David Rosenthal: evaluation

Transcript context

…Sure. This part of the show is where we analyze specifically looking at the IPO or acquisition that we’re talking about what tech themes can we extrapolate either from a true technology perspective or sort of from an investment and technology perspective. There’s a few here. I think the biggest one that we’ve already touched on is the flywheel. When I think about Amazon, it’s just like the canonical colloquial example of how to build the world’s best flywheel business where so many things feed into so many other things and fuel the business. But that wasn’t really part of the IPO, as Tom told us earlier, that that didn’t really get formalized until 2001. So, as we think about lessons learned from the IPO, it’s a lot about timing company creation correctly around new waves. I mean, the internet was… you have to believe that something is going to be a wave and be a little more contrarian than other people. I think that’s evidenced by the investors that passed in the earliest stages thinking that it was too risky. But the big thing for me is yeah, you have to believe wholeheartedly that you’re on the precipice of a wave and it’s not possible to create a top 10 world in the business without being on – Without riding a massive wave. I think for me the flipside of that coin that I think really shines through in reading about and reading this history of Amazon at that time is the long-term thinking that Jeff and the company and the board had. Even in those early days, if you believe you've identified a wave like that, if it truly will become as big as you think it will, it’s going to take a long time, decades. Jeff is, you know – and I don’t know if this was when he introduced the phrase but in that shareholder letter in 1997, he said, “It’s day one for the internet and for Amazon.” That perspective is really rare. Lots of people say they have it but to actually behave that way and make investments accordingly is quite impressive. It also applies even today when you talk about new projects or initiatives at Amazon or other companies. I know Jeff likes to say it often takes 10 years to prove it. So after you go public, it’s equally important to, one, continue to innovate. Don’t stop innovating just because you feel like you’re at the top of the mountain. You’re not going to survive if you don’t keep innovating and the others maintain that long-term thinking. An IPO gives you the opportunity to do that because you then have the money to do it, you have to somewhat ignore what the market is doing though. That’s another important part after you go public, I think.…

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