People & Money

Amazon’s Jeff Bezos: The Journey to $200 Billion

 

 

As he believed he only had a 30% chance of success, he was cautious about asking family members for funding. Still, his parents, despite fearing their son had gone mad for quitting a well-paying job to start a business on a strange thing called “The Internet”, raised up to $300,000. The company was headquartered at a two-bedroom apartment in Seattle where he worked alongside a small crew he had hired. On July 6, 1995, Amazon.com was opened to the world.

 

The world’s wealthiest man, Jeff Bezos, recently made history after becoming the first person to hit a net-worth of $200 billion. A clever businessman, Bezos’ investments are diversified: he owns Blue Origin, a space tourism company, as well as The Washington Post, the sixth most-circulated newspaper in the United States. But his status as a double centibillionaire is owed almost entirely to the wild success of Amazon, the online store he founded in 1994.

Twenty-six years later, Amazon is one of the ten most valuable companies of all-time. Even with the global economy suffering a huge blow, Amazon has been enjoying a spectacular 2020, with stock rising 86% so far this year. This is simply because millions of people find it safer to shop online amidst the new coronavirus pandemic. But the company’s beginnings were not so glamorous.

Founding and Launch

Amazon was founded during the dot-com bubble in the 1990s when businesses sought to capitalize on the massive spike of internet usage. By 1994, the internet was growing at an alarming rate of 2,300% per year. Bezos wanted to “participate in that thing called the Internet that I thought was going to be such a big deal.” Afraid of missing out on the opportunity to join the race towards the future, he quit his job at the Wall Street firm D.E. Shaw & Co. to focus on his brilliant business idea: create a huge catalog of mail-order books so large only a platform as large as the internet could hold them. Envisioning his company as the largest bookstore in the world where people could fish for books, he named it after the largest river in the world, the Amazon River.

As he believed he only had a 30% chance of success, he was cautious about asking family members for funding. Still, his parents, despite fearing their son had gone mad for quitting a well-paying job to start a business on a strange thing called “The Internet”, raised up to $300,000. The company was headquartered at a two-bedroom apartment in Seattle where he worked alongside a small crew he had hired. On July 6, 1995, Amazon.com was opened to the world.

Early Success and Market Domination

Within 30 days of launching, Amazon.com got patronage from every single state in America and from 45 other countries. All of this was with no media publicity whatsoever. But the press did come fast. The following year, Amazon landed on the front page of the Wall Street Journal, with the article praising the ingenuity of the company’s business model.

This media attention had an unintended consequence: Amazon’s success attracted some very powerful enemies. The 111-year-old Barnes & Noble decided to go online as well. This move, for a lot of market analysts, spelled the beginning of the end for Amazon, whose infancy in the business meant it would be crushed easily by a giant like Barnes & Noble. But the doomsday predictions never materialized. Amazon continued to thrive. By December 1999, Bezos’ Amazon stock was worth $10.5 billion. That same year, he was named Times’ Person of the Year.

Read More: India’s Mukesh Ambani becomes Fifth Richest Man in the World

Dot-Com Bubble Burst and Setback

The turn of the millennium spelled trouble for the tech industry. In March 2000, Barron’s published an article warning that many internet companies would soon go bankrupt. In April, Bloomberg put out a similar article noting that the numbers were pointing towards a disaster for the industry. The predictions were proven right. The 2000 Bloomberg US Internet Index revealed that 280 stocks lost a combined $1.755 trillion that year, most of the losses coming between March and September. Amazon was not spared. The company lost 90% of its stock value and was $2.1 billion in debt.

However, while dot-com companies were closing shop left and right, Amazon managed to survive the crisis due to a combination of shrewd management and dumb luck. Early in 2000, before the bubble burst, Amazon’s chief financial officer, Warren Jenson, was worried about the company’s cash position. In February, the company sold convertible bonds worth $672 million to European investors. Shortly after, the stock market crashed, making it difficult for companies to raise money. Luckily, Amazon had already secured enough cash to ride out the storm. The company recorded its first profit in the fourth quarter of 2001.

Expansion 

After establishing some stability, Amazon began to expand its business into other fields and launching new products. Between 2004 and 2017, it launched or acquired Amazon Prime, Amazon Elastic Compute Cloud, Amazon Music, Amazon Kindle, Lovefilm, Goodreads, Whole Foods, Amazon Restaurants, Amazon Fire and others.

Its expansion has mostly been a success. Amazon Kindle is the most successful e-reader in existence, having a market share of 75% in the United States and 95% in the United Kingdom. Its Amazon Prime Video streaming service, offering an array of films ranging from classics like The Godfather to modern crowd pleasers like Knives Out, has 150 million subscribers, second only to Netflix. Those numbers are not just for show; between 2015 and 2020, its stock rose 500%, with the company hitting a $1 trillion market cap in 2018.

Amazon’s success story has translated into immense wealth for its enigmatic founder who, despite paying $38 billion in a divorce settlement last year, has remained the world’s richest since March 6, 2018.

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