Jeff Bezos Revealed: Building Amazon One Box at a Time

get big fast the mantra of amazon.com and its boisterous founder Jeff Bezos from the moment I got there the feeling was that you just press down on the accelerator harder and harder the audacious entrepreneur rewrote the rules of retail there really was this sense of urgency around this internet land grab that was taking place you know how do we establish the Amazon brand and his strategy didn't always pay off even after Amazon went public people looked at the financials and said this company's not gonna make it amazon.com was actually profitable in December 1995 must have been for about one hour with a series of sly moves Jeff Bezos built and rebuilt amazon.com if you ask a question that Jeff doesn't feel like is something they want to go into the answer he gets gonna be the laughs and he's laughing all the way to the bank you can buy anything at amazon.com from books music shoes and clothing to a battle tank or a tiki hut Amazon is the most successful online retailer in the world and still run by the man who created it back in 1994 Jeff Bezos Jeff seemed to realize that being the singular place where a consumer can find and buy virtually anything that's available in the retail market was a critical part of the company's growth strategy the public image of Jeff Bezos is of a superhero entrepreneur and he is that if you look at his life from the very beginning he's taken risks and he solved problems and he's created billions of dollars well Bezos is more guarded than his outgoing public persona and declined to participate in this program Jeffery Preston Bezos was born in Albuquerque New Mexico on January 12th 1964 to Jacquie guys a 17 year old high school student guys divorced his biological father and married Miguel Bezos a Cuban immigrant and petroleum engineer for Exxon Miguel adopted four-year-old Bezos in 1968 Bezos described his early computer experience in a 2001 interview with the Academy of achievement there was a company in Houston that had loaned excess mainframe computer time to this little elementary school none of the teachers knew how to operate this computer nobody did but there was a stack of manuals and me and a couple of other kids stayed after class and learned how to program this thing as a teen Bezos embarked on his first serious entrepreneurial effort a summer camp based out of his house with an emphasis on science and literature five students signed up at a hundred and fifty dollars a pop in 1986 he graduated from Princeton University summa laude with degrees in electrical engineering and computer science Nicolas Carlson is deputy editor at Business Insider comm and has covered Amazon for six years faizal's actually recruited into a hedge fund and de shah and he didn't want to work in finance he actually wanted to work in computer programming but de Shah is a computer programmer and the hedge fund has sort of built around algorithms and the type of technology that basis is interested in it wasn't the only thing he found interesting he came upon a statistic that just astounded him he saw that the internet was growing it two thousand three hundred percent per year and he just became obsessed with this number studying the top 20 mail-order businesses Bezos saw an opportunity online Chris Anderson is editor-in-chief for Wired magazine you can see that there was this technological tsunami that was arriving that was going to disintermediate was going to create new distribution channels reset economics change the way we bought and sold and the question was which domain shall we apply it to the answer was books a commodity for which no comprehensive catalog existed in July 1994 he quit his secure Wall Street job to pursue his dream to create one of the world's first online bookstores his first investors his parents who he talked about with the Academy of achievement my dad's first question was what's the Internet okay so this he wasn't making a bet on this company or this concept he was making a bet on his son in the summer of 1994 Jeff Bezos and his wife Mackenzie headed to Washington State armed with $300,000 from his parents entrepreneur and technology expert Esther Dyson is chairman of the investment firm adventurer holdings you now have a lot of people leaving Wall Street to go I'm trying to startups but Jeff was different he had a really solid business / Wall Street background and then he created something amazing Bezos and his wife settled in Bellevue Washington and hired two programmers to write the code Bezos related the story in a speech at Lake Forest College in 1998 found a house that could serve as the first business and had a garage and seemed the right thing to do since there's a history of startups and garages this wasn't fully legitimate because it was a converted enclosed garage but I considered it somewhat legitimate because it wasn't insulated those were not impressive offices he dubbed the company Amazon after the seemingly endless South American River with its countless tributaries on July 16 1995 amazon.com opened its virtual doors to the public James Marcus was employee number 55 Marcus was hired to write book reviews for the site that was nothing more than a list of titles when I checked out their site to see if this was a place where I might want to work I discovered it was quite rudimentary actually there was a front page with an eclectic mixture of books but the most notable thing was that there was a huge catalogue of probably several hundred thousand books at the time but there was no content in that catalog the fledgling amazon.com had no advertising budget initial sales were generated solely by word-of-mouth Heath Terry is managing director of internet research at Connor core Genuity there was a lot different about Amazon really from the beginning you know they weren't in Silicon Valley they were in Seattle they weren't really into the whole hype of the bubble they were putting out press releases every single day the site caught on within a month books had been sold to customers in all 50 states and 45 other countries what was different than Amazon was that Jeff ran it right he was organized he understood distribution he understood how to motivate people to buy he just he did things with great attention to detail Bezos goal for growing the company could be summed up in a simple line get big fast was both a mantra and very much a strategic decision on Jeff's part everything had to be on steroids all growth had to be on steroids Eric best was manager of business development at Amazon from 1999 to 2001 there really was this sense of urgency around capturing e-commerce market share this internet land grab that was taking place you know how do we establish the Amazon brand and grow the overall business at the expense of competitors and within a very time-bound window the strategy paid off big time by the end of 1996 the company reached fifteen point seven million dollars in sales the gains were boosted by Amazon's ability to offer tax-free shopping to most online consumers what makes us different is vast selection convenience we deliver right to the desktop and also the fact that we're the broadest discounters in the world we discount over 300 thousand titles basically the best-selling titles that's twice as many titles as the largest physical book store even offers but early investors were frustrated the surge in sales came without profits while Amazon spent millions developing software and expanding its business you know there was a lot of a risk that was taken on by the company during those early days and I think there was a lot of speculation around whether or not that was the right thing to do it's easy now to look back and say of course Amazon needed that capital and they needed to invest at the rate that they did in order to achieve the scale that they now have that was not always clear from day one what was clear was that Bezos was unstoppable he kept up the pace and powered ahead for Amazon's IPO the idea was that you could not rest on your laurels for one moment and that you just had to keep innovating all the time and staying out of the competition all the time and never have even a millisecond of complacency on May 15 1997 the stock began trading on the Nasdaq stock market at $29.25 a share nearly $12 higher than its offering price the day of the actual IPO was a very big deal there were you know parties all over the company and Jeff addressed us you know over the speakerphone from New York I mean Jeff was telling us on the phone you know we've made history today you have all made history today it was pretty damn exciting but despite the well-received IPO tech analysts still offered a dour assessment of the company Tim O'Reilly is founder and CEO of O'Reilly Media most people remember the business story that Amazon was going to be toast people were scrutinizing their financials they were saying this company will never be profitable or there were a lot of naysayers the company's engineers were hard at work updating the site introducing features like one-click shopping by the end of 1997 the value of Amazon stock nearly tripled Jeff would say to us do not pay attention to the stock price he was very confident that in the long run it would go up and up and up but felt it was very dangerous to look at it in the short run Amazon continued their frantic expansion hiring more than 7,000 employees and beefing up their product line you know we just heard talk about virtually everything in anything we could sell groceries health care cell phone plans and cell phones magazines and then eventually you know hardware garden hoses and toys the expanded product line and high volume sales paid off for both amazon.com and Bezos on December 20th 1999 he was anointed Time magazine's Person of the Year made my mom cry and you know parents are always proud and that feels great it was the the ultimate legitimization of his sort of starry-eyed dream of conquering the world through e-commerce like you flipped to the inside of the magazine there's Jeff dressed as Indiana Jones swinging on a vine it was kind of making him into an American folk hero in a way it's like you suddenly like Paul Bunyan was in the office down the hall from you Bezos was at the top of his game but an industry-wide disaster was right around the corner by the late 90s amazon.com was an online juggernaut but in 2000 the dot-com bubble burst stock prices slumped and Jeff Bezos was forced to take drastic measures there were at least two waves of layoffs and as is usually the case with these things you don't know who's gonna go kind of cower in your office and wait for the HR person to you know summon you of the finger and it feels bad to see your colleagues go in the context of the slowing economy and the the the deep slowing and consumer confidence this was the only prudent decision that we could make by September 2001 the company's stock hit an all-time low and bottomed out at five dollars and 97 cents a share from poster child to whipping boy in nanoseconds it's not the kind of stock that you can own and sleep well if you're a small investor and I think by the way that's true of all internet stocks the advantage that Amazon had was they had built this war chest so to speak on their their balance sheet of cash to to fund them through all this Jeff Bezos made a lot of large bets and not all of them paid off the company didn't profit for many years in the beginning the reason Jeff Bezos got away with that and benefited long-terms because he was always very direct with employees and stakeholders in the company at long last by January 2002 those bets began to pay off Amazon stock price rebounded and Bezos company did something it hadn't done in seven years posted a profit the best thing can say about him is that he was unwavering in his confidence he could see the bigger picture and he knew that the skeptics were short-term errs they were not seeing the big picture and he stuck to the vision once the bubble burst the investors patience for companies saying we're going to make big investments in building out a dot-com site to our business was very very thin and so Amazon took advantage of that and started partnering with Target and Toys R Us and the gap and other traditional retailers the dot-com retail giant joined forces with more than four hundred companies but not all retailers were willing partners I do know of a number of cases in which he has acquired companies in order to take out competitors potential future competitors rather than because he actually wants that business to continue with his company back on track Bezos switched gears and increased his focus on a much different passion on March 6th 2003 he charted a helicopter to scout property in a remote region of Southwest Texas he was looking to buy up ranches for a venture he had started in 2000 called Blue Origin Blue Origin is a technology company whose purpose was to develop vertical takeoff and vertical landing rockets for human space travel the trip was nearly a disaster shortly after takeoff the helicopter flipped and landed in a riverbed in 2003 Jeff Bezos almost died in a helicopter crash it's sort of a pattern where he can go through something difficult like a dot-com crash be philosophical about it laughing off with his big famous laughs unlike Space Exploration ventures bankrolled by private backers including Elon Musk Richard Branson and John Carmack Bezos is obsessive about keeping his efforts at Blue Origin secret for a variety of reasons it's pretty secretive and I think actually from the point of view of the space industry that's sort of a pity what makes a good market is when you have a bunch of competitors openly competing and they try and position themselves against one another and the markets visible they compete for money they compete for people and so forth after six years of working behind closed doors and locked gates blue origins odd-looking tests rocket blasted off Bezos was also set to launch on another revolutionary effort this one closer to home this is an opportunity to hugely expand the book industry expand pricing expend the definition of what a book could be but it required someone with sufficient clout to do that end-to-end hardware software web integration and only Amazon was in a position to do that on November 19 2007 Jeff Bezos took to the Charlie Rose show to announce the release of a groundbreaking new product here in my hands is what we're talking about it is called the Tyndall tell me when you first had the idea that this might be possible what we realized at the time was that there were a few technologies that were sort of converging that we could combine together at the right recipe and make something that would be what we hoped would be transformative in the world of electronic reading the Kindle was an instant hit Amazon put this device out there that takes away so many of the aesthetic pleasures that people take in books you know you can't smell the pages anymore dog-ear the books but it turns out book lovers who are all these people that feared and load this thing now they love the Kindle the $399 ereader sold out nationwide in just five and a half hours the number of Kindles sold however remains a closely guarded secret a company spokesman said that they choose not to disclose the number Jane Freedman is former CEO of HarperCollins and co-founder of open-road integrated media no one today knows how many Kindles there really are out there it's a guessing game we know that there are millions but how many millions but its strategic for Amazon obviously because that's what they do they keep a lot of information close to the vest but publishers saw the Kindle as an industry killer there will be real blood on the tracks of publishing in the next few years because publishers did not wake up soon enough to the fact that Amazon was a competitor while the Kindle was making serious waves in the e-book marketplace Amazon was preparing to make its largest corporate acquisition to date Tony Hsieh is CEO of Zappos calm America's leading online shoe retailer when I first met Jeff Bezos in 2004 he hadn't contacted us and said they were interested in possibly acquiring Zappos at the time we said we weren't interested because sapless would kind of lose its identity Shay was hesitant to sell to Amazon they contacted us again and said they were willing to consider a different scenario where we could remain independent and we started realizing while they might actually be really great partners Amazon purchased the hot online shoe retailer in the summer of 2009 Zappos investors received 10 million Amazon shares worth about 1.2 billion dollars at the time the deal closed I got stopped which at this point is better than cash and what this kind of shows that Jeff Bezos and Amazon is someone who yes he can steamroll the competition when he needs to but he's also willing to play ball and negotiate and get what he wants but make everybody wealthier in the process the shoe fit but his cash cow the Kindle was about to get some very serious competition from a tech giant and we call it the iPad On January 27th 2010 Apple launched the iPad also designed for use as an electronic reading device Bezos responded aggressively by cutting costs and adding new features to his ereader one thing that Bezos has always been comfortable doing running Amazon is playing with very tight margins so when you see the Kindle lowering in price what you're seeing is Bezos recognizing what the real long term gain here for Amazon is to be the place where everyone buys all of their ebooks and the Kindle is just how they get them the phenomenal growth of the e-book market devastated bricks and mortar stores Amazon came on the scene and became a competitor to the bricks and mortar retailers and they were the e-tailer everybody was coexisting in fact borders and it may have been their downfall but borders did all of their digital their digital selling through Amazon had borders established its own presence it might have been a very different situation today according to the author's guild Amazon had been buying books from publishers at twelve to thirteen dollars wholesale and selling them as Kindle books for $9.99 taking a loss each time best-selling author John Grisham railed against Amazon's pricing model we're gonna get to a point if a book is worth ten dollars okay whether it's a discount hardback at Amazon or an e-book sold by Amazon for the Kindle if we're ten dollars okay then suddenly the whole industry is going to change you can lose publishers you lose bookstores others saw opportunity you look at all of the authors that have been and empowered by Kendall to develop a direct consumer relationship that they never had before and I think that's where Amazon is able to come out a winner and all of this by building this bridge between authors and their readers that in the past has never really existed Borders Books filed for bankruptcy and Barnes and Noble the world's largest bookshop chain is looking for a buyer in 2011 amazon.com stepped beyond the retail sales market and into the video streaming ring going head-to-head with Netflix Andrew wallenstein is a TV editor for Variety magazine I think if your Netflix you're looking at Amazon and really sizing them up as a competitor Amazon has a lot of traction online they've got deep pockets to buy just as much content there at the very beginning of this kind of effort but in time Amazon could grow to be just as big as Netflix the e-commerce retail giant is also fending off growing efforts to put an end to its untaxed online sales new laws may force Amazon to charge local sales tax but Bezos remains cool under fire and unfazed he continues to forge ahead Jeff Bezos has his fingers and everybody's pie he's got video streaming which competes with Netflix he's doing music now which competes with Apple and iTunes he's even selling Android apps in an amazon.com App Store that goes right after Google's marketplace if he sees something where Amazon can make a little piece of money and help its margins return you know so thin he'll go for it going forward has gotten him this far his space project is going even farther in April 2011 NASA awarded Blue Origin 22 million dollars to continue developing its space vehicle design he was listed by Forbes as the 30th richest person in the world estimating his net worth at 18 point 1 billion dollars amazon.com remains the world's largest online retailer he's not just a visionary with visions he's an architect with blueprints and some notion of how to make things work he thinks very carefully about design and structure and operations and that's what turns a vision arian is somebody who actually accomplishes something he could have sold Amazon to Barnes & Noble or probably to some other booksellers and walked away with many millions of dollars like in his early 30s since then he just keeps on coming up with really good ideas he's not the hard-charging going to take no prisoners type CEO he's somebody that has his vision for how he wants to build this company and is able to surround himself by people that buy into that I think ultimately that's one of the reasons that he's been as successful as he has

Channel: Bloomberg

Views: 677,309

Rating: 4.8392467 out of 5

Keywords: Bloomberg, Amazon.com (Venture Funded Company), Jeff Bezos (Organization Leader), Technology (Industry), Online Shopping (Industry), retail, internet, shipping

Id: tfAhTtBlb2Q

Length: 25min 3sec (1503 seconds)

Published: Mon Jan 26 2015