Real story of Amazon.com – Jeff Bezos Full Speech Full Text…
Listen to the MP3 Audio here: Amazing Amazon Story – Jeff Bezos Full Speech
Hello, I am Garth Fagan. I am going to be speaking to you about choreography!
Almost seven years ago now, I started this most incredible journey called Amazon.com. Actually at that time, it wasn’t even called Amazon. It was called Cadabra, Inc. — as in Abracadabra. That was the original name of the company.
Amazon.com wasn’t called Amazon at first
And I had phoned a lawyer on the way to Seattle from a cell phone. And he said – what do you do to incorporate the company. He said, what do you want the company to be called, and I said Cadabra. And he said, Cadaver, and he thought that was a bad name. We changed it a few months later.
The wake-up call that led to starting Amazon.com was finding that web usage in the spring of 1994 was growing at 2300% a year. And things just do not grow that fast. Outside of, I guess, usually like petri dishes or something. I mean it’s a very very unusual growth rate and that you could tell anecdotally even though there wasn’t good research on this at the time, the baseline of web usage wasn’t trivial.
And so something with a nontrivial baseline growing at 2300% a year is clearly going to be everywhere tomorrow. And so the question was what kind of business plan would make sense in the context of that growth.
And I went through a whole bunch of different things. I made a list of 20 different products, looking for the first best products to sell online. Came up with books for a bunch of reasons but primarily because books are very unusual in one respect and that is that there are more of them than there are products of the other category. 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”.