Amazon’s Jeff Bezos shareholder letter has some gems . . . and some clunkers

Jeff Bezos’ latest Amazon shareholder letter is striking in its clarity, directness, honesty, and meatiness. That’s unusual in communications from a CEO. Here’s a look at what’s great — and not so great — in this 1800-word letter.

It’s well organized, with an effective lead

In a read-on-screen world, you should start everything with a summary, but that summary doesn’t have to be simple, declarative, and boring. Look at how Bezos starts this year’s shareholder letter:

“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.”

The level of relentless innovation at Amazon is unmatched. This is a paranoid company that is always worried about falling behind. That’s why it’s always Day 1 for Amazon — and why Bezos is so afraid of getting to Day 2. Once leading companies like GM, Microsoft, and IBM entered Day 2 — with a focus on execution over innovation, and defense rather than offense — faded, and took years to bounce back. Others, like AOL and Sears, never really came back. So I get what Bezos is saying. So do all the employees at Amazon (the ones that don’t will soon be fired).

To be effective, a communication like must lay out a big idea, then back it up. Bezos backs it up with the clearly defined subheads in his letter:

True Customer Obsession

Resist Proxies

Embrace External Trends

High-Velocity Decision Making

Clear thesis statements

Each of these sections includes statements in plain language that anyone can understand. Here are some notable examples:

There are many advantages to a customer-centric approach, but here’s the big one: customers are always beautifully, wonderfully dissatisfied, even when they report being happy and business is great. Even when they don’t yet know it, customers want something better, and your desire to delight customers will drive you to invent on their behalf. No customer ever asked Amazon to create the Prime membership program, but it sure turns out they wanted it, and I could give you many such examples.

I really like “beautifully, wonderfully dissatisfied.” The idea that unhappiness is great for business is fundamental and counterintuitive.

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.

A common example is process as proxy. Good process serves you so you can serve customers. But if you’re not watchful, the process can become the thing. This can happen very easily in large organizations. The process becomes the proxy for the result you want. You stop looking at outcomes and just make sure you’re doing the process right. Gulp. 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.

This, and Bezos’ statement about the customer, define what bad companies do badly. They’re what United Airlines is getting wrong, for example.

[M]uch of what we do with machine learning happens beneath the surface. Machine learning drives our algorithms for demand forecasting, product search ranking, product and deals recommendations, merchandising placements, fraud detection, translations, and much more. Though less visible, much of the impact of machine learning will be of this type – quietly but meaningfully improving core operations.

It would be easy to get down in the technical weeds when talking about machine learning, but Bezos resists. He explains something complex simply. (For the most part — see later in this post for where he fails.)

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.

Why the weasel words here don’t seem too weaselly

These statements are folksy, informal, and intuitively attractive. They’re also filled with the vague intensifiers I call weasel words: “many advantages,” “many such examples,” “a tendency to manage,” “many shapes and sizes,” “much of the impact,” “somehow make . . . decisions.” So why aren’t I tearing down the language in this letter?

There are two reasons.

First of all, Bezos is not using these words the way that weasels generally do — as vague entreaties to make something sound more exciting, or as qualifiers to provide an excuse. And the density of weasel words is low enough that they don’t call attention to themselves.

And second, while these are generalizations, they are not meaningless platitudes. For example, here’s what Bezos says about being customer-obsessed:

There are many ways to center a business. You can be competitor focused, you can be product focused, you can be technology focused, you can be business model focused, and there are more. But in my view, obsessive customer focus is by far the most protective of Day 1 vitality.

That’s why “be customer obsessed” is not a meaningless platitude: it’s a choice, and other companies are making a different choice from Amazon’s.

Similarly, when Bezos suggests that companies should “[e]mbrace [external trends] and you have a tailwind,” that sounds like a platitude. But he goes on to explain how hard it is for large organizations to embrace trends that challenge them. That’s why embracing trends is more than a meaningless platitude — not everyone can do it.

There are juicy nuggets about decision-making here

You could do a whole business-school course on the wisdom in this letter. For example (these sentences are excerpts from the final section):

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?

Second, most decisions should probably be made with somewhere around 70% of the information you wish you had. If you wait for 90%, in most cases, you’re probably being slow.

Third, use the phrase “disagree and commit.” . . . “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?”

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.

While Bezos has good writing instincts, this letter has its share of questionable phrases

I’d give it four-and-a-half stars, not five, because Bezos does commit a few writing errors. I said the weasel words weren’t out of hand, but there are some places that don’t ring true, including the always-problematic words “deeply.” (Weasel words highlighted.)

Good inventors and designers deeply understand their customer. They spend tremendous energy developing that intuition. They study and understand many anecdotes rather than only the averages you’ll find on surveys. They live with the design.

This is trying to say something important, but it’s trying too hard with not enough specifics.

And Bezos almost manages to make machine learning and A.I. understandable, but eventually descends into the jargony weeds:

Using our pre-packaged versions of popular deep learning frameworks running on P2 compute instances (optimized for this workload), customers are already developing powerful systems ranging everywhere from early disease detection to increasing crop yields. And we’ve also made Amazon’s higher level services available in a convenient form. Amazon Lex (what’s inside Alexa), Amazon Polly, and Amazon Rekognition remove the heavy lifting from natural language understanding, speech generation, and image analysis. They can be accessed with simple API calls – no machine learning expertise required. Watch this space. Much more to come.

So we get jargon (“compute instances”), weasel words (“powerful systems”), cliches (“heavy lifting,”) and passive voice (“can be accessed”). It’s the one clunky, awful paragraph in the letter.

What you can learn from the Bezos letter

Study this letter and learn from it. Here are a few lessons I took away:

  • You don’t need to heavily promote your company in a shareholder letter; you can share wisdom instead. (Ask Warren Buffett.)
  • Write clearly and directly with “we” and “you.”
  • Organize into short, clear sections with subheads, but have a single main idea.
  • Be clear, direct, and human when talking about business.
  • If you use a common concept like “customer-centric,” make it meaningful with specific examples of how it applies in your business.
  • Managing a large company is a constant battle. If you narrate that battle with stories, people will believe in you, even if some of the stories don’t have happy endings.





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  1. I like this post. One thing: I’m trying to figure out whether you mean “…but it’s trying to, hard, without enough specifics” or “…but it’s trying too hard without enough specifics.” Either way, something is awry as it stands.