Damn! What a nice, bookish tycoon

The boss of Amazon.com is a cheerful guy who smiles a lot. And so he should, having made pounds 2bn from his online bookstore.

Jeff Bezos laughs a lot. But then again, why shouldn't he? He is a healthy 34-year-old, happily married, has a big yellow labrador, lives in a lovely house, loves his job, and, oh yes, in the last four years has made himself about $2bn selling books on the Internet, as the most successful online retailer.

You could forgive the founder of Amazon.com - which is yet to move into profit - all this if he were your usual miserable paranoid business mogul. But he's not. He's a very nice guy. It's very irritating.

Four years ago Bezos was a high-flyer on Wall Street. Working in a quantitative hedge fund (don't ask), at 30 he was a senior vice-president and doing very nicely. One day, looking around on the Web, he came across a number. "In the spring of 1994, I found Web usage was growing at 2,200 per cent a year. It's very unusual that something grows that fast," he recalls with a chuckle.

Bezos knew that quite a number of people were already using the Web. So he extrapolated. "Anything with a non-trivial base line growing at 2,200 per cent a year might be invisible today but would be ubiquitous tomorrow. That was the wake-up call."

He carefully analysed 20 different products he thought could be sold on the Net. "You had to be able to build something that offered enough value to the customer for people to want to use this new and infant technology. Really, that meant you had to do something that could only be done online. I picked books primarily because there are so many different [titles] - there were more items in the category than in any other," Bezos explains. "Over three million books are actively in print. No one could build a book store with three million titles. The largest bookstores in the world - and there are only three this big - carry 170,000 titles. Most book shops have 30,000 to 100,000 titles."

Bezos, being something of a nerd (he had studied computer science at Princeton University), invented "regret minimisation". "I projected myself into the future... When I am 80 what do I want to have done? I knew I would never regret having left Wall Street in the middle of the year, having forgone my 1994 bonus. By the time you are 80 you are not going to remember any of those things. But I thought I might regret not being involved in this thing called the Internet. Once I thought about it in that sort of way, I knew I would not regret taking the risk."

The first thing he needed was a base for his business. For many people, the Net is a virtual world, so you can build your business anywhere. But if you want to build a large business, you will need staff. And that means a decent-sized city.

"Our base had to be in a city with a large pool of technical talent. I narrowed it down to four places, and settled on Seattle." Not only is Seattle a pool of technical talent (Microsoft is based there, as are many other computer firms), but it is near the largest book warehouse in the world.

Next, Bezos went for the traditional Silicon Valley approach for his HQ. "We rented a house and the office was in the garage. I wanted some of the start-up legitimacy that comes with starting in a garage." With this he dissolves into laughter yet again. "Now I know why people move out of garages though," he adds, laughing even harder. "It is not that they run out of room, it is that they run out of electrical power. We had so many computers ... that the circuit breakers kept tripping."

In one of the Net's neatest ironies, Barnes and Noble - the world's biggest book firm, Amazon.com's largest competitor in the online book market, and probably the company with the most to lose from the Amazon revolution - proved invaluable for the fledgling company. "We couldn't really bring people to our office, so we held all our early meetings in a cafe two miles away, which just happened to be inside a Barnes and Noble store."

Creating business relationships with suppliers and distributors was a big challenge, but getting book details on to Amazon's computers was a massive, laborious job. "We had over a year to do it. We used a variety of sources and some of it was hand-keyed in. There was no short-cut," Bezos recalls. "It was just a lot of hard work. Sometimes we would get data on the same book from multiple sources, but it would be in conflict so we built all sorts of heuristics [programs] to resolve that kind of ambiguity." Then it was just the minor question of developing the software; testing the product, and getting the ball rolling. For most people this might have meant an advertising campaign, but Jeff Bezos did not even have a marketing budget.

"The Internet was a much smaller place three years ago. It's hard to actually remember... what the Internet was like three years ago. We had 300 beta customers [testing the system]. These were friends. We would e-mail them and would say: `Please come and put our system through its paces, but don't tell anybody what we are doing.' Then [after six weeks], when we finally had all the bugs worked out of the system, we sent an e-mail to [them] to say we were ready and could they please tell their friends about it. And these friends told other friends."

By electronic word of mouth, and by being featured on the very young Yahoo site, Amazon's name spread rapidly. "In July 1995, we had our first real paying customer. It is very exciting when you get your first customer who is not a relative. All the staff were saying: `Do you know this person? I don't know this person. Hey, how about you? Do you know this person?'". Bezos laughs hysterically remembering.

At first all Amazon's computers were set to sound a bell as an order came in, but that soon got switched off. "It got very annoying. In the very beginning it was just half a dozen sales a day, but within a few days it was several tens a day. Within a couple of months it was a hundred or more and then it accelerated. It was compound growth. If things double every day, it doesn't take long to build up big numbers." Things grew much faster than even Bezos expected. "Our business plan does not even begin to resemble what has actually happened. I think one thing we missed was that the Internet was exclusively made up of early adopters at that time. So all the people online, even though it was a relatively small number compared with today, were [those] who liked to try new things.

"We had a unique proposition. On day one we were 10 times the size of the largest bookstores - it was over a million titles. So people were finding obscure books they'd been looking for for years and saying this was unbelievable. And they'd order, not expecting it to really work, thinking they did not have much to lose. And then the book would come and they would really be blown away. And then they would tell all their friends."

As a result Amazon has grown and grown. In just over three years it has serviced 4.5 million customers. Not orders, customers. Sales run at about $600m a year and Amazon is valued at over $6bn. And today, it has its own five giant book warehouses.

So where now for Amazon's so nice boss? Last month he launched Amazon.co.uk, which is growing faster than its parent. It is exciting, but it really is just more of the same.

What excites Jeff Bezos is moving the business along. Four months ago Amazon launched into online CD sales and has already become the world's biggest online music retailer. Next up is videos. But these specific lines are just the start.

"Our strategy is to become an electronic commerce destination. When somebody thinks about buying something online, even if it is something we do not carry, we want them to come to us. We would like to make it easier for people online to find and discover the things they might want to buy online, even if we are not the ones selling them."

Bezos plans to link up with other merchants and direct customers to their sites - no doubt for a fee. But the interview is getting just a little serious. So one last question: "Are you still enjoying creating this business?" "Oh yeah. I love computers, I love business, I love rapidly changing environments. How could I have a better job?" With that he dissolves into yet more helpless laughter.

Arts and Entertainment
BBC Three was launched a little over five years ago with the slogan: “Three, is a magic number, yes it is.”

BBC Trust agrees to axe channel from TV in favour of digital move

TV
Arts and Entertainment
British actor Idris Elba is also a DJ and rapper who played Ibiza last summer

film
Arts and Entertainment

books
Arts and Entertainment
Armie Hammer in the new film of ‘The Lone Ranger’

TV
Arts and Entertainment

festivals
Have you tried new the Independent Digital Edition apps?
Arts and Entertainment

ebooksNow available in paperback
Arts and Entertainment

ebooks
Arts and Entertainment
Buying a stairway to Hubbard: the Scientology centre in Los Angeles
film review Chilling inside views on a secretive church
Arts and Entertainment
Jason Williamson, left, and Andrew Fearn of Sleaford Mods
musicYou are nobody in public life until you have been soundly insulted by Sleaford Mods
Arts and Entertainment
Natalie Dew (Jess) in Bend It Like Beckham The Musical
theatreReview: Bend It Like Beckham hits back of the net on opening night
Arts and Entertainment
The young sea-faring Charles Darwin – seen here in an 1809 portrait – is to be portrayed as an Indiana Jones-style adventurer
film
Arts and Entertainment
The audience aimed thousands of Apple’s product units at Taylor Swift throughout the show
musicReview: On stage her manner is natural, her command of space masterful
Arts and Entertainment
Channel 4 is reviving its Chris Evans-hosted Nineties hit TFI Friday

TV
Arts and Entertainment
Harrison Ford plays Indiana Jones in The Last Crusade (1989)

film
Arts and Entertainment

music
Arts and Entertainment
A Glastonbury reveller hides under an umbrella at the festival last year

Glastonbury
Arts and Entertainment

music
Arts and Entertainment
Miles Morales is to replace Peter Parker as the new Spider-Man

comics
Arts and Entertainment
The sequel to 1993's Jurassic Park, Jurassic World, has stormed into the global record books to score the highest worldwide opening weekend in history.

film
Arts and Entertainment
Odi (Will Tudor)
tvReview: Humans, episode 2
Arts and Entertainment
Can't cope with a Port-A-loo? We've got the solution for you

FestivalsFive ways to avoid the portable toilets

Arts and Entertainment
Some zookeepers have been braver than others in the #jurassiczoo trend

Jurassic WorldThe results are completely brilliant

Arts and Entertainment
An original Miffy illustration
art
Arts and Entertainment
Man of mystery: Ian McKellen as an ageing Sherlock Holmes
film review
Arts and Entertainment
Kitchen set: Yvette Fielding, Patricia Potter, Chesney Hawkes, Sarah Harding and Sheree Murphy
TV review
Arts and Entertainment
Chris Evans has been confirmed as the new host of Top Gear
TV
Arts and Entertainment
Top of the class: Iggy Azalea and the catchy ‘Fancy’
music
Latest stories from i100
Have you tried new the Independent Digital Edition apps?

ES Rentals

    Independent Dating
    and  

    By clicking 'Search' you
    are agreeing to our
    Terms of Use.

    How to stop an asteroid hitting Earth: Would people co-operate to face down a global peril?

    How to stop an asteroid hitting Earth

    Would people cooperate to face a global peril?
    Just one day to find €1.6bn: Greece edges nearer euro exit

    One day to find €1.6bn

    Greece is edging inexorably towards an exit from the euro
    New 'Iron Man' augmented reality technology could help surgeons and firefighters, say scientists

    'Iron Man' augmented reality technology could become reality

    Holographic projections would provide extra information on objects in a person's visual field in real time
    Sugary drinks 'are killing 184,000 adults around the world every year'

    Sugary drinks are killing 184,000 adults around the world every year

    The drinks that should be eliminated from people's diets
    Pride of Place: Historians map out untold LGBT histories of locations throughout UK

    Historians map out untold LGBT histories

    Public are being asked to help improve the map
    Lionel, Patti, Burt and The Who rock Glasto

    Lionel, Patti, Burt and The Who rock Glasto

    This was the year of 24-carat Golden Oldies
    Paris Fashion Week

    Paris Fashion Week

    Thom Browne's scarecrows offer a rare beacon in commercial offerings
    A year of the caliphate:

    Isis, a year of the caliphate

    Who can defeat the so-called 'Islamic State' – and how?
    Marks and Spencer: Can a new team of designers put the spark back into the high-street brand?

    Marks and Spencer

    Can a new team of designers put the spark back into the high-street brand?
    'We haven't invaded France': Italy's Prime Minister 'reclaims' Europe's highest peak

    'We haven't invaded France'

    Italy's Prime Minister 'reclaims' Europe's highest peak
    Isis in Kobani: Why we ignore the worst of the massacres

    Why do we ignore the worst of the massacres?

    The West’s determination not to offend its Sunni allies helps Isis and puts us all at risk, says Patrick Cockburn
    7/7 bombings 10 years on: Four emergency workers who saved lives recall the shocking day that 52 people were killed

    Remembering 7/7 ten years on

    Four emergency workers recall their memories of that day – and reveal how it's affected them ever since
    Humans: Are the scientists developing robots in danger of replicating the hit Channel 4 drama?

    They’re here to help

    We want robots to do our drudge work, and to look enough like us for comfort. But are the scientists developing artificial intelligence in danger of replicating the TV drama Humans?
    Time to lay these myths about the Deep South to rest

    Time to lay these myths about the Deep South to rest

    'Heritage' is a loaded word in the Dixie, but the Charleston killings show how dangerous it is to cling to a deadly past, says Rupert Cornwell
    What exactly does 'one' mean? Court of Appeal passes judgement on thorny mathematical issue

    What exactly does 'one' mean?

    Court of Appeal passes judgement on thorny mathematical issue