In Amazon’s 1997 letter to shareholders, our first, I talked about our hope to create an “enduring franchise,” one that might reinvent what it means to serve clients by unlocking the web’s energy. I famous that Amazon had grown from having 158 staff to 614, and that we had surpassed 1.5 million buyer accounts. We had simply gone public at a split-adjusted inventory value of $1.50 per share. I wrote that it was Day 1.

We have come a great distance since then, and we’re working more durable than ever to serve and delight clients. Final 12 months, we employed 500,000 staff and now instantly make use of 1.3 million folks around the globe. We now have greater than 200 million Prime members worldwide. Greater than 1.9 million small and medium-sized companies promote in our retailer, and so they make up near 60% of our retail gross sales. Prospects have linked greater than 100 million sensible house gadgets to Alexa. Amazon Net Providers serves thousands and thousands of shoppers and ended 2020 with a $50 billion annualized run charge. In 1997, we hadn’t invented Prime, Market, Alexa, or AWS. They weren’t even concepts then, and none was preordained. We took nice threat with every one and put sweat and ingenuity into every one.

Alongside the way in which, we have created $1.6 trillion of wealth for shareowners. Who’re they? Your Chair is one, and my Amazon shares have made me rich. However greater than 7/8ths of the shares, representing $1.4 trillion of wealth creation, are owned by others. Who’re they? They’re pension funds, universities, and 401(okay)s, and so they’re Mary and Larry, who despatched me this word out of the blue simply as I used to be sitting down to jot down this shareholder letter:

[Screenshot of letter from shareholders, part 1]
[Screenshot of letter from shareholders, part 2]

I’m approached with related tales on a regular basis. I do know individuals who’ve used their Amazon cash for faculty, for emergencies, for homes, for holidays, to start out their very own enterprise, for charity – and the record goes on. I am pleased with the wealth we have created for shareowners. It is important, and it improves their lives. However I additionally know one thing else: it isn’t the biggest a part of the worth we have created.

Create Extra Than You Eat

If you wish to achieve success in enterprise (in life, truly), you must create greater than you devour. Your objective must be to create worth for everybody you work together with. Any enterprise that does not create worth for these it touches, even when it seems profitable on the floor, is not lengthy for this world. It is on the way in which out.

Keep in mind that inventory costs are usually not concerning the previous. They’re a prediction of future money flows discounted again to the current. The inventory market anticipates. I will change gears for a second and speak concerning the previous. How a lot worth did we create for shareowners in 2020? It is a comparatively straightforward query to reply as a result of accounting techniques are set as much as reply it. Our web revenue in 2020 was $21.3 billion. If, as an alternative of being a publicly traded firm with 1000’s of householders, Amazon had been a sole proprietorship with a single proprietor, that is how a lot the proprietor would have earned in 2020.

How about staff? That is additionally a fairly straightforward worth creation query to reply as a result of we will have a look at compensation expense. What’s an expense for a corporation is revenue for workers. In 2020, staff earned $80 billion, plus one other $11 billion to incorporate advantages and varied payroll taxes, for a complete of $91 billion.

How about third-party sellers? We now have an inner group (the Promoting Accomplice Providers group) that works to reply that query. They estimate that, in 2020, third-party vendor income from promoting on Amazon had been between $25 billion and $39 billion, and to be conservative right here I am going to go along with $25 billion.

For patrons, we have now to interrupt it down into shopper clients and AWS clients.

We’ll do shoppers first. We provide low costs, huge choice, and quick supply, however think about we ignore all of that for the aim of this estimate and worth just one factor: we save clients time.

Prospects full 28% of purchases on Amazon in three minutes or much less, and half of all purchases are completed in lower than quarter-hour. Evaluate that to the everyday purchasing journey to a bodily retailer – driving, parking, looking retailer aisles, ready within the checkout line, discovering your automotive, and driving house. Analysis suggests the everyday bodily retailer journey takes about an hour. In the event you assume {that a} typical Amazon buy takes quarter-hour and that it saves you a few journeys to a bodily retailer every week, that is greater than 75 hours a 12 months saved. That is vital. We’re all busy within the early 21^st century.

In order that we will get a greenback determine, let’s worth the time financial savings at $10 per hour, which is conservative. Seventy-five hours multiplied by $10 an hour and subtracting the price of Prime offers you worth creation for every Prime member of about $630. We now have 200 million Prime members, for a complete in 2020 of $126 billion of worth creation.

AWS is difficult to estimate as a result of every buyer’s workload is so completely different, however we’ll do it anyway, acknowledging up entrance that the error bars are excessive. Direct value enhancements from working within the cloud versus on premises range, however an inexpensive estimate is 30%. Throughout AWS’s whole 2020 income of $45 billion, that 30% would suggest buyer worth creation of $19 billion (what would have value them $64 billion on their very own value $45 billion from AWS). The troublesome a part of this estimation train is that the direct value discount is the smallest portion of the shopper good thing about transferring to the cloud. The larger profit is the elevated pace of software program improvement – one thing that may considerably enhance the shopper’s competitiveness and high line. We now have no affordable method of estimating that portion of buyer worth besides to say that it is virtually definitely bigger than the direct value financial savings. To be conservative right here (and remembering we’re actually solely attempting to get ballpark estimates), I am going to say it is the identical and name AWS buyer worth creation $38 billion in 2020.

Including AWS and shopper collectively offers us complete buyer worth creation in 2020 of $164 billion.

Summarizing:
Shareholders      $21B
Staff          $91B
3P Sellers            $25B
Prospects           $164B
Whole                    $301B

If every group had an revenue assertion representing their interactions with Amazon, the numbers above can be the “backside strains” from these revenue statements. These numbers are a part of the rationale why folks work for us, why sellers promote via us, and why clients purchase from us. We create worth for them. And this worth creation will not be a zero-sum sport. It’s not simply transferring cash from one pocket to a different. Draw the field large round all of society, and you will find that invention is the basis of all actual worth creation. And worth created is finest considered a metric for innovation.

In fact, our relationship with these constituencies and the worth we create is not solely {dollars} and cents. Cash does not inform the entire story. Our relationship with shareholders, for instance, is comparatively easy. They make investments and maintain shares for a period of their selecting. We offer route to shareowners sometimes on issues akin to annual conferences and the precise course of to vote their shares. And even then they will ignore these instructions and simply skip voting.

Our relationship with staff is a really completely different instance. We now have processes they observe and requirements they meet. We require coaching and varied certifications. Staff have to point out up at appointed occasions. Our interactions with staff are many, and so they’re fine-grained. It is not simply concerning the pay and the advantages. It is about all the opposite detailed elements of the connection too.

Does your Chair take consolation within the end result of the latest union vote in Bessemer? No, he does not. I believe we have to do a greater job for our staff. Whereas the voting outcomes had been lopsided and our direct relationship with staff is robust, it is clear to me that we want a greater imaginative and prescient for the way we create worth for workers – a imaginative and prescient for his or her success.

In the event you learn a few of the information studies, you would possibly assume we have now no care for workers. In these studies, our staff are generally accused of being determined souls and handled as robots. That is not correct. They’re subtle and considerate individuals who have choices for the place to work. After we survey achievement heart staff, 94% say they’d advocate Amazon to a pal as a spot to work.

Staff are in a position to take casual breaks all through their shifts to stretch, get water, use the remainder room, or speak to a supervisor, all with out impacting their efficiency. These casual work breaks are along with the 30-minute lunch and 30-minute break constructed into their regular schedule.

We do not set unreasonable efficiency objectives. We set achievable efficiency objectives that take into consideration tenure and precise worker efficiency knowledge. Efficiency is evaluated over a protracted time frame as we all know that a wide range of issues can impression efficiency in any given week, day, or hour. If staff are on observe to overlook a efficiency goal over a time frame, their supervisor talks with them and offers teaching.

Teaching can be prolonged to staff who’re excelling and in line for elevated duties. In actual fact, 82% of teaching is optimistic, supplied to staff who’re assembly or exceeding expectations. We terminate the employment of lower than 2.6% of staff attributable to their lack of ability to carry out their jobs (and that quantity was even decrease in 2020 due to operational impacts of COVID-19).

Earth’s Finest Employer and Earth’s Most secure Place to Work

The actual fact is, the massive group of 1000’s of people that lead operations at Amazon have all the time cared deeply for our hourly staff, and we’re pleased with the work surroundings we have created. We’re additionally pleased with the truth that Amazon is an organization that does extra than simply create jobs for pc scientists and other people with superior levels. We create jobs for individuals who by no means received that benefit.

Regardless of what we have completed, it is clear to me that we want a greater imaginative and prescient for our staff’ success. We now have all the time needed to be Earth’s Most Buyer-Centric Firm. We cannot change that. It is what received us right here. However I’m committing us to an addition. We’re going to be Earth’s Finest Employer and Earth’s Most secure Place to Work.

In my upcoming function as Govt Chair, I will concentrate on new initiatives. I am an inventor. It is what I take pleasure in probably the most and what I do finest. It is the place I create probably the most worth. I am excited to work alongside the massive group of passionate folks we have now in Ops and assist invent on this enviornment of Earth’s Finest Employer and Earth’s Most secure Place to Work. On the main points, we at Amazon are all the time versatile, however on issues of imaginative and prescient we’re cussed and relentless. We now have by no means failed after we set our minds to one thing, and we’re not going to fail at this both.

We dive deep into issues of safety. For instance, about 40% of work-related accidents at Amazon are associated to musculoskeletal issues (MSDs), issues like sprains or strains that may be attributable to repetitive motions. MSDs are widespread in the kind of work that we do and usually tend to happen throughout an worker’s first six months. We have to invent options to cut back MSDs for brand new staff, a lot of whom is likely to be working in a bodily function for the primary time.

One such program is WorkingWell – which we launched to 859,000 staff at 350 websites throughout North America and Europe in 2020 – the place we coach small teams of staff on physique mechanics, proactive wellness, and security. Along with lowering office accidents, these ideas have a optimistic impression on common day-to-day actions outdoors work.

We’re growing new automated staffing schedules that use subtle algorithms to rotate staff amongst jobs that use completely different muscle-tendon teams to lower repetitive movement and assist shield staff from MSD dangers. This new know-how is central to a job rotation program that we’re rolling out all through 2021.

Our elevated consideration to early MSD prevention is already reaching outcomes. From 2019 to 2020, total MSDs decreased by 32%, and MSDs leading to time away from work decreased by greater than half.

We make use of 6,200 security professionals at Amazon. They use the science of security to resolve advanced issues and set up new trade finest practices. In 2021, we’ll make investments greater than $300 million into security tasks, together with an preliminary $66 million to create know-how that may assist forestall collisions of forklifts and different forms of industrial autos.

After we lead, others observe. Two and a half years in the past, after we set a $15 minimal wage for our hourly staff, we did so as a result of we needed to steer on wages – not simply run with the pack – and since we believed it was the precise factor to do. A latest paper by economists on the College of California-Berkeley and Brandeis College analyzed the impression of our determination to boost our minimal beginning pay to $15 per hour. Their evaluation displays what we have heard from staff, their households, and the communities they dwell in.

Our improve in beginning wage boosted native economies throughout the nation by benefiting not solely our personal staff but in addition different employees in the identical neighborhood. The examine confirmed that our pay elevate resulted in a 4.7% improve within the common hourly wage amongst different employers in the identical labor market.

And we’re not completed main. If we need to be Earth’s Finest Employer, we should not accept 94% of staff saying they’d advocate Amazon to a pal as a spot to work. We now have to purpose for 100%. And we’ll try this by persevering with to steer on wages, on advantages, on upskilling alternatives, and in different methods that we’ll determine over time.

If any shareowners are involved that Earth’s Finest Employer and Earth’s Most secure Place to Work would possibly dilute our concentrate on Earth’s Most Buyer-Centric Firm, let me set your thoughts comfy. Consider it this manner. If we will function two companies as completely different as shopper ecommerce and AWS, and do each on the highest degree, we will definitely do the identical with these two imaginative and prescient statements. In actual fact, I am assured they are going to reinforce one another.

The Local weather Pledge

In an earlier draft of this letter, I began this part with arguments and examples designed to exhibit that human-induced local weather change is actual. However, bluntly, I believe we will cease saying that now. You do not have to say that photosynthesis is actual, or make the case that gravity is actual, or that water boils at 100 levels Celsius at sea degree. These items are merely true, as is the fact of local weather change.

Not way back, most individuals believed that it will be good to handle local weather change, however additionally they thought it will value quite a bit and would threaten jobs, competitiveness, and financial progress. We now know higher. Good motion on local weather change is not going to solely cease unhealthy issues from taking place, it would additionally make our economic system extra environment friendly, assist drive technological change, and cut back dangers. Mixed, these can result in extra and higher jobs, more healthy and happier kids, extra productive employees, and a extra affluent future. This does not imply will probably be straightforward. It will not be. The approaching decade might be decisive. The economic system in 2030 will must be vastly completely different from what it’s at this time, and Amazon plans to be on the coronary heart of the change. We launched The Local weather Pledge along with International Optimism in September 2019 as a result of we needed to assist drive this optimistic revolution. We must be a part of a rising group of firms that perceive the imperatives and the alternatives of the 21^st century.

Now, lower than two years later, 53 firms representing virtually each sector of the economic system have signed The Local weather Pledge. Signatories akin to Finest Purchase, IBM, Infosys, Mercedes-Benz, Microsoft, Siemens, and Verizon have dedicated to realize net-zero carbon of their worldwide companies by 2040, 10 years forward of the Paris Settlement. The Pledge additionally requires them to measure and report greenhouse fuel emissions regularly; implement decarbonization methods via actual enterprise modifications and improvements; and neutralize any remaining emissions with extra, quantifiable, actual, everlasting, and socially useful offsets. Credible, high quality offsets are treasured, and we should always reserve them to compensate for financial actions the place low-carbon options do not exist.

The Local weather Pledge signatories are making significant, tangible, and impressive commitments. Uber has a objective of working as a zero-emission platform in Canada, Europe, and the U.S. by 2030, and Henkel plans to supply 100% of the electrical energy it makes use of for manufacturing from renewable sources. Amazon is making progress towards our personal objective of 100% renewable vitality by 2025, 5 years forward of our preliminary 2030 goal. Amazon is the biggest company purchaser of renewable vitality on this planet. We now have 62 utility-scale wind and photo voltaic tasks and 125 photo voltaic rooftops on achievement and kind facilities across the globe. These tasks have the capability to generate over 6.9 gigawatts and ship greater than 20 million megawatt-hours of vitality yearly.

Transportation is a significant element of Amazon’s enterprise operations and the hardest a part of our plan to fulfill net-zero carbon by 2040. To assist quickly speed up the marketplace for electrical automobile know-how, and to assist all firms transition to greener applied sciences, we invested greater than $1 billion in Rivian – and ordered 100,000 electrical supply vans from the corporate. We have additionally partnered with Mahindra in India and Mercedes-Benz in Europe. These customized electrical supply autos from Rivian are already operational, and so they first hit the highway in Los Angeles this previous February. Ten thousand new autos might be on the highway as early as subsequent 12 months, and all 100,000 autos might be on the highway by 2030 – saving thousands and thousands of metric tons of carbon. An enormous cause we wish firms to affix The Local weather Pledge is to sign to {the marketplace} that companies ought to begin inventing and growing new applied sciences that signatories have to make good on the Pledge. Our buy of 100,000 Rivian electrical vans is an ideal instance.

To additional speed up funding in new applied sciences wanted to construct a zero-carbon economic system, we launched the Local weather Pledge Fund final June. The funding program began with $2 billion to spend money on visionary firms that purpose to facilitate the transition to a low-carbon economic system. Amazon has already introduced investments in CarbonCure Applied sciences, Pachama, Redwood Supplies, Rivian, Turntide Applied sciences, ZeroAvia, and Infinium – and these are simply a few of the modern firms we hope will construct the zero-carbon economic system of the long run.

I’ve additionally personally allotted $10 billion to supply grants to assist catalyze the systemic change we are going to want within the coming decade. We’ll be supporting main scientists, activists, NGOs, environmental justice organizations, and others working to battle local weather change and shield the pure world. Late final 12 months, I made my first spherical of grants to 16 organizations engaged on modern and needle-moving options. It should take collective motion from large firms, small firms, nation states, world organizations, and people, and I am excited to be a part of this journey and optimistic that humanity can come collectively to resolve this problem.

Differentiation is Survival and the Universe Desires You to be Typical

That is my final annual shareholder letter because the CEO of Amazon, and I’ve one last item of utmost significance I really feel compelled to show. I hope all Amazonians take it to coronary heart.

Here’s a passage from Richard Dawkins’ (extraordinary) ebook The Blind Watchmaker. It is a couple of fundamental truth of biology.

“Staving off dying is a factor that you must work at. Left to itself – and that’s what it’s when it dies – the physique tends to revert to a state of equilibrium with its surroundings. In the event you measure some amount such because the temperature, the acidity, the water content material or {the electrical} potential in a dwelling physique, you’ll usually discover that it’s markedly completely different from the corresponding measure within the environment. Our our bodies, as an illustration, are normally hotter than our environment, and in chilly climates they must work arduous to keep up the differential. After we die the work stops, the temperature differential begins to vanish, and we find yourself the identical temperature as our environment. Not all animals work so arduous to keep away from coming into equilibrium with their surrounding temperature, however all animals do some comparable work. As an example, in a dry nation, animals and crops work to keep up the fluid content material of their cells, work in opposition to a pure tendency for water to circulation from them into the dry outdoors world. In the event that they fail they die. Extra usually, if dwelling issues did not work actively to forestall it, they’d finally merge into their environment, and stop to exist as autonomous beings. That’s what occurs once they die.”

Whereas the passage will not be supposed as a metaphor, it is nonetheless a unbelievable one, and really related to Amazon. I’d argue that it is related to all firms and all establishments and to every of our particular person lives too. In what methods does the world pull at you in an try and make you standard? How a lot work does it take to keep up your distinctiveness? To maintain alive the factor or issues that make you particular?

I do know a fortunately married couple who’ve a working joke of their relationship. Not sometimes, the husband appears on the spouse with fake misery and says to her, “Cannot you simply be regular?” They each smile and snigger, and naturally the deep fact is that her distinctiveness is one thing he loves about her. However, on the similar time, it is also true that issues would typically be simpler – take much less vitality – if we had been a bit of extra regular.

This phenomenon occurs in any respect scale ranges. Democracies are usually not regular. Tyranny is the historic norm. If we stopped doing all the steady arduous work that’s wanted to keep up our distinctiveness in that regard, we’d shortly come into equilibrium with tyranny.

Everyone knows that distinctiveness – originality – is effective. We’re all taught to “be your self.” What I am actually asking you to do is to embrace and be life like about how a lot vitality it takes to keep up that distinctiveness. The world needs you to be typical – in a thousand methods, it pulls at you. Do not let it occur.

It’s important to pay a value on your distinctiveness, and it is price it. The fairy story model of “be your self” is that each one the ache stops as quickly as you permit your distinctiveness to shine. That model is deceptive. Being your self is price it, however do not anticipate it to be straightforward or free. You will must put vitality into it constantly.

The world will all the time attempt to make Amazon extra typical – to deliver us into equilibrium with our surroundings. It’ll take steady effort, however we will and have to be higher than that.

* * *

As all the time, I connect our 1997 shareholder letter. It concluded with this: “We at Amazon.com are grateful to our clients for his or her enterprise and belief, to one another for our arduous work, and to our shareholders for his or her assist and encouragement.” That hasn’t modified a bit. I need to particularly thank Andy Jassy for agreeing to tackle the CEO function. It is a arduous job with a number of accountability. Andy is good and has the very best of excessive requirements. I assure you that Andy will not let the universe make us typical. He’ll muster the vitality wanted to maintain alive in us what makes us particular. That will not be straightforward, however it’s vital. I additionally predict will probably be satisfying and oftentimes enjoyable. Thanks, Andy.

To all of you: be type, be authentic, create greater than you devour, and by no means, by no means, by no means let the universe clean you into your environment. It stays Day 1.

Sincerely,

To our shareowners:

Jeffrey P. Bezos
Founder and Chief Govt Officer
Amazon.com, Inc.