That's important. In 2021, we'll invest more than $300 million into safety projects, including an initial $66 million to create technology that will help prevent collisions of forklifts and other types of industrial vehicles. Not long ago, most people believed that it would be good to address climate change, but they also thought it would cost a lot and would threaten jobs, competitiveness, and economic growth. We create jobs for people who never got that advantage. But, it wasnt until 2020, after taking the learnings from Graviton and innovating on a new chip, that we had something remarkable with our Graviton2 chip, which provides up to 40% better price-performance than the comparable latest generation x86 processors. For example, about 40% of work-related injuries at Amazon are related to musculoskeletal disorders (MSDs), things like sprains or strains that can be caused by repetitive motions. And value created is best thought of as a metric for innovation. But, as bandwidth got much faster to peoples homes and mobile devices, along with the advent of connected TVs, streaming was going to be a much better customer solution, and we focused our efforts on streaming. Customers want various flavors of compute (e.g. It remains Day 1. A recent paper by economists at the University of California-Berkeley and Brandeis University analyzed the impact of our decision to raise our minimum starting pay to $15 per hour. Here's The Viral Letter Jeff Bezos Wrote To Shareholders When Amazon That's not accurate," he said. Amazon is making progress toward our own goal of 100% renewable energy by 2025, five years ahead of our initial 2030 target. By Lisa Lacy. Customers complete 28% of purchases on Amazon in three minutes or less, and half of all purchases are finished in less than 15 minutes. 4 Takeaways From Jeff Bezos' Annual Shareholder Letter But rather than focus on the company's long . We realized that the Web was, and still is, the World Wide Wait. It's going to take collective action from big companies, small companies, nation states, global organizations, and individuals, and I'm excited to be part of this journey and optimistic that humanity can come together to solve this challenge. Coaching is also extended to employees who are excelling and in line for increased responsibilities. Those that move slower than their competitive peers fall away over time. Hollywood strikes will change the booming creator economy - The This phenomenon happens at all scale levels. 2000: In lean times, build a cash moat. We terminate the employment of less than 2.6% of employees due to their inability to perform their jobs (and that number was even lower in 2020 because of operational impacts of COVID-19). As the world opened up again starting in late Q2 2021, and more people ventured out to eat, shop, and travel, consumer spending returned to being spread over many more entities. Our increase in starting wage boosted local economies across the country by benefiting not only our own employees but also other workers in the same community. "The fact is, the large team of thousands of people who lead operations at Amazon have always cared deeply for our hourly employees, and we're proud of the work environment we've created," Bezos said. While the voting results were lopsided and our direct relationship with employees is strong, it's clear to me that we need a bettervisionfor how we create value for employees a vision for their success. How much work does it take to maintain your distinctiveness? We think of builders as people who like to invent, who look at customer experiences, dissect what doesnt work well about them, and seek to reinvent them. In what ways does the world pull at you in an attempt to make you normal? Perhaps more impressive is the fact that Amazon now directly employs 1.3 million people around the world and has more than 1.9 million small and medium-sized businesses selling on its platform. If any shareowners are concerned that Earth's Best Employer and Earth's Safest Place to Work might dilute our focus on Earth's Most Customer-Centric Company, let me set your mind at ease. Whatever role Amazon played in the world up to that point became further magnified as most physical venues shut down for long periods of time and people spent their days at home. Ring and Blink provide the leading digital home security solutions, Astro is a brand new home robot that we just launched in late 2021), but its safe to say that every one of our devices, whether youre talking about Kindle, FireTV, Alexa/Echo, Ring, Blink, or Astro is an invention-in-process with a lot more coming that will keep improving customers lives. Join thousands of tech enthusiasts and participate. I have also personally allocated $10 billion to provide grants to help catalyze the systemic change we will need in the coming decade. 3/ Give Teams the Right Tools and Permission to Move Fast: Speed is not pre-ordained. Were optimistic that there is a pretty good business model for us too, but well seeand its a real game changer for underserved families and businesses that will unfold over many years as we keep evolving its capabilities. "Despite what we've accomplished, it's clear to me that we need a better vision for our employees' success," Bezos said. Jeffrey P. BezosFounder and Chief Executive OfficerAmazon.com, Inc. Got a tip? Jeff Bezos' Original 1997 Letter to Amazon Shareholders A final quick example is Kuiper, our low Earth orbit satellite network that were spending over $10 billion to build in the next several years. rotational programs that help employees avoid spending too much time doing the same repetitive motions, wearables that prompt employees when theyre moving in a dangerous way, improved shoes to provide better toe protection, training programs on body mechanics, wellness, and safety practices). But I also know something else: it's not the largest part of the value we've created. We all know that distinctiveness originality is valuable. But, at the same time, it's also true that things would often be easier take less energy if we were a little more normal. Direct cost improvements from operating in the cloud versus on premises vary, but a reasonable estimate is 30%. Although many leaders often mention phenomenal tech entrepreneurs as their true inspiration, like Steve Jobs, Mark Zuckerberg, Jack Ma, Elon Musk, and Bill Gates, Bezos' name used to be overshadowed in the past few yearsuntil his resignation from Amazon and his last . How about third-party sellers? One early meeting in particularfor our core compute service called Elastic Compute Cloud ("EC2")was scheduled for an hour, and took three, as we animatedly debated whether we could launch a compute service without an accompanying persistent block storage companion (a form of network attached storage). These informal work breaks are in addition to the 30-minute lunch and 30-minute break built into their normal schedule. And we'll do that by continuing to lead on wages, on benefits, on upskilling opportunities, and in other ways that we will figure out over time. We won't change that. Amazon has already announced investments in CarbonCure Technologies, Pachama, Redwood Materials, Rivian, Turntide Technologies, ZeroAvia, and Infinium and these are just some of the innovative companies we hope will build the zero-carbon economy of the future. Andy is well known inside the company and has been at Amazon almost as long . Smart action on climate change will not only stop bad things from happening, it will also make our economy more efficient, help drive technological change, and reduce risks. Thats rarely, if ever, how it happens. In the early days of AWS, people sometimes asked us why compute wouldnt just be an undifferentiated commodity. If they fail they die. Money doesn't tell the whole story. The difficult part of this estimation exercise is that the direct cost reduction is the smallest portion of the customer benefit of moving to the cloud. Transportation is a major component of Amazon's business operations and the toughest part of our plan to meet net-zero carbon by 2040. However, as weve long said, online bookselling, and online commerce in general, should prove to be a very large market, and its likely that a number of companies will see significant benefit. Many large players have moved online with credible offerings and have devoted substantial energy and resources to building awareness, traffic, and sales. "This is Day 1 for the Internet and, if we execute well, for Amazon.com." (1997) 2. Amazon.com passed many milestones in 1997: by year-end, we had served more than 1.5 million customers, yielding 838% revenue growth to $147.8 million, and extended our market leadership despite aggressive competitive entry. 2023 TechSpot, Inc. All Rights Reserved. It remains Day 1. Coaching is also extended to employees who are excelling and in line for increased responsibilities. Combined, these can lead to more and better jobs, healthier and happier children, more productive workers, and a more prosperous future. You'll have to put energy into it continuously. Discovery, Paramount, Starz, Corus Entertainment, and Globo have found that theyre driving substantial incremental membership and better customer experience through Channels. AWS played a major role in enabling this business continuity. Adding AWS and consumer together gives us total customer value creation in 2020 of $164 billion. 87990cbe856818d5eddac44c7b1cdeb8, Continue reading your article witha WSJ subscription, Already a subscriber? In the Exec Chair role, I intend to focus my energies and attention on new products and early initiatives. Today, there are hundreds of millions of Alexa-enabled devices out there (in homes, offices, cars, hotel rooms, Amazon Echo devices, and third-party manufacturer devices); you can listen to musicor watch videos now; you can control your lights and home automation; you can create routines like Start My Day where Alexa tells you the weather, your estimated commute time based on current traffic, then plays the news; you can easily order retail items on Amazon; you can get general or customized news, updates on sporting events and related statsand were still quite early with respect to what Alexa and Alexa-related devices will do for customers. Every year since Amazon went public, Bezos has written a widely read letter to the shareholders. In 2020, employees earned $80 billion, plus another $11 billion to include benefits and various payroll taxes, for a total of $91 billion. Its easier said than done, but here are some components that have helped us: 1/ Hire the Right Builders: We disproportionately index in hiring builders. The world wants you to be typical in a thousand ways, it pulls at you. Uber has a goal of operating as a zero-emission platform in Canada, Europe, and the U.S. by 2030, and Henkel plans to source 100% of the electricity it uses for production from renewable sources. Employees have to show up at appointed times. Amazon has famously held a core set of leadership principles, chief among them being that the company is "customer obsessed." And value created is best thought of as a metric for innovation. But I am committing us to an addition. Similarly, at our scale, we have a significant carbon footprint. Transportation is a major component of Amazon's business operations and the toughest part of our plan to meet net-zero carbon by 2040. 2021 Letter to Shareholders - About Amazon They're pension funds, universities, and 401(k)s, and they're Mary and Larry, who sent me this note out of the blue just as I was sitting down to write this shareholder letter: I am approached with similar stories all the time. We all know that distinctiveness originality is valuable. It's where I create the most value. Does your Chair take comfort in the outcome of the recent union vote in Bessemer? With a net worth of US$150 billion as of July 2023, Bezos is the third-wealthiest person in the world . Late last year, I made my first round of grants to 16 organizations working on innovative and needle-moving solutions. In the letter, Bezos said Amazon, a company famous for focusing relentlessly on the consumer, will now do the same for its employees. We took great risk with each one and put sweat and ingenuity into each one. We are incredibly fortunate to have this group of dedicated employees whose sacrifices and passion build Amazon.com. Its not easy to work here (when I interview people I tell them, You can work long, hard, or smart, but at Amazon.com you cant choose two out of three), but we are working to build something important, something that matters to our customers, something that we can all tell our grandchildren about. That's not accurate. It is not just moving money from one pocket to another. The difficult part of this estimation exercise is that the direct cost reduction is the smallest portion of the customer benefit of moving to the cloud. I think we need to do a better job for our employees. The world wants you to be typical in a thousand ways, it pulls at you. In 1997, we hadn't invented Prime, Marketplace, Alexa, or AWS. Truly, Bezos's passion is only a few degrees cooler, if that, urging people to ignore the "fairy tale" idea that if you'll only "be yourself," all your pain will stop. From 2019 to 2020, overall MSDs decreased by 32%, and MSDs resulting in time away from work decreased by more than half. We're developing new automated staffing schedules that use sophisticated algorithms to rotate employees among jobs that use different muscle-tendon groups to decrease repetitive motion and help protect employees from MSD risks. Jeff's letters to Amazon shareholders are an insightful read. The investment program started with $2 billion to invest in visionary companies that aim to facilitate the transition to a low-carbon economy. Despite what we've accomplished, it's clear to me that we need a better vision for our employees' success. This doesn't mean it will be easy. As Bezos is scheduled to step down as chief executive on Monday, he published his final letter earlier this year. We continued to increase compensation such that our average starting hourly salary is currently over $18. It's about all the other detailed aspects of the relationship too. We set achievable performance goals that take into account tenure and actual employee performance data. In addition to reducing workplace injuries, these concepts have a positive impact on regular day-to-day activities outside work. Your Chair is one, and my Amazon shares have made me wealthy. This initiative was slowed by the challenges of the pandemic, but weve since resumed our focus here. Our goal is for Alexa to be the worlds most helpful and resourceful personal assistant, who makes peoples lives meaningfully easier and better. If each group had an income statement representing their interactions with Amazon, the numbers above would be the "bottom lines" from those income statements. For many years, the industry had used Intel or AMDx86 processors. Our more than $2 billion Housing Equity Fund that we started a year ago has already allocated $1.2 billion toward affordable housing initiatives in the areas around Washington states Puget Sound region, Arlington (Virginia), and Nashville (Tennessee). Jeff set the bar high on these letters, and I will try to keep them worth reading. Our net income in 2020 was $21.3 billion. Bezos pointed to the recent union election outcome at one of Amazon's Alabama warehouses as an example of why the company needs to address challenges within its workforce. In 1997, Amazon CEO Jeff Bezos wrote his first letter to shareholders and set a precedent for decades of startups after it. Bezos appealed to the stakeholders that the company fared well in 1999. We have important partnerships with these companies, but realized that if we wanted to push price and performance further (as customers requested), wed have to develop our own chips, too. I know a happily married couple who have a running joke in their relationship. Roughly 40% of work-related injuries are sprains or strains mostly due to repeating the same motions and are common among new employees, he said. To be conservative here (and remembering we're really only trying to get ballpark estimates), I'll say it's the same and call AWS customer value creation $38 billion in 2020. But this is Day 1 for the Internet and, if we execute well, for Amazon.com. We now know better. Here are three lessons investors might want to take note of from his final letter before he. And even then they can ignore those directions and just skip voting. I'm proud of the wealth we've created for shareowners. Who are they? He also touches on . This track record of frequent invention is not only why more sports entities are choosing to work with Prime Video, but also why so many large entertainment companies have become Prime Video Channels partners. Such things arent meant to be easy. We feel good about what weve done, and even more excited about what we want to do. Read Amazon CEO Jeff Bezos 2016 Letter to Shareholders - Business Insider When we die the work stops, the temperature differential starts to disappear, and we end up the same temperature as our surroundings. Whether companies saw extraordinary demand spikes, or demand diminish quickly with reduced external consumption, the clouds elasticity to scale capacity up and down quickly, as well as AWSs unusually broad functionality helped millions of companies adjust to these difficult circumstances. It's significant, and it improves their lives. That version is misleading. I'm going to switch gears for a moment and talk about the past. These numbers are part of the reason why people work for us, why sellers sell through us, and why customers buy from us. 2020 Letter to Shareholders - About Amazon Andy is brilliant and has the highest of high standards. We launched The Climate Pledge together with Global Optimism in September 2019 because we wanted to help drive this positive revolution. Its a leadership choice. EX-99.1 - SEC.gov Not infrequently, the husband looks at the wife with faux distress and says to her, "Can't you just be normal?" MSDs are common in the type of work that we do and are more likely to occur during an employee's first six months. But this is Day 1 for the Internet and, if we execute well, for Amazon.com. We will continue to learn from both our successes and our failures. They estimate that, in 2020, third-party seller profits from selling on Amazon were between $25 billion and $39 billion, and to be conservative here I'll go with $25 billion. The bigger benefit is the increased speed of software development something that can significantly improve the customer's competitiveness and top line. These informal work breaks are in addition to the 30-minute lunch and 30-minute break built into their normal schedule.". Jeff Bezos, Amazon's (AMZN-1.55%) CEO and founder, and one of the most respected minds in business, recently released his annual shareholder letter. MSDs are common in the type of work that we do and are more likely to occur during an employee's first six months. It's on the way out. Accordingly, we want to share with you our fundamental management and decision-making approach so that you, our shareholders, may confirm that it is consistent with your investment philosophy: We arent so bold as to claim that the above is the right investment philosophy, but its ours, and we would be remiss if we werent clear in the approach we have taken and will continue to take. Conversely, our Consumer revenue grew dramatically in 2020. "If any shareowners are concerned that Earth's Best Employer and Earth's Safest Place to Work might dilute our focus on Earth's Most Customer-Centric Company, let me set your mind at ease," Bezos said. In fact, I'm confident they will reinforce each other. This requires sustained investment in systems and infrastructure to support outstanding customer convenience, selection, and service while we grow. "Amazon today remains a small player in . The phone was unsuccessful, and though we determined we were probably too late to this party and directed these resources elsewhere, we hired some fantastic long-term builders and learned valuable lessons from this failure that have served us well in devices like Echo and FireTV. These informal work breaks are in addition to the 30-minute lunch and 30-minute break built into their normal schedule. Our purchase of 100,000 Rivian electric vans is a perfect example. In the early 2000s, it took us an average of 18 hours to get an item through our fulfillment centers and on the right truck for shipment. Customers love it, it can grow to be very large, it has . He also defended Amazon as "Earth's best employer and Earth's safest place to work" a direct refutation of repeated allegations from delivery and warehouse employees who say they're overworked, and are forced to pee in bottles to save time. Amazon Web Services serves millions of customers and ended 2020 with a $50 billion annualized run rate. PDF Dear shareholders We are still in the early stages of learning how to bring new value to our customers through Internet commerce and merchandising. I read each of the letters and share my notes in this vide. Mr. Bezos is set to step down as CEO in the third quarter and will remain chairman. Our net income in 2020 was $21.3 billion. I know a happily married couple who have a running joke in their relationship. And this value creation is not a zero-sum game. In Amazon's 1997 letter to shareholders, our first, I talked about our hope to create an "enduring franchise," one that would reinvent what it means to serve customers by unlocking the internet's power. A Division of NBCUniversal. That hasn't changed a bit. It's a hard job with a lot of responsibility. Summarizing:Shareholders $21BEmployees $91B3P Sellers $25BCustomers $164BTotal $301B. Photo: patrick t. fallon/Agence France-Presse/Getty Images. It's not just about the pay and the benefits. To deliver as reliably and cost-effectively as we desire, and to serve Amazon Prime members expecting shipments in a couple of days, we spent years building out an expansive set of fulfillment centers, a substantial logistics and transportation capability, and reconfigured how we did virtually everything in our facilities.
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