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If you like Jeff Bezos's story, you might also like:
Timothy Berners-Lee,
Stephen Case,
Michael Dell,
Michael Eisner,
Lawrence Ellison,
Bill Gates,
John Hennessy,
Reid Hoffman,
Ray Kurzweil,
Craig McCaw,
Pierre Omidyar,
Larry Page,
George Rathmann,
Fred Smith and
Ted Turner

Jeff Bezos can also be seen and heard in our Podcast Center

Jeff Bezos's recommended reading: A Wrinkle in Time

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Jeff Bezos
Jeff Bezos
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Jeff Bezos Interview (page: 4 / 6)

Founder and CEO,

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  Jeff Bezos

When you showed up in Seattle, you had left your job, you'd left any regrets you might have behind you. How do you get something like started? What did you have to do?

Jeff Bezos: That blank sheet of paper stage is one of the hardest stages, and one of the reasons it's hard is because at that stage there's nobody counting on you but yourself. Today it's easy because we've got millions of customers counting on us, and thousands of investors counting on us, and thousands of employees all counting on each other. In that beginning stage it's really just you, and you can quit any time. Nobody is going to care, so you set about doing the simple things first.

So, you want to start a company. Well, the first thing you do is you should write a business plan, and so I did that. I wrote about a 30-page business plan. I wrote a first draft. In fact, I wrote the first draft on the car trip from the East Coast to the West Coast. And, that is very helpful. You know the business plan won't survive its first encounters with reality. It will always be different. The reality will never be the plan, but the discipline of writing the plan forces you to think through some of the issues and to get sort of mentally comfortable in the space. Then you start to understand, if you push on this knob this will move over here and so on. So, that's the first step.

[ Key to Success ] Preparation

We tried to get a lot of the little housekeeping details done even before we arrived in Seattle. I called a friend who lived in Seattle and asked if he could recommend an attorney. He recommended his divorce lawyer, but that's who we used. It was a general practitioner, a sort of small sole practitioner. He incorporated the company. He asked me on the cell phone what name would you like the company incorporated under. I said, "Cadabra, as in abra cadabra." And he said, "Cadaver?" I knew then that was not going to be a good name. We went ahead and incorporated under that name. We changed it about three months later.

I stopped in San Francisco and interviewed vice presidents of engineering, because that was going to be an important long lead time item. We needed to build the technology that would run the store, and found the person who turned out to be the most important person ever in the history of on that trip. A guy named Shel Kaphan, who built all of our early systems. He had help from others, but he was the architect, he engineered them, and just did a fantastic job. So writing the business plan, the initial hiring, getting the company incorporated, all these are simple, almost pedestrian tasks, but that's how you start, one step at a time.

Were investors knocking at your door?

Jeff Bezos: Oh no.

The first initial start-up capital for came primarily from my parents, and they invested a large fraction of their life savings in what became And you know, that was a very bold and trusting thing for them to do because they didn't know. My dad's first question was, "What's the Internet?" Okay. So he wasn't making a bet on this company or this concept. He was making a bet on his son, as was my mother. So, I told them that I thought there was a 70 percent chance that they would lose their whole investment, which was a few hundred thousand dollars, and they did it anyway. And, you know, I thought I was giving myself triple the normal odds, because really, if you look at the odds of a start-up company succeeding at all, it's only about ten percent. Here I was, giving myself a 30 percent chance.

[ Key to Success ] Courage

Start up companies need early planetary alignment.

There are so many things that can go wrong. When we launched that store in July of 1995, we were shocked at the customer response. Literally in the first 30 days we had orders from all 50 states and 45 different countries, and we were woefully unprepared from an operational point of view to handle that kind of volume. In fact, we quickly expanded. We talked to our landlord and we expanded into a 2,000 square foot basement warehouse space that had six-foot ceilings. One of our ten employees was six-two; he went around like this the whole time. We were doing our day jobs, which might have been computer programming -- all the different things that ten people will do in a tiny start-up company. And then we would spend all afternoon into the wee hours of the morning packing up the orders and shipping them out. I would drive these things to UPS so we could get the last one, and we would wait till the last second. I'd get to UPS and I would sort of bang on the glass door that was closed. They would always take pity on me and sort of open up and let us ship things late. We had so many orders that we weren't ready for, that we had no real organization in our distribution center at all. In fact, we were packing on our hands and knees on a hard concrete floor. I remember, just to show you how stupid I can be -- my only defense is that it was late. We were packing these things, everybody in the company and I had this brainstorm as I said to the person next to me, "This packing is killing me! My back hurts, this is killing my knees on this hard cement floor" and this person said, "Yeah, I know what you mean." And I said, "You know what we need?" My brilliant insight. "We need knee pads!'" I was very serious, and this person looked at me like I was the stupidest person they'd ever seen. I'm working for this person? This is great. "What we need is packing tables."

I looked this person and I thought that was the smartest idea I had ever heard. The next day we got packing tables and I think we doubled our productivity. That early stage, by the way of, when we were so unprepared, is probably one of the luckiest things that ever happened to us, because it formed a culture of customer service in every department of the company. Every single person in the company because we had to work with our hands so close to the customers, making sure those orders went out really set up a culture that served us well, and that is our goal, to be earth's most customer-centric company. In a second round of fund-raising, about a year later or so, we raised a million dollars and I had to talk to about 60 different people. These were angel investors. Venture capitalists were totally uninterested. It wasn't like what people think of today.

In 1998 and 1999 you could raise $60 million for an Internet idea without a business plan with a single phone call. It was a very different era, but back in 1995 it was very difficult to raise money. And, by the way, it wasn't more difficult than it had been for the previous 20 years to raise money, it just was sort of normally hard. It's supposed to be hard to raise a million dollars. So, with a lot of hard work we raised that million dollars from about 20 different angel investors who invested about $50,000 each, and that was the original money that really funded

[ Key to Success ] Perseverance

Did you ever have any self-doubts, fear of failure?

Jeff Bezos: In a strange way, no. Because remember...

Once you are looking at the odds in a realistic way -- it's very important for entrepreneurs to be realistic -- and so if you believe on that first day while you're writing the business plan that there's a 70 percent chance that the whole thing will fail, then that kind of relieves the pressure of self-doubt. It's sort of like, I don't have any doubt about whether we're going to fail. That's the likely outcome. It just is, and to pretend that it's not will lead you to do strange and unnatural things. So, what you do with those early investment dollars -- if you have $300,000 and then you have a million dollars -- what you do with those early precious capital resources is you go about systematically trying to eliminate risk. So, you pick whatever you think the biggest problems are, and you try to eliminate them one at a time. That's how small companies get a little bit bigger, and then a little bit bigger, and a little bit bigger, until finally, at a certain stage, you reach a transition where the company has more control over its future destiny.

[ Key to Success ] Perseverance

When a company is very tiny it needs a tremendous amount of not only hard work but, as we talked about earlier, luck. As a company gets bigger it starts to become a little more stable. At a certain point in time the company has a much bigger influence over its future outcome and it needs a lot less luck and instead it needs the hard work. At that point there's a little bit more pressure, because if you fail you have nobody to blame but yourself.

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This page last revised on Nov 26, 2013 01:54 EDT
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