organizations. The senior team at Amazon is determined to keep our decision-making velocity high. Speed matters in business—plus a high-velocity decision-making environment is more fun too. We don’t know all the answers, but here are some thoughts. First, never use a one-size-fits-all decision-making process. Many decisions are reversible, two-way doors. Those decisions can use a light-weight process. For those, so what if you’re wrong? I wrote about this in more detail in last year’s letter. Second, most decisions should probably be made with somewhere around 70 percent of the information you wish you had. If you wait for 90 percent, in most cases, you’re probably being slow. Plus, either way, you need to be good at quickly recognizing and correcting bad decisions. If you’re good at course correcting, being wrong may be less costly than you think, whereas being slow is going to be expensive for sure. Third, use the phrase “disagree and commit.” This phrase will save a lot of time. If you have conviction on a particular direction even though there’s no consensus, it’s helpful to say, “Look, I know we disagree on this, but will you gamble with me on it? Disagree and commit?” By the time you’re at this point, no one can know the answer for sure, and you’ll probably get a quick yes. This isn’t one way. If you’re the boss, you should do this too. I disagree and commit all the time. We recently greenlit a particular Amazon Studios original. I told the team my view: debatable whether it would be interesting enough, complicated to produce, the business terms aren’t that good, and we have lots of other opportunities. They had a completely different opinion and wanted to go ahead. I wrote back right away with “I disagree and commit and hope it becomes the most watched thing we’ve ever made.” Consider how much slower this decision cycle would have been if the team had actually had to convince me rather than simply get my commitment. Note what this example is not: it’s not me thinking to myself “Well, these guys are wrong and missing the point, but this isn’t worth me chasing.” It’s a genuine disagreement of opinion, a candid expression of my view, a chance for the team to weigh my view, and a quick, sincere commitment to go their way. And given that this team has already brought home eleven Emmys, six Golden Globes, and three Oscars, I’m just glad they let me in the room at all! Fourth, recognize true misalignment issues early and escalate them immediately. Sometimes teams have different objectives and fundamentally different views. They are not aligned. No amount of discussion, no number of meetings will resolve that deep misalignment. Without escalation, the default dispute resolution mechanism for this scenario is exhaustion. Whoever has more stamina carries the decision. I’ve seen many examples of sincere misalignment at Amazon over the years. When we decided to invite third-party sellers to compete directly against us on our own product detail pages—that was a big one. Many smart, well-intentioned Amazonians were simply not at all aligned with the direction. The big decision set up hundreds of smaller decisions, many of which needed to be escalated to the senior team. “You’ve worn me down” is an awful decision-making process. It’s slow and de-energizing. Go for quick escalation instead—it’s better. So, have you settled only for decision quality, or are you mindful of decision velocity too? Are the world’s trends tailwinds for you? Are you falling prey to proxies, or do they serve you? And most important of all, are you delighting customers? We can have the scope and capabilities of a large company and the spirit and heart of a small one. But we have to choose it. A huge thank-you to each and every customer for allowing us to serve you, to our shareowners for your support, and to Amazonians everywhere for your hard work, your ingenuity, and your passion. It remains Day 1.

*For something amusing, try asking, “Alexa, what is sixty factorial?”

2017 Letter:  Building a Culture of High Standards

Intrinsic or Teachable? First, there’s a foundational question: are high standards intrinsic or teachable? If you take me on your basketball team, you can teach me many things, but you can’t teach me to be taller. Do we first and foremost need to select for “high standards” people? If so, this letter would need to be mostly about hiring practices, but I don’t think so. I believe high standards are teachable. In fact, people are pretty good at learning high standards simply through exposure. High standards are contagious. Bring a new person onto a high standards team, and they’ll quickly adapt. The opposite is also true. If low standards prevail, those too will quickly spread. And though exposure works well to teach high standards, I believe you can accelerate that rate of learning by articulating a few core principles of high standards, which I hope to share in this letter.

Universal or Domain Specific? Another important question is whether high standards are universal or domain specific. In other words, if you have high standards in one area, do you automatically have high standards elsewhere? I believe high standards are domain specific, and that you have to learn high standards separately in every arena of interest. When I started Amazon, I had high standards on inventing, on customer care, and (thankfully) on hiring. But I didn’t have high standards on operational process: how to keep fixed problems fixed, how to eliminate defects at the root, how to inspect processes, and much more. I had to learn and develop high standards on all of that (my colleagues were my tutors). Understanding this point is important because it keeps you humble. You can consider yourself a person of high standards in general and still have debilitating blind spots. There can be whole arenas of endeavor where you may not even know that your standards are low or nonexistent, and certainly not world class. It’s critical to be open to that likelihood.

Perfect Handstands

A close friend recently decided to learn to do a perfect free-standing handstand. No leaning against a wall. Not for just a few seconds. Instagram good. She decided to start her journey by taking a handstand workshop at her yoga studio. She then practiced for a while but wasn’t getting the results she wanted. So, she hired a handstand coach. Yes, I know what you’re thinking, but evidently this is an actual thing that exists. In the very first lesson, the coach gave her some wonderful advice. “Most people,” he said, “think that if they work hard, they should be able to master a handstand in about two weeks. The reality is that it takes about six months of daily practice. If you think you should be able to do it in two weeks, you’re just going to end up quitting.” Unrealistic beliefs on scope—often hidden and undiscussed—kill high standards. To achieve high standards yourself or as part of a team, you need to form and proactively communicate realistic beliefs about how hard something is going to be—something this coach understood well.

Skill Beyond recognizing the standard and having realistic expectations on scope, how about skill? Surely to write a world-class memo, you have to be an extremely skilled writer. Is it another required element? In my view, not so much, at least not for the individual in the context of teams. The football coach doesn’t need to be able to throw, and a film director doesn’t need to be able to act. But they both do need to recognize high standards for those things and teach realistic expectations on scope. Even in the example of writing a six-page memo, that’s teamwork. Someone on the team needs to have the skill, but it doesn’t have to be you. (As a side note, by tradition at Amazon, authors’ names never appear on the memos—the memo is from the whole team.)

So, the four elements of high standards as we see it: they are teachable, they are domain specific, you must recognize them, and you must explicitly coach realistic scope. For us, these work at all levels of detail. Everything from writing memos to whole new, clean-sheet business initiatives. We hope they help you too.

AWS: It’s exciting to see Amazon Web Services, a $20 billion revenue run rate business, accelerate its already healthy growth. AWS has also accelerated its pace of innovation—especially in new areas such as machine learning and artificial intelligence, Internet of Things, and serverless computing.

Whole Foods: When we closed our acquisition of Whole Foods Market last year, we announced our commitment to making high-quality, natural and organic food available for everyone, then immediately lowered prices on a selection of best-selling grocery staples, including avocados, organic brown eggs, and responsibly farmed salmon. We followed this with a second round of price reductions in November, and our Prime member exclusive promotion broke Whole Foods’ all-time record for turkeys sold during the Thanksgiving season. In February, we introduced free two-hour delivery on orders over $35 for Prime members in select cities, followed by additional cities in March and April, and plan continued expansion across the United States throughout this year. We also expanded the benefits of the Amazon Prime Rewards Visa Card, enabling Prime members to get 5 percent back when shopping at Whole Foods Market.

India: is the fastest growing marketplace in India, and the most visited site on both desktop and mobile, according to comScore and SimilarWeb. The mobile shopping app was also the most downloaded shopping app in India in 2017, according to App Annie. Prime added more members in India in its first year than any previous geography in Amazon’s history. Prime selection in India now includes more than forty million local products from third-party sellers, and Prime Video is investing in Indian original video content in a big way, including two recent premiers and over a dozen new shows in production.

2018 Letter:  Intuition, Curiosity, and the Power of Wandering

The percentages represent the share of physical gross merchandise sales sold on Amazon by independent third-party sellers—mostly small and medium-sized businesses—as opposed to Amazon retail’s own first party sales. Third-party sales have grown from 3 percent of the total to 58 percent. To put it bluntly: Third-party sellers are kicking our first-party butt. Badly. And it’s a high bar too because our first-party business has grown dramatically over that period, from $1.6 billion in 1999 to $117 billion this past year. The compound annual growth rate for our first-party business in that time period is 25 percent. But in that same time, third-party sales have grown from $0.1 billion to $160 billion—a compound annual growth rate of 52 percent. To provide an external benchmark, eBay’s gross merchandise sales in that period have grown at a compound rate of 20 percent, from $2.8 billion to $95 billion. Why did independent sellers do so much better selling on Amazon than they did on eBay? And why were independent sellers able to grow so much faster than Amazon’s own highly organized first-party sales organization? There isn’t one answer, but we do know one extremely important part of the answer: We helped independent sellers compete against our first-party business by investing in and offering them the very best selling tools we could imagine and build. There are many such tools, including tools that help sellers manage inventory, process payments, track shipments, create reports, and sell across borders—and we’re inventing more every year. But of great importance are Fulfillment by Amazon and the Prime membership program. In combination, these two programs meaningfully improved the customer experience of buying from independent sellers. With the success of these two programs now so well established, it’s difficult for most people to fully appreciate today just how radical those two offerings were at the time we launched them. We invested in both of these programs at significant financial risk and after much internal debate. We had to continue investing significantly over time as we experimented with different ideas and iterations. We could not foresee with certainty what those programs would eventually look like, let alone whether they would succeed, but they were pushed forward with intuition and heart, and nourished with optimism.

AWS itself—as a whole—is an example. No one asked for AWS. No one. Turns out the world was in fact ready and hungry for an offering like AWS but didn’t know it. We had a hunch, followed our curiosity, took the necessary financial risks, and began building—reworking, experimenting, and iterating countless times as we proceeded.

SageMaker removes the heavy lifting, complexity, and guesswork from each step of the machine learning process—democratizing AI. Today, thousands of customers are building machine learning models on top of AWS with SageMaker. We continue to enhance the service, including by adding new reinforcement learning capabilities.

2019 Letter:  Scale for Good

To our shareowners: One thing we’ve learned from the COVID-19 crisis is how important Amazon has become to our customers. We want you to know we take this responsibility seriously, and we’re proud of the work our teams are doing to help customers through this difficult time.

Following CDC guidance, our Alexa health team built an experience that lets US customers check their risk level for COVID-19 at home. Customers can ask, “Alexa, what do I do if I think I have COVID-19?” or “Alexa, what do I do if I think I have coronavirus?” Alexa then asks a series of questions about the person’s symptoms and possible exposure. Based on those responses, Alexa then provides CDC-sourced guidance.

Echo users have the option to say, “Alexa, make a donation to Feeding America COVID-19 Response Fund.”


PART 2 Life and Work


Even when our kids were four, we would let them use sharp knives, and when they were seven or eight, we would let them use certain power tools. My wife, much to her credit, has this great saying: “I would much rather have a kid with nine fingers than a resourceless kid,” which is a great attitude about life.

Buying the Washington Post

If today you are designing and building a machine-learning system for a self-driving car, you need millions of driving miles of data for that car to learn how to drive. Humans learn incredibly efficiently. Humans do not need to drive millions of miles before we learn how to drive. We’re probably doing something called “transfer learning” in the parlance of the machine-learning field. Humans have already learned so many different skills, and we’re able to map those skills onto new skills in a very efficient way. The AlphaGo program that recently just beat the world Go champion played millions of games of Go. The human champion has played thousands of games of Go, not millions. And they’re almost at the same level, the human champion and the computer program. Plus, the human is doing something fundamentally different—we know because we are so power efficient. I don’t remember the exact figure, but AlphaGo is one example that uses thousands and thousands of watts of power. I think it’s over one thousand servers running in parallel. And Lee Se-dol, the human champion, uses about fifty watts. Somehow we’re doing these unbelievably complex calculations incredibly power efficiently—we’re data efficient and power efficient. So when it comes to AI, we in the machine-learning community have a lot to learn.


THE WAY YOU earn trust, the way you develop a reputation is by doing hard things well over and over and over. The reason, for example, that the US military, in all polls, has such high credibility and reputation is because, over and over again, decade after decade, it has done hard things well. It really is that simple. It’s also that complicated. It’s not easy to do hard things well, but that’s how you earn trust. And trust, of course, is an overloaded word. It means so many different things. It’s integrity, but it’s also competence. It’s doing what you said you were going to do—and delivering. And so we deliver billions of packages every year; we say we’re going to do that, and then we actually do it. And it’s also taking controversial stances. People like it when you say, “No, we’re not going to do it that way. I know you want us to do it that way, but we’re not going to.” And even if they disagree, they might say, “We kind of respect that, though. They know who they are.” It is also helpful to have clarity. If we are clear that we are going to do this and we aren’t going to do that, then people can opt in or opt out. They can say, “Well, if that’s Amazon’s position or Blue Origin’s position or AWS’s position on something, then I don’t want to be part of that.” And that’s okay. We live in a big democracy with lots of opinions, and I want to live in that world. I want to live in a place where people can disagree. What I want, too, is to live in a place where people can disagree and still work together. I don’t want to lose that. People are entitled to their opinions, but it is the job of a senior leadership team to say no. One of the things that’s happening inside technology companies is that there are groups of employees who, for example, think that technology companies should not work with the Department of Defense. In my view, if big tech is going to turn its back on the Department of Defense, this country is in trouble. That just can’t happen. And so the senior leadership team needs to say to people, “Look, I understand these are emotional issues. That’s okay, and we don’t have to agree on everything, but this is how we’re going to do it. We are going to support the Department of Defense. This country is important. It is still.”

Recruiting Talent

How do you hire great people and keep them from leaving? By giving them, first of all, a great mission—something that has real purpose, that has meaning. People want meaning in their lives. And this is a giant advantage that the US military has because its people have a real mission. They have meaning. And that is huge. And so that’s a big recruiting advantage.


There are two types of decisions. There are decisions that are irreversible and highly consequential; we call them one-way doors, or Type 2 decisions. They need to be made slowly and carefully. I often find myself at Amazon acting as the chief slowdown officer: “Whoa, I want to see that decision analyzed seventeen more ways because it’s highly consequential and irreversible.” The problem is that most decisions aren’t like that. Most decisions are two-way doors. You can make the decision, and you step through. It turns out to have been the wrong decision; you can back up. And what happens in large organizations—not in start-up companies but in large organizations—is that all decisions end up using the heavyweight process that is really intended only for irreversible, highly consequential decisions. And that’s a disaster. When there’s a decision that needs to be made, you need to ask, “Is it a one-way door or a two-way door?” If it’s a two-way door, make the decision with a small team or even one high-judgment individual. Make the decision. If it’s wrong, it’s wrong. You’ll change it. But if it’s a one-way door, analyze it five different ways. Be careful, because that is where slow is smooth and smooth is fast. You do not want to make one-way-door decisions quickly. You want to get consensus or at least drive a lot of thought and debate. What can also really speed up decision making, in addition to asking whether a decision involves a one-way or two-way door, is teaching the principle of disagreeing and committing. So you’ve got passionate missionaries, which you need to have. Everybody cares, and if you’re not careful, the decision process can basically become a war of attrition. Whoever has the most stamina will win; eventually the other party, with the opposite opinion, will just capitulate: “Okay, I’m exhausted. We’ll do it your way.” That is the worst decision-making process in the world. It leaves everybody demoralized, and you also get a kind of random result. A much better approach is for the more senior person to escalate to even more senior leaders. Controversial decisions need to be escalated quickly. You can’t let two junior people argue for a year and exhaust themselves. You have to teach those junior people. When your team is really at loggerheads, escalate—and escalate fast. And then you, as the more senior person, hear the various points of view, and you say, “Look, none of us knows what the right decision is here, but I want you to gamble with me. I want you to disagree and commit. We’re going to do it this way. But I really want you to disagree and commit.” And here’s the important part: Sometimes this disagreement happens between the more senior person and a subordinate. The subordinate really wants to do it one way, and the senior person really thinks it should be done a different way. And it’s often the case that the more senior person should disagree and commit. I disagree and commit all the time. I’ll debate something for an hour or a day or a week. And I’ll say, “You know what? I really disagree with this, but you have more ground truth than I do. We’re going to do it your way. And I promise I will never tell you I told you so.” It’s actually very calming really because it’s acknowledging the reality that the senior person has a lot of judgment. That judgment is super valuable, and that’s why sometimes you should overrule subordinates even when they have better ground truth. But that’s your judgment. And sometimes you’re, like, “I know this person, or I’ve worked with them for years. They have great judgment. They really disagree with me, and they have way better ground truth. I’m going to disagree and commit.”


ZERO-SUM GAMES ARE unbelievably rare. Sporting events are zero-sum games. Two teams enter an arena. One’s going to win; one’s going to lose. Elections are zero-sum games. One candidate is going to win; one candidate is going to lose. In business, however, several competitors can do well.

Government Scrutiny and Big Companies

ALL BIG INSTITUTIONS of any kind will and should be examined, scrutinized, and inspected. Governments should be inspected. Government institutions, big educational institutions, big nonprofits, big companies—they’re going to get scrutiny. It’s not personal. It’s what we as a society want to have happen, and I remind people internally not to take scrutiny of Amazon personally. That will lead to a lot of wasted energy. This scrutiny is just normal. It’s actually healthy and good. We want to live in a society where people are worried about big institutions. I think we are so inventive that—whatever regulations are promulgated or however they work—they won’t stop us from serving customers. Under all kinds of regulatory frameworks that I can imagine, customers are still going to want low prices. They’re still going to want fast delivery. They’re still going to want big selection. These are so fundamental and what we do. I would also say that it’s really important that politicians and others understand the value big companies bring in and not demonize or vilify business in general or especially big companies, and for the simple reason that there are certain things that only big companies can do. I’ve seen this throughout Amazon’s journey. I know what Amazon could do when we were ten people, and I know what we could do when we were one thousand people, and I know what we could do when we were ten thousand, and I know what we can do today when we’re over half a million.

I intend to give away my fortune. I don’t know how much of it I’m going to give away—I’m also going to invest a lot of it in Blue Origin. I start with a mission, and if you have a mission, there are three ways to fulfill it: you can do it with government, you can do it through a nonprofit, and you can do it through a for-profit. If you can figure out how to do it with a for-profit structure, that has a lot of advantages for many reasons. One, it’s self-sustaining. Take the iPhone. The last thing we need is a nonprofit company making phones. It turns out there’s a healthy competitive ecosystem that likes to build these things. There’s no market failure here. If, like the Gates Foundation, you look at room-temperature vaccines, there’s no market for room-temperature vaccines. Anybody who can afford a vaccine can also afford a refrigerator, and so you need to start solving problems that have no market solution. And then you get to other things, like the court system and the military and so on. You can’t even figure out a nonprofit model.

The Purpose of Going into Space

The historic compounding rate of global energy usage is 3 percent a year. It doesn’t sound like very much, but over many years the compounding becomes extreme. Three percent compounded annually is the equivalent of doubling human energy use every twenty-five years. If you take global energy use today, you can power everything by covering Nevada in solar cells. Now, that seems challenging, but it also seems possible, and it is mostly desert anyway. But in just a couple hundred years, at that 3 percent historic compounding rate, we’ll need to cover the entire surface of the Earth in solar cells. Now, that’s not going to happen. That’s a very impractical solution, and we can be sure it won’t work. So what can we do? Well, one thing we can do is focus on efficiency, and that is a good idea. The problem, though, is that it’s already assumed. As we’ve been growing our energy usage 3 percent a year for centuries, we have always focused on efficiency. Let me give you some examples. Two hundred years ago you had to work eighty-four hours to afford one hour of artificial light. Today you have to work 1.5 seconds to afford an hour of artificial light. We’ve moved from candles to oil lamps to incandescent bulbs to LEDs and gotten tremendous efficiency gains. Another example is air transportation. In the half century of commercial aviation, we’ve seen a fourfold efficiency gain. Half a century ago it took 109 gallons of fuel to fly one person across the country. Today, in a modern 787, it takes only 24. It’s an incredible improvement. It’s very dramatic.

We could have a trillion humans in the solar system, which means we’d have a thousand Mozarts and a thousand Einsteins. This would be an incredible civilization.

A space colony would be very different from the International Space Station. Inside it would have high-speed transport, agricultural areas, cities. The stations don’t all have to have the same gravity. You could have a recreational colony that kept zero G so you could go flying with your own wings. Some would be national parks. These would be really pleasant places to live. Some of these O’Neill colonies might choose to replicate Earth cities. They might pick historical cities and mimic them in some way. There would be whole new kinds of architecture. These are ideal climates. This is Maui on its best day all year long—no rain, no storms, no earthquakes.

Who is going to do this work? Not me. This is a big vision that will take a long time to realize. Kids in school today and their children will do it. They will build whole industries with thousands of future companies encompassing whole ecosystems. There will be entrepreneurial activity, unleashing creative people to come up with new ideas about how to use space. But those entrepreneurial companies cannot exist today. It’s impossible because the price of admission to do interesting things in space right now is just too high. Because there’s no infrastructure. I started Amazon in 1994. All of the heavy-lifting infrastructure needed for Amazon to exist was already in place. We did not have to build a transportation system to deliver packages. It existed already. If we’d had to build that, we would have needed billions of dollars in capital. But it was there. It was called the US Postal Service, Deutsche Post, the Royal Mail, UPS, and FedEx. We got to stand on top of that infrastructure. The same was true of payment systems. Did we have to invent a payment system and roll that out? That would have taken billions of dollars and many decades. But no, it already existed. It was called the credit card. Did we have to invent computers? No, they were already in most homes, mostly to play games, but they were there. That infrastructure already existed. Did we have to build a telecom network, requiring billions more dollars? No, we didn’t. It was in place, mostly to make long-distance phone calls and built by global telecom carriers like AT&T and their equivalents around the world. Infrastructure lets entrepreneurs do amazing things.

First, we must have a radical reduction in launch cost. Launches are simply too expensive today. And second, we have to use in-space resources. Earth has a very powerful gravitational field, and lifting all of our resources off of Earth just isn’t going to work. We need to be able to use resources that are already in space.

The key point here is operability. The space shuttle was only reusable in the most daunting of senses. In reality, NASA would bring the space shuttle back, inspect it in very elaborate ways, and then refly it.

When we built New Shepard, a suborbital vehicle designed for space tourism, we made some very curious technology decisions. It is, first of all, powered by liquid hydrogen, the highest-performing rocket fuel but also the most difficult to work with. It’s not needed for a suborbital mission, but we chose it because we knew we were going to need it for the next stage. We wanted to get practice with that hardest-to-use but highest-performing propellant. We made the same decision with vertical landing for New Shepard, even though other landing mechanisms would have worked at this scale. The great thing about vertical landing is it scales up really well. It’s very counterintuitive, but the bigger the vehicle, the easier vertical landing gets. Vertical landing is like balancing a broom on your fingertip. You can balance a broom, but try balancing a pencil. The moment of inertia of the pencil is too small. Right from the start, we wanted to build a human-rated system so we would be forced to think clearly about safety and reliability, escape systems—all the things we knew we would need to have practice with in order to build our next generation of vehicle. So it’s all about practice.

But there’s an even more important question I almost never get asked: “What’s not going to change over the next ten years?” And that question is so important because you can build your plans around those things. So I know for a fact that Amazon customers are going to want low prices ten years from now. That’s not going to change. Customers are going to want fast delivery. They’re going to want big selection. So all the energy we’ve put into those things will continue to pay dividends. It is impossible to imagine a customer coming to me ten years from now and saying, “Jeff, I love Amazon. I just wish you delivered a little more slowly” or “I just wish the prices were a little higher.” That’s not going to happen. When you can figure out the things that are going to remain true under almost all circumstances, then you can put energy into them.

Vice President Mike Pence said that it’s the stated policy of the Donald J. Trump administration and the United States to return American astronauts to the moon within the next five years. I love this. It’s the right thing to do, and for those of you doing the arithmetic at home, that’s 2024. And we can help meet that timeline. It’s time to go back to the moon, this time to stay.

It’s Still Day One for America

THANK YOU, CHAIRMAN CICILLINE, Ranking Member Sensenbrenner, and members of the Subcommittee. I’m Jeff Bezos. I founded Amazon twenty-six years ago with the long-term mission of making it Earth’s most customer-centric company.

You earn trust slowly, over time, by doing hard things well—delivering on time; offering everyday low prices; making promises and keeping them; making principled decisions, even when they’re unpopular;

The global retail market we compete in is strikingly large and extraordinarily competitive. Amazon accounts for less than 1 percent of the $25 trillion global retail market and less than 4 percent of retail in the US. Unlike industries that are winner-take-all, there’s room in retail for many winners. For example, more than eighty retailers in the US alone earn over $1 billion in annual revenue. Like any retailer, we know that the success of our store depends entirely on customers’ satisfaction with their experience in our store. Every day, Amazon competes against large, established players like Target, Costco, Kroger, and, of course, Walmart—a company more than twice Amazon’s size. And while we have always focused on producing a great customer experience for retail sales done primarily online, sales initiated online are now an even larger growth area for other stores. Walmart’s online sales grew 74 percent in the first quarter. And customers are increasingly flocking to services invented by other stores that Amazon still can’t match at the scale of other large companies, like curbside pickup and in-store returns. The COVID-19 pandemic has put a spotlight on these trends, which have been growing for years. In recent months, curbside pickup of online orders has increased over 200 percent in part due to COVID-19 concerns. We also face new competition from the likes of Shopify and Instacart—companies that enable traditionally physical stores to put up a full online store almost instantaneously and to deliver products directly to customers in new and innovative ways—and a growing list of omnichannel business models. Like almost every other segment of our economy, technology is used everywhere in retail and has only made retail more competitive, whether online, in physical stores, or in the various combinations of the two that make up most stores today. And we and all other stores are acutely aware that, regardless of how the best features of “online” and “physical” stores are combined, we are all competing for and serving the same customers. The range of retail competitors and related services is constantly changing, and the only real constant in retail is customers’ desire for lower prices, better selection, and convenience.

Third-party sales now account for approximately 60 percent of physical product sales on Amazon, and those sales are growing faster than Amazon’s own retail sales. We guessed that it wasn’t a zero-sum game. And we were right—the whole pie did grow, third-party sellers did very well and are growing fast, and that has been great for customers and for Amazon.

And it is striking to remember how recent all of this is. We did not start out as the largest marketplace—eBay was many times our size. It was only by focusing on supporting sellers and giving them the best tools we could invent that we were able to succeed and eventually surpass eBay.

Let me close by saying that I believe Amazon should be scrutinized. We should scrutinize all large institutions, whether they’re companies, government agencies, or non-profits. Our responsibility is to make sure we pass such scrutiny with flying colors. It’s not a coincidence that Amazon was born in this country. More than any other place on Earth, new companies can start, grow, and thrive here in the US. Our country embraces resourcefulness and self-reliance, and it embraces builders who start from scratch.

Immigrants like my dad see what a treasure this country is—they have perspective and can often see it even more clearly than those of us who were lucky enough to be born here. It’s still Day One for this country, and even in the face of today’s humbling challenges, I have never been more optimistic about our future. I appreciate the opportunity to appear before you today and am happy to take your questions.

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