Bezos would frequently quote famous investor Benjamin Graham, who was Warren Buffett’s mentor and idol, when reminding employees and shareholders about Amazon’s long-term goals.
“I would say, ‘look, we got to remember the great quote from Benjamin Graham: In the short run, the stock market is a voting machine, in the long term, it’s a weighing machine,’” Bezos recalled at the forum. ”‘So don’t think about the daily stock price.’”
Since the beginning, Amazon employees had stock options, and he did not want them to measure success with stock price.
“I said, ‘look, when the stock is up 30% in a month, don’t feel 30% smarter, because when it’s down 30% in a month, then you’re gonna have to feel 30% dumber, and it’s not gonna feel as good,’” Bezos recalled at the forum.
During the dot-com crash, Amazon had a “brutal year,” as Bezos said in his letter to shareholders in 2000. Shares were already down 80% from the previous year at the time he wrote the letter, but he still wrote that “the company is in a stronger position now than at any time in its past.”
“It was good that I laid that groundwork, because in the year 2000, the whole thing came tumbling down,” Bezos recalled at the forum. “The stock went down to $6″ in 2001.
Despite this drop, Bezos never doubted Amazon’s business model.
“I had all the internal metrics on how many customers we had and I could see,” he said at the forum. “People thought we were losing money.... I just knew it was a fixed cost business, and as soon as we reached a sufficient scale, we would have a very good business.”
Knowing this concept, according to Bezos, was what kept him calm during the ups and downs.
“That understanding of the fixed nature of our expenses, relative to physical retail, is what led us to have the ‘get big fast’ strategy. We knew that our economics would be improved if we had sufficient scale,” he said.
Amazon has a current market capitalization of over $1.5 trillion.