Amazon.com Inc. (NASDAQ:AMZN) doesn’t even have to release its earnings to make the news. The scope of Amazon is now so broad and so deep that even a minor stirring in the water is enough to generate company news.
On Wednesday, company CEO Jeff Bezos released his annual shareholder letter. It’s actually a short, yet critically important, read. It describes some fundamental essentials about Amazon’s corporate culture which is one of the reasons why the companies become so successful. Whether you are an AMZN stock owner, or are considering becoming one, there are few things from the letter that I think deserve to be highlighted.
Bezos attributes the AMZN stock success to having high standards, but he asks an important question as to whether high standards are “intrinsic or teachable.” He believes the latter, and I heartily agree. Motivated individuals, and even unmotivated individuals, will often rise to a higher call. I myself had a high school teacher who demanded the very best, and lifted many failing math students and made them into B students are better.
We often hear the term “step up” in reference to second-string professional athletes. I’ve certainly seen many creative artists constantly improve the quality of their content because they strive to make it better. There is simply no denying that Amazon has set very high standards within the company, and it is obvious in every way when you interface with the company as a consumer.
Bezos points out that “unrealistic beliefs on scope kill high standards.” This comes down to internal corporate communications. As a communications professional, I can’t tell you the importance of properly communicating what a path to success looks like. Hard work isn’t enough. You must communicate the company vision and establish realistic and attainable goals, often achieved in steps, for your employees. Clearly, Amazon has this down.
Bezos talks about some other concepts, but he points out some of the milestones that Amazon has achieved recently, which I believe are directly attributable to these elements of company culture.
Company Culture Leads to Company Achievements
Amazon Prime now has over 100 million paying members. This is simply extraordinary. That’s more members than even Costco Corporation (NASDAQ:COST) has. At $99 a pop (the typical cost of a membership), that means Amazon is generating $10 billion a year without even lifting a finger.
Amazon Web Services is generating a run rate of $20 billion annually. Active users increased by 250% last year alone.
I was frankly amazed to discover that more than half of the units sold on Amazon worldwide are now from third-party sellers. 300,000 domestic small- and medium-size businesses began selling on Amazon last year. 40 million items were purchased from them on Prime Day alone.
Alexa now has 30,000 skills from outside developers, and controls more than 4,000 home devices. Amazon Echo, the Fire Stick, Prime Video and Music Services continue to grow robustly.
Anecdotal reports are that the Whole Foods Market integration has not been going terribly well. I can say that, from my own experience, the stores in my area have been reorganized, revamped, are much more brightly lit and feel stocked with more product than before.
Meanwhile, even as reports dribble in that working conditions at Amazon aren’t terribly great, Amazon now employs some 560,000 people.
Bottom Line on AMZN Stock
What does this mean as far as AMZN stock is concerned? Behind every great company is a great company culture. Amazon seems to have always had a vision under its CEO. At the mid and upper levels, it appears that this vision is being properly communicated to employees.
All of this bodes well for the company’s future. If Amazon can extend this team culture down to the lowest level employee, much as Southwest Airlines (NYSE:LUV) has done, it could only be a good thing for the stock going forward.
Lawrence Meyers is the CEO of PDL Capital, a specialty lender focusing on consumer finance and is the Manager of The Liberty Portfolio at www.thelibertyportfolio.com. He does not own any stock mentioned. He has 23 years’ experience in the stock market, and has written more than 2,000 articles on investing. Lawrence Meyers can be reached at [email protected]