In his final CEO letter, Amazon’s Bezos looks beyond the shareholder model

The note is a prime example of how big corporations are balancing the traditional priority of shareholder gains with the rise of employee experience and stakeholder capitalism.

Bezos shareholder letter

There’s no denying that Jeff Bezos is a fine writer—and his skill with the written word is on display in his final note as CEO of Amazon. He will transition to executive chairman after decades spent building the online retail giant into the fourth most valuable brand in the world.

His note to shareholders starts with a look backward, acknowledging the great strides made since the company went public in 1997.

He writes:

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. I noted that Amazon had grown from having 158 employees to 614, and that we had surpassed 1.5 million customer accounts. We had just gone public at a split-adjusted stock price of $1.50 per share. I wrote that it was Day 1.

Yet, where the note offers the most intrigue is in its attempt to balance the shareholder model that has driven the company to create $1.6 trillion in value for stock owners (and created immense wealth for Bezos himself) with the new stakeholder model of capitalism that has risen to prominence in recent years.

The stakeholder model was espoused notably by the Business Roundtable in 2019, where JP Morgan’s Jamie Dimon said, “the American Dream is fraying.” Even before the COVID-19 crisis swept through the business world, disrupting legacy business models and accelerating digital transformation, there was a belief that shareholder value was an insufficient metric for the value of a brand or corporation.

Stock value is the top concern to shareholders, the target audience of Bezos’ letter. Yet Bezos quickly pivots to identify other areas of value that he says the company has created since 1997:

I know people who’ve used their Amazon money for college, for emergencies, for houses, for vacations, to start their own business, for charity – and the list goes on. I’m proud of the wealth we’ve created for shareowners. It’s significant, and it improves their lives. But I also know something else: it’s not the largest part of the value we’ve created.

Bezos argues that the company has created immense value for employees, third-party sellers and customers. He cites employee earnings of $80 billion during 2020, plus another $11 billion in benefits and $25 billion in profits for third-party vendors on Amazon’s platform. For customers, Bezos creates his own value equation based on the average time savings for customers using Amazon’s tools.

He writes:

If you assume that a typical Amazon purchase takes 15 minutes and that it saves you a couple of trips to a physical store a week, that’s more than 75 hours a year saved. That’s important. We’re all busy in the early 21st century.

So that we can get a dollar figure, let’s value the time savings at $10 per hour, which is conservative. Seventy-five hours multiplied by $10 an hour and subtracting the cost of Prime gives you value creation for each Prime member of about $630.

Employee relations

It’s the employee experience that is getting a closer look from many organizations, and Bezos in his note admits that Amazon has work to do to rebuild its employer reputation. The admission shows that the recent unionization fight in Bessemer, Alabama, and the national media scrutiny about working conditions at Amazon facilities have taken a toll.

Here’s how Bezos calls for more investment in employee experience:

Our relationship with employees is a very different example. We have processes they follow and standards they meet. We require training and various certifications. Employees have to show up at appointed times. Our interactions with employees are many, and they’re fine-grained. It’s not just about the pay and the benefits. It’s about all the other detailed aspects of the relationship too.

Does your Chair take comfort in the outcome of the recent union vote in Bessemer? No, he doesn’t. I think we need to do a better job for our employees. While the voting results were lopsided and our direct relationship with employees is strong, it’s clear to me that we need a better vision for how we create value for employees – a vision for their success.

Bezos goes on to push back on accusations that have been published in news media outlets that employees have been denied breaks, forced to urinate in bottles and other workplace horror stories. He cites how 94% of workers would recommend Amazon as a place to work, according to internal survey data.

It’s a reminder to communicators that internal feedback might not capture the full story—and that disgruntled employees might not always be willing to report poor working conditions.

Workplace wellness

Bezos’ letter also highlights the rising tide of workplace wellness initiatives, which are seeing increased investment from companies of all stripes amid the ongoing global public health crisis.

He writes:

We dive deep into safety issues. 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. MSDs are common in the type of work that we do and are more likely to occur during an employee’s first six months. We need to invent solutions to reduce MSDs for new employees, many of whom might be working in a physical role for the first time.

One such program is WorkingWell – which we launched to 859,000 employees at 350 sites across North America and Europe in 2020 – where we coach small groups of employees on body mechanics, proactive wellness, and safety. In addition to reducing workplace injuries, these concepts have a positive impact on regular day-to-day activities outside work.

CEO activism

Bezos finishes his letter with words about Amazon’s commitment to fight climate change, along with a passage about the importance of democracy and the need for companies to put resources into preserving institutions. The words align with the current moment of CEO activism, where major companies are banding together to call for action on issues such as climate change and  voting rights.

Bezos describes the need for corporations to take an active role in these issues as a metaphor for organic life’s fight against entropy:

Democracies are not normal. Tyranny is the historical norm. If we stopped doing all of the continuous hard work that is needed to maintain our distinctiveness in that regard, we would quickly come into equilibrium with tyranny.

We all know that distinctiveness – originality – is valuable. We are all taught to “be yourself.” What I’m really asking you to do is to embrace and be realistic about how much energy it takes to maintain that distinctiveness. The world wants you to be typical – in a thousand ways, it pulls at you. Don’t let it happen.

You can read Bezos’ final CEO letter here.

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