Jeff Bezos, the founder of Amazon.com, was born in Albuquerque, New Mexico in 1964. His mother, Jackie, was in her teens when he was born and she was only married to his biological father for about a year. She married Mike Bezos when Jeff was four. Mike was a Cuban who escaped to the United States when he was fifteen. He put himself through college in New Mexico and eventually became an engineer at Exxon.
Jeff attended Miami Palmetto high school and was valedictorian of his class. He went to Princeton and planned to study physics. He believed, however, that other physics students were much smarter than him. Therefore, he studied electrical engineering and computer science. He graduated summa cum laude in 1986 with a GPA of 4.3 on a 4.0 scale.
After he graduated from Princeton, Jeff joined a high-tech startup in New York called FITEL, which was building a network to facilitate international trade. After two years at FITEL, he joined Bankers Trust Company. At Bankers Trust, he setup computer systems that managed $250 billion in assets and eventually became the company’s youngest vice president.
In 1990, he joined D.E. Shaw and Company. He helped the company build the most technically advanced hedge funds on Wall Street. He eventually went from being a computer expert to a money manager, and became the company’s youngest vice president. In 1994, Jeff read a statistic that said the Internet was growing at a rate of 2300% per year. He decided to leave D.E. Shaw and Company to form Amazon.com, which he named after the seemingly endless South American River.
He and his wife, MacKenzie, drove to Seattle to be close to a book wholesaler called Ingram. MacKenzie drove the car while Jeff typed the business plan for the company. Jeff had already spent several months planning Amazon.com while he was at D.E. Shaw. He had traveled multiple times to California to meet with Shel Kaphan, a programmer who was the first employee at Amazon.com, and other programmers.
Jeff, Shel, and a contractor named Paul Barton-Davis built the prototype for Amazon.com in Jeff’s garage in Seattle. The garage was heated by an oven in the middle of the room. There were extension cords everywhere. Jeff built desks made from doors that he purchased at Home Depot for sixty dollars each. In fact, all of the desks at the current Amazon.com are made of doors. Jeff, Shel, and Paul spent a year developing database programs and creating the website.
Jeff needed to raise a million dollars to finance the company. He met with over 60 people over several months. He eventually raised the money through twenty-two angel investors, whom consisted of family, friends, and former colleagues. When the site was finished, Jeff asked 300 friends and acquaintances to test it.
On July 16, 1995, Amazon.com went live to the world and Jeff told the testers to spread the word that it was open. Within 30 days, the company had sold books to all fifty states and forty-five foreign counties. By September, the site had sales of $20,000 a week. Shortly after the launch, they added new features to the site, such as one-click shopping, customer reviews, and e-mail order verification.
Jeff has a unique management style. He invokes loyalty from his employees and most of them see him as a colleague. He has a distinctive, loud laugh that he uses to “charm and disarm” people. He often refers to himself as a computer nerd and jokes about his lack of social skills. He created the concept that a team should only consist of enough people to eat two pizzas, which he calls “two-pizza teams.” He is known as a fun person to work with, but his employees and investors know that he is serious about his company.
The main focus of Jeff’s corporate strategy is customer service. Instead of focusing on the competition, he focuses on how he can improve his customers’ experience. Jeff believes that if a company is watching its competitors, it is unlikely to be creative. He does, however, say that the company watches its competitors’ innovations and will often test these innovations on Amazon.com.
Another focus of Jeff’s corporate strategy is to always provide lower prices. Many people consider Amazon.com to be the online version of Wal-Mart. It constant provides prices that are lower than its online and offline competitors. It provides free shipping with orders that are twenty-five dollars or more. Its warehouses are located in areas that enable its customers to avoid sales tax. For example, the warehouse that the company uses to serve its East Coast customers is located in Delaware, which does not have sales tax.
Jeff believes in constantly running experiments to improve Amazon.com. The company will “show half of its customers one thing and half another, and quickly get some results back on how people actually behave.” The company actually upset some of its customers when they found out it was using dynamic pricing on its DVDs; some customers would see one price and others would see another price. It would be much more difficult, if not impossible, to run experiments like this if it was a physical store.
Jeff, however, realized from the beginning that Amazon.com could not be entirely based online. Amazon.com owns its own warehouses of products, so it can control the quality of the customer experience. It is able to ship a multitude of products to its customers in a single shipment. It is able to verify that products are not damaged, which is something that a distributor or wholesaler might not check as thoroughly.
Jeff has achieved an extremely high degree of success in his current position. He formed and manages the largest online retailer. He defined the way many companies do business on the Internet. He’s done all of this and he’s only forty years old. He is currently worth about five billion dollars.