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“Invention is the root of our success.” So said Jeff Bezos, who – among other things – founded Amazon.com 27 years ago, grew it into a trillion-dollar company and, along the way, became the world’s second-richest person.

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Bezos is stepping down as CEO of Amazon and transitioning to the Executive Chairman role. He announced his departure in a letter to Amazon employees on Tuesday.

In that letter, Bezos answered the trillion-dollar question that everyone in the world wants to ask the man: how?

How did you turn an idea of an online bookstore in the 1990s, into a $1.7 trillion technology empire today, spanning e-commerce, cloud computing, digital advertising, streaming TV, grocery stores, and more?

His response was simple: invention.

“Invention is the root of our success. We’ve done crazy things together, and then made them normal. We pioneered customer reviews, 1-Click, personalized recommendations, Prime’s insanely-fast shipping, Just Walk Out shopping, the Climate Pledge, Kindle, Alexa, marketplace, infrastructure cloud computing, Career Choice, and much more. If you get it right, a few years after a surprising invention, the new thing has become normal. People yawn. And that yawn is the greatest compliment an inventor can receive.”

Believe it or not, it really is that simple.

Innovation is the fuel of growth.

Why Jeff Bezos Is Right About Innovation

Think about the world’s largest companies today outside of Amazon.

You have Alphabet ($1.3 trillion market cap), Apple ($2.3 trillion), Microsoft ($1.8 trillion) and Facebook ($780 billion).

How did they get there? The same way Amazon did – through innovation.

Alphabet’s founders Sergey Brin and Larry Page figured out back in the late 1990s how to create a centralized online database that indexed the entire internet and made it searchable. Then the company acquired YouTube. Then it plunged into cloud computing with Google Cloud. Then it launched a self-driving business named Waymo.

That’s innovation. The result? A trillion-dollar company.

Mark Zuckerberg, meanwhile, figured out in the early 2000s how to connect college students online. He took that platform, and expanded its use case to the masses. Then the company got into messaging (Messenger and WhatsApp), pictures (Instagram), and commerce (Marketplace and Facebook Shops).

That’s innovation. The result? A near-trillion-dollar company.

Lather, rinse, repeat for Microsoft and Apple. Bill Gates and Steve Jobs were relentless innovators. They made computers and smartphones ubiquitous – and then their successors created enormous software businesses on top of their hardware empires.

That’s innovation.

Get the point?

Today’s trillion-dollar businesses all have one thing in common – they’re relentlessly innovative.

So if you’re looking for the next Amazon, the next Alphabet, the next Apple, the next Facebook and the next Microsoft, start by looking at today’s most innovative companies.

Which companies are at the top of my list? Consider these hyperinnovative names:

  • Square (NYSE:SQ). This is a payments processor turned digital money ecosystem operator that is so innovative, it was able to post its best year ever during the Covid-19 pandemic (when its core business was essentially shut down) because of its brand-new mobile money app, Cash App. The next big innovation? Banking.
  • Canoo (NASDAQ:GOEV). Lots of EV companies out there. None as innovative as Canoo – who is quite literally reinventing the wheel. The company has made, from scratch, an entirely new type of car that maximizes interior space and is built for the era of self-driving. Plus, the company has completely reimagined how we buy cars, and is pioneering a disruptive subscription model for shared car ownership. The DNA here is innovative to its core.
  • C3.ai (NYSE:AI). Making enterprise AI systems is tough. So tough that a lot of companies have given up on deploying AI. Not C3.ai. The company is breaking ground on making scalable and easily-deployable open AI architectures that can and will fundamentally change every industry in the world. There is nothing more innovative than tackling the world’s biggest challenge and then, in turn, changing the world – that’s exactly what C3.ai is doing today.
  • Axon (NASDAQ:AAXN). The company used to make tasers – and only tasers. Indeed, its name used to be Taser International. Then the company started selling body cameras. Then dash cameras. Then a suite of cloud-hosted software services aimed at digitizing police agencies. The result is that Axon now stands alone as the unrivaled leader in law enforcement technology – and is in a position of strength to digitize every public safety agency in the world over the next decade.
  • Tesla (NASDAQ:TSLA). Yes, everyone knows this name, but there are plenty who still don’t believe in Elon Musk & Co. Yet, Musk’s innovative thinking continues to drive Tesla’s stock to newer heights, and I’m seeing plenty of strength in this name in 2021. Tesla reported favorable fourth-quarter figures, which were home to yet-another profit (its sixth profitable quarter in a row) and record deliveries. The big picture here is that Tesla is on the verge of becoming a global powerhouse and dominating many industries, including automobiles, energy generation, and energy storage. This is a stock that innovation-minded investors really must own for its disruptive potential.
  • Luminar Technologies (NASDAQ:LAZR). Self-driving will be a widespread reality by the late 2020s. The technology that will enable this disruption is LiDAR, and the best LiDAR maker in the world is Luminar. Founder by a boy genius who could very easily be the next Elon Musk, Luminar has made the industry’s highest-performance and most cost-effectively LiDAR sensors. By 2030, this company’s LiDAR sensors will be on most cars in America.
  • Stem (NYSE:STPK). The world’s pivoting to clean energy. The two biggest clean energy sources – solar and wind – are intermittent. So, in order to power a clean energy future, we need energy storage solutions. Stem makes those solutions. More than that, they make AI-powered energy storage solutions which leverage a vast network of energy data to dynamically and automatically maximize energy output and minimize energy costs. These solutions will be installed at most office locations across the world by 2030.

These are among the most innovative companies in the world today – and they could very easily end up being the market’s biggest winners over the next 5 to 10 years.

Alas, though, I’ll let Bezos have the last word here. One of the world’s greatest innovators ended his retirement letter with the following advice. They are, to say the least, worth applying to your investments:

“Keep investing, and don’t despair when at first the idea looks crazy. Remember to wander. Let curiosity be your compass. It remains Day 1.”

On the date of publication, Luke Lango did not have (either directly or indirectly) any positions in the securities mentioned in this article.

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