The Tech Sales Newsletter #82: Letters from Stripe
This week I'll cover the company behind one of the most highly anticipated IPOs in tech this year - Stripe.
While not a cloud infrastructure company in the traditional sense, they are a great example of a player that has achieved a significant edge in their market due to advanced implementations of AI. They also provide critical fintech services to the majority of new cloud infrastructure software startups, making them a hidden factor of success.
The key takeaway
For tech sales: Stripe is a good opportunity from a tech sales perspective and will be a great stepping stone for many reps in the industry. The primary challenge is that you'll very likely get paid close to on-target earnings (OTE) rather than overperform - whether that's acceptable or not and how much IPO shares would change the risk/reward ratio depends mostly on your own personal goals.
For investors: As we are ramping up towards an IPO, Stripe stock is trading at 18% higher versus 1 year ago on the private markets. As the most exciting fintech IPO currently, it represents an obvious opportunity for those who focus on developer-centric companies that play a meaningful role in cloud infrastructure software.
The Stripe perspective
It's not a secret that in this newsletter I have a strong preference for evaluating companies and sales organizations based on how their leaders think, rather than "official" corporate talk-track. Earnings calls, podcasts, and interviews are the bread and butter of meaningful insights over third-party analyst reports or slides full of financial metrics.
The most powerful form of thought leadership comes in the form of intentional writing from the leaders. Not "content" or ghostwritten stuff, but the actual long-form outline of what they think on specific topics (ideally what they actually think about the business they are in).
Stripe is a bit unusual in this regard since they send out an annual letter which has been gaining attention in the last few years. As far as I'm concerned, they feel clearly inspired by Bezos's annual shareholder letters which he would write once per year from 1997 until 2021.
This is a compliment. The inevitable and exceptional success of Amazon (and later AWS) is obvious in every single year of those letters. But this article is about Stripe, so let's focus on the time and place where one of the most successful fintech companies in the world is gearing up for an IPO.
Businesses on Stripe generated $1.4 trillion in total payment volume in 2024, up 38% from the prior year, and reaching a scale equivalent to around 1.3% of global GDP. We attribute this year's rapid growth in part to our long-standing investments in building machine learning and artificial intelligence into our products. These bets continue to pay off, increasing revenue for existing customers, encouraging more businesses to switch to Stripe, and helping new companies reach significant scale unprecedentedly quickly—more on all of those points later. Future growth rates will fluctuate (2024 was an unusually good year), but we're as enthusiastic as ever about the long-term trends in the internet economy.
Stripe was profitable in 2024, and we expect to be so in 2025 and beyond. Durable profitability allows us to plow back much of our operating earnings into research and development. In each of the last six years, Stripe has reinvested a much higher proportion of our earnings in R&D than any comparable company. We believe this ability will prove particularly important in the coming years, as stablecoins, AI, and other forces reshape the landscape. Stripe's growth to date is evidence of the intense market demand for programmable financial services. The associated transformation is still early.
$1.4 trillion in processed payments would put them around $25 billion in revenue, an outstanding performance by any measure (high 30s growth rate).
This money is not there to sit idle - it's being actively reinvested in giving the founders a bigger edge in the market. When we talk about an IPO in the context of these figures, it's difficult to see that as a "pay day", rather it's clearly part of an ambitious next step for them that requires additional funding.
The phrase "the associated transformation is still early" is a funny one, because it's a direct callback to how Bezos would finish his letters with "it's still Day 1".
The businesses on Stripe span every chromosome of the economic genome, from top corporate leaders (half of the Fortune 100 uses Stripe) to hyper-growth companies (we count 80% of the Forbes Cloud 100 and 78% of the Forbes AI 50 as customers¹) to newly formed upstarts (one in six new Delaware corporations incorporates with Stripe Atlas). At any scale, Stripe customers share one important characteristic: outsized growth. In aggregate, the revenue that businesses process on Stripe is growing seven times faster than that of all companies in the S&P 500.
Stripe adoption is accelerating across all niches, but arguably its biggest B2B penetration is in cloud-native customers. The Stripe Atlas bit is not there randomly - it's a great example of how Stripe is going outside of its "financial services" box and instead offering a highly rated practical service for starting a business.
Back in 1957, companies could expect to remain in the index for 61 years. In 1980, the average tenure was 36 years. Today, it's just under 20 years.² Enduring businesses are increasingly rare.
Established businesses are coming to Stripe as they seek to modernize and buck this trend. Here are some examples of organizations from across the centuries and how they're working with Stripe:
The University of Oxford (founded 1096)³ now accepts student payments online. Oxonians can pay for their books or boat club memberships with Apple Pay or Link.
The Church of England (founded 1534) now collects donations online and can programmatically fund more than 16,000 parish churches around the UK.
The Gaelic Athletic Association (founded 1884) has digitized 2,200 clubs with 600,000 members across Ireland and the world.
The Hershey Company (founded 1894) is now letting candy connoisseurs buy everything from Hershey's Kisses to Reese's Pieces in bulk directly online.
PepsiCo (founded 1898) is saving time for its business customers (e.g., restaurants, grocery stores), allowing them to automatically restock supplies of Pepsi brands like Gatorade, SodaStream, Rockstar Energy, Lay's, Doritos, and more.
Comcast (founded 1963) automated its entire TV advertising booking process. On Universal Ads, anyone can now buy a TV spot and run it on NBCUniversal or Fox like they would on Facebook.
NVIDIA (founded 1993) is allowing developers to buy GPUs on a self serve basis, and is even selling compute as a cloud service.
Perplexity (founded 2022), an AI search engine with 500 million monthly queries, is moving from human commerce to machine commerce with Stripe.
These improvements are partly attributable to the scale of the Stripe data network: we're continually retraining dozens of machine learning models that optimize every part of the transaction flow over an economy-scale dataset. The resulting optimizations are big enough that businesses see them in their top-line revenue figures. Businesses simply start making more money when they switch to Stripe.
The other reason established companies come to Stripe is because the payments landscape continues to evolve so rapidly. Businesses need to adapt to the proliferation of new payment methods and business models, the growing sophistication of fraudulent actors, the ever more exacting expectations of consumers, and the transformation in the commerce experience instigated by AI. Our customers recognize that being on a legacy payments platform puts them at risk of being left behind.
The value proposition at its core here is "let us help you make more money, while spending less and taking lower risks; p.s. your developers will love us". That's difficult to argue with.
Source: Stripe Annual Letter 2024
Much as SaaS started horizontal and then went vertical (first Salesforce and then Toast), we're seeing a similar dynamic playing out in AI: we started with ChatGPT, but are now seeing a proliferation of industry-specific tools. Some people have called these startups "LLM wrappers"; those people are missing the point. The O-ring model in economics shows that in a process with interdependent tasks, the overall output or productivity is limited by the least effective component, not just in terms of cost but in the success of the entire system. In a similar vein, we see these new industry-specific AI tools as ensuring that individual industries can properly realize the economic impact of LLMs, and that the contextual, data, and workflow integration will prove enduringly valuable.
Examples in this vein include Abridge, Nabla, and DeepScribe, which are rethinking medical and patient care, while Studeo is reshaping how real estate businesses market property. Architects are using SketchPro to instantly render designs with simple text prompts, restaurants are using Slang.ai to take phone reservations, and property managers are unifying customer support with HostAI. Harvey, whose AI legal assistant is used by many Fortune 500 companies, quadrupled revenue in 2024.
There is an argument to be made that Stripe has been instrumental in helping AI startups launch. Almost every company in the space in the last years that has a PLG motion is doing it through Stripe. The time to market is then only limited by how quickly you can launch your product, rather than an extensive administrative layer that needs to be put in place before you can collect a single dollar.
The interesting thing is that Patrick and John are not simply stating that they like how their business is being adopted in those companies, they are actively defending the vision of those startups as valid and relevant.
Source: Stripe Annual Letter 2024
From 2005 to 2017, independent pizzerias in the United States saw a decline in numbers as the industry franchised. Then that trend inverted in 2017. By 2023, more independent pizzerias launched in America than in any other year on record.
We think the rise of vertical SaaS is at least partly responsible. From a platform like Slice, dedicated specifically to the needs of pizzerias, new businesses can get a logo, website, payment system, ordering system, marketing toolkit, and branded boxes—basically everything else they need to operate their pizza business (except an oven and the perfect sauce). They can remain independent while still benefiting from a franchisee's economies of scale.
Today, 60% of all small businesses in America use vertical SaaS platforms to help run their business. Arborists use SingleOps, towing companies use Traxero (which even has a state-of-towing podcast), and liquor stores use Transformity's AI-driven inventory management. If you want to open a med spa, Moxie can get you going in 30 days. Independent law firms use Clio; pool cleaners use Skimmer; churches use Planning Center, Tithe.ly, Subsplash, or Pushpay; synagogues use Shulware; truck dealerships use Procede; and funeral homes use Meadow Memorials or Tribute Technology.
These platforms and more than 14,000 others use Stripe to offer payments services to their customers. And across nearly every sector of the economy, we see more and more independent businesses leveraging software platforms for impressive growth. In the US, 6.3% of SMBs powered by vertical SaaS platforms on Stripe earn $1 million in total revenue in their first year—nearly 60% more than in one benchmarked comparison set.
The next important category that's highlighted here is Vertical SaaS - different cloud-native services that help serve SMBs around the world in a variety of little niches.
The 43% of US GDP that is driven by small businesses contains untapped potential energy. 77% of these businesses say growth capital is hard to come by. Vertical SaaS, with Stripe Capital, can help. Last year, hundreds of thousands of independent businesses using platforms like Jobber or Housecall Pro logged in to their software to find an offer for growth capital waiting for them. Funds arrive in under 48 hours and are repaid as a percentage of sales. No lengthy applications to fill out, no trips to the bank with reams of printed PDFs, no denial from an underwriter who can't wrap their head around the business. The majority of recipients report using the loans for growth investments, and 98% of companies that receive funding this way say they'd do it again.
We see significant potential for vertical SaaS platforms beyond financial services. We wrote earlier in this letter about the rise of vertical AI, and it's unsurprising that vertical SaaS companies are leading protagonists. Jobber Copilot analyzes data, prepares marketing campaigns, and even automatically responds to customer calls on behalf of home services businesses; Practice Better is enabling health professionals to take better notes and focus on their patients; and Fundraise Up is giving charities AI to encourage their donors to be even more generous. It took many years for smaller companies to benefit from previous technological revolutions, but vertical SaaS is bringing AI to the small business economy right away.
Vertical SaaS started and is most mature in the US, but is now becoming a global phenomenon. Over a quarter of Australian small businesses are using vertical SaaS, as are nearly a fifth of small businesses in the UK. Other markets like Singapore (14%), France (8%), and Germany (5%) are more nascent, but adoption is growing quickly. We're seeing platforms like ServiceM8 and Ignition in Australia (for tradespeople and professional services, respectively), allO in Germany (for restaurants), Playtomic in Spain and Anybuddy in France (for sports clubs), and Canterly in Singapore (for equestrian management) all taking off.
All countries want their small businesses to succeed, yet economics research consistently finds that large firms are faster in adopting technology. Vertical SaaS is how we ensure that small and medium-sized businesses fully benefit from software, the internet, and AI. This in turn highlights why internet-native, programmable financial services are so important: they're the foundation that vertical SaaS platforms need to flourish.
Similar to Atlas (to help you register your company), Stripe Capital is another service that can help entrepreneurs take the next step, by helping them raise funding easily and natively within the platform.
The most effective lever we have to keep businesses safe is Stripe's reputation network. Data from $1.4 trillion in annual payments volume means that each payment makes the next payment safer, a flywheel spinning with now-considerable momentum. Stripe Radar develops a notion of trust for not only credit cards but email addresses, IP addresses, phone numbers, shipping addresses, devices, and many more details besides. This trust allows Stripe to precisely distinguish between expected and suspicious behavior.
In doing so, scale matters. When a credit card is used for a payment, there is a greater than 92% chance that Stripe has encountered the same card before. We can then compare this transaction to prior behavior. For instance, if we see a card being used with a new email address, the very newness of the email address is a suspicious fact (with a 60% higher likelihood of fraud).
There are less obvious patterns to watch for, too. Our models passively learn which shipping addresses are owned by freight forwarders—the improbable number of distinct buyers per address, billing addresses far from shipping addresses, etc.—and weigh that fact an appropriate amount. (We're happy to facilitate commerce for people on the move; we don't want anyone defrauding innocent businesses.) No single data point is dispositive, but, across thousands of them, we can piece together an accurate picture.
The most technologically complicated service offered by Stripe is their fraud detection algorithms. Arguably, it's one of the most difficult machine learning challenges to solve in any financial institution.
If you lean in too much into the "compliance" part, you'll frustrate many businesses and customers who are blocked from transacting because "the system said no".
If you are too flexible and can only catch the most egregious examples of fraud, then you put everybody in a worse position (high-risk environments do not lead to improved business outcomes).
This is not a "solved problem" by any stretch of the imagination, but Stripe is one of the few companies that can tackle it due to the sheer scope of payment processing data they collect globally. Due to compliance and risk reasons, most financial institutions are purely limited to the market that they operate in and even there is a limited network effect (i.e., JPMorgan can only see what users of JPMorgan cards are buying). Credit card services like Visa and Mastercard have a bigger view, but their preference has been to only provide the infrastructure, offloading disputes fundamentally back to the banks.
Stripe is arguably the only financial institution that has the sample of data, diverse customer base, and technical chops to deliver an accurate fraud detection algorithm at scale. This by itself is a significant edge that will only get bigger as AI capabilities advance.
Source: Stripe Annual Letter 2024
While LLMs mostly deal with knowledge that changes slowly (the laws of physics haven't changed since we started asking Claude for explanations), fraud distributions are not stationary: fraudulent actors adapt their behavior as soon as they're thwarted. As such, we also enable our models to adapt in real time, so that future decisions benefit from all prior data. When a Stripe Radar fraud model makes a decision on a payment, it knows about events that occurred 100 milliseconds ago across the Stripe network. (We've open-sourced some of the infrastructure we built for this.)
With these and other techniques, we reduced card testing on Stripe by over 80% in the past two years, protecting our customers from billions of fraudulent transactions. Fraudsters: you're going to have to start working through your lunch breaks.
Fraud costs around 3% of the revenue of any online business. Reducing this increases the growth rate of any business. It's an obvious problem that needs solving, and there are very few other players that can tackle this challenge effectively.
It's also the highest existential risk in front of Stripe today. The company is developer-focused and arguably offers the best set of tools on the market. If the payment platform becomes known for being easily exploited by criminals, it will lead to a loss of trust with its most sensitive customer base, which is likely to have significant long-term consequences.
The top stablecoin use cases today involve tangible, real-world activity. CFOs use stablecoins to manage corporate treasury, immigrants use them for remittance, citizens of countries with unstable currencies use them for dependable savings, and payments teams use them to enable customers from countries with low card penetration. Some of our favorite examples: SpaceX uses Bridge to repatriate funds from Starlink sales in Argentina, Nigeria, and other markets. DolarApp, a neobank in Mexico, uses Bridge to help individuals receive USD payments from payroll providers like Deel. Airtm uses Bridge to disburse payments to workers all over Latin America.
Why care about stablecoins? Improvements to the basic usability of money make economies more prosperous. Consider the transitions from coins to banknotes, from the gold standard to fiat currency, and from paper instruments to electronic payments. Stablecoins are a new branch of the money tree. Such transitions occur with some regularity over the centuries, and the effects tend to be large.
Stablecoins have four important properties relative to the status quo. They make money movement cheaper, they make money movement faster, they are decentralized and open-access (and thus globally available from day one), and they are programmable. Everything interesting follows from these characteristics.
As I mentioned at the beginning of this section, Patrick and John Collison are clearly seeing themselves as visionaries in this field (and by now they have the track record to back it up). Stablecoins are an obvious, if risky, bet.
On one hand, most currencies today are managed in a "programmable" manner. It's only logical that this would continue as a trend; cash will be phased out, and then the "digital dollar" will become the default.
Stablecoins are the precursor to this, and it's not clear yet whether they'll survive past the moment when Central Bank Digital Currency (CBDC) becomes a reality (which with the current administration was completely frozen following an executive order back in January).
What is obvious is that programmable money is superior to the existing alternatives and is the perfect fit for the most developer-friendly financial platform in the industry.
There are many valuable things that one can work on in the world, but hardly a day goes by without us reflecting on how fortunate we are to play a small role in supporting the collective work of Stripe's customers. The businesses we work with are advancing the prosperity of our societies in ways large and small, and their ingenuity is why we're excited to get to work every day. To customers reading this letter: thank you for your trust.
One of the most interesting parts of Bezos's shareholder letters was the humility and genuine interest he had towards his customers and partners. There are not a lot of founders who display that type of curiosity, but when it comes to Stripe, it's obvious from the stories and themes they showcase.
Competitive landscape and the tech sales opportunity
One of the parts that I enjoy the most about tech sales is that in almost every niche you'll find several multi-billion dollar companies, caught in a complicated battle for market share. In the case of Stripe, they compete with several similarly sized (and some much larger) companies that have their own pros and cons.
PayPal: The "incumbent" in the space, PayPal is a good example of a large player that doesn't innovate but instead buys their way into "an expanded portfolio". Since they were getting outplayed in the API and "finance as an infrastructure" game, they decided to acquire Braintree, competing on both technology and price. While they still have a 10-15% higher volume of transactions, there are multiple areas where it's clear that Stripe is the superior choice for customers. PayPal's primary strength right now is customer familiarity and high availability.
Adyen: If PayPal is the legacy option, Adyen is very much the Enterprise alternative to Stripe. Well known for its resilience, stability, and focus on delivering a comprehensive B2B service, Adyen has been growing at a very similar rate and has a strong Go-to-Market (GTM) team (funnily enough, both companies have the same RepVue attainment rating of 64%). Adyen also has a strong payment terminal business and is known for bespoke implementations.
Square: The reverse of Adyen, they have a strong SMB presence and large physical footprint. While they would not "win" over Stripe long term, they occupy a significant market share in a potential expansion area.
Legacy payment processors: Worldpay, Finserv, Global Payments - essentially the backbone of the existing payment industry. More importantly, they run expanded businesses in multiple areas, often with conflicting interests. They also often interact via intermediaries (such as banks or credit card insurers) rather than directly integrating with companies.
It's important to keep in mind that winning the "full" payment flow in a lot of cases will not be possible, due to risk, compliance, and other factors. The goal for Stripe is to be developer-centric and deliver the best modern stack on the market for programmable money.
So what does being a sales rep there look like?
Source: RepVue
The overall consensus is that Stripe is great to work for, but selling means getting through a lot of internal red tape and you'll not be rewarded as well as at other companies.
Source: RepVue
This is not that surprising once we look at their company role split:
Source: LinkedIn
From more than 11,000 employees, sales represents around 12% of the workforce. For comparison, Adyen, who focus on Enterprise only, are running at an 18% ratio based on LinkedIn but most probably have close to double the Go-to-Market team (at 5,000 employees nonetheless).
This has a lot to do with the Product-Led Growth motion for Stripe, and like many developer-centric companies still run by their (engineering) founders, there is a lack of interest or investment in the sales teams.
As such, it's very unlikely that it's an "amazing" experience for a sales rep, but it can be foundational in terms of practical skills and knowledge that can then be leveraged into more lucrative opportunities. On-Target Earnings (OTE) attainment is also (literally) the same as Adyen at 64%, which gives a good indication of the trade-offs between a sales-centric organization with too many reps versus an engineering-centric org that doesn't want to overcompensate.
There is also a lot to be said for being part of a company that actually innovates and still has a significant "level up" event in the form of an IPO ahead of them. To tie this off, here is the original Bezos shareholder letter from 1997:
Creator: Drew Angerer | Credit: Getty Images
1997. It's All About the Long Term
To our shareholders:
Amazon.com passed many milestones in 1997: by year-end, we had served more than 1.5 million customers, yielding 838% revenue growth to $147.8 million, and extended our market leadership despite aggressive competitive entry.
But this is Day 1 for the Internet and, if we execute well, for Amazon.com. Today, online commerce saves customers money and precious time. Tomorrow, through personalization, online commerce will accelerate the very process of discovery. Amazon.com uses the Internet to create real value for its customers and, by doing so, hopes to create an enduring franchise, even in established and large markets.
We have a window of opportunity as larger players marshal the resources to pursue the online opportunity and as customers, new to purchasing online, are receptive to forming new relationships. The competitive landscape has continued to evolve at a fast pace. Many large players have moved online with credible offerings and have devoted substantial energy and resources to building awareness, traffic, and sales. Our goal is to move quickly to solidify and extend our current position while we begin to pursue the online commerce opportunities in other areas. We see substantial opportunity in the large markets we are targeting. This strategy is not without risk: it requires serious investment and crisp execution against established franchise leaders.
It's All About the Long Term
We believe that a fundamental measure of our success will be the shareholder value we create over the long term. This value will be a direct result of our ability to extend and solidify our current market leadership position. The stronger our market leadership, the more powerful our economic model. Market leadership can translate directly to higher revenue, higher profitability, greater capital velocity, and correspondingly stronger returns on invested capital.
Our decisions have consistently reflected this focus. We first measure ourselves in terms of the metrics most indicative of our market leadership: customer and revenue growth, the degree to which our customers continue to purchase from us on a repeat basis, and the strength of our brand. We have invested and will continue to invest aggressively to expand and leverage our customer base, brand, and infrastructure as we move to establish an enduring franchise.
Because of our emphasis on the long term, we may make decisions and weigh tradeoffs differently than some companies. Accordingly, we want to share with you our fundamental management and decision-making approach so that you, our shareholders, may confirm that it is consistent with your investment philosophy:
We will continue to focus relentlessly on our customers.
We will continue to make investment decisions in light of long-term market leadership considerations rather than short-term profitability considerations or short-term Wall Street reactions.
We will continue to measure our programs and the effectiveness of our investments analytically, to jettison those that do not provide acceptable returns, and to step up our investment in those that work best. We will continue to learn from both our successes and our failures.
We will make bold rather than timid investment decisions where we see a sufficient probability of gaining market leadership advantages. Some of these investments will pay off, others will not, and we will have learned another valuable lesson in either case.
When forced to choose between optimizing the appearance of our GAAP accounting and maximizing the present value of future cash flows, we'll take the cash flows.
We will share our strategic thought processes with you when we make bold choices (to the extent competitive pressures allow), so that you may evaluate for yourselves whether we are making rational long-term leadership investments.
We will work hard to spend wisely and maintain our lean culture. We understand the importance of continually reinforcing a cost-conscious culture, particularly in a business incurring net losses.
We will balance our focus on growth with emphasis on long-term profitability and capital management. At this stage, we choose to prioritize growth because we believe that scale is central to achieving the potential of our business model.
We will continue to focus on hiring and retaining versatile and talented employees, and continue to weigh their compensation to stock options rather than cash. We know our success will be largely affected by our ability to attract and retain a motivated employee base, each of whom must think like, and therefore must actually be, an owner.
We aren't so bold as to claim that the above is the "right" investment philosophy, but it's ours, and we would be remiss if we weren't clear in the approach we have taken and will continue to take.
With this foundation, we would like to turn to a review of our business focus, our progress in 1997, and our outlook for the future.
Obsess Over Customers
From the beginning, our focus has been on offering our customers compelling value. We realized that the Web was, and still is, the World Wide Wait. Therefore, we set out to offer customers something they simply could not get any other way, and began serving them with books. We brought them much more selection than was possible in a physical store (our store would now occupy six football fields), and presented it in a useful, easy-to-search, and easy-to-browse format in a store open 365 days a year, 24 hours a day. We maintained a dogged focus on improving the shopping experience, and in 1997 substantially enhanced our store. We now offer customers gift certificates, 1-Click(SM) shopping, and vastly more reviews, content, browsing options, and recommendation features. We dramatically lowered prices, further increasing customer value. Word of mouth remains the most powerful customer acquisition tool we have, and we are grateful for the trust our customers have placed in us. Repeat purchases and word of mouth have combined to make Amazon.com the market leader in online bookselling.
By many measures, Amazon.com came a long way in 1997:
Sales grew from $15.7 million in 1996 to $147.8 million -- an 838% increase.
Cumulative customer accounts grew from 180,000 to 1,510,000 -- a 738% increase.
The percentage of orders from repeat customers grew from over 46% in the fourth quarter of 1996 to over 58% in the same period in 1997.
In terms of audience reach, per Media Metrix, our Website went from a rank of 90th to within the top 20.
We established long-term relationships with many important strategic partners, including America Online, Yahoo!, Excite, Netscape, GeoCities, AltaVista, @Home, and Prodigy.
Infrastructure
During 1997, we worked hard to expand our business infrastructure to support these greatly increased traffic, sales, and service levels:
Amazon.com's employee base grew from 158 to 614, and we significantly strengthened our management team.
Distribution center capacity grew from 50,000 to 285,000 square feet, including a 70% expansion of our Seattle facilities and the launch of our second distribution center in Delaware in November.
Inventories rose to over 200,000 titles at year-end, enabling us to improve availability for our customers.
Our cash and investment balances at year-end were $125 million, thanks to our initial public offering in May 1997 and our $75 million loan, affording us substantial strategic flexibility.
Our Employees
The past year's success is the product of a talented, smart, hard-working group, and I take great pride in being a part of this team. Setting the bar high in our approach to hiring has been, and will continue to be, the single most important element of Amazon.com's success.
It's not easy to work here (when I interview people I tell them, “You can work long, hard, or smart, but at Amazon.com you can't choose two out of three”), but we are working to build something important, something that matters to our customers, something that we can all tell our grandchildren about. Such things aren't meant to be easy. We are incredibly fortunate to have this group of dedicated employees whose sacrifices and passion build Amazon.com.
Goals for 1998
We are still in the early stages of learning how to bring new value to our customers through Internet commerce and merchandising. Our goal remains to continue to solidify and extend our brand and customer base. This requires sustained investment in systems and infrastructure to support outstanding customer convenience, selection, and service while we grow. We are planning to add music to our product offering, and over time we believe that other products may be prudent investments. We also believe there are significant opportunities to better serve our customers overseas, such as reducing delivery times and better tailoring the customer experience. To be certain, a big part of the challenge for us will lie not in finding new ways to expand our business, but in prioritizing our investments.
We now know vastly more about online commerce than when Amazon.com was founded, but we still have so much to learn. Though we are optimistic, we must remain vigilant and maintain a sense of urgency. The challenges and hurdles we will face to make our long-term vision for Amazon.com a reality are several: aggressive, capable, well-funded competition; considerable growth challenges and execution risk; the risks of product and geographic expansion; and the need for large continuing investments to meet an expanding market opportunity. However, as we've long said, online bookselling, and online commerce in general, should prove to be a very large market, and it's likely that a number of companies will see significant benefit. We feel good about what we've done, and even more excited about what we want to do.
1997 was indeed an incredible year. We at Amazon.com are grateful to our customers for their business and trust, to each other for our hard work, and to our shareholders for their support and encouragement.
/s/ JEFFREY P. BEZOS
Jeffrey P. Bezos
Founder and Chief Executive Officer Amazon.com, Inc.
