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Bezos, Jeff - Overview, Personal Life, Career Details, Chronology: Jeff Bezos, Social and Economic Impact

amazon company book books

(1964-)
Amazon.com, Inc.

Overview

Pioneer retailer on the World Wide Web, Jeff Bezos has proven that a fortune can be made by convincing people to rethink the way they shop. With Amazon.com, Bezos has created the world’s largest bookstore of available titles with virtually no inventory or property costs. Browsing for a book will never be quite the same again with the online ease and convenience that Amazon provides. Bezos caught the online wave at the right time and must compete with the many imitators who wish to similarly succeed in selling products over the Internet.

Personal Life

Jeff Bezos was born in Albuquerque, New Mexico in 1964. His father is an Exxon executive, and Bezos was brought up in affluence and privilege. Until he was 16, Bezos spent his summers rounding up herds and fixing windmills on his grandfather’s ranch in tiny Cotulla, Texas. Although he did not pursue a career as a cowboy, there is something about the lure of the frontier that caught Bezos’ imagination and spurred his interest in the untapped potential of the Internet. From an early age, Bezos wanted to be an entrepreneur.

He attended Princeton University, where he graduated in 1986 with a Bachelor of Science degree in electrical engineering and computer science (summa cum laude and a member of Phi Beta Kappa). He is married to an aspiring novelist, MacKensie, and shares his home with a Labrador retriever, named Kamala after a minor “Star Trek” character. Relocating from New York City to Seattle to create Amazon.com, Bezos set out to found a company that could take advantage of the 230 percent annual growth in Internet usage. When the company went public in 1996, Bezos’s net worth was valued at more than $500 million. Amazon is growing at a rate of 3,000 percent a year, and Bezos expects to reach $1 billion in annual sales by the year 2000. When Amazon sold its millionth book, Bezos fulfilled his promise to personally deliver it: a Princess Diana biography to Tokyo. Bezos works in a somewhat rundown section of Seattle, Washington, in a small office with a desk he made of a door nailed to two-by-fours as legs; he built all his company’s desks according to this model in Amazon’s early days. As he proudly declares, “We spend money only in areas where it matters to our customers.” Analytical and methodical, Bezos is also enthusiastic and tireless in promoting his company and the potential of the Internet to change the way people buy. Ironically, however, Bezos confesses to buying about half of his books in regular stores where the browsing helps fulfill a social function.

Career Details

When Bezos graduated from Princeton he headed to Wall Street. Interested in a job with a high-tech start-up company, he joined Fitel, a new company that coupled high tech with high finance by creating software for tracking international stock trades. Under the management of David Shaw, whom Bezos credits for teaching him a great deal about becoming a good manager, Fitel had only 11 employees when Bezos joined the firm. In 1988 Fitel was sold to a Japanese firm, and Bezos joined the Bankers Trust Company, which leads the development of computer systems that helped manage more than $250 billion in assets. In 1990, Bezos moved to D.E. Shaw & Co. where he helped build one of the most successful and technically sophisticated quantitative hedge funds on Wall Street, becoming the company’s youngest vice president in 1992.

The genesis for the creation of Amazon.com began in the Spring of 1994 when Bezos was struck by the amazing annual growth of Internet usage. Nothing was growing as quickly, and Bezos began to explore the idea of creating a business that would tap into that growth. He decided on Internet retailing and methodically prepared a ranked list of the leading products that could best be sold over the Internet. Books led the list because there are so many items and no existing traditional bookstore could possibly offer 2.5 million titles as Amazon.com does. The largest bookstore carries fewer than 200,000 titles. Settling on his product, he next considered a location for his business. Bezos carefully and methodically examined his options. He needed a location near a major book wholesaler, within reach of a pool of high-tech talent to make on-line sales work, and in a small-population state, to avoid sales tax when products were shipped across state lines. Narrowing it down to the western United States, Bezos eventually chose Seattle, Washington. In choosing a name for his company, Bezos was equally precise and analytical. He wanted a name that started with the letter A to head any alphabetical list, would be short and easy to spell, would be internationally recognizable, and most importantly, would convey a sense of size that his company would offer as the largest bookstore in the world. He finally settled on Amazon.com, after the largest river in the world. Bezos launched Amazon.com in June 1995. Early investors who put up $30,000 in 1994 would be holding Amazon stock worth $4.5 million at the end of 1997. The company, with 600 employees, ships books at a rate of about $150 million a year, which equals approximately 30 traditional chain bookstore superstores. The secret behind Amazon’s amazing quick growth is that the vast majority of books ordered are then purchased from book wholesalers’ warehouses, which allowed Bezos to start his company with little capital and does not require large investments in real estate or inventory.

Chronology: Jeff Bezos

1964: Born.

1986: Graduated from Princeton University.

1986: Hired by Fitel.

1988: Hired by Bankers Trust, Co.

1990: Promoted to vice president.

1990: Hired by D.E. Shaw & Co.

1992: Promoted to senior vice president.

1995: Started Amazon.com.

1997: Amazon.com went public.

1998: Amazon.com sold its millionth book.

Despite his company’s successful growth, analysts predicted that Amazon.com could not survive once the other bookstore giants such as Barnes & Noble and Borders copied Bezos’s simple idea. So far, however, the analysts have been proven wrong. Bezos is confident that his company has an advantage over the others because Amazon.com is technologically based and focused exclusively on-line. Other companies that are real-estate based, he predicts, will have a harder time successfully accomplishing both Internet and traditional retailing. Success will depend, according to Bezos, on customer satisfaction and ease of service, which Amazon.com is determined to provide. Eventually, Bezos anticipates moving onto other information-based products such as CDs and videos. Although Amazon.com has achieved remarkable success in dominating the online book market, the company lost $30 million in 1997 and expects to lose the same amount in 1998 before showing a small profit in 1999. Bezos has invested his profits in expanding his business, following the principle of GBF: “Get Big Fast.” Long-term success, according to Bezos, will depend on becoming one of the few “brands that matter.” As he has said, “There are always two or three or four brands that matter. With the lead we have today, we should be the number one player.”

Jeff Bezos is a pioneer in on-line retailing who has played an important role in helping to transform the way people shop today. Although skeptics have dismissed the financial viability of conducting large businesses on the Internet, Bezos has shown how it can be done by anticipating what his customers want and skillfully using the best technology to re-imagine the book business. Bezos realized that the Web could offer what a traditional bookstore could never deliver: a “stock” of more than 2.5 million titles. Customers can sample reviews and follow links to other books by the same author or to other books on comparable subjects. Convenience and service, the Amazon.com specialty, are factors that could substantially alter retailing.

Social and Economic Impact

Bezos, in creating a business plan and implementing it with Amazon.com, showed how an upstart company can quickly become an industry leader in the high-tech age. Without the need for great initial investment or inventory, but with considerable focus on his market and the demands of on-line retailing, Bezos almost immediately challenged the largest bookstore giants. Information is the Internet’s greatest attribute, and Bezos has shown how his customers’ need for books can be satisfied in a radically different way. Amazon.com has also established new benchmarks in the publishing industry, while raising the level of customer service. Amazon has caused publishers to lower inventory and centralized distribution. The industry can also advance order certain books and pre-sell some titles by getting feedback from readers about what their favorite authors should publish. For the customer, Bezos through Amazon.com has cut prices up to 40 percent on special featured books, has customized book selections, has created reader forums, and has provided interactivity between readers and authors. In response to changes in book retailing, traditional bookstores have also changed what they sell, stressing more reasons to visit their stores, such as coffee and pastries, poetry readings, and book signings.

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