How to invest like Jeff Bezos
Just in case you haven't heard of Jeff Bezos - he is the founder of Amazon and one of the richest men in the world.
But not because of an astronomical yearly salary. In fact, his annual salary was a little over $80,000 per year. So how why is he is so rich?
Equity is the answer.
The majority of his wealth comes from his shares in Amazon and equity he owns in other companies, which is why we're taking a look at his sleek investment portfolio.
But first, a quick background check
Jeff Bezos was born in Albuquerque, New Mexico in 1964 and graduated from Princeton University in 1986 with degrees in electrical engineering and computer science. After graduation, he worked on Wall Street and eventually became the youngest vice president at the investment firm D.E. Shaw & Co.
In 1994, he founded Amazon.com, and we all know Amazon (unless you've literally been living in a cave since '94. In 2018, Jeff became the first person in modern history to have a net worth of over $100 billion. His personal wealth has continued to grow, and he is now worth over $200 billion.
Jeff stepped down as CEO from Amazon in February 2021, but remains involved with the company as executive chairman. He is now focusing on his other ventures, including Blue Origin, his space exploration company, and The Washington Post, which he owns.
His investment portfolio
Most notable early angel investment - Google
Bezos convinced Google's founders to let him become an early investor, even though the funding round had already closed.
Bezos and his wife were vacationing in the Bay Area when he reached out to Shriram with a request to meet the guys behind Google.
Bezos ended up investing $250,000 in Google in 1998 at 4 cents a share in Google. Six years later when Google IPOed, the stake was the equivalent of 3.3 million GOOG shares.
Bezos’ stake would be worth $4.8 billion today, a gain of nearly 20,000% in a little over two decades.
Other angel investments
Jeff has invested in 34 companies to to date, including;
- Zocdoc
- Kong
- General Assembly
- Airbnb
- Uber
- ChaCha
- Domo
- Business Insider
- Convoy
- Beacon
- Rescale
- JumpStory
- HempnFibers
- Behance
Big exits
Jeff Bezos has had 13 exits.
- Uber
- Airbnb
- Behance
- Pelago
- Business Insider
- Domo
- EVERFI
- General Assembly
- Pro
- TraceMe
- Capita
- Vicarious
Jeff Bezos's investment thesis
- Customer Centric
Understanding the opinions of the masses is crucial in making informed decisions. It's not enough to simply go against the crowd because it seems like the right thing to do. Instead, conduct thorough research and analysis to determine the prevailing thoughts and then use that information to make a well-informed decision.
By doing so, you can identify whether the majority is correct or not and make investments that will yield greater profits.
- Clarity
For Jeff, clarity and focus are essential for success in investing. These qualities help investors to conduct thorough research and analysis, while also staying up-to-date with market trends.
Jeff believes that the effort put into research and analysis is never wasted. In fact, his strategy for Amazon was to prioritize a large customer base with low margins, rather than a small customer base with high margins.
This approach has helped him achieve both recognition and high returns on his shares in the company.
- Know your investment philosophy
Something that new angels won't know is that to be a successful investor you need to have a clear philosophy and stick to it. It's not just about throwing money at any company that looks promising, it should also fit into your investment thesis.
- Long-term strategy
Jeff Bezos is known for his long-term investment strategy, often holding onto companies for five to 10 years or more. He has even invested multiple times in some companies and remains committed through market ups and downs.
It's wise to invest in companies with a long-term outlook and resist the urge to panic sell during market downturns.
Jeff Bezos & his best advice to founders
- Always focus on the customer
Jeff made "Customer Obsession" one of the core principles of his company's leadership. This principle emphasizes the importance of starting with the customer and working backwards, striving to earn and maintain their trust. While competitors are certainly important to consider, Bezos believes that a true obsession with the customer is what sets successful leaders apart.
If a company can make its customers happy, then everything else will fall into place. Without happy customers, a business cannot thrive in the long run. Customer satisfaction is the key to success, regardless of how big the profits are or how fast the business is growing.
- Passion is the driver
We probably already know this one but be passionate about what you do. Jeff Bezos believes passion is what drives individuals to persevere through tough times and compete against others who share the same drive.
Having a strong passion for your work can help you overcome obstacles and emerge even stronger.
- Be a risk taker
Bezos is known for his willingness to take risks in order to achieve big things.
Not all risks will pay off, but large-scale risk taking is necessary for the success of his company and for society as a whole. If a business idea has no risk, it's probably not worth pursuing.
Jeff Bezos on Entrepreneurship
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