Looking back into the histories of large enterprises, you can learn many important lessons. Analysing today’s successful companies past shareholder letters can gain many insights into the strategy which helped them to get to where they are today.

Today I look into Amazon’s first Letter to Shareholders from 1997, written by Jeff(rey) Bezos. Even though it is already 27 years old, it still holds many valuable lessons which can be applied to growing a business in 2025 (you only notice the letter’s age when strategic partners like Yahoo!, Netscape or AltaVista are mentioned).

Long term vision

One of the key points you notice while reading the letter is the focus on long term goals instead of short term wins to satisfy shareholders.

Long term focus thus will lead to market leadership which in return “can translate directly to higher
revenue, higher profitability, greater capital velocity, and correspondingly stronger returns on invested capital”.

The market leadership role also reflects in Amazon’s key metrics in this time:

• Customer and revenue
  growth
• Degree of repeating purchases by customers
• Strength of the Amazon brand

Investment philosophy

Besides the long term strategies, Bezos mentions multiple other key aspects of their investment philosophy.

For one, they based their effectiveness on clear analytical stats and emphasised that Amazon learns from both their successes and failures.

Also, they enforced bold investments. This was manifested with a courageous statement: “Some of these investments will pay off, others will not, and we will have learned another valuable lesson in either case”. This really is a powerful sentence to be in a letter to shareholders, as they often rather like stable investments with less potential to fail. But in Amazon’s case, it turned out to be the right mindset.

Other strategies they published were the sharing of their thinking process in regard to their choice-making, maintaining their lean culture and focusing on hiring great employees.

Those employees were paid partly via stock options. This should lead to motivated employees, “each of whom must think like, and therefore must actually be, an owner”. What an important way to think back then.

The numbers

Already in 1997, they offered 1-Click Shopping and focused on reviews and recommendation features. This was very future-oriented and was surely one of the areas which helped them grow that massively.

The most important aspect, though, was word of mouth, the “most powerful customer acquisition tool they had”. This once again shows that having a great product reduces the need for marketing drastically.

The success showed in their numbers: Sales grew by 838 % to $147.8 million, customer accounts by 738 % to 1.5 million. The amount of employees rose from 158 to 614 and the number of titles to over 200.000. Keep in mind: At this time, Amazon did not sell any other products than books!

Employees

Jeff Bezos emphasised the importance of high performing employees multiple times in the letter. Setting a high bar in hiring was the “single most important element of Amazon.com’s success”.

As building an important product is not easy, Jeff Bezos liked to tell people in hiring interviews that “you can work long, hard, or smart, but at Amazon.com you can’t choose two out of three”. This statement surely sorted out all applicants which would not give 100 % to reach Amazon’s high goals.

Future

For 1998 they wanted to add music to their catalogue and focus on growing overseas, as their main focus was the US back then. At the end of the letter, Jeff Bezos puts another statement which might seemed bold at the time, but totally true in today’s retrospective view: “However, as we’ve long said, online bookselling, and online commerce in general, should prove to be a very large market, and it’s likely that a number of companies will see significant benefit”.

The letter was really interesting to read. In my opinion, everybody can learn something from it. I recommend you to read it for yourself. In the coming posts I will look into the following letters to see how their strategies evolved over the years and what went true and what not.