Jeff Bezos

From Academic Kids

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Jeff Bezos on the cover of TIME as Person of the Year 1999

Jeffrey Preston Bezos (born January 12, 1964) is the president, chief executive officer, and chairman of the board of Amazon.com. Bezos, a Phi Beta Kappa graduate of Princeton University, worked as a financial analyst for D.E. Shaw before founding Amazon.com in 1994. He was TIME magazine's Person of the Year in 1999.

Contents

Early life

Jeffrey P. Bezos was born in Albuquerque, New Mexico. His mother's ancestors were early settlers in Texas, and over the generations had acquired a 25,000 acre (100 km²) ranch in Cotulla. Jeffrey's maternal grandfather was a regional director of the Atomic Energy Commission in Albuquerque. He retired early to the ranch, where Jeffrey spent most summers of his youth, working with his grandfather at the enormously varied tasks essential to the operation. At an early age, he displayed a striking mechanical aptitude. Even as a toddler, he asserted himself by dismantling his crib with a screwdriver.

Jeffrey was born when his mother was still in her teens, and her marriage to his father lasted little more than a year. She remarried when Jeffrey was four. Jeffrey's stepfather, Mike Bezos, was born in Cuba. He escaped to the United States alone at age 15, and worked his way through the University of Albuquerque. When he married Jeffrey's mother, the family moved to Houston, Texas, and Mike Bezos became an engineer for Exxon. Jeff attended River Oaks Elementary in Houston from the 4th to 6th grades.

Jeffrey showed intense and varied scientific interests at an early age. He rigged an electric alarm to keep his younger siblings out of his room and converted his parents' garage into a laboratory for his science projects. The family moved to Miami, Florida, where Jeffrey attended Miami Palmetto Senior High School [1] (http://mpsh.dadeschools.net). In high school, Jeffrey fell in love with computers and was valedictorian of his class. He entered Princeton University planning to study physics, but soon returned to his love of computers, and graduated with a degree in computer science and electrical engineering.

Early career

After graduation, Jeff Bezos found employment on Wall Street, where computer science was increasingly in demand to study market trends. He went to work at Fitel, a start-up company that was building a network to conduct international trade. He stayed in the finance realm with Bankers Trust, rising to a Vice Presidency.

At D. E. Shaw, a firm specializing in the application of computer science to the stock market, Bezos was hired as much for his overall talent as for any particular assignment. While working at Shaw, Jeff met his wife, Mackenzie, also a Princeton graduate. He rose quickly at Shaw, becoming a senior vice president, and looked forward to a bright career in finance, when he made a discovery that changed his life, and the course of business history.

By 1994, the World Wide Web had begun to be known outside the narrow circles of computer science researchers and physicists, but there was no Web commerce to speak of. One day that spring, Jeffrey Bezos observed that Web usage was increasing by 2,300 percent a year. He saw an opportunity for a new sphere of commerce, and immediately began considering the possibilities.

Rise of Amazon.com

Origins

In typically methodical fashion, Bezos reviewed the top 20 mail order businesses, and asked himself which could be conducted more efficiently over the Internet than by traditional means. Books were the commodity for which no comprehensive mail order catalogue existed, because any such catalog would be too big to mail. The catalog was perfect for the Internet, which could share a vast database with a virtually limitless number of people.

He flew to Los Angeles, California, the very next day to attend the American Booksellers' Convention and learn everything he could about the book business. He found that the major book wholesalers had already compiled electronic lists of their inventory. All that was needed was a single location on the Internet where the book-buying public could search the available stock and place orders directly. Bezos's employers weren't prepared to proceed with such a venture, and Bezos knew the only way to seize the opportunity was to go into business for himself. It would mean sacrificing a secure position in New York, but he and his wife, Mackenzie, decided to make the leap.

Jeff and Mackenzie flew to Texas on the Fourth of July weekend and picked up a Chevy Blazer (a gift from Mike Bezos) to make the drive to Seattle, Washington, where they would have ready access to the book wholesaler Ingram and to the pool of computer talent Jeff would need for his enterprise. Mackenzie drove while Jeff typed a business plan. The company was originally named Cadabra, as in the magical phrase "abra cadabra." After several conversations in which people misheard Cadabra.com as "cadaver," the company's name changed to Amazon.com for the South American river.

They set up shop in a two-bedroom house, running extension cords to the garage. Jeff set up three Sun Microstations on tables he'd made out of doors from Home Depot for less than $60 each. When the prototype site was up and running, Jeff asked 300 friends and acquaintances to test it. The code worked seamlessly across different computer platforms. On July 16 1995, Bezos opened his site to the world, and told his 300 beta testers to spread the word. In 30 days, with no press, Amazon had sold books in all 50 states and 45 foreign countries. By September, it had sales of $20,000 a week. Bezos and his team continued improving the site, introducing such unheard-of features as one-click shopping, customer reviews, and e-mail order verification.

Growth

The business grew faster than Bezos or anyone else had ever imagined. When the company went public in 1997, skeptics wondered if an Internet-based start-up bookseller could maintain its position once traditional retail heavyweights like Barnes and Noble or Borders entered the Internet picture. Two years later, the market value of shares in Amazon was greater than that of its two biggest retail competitors combined, and Amazon struck a deal with Borders to handle the franchise's Internet traffic.

From the beginning, Bezos sought to increase market share as quickly as possible, at the expense of profits. When he disclosed his intention to go from being "Earth's biggest bookstore" to "Earth's biggest anything store," skeptics thought Amazon was growing too big too fast, but a few analysts called it "one of the smartest strategies in business history."

Jeff had told his original investors there was a 70 percent chance they would lose their entire investment, but his parents signed on for $300,000, a substantial portion of their life savings. "We weren't betting on the Internet," his mother has said. "We were betting on Jeff." By the end of the decade, as six percent owners of Amazon.com, they were billionaires. The stock has split three times, and to this day, about a third of the shares are held by members of the Bezos family.

Through each round of expansion, Jeff Bezos continually emphasized the "Six Core Values: customer obsession, ownership, bias for action, frugality, high hiring bar and innovation." "Our vision," he said, "is the world's most customer-centric company. The place where people come to find and discover anything they might want to buy online." Amazon moved into music CDs, videos, toys, electronics and more. When the Internet's stock market bubble burst, Amazon re-structured, and while other dot.com start-ups evaporated, Amazon was posting profits.

In October 2002, the firm added clothing sales to its lineup through partnerships with hundreds of retailers, including The Gap, Nordstrom, and Land's End. Amazon shares its expertise in customer service and online order fulfillment with other vendors through co-branded sites, such as those with Borders and Toys R Us, and through its Amazon Services subsidiary. In September 2003, Amazon announced the formation of A9.com, a new venture aimed at developing a commercial search engine that focuses on e-commerce web sites. At the same time, Amazon launched an online sporting goods store, which offers 3,000 different brand names. Amazon.com ended 2003 with its first full-year profit and annual sales of over $5.25 billion, an increase of more than a third over 2002.

Today, Jeff Bezos and Mackenzie live north of Seattle and are increasingly concerned with philanthropic activities. "Giving away money takes as much attention as building a successful company," he has said. Jeff Bezos also reportedly operates Blue Origin, a secretive company developing a manned suborbital launch vehicle.

Estimated wealth

According to Forbes list of the World's Wealthiest People [2] (http://www.forbes.com/maserati/billionaires2004/LIRRYMV.html?passListId=10&passYear=2004&passListType=Person&uniqueId=RYMV&datatype=Person):

  • 1999 – $10.1 billion, ranked no. 19
  • 2000 – $6.0 billion, ranked no. 55
  • 2001 – $2.0 billion, ranked no. 234
  • 2002 – $1.5 billion, ranked no. 293
  • 2003 – $2.5 billion, ranked no. 147
  • 2004 – $5.1 billion, ranked no. 82

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