The Story of Amazon: how Jeff Bezos becomes the richest man in the world
When Jeff Bezos decided to create a business to sell books online, he quits D. E. Shaw & Co. where he worked then (an investment company where he earned about 200,000 $ a year). He invested 10,000 $ from his own money and in 1994 registered the company in the US state of Washington, but began operations in July 1995. The company was registered with the name "Cadabra". When the legal consultant reads it for the first time, he points out to Bezos that the name sounds very similar to the word "cadaver", a word a bit macabre. Jeff considered the name Relentless.com but then opts for Amazon, inspired by the Amazon River in south America. The river also appears in the first logo of the company.
The beginning
The beginnings, as Jeff Bezos has often told, were not easy. He and his wife MacKenzie Tuttle (from which he recently divorced) had to manage the full company, dealing with everything from accounting to good shipping. The photo of Bezos in his office, alone, with the desk invaded by cables and amazon.com written with a spray on a panel on the wall has become a motivational meme for everyone. Because it sounds more or less like this: when you think of giving up, remember that this gentleman has become the richest man in the world. Although in reality, in that office, Bezos didn't stay there long.
First time online
When the site went online, in July 1995, a counter trills at each order. To avoid becoming crazy, the few Amazon employees deactivate it after a few days. During its first month, the site sold books in 50 US states and 45 countries around the world.
In 1996, during a dinner, the bosses of the rival online booksellers, Barnes & Noble, one of the largest American chain bookstore, say that yes - Amazon is appreciable - but - sorry - it will be swept away by the company's new website, which would be launched soon. Bezos knew that Barnes & Noble can replicate his business model, but then he asks himself: "Can Amazon become a big brand before Barnesandnoble.com buys, builds, learn and acquires the skills needed to become an excellent online retailer?" Today we know the answer.
Amazon: The Initial Public Offering
On May 15th 1997, less than three years after the foundation of the company and two years after the launch of the site, Amazon went public. It was worth 300 million dollars and already defined as "the largest book store in the world". The managers of Barnes & Noble did not accept it and bring Amazon to court: the definition of Amazon would be false because the site is not a book seller but only an intermediary. The lawsuit was closes a few months later with an agreement: they both simply allow each other to define themselves as the largest library on the planet.
Bezos in the meantime had other things to take care of like expanding the company. Amazon starts opening several offices around the United States, multiplying distribution centers. In 1998 it stops being just a book seller and starts to sell CDs. In 1999 comes the first idea of what would have made the company great today: Amazon starts to sell products of other retailers. In the beginning it is a way to find and buy rare books. Then to buy merchandising linked to some titles. It soon becomes the largest book market in the world.
Jeff Bezos: Person of the year
Jeff Bezos, 35 years old, is the man of the year according to the Time, who describes him "the king of cybercommerce". Among popes, activists and presidents, a CEO never won the magazine cover.
But while his face become famous to the public, his company is under pressure. The dot com bubble bursts and shares value fall in a few months from over 100 $ to less than 10. Ten years will be required to reach again the market value of 1999. Since then, however, the climb never stops.
The Amazon failures
Like everyone, also Jeff Bezos also had flops. While the Kindle, the e-reader launched in 2007 was a huge success, the public rejected instead the Amazon's Fire Phone of which today we lost the traces. What it was? It was the Amazon smartphone, a device that never broken through, a complete failure. It was supposed to be a revolution for the mobile phone world and instead it was a flop on which the company spent about 170 million dollars between production and marketing.
The Bezos motto
Amazon closed the year 2018 with a turnover of 233 billion dollars. In 2005 it was still below 10 billions while 100 billion was exceeded for the first time in 2015.
In recent years profits, historically kept low in order to have aggressive prices, have also rise. Until three years ago, they had exceeded one billion only once, in 2010. In 2016 they reached 2.3 billion and in 2017 3 billion. Last year profits exploded, 10 billion. Bezos has preferred (and in part still prefers) to expand the company rater than to gain immediately. And it is precisely this idea that has produced an apparently paradoxical effect: Bezos has become the richest man on the planet. This is thanks to the Amazon shares that have pushed - for a short period - capitalisation value over a trillion dollars. It is all consistent with the Bezos philosophy, explained in a letter to shareholders in 1997: "Patiently experiment, accept failures, plant seeds, protect the trees and raise the stakes when you see the pleasure of the customer". The today's Amazon motto is: "guide your company as if it had just been born".
Amazon Stores
When Amazon imposed its domain on the market, many thought that physical stores would die: many but not Jeff Bezos. Since 2015, the Amazon's CEO has combined digital with brick, starting (again) from pages and paper: he opened the first library in Seattle. The importance that Bezos dedicates to stores is confirmed by the fact that the company's largest acquisition is made up of real shelves and not digita bits: in 2017 Amazon pays 13.7 billion for the supermarket chain WholeFoods. The Amazon 4-stars (which sell items with positive online reviews) and Amazon Go (without cash desk) have also arrived. A physical network that, together with increasingly widespread distribution centers, has a dual purpose: on one hand it creates new revenue channels; on other it creates a system of "sentinels" that in the future could be used as new e-commerce's channel for super-fast deliveries or to order online and pick up at the cash desk. Although the business involves more and more sectors (and who knows how many more, starting from food delivery), Bezos does not lose the focus on e-commerce. The heart of the company needs continuous stimulation: in the last quarter, sales grew "only" by 14% year on year. This is why they are already moving, testing deliveries with drones and robots, reducing shipping times for Prime subscribers to one day and starting the construction of an airport that will allow Amazon to manage the entire logistics chain.
Small steps
The rise has been slow, with a strategy that has rejected the easy and immediate gain but which has aimed at a consolidation, made with small but constant steps. So, while many of the protagonists of the 1990s and early 2000s web revolution had a bad end, Amazon survived and wiped out almost all the original competitors in the e-commerce field. From books he began to sell the DVDs, then the CDs and then clothing, toys, furniture. The first profits came a few years after the IPO, but since then it has been an unstoppable rise.
The future
Today's Amazon businesses go far beyond the original core business of online sales. Bezos has created a fortune, becoming the absolute protagonist in various sectors: from publishing, with the purchase of the Washington Post to Hollywood, to founding Amazon Studios to compete with Netflix and Hulu, up to the run in space with the foundation by Blue Origin. But the big hit was definitely the acquisition of large retailers with the purchase of 14 billion dollars for the giant Whole Foods. From the beginning of 2017, Amazon's investments to acquire new realities amount to over 20 billion dollars. But it is this enormous expansion that has alarmed the Washington authorities who increasingly want to see clearly where Amazon is going. As for the other web giants - from Google to Facebook - the concern is about the power that the hi-tech big are achieving, with many in Congress demanding stricter and more stringent rules. A theme that is also animating the electoral campaign for the American presidential elections of 2020, with Bezos squeezed between Donald Trump who wants to make Amazon pay more taxes and democratic candidates like Elizabeth Warren who ask for a separation of the Seattle giant's activities.
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