David Rosenthal: evaluation

Transcript context

…I think Amazon has been rightly known for not making any money and being willing to invest and to the extent that the financial markets allow you to. So, I think if it had been in the hands of let’s say an acquiring party, you would not have seen this kind of growth and innovation and expansion. So, Jeff has had a unique ability to think long-term and make it clear that he’s thinking long term so that the investors understand that this is a long-term investment. He likes to say that “you get the investors you ask for.” Meaning that if you focus on two cents more profit per quarter, then you get investors who’d focus on that. It takes you a while I think to get the right kind of investors, but if you say long-term cash flow is how we measure the business, pretty soon you get investors who are willing to invest on that basis. I mean, it’s possible if you don’t grow, they aren’t going to like your message itself but you end up with fewer short-term investors and more long-term. I think that’s helped Amazon a lot. I’m super curious on this. We were chatting a little bit before the show and this is the perfect place in the story, too. So at the end of 1997, Amazon wraps up the year with 148 million in revenue, up from 16 the year before. Incredible growth. But I think, to my mind, the most incredible thing that happens at the end of 1997 is Jeff publishes his first annual letter to shareholders. So the company has been public for 7 or 8 months at this point and Jeff writes this amazing letter that is included in the annual report and he’s included every year since with his then current year letter as well. The document is a masterpiece of long-term thinking. How did that document come together? Did Jeff just walk into a board meeting one day and said, “Hey, I think I’m going to write a letter to all of our shareholders”? Well, I didn’t help him write it unfortunately. I wish I was a coauthor. But I think one of the key people in those early days was this Joy Covey who had been recruited as the CFO. Thinking back a little bit on that, when we started talking about going public, John Doerr said, “Well I’m going to vote against going public unless you bring in some more senior management. You can’t go public with you and a couple of technical people.”…

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