(1964–)
Chairman, chief executive officer, and president, Amazon.com
Nationality: American.
Born: January 12, 1964, in Albuquerque, New Mexico.
Education: Princeton University, BS, 1986.
Family: Son of Miguel Bezos (Exxon engineer) and Jackie Gise Jorgensen; married McKenzie Tuttle (former D. E. Shaw & Company researcher); children: one.
Career: Fitel, 1986–1988; Bankers Trust Company, 1988–1990, software developer; 1990, vice president; D.E. Shaw & Company, 1990–1992; 1992–1994, senior vice president; Amazon.com, 1995–, chairman, CEO, and president.
Awards: Person of the Year, Time, 1999.
Address: Amazon.com, 1200 12th Avenue South, Seattle, Washington 98144; http://www.amazon.com.
Jeff Bezos founded Amazon.com in 1995 as an online bookstore. Due to customer demand the company later expanded and added other products to its inventories, including videos, DVDs, electronics, toys, apparel, software, household items, and gourmet food. In an interview published in Dealerscope magazine, Bezos indicated that books were chosen as Amazon.com's first product category "because they offered so much selection"; in the same interview, Bezos stated, "I think the main thing that has differentiated Amazon.com from conventional retailers is its obsessive/compulsive focus on the endto-end customer experience. That includes having the right products, the right selection, and low prices" (January 2003).
Started up in Seattle, Washington, Amazon.com had its first base of operation in the Bezos's garage, which was converted into a workspace initially housing three Sun workstations. Amazon grew to be an international enterprise and eventually expanded to include sites in Canada, the United Kingdom, France, and Japan. Coworkers and chroniclers of the Amazon story characterized Bezos as a visionary and as a man who on the surface was easygoing but kept his employees on demanding schedules. Bezos demanded quick turnaround time for project completion. He scheduled weekly management meetings which often ran as long as four hours, with managers reporting on new products and pricing and taking on questions from the CEO. Bezos promoted innovative efforts among his employees through the Just Do It program, which rewarded those who came up with and executed ideas that helped the company—without first obtaining permission from their bosses. Bezos was committed to hiring the best employees, always looking for intelligent and innovative individuals.
Developing Entrepreneurial Skills
Jeff Bezos was a gifted child; at the age of three, tired of sleeping in a crib, he found a screwdriver and took the crib apart. He subsequently tinkered with models and with a Radio Shack electronics kit. Every summer Bezos stayed at his grandfather's ranch, where he would repair windmills and the tractor and brand cattle, among other tasks. An avid young inventor, he created a solar microwave and a door buzzer that alerted him when his siblings were entering his room. When asked who his heroes were in a Time magazine interview, Bezos cited Thomas Edison and Walt Disney. He visited Disney World six times and was impressed with Disney's powerful vision: "He knew exactly what he wanted to build and teamed up with a bunch of really smart people and built it" (December 27, 2003).
Bezos was a model student who was profiled (under an assumed name) in the 1977 book entitled Turning on Bright Minds: A Parent Looks at Gifted Education, by Julie Ray. Bezos was named class valedictorian when he graduated from high school in 1982 and won the Silver Knight Award from the Miami Herald. He graduated summa cum laude from Princeton in 1986, earning Phi Beta Kappa membership.
Bezos's entrepreneurial spirit became evident when he obtained his first post-graduation position at Fitel, a start-up that focused on creating a network for international financial trade. After two years, when Fitel failed to get off the ground, Bezos moved on to Bankers Trust, where he was responsible for developing software applications for pension-fund clients. He eventually became a vice president at Bankers Trust. He then moved on to D. E. Shaw & Company, a financial-trading company on the cutting edge of computer technology. David Shaw, the company's founder, was an inspiration to Bezos. Shaw was likewise impressed with Bezos and rapidly promoted him to senior vice president. In an interview with Time, Shaw characterized Bezos as "sort of an entrepreneurial odd-jobs kind of a person" (December 27, 2003). In 1994 Bezos left D. E. Shaw, having decided to build and operate his own company.
Amazon.Com: the Early Years
Bezos had paid close attention to the rapid rise of the World Wide Web, noting in 1994 that it was growing at an annual rate of 2,300 percent, and therein looked for a purer entrepreneurial outlet. He began his research by making a list of the top 20 mail-order companies, observing that there were no book mail-order companies because a comprehensive catalog would have needed to be thousands of pages long and thus expensive to mail. Bezos decided that an Internet-based company would have the capability to offer a substantially wider selection of printed matter to consumers. Thus, he made a thorough study of the book business, beginning by attending the American Booksellers' Association's annual convention.
When Bezos told Shaw that he was leaving to launch an online book business, Shaw advised him to take some time to reconsider. Bezos eventually came to his decision in a characteristically creative way. He told Time that he pictured himself at 80 years of age and was certain that he would regret neither missing out on a six-figure Christmas bonus nor having tried to build an online business and failing. He stated, "In fact, I'd have been proud of myself for having taken that risk and tried to participate in that thing called the Internet that I thought was going to be such a big deal. And I knew if I didn't try this, I would reget it. And that would be inescapable" (December 27, 1999).
Bezos's parents supported his decision, investing the $300,000 they had saved for retirement in their son's venture (which was later amply rewarded; they became billionaires). Bezos initially planned to name his company Abracadabra; that name was later scrapped in favor of Amazon, inspired by the river. Bezos and his wife, McKenzie, moved to Seattle to start the company and persuaded the highly successful programmer Shel Kaphan to be among the first employees hired. Bezos officially founded Amazon.com in 1994. In June 1995 the first Web site was tested. On July 16, 1995, Amazon.com was made available to consumers in every state and 45 other countries. Sales were immediate. Bezos told Time, "Within the first few days, I knew it was going to be huge" (December 27, 1999). The media noticed and reported on Amazon, and as a result of the publicity the company's consumer base rapidly increased. Bezos owned and operated his own warehouses for the book inventory; as of 2003 Amazon had six.
After the Web site was launched, it was fine-tuned by Bezos and his employees to include features such as one-click shopping and customer reviews. Investors were able to buy stock in Amazon.com beginning in 1997 when the company went public. Over the next few years Bezos expanded the company by launching Web sites in Canada, the United Kingdom, Germany, France, and Japan.
Bezos constantly tapped into exactly what his customers wanted. He told Dealerscope, "We were doing such a good job with books, and we started getting these e-mails, initially for other media categories, like music, DVDs, or VHS" (January 2003). Bezos then actively asked customers what they wanted Amazon to sell, which led to further expansion into products such as electronics, toys, kitchenware, and gourmet foods. In early 2003 Bezos reported that electronic products were the second-largest category of items sold, after books.
Management Style
On the surface Bezos was easygoing with a sense of humor. On the other hand, employees and chroniclers found that he was adamant in his expectations of quick turnaround time on project completion and high productivity, as well as of innovativeness and intelligence. At managers' meetings Bezos personally asked his team questions about new Amazon initiatives. He was a hands-on leader and reviewed everything from press releases that quoted him to average customer contacts per order to breakdowns of e-mail contracts and other details of the business. In a 2003 Fortune magazine article, Fred Vogelstein reported that 20 of Amazon's 50 top executives left between 2001 and 2003. Consequently, Bezos was characterized as a relentless recruiter of talented, innovative individuals. Bezos and personnel managers were known to thoroughly examine prospective employees' college transcripts and SAT scores. According to Bezos, "People here like to invent, and as a result other people who like to invent are attracted here. And people who don't like to invent are uncomfortable here. So it's self-reinforcing" (May 26, 2003).
To encourage new ideas, Bezos instituted the Just Do It program, wherein the winners were those who proceeded with projects that they felt would help the company without first asking their bosses' permission. Bezos believed in the benefits of communication with customers and listened to and used their ideas for expansion. Via the Web site Amazon customers were encouraged to recommend their favorite books and products through reviews, and many compiled lists of their favorite items.
Bezos looked to growth and expansion of Amazon.com through partnerships with other companies. In 1999 Amazon partnered with Sotheby's to provide online auctions of items ranging from fine art to collectibles. Additionally, Amazon acquired the International Movie Database and bought the companies Back to Basics and Tool Crib of the North. Amazon.com partnered with Toys "R" Us in 2000 to establish a cobranded toy and video-game store.
In 2000 Bezos and his company were put to the ultimate test. At a time when many dot-com companies were going out of business, Amazon's stock price fell from $106 in December 1999 to $41.50 in September 2000. To deal with this crisis, Bezos was forced to lay off 1,300 employees in February 2001. He also cut back on products, eliminating those that had yet to prove profitable for the company.
In 2001 Amazon formed an agreement with Borders to provide inventory, order fulfillment, and customer service for Borders.com. Funds also came into Amazon via cooperation with America Online and the purchase of assets from Egghead.com. Through the efforts of Bezos and his team Amazon turned a profit in the last quarter of 2001. Continuing expansion efforts in 2002, Amazon started selling clothing from established names such as The Gap, Land's End, and Nordstrom. In January 2004 Amazon.co.uk, the company's United Kingdom site, formed an agreement with the British Library to make rare and out-of-print books available for sale online.
Amazon not only survived the crisis of 2000 but flourished. For the fourth quarter of 2003 the company posted a net income of $73.2 million. The Wall Street Journal reported that in 2003 Amazon reported an annual net profit for the first time. Between January 2003 and 2004 company stock prices tripled.
Sources for Further Information
De Jonge, Peter, "Riding the Wild, Perilous Waters of Amazon.com," New York Times, March 12, 1999.
Keefe, Collin, "Jeff Bezos: Founder and CEO, Amazon.com," Dealerscope, January 2003, p. 76.
Quittner, Joshua, "An Eye on the Future," Time, December 27, 1999, pp. 55–56.
Saunders, Rebecca, Business the Amazon.com Way: Secrets of the World's Most Astonishing Web Business, Milford, Conn.: Capstone USA, 1999.
Vogelstein, Fred, "Mighty Amazon," Fortune, May 26, 2003, p. 60.
Weill, David, and Denise M. Bonilla, Leaders of the Information Age, New York, N.Y.: H. W. Wilson, 2003.
Wingfield, Nick, "Amazon Reports Annual Net Profit for the First Time," Wall Street Journal, January 28, 1994.
—Lucy Heckman
Good ideas will always get funded, so that's not going to be a problem. But you will see that it will be harder and harder for bad ideas to get funded.
