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Amazon tycoon, Jeff Bezos’ journey began in a Seattle garage, where he and his partner, MacKenzie, started selling books online. Through a series of smart decisions and well-timed risks, Bezos grew Amazon into the online behemoth it is today.
As large and pervasive as the behemoth online-shopping platform Amazon is today, it’s paramount to remember that it originated from just a small garage.
The founder, Jeff Bezos, and his first batch of employees packed books and took them to the post office themselves without any supply-chain contingency involved in the process. Today, in terms of core revenue generation, Amazon is the biggest internet-based company in the world and has come a long way since it started out selling books online in 1994.
Amazon is an online-shopping phenomenon, and the company sells almost everything from books for readers to shipping-container-houses for residents. Amazon has transformed into a one-stop-shop for consumers all over the world and is continuously evolving. In this article, we will explore Amazon’s earliest days while highlighting some of the tech corp’s most well-versed milestones.
Jeffrey Preston Jorgensen was born in Albuquerque, New Mexico in 1964 to mother Jackie, who was a 17-year-old high school student at the time. His biological father soon separated from Jeff’s mother, and Jeff was adopted by Mike Bezos, Jackie’s husband. The young family packed up and moved to Houston, Texas, where Jeff attended elementary school and spent summers at his maternal grandfather’s ranch in Cotulla. Under the sweltering heat of the Texas sky, Jeff learned aspects of managing a cattle ranch, picking up unique physical labor skills. Perhaps it was at the ranch, looking out over the stretches of grasses and farmland, that Jeff began thinking about space – all the vastness that could be explored with scientific innovation. According to Business Insider, he once told his teachers, “The future of mankind is not on this planet.” Clearly, from an early age, Jeff had extraplanetary expectations for technology, and he was keen to see them take hold.
Bezos’s family grew and continued moving, eventually landing in Miami, Florida. Here, Bezos began focusing on science and technology in his high school classes, even attending the Student Science Training Program at the University of Florida. Bezos’s entrepreneurial mind was already taking shape, and after working a typical teenage job at McDonald’s, he started his first business with his high school girlfriend. Interestingly, this would not be the first time he relied on the intellect and resourcefulness of a partner to create a start-up — more on this later. The Dream Institute, a summer camp for younger grade-schoolers, focused on literature and creative thinking, and at a price point of $600 per student, Bezos was able to get a taste of entrepreneurship.
Bezos was nominated as the valedictorian upon graduating from Miami Palmetto Senior High School in 1982. He waxed poetic — or scientific — about launching humans from Earth and turning the planet into a national park. His dreams of space exploration were becoming grander, although surely no one among his peers could have predicted he’d one day bring humanity closer to realizing his visions.
Bezos attended Princeton University, where he was an involved and fastidious student. He was a member of Phi Beta Kappa, the oldest academic honor society in American education; he joined the likes of the many presidents and Supreme Court justices who have also been members. He graduated summa cum laude in 1986 with a 4.2 GPA, receiving his BSE in electrical engineering and computer science. He turned down job offers from prominent tech companies like Intel and Bell Labs, instead turning his attention to a financial technology start-up called Fitel, where he became the eleventh employee. Entering on the ground floor of this business allowed him to understand the workings of an up-and-coming enterprise while honing his understanding of the financial world.
After his time at Fitel, Bezos continued his work in the finance industry by joining D.E. Shaw & Co. in 1990. The hedge fund utilized mathematical modeling to assess investment in the internet, which was still a young entity teeming with potential. Bezos recognized the opportunities of this growing technology, and with the rapidly-growing possibilities of the World Wide Web in mind, Bezos left his senior vice president title at the company to continue building his idea of an online “everything store.” But he didn’t do it alone; he acquired the help of his colleague, MacKenzie Scott Tuttle. The pair shared dreams of capitalizing on the internet’s growing notability and they wed in 1993. Soon after, they embarked on a cross-country road trip to Seattle, drafting the plans for their venture along the way. It was in this new city that Bezos laid the groundwork for what would become the behemoth online retailer we know today.
When Bezos and MacKenzie left their hedge fund jobs to open a virtual bookstore in 1994, there was little certainty that their endeavor would pay off. Bezos warned investors, his parents among them, that there was a significant chance his company would go bankrupt. But Bezos and MacKenzie had good business instincts: internet usage was growing by more than 2000% each year, and consumers were hungry for a retailer that would be open 24 hours a day. His genius idea to merge the eternal utility and tangibility of books with the potential of the internet was cunning; Bezos looked at relic texts and realized customers would appreciate a platform that offered groundbreaking accessibility to such material treasures. There’s also a certain beauty in Amazon’s very first book sale, Douglas Hofstadter’s “Fluid Concepts and Creative Analogies: Computer Models of the Fundamental Mechanisms of Thought,” which explores analogies as functions of human problem solving and the importance of computer modeling.
The elegance of the company’s conception doesn’t mean the operation was grandiose, however. Amazon, named after the wild South American river with the largest discharge volume on the planet, began in Bezos’s garage in Bellevue. He and MacKenzie hired Shel Kaphan as VP of Research and Development, along with a handful of other employees. The small team created a website retailing the vast digital catalogs book stores and distributors used. Kaphan recognized that because the company name began with the letter A, it would rise to the very top of alphabetical rankings of new sites — another stroke of genius. Kaphan also had his finger on the “cool” pulse of the internet and was able to launch Amazon onto various lists of up-and-coming enterprises across the Web. Together, the employees worked on desks made of doors purchased from Home Depot and set up a small bell that would ring every time Amazon made a sale. It’s no surprise that the bell was soon disassembled once sales began to surge.
Amazon managed to sell books to all 50 states and to more than 45 countries within the first few months, and it offered novel features for its customers, including the ability to share book reviews and post links to out-of-print texts. Amazon’s sales continued to climb past $20,000 each week, and Bezos and his team decided to set their sites on their initial public offering.
On May 15, 1997, Amazon went public at $18 per share, giving it a valuation of $300 million. In its filing process, the company warned all its stakeholders and the investors that it expected to report “substantial operating losses for the foreseeable future” due to massive investments in technology. Recall that society was well into the Information Age at this point and the scale of investments in internet-related companies had created a financial bubble. Amazon was also contending with aggressive competition from brick-and-mortar book retailers like Barnes & Noble, who issued a lawsuit against the company just a few days before its IPO (ironically, many Amazon meetings took place in the nooks and crannies of Barnes & Nobles storefronts). Fortunately, the contention upon which Amazon was being sued — its claim that it was the world’s largest bookstore — would amount to a matter of semantics as the suit was settled out of court.
As the overall demand increased, Amazon opened a secondary distribution and warehousing center in New Castle, Delaware, to serve customers on the East Coast. The 200,000-square-foot facility was the comprehensive beginning of a network that will eventually be a part of every city in the nation. After this phase, Amazon expanded its offerings and started to sell CDs and DVDs to the mass-market. Amazon’s music selection launched with more than 125,000 titles, which were far more average than the physical stores back then.
In the year 1999, Amazon patented the ability to purchase an item online with the click of a mouse; this technology was hailed “1-Click”. The technology gave Amazon an early advantage by prompting customers to buy products with more ease than ever. “1-Click” also allowed Amazon to harvest consumer data, which strengthened its network of purchasing information. Amazon also started to brand itself as a way for shoppers to find rare collectible books and other specialty items, allowing third-party sellers to hawk used merchandise in what it called zShops or Marketplace. Now Amazon customers had access to an entirely new world of items, and the company’s prowess as an authoritative retailer boomed.
As a result, Amazon sparked a huge increase in the volume of transactions on its platform; over a million customers bought something from the third-party seller marketplace. On December 27, 1999, Time Magazine named Jeff Bezos Person of the Year, dubbing him “the king of cybercommerce.” At age 35, Bezos was the fourth-youngest recipient of the amazing distinction.
Of course, it wasn’t long after that the dot-com bubble finally burst. Internet-based companies that had seen tremendous surges in investment were forced into bankruptcy, leaving little but doubt and trepidation in their wake. Perhaps because of Bezos’s hesitancy to overpromise and his ability to think long-term — Amazon had recently sold $672 million in convertible bonds to increase to bolster its liquidity — the platform pulled through the crash. It survived, but its stock value dropped considerably, and in an era when internet companies were seen as tumultuous, there was still uncertainty regarding how Amazon would regain its footing. Bezos was forced to borrow billions of dollars to strategize, but there was one small upside to the crash: there were now fewer online retailers to compete with.
Amazon began doubling down on its effort to hook consumers, waiving shipping fees, cutting prices and expanding the range of goods it sold. In 2002, Amazon announced a partnership with several major clothing companies to offer more than 400 apparel brands on its online store. Amazon sold hundreds of thousands of apparel items and happily took its 10% commission per sale. This propelled the company to move far beyond books with offerings that included electronics, toys, kitchenware and even magazine subscriptions. In 2003, Amazon started to generate extra income through the licensing of its precise platform to other e-commerce websites, including Target and Borders. Fifteen years later, Amazon Web Services dominated cloud hosting and has become the company’s biggest revenue driver.
Bezos continued to seek new ways of running his business. In 2004, Amazon paid $75 million to acquire Joyo, the largest online seller of books and electronics in the growing Chinese market. Despite the fact that Joyo already serviced 80 million customers, Amazon’s new international division, renamed Amazon China, faced stiff competition. As of 2018, it held only 0.7% of online sales, trailing far behind Alibaba’s 58.2%, according to eMarketer.
During an earnings call in 2005, Bezos announced a $79-a-year loyalty program that included free two-day shipping on any order. The idea would entice veteran customers to continue purchasing goods from the platform and would hook new buyers into laying down their cash for convenience. Now, with more than 100 million members worldwide, Prime is considered one of Amazon’s most valuable assets.
Just as the 2007 holiday shopping season began, Amazon unveiled the Kindle, an electronic reading device enabling users to wirelessly download books, magazines and newspaper articles, among other content. This product had been in the works since 2004 and embodied Bezos’s next genius merger of technology with text. The Kindle revolutionized how readers purchased, accessed and read their books, and literature was changed forever.
In the same year, Amazon made a decision that transformed Seattle’s real estate market. The corporation made a deal with the city and developers to fuse its dispersed workforce into a 1.6-million-square-foot resolute industrial neighborhood north of downtown. The city raised its height limits to accommodate the larger buildings, effectively bending to Amazon’s influence. After all, a larger flagship would mean increased employment, increased dissemination of merchandise and increased profit for the city of Seattle. The company’s new headquarters eventually housed 40,000 employees on more than 8 million square feet.
With the Kindle on the market and succeeding, it seemed pertinent for Amazon to capitalize on its share in the e-book realm. In 2008, Amazon paid $300 million for the audiobook company Audible, which housed a library of 80,000 programs in the United States and Europe. After the acquisition, Amazon dove further into the world of online shopping by buying online shoe retailer Zappos in an all-stock deal worth nearly $900 million. Following these buy-ins, Amazon bought Kiva Systems, a Massachusetts-based maker of warehouse robots, for $775 million. The deal allowed Amazon to amp up automation at its fulfillment centers, delivering products faster and with reduced need for human staff. Amazon later terminated Kiva’s client relationships with retailers like Office Depot and the Gap to sequester the proprietary technology.
Recall that in the earliest days of Amazon, Bezos and his handful of employees were responsible for packaging and sending books through the post office; their labor was probably seen as a polite necessity. In 2013, nearly twenty years later, Amazon entered into a confidential contract with the US Postal Service to begin delivering packages through the US Postal Service seven days a week in Los Angeles and New York.
Amazon then entered the smartphone market with its Fire phone that fully integrated with Amazon’s universe of media streaming options. The phone slackened due to lower consumer demand and competition with cellular giants like Apple.
The internet was now accessible to households and everyone within. Children were asking for video games for Christmas, and the internet saw a resultant demand for streaming services. In response, Amazon purchased Twitch Interactive, a three-year-old video game streaming company for $970 million. The 2014 deal not only complimented the work being done at Amazon’s game production division, but it helped pull the global gaming community toward its cloud platform, Amazon Web Services. Twitch is now the number-one game-streaming platform in the world.
After debuting its first smart speaker in 2014 to selected customers, Amazon put the Echo in 3,000 stores nationwide just in time for the holiday season. The Echo is the platform for Alexa, Amazon’s virtual personal assistant, and represents the key to a wealth of consumer data and purchasing decisions. Amazon Echo paved the path toward Amazon’s powerful consumer-oriented shopping experiences. Around the same time, Amazon upped its stake by purchasing Whole Foods’ 471 stores for a staggering $13.7 billion. Now Amazon had the ability to handle every aspect of a consumer’s day, from taking an audio recording of the grocery list to tracking purchases at Whole Foods. Fueled by investors’ enthusiasm and keenness for chunky profits, Amazon stock prices reached soaring heights making the company worth $1 trillion.
Amazon now has more than 650,000 employees and occupies more than 290 million square feet of real estate. The platform accounts for nearly half of the online retail in the US. It operates in sectors ranging from janitorial services to defense contracting and so much more. With Amazon’s prominence (and profits) under his belt, Bezos has now been able to reexamine his earliest dreams of space exploration. He launched his spaceflight company, Blue Origin, in 2000, but has now turned his ideas into reality with the development of a crewed suborbital spacecraft and an orbital launch vehicle. It’s unknown where exactly Amazon will go next, but if there’s any merit to Bezos’s childhood fantasies — stepping out into the unexplored universe, looking back at Earth as a gigantic playground — we might just see Amazon take on space exploration in the near future.
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Norman Farrar is a serial entrepreneur who provides online marketing and managed eCommerce solutions for brands. He has worked with Fortune 500 companies such as Coca-Cola, Mercedes-Benz and 20th Century Fox. Since the early 1990s, Norman has focused on helping entrepreneurs optimize their operations and unlock their business’s potential.
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