Jeff BezosFounder & CEO of Amazon Published On: Thursday, September 22, 2016 Views 12102
Who is Jeff Bezos?
Born on the 12th of 1964, Jeff Bezos is the Founder, chairman and CEO of Amazon.com, the online merchant of everything that has played a significant role in the upliftment of eCommerce as well.
Today, with an estimated net worth of $66.7 Bn, Jeff is listed as the 3rd wealthiest person in the world (August 2016). Under his guidance, Amazon.com has also risen up to a market cap of $292.6 Billion and has become the world’s largest online retailer and a model for Internet sales.
Other than Amazon, Jeff is also the proud owner of privately-funded aerospace developer and manufacturer “Blue Origin” and had also purchased “The Washington Post” newspaper as well.
“Blue Origin” is a human spaceflight start-up company that was founded in 2000! This was due to his love for space travel. Their idea was to commercialise space travel. The company was kept secret for a few years, and only came to be known publicly in 2006 when it purchased a large piece of land in west Texas for the launch and test facility.
In 2013, Jeff also discussed commercial spaceflight opportunities and strategies with multibillionaire founder of Virgin Group and Chairman of Virgin Galactic – Richard Branson.
But in November 2015, Blue Origin’s New Shepard space vehicle successfully flew to space and also reached its planned test altitude before executing an historic vertical landing back at the launch site in West Texas.
Going ahead – Blue Origin in an extensive flight test program of New Shepard expects to begin carrying “test passengers” in 2017 and initiate commercial flights in 2018. Currently, they are building six vehicles that will support all phases of testing and operations,
The Washington Post
In October 2013, Jeff had purchased The Washington Post newspaper for $250 million in cash, under the name Nash Holdings LLC. This also led to the exit of the longtime owners the Graham family who owned the paper for about 140 years straight.
In March 2014, Bezos made his first significant change at the paper and lifted the online payment barrier for subscribers of some number of US local newspapers
Additionally, he has also made several other business investments through his personal investment company – “Bezos Expeditions”. Some of these investments include: -
Airbnb (sharing economy), Stack Exchange (technology publishing), Twitter (social networking), Uber (sharing economy), Business Insider (publishing), Crowdrise (for-profit charitable giving platform), General Fusion (sustainable energy nuclear fusion), Aviary (software photo editing), D-Wave Systems (quantum computing), Glassybaby (supports cancer patients), Juno Therapeutics (cancer biopharmaceuticals), Lookout (technology mobile security), MakerBot Industries (3D printers), MFG.com (manufacturer direct marketplace), Nextdoor (localized social networking), Rethink Robotics (manufacturing robots), and many more…
In 1998, Jeff also invested in Google.com and became an early investor. He invested $250,000 in against of roughly 3.3 million shares. These shares today are worth roughly about $2.2 billion today.
Other than that, being a well known philanthropist, Jeff has also made several not-for-profit contributions as well.
Talking about his accomplishments, Jeff has a list accolades attached to his name, some of these include: -
- Named as Time magazine’s Person of the Year (1999)
- Selected as one of America’s best leaders by U.S. News & World Report (2008)
- Named as Businessperson of the Year by Fortune (2012)
- Awarded with the Heinlein Prize for Advances in Space Commercialization (2016)! The prize money of $250,000 was donated to the Students for the Exploration and Development of Space by Bezos
Talking about his personality and personal life – Jeff is known to be highly secretive! His biographer had to literally dig inside a trash can to discover that a company called – Blue Origin existed. All, most people know is, he is married to MacKenzie and have four children! Other than that, very little is known about what he does outside of Amazon and running his venture capital firm.
How was his early life, like?
Jeff was born in New Mexico to Jacklyn (who was a teenager at the time of his birth) and Ted Jorgense. This marriage only lasted a little more than a year, post which she remarried to Miguel Bezos (a Cuban who immigrated to the United States alone when he was fifteen years old) in April 1968. Jeff was four that time.
After the wedding, the family moved to Texas, and Miguel became an engineer for Exxon Mobil. Jeff completed his early education from River Oaks Elementary School in Houston and Miami Palmetto Senior High School. Later, he then went on to complete his graduation with two Bachelor of Science degrees in electrical engineering and computer science from Princeton University.
After completing his graduation in 1986, Jeff turned down job offers from Intel and Bell Labs to join a start-up called Fitel. After quitting Fitel, he went on to join Bankers Trust and then also worked on Internet-enabled business opportunities at D. E. Shaw & Co, as well.
By 1994, Jeff was already the youngest-ever senior vice president at the Wall Street investment banker – D.E. Shaw & Co. He was just 30-year-old, and was already drawing a six-figure salary.
He was, what many would call successful! But Jeff had other plans.
In attempts to pursue his secret fancy for the electronic retailing, Jeff decided to leave his high-paying job, that too, just before a high bonus, and start his own company on the web.
How has the journey of Amazon been?
Jeff had founded Amazon.com in 1994
He first got the idea to start an Internet enterprise in 1994. He was surfing the Internet in search of new ventures for D.E. Shaw & Co. to invest in. That is when he stumbled upon a statistic stating that World Wide Web usage was growing by 2,300% a month.
This coincided with a then-new US Supreme Court ruling holding that mail order catalogs were not required to collect sales taxes in states where they lack a physical presence.
Bezos immediately recognized the expansive possibilities of selling online and began exploring the possibilities of developing an Internet business around it.
He jotted down a list of 20 potential products that held the potential to sell through the Internet. After reviewing the list, books turned out to become the obvious choice! Primarily because of the number of titles that existed. Jeff noticed that even the largest superstores could stock only a mere fraction of what the available books, and a “virtual” bookstore could offer millions of titles.
And it was decided! Jeff passed up a fat bonus, packed his wife, and their dog and headed for a cross-country drive from New York to Seattle. MacKenzie drove during the trip, while Jeff jotted down the business plan and started calling prospective investors.
And just like that – Amazon.com was formed!
The initial years
The company was started with an initial seed investment of $1 Million from family and friends, in the garage of a house that they rented!
He chose Seattle as the ideal city for his new venture because, not only was it home to a tremendous pool of high-tech talent, but it was also in close proximity to Ingram Book Group’s Oregon warehouse.
For the next one year, Jeff along with his initial team of five employees worked on learning how to source books and setting up a computer system that would make Amazon.com easy to navigate.
And finally in July 1995, with an option of more than 1 million titles, Amazon.com opened its virtual doors and called itself “Earth’s Biggest Book Store”.
With just word of mouth and emails, Amazon became an instant success. The orders had started to pour in.
In the next three years, Amazon.com grew on to become from a company with 100 employees that drew sales of more than $15.7 million, to a company , to a company of more than 3,000 employees and more than $610 million in sales, in just 3 years.
The growing years…!
What was interesting to note was that, even though their sales were growing at a rate of 3000% annually and by now, they had become country’s third-largest bookseller: but they were yet to make money. In fact, the company lost about $30 million in 1997, followed by another $1.25 million in 1998.
But Jeff belonged to a very different mindset, and all of these things didn’t affect him. He wanted to make Amazon the most customer-centric company in the world.
Keeping that in mind – running behind profitability or becoming profitable at that point would have been a bad decision, according to Jeff! This was being done in favour of establishing brand-name recognition, and to achieve that, most of Amazon’s revenues were being poured into marketing and promotion.
Soon, Amazon was seen to be expanding itself into other markets including: music, gifts and pharmacy sections. To cash in on the growing popularity of online auctions such as eBay and uBID, Amazon also joined Sotheby’s Holdings Inc in June 1999 to launch the online auction site sothebys.amazon.com, as well.
This strategy of the company worked well in their favour! Although, this irked a few investors, but the strategy helped the company survive the dot-com bubble burst. And albeit the bubble burst costed them 1500 of their employees; unlike their competitors who got wiped off, Amazon managed to stay afloat.
In fact, the company announced their first ever profit of $5 million on revenues of more than $1 billion, or one penny per share, in the 4th quarter of 2001.
The re-valuation of Amazon also led Jeff to look for ways to diversify Amazon’s business model, which eventually led to Amazon Marketplace, which let Amazon customers to sell their used books, and other products alongside Amazon’s own offerings. Till date, Amazon’s used-items marketplace remains undefeated and is still the largest in the world.
By 2004, roughly 60% (and growing) of US households had Internet access, and Amazon was he #1 sensation on the internet. From books and CDs to clothing, electronics, to almost everything, Amazon was uniquely positioned to take advantage of the growing number of Americans who were shopping online. They were now drawing revenues worth $6.9 billion, which further increased to $8.5 billion in 2005 as well.
Ten years back, when Amazon had just begun, New York Times doubted that 20 million people used the Internet on a regular basis, and that their business model held any potential. But there is no doubt that, any such doubts existed in its head.
Amazon further went on to add Amazon Prime program and free two-day shipping within the continental United States for a $79 annual fee. In 2007, they also introduced Amazon Kindle – a lightweight device for reading electronic books. This move largely became responsible for the creation of the eBook market in the U.S. and abroad.
Later, Amazon also entered the tablet market with the Kindle Fire, their low-cost alternative to the iPad, as well
By 2014, the company had further grown its revenues to ₹88.8 billion, which has now further grown on to Revenue Increase $107 billion in 2016. They now hold a market cap of $292 Billion as well.
Jeff becomes the third richest person in the world…!
It was recently reported in July 2016 that Jeff ($65.3 billion) has surpassed Warren Buffett ($64.9 billion) to become the third wealthiest person in the world.
But how did that happen?
Well, Jeff owns close to 18% of Amazon. Now, with the drastic growth in business, their stock price too had risen by 50% since February. To add to that – after Amazon reported better-than-expected results of around $850 million in profit for the second quarter and their share price rose further in after-hours trading as well.
On the other end, Warren Buffett who also owns close to 18% of Berkshire, had made a donation of $2.86 billion of Berkshire stock to the Bill & Melinda Gates Foundation and four family charities. This affected their stock price greatly.
Furthermore – there has been a Wells Fargo bank’s fake account scandal, which has led the bank to be fined with a combined $190 million by the California and federal regulators as it was alleged of illegally opening millions of unauthorized accounts to meet their aggressive internal sales goals.
This further resulted in a 3% drop in company shares and Warren Buffett, who owns 2 million shares of Wells Fargo, lost $1.3 Billion. To worsen things more – Berkshire Hathaway also owned 10% of the bank.
The only two billionaires richer than Jeff Bezos remain Bill Gates ($78 billion) and founder of Zara – Amancio Ortega ($73.1 billion).
This is what led to Jeff’s rise, and Warren Buffett’s fall drop!