Building Value vs Building Profits

I am half way through the Brad Stone's The Everything Store: Jeff Bezos and the Age of Amazon. Don't know the remaining half (yet!), but already this book is getting my personal book of the year 2013 award. It is a wonderful story driven by what Stone calls Jeffism: "We are genuinely customer-centric, we are genuinely long-term oriented and we genuinely like to invent.". I have never heard anybody declaring publicly what is so close to my own entrepreneur's heart. Here is the full paragraph quoted:

 “If you want to get to the truth about what makes us different, it’s this,” Bezos says, veering into a familiar Jeffism: “We are genuinely customer-centric, we are genuinely long-term oriented and we genuinely like to invent. Most companies are not those things. They are focused on the competitor, rather than the customer. They want to work on things that will pay dividends in two or three years, and if they don’t work in two or three years they will move on to something else. And they prefer to be close-followers rather than inventors , because it’s safer. So if you want to capture the truth about Amazon, that is why we are different. Very few companies have all of those three elements.”

Stone, Brad (2013-10-15). The Everything Store: Jeff Bezos and the Age of Amazon (p. 12). Little, Brown and Company. Kindle Edition.

I covered the subject of long term customer focus and long term innovation several times (here, and in the Successful Startup episodes). This sounds truly romantic, but for the CEO it usually means a continuous battle with investors, as I described in the Part 4:

It starts with the mindset of a team. Which starts with the mindset of the leaders. Quality mindset is a will that has to be expressed by the founders. Because quality is expensive. And quality is slow. Today investors (and many founders too) want inexpensive and quick. Unfortunately inexpensive and quick always turns out expensive and slow. But still many do not understand this.

And what was my joy last Friday, when I read Henry Blodget's Analyst Raises Amazon Price Target To $400 A Share! on the Business Insider. Henry captures the essence of long term value versus short term profits:

If more companies behaved the way Amazon does, reinvesting more of their earnings, putting customers and long-term value creation ahead of near-term profit, the U.S. economy would be much better off. Fewer companies would be making nearsighted decisions designed to boost the current year's profits while under-investing in the long term. Fewer companies would be firing thousands of valuable employees just to meet random quarterly financial targets. And more Americans would be working and having more money to spend, thus boosting the rest of the economy (almost every dollar a company spends in this country becomes revenue, wages, and spending money for other companies and people).

I am absolutely delighted having Amazon as the proof the long term focus, against all odds, works. To me Amazon is the iconic company and Jeff Bezos is the iconic leader. I have always been saying we, as the civilization, can (and should!) bear the burden of investment in long-term creation of value, instead of short-term profit reaping. I feel a tiny part of that movement and I fully support Amazon's drive in this direction.

PS. You can follow my public Amazon Kindle highlights using this link: https://kindle.amazon.com/profile/Szymon-Slupik/196937