Jeff would imagine himself at age 80, "What have I regretted in life?"
And work backwards to guide your present decisions.
Most of our regrets are from the things we didn’t try, the risks we didn’t take, or the paths we didn’t travel.
Jeff Bezos left a lucrative career at 30 to start an online book store.
His letters since founding Amazon are full of insights into investing, decision making and life.
I have consumed all of Jeff's letters and interviews since 1997.
This is what I have learned:
Jeff would imagine himself at age 80, "What have I regretted in life?"
And work backwards to guide your present decisions.
Most of our regrets are from the things we didn’t try, the risks we didn’t take, or the paths we didn’t travel.
Competition is sparse when you are competing in decades.
Many companies make decisions based on the next three to five years.
Bezos is investing for the next two decades.
A company's value today is the present value of future cash flows.
85% of a company's value are from year 3 and beyond.
Invest today to ensure that a company achieves durable growth in the future.
Focus on solving problems and the share price will take care of itself.
Share prices in the short-run has no indication as to how well the company is doing.
At the heart of everything, it's about creating value.
Value creation is not a zero-sum game.
It is why people work for Amazon, why sellers sell on Amazon and why customers buy on Amazon.
The universe will try to pull you back if you try to be different.
But do it anyway.
There's a price to pay to be distinct.
But to be distinct is to survive.
Often times bets with great risk-reward ratios look crazy.
And conventional wisdom will tell you you are crazy & wrong.
This is where your work & conviction comes in.
Jeff Bezos' hiring questions:
1. Do we admire this person?
2. Along what dimension is this person a possible superstar?
3. Will this person raise the bar for their team?
Fight the entropy of mediocrity, keep raising your talent bar.
To innovate is to try.
To try is to risk failure.
Focus not on the outcome, but on the learnings.
And keep getting better.
Most decisions are reversible and should be made quickly.
As an organization grows, there's a tendency to indulge in bureaucracy for all decisions.
Being over conservative & moving too slowly may be the riskiest of all.
I hope you enjoyed it.
If you like this, follow me here @steadycompound
I write about investment concepts, business breakdowns and growth philosophies.
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When Bezos first started his online bookstore, he registered "https://t.co/fuGyMJSAOx".
This encapsulates his ambition and the attitude he brings to building Amazon—relentless.
More from Thomas Chua
Buffett's letters taught me more about investing than any business school ever could.
Even after investing for 14 years, I uncover new insights every time I reread his letters.
Recently, I reread his letters from 1977 to 2020 for a third time.
Here are my key insights:
1. Moat is NEVER stagnant
A company's competitive position either grows stronger or weaker each day.
Widening the moat must always take precedence over short-term targets.
2. Commodity businesses
A business without moat will have its returns competed away.
Regardless of improvement, your competitors will quickly copy your advantage away.
Where returns on capital is dismal, reinvestment will only destroy value.
3. The flywheel effect
Buffett was preaching about the flywheel effect before it became cool.
Back then, newspapers were similar to today's platform businesses like Amazon, Meta, and App Store.
More readers beget more advertisers beget more readers.
4. Operating leverage
Companies with high fixed costs and low variable costs will see earnings rise faster than revenue.
However, it cuts both ways.
It becomes a disaster when revenue is declining.
Check out my article on how operating leverage works: https://t.co/Nv747oBAK0
Even after investing for 14 years, I uncover new insights every time I reread his letters.
Recently, I reread his letters from 1977 to 2020 for a third time.
Here are my key insights:
1. Moat is NEVER stagnant
A company's competitive position either grows stronger or weaker each day.
Widening the moat must always take precedence over short-term targets.
2. Commodity businesses
A business without moat will have its returns competed away.
Regardless of improvement, your competitors will quickly copy your advantage away.
Where returns on capital is dismal, reinvestment will only destroy value.
3. The flywheel effect
Buffett was preaching about the flywheel effect before it became cool.
Back then, newspapers were similar to today's platform businesses like Amazon, Meta, and App Store.
More readers beget more advertisers beget more readers.
4. Operating leverage
Companies with high fixed costs and low variable costs will see earnings rise faster than revenue.
However, it cuts both ways.
It becomes a disaster when revenue is declining.
Check out my article on how operating leverage works: https://t.co/Nv747oBAK0
