3 KEY POINTS FROM JEFF BEZOS TO IDENTIFY GOOD STOCKS
As a stock investor, you are likely familiar with Jeff Bezos, the founder and former CEO of Amazon. Since I am so free, I have read all of his shareholder letters and I must say his writings are a must-read for anyone interested in investing or want to be an entrepreneur. There are a lot of key lessons and ideas from Jeff Bezos that teaches me how to build a sustainable business which can also apply on how to pick good stocks.
Therefore, I decided to only focus on the top 20% lessons that Jeff Bezos always mentioned which will affect 80% of the results. We will explore deeper into Bezos' thinking and explore the top 3 key lessons from his letters that can help you improve your stock picks. By applying these lessons to your own investing approach, you can better position yourself for long-term success and achieve better results.
CUSTOMER OBSESSION:
"The most important single thing is to focus obsessively on the customer. Our goal is to be earth's most customer-centric company." (1998)
"We're not competitor obsessed, we're customer obsessed. We start with what the customer needs and we work backwards." (2011)
"We innovate by starting with the customer and working backwards." (2016)
Bezos's vision for Amazon has been a consistent focus of his letters since the company's inception. The CEO believes that putting the customer at the center of everything a company does is critical to success. He argues that businesses that focus on customer needs, instead of their competitors, are more likely to survive and thrive over the long term. They start the innovation process by deeply understanding the needs and desires of their customers, and then work backwards to create that which will ensure that the end result is something that truly meets those needs and adds value to their lives.
Amazon emphasizes on providing a wide selection of products, competitive prices, and fast and reliable delivery. Amazon has invested heavily in its logistics and fulfillment infrastructure to ensure that it can deliver packages to customers quickly and efficiently. The company also offers a range of services, such as Amazon Prime and Amazon Web Services, that are designed to meet the needs of its customers. Additionally, Amazon uses customer data to personalize the shopping experience and make product recommendations that are tailored to each individual customer. All of these are to improve customer experience and delight their customers.
LONG-TERM THINKING:
"We believe that a fundamental measure of our success will be the shareholder value we create over the long term." (1997)
"We are willing to be misunderstood for long periods of time." (2005)
"We’ll 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." (2013)
Bezos has consistently advocated for long-term thinking and investment over short-term gains. He has stated that Amazon's success is due to its willingness to focus on the long-term, even when it meant sacrificing short-term profits. This approach has allowed Amazon to invest in new products, services, and markets that might take years to pay off but ultimately benefit customers and shareholders in the long run. In his 2016 letter, Bezos wrote, "We don't celebrate a 10% increase in the stock price like we celebrate excellent customer experience."
One example of a US listed company that is known for its long-term thinking is Tesla, Inc. The company's mission is to accelerate the transition to sustainable energy, and it has a long-term vision to revolutionize the transportation industry and promote the use of renewable energy sources. Tesla has invested heavily in research and development, as well as in building a network of charging stations, to support its long-term goals. Additionally, Tesla's CEO, Elon Musk, is known for his focus on long-term thinking and his willingness to make bold bets on the company's future.
CONTINUOUS IMPROVEMENT:
"The bar has continuously risen. The customers have gotten used to more, so you have to keep inventing to stay ahead of that." (2011)
"Good inventors and designers deeply understand their customer. They spend tremendous energy developing that intuition." (2016)
"Customers are always beautifully, wonderfully dissatisfied, even when they report being happy and business is great. Even when they don’t yet know it, customers want something better, and your desire to delight customers will drive you to invent on their behalf." (2016)
Bezos understands that customers expect the best, and that companies must continually innovate in order to stay ahead of the competition. He emphasizes the importance of deeply understanding customer needs and investing significant energy in developing intuition about them. Bezos encourages companies to focus on delighting customers and use that to guide you to improve your business because customers somehow are always looking for something better, even if they seem happy with the current offering.
Apple is one good example that always improves based on customer-centric innovation. Apple has consistently released new and improved versions of their popular products, such as the iPhone and MacBook, to meet the ever-changing needs and expectations of their customers. Apple has a reputation for being highly focused on design and user experience, and they have developed a strong and loyal customer base as a result. Apple has also made significant investments in customer service, with their AppleCare program and Apple Support app, to ensure that customers have a positive experience with their products and receive the help they need.
CONCLUSION
Jeff Bezos' philosophy of customer obsession, long-term thinking and continuous improvement has been integral to Amazon's phenomenal success. These principles have not only helped Amazon outperform its competitors but have also resulted in an ever-increasing stock price. As such, it's clear that Amazon's commitment to these principles sets a clear precedent for other company's success too. So when we are researching for a stock, make sure your company has these 3 principles too and you can expect to see sustained growth and increase in share price for years to come.
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