About once a year, Jeff Bezos would spend a few minutes discussing Amazon’s stock price with the entire company at one of our quarterly All-Hands Meetings. It went something like this:
“You may have all noticed that our stock price has gone up about 30% over the last month. While this is great, I would caution you not to get too excited about this. When the stock is up 30% in a month, you want to avoid feeling 30% smarter, because when it’s down 30% in a month, then you’re going to have to feel 30% dumber, and it’s not going to feel as good.”
He would further point out that, in the short term, Amazon’s stock price is a poor measure of success. He would reference the famous investor Benjamin Graham’s wisdom: “In the short run, the stock market is a voting machine; in the long term, it’s a weighing machine.”
I was regularly asked by peers and business leaders outside Amazon how I felt about working at such a volatile company. Their perception of Amazon was based on the gyrations of our stock price going up and down, and up and down again and again.
What I explained to them is that what is happening inside our company had no relationship to the concurrent gyrations of our stock price. In fact, inside, there were very few highs and lows. To me, it felt like we were climbing a steep mountain at a steady upward pace. It was hard, and we would have setbacks along the way, but every year we moved a little higher up that mountain.
We spent each day heads down working on the growth drivers of our business:
– how do improve our breadth of items available?
– how do we better manage our inventory to maintain a high in-stock rate?
– how do we speed up our inbound supply chain while reducing cost and defects?
– how do we speed up our ability to pick pack and ship items faster while reducing cost and defects?
When you are heads-down and focused on your controllable inputs, you don’t watch the stock price.
Jeff knew, and taught all of Amazon, that you cannot control your outputs. You can only control your inputs. He (and we) had the belief that over the long term this approach would grow revenue, free cash flow, and, inevitably, the stock price.
If you want to learn more about how we did this, check out our online course offering: https://lnkd.in/dEUf5X-M
