I persuaded my (then) in-laws not to invest in Amazon at this stage (I was the 2nd employee at the company). They would have certainly put in $50k or so. Fortunately, they are lovely Quaker people and as far as I know have never held a grudge against me because of this (incorrect) advice.
There are some inaccuracies in this article, too. Most of the investment window described here actually took place in 1995 - Jeff had enough cash to see things through the end of 1994. He and Mackenzie did not live in a 1 bedroom apartment that they "rented when they moved to the city" - they rented a house in Bellevue and the already-converted garage was the first Amazon office. They may well have moved to 1 room apartment later, as it became clear that the company would definitely be in Seattle itself.
I encourage you to write down everything you remember of your experience there. You don't have to publish it, but future historians will surely find it very interesting.
People are always eager for anecdotes about the early days of Apple and Microsoft, but surprisingly there's very little about Amazon.
Robert Spector documented a lot of the earliest stuff in
his book "Get Big Fast" (he even managed to speak to quite a few of the actual people involved).
One of the problems with properly documenting the first year or so is that the people involved mostly don't want to talk about it, or want to turn it into the stuff of legend.
The one person who was there for the full first 5 years besides Jeff (and Mackenzie, to whatever extent she was deeply involved, which I never sensed was a lot, but I may be wrong about that) doesn't like talking about Amazon publicly (though he did a little for a recent PBS documentary). Lots of other people came and went during that time (including me), and we're all a bit like the blind folk feeling out the elephant: we know part of the story, but not the full picture.
Jeff himself doesn't seem very interested in talking about the early period, or if he does, it seems important to him that the story describes a trajectory that obviously connects with what was to come (which is not entirely unfair).
The people who stayed for the long haul generally don't want to talk, it seems; the people who left mostly have not-so-positive stories to tell at this point (partly because of the behemoth that the company has become).
Personally, I think that Amazon's complete failure to take the high road in creating the model of retail in the 21st century is the more important story than details from the early days. The appalling treatment of employees, the conflicts between operating a marketplace and being a seller within that marketplace, and the general emphasis on our lives as consumers instead of the more important roles of citizen and employee .... this is what's really important about the Amazon story in my opinion.
Oh wait, it's HN. You want to hear about how I pushed and pulled C++ objects to and from Oracle in 1994, and how integrated that into NSAPI, amirite? :)
> Oh wait, it's HN. You want to hear about how I pushed and pulled C++ objects to and from Oracle in 1994, and how integrated that into NSAPI, amirite? :)
No. In fact, everything you shared is really interesting.
By the way, I was at AWS from 2008 to 2014, I started when the team was about 150 people or so. It's now in the ballpark of 50k I think, or even north of that.
It's interesting how the "beginnings" of a business that eventually gets big are always "adapted" to current times.
Would you have any advice to share for someone working on building an online store / e-commerce system for small businesses (not a marketplace, one a store could conceivable pay as a SaaS solution or deploy themselves with no strings attached - not even through licensing)?
Sorry, I worked on this stuff so long ago that no advice I could offer today about technology is relevant. Back in 1994, we worked in C++ and used Oracle directly and loaded our shared object into Netscape Server. AFAICT, nobody in their right minds works this way today.
In addition, we had to invent a whole new way of doing what was essentially mail order - there were several mail order packages available in 1994, but all of them were predicated on the notion that you either had stuff in stock, or were going to order a bunch more so that you had it in stock. Amazon was different: in the early days, we had essentially nothing in stock, so we had to invent an entirely new way of managing order flow and stock management.
I felt that I knew him quite well for the (brief) time we worked together. I saw him again about 4-5 years after I left, but never since then. If he's aware of my public statements and documentary appearances over the last couple of years, I doubt there's much of a warm feeling there, but who knows ...
I have served as a fact witness for Amazon in a couple of patent cases, saving the company very large amounts of money. I'd like to think he's aware of this, although I have no basis for that.
That's very interesting. It's fascinating to realize just how much of a "wake" there is behind people society deems successful. I watched a great speech by Arnold Schwarzenegger recently, where he said something like "the biggest insult someone could give me would be to say that I am a self-made man. I've worked hard, but I'm not self-made. I'm only here because of the people who helped me get here.
I wonder what Bezos thinks of himself. Does he envision himself as a self-made man, or does he see his success as the result of the hard work of many thousands or millions of people?
I'm inclined to say the former, especially given his treatment of the Amazon workforce, as you laid out in your public statements. I would love to hear more of your story, and I'll look for any documentaries with you. Thanks for your answer :).
By the way, I know it might sound like a "trap" or similar, but I am starting a new podcast and I would like to see if you're interested in having a nice chat with me. I'm not trying to extract any specific controversy, or to be sensationalist - there are no sponsors, I do it with total freedom, and the VC I am involved with allows me to do what I want - so, no traps or hidden agendas (if you can believe that). Email is my HN username @ gmail.
Even if you just want to say no, just say hello in any case :)
Apologies for the kind of tangental question but just really curious.
In the really early days of Amazon, did the company and/or the group of people feel like something really special, or did it feel like a totally regular bunch of people just working on some idea that was half decent? Was there any sense at all of the type of company it could become?
For most of the time that I worked at amzn, it was really just Jeff, Shel (Kaphan) and myself, with Mackenzie apparently do the accounting somewhere else. The three of us were a tight threesome back then, and we knew that we were building something very new and quite possibly momentous (in particular, the idea of what we called "almost in time" retail, aka "we don't have it in stock but we can it for you really quickly"; of course, that idea has largely gone away these days).
Jeff had much bigger dreams from day zero than most people acknowledge (basically, to be the Sears of the 21st century), and Shel and I both knew that.
On the other hand, day to day work involved mostly the same old problems, there were the same conflicts (i excused myself from all discussions about website design because it was clear that Jeff and I were never going to agree about almost any of it), and the whole thing felt as if it could have folded up at any moment before about (say) October of 1995. After that, there were more people on board, sales were skyrocketing, and it was clear that it was a thing.
I left amzn for many reasons, but in part because it was obvious to me by the fall of 1995 what kind of company it was going to become, and I wanted nothing to do with that. I still don't, which is why I've spoken out a bit more publically about the company over the last year or two.
Could you elaborate on what it could become part? And what was Jeff Bezos like as a thinker and programmer, is he really as brilliant as some people say he is ? What in your opinion was his greatest strength aside from timing and access to capital.
Jeff is an incredibly smart person. He's well informed, can think deeply, and quickly, and can connect across disciplines and boundaries.
But ... his greatest strength is understanding that he's not smart enough, and the important thing is to hire people who are better than you to do the things that need to be done, so that you have time for thinking about what needs to be done.
It was nice to work for a guy with a BS in CS, someone who understood aspects of the sorts of problems that myself and the other founding programmer faced in the early days. We could talk about scaling issues, or database design issues, and Jeff had more than your typical "boss" understanding of what we meant.
But we were both much better programmers than Jeff would ever be. On the other hand, he's demonstrably much better at building and running a massive corporation, and much more willing to make decisions that many of us (I hope) would stumble over.
What Amazon became was a massive corporation that didn't care much about employee burnout, didn't care much about its treatment of employees at all, and relentlessly focused people on their lives as consumers, when most of us spend more of our lives as employees and citizens. Amazon has been amazing for us all as consumers, but it's almost certainly a net negative when viewed through the lens of employees (within and outside the company) and citizens.
Something I've always wondered - before there's prestige and an aura around the company, how are 'really smart' people drawn to join an upstart?
These folks (who are "smarter than") usually have offers from everywhere in the valley, and without prestige or big salary, I'm curious to know if the conversion is primarily a vision or a 'reality distortion field' like story? Or was there any burden of proof for Jeff on progress towards the vision?
Edit: just saw you said Jeff knew the vision at the start, how did he prove he was the one to do it early on (founder-startup fit)?
Actually, this was a puzzle at the beginning, and I'm not sure when it stopped being so (though presumably it stopped being so long ago).
In the early days, there were just two of us programmers, and we began to sense that there was a backlog of programming tasks that we just didn't have the time to get to. We proposed the Jeff that we hire a third programmer. He wanted someone with a PhD in CS from one of the top 5 CS schools. We said "Jeff, we're a tiny startup in Seattle (remember, this is 1994, Seattle was different), we're never going to hire people like that". He insisted. We interviewed several of those people - they weren't interested (as we predicted). We bugged him and bugged him and eventually he relented and let us hire a less qualified, less stellar guy, just to get some tasks done.
In retrospect, Jeff had been exactly right. We should have held out for another A+ programmer, with the skills and vision to drive forward whatever tasks they were given (or self-identified). Instead we hired a capable, skilled person who needed a lot of hand-holding and encouragement (not to worry, I think he did pretty well for himself).
Jeff knew we had made a mistake (albeit not a very big one), and asserted very affirmatively that the company would not do that again. When we started hiring editors, he wanted people with "multiple years experience at a major national publication". The two of us founding programmers didn't try to talk him down from that, and eventually he was able to recruit such people. I don't know how he convinced them to join Amazon, even to this day.
Also, recall that in 1994, "the valley" wasn't what it later became. The people amazon was hiring in the 1995-1998 period weren't looking to the valley for alternative employment, for the most part.
Probably a combination of good pitch / persuasion, first impression of the guy/gal pitching you, and the product itself.
Also, keep in mind, Jeff came from a hedge fund, having worked/analyzed the (then) internet and consumer market - so it seems he had more than a hunch of its potential.
And the fact that he was a tech guy (before banking), probably meant he could easily talk their language - in technical terms.
This is all true, but I think also irrelevant. We built Amazon without convincing anyone that Jeff was right, other than the sort of people mentioned in the article. By the time he started reaching out for VC money (Kleiner Perkins, but also Nick Hanauer who wasn't really VC), it was clear to anyone with half a brain that there was a sensible investment to be made.
I remember that not long after we "opened the doors" to the public, we had a visit from some reps from either Ingram or Baker & Taylor, the US's two biggest book distributors (I forget which). Part of the reason Jeff had picked Seattle was that it was within the 1 day delivery radius for both companies. These guys came over to see what we were doing and they were completely flabbergasted. They could not believe that a few people in a small commercial building in Seattle had built what we had already done by that point. They had no idea of the technologies involved, they had no grasp of the vision. But we never had to convince companies like this - we just ordered books from them, as their customers, and then sold them to ours.
My favorite, very fuzzy memory of "early investors in amzn" concerns someone who appears to have successfully dropped off the map. We had hired a guy called who had graduated from a college in OR known for being a bit "wooly" but nevertheless generated high quality grads. Jeff wanted to hire some more people from the school, and asked the guy for suggestions. We ended up hiring (among others) a philosophy grad who was also a carpenter and cycling fiend. This guy designed and built the first specialized packing tables for the company. He was a gentle, reflective soul, not really into computers or tech or startups or any of what amazon was about, as I recall.
When he heard that Jeff was looking for "angel" investors (as opposed to VC money, which he wanted to avoid as much as possible), the carpenter went to see Jeff about putting his life savings into the company. My recollection is that he might have had about $35k saved up (he was a deeply frugal person, too). Jeff told him twice that it was a terrible idea, that the company was still incredibly risky, and it was insane for someone so young. The third time, Jeff relented, and allowed him to buy a bunch of stock.
Based on the article, if he had held onto his stock, it would have been worth about $5BN. More likely, he sold it along the way, and probably netted somewhere in the 10s to 100s of millions.
I have no idea what happened to the carpenter, but I hope that he's happy somewhere with some beautiful handtools in a woodshop he built himself, riding one of many custom made bicycles across a lovely landscape. Based on what I knew of him back then, definitely the most deserving and philosophically appropriate winner at the amazon stock roulette game.
I just kind of stumbled into the comments for this article, but having read your comments, I’m glad I did. Thanks for taking the time to thoughtfully share your insights.
My brother blew what would've been a few million dollars worth Bitcoin on pizzas and some other frivolous crap back when the novelty of doing that was worth more than the Bitcoin itself.
Whenever I heard these kinds of stories, I remind myself that loss aversion is a cognitive bias that we all share.
Sure, maybe some people passed on an opportunity to invest in 1994, but the general public had the opportunity to invest in Amazon any time after Amazon's IPO in May 1997. Someone who invested $50k then would be holding shares worth $95 million today. It's not quite billionaire territory, but it's still a very successful investment by anyone's standard.
For much of Amazon's early history, it was something of a laughingstock, as the company had clearly stated that it didn't plan to make money in the foreseeable future, if ever. At a minimum, it made the company difficult to value (and still does).
One of Amazon's important achievements was to attract and retain investors willing to go along for the "their margin is our opportunity" inexorable slow-boat ride to dominance.
>For much of Amazon's early history, it was something of a laughingstock, as the company had clearly stated that it didn't plan to make money in the foreseeable future, if ever.
I still remember John C. Dvorak saying how awful amazon is and that it will never make money just ~10 years ago.
Apple makes the arrogant assumption of thinking that it knows what you want and need. It, unfortunately, leaves the “why” out of the equation — as in “why would I want this?” The Macintosh uses an experimental pointing device called a ‘mouse’. There is no evidence that people want to use these things. I dont want one of these new fangled devices.
I could never be sure if Dvorak was actually serious or just always writing stuff that was purposely inflammatory to get a reaction. Basically the print/magazine version of clickbait before that word was even invented.
“I was talking with Dvorak at the Vloggercon party this evening, and he started telling a story about how he deliberately pisses Mac users off to get flow for his stories…” – Dave Winer
Another way of looking at this is, stock value doesn't just not mean what reasonable people think it means - the meaning of prices is 200% wrong.
Another way of looking at this is, no one is going to be able to redeem all the Amazon stock there is for cash at this price, that only mark-to-market is wrong.
Another way of looking at this is, Jeff Bezos was happy doing what he was doing for peanuts throughout Amazon's early lifetime, so would wealth taxes or CEO compensation caps or whatever boogeyman really have dissuaded him from taking other people's money?
> Another way of looking at this is, no one is going to be able to redeem all the Amazon stock there is for cash at this price, that only mark-to-market is wrong.
Maybe, maybe not. Amazon’s daily trading volume is about 3 million shares, and there are around 500 million shares outstanding. In 150 days the entire market value of the company trades.
It would be weird if the whole thing was sold at once, but there would be people interested in buying. The company has real value.
A wealth tax would have limited the amount of early investment available to Amazon (and the start-up ecosystem as a whole), and it very well might have forced liquidation of shares at critical points in the company's early history when Bezos was wealthy on paper as an Amazon shareholder.
> For much of Amazon's early history, it was something of a laughingstock
This seems like a real stretch. Amazon IPOed in 1997 for $0.5B, and grew to $30B by 1999. It crashed to $3B in the dot com bust, but that was the case for the entire tech industry. Between 2001 and 2007, it grew 10x from $3B to $30B.
Even including the dot-com crash, Amazon had grown ~60x in its first decade as a public company. I don't think anyone would be laughing at those growth rates.
Yeah it took me a while to accept this. There are 50 different ways you could be a multi millionaire in a month if you were willing to place big bets but the reality is this a pretty insane way to act for most people on most circumstances.
I guess in some cases it feels more tangible like if you specificly had the chance to invest but it really isn't much different than all those other things you could have done.
I sold 4 Bitcoin when they hit 1000 and I'm not even mad. I liked them in a Dell laptop with a discrete laptop graphics card back when that was possible using pools.
Probably less than half of the $95m. AMZN opened at double its IPO price, and climbed up from there. The only way you could have gotten the IPO price is if you had a major account with Morgan-Stanley or the like and had a good relationship with them (i.e. you did a lot of trades so they got lots of commissions).
But yeah, there was still plenty of time for anyone to make a spectacular investment in Amazon.
This is not just about loss aversion. What if you give your family and friends now such an opportunity. Some of them will win some of them lose.
It's quite hard emotionally I guess. To see some of them who just by pure chance got rich and others who are poor. You can't give it afterwards. Money at times is just a gift from the devil in disguise.
He valued his idea at $5M before he had even sold a book and managed to convince 22 people to invest at least $50k in him. That’s quite the story, especially back before he internet was a staple in all our lives. Kudos to those who held on the stock. Moral of the story, as is usual in investing, never sell.
I still have Sun Microsystems stock certificates, purchased in ~1999. They are more valuable as curiosities or as recycled paper than as a tradeable security.
You have to know when to hold 'em, know when to fold 'em, know when to walk away, know when to run.
They were a gift from a relative who liked to hold physical certificates. They do give the holder a feeling that a small chunk of the company is truly theirs.
I didn't redeem the (very low-value) shares because I didn't want a tiny slice of Oracle or a few dollars; I'd rather have an actual chunk of Sun.
Aren't those ornamental at this point, though? Like I thought they use some other record-keeper as the source of truth on who owns the stock, rather than whether you hold a certain piece of paper (bearer shares).
Stock certificates usually have your name on them, and then there's a process to sign them over to someone. The corporation has a register of its shareholders, and in this case it's you.
At least in Canada, once you get a physical share, you can then buy shares directly from many companies by writing them a cheque without any commissions. Less important as trades here now average around $10, but that's fairly recent for many.
I still have a share of a Canadian bank that spiked in value by the time I got my certificate sorted out. They still mail me a cheque every 3 months for <$1 in dividends.
When I first heard of Amazon starting up, I was kinda amused, and didn't pay much attention. Like they didn't get the point of a distributed hypertext of everything, and they picked the most incongruous-sounding thing to sell on it (paper books!).
Not that I gave it much thought. We dismissed a lot of companies back then, because most of them were obvious nonsense by people who didn't know what they were doing (technically and service/product-wise, not investment-scam-wise) and they didn't have to care, and I grouped Amazon in with the silly companies.
Now the Web browser is not much your interface to a hypertext, but a massively bloated GUI toolkit (albeit with zero-install, a really rich layout widget, and unprecedented spying on intimate reading/interaction behavior and communications)... and that silly we'll-use-the-hypertext-to-sell-paper-books company now sells me most of the things I buy now, and even operates the servers for my company and the majority of companies I use. :)
I know it's not the intent of the article, but the only thing I can think of is that it must be nice to have "family and friends" that can afford to hand you $50K each to back your strange new idea.
I can try to imagine how someone might feel to have passed on the opportunity to invest. Yes, money is not everything in life... But missing on a billion dollar might not be easy to process for most of us.
I left amzn after 1 year of my options vested. Compared to almost all Americans, it made me rich. It let me spend 10 years as an at-home parent raising my daughter. Had I stayed the full term, I'd have owned 1% of the company (I got ripped off in my initial negotiations with Jeff :).
Occasionally I wonder what I'd have done with all that money, but very rarely. I don't miss the billions. The $1M (plus or minus) that I got out of it was more than enough to count myself deeply fortunate. Nobody "earns" that much money - I just got lucky.
I prefer the path I took - a great life, much happiness, low stress, and for the last 20 years, the fun and games of building one of the most successful libre software projects around.
Would you be keen to come on my podcast (https://www.raddadshow.com) to talk about this? IMO buying 10 years of freedom with 12 months of work is a pretty good deal! Many people that have money end up with less. It would be fun to explore your life, and maybe inspire future generations to reconfigure priorities.
I had no idea what percentage to ask for. I asked a few friends who had been in startups, and that convinced me that the 1% I was being offered (over 5 years) was a good deal. What I didn't realize till about a year later was that my friends had all joined their respective companies as, say, employee #20 or #30. I was coming into a company with zero employees, and it turns out that I should have been pushing for on the order of 5x was I was being offered.
OTOH, I did tell Jeff that I was having a daughter in several months and planned to go to a 3 day week after that happened. He agreed to that ("I knew when I met you that you'd think about work 24/7 anyway"), so there was a tradeoff there.
I'm not really complaining, but when I did find out what some other early hires had negotiated, it stuck in my throat for a bit.
Decisions can only be evaluated in the context in which they were made.
A friend invested much of his savings equally in ~5 promising Seattle-area businesses in the early 2000s. Four went to zero, one was AMZN. Had he chosen only slightly differently, five might have gone to zero.
> “I was stupid enough to sell them rights to the whole bunch,” Sapkowski said at the time. “They offered me a percentage of their profits. I said, ‘No, there will be no profit at all — give me all my money right now! The whole amount.’ It was stupid. I was stupid enough to leave everything in their hands because I didn’t believe in their success. But who could foresee their success? I couldn’t.”
Do you think he would have returned the lump sum if the game failed and they went broke?
And one could argue that the gamemakers were much more motivated to create a successful product when they started out in the red, but got the keep all of any profits.
That guy really has bad luck. From the Wikipedia article,
"In the early 1990s, Wayne sold the original Apple partnership contract paper, signed in 1976 by Jobs, Wozniak, and himself, for US$500. In 2011, the contract was sold at auction for $1.6 million.[15] Wayne has stated that he regrets that sale.[5][6][16]"
Bezos works on wall street before Amazon I think most of his F&F were quite well off already, anyone who can easily dump $50K into a friends project doesn’t have money problems.
One trait successful investors share is that they don’t cry over missed opportunities.
To be an accredited investor, a person must have an annual income exceeding $200,000, or $300,000 for joint income, for the last two years with expectation of earning the same or higher income in the current year. An individual must have earned income above the thresholds either alone or with a spouse over the last two years. The income test cannot be satisfied by showing one year of an individual's income and the next two years of joint income with a spouse. The exception to this rule is when a person is married within the period of conducting a test.
A person is also considered an accredited investor if they have net worth exceeding $1 million, either individually or jointly with his spouse. The SEC also considers a person to be an accredited investor if they are a general partner, executive officer, director or a related combination thereof for the issuer of unregistered securities.
Exactly. If I were to ask my F&F for money they would ask me if I'm in trouble, what's wrong, and if I can pay this month's rent. All in who you know whether your business launches or not.
And somewhere out there today is a penny stock or "sketchy"/high-risk investment that will go to the moon. And it will seem to straightforward in hind-sight, but ignore a lot of other failures.
There are a lot of companies that transform themselves. They start some initial project, pivot, get a cash cow and then follow the market. Some don't.. all the typewriter manufacturers missed the computing revolution. Mainframe to the micro pc etc... Even say, nokia to iphone.
There are some inaccuracies in this article, too. Most of the investment window described here actually took place in 1995 - Jeff had enough cash to see things through the end of 1994. He and Mackenzie did not live in a 1 bedroom apartment that they "rented when they moved to the city" - they rented a house in Bellevue and the already-converted garage was the first Amazon office. They may well have moved to 1 room apartment later, as it became clear that the company would definitely be in Seattle itself.