Behind the rise of Jeff Bezos and Amazon: Richard L. Brandt on the founder's Texas roots, the site's chaotic early days, why negative reviews are allowed and his increasing use of personal data.
By RICHARD L. BRANDT
Jeffrey Preston Bezos was 4 years old when he first arrived at his grandfather's cattle ranch in Cotulla, Texas. The Lazy G is a sprawling 25,000-acre spread in the southwest part of the state—an unspoiled habitat of mesquite and oak trees, the home of whitetail deer (popular among local hunters), wild turkeys, doves, quail, feral hogs and sheep. (click below to read more)
Jeff's maternal grandfather, Lawrence Preston Gise, was a just-retired rocket scientist who was ready to trade in his missile research for the simple and demanding life at the ranch, and he wanted to share that life with his grandson. Until he was 16 years old, Jeff spent every summer there.
At the ranch he learned to clean stalls, to brand and castrate cattle, to install plumbing and to handle other ranch-hand tasks. One day, his grandfather towed in a dilapidated D6 Caterpillar bulldozer with a stripped transmission. Fixing it would be tough: He would have to remove a 500-pound gear from the engine. No problem; he simply built himself a small crane. Jeff helped.
"One of the things that you learn in a rural area like that is self-reliance," Mr. Bezos said. "People do everything themselves. That kind of self-reliance is something you can learn, and my grandfather was a huge role model for me: If something is broken, let's fix it. To get something new done you have to be stubborn and focused, to the point that others might find unreasonable."
In the summer of 1994, Mr. Bezos quit his job in New York as a vice president at the financial-services firm D.E. Shaw. He and his wife, MacKenzie, moved to Seattle to take advantage of the explosive growth of the Internet and to start Amazon. The company's original name, Cadabra, was nixed after someone misheard it as "cadaver."
When the site first launched in 1995, everyone at the company was working until 2 or 3 in the morning, kneeling on a concrete floor, to get the books packed, addressed and shipped. Jeff Bezos in 1998, above.
Their first rental, a three-bedroom house in the suburb of Bellevue, cost $890 a month. Mr. Bezos chose it in part because it had one crucial requirement—a garage, so that he could boast of having a garage start-up like Silicon Valley legends from Hewlett-Packard on. The garage had actually been converted into a recreation room, but Mr. Bezos figured it was close enough.
The site was launched on July 16, 1995—just as masses of people started moving onto the Internet and before many competitors had created strong commercial sites.
Mr. Bezos moved the company to an industrial neighborhood that it shared with a needle-exchange program and a shuttered pawnshop. He had 1,100 square feet of office space on the second floor and 400 square feet in the basement to use as a warehouse. The desks were made from cheap doors, with sawed-off two-by-fours for legs. The warehouse could store just a few hundred books on their way from the distributor to customers.
Thanks to discounts of 10% to 30%, orders started coming in as soon as the site launched. At first, there were a half-dozen orders per day. One of the programmers set up the computers so that a bell would ring every time an order came in. A great novelty at first, it quickly got annoying and had to be turned off.
Three days after launch, Mr. Bezos got an email from Jerry Yang, one of the founders of Yahoo. "Jerry said, 'We think your site is pretty cool; would you like us to put it on the What's Cool page?' " Mr. Bezos later recalled. "We thought about it some, and we realized it might be like taking a sip from a fire hose, but we decided to go ahead and go for it." Yahoo put the site on the list, and orders soared.
By the end of the week, Amazon took in over $12,000 worth of orders. It was hard to keep up. That week, the company shipped just $846 worth of books. The following week brought in nearly $15,000 worth of orders, and the team was able to ship just over $7,000 worth of them.
At launch, the site wasn't even truly finished. Mr. Bezos's philosophy was to get to market quickly, in order to get a jump on the competition, and to fix problems and improve the site as people started using it. Among the early mistakes, according to Mr. Bezos: "We found that customers could order a negative quantity of books! And we would credit their credit card with the price and, I assume, wait around for them to ship the books."
During the first few weeks, everyone at the company was working until two or three in the morning to get the books packed, addressed and shipped. Mr. Bezos had neglected to order packing tables, so people ended up on their knees on the concrete floor to package the books. He later recalled in a speech that, after hours of doing this, he commented to one of the employees that they had to get knee pads. The employee, Nicholas Lovejoy, "looked at me like I was a Martian," Mr. Bezos said. Mr. Lovejoy suggested the obvious: Buy some tables. "I thought that was the most brilliant idea I had ever heard in my life," he said.
Despite what seemed to be a pathetically amateurish operation, Amazon grew up very quickly once it was launched. By October, the company had its first day logging in 100 book sales. In less than a year, it had its first hour with an order of 100 books. Word kept spreading, despite the fact that the company did virtually no advertising its first year. The one exception: Mr. Bezos hired mobile billboards to cruise by Barnes & Noble stores displaying the question, "Can't find that book you wanted?" along with Amazon's website address.
The company's customer service—which Mr. Bezos later called "the cornerstone of Amazon.com"—started with the founder himself answering emails. By 1999 it was manned by 500 representatives packed into cubicles and answering customers' questions.
The people handling these emails were generally overqualified and underpaid, with no experience in bookselling. Disaffected academics were popular because they were well-read and could supposedly help find books on a huge variety of topics. They were paid about $10 to $13 an hour, but with the possibility of promotions and stock options dangled before their glazed eyes. The best of them could answer a dozen emails a minute. Those who dropped below seven were often fired.
One customer-service manager recalled that, when the staff got a week and a half behind in answering emails—despite putting in 12-hour days, seven days a week—Mr. Bezos called her to complain. When she told him they couldn't work any harder, he came up with a solution: They dedicated one weekend to competing with each other to see who could get through the most unanswered emails.
During that 48-hour period, everyone worked at least 10 hours beyond their regular shifts. Each person was given a cash bonus of $200 for every thousand messages he or she could answer. It cleared out the backlog.
In the very early days, Mr. Bezos had employees pick out the 20 strangest titles sold every week and awarded a prize for the strangest. Some of the winners: "Training Goldfish Using Dolphin Training Techniques," "How to Start Your Own Country" and "Life Without Friends."
One of his more controversial early decisions was to allow customers to post their own book reviews on the site, whether they were positive or negative. Competitors couldn't understand why a bookseller would allow such a thing. Within a few weeks, Mr. Bezos said, "I started receiving letters from well-meaning folks saying that perhaps you don't understand your business. You make money when you sell things. Why are you allowing negative reviews on your Web site? But our point of view is [that] we will sell more if we help people make purchasing decisions."
Over time, Mr. Bezos's unusual management style began to develop. He's not always a "nice" CEO. He can inspire and cajole but also irritate and berate. He can see the big picture—and micromanage to distraction. He's quirky, brilliant and demanding.
One former executive recalled that, at an offsite retreat where some managers suggested that employees should start communicating more with each other, Mr. Bezos stood up and declared, "No, communication is terrible!"
He wanted a decentralized, even disorganized company where independent ideas would prevail over groupthink. He instituted, as a company-wide rule, the concept of the "two-pizza team"—that is, any team should be small enough that it could be fed with two pizzas.
From the beginning, Mr. Bezos was fanatical about squeezing from Amazon.com every incremental degree of usefulness. New features were often simple things, like 1-Click ordering—whose notorious patent was called by one law journal "probably the most memorable example of an unoriginal software patent." It forbids any other online retailer from using a one-click purchasing option without paying a royalty to Amazon.
An elderly woman once sent an email to the company saying that she loved ordering books from the site but had to wait for her nephew to come over and tear into the difficult-to-open packaging. Mr. Bezos had the packaging redesigned to make it easier to open.
He continues to try to improve the site. In June 2008, Amazon filed a patent application titled "Movement recognition as input mechanism." Customers may soon be able to make purchases simply by nodding their heads at their computer, Kindle or cellphone. Industry wags have dubbed it the "1-Nod patent."
Last December, word leaked out about another new patent, for a system that enables people who get gifts through Amazon to return them even before they arrive. If Aunt Mildred has a habit of sending unwanted gifts, the patent says, the site will include an option to "convert all gifts from Aunt Mildred." (The patent includes the name of the presumably fictitious relative.) It allows the receiver to track when the well-meaning relative buys a gift for him and to change it to something more desirable before it ships. Gift recipients can also apply other rules such as, "No clothes with wool."
The idea is not only to please fussy would-be gift recipients; it also could save Amazon millions of dollars in purchases that don't have to be exchanged. The patent lists Mr. Bezos as the inventor.
—Mr. Brandt is the author of "The Google Guys." This essay is adapted from his new book, "One Click: Jeff Bezos and the Rise of Amazon.com."
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