Jeff Bezos’ Criteria For A Great Business by Greg Speicher
Warren Buffett famously uses four filters when selecting an investment.
- Does he understand the business?
- Does it have a competitive advantage?
- Does it have able and trustworthy management?
- Can it be purchased at an attractive valuation (margin of safety)?
Jeff Bezos’ Criteria For A Great Business
In Amazon.com’s 2014 Letter to Shareholder, Jeff Bezos begins with his own set of criteria for a “dreamy business offering”.
Recently, Bruce Greenwald carried out a virtual Fireside Chat with Li Lu, the founder and chairman of Himalaya Capital. Greenwald and Lu covered multiple topics during the discussion, addressing everything from the value investor's approach to appraising businesses and what he had learned from his great friend Charlie Munger. The duo also discussed China's economy Read More
- “Customers love it,
- it can grow to very large size,
- it has strong returns on capital, and
- it’s durable in time – with the potential to endure for decades.”
Bezos writes that, “When you find one of these, don’t just swipe right, get married.”
Bezos makes no mention of valuation.
In my estimation, there are not many businesses that meet these criteria. Finding one a year and buying right would be more than enough.