Jeff Bezos’ story is the true embodiment of the American dream. He started out as a bookstore owner and managed to accumulate so much wealth that he is now one of the richest CEOs in the world. His net worth is currently at $6.1 billion, having skyrocketed in 2018. He owns 17% of stock in Amazon.
Not counting the current President of Russia, Jeff Bezos is the wealthiest person in all of history. He is worth well over what Bill Gates was worth, even before he began to donate a good chunk of his money. Let’s break down his net worth for a second. The average person in the United States is making a little over $70,000. If you wanted to make as much as Jeff Bezos, you would have to work over 80,000 years. Over 40 nations (42 to be exact) have a combined GDP that does not amount to the his net worth.
Taking a Risk
Amazon is a great company and has merited a lot of success. Even so, the absurdity of Bezos’ personal wealth is still hard to swallow. Those who have bought into Amazon in its early days are fairly happy as well. That being said, it was not always obvious that the company would come to do as well as it is right now. It started out in 1994 and at the time was not taken particularly seriously. The internet was just a baby back then, and no one realized the profound effect it would end up having on every aspect of everyday life. The sentiment was largely that the internet was being marketed as something that would change lives, but that there was no conclusive proof it would really take off anytime soon.
As a result, tech companies and online realtors such as Amazon were a fairly risky bet to put your money into. But Jeff Bezos knew the potential of what he was tapping into. If you had the right financial advisor at the time, you were sitting on a goldmine that no one knew was about to overflow. Bezos went all in, banking on the success of the internet.
Putting Down Roots
One thing that really helped him at the time was the Supreme Court case in which businesses that focused on a model of mail order did not have to pay the same sales tax as those with physical headquarters in a state. This helped the company save an absurd amount of money that would have otherwise hindered development. At the time, it was not clear that e-commerce would become the prevailing mode of business (even today, there are still skeptics as to the expansion of e-commerce and increase in volume of small, low value goods being transported at such an alarming rate).
Amazon began as a bookselling company, based on the idea that Bezos came up with that this would be the most profitable business model. He had immediately tapped into a market that desperately needed reforming. There were millions of books that were printed and needed to be delivered to people around the country (as well as around the world).
The business started out as small. With the advice of family and friends, he started to map out how he could make the model work financially and where he would need to invest. He set up shop in his hometown of Seattle, Washington. Almost immediately, people began putting in orders at an alarming rate. it was incredible. He knew immediately that this had the capability of revolutionizing the market.
Amazon went all over the United States within a matter of two months, and then they went global. They were bringing in over $20,000 each week by the next year. They were able to sell books that were being held by suppliers and different warehouses, meaning that they had an endless supply. They could cut out the middleman in a number of transactions and save money. Of course, competitors began to pop up. Bezos was always one step ahead of the game.
They would not stop at books. This was going to be a truly global operation. They would sell everything and anything, and bring it anywhere. He took the company public in late 1995, a process which took about two years. He was going to need investors in on this if he was ever going to make it as big as he envisioned it to be. He was clear about the fact that profits would not be immediate and instead, this would be a long-term investment. The company was focused on getting as big as it possibly could, even if it took a couple of years for the results to manifest. In the end, he was able to find investors who were interested in that sort of deal.
How Fast Can You Grow?
Bezos needed to be sure to grow the company as fast as possible. He invested in new tech, initiatives, and purchased many smaller competitors. The company became a leader in the market, slowly taking over much of the industry and retaining its initial lead. Sure, there were investors that were getting impatient, but it all paid off when the dot com bubble went belly up in 2000. With many competitors out of the market, Amazon began to stretch its legs. It turned a profit in 2001 of $5 million dollars. Amazon had to layoff over 1000 employees after the bubble, but survived the economic turmoil.
With the increasing popularity of the internet through years, there was no turning back. More than half of American households had internet access by 2006 and it began growing even more steadily. With Amazon controlling such a large market share, it became impossible for other competitors to keep up with their constant innovation. They invested in the Kindle, changing the way readers would go about reading indefinitely. Their monopoly on the device made it so that readers were forced to go through them to purchase a variety of books. And although there were similar devices made, it was this jump on the competition that managed to make Amazon so huge.
Through the years, Amazon has become more than just a bookstore, turning into the Goliath of online retail people know it to be. What started off as an idea to occupy a small space of the market turned into a defining company that would change the industry forever. Such is the genius of Jeff Bezos.