Amazing Amazon Story by Jeff Bezos Full Speech (Transcript)

So there are literally millions of different books in print in any given time.

And computers are good at organizing such large selections of products and you could build something online that literally couldn’t be built any other way. You couldn’t have a physical world bookstore or paper catalog with millions of different books. And the primitive technology that was the web in 1994 clearly required that kind of characteristic for business. It had to be something that could only be done in that way. So that’s what led to books.

Regret Minimization Framework

When I decided to do this, I first talked to my wife who is sitting here in the audience. And she had married a relatively stable goofy but still relatively stable person working at a Wall Street firm. I worked at a quantitative hedge fund and this was a hard decision.

And I was looking for the right framework in which to make that kind of important decision and the right framework I found is the regret minimization framework and that’s just a nerdy way of saying that you want to project yourself to age 80. And then think back over your life and if you are 81, you want to minimize number of regrets you have throughout that period of time. I think this is something a lot of people do maybe subconsciously be probably – very few people probably name at regret minimization framework because most people are healthier than that.

But it was a very clear way for me to think about making that kind of life decision. And the way it helped was I thought, okay, if I go do this thing and participate in this thing called the Internet, though I genuinely believe is going to be a big deal. And if I fail, am I going to regret having tried and failed? I knew the answer of that was no.

But I also knew that if I didn’t try that I would always regret that. I would always wonder and it would haunt me until that mythical day which I actually hope will come. My wife would try to get me to eat better. One of her heroes is Dr. Wild. So if you are in the audience — that your dietary constraints are currently being inflicted upon me. But I suspect it may help me over the long-term.

Amazon.com – Early Days

And so that was how the decision was made to do this. And there are just literally tons of stories about the early days of getting Amazon.com set up.

We spent about a year building the software infrastructure and getting all the vendor relationships in place and so on and so on. The day before we were ready to launch the store in July of 1995, one of the software engineers who were looking at our little 400 square foot distribution center. And I remember very clearly this person looked at the 400 square feet, about the size of one car garage. So it was kind of a toy distribution center and they would build software systems behind it.

And he said — he looked at this little space, he’s like, “I can’t figure out if this is incredibly optimistic or hopelessly pathetic”. And indeed, we didn’t know. There really was no way to know how customers were going to adopt this kind of technology in these very early days. There was a lot of risk involved. In fact, also in the audience today are my parents who were the original funders of them. They invested about $300,000 which was roughly — was a reasonably large fraction of their life savings.

And my dad’s first question was, “What’s the Internet?” So they were not betting on the concept or the idea. They were betting on their son.

I told him, I thought there was a 70% chance they would lose their entire investment. And that was an important disclosure because I wanted to be able to go home for Thanksgiving dinner no matter what happened. I’m very happy that, that investment has worked out very well for them.

But it was a – I was going to myself triple the normal odds. Start-up companies are very tricky things and fewer than 10% of them actually go on to make any return on an investment at all. And so I was doing myself a 30% chance and just wildly overconfident.

But things actually worked out. The planets aligned in those early days and start-up companies need early planetary alignment, because there are so many things that can go wrong. And when we launched that store in July of 1995, we were shocked at the customer response.

Literally in the first 30 days, we had orders from all 50 states and 45 different countries. And we were woefully unprepared from an operational point of view to handle that kind of volume. And in fact, this — we quickly expanded, we talked to our landlord and we expanded into a 2000 square foot basement warehouse space that had 6 foot ceilings. One of our 10 employees was 6 foot 2 inch. He went around like this the whole time.

And we were doing our day jobs which might’ve been computer programming and all the different things that 10 people will do in a little tiny start-up company. And then we would spend all afternoon and into the wee hours of the morning packing up the orders and shipping them out – I would drive these things to UPS and so we get the last one – and we wait to the last second. I get to UPS, and I’d sort of bang on the glass door that was closed. And they always would take pity on me, and sort of open up and let us ship things late.

We had so many orders that we weren’t ready for that we had no real organization in our distribution centers at all. In fact, we didn’t – we were packing on our hands and knees on a hard concrete floor and — I remember just to show you how stupid I can be – my only defense is that it was late. But we were packing these things — everybody in the company and I had this brainstorming, and I said to the person next to me, “This packing is killing me. You know, my back hurts, this is killing my knees on this hard cement floor. And the person said, “Yeah, I know what you mean”.

And I said, “No, we need – it’s my brilliant insight — we need knee pads”. I was very serious, and this person looked at me like I was the stupidest person he’d ever seen, and like, “I’m working for this person. This is great” And said, “What we need is packing tables”

And I look at this person and I thought that was the smartest idea I’d ever heard. The next day we got packing tables, and I think we doubled our productivity.

That early stage by the way of Amazon.com where we were so unprepared is probably one of the luckiest things that ever happened to us because it formed a culture of customer service in every department of the company, every single person in the company because we had to work with our hands so close to the customers making sure those orders went out, really set up a culture that served us well, and that is our goal to be earth’s most customer-centric company.

And I think this is zero now which I am suspecting means in the meantime it’s trying to turn over to questions. So I will do so.

So we have time for about three questions.

Question-and-answer Session

Female Audience: [Inaudible]

Jeff Bezos: The balcony always gets kind of neglected, isn’t it? Yeah, okay, go ahead.

Female Audience: [Question Inaudible]

Jeff Bezos: What advice would I give to an Internet startup company now? Well, my advice would be the same for any kind of entrepreneur and that is make sure that you are focused on something you’re passionate about. So if you look at the early Internet companies they were started and focused on doing something that they thought was very interesting long before the Internet was fashionable in any way. We are currently an underdog once again. We’ve been in business for six years and there was exactly one year where we were not the underdog and that was 1999.

I like the underdog years because it makes – I like it when all the people we hired, their parents told them they were crazy. Like that was kind of the good era, fortunately it’s back. In 1999, all the parents were like, you know, given their brothers and sisters high-fives, my son is working at Amazon.com. So that’s a very – you can’t follow the fashion when you’re trying to do a start-up company, or I think really anything in life. But you have to — as an entrepreneur if you’re going to build a company, pick something you think is interesting, that has the intersection of genuinely creating real customer value and just stay right there and let the wave catch you.

Male Audience: Grant Hutchins from Oklahoma. I was wondering what were some of the other products you considered and also on kind of a personal note, you sell a lot of books but do you ever read them?

Jeff Bezos: On the list — the list was built by looking at mail-order sales. So when I got the original list, it was sorted in order of size by mail-order. So for example, apparel is a very large mail-order category. So apparel was near the top of the list. That’s — the things that were – that ended up near the top of the list were books as number one obviously. Music, videos, computer software, computer hardware, those were the kinds of things near the top of that first ranked list — and I’m sorry – I am terrible at multipart questions. What was your second question?

Male Audience: I asked, do you read books very often?

Jeff Bezos: Do I read books? Yes, in fact, I do. In fact, my parents will attest to the fact that I was difficult to punish as a child because I was quite happy to be grounded. And I’d stay in my room and read. I’m a big science-fiction fan and that’s probably – I’d say at least half of my reading is science fiction and it has been ever since I spent the summers at my grandfather’s ranch which I had to say I know that we’re having geography problems with the entire city but that was in Texas, not New Mexico. In fact, it’s only about 90 miles from where we are right now. But so that had a little sort of Andrew Carnegie style library in that town and which is very tiny library but like – I have been a third of the collection which was all donated by citizens of this 3000 person town. But a third of the collection was science-fiction, because there was this one guy in town who loved science fiction.

And so that’s been a long love affair. And then my wife inflicts good fiction on me every once in a while and which I wasn’t loving but my favorite novel is Remains Of The Day.

Male Audience: Hello, my name is Ian. I am from Los Angeles. I’d like to thank you for Amazon.com. It saved me many times. I couldn’t get the book at my local bookstore but that’s not what I want to ask.

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