Bezos, Jeffrey P.

Bezos, Jeffrey P.

(1964–  ) American

Entrepreneur

With its ability to display extensive information and interact with users, the World Wide Web of the mid-1990s clearly had commercial possibilities. But it was far from clear how traditional merchandising could be adapted to the online world, and how the strengths of the new medium could be translated into business advantages. In creating Amazon. com, “the world’s largest bookstore,” Jeff Bezos would show how the Web could be used to deliver books and other mer-chandise to millions of consumers.

Jeff Bezos was born on January 12, 1964, and grew up in Miami, Florida. He would be remembered as an intense, strong-willed boy who was fascinated by gadgets but also liked to play football and other sports. His uncle, Pres-ton Gise, a manager for the Atomic Energy Commission, encouraged young Bezos’s interest in technology by giving him electronic equipment to dismantle and explore. Bezos also liked science fiction and became an enthusiastic advo-cate for space colonization.

Bezos entered Princeton University in 1982. At first he majored in physics, but later switched to electrical engi-neering, graduating in 1986 with highest honors. By then Bezos had become interested in business software applica-tions, particularly financial networks. At the age of only 23, he led a project at Fitel, a financial communications network, managing 12 programmers and commuting each week between the company’s New York and London offices.

As a vice president at Bankers Trust, a major Wall Street firm in the late 1980s, Bezos became very enthusiastic about the use of computer networking and interactive software for providing timely information for managers and investors. However, he found that the “old line” Wall Street firms resisted his efforts and declined to invest in these new uses of information technology.

In 1990, however, Bezos was working at the D.E. Shaw Company and his employer asked him to research the com-mercial potential of the Internet, which was starting to grow (even though the World Wide Web would not reach most consumers for another five years). Bezos ranked the top 20 possible products for Internet sales. They included computer software, office supplies, clothing, music—and books.

Analyzing the publishing industry, Bezos identified ways in which he believed it was inefficient. Even large bookstores could stock only a small portion of the avail-able titles, while on the other hand many books that were in stock stayed on the shelves for months, tying up money and space. Bezos believed that by combining a single huge warehouse with an extensive tracking database, an online ordering system, and fast shipping, he could satisfy many more customers while keeping costs low.

Bezos pitched his idea to D.E. Shaw. When the company declined to invest in the venture, Bezos decided to put his promising corporate career on hold and start his own online business. By then it was the mid-1990s and the World Wide Web was just starting to become popular, thanks to the new graphical Web browsers such as Netscape.

Looking for a place to set up shop, Bezos decided on Seat-tle, partly because the state of Washington had a relatively small population (the only customers who would have to pay sales tax) yet had a growing pool of technically trained workers, thanks to the growth of Microsoft and other com-panies in the area. After several false starts he decided to call his store Amazon, deciding that the name of the Earth’s biggest river would be suited to earth’s biggest bookstore. Amazon’s first headquarters was a converted garage.

Bezos soon decided that the existing software for mail-order businesses was too limited and set a gifted program-mer named Shel Kaphan to work creating a custom program that could keep track not only of each book in stock, but how long it would take to get more copies from the pub-lisher or book distributor.

By mid-1995 Amazon.com was ready go online from a new Seattle office using $145,553 contributed by Bezos’s mother from the family trust. As word about the store spread through Internet chat rooms and a listing on Yahoo!, the orders began to pour in and Bezos had to struggle to keep up. Despite the flood of orders, the business was los-ing money as expenses piled up even more quickly.

Bezos went to Silicon Valley in search of venture capital. Bezos’s previous experience as a Wall Street “star,” together with his self-confidence, enabled him to raise $1 million. Bezos believed that momentum was the key to long-term success. The company’s motto became “get big fast.” Rev-enue was poured back into the business, expanding sales into other product lines such as music, video, electronics, and software. The other key element of Bezos’s growth strat-egy was to take advantage of the vast database that Amazon was accumulating—not only information about books and other products, but about what products a given individ-ual or type of customer was buying. Once a customer has bought something from Amazon, he or she is greeted by name and given recommendations for additional purchases based upon what items other customers who had bought that item had also purchased. Customers are encouraged to write reviews of books and other items so that each cus-tomer gets the sense of being part of a virtual peer group.

By 1997, the year of its first public stock offering, Ama-zon seemed to be growing at an impressive rate. A year later the stock was worth almost $100 a share, and by 1999 Jeff Bezos’s personal wealth neared $7.5 billion. Bezos and Amazon proved to be one of the few Internet businesses to weather the “dot-bust” collapse of 2000 and 2001. In 2003 Amazon.com chalked up its first annual profit, and the company’s stock prices tripled during that time.

Bezos gained a reputation as a very demanding CEO, insisting on recruiting top talent, then demanding that proj-ects set bold goals and complete them ahead of schedule. The pressure resulted in high turnover of top executives, but Bezos has also been quick to encourage and reward initiative. (The company’s “Just Do It” program encourages managers to start projects without asking permission of their superiors.)

Aside from Amazon.com, Bezos has maintained his interest in space travel. In 2002 he founded a company called Blue Origin, whose spaceship project has remained

shrouded in secrecy. However, in January 2007 the com-pany released video of the first successful (albeit brief) test of a prototype suborbital passenger craft.

Bezos has written a new chapter in the history of retail-ing, making him a 21st-century counterpart to such pio-neers as Woolworth and Montgomery Ward. Time magazine acknowledged this by making him its 1999 Person of the Year, while Internet Magazine put Bezos on its list of the 10 persons who have most influenced the development of the Internet.