
Jeff Bezos convinced 22 investors to back his new company Amazon in 1994 (2018) - simonebrunozzi
https://www.scmp.com/news/world/united-states-canada/article/2143375/1994-he-convinced-22-family-and-friends-each-pay
======
PaulDavisThe1st
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.

~~~
WalterBright
> I was the 2nd employee at the company

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.

~~~
simonebrunozzi
Seconded. Please. Share as much as you can.

~~~
PaulDavisThe1st
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? :)

~~~
henvic
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)?

~~~
PaulDavisThe1st
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.

------
quicklime
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.

~~~
ISL
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.

~~~
wnevets
>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.

~~~
an_opabinia
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?

~~~
graeme
> 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.

[https://finbox.com/NASDAQGS:AMZN/explorer/volume_avg_3m](https://finbox.com/NASDAQGS:AMZN/explorer/volume_avg_3m)

[https://ycharts.com/companies/AMZN/shares_outstanding](https://ycharts.com/companies/AMZN/shares_outstanding)

------
bluedevil2k
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.

~~~
ISL
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.

~~~
zorpner
...and the best that you can hope for is to die in your sleep.

~~~
santoshalper
I do every day.

------
neilv
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. :)

~~~
PaulDavisThe1st
AWS was the one part of this story that Jeff didn't foresee back at the
outset.

------
filleduchaos
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.

~~~
james_s_tayler
It's the friends, family and fools round.

------
simonebrunozzi
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.

~~~
PaulDavisThe1st
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.

~~~
summitsummit
I'm glad you found happiness and out of the rat race. how did you get ripped
off?

~~~
PaulDavisThe1st
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.

------
supernova87a
Yeah, but the problem is, how were you to know at that time that _this_ was
the one that would strike it big?

Every one of 1,000 young startup-y aspiring entrepreneurs thinks he/she is the
next one. If you could bet right, you should become a VC.

------
beamatronic
If his parents had that kind of money to invest, back then, he was already
extremely rich.

