A CEO Describes the Single Key to Success

Shareholders love to dig through the letters CEOs write to shareholders once a year when they release their proxies. Among the most well-read are those by Warren Buffett and Jamie Dimon. Buffett is the most successful investor in American history, and Dimon is his generation’s greatest banker. The two letters could not be more different in length. Buffett’s is a few hundred words long. Dimon covered 66 pages and 35,000 words this year.

The new chief executive officer of the nation’s second-largest company, Amazon.com Inc. (NASDAQ: AMZN), has just written his second shareholder letter. Many call Andy Jassy one of the worst big tech CEOs of the past several years. Amazon’s core e-commerce business is in deep trouble. Jassy overbuilt Amazon and has decided to fire thousands of workers to return to reasonable margins. (These are 17 terrible investments by Amazon.)

Amazon’s shares have fallen 32% in the past year. The situation is bad enough that shareholders want founder and former CEO Jeff Bezos to return.

Jassy’s letter has one piece of advice that is valuable to almost every business, which he does not seem to have adopted. Near the start of his 10-page letter, he writes, “While there were an unusual number of simultaneous challenges this past year, the reality is that if you operate in large, dynamic, global market segments with many capable and well-funded competitors (the conditions in which Amazon operates all of its businesses), conditions rarely stay stagnant for long.”

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Jassy had run Amazon as if it were the same company it was in July 2021 when the COVID-19 pandemic helped Amazon encourage people to order products online due to the danger of the disease.

Amazon will post its first-quarter results in a week. They are expected to be dismal because Amazon already has said they will be. Revenue could be as low as $121 billion, up only 4% from the same quarter the year before. Operating income could be as low as $0, compared to $3.7 billion.

In his letter, Jassy covers his entire 15-year tenure. He does not say much about the layoffs or the stock price. Perhaps they will go away because “conditions rarely stay stagnant for long.”

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