The Everything Store: Jeff Bezos and the Age of Amazon

by Brad Stone

Bezos and his wife grew fond of another possibility: Relentless.com. Friends suggested that it sounded a bit sinister. But something about it must have captivated Bezos: he registered the URL in September 1994, and he kept it. Type Relentless.com into the Web today and it takes you to Amazon.

Bezos chose to start his company in Seattle because of the city’s reputation as a technology hub and because the state of Washington had a relatively small population (compared to California, New York, and Texas), which meant that Amazon would have to collect state sales tax from on...

Bezos built the first two desks out of sixty-dollar blond-wood doors from Home Depot, an endeavor that later carried almost biblical significance at Amazon, like Noah building the ark. In late September, Bezos drove down to Portland,

Oregon, to take a four-day course on bookselling sponsored by the American Booksellers Association, a trade organization for independent bookstores.

At the same time, Kaphan started looking for computers and databases and learning how to code a website—in those days, everything on the Internet had to be custom built.

“There wasn’t really anything except for a guy with a barking laugh building desks out of doors in his converted garage, just like he’d seen in my Santa Cruz home office. I was taking a big risk by moving and accepting a low salary and so even though I had some savings, I didn’t feel comfortable committing more than I did.”

In early 1995, Bezos’s parents, Jackie and Mike Bezos, invested $100,000 in Amazon.

Bezos told his parents there was a 70 percent chance they could lose it all. “I want you to know what the risks are, because I still want to come home for Thanksgiving if this doesn’t work,” he said.

There was little urgency to their efforts, at least at first.

“At first it didn’t really have a lot of the energy one stereotypically associates with a startup,”

One of their driving goals was to create something superior to the existing online bookstores, including Books.com, the website of the Cleveland-based bookstore Book Stacks Unlimited. “As crazy as it might sound, it did appear that the first challenge was to do something better than these other guys,” Davis says. “There was competition already. It wasn’t as if Jeff was coming up with something completely new.”

“This is not only the largest river in the world, it’s many times larger than the next biggest river. It blows all other rivers away,” Bezos said.

Bezos began to think about hiring other employees—and that meant finding a more professional place to work.

The site was bare, crammed with text and tuned to the rudimentary browsers and slowpoke Internet connections of the time. “One million titles, consistently low prices,” that first home page announced in blue underlined text. Next to that was the amateurishly illustrated logo: a giant A set against a marbled blue background with the image of a river snaking through the letter. The site seemed uninviting to literate people who had spent their lives happily browsing the shelves of bookstores and libraries. “I remember thinking that it was very improbable that people would ever want to do this,” says Susan Benson, whose husband, Eric, was a former colleague of Kaphan’s. Both would become early employees at Amazon.

These were all state-of-the-art developments during the gritty initial days of the Web, a time when tools were primitive and techniques were constantly evolving.

Amazon’s first engineers coded in a computer language called C and decided to store the website in an off-the-shelf database called Berkeley DB that had never seen the levels of traffic to which it would soon be exposed.

Each order during those early months brought a thrill to Amazon’s employees. When someone made a purchase, a bell would ring on Amazon’s computers, and everyone in the office would gather around to see if anyone knew the customer. (It was only a few weeks before it started ringing so often that they had to turn it off.)

major book distributors, paying the standard wholesale rate of 50 percent off the list price (the advertised pr...

There was little science to Amazon’s earliest distribution methods. The company held no inventory itself at first. When a customer bought a book, Amazon ordered it, the book would arrive within a few days, and Amazon would store it in the basement and then ship it off to the customer. It took Amazon a week to deliver most items...

Even back then, Amazon was making only a slender profit on most sales. It offered up to 40 percent off the list price on bestsellers and books that were included in Spotlight, an early feature on the website that highlighted new titles each day. The company offered 10 percent off the list price on othe...

One early challenge was that the book distributors required retailers to order ten books at a time. Amazon didn’t yet have that kind of sales volume, and Bezos later enjoyed telling the story of how he got around it. “We found a loophole,” he said. “Their systems were programmed in such a way that you didn’t have to receive ten books, you only had to order ten books. So we found an obscure book about lichens that they had in their system but was out of stock. We began ordering the one book we wanted and nin...

Bezos believed that if Amazon.com had more user-generated book reviews than any other site, it would give the company a huge advantage; customers would be less inclined to go to other online bookstores. They had discussed whether such unfiltered user-generated content could get the company in trouble. Bezos decided to watch reviews closely for offensive material rather than read everything before it was published.

In speeches, Bezos later recalled getting an angry letter from an executive at a book publisher implying that Bezos didn’t understand that his business was to sell books, not trash them. “We saw it very differently,” Bezos said. “When I read that letter, I thought, we don’t make money when we sell things. We make money when we help customers make purchase decisions.”

No one had been hired yet to pack books, so when volumes rose and the company fell behind on shipping, Bezos, Kaphan, and the others would descend to the basement at night to assemble customer orders. The next day, Bezos, MacKenzie, or an employee would drive the boxes to UPS or the post office.

just like David Shaw, Bezos wanted all of his employees to be high-IQ brainiacs.

Bezos and his employees had of course heard of Yahoo and they sat around eating Chinese food that night and discussing whether they were ready for a wave of new business when they were already drowning in orders.

within the first month of their launch they had sold books to people in all fifty states and in forty-five countries.8 Every day the number of orders increased, and the tendrils of chaos—the company’s constant antagonist over the next several years—began to tighten around the young startup.

Bezos insisted that Amazon had to have a customer-friendly thirty-day-return policy,

While he and his employees worked exceedingly long days, Bezos was always thinking about raising money.

That summer the Bezos family, using the Gise family trust (Gise was Jackie’s maiden name), invested another $145,000 in Amazon.9 But the company couldn’t continue hiring and growing on the Bezos family savings alone.

He canvassed sixty potential investors, seeking to raise $1 million from individual contributions of $50,000 each.10

In the meetings, Bezos presented what was, at best, an ambiguous picture of Amazon’s future. At the time, it had about $139,000 in assets, $69,000 of which was in cash. The company had lost $52,000 in 1994 and was on track to lose another $300,000 that year. Against that meager start, Bezos would tell investors he projected $74 million in sales by 2000 if things went moderately well, and $114 million in sales if they went much better than expected. (Actual net sales in 2000: $1.64 billion.) Bezos also predicted the company would be moderately profitable by that time (net loss in 2000: $1.4 billion). He wanted to value the fledgling firm at $6 million—an aggressive valuation that he had seemingly picked out of thin air. And he told investors the same thing he told his parents: the company had a 70 percent chance of failing.

This highly driven, articulate young man talked with conviction about the Internet’s potential to deliver a more convenient shopping experience than crowded big-box stores where the staff routinely ignored customers. He predicted the company’s eventual ability to personalize a version of the website for each shopper based on his or her previous purchases.

And he prophesied what must have seemed like a radical future: that everyone would one day use the Internet at high speeds, not over screeching dial-up modems, and that the infinite shelf space of the Web would enable the fulfillment of the merchandiser’s dream of the everything store—a store with infinite selection.

“He was so convinced that what he was doing was basically the work of God and that somehow the money would materialize. The real wild card was, could he really run a business? That wasn’t a gimme. Of course, about two years later I was going, ‘Holy shit, did we back the right horse!’ ”

“It’s one thing to have a good idea, but it’s another to have confidence in a person to execute it,” he says.

Many others turned Bezos down.

“We got the normal comments from well-meaning people who basically didn’t believe the business plan; they just didn’t think it would work.”11 Among the concerns was this prediction: “If you’re successful, you’re going to need a warehouse the size of the Library of Congress,” one investor told him.

Bezos felt that hiring only the best and brightest was key to Amazon’s success.

“Every time we hire someone, he or she should raise the bar for the next hire, so that the overall talent pool is always improving,” he said, a recurring Jeffism.

Bezos wasn’t looking for the correct answer, only for the individual to demonstrate creativity by coming up with a sound way to derive a possible solution. And if the potential employees made the mistake of talking about wanting a harmonious balance between work and home life, Bezos rejected them.

Amazon at the time was offering about sixty thousand a year in salary, stock options of questionable value, a meager health plan with a high deductible, and an increasingly frenetic work pace. “We would look at him and ask, How do you think you’re ever going to attract anyone with that kind of background to a company that has no revenue and that is not projected to have any kind of revenue?” Davis said. “I don’t see what the selling point is here!”

He was unusually confident, more stubborn than they had originally thought, and he strangely and presumptuously assumed that they would all work tirelessly and perform constant heroics. He seemed to keep his ambitions and plans very close to the vest, not revealing much even to Kaphan. When his goals did slip out, they were improbably grandiose.

That year the engineers rigged a database command, rwerich, to track the number of daily purchases as well as orders throughout the lifetime of the company. They obsessively watched those numbers grow—it was one of their pleasures amid the typically frenetic days. Bezos eventually told them to stop doing it, in part because it was putting too much strain on the servers. And when Amazon had its first five-thousand-dollar-order day and Lovejoy wanted to throw a party, Bezos rejected the idea. “There are a lot of milestones coming and that’s not the way I want to run things,” he said.

Set up

“You can work long, hard, and smart, but at Amazon.com you can pick only two out of three.”

“You can work long, you can work hard, you can work smart, but at Amazon you can’t choose two out of three.”

By the first weeks of 1996, revenues were growing 30 to 40 percent a month,

No one had any idea how to deal with that kind of growth, so they all made it up as they went along.

The number of orders each day immediately doubled.

The world now knew about Amazon.com, and, likely, so did Barnes & Noble and Borders, the nation’s largest book chains.