WEBVTT - Part Two: Jeff Bezos and the Birth of Amazon 0:00:02.480 --> 0:00:05.960 Hey, everybody, Robert Evans here again. As I stated last time, 0:00:06.080 --> 0:00:09.760 this episode ran very long, so we split into two parts. UM. 0:00:09.800 --> 0:00:12.680 I'm going to just dive into the episode with Jake 0:00:12.720 --> 0:00:16.840 and I right now, So thanks for listening watching if 0:00:16.920 --> 0:00:20.599 you can see sound. Um. In any case, here's more bezos. 0:00:22.280 --> 0:00:25.040 Jeff had been a demanding taskmaster to his employees up 0:00:25.079 --> 0:00:26.880 to this point, but he also sounds like he was 0:00:26.920 --> 0:00:30.200 a reasonably well liked boss that complaints you here later 0:00:30.240 --> 0:00:33.000 about him. He's very strict, he's very like dedicated. He 0:00:33.040 --> 0:00:35.280 wants a lot of work out of you. UM. I 0:00:35.320 --> 0:00:39.239 haven't heard anything like allegations that he was abusive at 0:00:39.280 --> 0:00:41.280 this point, and that's because I think he's not really 0:00:41.280 --> 0:00:44.360 in charge. He's not running the company. He's got people 0:00:44.400 --> 0:00:46.920 above him, and I think that tempers some of what 0:00:46.960 --> 0:00:50.519 will later become his worst attributes as a boss. For 0:00:50.680 --> 0:00:53.519 some time, Jeff had been talking out different business ideas 0:00:53.560 --> 0:00:56.640 with his mentor, David Shaw. Many of these ideas were 0:00:56.640 --> 0:00:59.040 financed focused, but one of the ideas they would talk 0:00:59.040 --> 0:01:03.000 about was what they call the Everything Store. Now. The 0:01:03.040 --> 0:01:06.280 Internet was young back then, and it was still very small, 0:01:06.319 --> 0:01:09.880 but both men were enough future focused to understand its 0:01:09.880 --> 0:01:12.479 potential and the fact that an online company that could 0:01:12.480 --> 0:01:16.240 sell products directly from manufacturer to consumer could save a 0:01:16.319 --> 0:01:19.720 fortune on store space and among other things and undercut 0:01:19.760 --> 0:01:22.840 retail chains. This was not a revolutionary idea. I'm sure 0:01:22.840 --> 0:01:24.880 a number of people realized this was going to happen 0:01:24.920 --> 0:01:27.399 at some point, but Jeff and David are talking about 0:01:27.400 --> 0:01:29.440 it very early on, and Jeff did come up with 0:01:29.480 --> 0:01:32.600 one innovative plan for how this store would work. His 0:01:32.720 --> 0:01:35.480 idea was that it should be driven by customer reviews. 0:01:35.800 --> 0:01:38.480 Any customers should be able to leave a review, UM, 0:01:38.560 --> 0:01:41.040 and you know, all of those reviews should be collected, 0:01:41.040 --> 0:01:44.560 and you should get people buying, should be like shown 0:01:44.640 --> 0:01:48.680 products based on what which stuff is best reviewed? UM. Now, 0:01:48.680 --> 0:01:50.640 this had never been done on a large scale. That's 0:01:50.640 --> 0:01:52.880 how the whole internet works now. But Jeff is really 0:01:52.920 --> 0:01:55.520 like kind of the first person who commits to doing 0:01:55.560 --> 0:01:59.480 this anywhere in internet commerce. UM. And that's really when 0:01:59.520 --> 0:02:02.520 you're looking kind of what set Amazon initially apart from 0:02:02.560 --> 0:02:05.760 other attempts. That was a big part of it. UM. 0:02:05.800 --> 0:02:08.160 For a while, the Everything Store was a fun thought 0:02:08.200 --> 0:02:11.240 experiment for Shaw, but Bezos grew obsessed with it in 0:02:11.320 --> 0:02:14.120 his free time, he would read analyzes of the growth 0:02:14.160 --> 0:02:17.160 of the early Internet, and in nine he came across 0:02:17.240 --> 0:02:20.440 information that web activity had surged by two hundred and 0:02:20.520 --> 0:02:23.880 thirty thousand percent in the last year. So he thought 0:02:24.000 --> 0:02:26.800 quite accurately that someone could make a shipload of money 0:02:26.840 --> 0:02:29.640 on the Internet with a growth percentage like that. So 0:02:29.680 --> 0:02:32.240 he decides to quit his high paying job because he's 0:02:32.240 --> 0:02:34.040 already very success He could have stayed at D. E. 0:02:34.120 --> 0:02:36.600 Shaw for the rest of his career and almost certainly 0:02:36.639 --> 0:02:39.200 would have been a multimillionaire. You know, UM would have 0:02:39.240 --> 0:02:42.399 been a very successful career, but he's he wants more 0:02:42.440 --> 0:02:45.400 than that, so he quits his job. Um kind of 0:02:45.400 --> 0:02:48.480 baffles his mentor, and he and his new wife, Mackenzie 0:02:48.520 --> 0:02:50.840 Flight of Texas, grab a ship car from some family 0:02:50.840 --> 0:02:54.600 members and drive to California. Mackenzie drives while Jeff spends 0:02:54.639 --> 0:02:57.800 the whole time like putting together spreadsheets and reading different 0:02:58.040 --> 0:03:00.240 sort of business laws and figuring out how he's going 0:03:00.320 --> 0:03:04.440 to make this this company he wants to form work Um. 0:03:04.600 --> 0:03:06.400 One of the things he finds out on his drive 0:03:06.480 --> 0:03:09.200 is that, due to a nineteen two Supreme Court case, 0:03:09.680 --> 0:03:12.680 merchants did not have to collect sales tax and states 0:03:12.720 --> 0:03:15.320 they didn't operate in. And this is kind of the 0:03:15.360 --> 0:03:18.600 loophole that makes early Amazon dot Com possible, the fact 0:03:18.639 --> 0:03:20.800 that like again when it because a big part of 0:03:20.800 --> 0:03:23.280 it is that they can really undercut prices. Part of 0:03:23.280 --> 0:03:25.280 that is we're not paying for a brick and mortar store, 0:03:25.320 --> 0:03:27.239 so we don't have to pay for like employees to 0:03:27.320 --> 0:03:29.799 stock ship, we don't have to play pay for storage space. 0:03:30.080 --> 0:03:32.680 We can sell direct from the manufacturer. But part of 0:03:32.680 --> 0:03:35.240 it is due that is because if you're an online 0:03:35.280 --> 0:03:38.080 retailer in this period, you don't have to collect sales 0:03:38.120 --> 0:03:40.120 tax from any state but the one year in So 0:03:40.760 --> 0:03:43.000 if people who live in the state that your business 0:03:43.040 --> 0:03:45.160 is operated in buy from you, they have to pay 0:03:45.200 --> 0:03:47.880 sales tax, but nobody else does, which again means you 0:03:47.920 --> 0:03:53.040 can undercut everybody else. So Jeff had initially picked California 0:03:53.160 --> 0:03:55.280 as the place to launch Amazon dot Com, but when 0:03:55.280 --> 0:03:58.880 he learns about this law, he moves to Washington State instead. 0:03:59.320 --> 0:04:03.960 Um and he picks Washington because number one, no income 0:04:03.960 --> 0:04:06.240 tax in Washington. I think that has an impact on it. 0:04:06.600 --> 0:04:08.840 Number two, and I think the main reason he picks 0:04:08.840 --> 0:04:12.080 it is because it has really good infrastructure. Microsoft is 0:04:12.120 --> 0:04:14.320 based near Seattle, so it has the kind of infrastructure 0:04:14.320 --> 0:04:16.839 you need to create a tech company. But almost no 0:04:16.880 --> 0:04:19.799 one lives in Washington. The whole Pacific Northwest is very 0:04:19.839 --> 0:04:23.200 like sparsely populated, so it meant that like the least 0:04:23.320 --> 0:04:26.719 number of customers possible would have to pay sales tax 0:04:26.720 --> 0:04:29.119 for Amazon products, and no one in the other forty 0:04:29.200 --> 0:04:32.279 nine states has to pay. The initial plan was to 0:04:32.360 --> 0:04:35.240 sell books, because virtually all books came from one or 0:04:35.240 --> 0:04:39.200 two distribution companies who already had good distribution infrastructure, and 0:04:39.240 --> 0:04:42.279 because books are comparatively simple to ship and store. The 0:04:42.360 --> 0:04:44.640 plan from the beginning, but from Jeff, was to make 0:04:44.680 --> 0:04:47.760 money selling a single product online and then branch out 0:04:47.800 --> 0:04:51.520 eventually to selling everything. The first name for what would 0:04:51.560 --> 0:04:55.040 be called Amazon was very stupid. Jeff wanted to call 0:04:55.080 --> 0:04:59.800 it Cadabra Incorporated, like like a yeah, that was his 0:05:00.160 --> 0:05:02.960 was really married to this name for a while, um, 0:05:03.000 --> 0:05:04.680 which is terrible, and a lot of his friends tell 0:05:04.720 --> 0:05:08.520 him it's a bad name. There's kind of this like 0:05:08.600 --> 0:05:11.279 early Journey, where everyone around Jeff is being like, hey, 0:05:11.279 --> 0:05:12.720 how about this as a name? How about this is 0:05:12.760 --> 0:05:14.760 a name? Like one of his friends suggest, why don't 0:05:14.800 --> 0:05:16.799 we just call it make it so dot com based 0:05:16.839 --> 0:05:20.120 on like Captain Picard, who T and G is on 0:05:20.160 --> 0:05:22.080 the air at the point, and that's like Jeff's favorite 0:05:22.080 --> 0:05:24.359 Star Trek character. I think they decide not to do 0:05:24.400 --> 0:05:27.440 that because I'm sure it would be copyright infringement. Um. 0:05:27.560 --> 0:05:29.760 So they stick with Cadabra, even though everyone's trying to 0:05:29.760 --> 0:05:32.280 talk him out of it. Um. He and Mackenzy get 0:05:32.360 --> 0:05:34.960 to Seattle. They rent a three bedroom home, which is 0:05:35.000 --> 0:05:37.880 their first headquarters. They operated out of the garage, and 0:05:37.920 --> 0:05:41.679 they immediately set to work starting a business. Their first lawyer, 0:05:41.760 --> 0:05:44.200 the first lawyer for what becomes Amazon, is the one 0:05:44.200 --> 0:05:47.599 who finally talks Jeff out of Cadabra Incorporated as a name, 0:05:47.920 --> 0:05:49.880 and he does so by pointing out that over the 0:05:49.880 --> 0:05:53.080 phone it sounds like saying cadaver, and He's like, people, 0:05:53.480 --> 0:05:58.280 as I got a yeah, that's not a bad point. Um. 0:05:58.320 --> 0:06:00.560 Sitting together in their living room, m Z and Jeff 0:06:00.600 --> 0:06:04.480 Bezos registered a number of domains with potential names Awake 0:06:04.600 --> 0:06:08.919 dot com, brows dot com, book Mall dot com. The 0:06:09.000 --> 0:06:13.920 name they kept coming back to was relentless dot com. 0:06:13.960 --> 0:06:17.919 They really like this. Jeff loves that name. He like 0:06:18.600 --> 0:06:20.919 I think he prefers it to Amazon. I believe it 0:06:21.000 --> 0:06:25.599 is still his favorite possible name for his company, Relentless. 0:06:25.680 --> 0:06:29.360 That's what he thinks is the best possible name. I 0:06:29.400 --> 0:06:32.000 think it's shit. Um. I think Amazon's a fine name 0:06:32.000 --> 0:06:35.479 for a company. Yeah, relentless is a bad name. But 0:06:35.680 --> 0:06:38.120 Jeff never is able to really let this go. He 0:06:38.240 --> 0:06:42.479 buys the relentless dot com domain in n He really 0:06:42.520 --> 0:06:44.840 tries to make this happen again. His friends kind of 0:06:44.839 --> 0:06:47.800 come together, friends and like early employees, and eventually you're like, 0:06:48.080 --> 0:06:51.160 it's creepy, Jeff, Like, it's a creepy name for your store. 0:06:51.440 --> 0:06:53.440 People are not going it's not going to be good 0:06:53.480 --> 0:06:57.160 for us UM and Amazon. He finally gets convinced to 0:06:57.200 --> 0:06:59.240 pick Amazon, and the reason they decide on it is 0:06:59.279 --> 0:07:01.279 that it kind of speak to his how grand his 0:07:01.360 --> 0:07:03.279 goal is because the Amazon is the biggest river in 0:07:03.320 --> 0:07:07.159 the world, right um, But it also is is it's 0:07:07.160 --> 0:07:09.920 a placid name. It's not a name that scares anybody. 0:07:09.960 --> 0:07:13.400 But Jeff never gives up on relentless dot com entirely. 0:07:13.400 --> 0:07:15.960 And in fact, Jake, if you open a browser right 0:07:16.000 --> 0:07:19.280 now and you type in relentless dot com, it'll take 0:07:19.320 --> 0:07:30.320 you to Amazon. Well and dot com. Jesus Christ couldn't 0:07:30.320 --> 0:07:33.160 even give it to the drinks company, just like nope. Yeah, 0:07:33.280 --> 0:07:35.800 And it's one of those things. It's this, it's what 0:07:35.840 --> 0:07:37.240 we've been kind of coming back to and back to. 0:07:37.280 --> 0:07:39.600 It's like he's never really changed as a person, Like 0:07:39.800 --> 0:07:43.000 he liked everything about him today is the same as 0:07:43.040 --> 0:07:45.720 when he was in sixth grade pretty much. And obviously 0:07:45.800 --> 0:07:47.800 the fact like he wanted relentless dot com to be 0:07:47.800 --> 0:07:49.320 the name. I don't think he every gets over that, 0:07:49.880 --> 0:07:54.320 um relentless, that it's relentless energy dot com. That's so long, man, 0:07:55.280 --> 0:07:57.840 he can sell it to them. Yeah, another one of 0:07:57.920 --> 0:08:02.480 Amazon's victims, that energy company. You know who else is 0:08:02.520 --> 0:08:08.679 a victim of Amazon? Jeff Well, Jeff Jake, the products 0:08:08.680 --> 0:08:12.840 and services that support this podcast. Yeah, actually, I'm sure 0:08:12.840 --> 0:08:14.960 a number of them sell products on Amazon. But whatever, 0:08:15.040 --> 0:08:25.560 we don't need to think about that as uh we 0:08:25.760 --> 0:08:30.880 are back so uh. The same month that Jeff bought 0:08:30.920 --> 0:08:33.960 the relentless dot com domain, he drove down to Portland, 0:08:34.000 --> 0:08:36.560 Oregon to take a four day course on book selling 0:08:36.679 --> 0:08:40.440 sponsored by the American Booksellers Association. He learned the ropes 0:08:40.480 --> 0:08:42.959 of the business, and soon they were off selling books 0:08:43.000 --> 0:08:45.800 at a slow pace at first. UM and Jeff and 0:08:45.840 --> 0:08:48.880 his first couple of employees are like physically because the 0:08:48.920 --> 0:08:51.520 way it works is they're they're buying books from one 0:08:51.520 --> 0:08:54.160 of the two distributors who sells books to all the bookstores. 0:08:55.040 --> 0:08:57.520 Like they get in order. They order the book from 0:08:57.559 --> 0:09:00.719 the distributor, and then the distributorship the book to them, 0:09:00.760 --> 0:09:02.760 and then they mail the book to the customer. Right. 0:09:03.080 --> 0:09:05.400 They don't have a warehouse, they have a garage, so 0:09:05.480 --> 0:09:09.080 like they're getting books as they're ordered and their painstakingly 0:09:09.160 --> 0:09:12.480 mailing out each book themselves. And Jeff is to his credit, 0:09:12.520 --> 0:09:14.600 involved in all of the ship work from the start, 0:09:14.640 --> 0:09:18.040 Like he's putting stuff in packages, he's picking up deliveries, 0:09:18.080 --> 0:09:20.040 he's mailing them off, and so is Mackenzie. And so 0:09:20.120 --> 0:09:22.439 we're like they're all kind of doing everything right, all 0:09:22.440 --> 0:09:25.040 of the early employees are doing every part of running 0:09:25.080 --> 0:09:28.080 the business. There's no there's no like where there's no 0:09:28.640 --> 0:09:32.120 warehouse staff, right, Like Jeff is the warehouse and so 0:09:32.240 --> 0:09:36.880 is Mackenzie. Like everyone is everything in early Amazon. Um 0:09:36.920 --> 0:09:41.160 that said, when it came to funding Amazon, other people 0:09:41.200 --> 0:09:44.400 did most of the heavy lifting. Amazon did start with 0:09:44.440 --> 0:09:47.360 ten thousand dollars that Jeff Bezos had saved up himself, 0:09:47.400 --> 0:09:50.600 and another eight four thousand dollars in what are generally 0:09:50.640 --> 0:09:53.560 referred to as interest free loans. Now, a lot of 0:09:53.559 --> 0:09:56.600 this company this money actually came from his first employees. 0:09:56.640 --> 0:09:58.800 He would basically when he was bringing he would he 0:09:58.840 --> 0:10:01.720 was hiring people he'd met elsewhere in business and saying like, look, 0:10:02.320 --> 0:10:04.640 you come to this company, take a pay cut, and 0:10:04.679 --> 0:10:07.600 if you pay I'll let you buy stock now, right, 0:10:07.880 --> 0:10:09.920 and like that's a big part of how he founds 0:10:09.960 --> 0:10:13.720 the early company. So for example, um, his first employee 0:10:13.760 --> 0:10:16.120 is a guy named Shell Kaplan, who many consider the 0:10:16.120 --> 0:10:18.480 co founder of the company and who Jeff later kind 0:10:18.480 --> 0:10:22.000 of betrays. Shell was Jeff's good friend, and he joins 0:10:22.000 --> 0:10:24.280 Amazon because he believes in the vision of the company 0:10:24.360 --> 0:10:26.720 so much that he takes a fifty pay cut and 0:10:26.760 --> 0:10:29.440 he pays five grand to buy stock when he joins 0:10:29.480 --> 0:10:32.360 in order to help fund the company. Oh he must 0:10:32.360 --> 0:10:35.280 be fucking loaded enough. Oh yeah, I mean he's yes, 0:10:35.320 --> 0:10:37.199 he did very very well. And in fact, like he 0:10:38.520 --> 0:10:41.160 considered buying more but didn't want to gamble that much. 0:10:41.160 --> 0:10:45.480 And it's like, I mean, it worked out well for him. Um, 0:10:45.600 --> 0:10:48.680 Jeff's parents were the first angel investors he had, dumping 0:10:48.679 --> 0:10:51.520 a hundred thousand dollars of their oil money into the venture. 0:10:51.559 --> 0:10:55.040 In early nine, Jeff told his parents there was a 0:10:55.080 --> 0:10:58.240 seventy chance they'd lose it all, explaining, I want you 0:10:58.280 --> 0:11:00.199 to know what the risks are because I still want 0:11:00.200 --> 0:11:03.880 to come home for Thanksgiving if this doesn't work. UM, 0:11:03.920 --> 0:11:07.679 which is at least respectable. Uh. From the beginning, Amazon's 0:11:07.720 --> 0:11:10.680 promise to customers was a bookstore that was always in stock. 0:11:10.880 --> 0:11:13.559 Now they were really just letting regular people order books 0:11:13.600 --> 0:11:16.320 the same way that bookstores did, straight from the people 0:11:16.360 --> 0:11:18.560 who actually like kept them in a warehouse and charging 0:11:18.559 --> 0:11:21.520 a premium for the privilege. The book distributors had a 0:11:21.600 --> 0:11:23.600 rule where they'd only ship a book if you ordered 0:11:23.600 --> 0:11:26.640 ten at a time. Since Amazon wasn't selling enough books 0:11:26.640 --> 0:11:29.040 to to order ten books at a time generally, the 0:11:29.080 --> 0:11:32.240 company developed a sneaky strategy of ordering the book they needed, 0:11:32.280 --> 0:11:34.760 and like nine copies of an out of print book, 0:11:35.280 --> 0:11:37.120 if the books were out of stock or out of print, 0:11:37.360 --> 0:11:40.920 the order would get auto canceled by the ordering software UM, 0:11:40.920 --> 0:11:43.120 and the one book that Amazon needed would get shipped 0:11:43.160 --> 0:11:44.760 their way. And so that's how they got over this 0:11:44.840 --> 0:11:46.920 limit was kind of like fucking with the system and 0:11:46.920 --> 0:11:50.160 and hurting this company's profitability that they were utterly reliant on. 0:11:50.520 --> 0:11:52.320 But at this stage, it's not really a big enough 0:11:52.720 --> 0:11:56.199 business that anyone notices what they're doing. Um, In its 0:11:56.240 --> 0:11:59.520 first year of operation, Amazon required another cash infusion from 0:11:59.600 --> 0:12:02.440 Jeff's parents, this one of a hundred and forty five 0:12:02.480 --> 0:12:07.360 thousand dollars. So fucking hell he gets I mean, he's 0:12:07.400 --> 0:12:09.560 kind of funded by x on Mobile, you know, like 0:12:09.679 --> 0:12:12.000 his dad gets rich from x on Mobile, and that's 0:12:12.080 --> 0:12:14.800 what allows Amazon to survive its first year or two. 0:12:15.320 --> 0:12:16.880 What what I don't get is why did he need 0:12:16.960 --> 0:12:19.880 those big lumps of money from his parents. You know, 0:12:19.960 --> 0:12:21.640 you already had like a really good job. I know 0:12:21.720 --> 0:12:24.400 he quit, but did he not like save anything, you 0:12:24.400 --> 0:12:26.720 know what I mean? I don't know. You know, it's 0:12:26.880 --> 0:12:29.080 an idea too. I think tim grand which is what 0:12:29.120 --> 0:12:31.480 he invested in, its more money. I don't, I don't 0:12:31.640 --> 0:12:33.760 he wasn't. I don't know if it's that he made 0:12:33.800 --> 0:12:36.360 his parents put most of the investment in, or if 0:12:36.400 --> 0:12:39.440 he just like legitimately that was kind of what you 0:12:39.760 --> 0:12:42.560 made in fintech at that point. I really don't know 0:12:42.600 --> 0:12:46.280 what his actual net worth was. Um, but yeah, I 0:12:46.280 --> 0:12:49.040 mean it's it is kind of worth noting as a 0:12:49.080 --> 0:12:51.280 number of people will always point out that like, again, 0:12:51.360 --> 0:12:55.040 he's he's he's very reliant on his his family money 0:12:55.160 --> 0:12:59.320 in order to uh, you know, a couple of hundred grand. 0:13:00.280 --> 0:13:03.360 It's not an insignificant investment against the thing that all 0:13:03.360 --> 0:13:07.079 these guys have in common. Um. That said, Bezos and 0:13:07.120 --> 0:13:10.200 his early employees knew that like mom and dad's money 0:13:10.200 --> 0:13:12.080 ain't gonna keep going forever, and they have to pound 0:13:12.080 --> 0:13:14.839 the pavement to find investors. It was not an easy 0:13:14.840 --> 0:13:17.040 sell at first Amazon. The year his mom and dad 0:13:17.040 --> 0:13:18.960 put a hundred and four you have granted into the business, 0:13:19.040 --> 0:13:22.760 the company lost three hundred thousand dollars. Um. Amazon is 0:13:22.800 --> 0:13:26.280 a lost leader for a while. Jeff told every potential 0:13:26.280 --> 0:13:29.360 investor that the company had a seventy chance of failing, 0:13:29.559 --> 0:13:32.720 but he projected net sales of seventy four million dollars 0:13:32.760 --> 0:13:34.760 by the year two thousands. So he's like, yeah, we're 0:13:34.760 --> 0:13:37.000 losing money now, but we'll be making tens of millions 0:13:37.000 --> 0:13:39.040 of dollars by the year two thousand. And it's one 0:13:39.040 --> 0:13:41.120 of those things I think at the time most people 0:13:41.120 --> 0:13:43.440 would have probably rightly been like, well that is a 0:13:43.679 --> 0:13:45.920 is nonsense, Like you're just you're just pulling a number 0:13:45.920 --> 0:13:48.880 out of your ass. He was actually pessimistic with that estimate, 0:13:48.920 --> 0:13:51.640 because actual net sales for Amazon in the year two 0:13:51.679 --> 0:13:55.360 thousand were one point six four billion dollars um. Now, 0:13:55.400 --> 0:13:57.840 Amazon still loses money in the year two thousand up 0:13:57.920 --> 0:14:02.120 until like two thousand fifteen. I think they're losing money constantly. Uh, 0:14:02.320 --> 0:14:05.040 but their income grows and that's why people keep investing 0:14:05.040 --> 0:14:07.760 in them, and then they keep like reinvesting their profits 0:14:07.760 --> 0:14:12.040 back into expanding the business. Um. So the investment money 0:14:12.040 --> 0:14:15.520 starts to come in. N venture capitalists port tens of 0:14:15.559 --> 0:14:18.400 millions of dollars into Amazon, and things begin moving very 0:14:18.480 --> 0:14:22.760 fast for Jeff. Amazon's first company motto was get Big Fast, 0:14:22.880 --> 0:14:25.320 which is also the motto for a significant portion of 0:14:25.360 --> 0:14:27.760 steroid twitter. Um. And I guess we can make a 0:14:27.760 --> 0:14:30.320 comment about all the testosterone Jeff appears to be taking 0:14:30.360 --> 0:14:35.880 these days. But yeah, he got big fast, that's for sure. Yeah. 0:14:36.120 --> 0:14:39.200 The company had its I p O in nine. It 0:14:39.280 --> 0:14:42.240 succeeded in winning a stupid legal fight with Barnes and Noble, 0:14:42.280 --> 0:14:44.480 who are like desperate to try to kill Amazon, but 0:14:44.560 --> 0:14:47.240 not quite smart enough to figure out how UM and 0:14:47.320 --> 0:14:51.280 it expands from books to CDs, DVDs, toys, and electronics. 0:14:51.600 --> 0:14:54.400 In his first letter to shareholders, Jeff Bezos and some 0:14:54.480 --> 0:14:57.400 of his early employees wrote, this is day one for 0:14:57.440 --> 0:15:00.280 the Internet, and if we execute well day one for 0:15:00.360 --> 0:15:04.720 Amazon dot Com. Now that is important because it's become 0:15:04.880 --> 0:15:09.080 kind of like a religion within Amazon corporate culture. You 0:15:09.120 --> 0:15:12.680 will hear day one constantly. There's Day one posters everywhere. 0:15:12.960 --> 0:15:17.520 Jeff regularly emphasizes the need for day one thinking. Treating 0:15:17.560 --> 0:15:20.240 what they're doing like it's the first time anybody's done 0:15:20.240 --> 0:15:23.960 it again. Not a bad way too, obviously, this is 0:15:23.960 --> 0:15:25.600 a part of the company's success. That's not a bad 0:15:25.640 --> 0:15:29.040 way to look at things if you're trying to innovate them. UM. 0:15:29.200 --> 0:15:32.760 For its first few years, Amazon grew meteorically. Bezos was 0:15:32.840 --> 0:15:36.640 Person of the Year in nineteen, which actually causes some 0:15:36.720 --> 0:15:39.360 problems for him because the article itself and all the 0:15:39.360 --> 0:15:42.480 attention generated by this fawning piece helps to send a 0:15:42.600 --> 0:15:46.600 flood of customers to Amazon for holiday season, and this 0:15:46.680 --> 0:15:49.600 is the first time Amazon has a huge holiday season. 0:15:49.600 --> 0:15:53.120 They've recently expanded to products other than books. Um, and 0:15:53.160 --> 0:15:55.640 they get all this media attention and people start flowing 0:15:55.720 --> 0:15:59.200 flooding there to like buy Christmas presents and Hanakah presents 0:15:59.200 --> 0:16:02.560 and stuff from them. Um and Bezos had put millions 0:16:02.560 --> 0:16:05.560 in investment capital into expanding Amazon for this moment. This 0:16:05.600 --> 0:16:08.040 had been his goal and was part of the strategy. 0:16:08.080 --> 0:16:11.920 But they kind of suck it up because actually keeping 0:16:12.000 --> 0:16:15.280 number one, keeping the most popular toys and stock proved 0:16:15.280 --> 0:16:17.520 to be kind of impossible. They were selling too fast, 0:16:17.800 --> 0:16:20.240 but a bunch of other stuff they bought didn't sell, 0:16:20.320 --> 0:16:23.480 and so like their warehouses are filled with unsold inventory 0:16:23.560 --> 0:16:27.400 while people can't get the products that they actually want. Um. 0:16:27.440 --> 0:16:30.320 It's enough of like a cluster fuck, and largely caused 0:16:30.360 --> 0:16:32.960 by issues with the warehouse right, Like he hadn't scaled 0:16:33.080 --> 0:16:37.000 up distribution enough in order to actually handle the demand. 0:16:37.240 --> 0:16:40.080 They've only got like five warehouses at this point. So 0:16:40.280 --> 0:16:43.040 this causes enough of a calamity that it starts. It 0:16:43.080 --> 0:16:45.440 results in this like flood of bad press. Journalists start 0:16:45.440 --> 0:16:48.320 writing articles about how Amazon stock is overvalued and like 0:16:48.600 --> 0:16:50.680 the company is about to come to a crashing end, 0:16:50.720 --> 0:16:54.040 and it's actually really kind of an existential threat for Amazon, 0:16:54.480 --> 0:16:56.840 and in order to kind of meet the threat, Bezos 0:16:56.880 --> 0:17:01.000 institutes what he calls a Save Santa operation. He forces 0:17:01.120 --> 0:17:03.720 his like all of his employees, like the guys who 0:17:03.760 --> 0:17:06.400 are like coding, the people who are like doing marketing, 0:17:06.400 --> 0:17:08.479 the people who are like all of his like actual 0:17:08.520 --> 0:17:11.640 staff employees, he forces to take two weeks each leave 0:17:11.680 --> 0:17:14.880 their families and spend two weeks of the holidays staffing 0:17:14.920 --> 0:17:19.040 customer service lines or working distribution in like isolated warehouses. 0:17:19.440 --> 0:17:22.280 To save money, workers were kept two to a hotel room. 0:17:22.520 --> 0:17:24.480 And I'm gonna quote from the Everything Store here to 0:17:24.480 --> 0:17:29.520 talk about this first big Amazon holiday season infirmly. Some 0:17:29.560 --> 0:17:32.240 employees stayed at the Golden Nugget in Reno, and after 0:17:32.280 --> 0:17:34.639 they worked at the graveyard shift, they met for beers 0:17:34.640 --> 0:17:37.359 at the casino bar at six am. Later, a few 0:17:37.359 --> 0:17:40.280 swore they had been working alongside furloughed prisoners from a 0:17:40.320 --> 0:17:43.840 nearby jail, though that is difficult to prove. Early employee 0:17:43.840 --> 0:17:46.520 Tom shon Hoff was among the group that went to Delaware, 0:17:46.520 --> 0:17:48.760 where the facility was having problems with the quality of 0:17:48.760 --> 0:17:51.200 the temporary labor pool. There were a lot of temp 0:17:51.240 --> 0:17:53.399 workers that looked like the rehab center had pushed them 0:17:53.440 --> 0:17:55.919 out the back door. He says he watched one worker 0:17:55.960 --> 0:17:58.520 get fired for intoxication and then wet himself while he 0:17:58.600 --> 0:18:04.080 tried to protest. So, yeah, we're starting to see the beginnings, 0:18:04.160 --> 0:18:09.560 right of like the Jeff Wayno today, it was enough 0:18:09.600 --> 0:18:13.159 of a debacle that some executives and it's kind of 0:18:13.160 --> 0:18:15.800 a mix of how badly the Christmas season goes and 0:18:15.840 --> 0:18:20.040 how like how infuriated they are by this time article 0:18:20.080 --> 0:18:22.480 where he like is fluffing himself and that leads to 0:18:22.520 --> 0:18:25.639 a lot of this rush on Amazon. Some executives try 0:18:25.680 --> 0:18:27.360 to push him out of his company. They call him 0:18:27.359 --> 0:18:31.000 impetuous and controlling Um, and this sparks a fight with 0:18:31.040 --> 0:18:33.240 the board and alleged fight with the board. Some board 0:18:33.240 --> 0:18:35.440 members deny it happened. There are there are other people 0:18:35.440 --> 0:18:37.520 who are executives at the time who say it happened. 0:18:37.800 --> 0:18:40.719 There's this fight to try to oust Jeff Um. And 0:18:40.760 --> 0:18:43.760 this is not that long after uh, Steve Jobs had 0:18:43.760 --> 0:18:46.200 been ousted from Apple, right, there's this period where Jobs 0:18:46.200 --> 0:18:49.000 gets forced out of Apple. He creates a computer company, 0:18:49.040 --> 0:18:53.159 he creates pixar Um. Jeff manages to avoid this happening 0:18:53.160 --> 0:18:56.359 because he keeps the majority of Amazon stock, but the 0:18:56.400 --> 0:18:58.600 early years are rough, and you know, there's a lot 0:18:58.640 --> 0:19:00.960 of people saying Amazon and is dead in the like 0:19:01.000 --> 0:19:03.159 two thousand, two thousand one, people saying the company is 0:19:03.200 --> 0:19:06.560 never going to survive another couple of years. Bezos actually 0:19:06.560 --> 0:19:09.920 gets investigated for insider trading in two thousand one because 0:19:09.960 --> 0:19:12.320 of like how bad some of the financial decisions he 0:19:12.400 --> 0:19:15.520 makes are. Um and the company is just bleeding money 0:19:15.600 --> 0:19:18.960 through its early years, like their their profits are increasing rapidly, 0:19:19.000 --> 0:19:23.399 but they're just like pissing cash into a fucking trash fire. 0:19:24.080 --> 0:19:27.159 That said, by the early odds, things had started to 0:19:27.200 --> 0:19:30.440 stabilize and the company began to grow like exponentially. It's 0:19:30.440 --> 0:19:33.880 profitability again. They're still losing money, but they're growing profits 0:19:33.880 --> 0:19:36.719 by so much that investors are willing to keep pumping 0:19:36.720 --> 0:19:38.919 money into the company because they're like, well, if we 0:19:39.000 --> 0:19:41.840 stop reinvesting in the company, eventually there will be dividends 0:19:41.840 --> 0:19:44.400 and shipped for us. It's just yeah, you know that 0:19:44.400 --> 0:19:47.520 that's kind of like how he sells this to them, um, 0:19:47.600 --> 0:19:49.439 And you know the broad strokes of the rest of 0:19:49.480 --> 0:19:52.280 the story, Jake, everybody does because we've all lived through it, right. 0:19:52.320 --> 0:19:55.280 Amazon expands steadily and despite losing to Apple in the 0:19:55.320 --> 0:19:59.040 digital music race because Jeff Bezos doesn't understand music. The 0:19:59.160 --> 0:20:02.159 company rises is to become the globe striding colossus we 0:20:02.200 --> 0:20:05.000 all know today. To close us out, then, I think 0:20:05.040 --> 0:20:07.520 the best thing I could do, rather than sort of like, oh, 0:20:07.600 --> 0:20:10.480 let's talk about how they started Amazon Web Services, or 0:20:10.560 --> 0:20:13.719 let's talk about how they expanded in the television, right, 0:20:13.760 --> 0:20:16.199 I think the best way I could actually close us 0:20:16.200 --> 0:20:19.080 out today is to hone in on the first stirrings 0:20:19.119 --> 0:20:21.760 of two problems that are kind of the main things 0:20:21.800 --> 0:20:26.119 Amazon gets criticized for today. Number one would be it's relentless, 0:20:26.160 --> 0:20:29.439 obsessive and unhealthy work culture, and number two would be 0:20:29.480 --> 0:20:33.000