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Annual Letters


I remember visiting Granny's house (my Mother's Mother) for Easter as a kid. By middle school, one of the things I liked to do was look at the several annual reports she received - Exxon and Southern Company. I learned what the Income statement, balance sheet and cash flow statement were. By high school I subscribed to Barrons, and my first merit badge in Scouts was Coin Collecting.  Yes, I was a little bit of an Alex P. Keaton. 

As time went on, I found I got the most out of the annual letter the CEO's would write. When I worked for Digital Equipment, I loved Ken Olsen's annual letters. I also thought IBM had good letters with a lot of foresight on trends (although they have not really capitalized on them the past couple of decades).

Over the past 20 years, I have been drawn to two annual letters - Warren Buffett's from Berkshire Hathaway (you have to love the HTML generated by Word), and Jeff Bezos from Amazon (also available in book form - free on Kindle).  I have read all of their annual letters multiple times and find them inspirational and reinforcing of a lot of things I try to live up to at GiveSignup | RunSignup and the other companies I am involved with. It is why I write an annual "Year in Review" (links on the front page of my website).

Here are my top take-aways.

Long Term

Bezos refers to "Day 1" in every annual letter.  He is always just beginning because the future holds boundless potential. From that first annual letter:
"Because of our emphasis on the long term, we may make decisions and weigh tradeoffs differently than some companies. We will continue to focus relentlessly on our customers. We will continue to make investment decisions in light of long-term market leadership considerations rather than short-term profitability considerations or short-term Wall Street reactions."

Buffett is 90, and he brings a hindsight that balances Bezos ride on the Internet Express Train that Amazon has ridden. One of my favorite Buffet quotes is:
"Someone's sitting in the shade today because someone planted a tree a long time ago".

Tap Dancing to Work

This is the title of Buffett's book, but serves as the perfect description for the style that both Buffett and Bezos bring to their jobs. Watching them and reading their annual reports, you can feel the positive energy that they get from their businesses and that their businesses receive from them.

"Find your passion. I was very, very lucky to find it when I was seven or eight years old... You're lucky in life when you find it. And you can't guarantee you'll find it in your first job out. But I always tell college students that come out (to Omaha), 'Take the job you would take if you were independently wealthy. You're going to do well at it.'" - Warren Buffett.

“I think one thing I find very motivating — and I think this is probably a very common form of motivation or cause of motivation — is… I love people counting on me, and so, you know, today it’s so easy to be motivated, because we have millions of customers counting on us at We’ve got thousands of investors counting on us. And we’re a team of thousands of employees all counting on each other. That’s fun.” - Jeff Bezos


If you don’t understand the details of your business you are going to fail.” - Jeff Bezos

Each year Warren Buffett takes the stage at their annual shareholders meeting and answers questions for about 3-4 hours. He does not know the questions beforehand, and it is amazing to watch his command of such a large and diverse business.  His memory of numbers, and ability to crystalize a set of facts into a well thought out conclusion.

At the end of our Symposiums I always take questions in an open floor - any question is fair game. Here is an example from our 2021 Winter Virtual Symposium.

Trust and Mistakes

Both leaders are well known for encouraging mistakes - and trying to recognize them quickly and learn from them and move on. In this year's annual letter Buffett admits to an $11 Billion mistake in buying PCC for too much money. He faced that problem this year, and moved on.

Bezos categorizes decisions into one way doors and two way doors.  As long as you can come back thru the door after seeing the decision was a mistake then it is more efficient to move forward than over analyze.

Bezos also says this: "If you’re going to invent, it means you’re going to experiment, and if you’re going to experiment, you’re going to fail, and if you’re going to fail, you have to think long term."

Customer Obsession

Your brand is what other people say about you when you’re not in the room.” - Jeff Bezos

Both leaders write repeatedly about their business's focus on the customer. Bringing true value to the customer, making the customer "delighted", the value of word of mouth.

As Buffet succinctly states "the customer is the boss."

Buffet has popularized the idea of businesses build defensible moats in their business model.  Bezos has talked quite a bit about the fact that AWS had a 7 year head start in the cloud computing business that allowed it to develop a moat of infrastructure investment, technological advancement and customer adoption.

They both do not rest on their laurels, and see continued investment as the key to keeping that moat high.  Buffett talks in this year's letter about how BNSF Railroad has invested $20 Billion over depreciation in capital improvements since their acquisition in 2010. This ensures the moat of that business remains high against competitors.

On the endurance side of our business, we continue to invest far more than our competitors in our technology. On the nonprofit side of the business, we feel good about the opportunity partly because the vendors in that market have very low moats to their businesses other than contracts that lock their customers in - not really something that makes sense if you believe in the long term and customer obsession philosophies covered above.

Favorite Bezos Quotes

Here is a collection of quotes I like from Bezos Annual Letters:

“We will continue to make investment decisions in light of long-term market leadership considerations rather than short-term profitability considerations or short-term Wall Street reactions.”

We hold as axiomatic that customers are perceptive and smart, and that brand image follows reality and not the other way around."

"We must be committed to constant improvement, experimentation, and innovation in every initiative."

"NOVEMBER 19, 2007, was a special day. After three years of work, we introduced Amazon Kindle to our customers. Kindle is purpose-built."

"I guarantee you there is more innovation ahead of us than behind us"

From 2008 "IN THIS TURBULENT global economy, our fundamental approach remains the same. Stay heads down, focused on the long term and obsessed over customers."

"We may make less per item, but by consistently earning trust we will sell many more items."

"The most radical and transformative of inventions are often those that empower others to unleash their creativity—to pursue their dreams. That’s a big part of what’s going on with Amazon Web Services, Fulfillment by Amazon, and Kindle Direct Publishing. With AWS, FBA, and KDP, we are creating powerful self-service platforms that allow thousands of people to boldly experiment and accomplish things that would otherwise be impossible or impractical. These innovative, large-scale platforms are not zero-sum—they create win-win situations and create significant value for developers, entrepreneurs, customers, authors, and readers."

"A word about corporate cultures: for better or for worse, they are enduring, stable, hard to change. They can be a source of advantage or disadvantage. You can write down your corporate culture, but when you do so, you’re discovering it, uncovering it—not creating it. It is created slowly over time by the people and by events—by the stories of past success and failure that become a deep part of the company lore. If it’s a distinctive culture, it will fit certain people like a custom-made glove. The reason cultures are so stable in time is because people self-select. Someone energized by competitive zeal may select and be happy in one culture, while someone who loves to pioneer and invent may choose another. The world, thankfully, is full of many high-performing, highly distinctive corporate cultures."

“Day 2 is stasis. Followed by irrelevance. Followed by excruciating, painful decline. Followed by death. And that is why it is always Day 1. How do you fend off Day 2? Day 1 defense: customer obsession, a skeptical view of proxies, the eager adoption of external trends, and high-velocity decision making.”

"Market research and customer surveys can become proxies for customers - something that’s especially dangerous when you’re inventing and designing products. Good inventors and designers deeply understand their customer."

"People have a voracious appetite for a better way, and yesterday’s “wow” quickly becomes today’s “ordinary.” I see that cycle of improvement happening at a faster rate than ever before."

"Find the real root cause or causes—and then do real root fixes. So then, when you fix it, you’re not just fixing it for that one customer. You’re fixing it for every customer, and that process is a gigantic part of what we do."

"The way you earn trust, the way you develop a reputation is by doing hard things well over and over and over."

"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.”

"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."

"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."