In 1999, Jeff Bezos spoke with David and Tom Gardner on the Motley Fool Radio show -- in the conversation, he laid out the long-term vision for Amazon and why the company was forgoing short-term profits to grab as much market share as possible.
Jeff Bezos: Well, I think what we're trying to do is be Earth's most customer centric company. And so it's a whole bunch of little things that add up and some big things. But if you can be a customer company, and sometimes people ask us, are you a book company or a music company, or now are you a toy company or... And we're none of those things. We're trying to be a customer company. And you can sort of uniquely do that well on the internet because of the possibilities for personalization, and you know, putting each individual customer at the center of your universe. And if you can do that, you'll have something completely new. And that sort of customer centric-ness, the service, the experience. I guess another way to say this, to me, starting with the customer and working backwards.
Host: Okay.
Jeff Bezos: We can be known for that. That that allows us to do a lot of things for customers.
Host: Okay. Now given that, Jeff, I want to ask you a question we asked you actually about a year ago when we last had you on, and maybe the answer's changed, but maybe it hasn't, and that is, given that you want to be Earth's most customer centric company, who do you regard as Amazon's primary competition today, here at the end of August?
Jeff Bezos: Well, it's a very interesting question, and in fact our competitive set changes so fast, the people we have to focus on as competitors seem to change almost daily. And I think that one of the reasons that I ask everybody on Amazon.com to be obsessed over customers instead of competitors is because of that. The customer needs evolve, but they evolve so much more slowly than the competitive set and the technologies and all the other things that you can get confused by. So it's a tough question to answer that way. I'd say in each category that we do business, we have a focus competitor.
Host: Okay.
Jeff Bezos: That we pay attention to. That's probably, and then of course those are the sort of the online companies. We can watch those competitors and learn from them, but they're also the bigger companies that are the physical companies. That's where the revenues are. That's, those are the other companies you have to look at as competitors because that's where the customers are today.
Host: Now Jeff, a couple of weeks ago we had a CEO of Yahoo, Tim Koogle, on and Tim was talking about in the case of Yahoo, their desire right from the beginning to build profitability into their corporate culture and to define their business on that commercial mission of turning over value in terms of earnings right away to shareholders. Say Amazon is obviously taken a different path, continues to be unprofitable while showing incredible revenue growth and growth in customers around the world. But at what point does profitability become your primary concern, and how do you reassure your employees and investors in the interim until we get there?
Jeff Bezos: Well, that's a great question. What we try to do is first of all, be extremely consistent and make sure everybody understands, both internally and externally, that this is a conscious strategy at the same time to build a culture, a lean culture, that will support profitability at the right time. So if you, cultures are incredibly hard to change, so if you end up with a culture that doesn't support that, a culture, or a high cost structure that makes it impossible at any skill level to be profitable, you're just sunk because all companies have to be profitable in the long term, or you don't get to keep doing anything for customers.
But we believe it will be a huge mistake to try to optimize now for short term profitability. This is the one of the most unusual business events of all time, sort of what's happening as a result of the internet, this big dislocation it's caused, and our sort of insurmountable opportunity. And the right way to think about in the way we think about internally as to when we should shift more focus towards internal profitability, towards profitability in the short term is, is the watching the ratio of our mature businesses to our new opportunities that we're investing in. And right now I'd say we have one sort of semi-mature business, which is our US books business, and then we're investing in Germany and the UK. We're investing in new product categories like toys and electronics. And we're investing in whole new business models like auctions. So with all of these opportunities, you know, we just think it would be a mistake, it would be shortsighted to try and optimize for profitability in the short term.
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