Hey all,
Saul and board monitors I don’t think this video interview is off topic, in fact I think it’s really a great lesson that’s needed right now in investing in innovators and visionaries. To not get lost in a smaller time frame, to look further out and understand that it takes time to let the great ones play out.
There is so much in this interview that helps explain why we invest in the NETs and the SNOWs right now.
Bezos was a very humble guy with a vision, and a mission. Being patient as an investor that also believed in that vision, that was a life changer for anyone that invested and held on. I think along the way AMZN lost more then 80% of its value three times?
I think you will get a lot out of this interview on 60 Minutes from 1999. Yes the world was very different, but some important things never change.
Being patient as an investor that also believed in that vision, that was a life changer for anyone that invested and held on. I think along the way AMZN lost more then 80% of its value three times?
Amazon went down ~95% from 1999-2001, and anyone following Saul’s methodology would have sold out somewhere well along the way down, as their revenue growth did great through 2000, but it faltered big-time in the 2001 recession.There was the opportunity to climb back aboard as growth resumed, of course.
Of course it’s easy to point to AMZN, in retrospect, as an example of what holding onto a great growth stock can do, but doing it in real time is vastly more difficult. How many investors could have stomached losing 95%, seeing growth evaporate at the bottom, no profits, massive dilution, etc … and still held the faith right on through to glory 20 years later? Very, very few.
Of course it’s easy to point to AMZN, in retrospect…How many investors could have stomached losing 95% … and still held the faith right on through to glory 20 years later?
You didn’t need to wait 20 years. AMZN regained its 1999 peak price in 2007, about 6 years after the 2001 low. It then doubled its value over the next 4 years, and 30x’ed its price over the next 14 years.
Here’s Amazon’s annual revenues since 2001. Their 2021 revenue was 150 times the 2001 revenue. Note that YoY revenue growth for Amazon never exceeded 41%, whereas all our SaaS companies have grown revenues at rates ranging from 50% to 80%+ YoY for over 3 years now. And with 70%+ gross margins and recurring revenues to boot.
SaaS company founders are well aware of the Amazon and AWS playbook. They are re-investing all or most of their profits into the marketing, operations and R&D required to capture an increasing share of an enormous TAM. And it’s still very early in the game - years of expansion are ahead.
Year Revenue Change
2021 $469.82 B 21.7%
2020 $386.06 B 37.62%
2019 $280.52 B 20.45%
2018 $232.88 B 30.93%
2017 $177.86 B 30.8%
2016 $135.98 B 27.08%
2015 $107.00 B 20.25%
2014 $88.98 B 19.52%
2013 $74.45 B 21.87%
2012 $61.09 B 27.07%
2011 $48.07 B 40.56%
2010 $34.20 B 39.56%
2009 $24.50 B 27.88%
2008 $19.16 B 29.19%
2007 $14.83 B 38.5%
2006 $10.71 B 26.16%
2005 $8.49 B 22.67%
2004 $6.92 B 31.49%
2003 $5.26 B 33.84%
2002 $3.93 B 25.96%
2001 $3.12 B
“Note that YoY revenue growth for Amazon never exceeded 41%, whereas all our SaaS companies have grown revenues at rates ranging from 50% to 80%+ YoY for over 3 years now. And with 70%+ gross margins and recurring revenues to boot.”
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My takeaway:
This board, as focused today, would have deemed AMZN to not be hyper-growth or worthy of discussion here.
Yep, but it was hyper-growth through the year 2000 … though it never did have the crazy gross margins. If a hyper-growth investor were in the stock due to its awesome growth in the 1999-2000 era, they would have ridden it quite a way down as the company continued to grow rapidly through year 2000, and then never gotten back into it, instead finding other hyper-growth companies to invest in and benefiting from the bull market that way.