by Brad Stone
Bezos also pitched Bob Gelfond, a former D. E. Shaw colleague. Gelfond turned for advice to his skeptical father, a man who had had a long career in book publishing and who had experienced the pain of trying to get his company to embrace personal computers. His father recommended against the investment, but Gelfond had watched Bezos smoothly operate in the hedge-fund world and bet on his friend anyway. “It’s one thing to have a good idea, but it’s another to have confidence in a person to execute it,” he says.
Many others turned Bezos down. Hanauer and his mother invested, but one of Hanauer’s brothers and his father declined. Tom Alberg, a former executive at McCaw Cellular, met Bezos and was dubious because he loved browsing in bookstores. Then a few days later he failed to find a business book for his son at a local shop, and he changed his mind and decided to invest. The attorney who told Alberg about the deal invited Bezos to speak at an investment group that met regularly at Seattle’s tony Rainier Club. He thought the valuation was too high and passed.
Bezos later told the online journal of the Wharton School, “We got the normal comments from well-meaning people who basically didn’t believe the business plan; they just didn’t think it would work.”11 Among the concerns was this prediction: “If you’re successful, you’re going to need a warehouse the size of the Library of Congress,” one investor told him.
Todd Tarbert, Amazon’s first lawyer, sighs heavily when recalling his decision about whether to personally back the company. For the first time in his career, he wanted to invest in a client’s firm, and he secured written permission to do so from the Washington State Bar Association. He also talked to his father about taking out a loan against their jointly owned farmhouse. But then Tarbert’s son was born prematurely, and he took a month off from work and never got around to writing the $50,000 check. By the time Tarbert returned, Bezos had already raised the $1 million at a slightly-lower-than-hoped-for $5 million valuation.
One day in late 1997, after Amazon’s IPO, Tarbert was playing golf with his dad. “You know that company Amazon that just went public?” his father asked. “Was that the company we were talking about? What happened with that?”
“Yeah, Dad. You don’t want to know,” Tarbert replied.
“Well, what would that be worth today?” his father continued.
“At least a few million,” Tarbert said.
At the end of that summer, Nicholas Lovejoy told Bezos he wanted to move from part-time to full-time. To his surprise, his former D. E. Shaw colleague didn’t want to hire him full-time. Lovejoy had been working a modest thirty-five hours a week, playing ultimate Frisbee, kayaking, and hanging out with his girlfriend, and Bezos was imagining a different culture for Amazon, one where employees worked tirelessly for the sake of building a lasting company and increasing the value of their own ownership stakes. Lovejoy pleaded his case, arguing he was ready to sign up for sixty hours a week like everyone else, but he couldn’t change Bezos’s mind. Bezos even asked him to find a full-time employee to replace himself, which seemed particularly cruel. Eventually Lovejoy gave him a stack of résumés, and he put his own at the top. He also appealed to MacKenzie, Kaphan, and Davis and got them to change the boss’s mind. Lovejoy would work a variety of jobs at Amazon over the next few years, writing code and book reviews, ferrying packages to the post office at night, and eventually winding up in finance.
Bezos felt that hiring only the best and brightest was key to Amazon’s success. For years he interviewed all potential hires himself and asked them for their SAT scores. “Every time we hire someone, he or she should raise the bar for the next hire, so that the overall talent pool is always improving,” he said, a recurring Jeffism. That approach caused plenty of friction. As Amazon grew, it badly needed additional manpower, and early employees eagerly recommended their friends, many of whom were as accomplished as they were. Bezos interrogated the applicants, lobbing the kind of improbable questions that were once asked at D. E. Shaw, like “How many gas stations are in the United States?” It was a test to measure the quality of a candidate’s thinking; Bezos wasn’t looking for the correct answer, only for the individual to demonstrate creativity by coming up with a sound way to derive a possible solution. And if the potential employees made the mistake of talking about wanting a harmonious balance between work and home life, Bezos rejected them.
Paul Davis was incredulous. Amazon at the time was offering about sixty thousand a year in salary, stock options of questionable value, a meager health plan with a high deductible, and an increasingly frenetic work pace. “We would look at him and ask, How do you think you’re ever going to attract anyone with that kind of background to a company that has no revenue and that is not projected to have any kind of revenue?” Davis said. “I don’t see what the selling point is here!”
Little by little, the CEO with the piercing laugh, thinning hair, and twitchy demeanor revealed his true self to his employees. He was unusually confident, more stubborn than they had originally thought, and he strangely and presumptuously assumed that they would all work tirelessly and perform constant heroics. He seemed to keep his ambitions and plans very close to the vest, not revealing much even to Kaphan.
When his goals did slip out, they were improbably grandiose. Though the startup’s focus was clearly on books, Davis recalls Bezos saying he wanted to build “the next Sears,” a lasting company that was a major force in retail. Lovejoy, a kayaking enthusiast, remembers Bezos telling him that he envisioned a day when the site would sell not only books about kayaks but kayaks themselves, subscriptions to kayaking magazines, and reservations for kayaking trips—everything related to the sport.
“I thought he was a little bit crazy,” says Lovejoy. “At the time we offered 1.5 million books. Only about 1.2 million of those you could actually order. The database came from Baker and Taylor and we had about forty books in the warehouse.”
Bezos was also proving himself to be something of a spoilsport. That year the engineers rigged a database command, rwerich, to track the number of daily purchases as well as orders throughout the lifetime of the company. They obsessively watched those numbers grow—it was one of their pleasures amid the typically frenetic days. Bezos eventually told them to stop doing it, in part because it was putting too much strain on the servers. And when Amazon had its first five-thousand-dollar-order day and Lovejoy wanted to throw a party, Bezos rejected the idea. “There are a lot of milestones coming and that’s not the way I want to run things,” he said.
By early 1996, the young company was outgrowing its space in the Color Tile building. Employees were jammed into three small rooms, four door-desks in each, and the basement warehouse was overflowing with books. Kaphan, Davis, and Bezos piled into a car and went looking for a larger office in industrial areas around Lake Washington. Bezos emerged from every building to proclaim the space too small, Davis recalls. He wanted to accommodate whatever came for the company down the road.
That March, Amazon finally moved to a larger building with a more spacious warehouse a few blocks away. The new office was next to the Pecos Pit, a popular barbecue stand whose tantalizing aromas would waft into the warehouse each day starting at around ten in the morning.
But one early employee did not move with them. Paul Davis, who later became an advocate for open-source software and a critic of Amazon’s enforcing its 1-Click patent, told Bezos he wanted to spend more time with his newborn daughter. Leaving Amazon so early cost him a literal fortune in unclaimed stock options. A few months later, he would punctuate that misstep by slicing off the tip of his thumb with a band saw while preparing his home for sale. Bezos and Tom Schonhoff went to visit him in the hospital.
Somehow Davis, a native Londoner, was immune to the gospel of Jeff. He looked askance at the work-first zealotry, and he noticed that Bezos had changed a clever motivational phrase about choosing among three ways to work. In the old Bellevue house, Bezos had said to Kaphan and Davis, “You can work long, hard, and smart, but at Amazon.com you
can pick only two out of three.” Now the young CEO liked to recite, “You can work long, you can work hard, you can work smart, but at Amazon you can’t choose two out of three.”
Davis had a KILL YOUR TV bumper sticker on his Honda Civic, and so to commemorate Davis’s departure, Bezos laid down a blue tarp in the parking lot and put an old computer terminal and keyboard on it. He handed Davis a sledgehammer and then filmed him smashing the machine. Afterward, Davis kept the Escape key.
* * *
By the first weeks of 1996, revenues were growing 30 to 40 percent a month, a frenzied rate that undermined attempts at planning and required such a dizzying pace that employees later found gaps in their memory when they tried to recall this formative time. No one had any idea how to deal with that kind of growth, so they all made it up as they went along.
That spring, at the American Association of Publishers annual convention, the chairman of Random House, Alberto Vitale, told a Wall Street Journal reporter about the new online bookselling sensation from the Pacific Northwest. A few weeks later, Amazon was featured in a front-page WSJ article, “How Wall Street Whiz Found a Niche Selling Books on the Internet,” and Bezos had his first stippled-and-hatched portrait in the country’s largest financial newspaper. The number of orders each day immediately doubled. The world now knew about Amazon.com, and, likely, so did Barnes & Noble and Borders, the nation’s largest book chains.
With the influx of the $1 million in fresh capital, the company upgraded its servers and software, and, more important, it hired. Bezos added waves of new employees to customer service, to the warehouse, and to Kaphan’s technical team. He started building an editorial group—writers and editors who would craft a literary voice for the site and give customers a reason to keep coming back. The group’s mission was to make Amazon the most authoritative online source of information about books and replicate the trustworthy atmosphere of a quirky independent bookstore with refined literary tastes. “We were asking people to put a credit card into the computer, which at the time was a radical concept,” says Susan Benson, whose job title evolved to managing editor. Editorial “was important both in creating a good shopping experience but also in getting people comfortable about the idea that there were people on the other side of the screen that they could trust.”
That summer, the company launched what could be considered its first big innovation: allowing other websites to collect a fee when they sent customers directly to Amazon to buy a book. Amazon gave these approved sites an 8 percent commission for the referral. The Associates program wasn’t exactly the first of its kind, but it was the most prominent and it helped spawn a multibillion-dollar-a-year industry called affiliate marketing. It also allowed Amazon, very early on, to extend its reach across the Web to other sites, entrenching it in advance of the looming competition.
By that spring, the company was burning cash hiring and buying equipment and server space, so Bezos decided to raise venture capital. He started negotiating with the Boston-based General Atlantic, whose partners discussed valuing the company at $10 million, eminently reasonable for a startup on track for $15.7 million in sales and $5.8 million in losses that year. Then John Doerr, a prominent partner at the storied Silicon Valley venture-capital firm Kleiner Perkins Caufield and Byers, heard about the company and flew up to Seattle for a visit.
“I walked into the door and this guy with a boisterous laugh who was just exuding energy comes bounding down the steps,” says Doerr, who had backed such winners as Netscape and Intuit. “In that moment, I wanted to be in business with Jeff.” Bezos introduced him to MacKenzie and Kaphan and took him on a tour of the warehouse, where all the outbound orders were neatly stacked on door-desks. When Doerr asked about the volume of daily transactions, Bezos leaned over a computer and typed a grep command next to a UNIX prompt, instantly pulling up the data—and demonstrating his technical fluency. Doerr swooned.
Kleiner and General Atlantic dueled for the next few weeks over the investment, driving Amazon’s valuation up to an altitude that Bezos had not imagined possible. He chose Kleiner on the strength of its reputation in the technology community. It invested $8 million, acquiring a 13 percent stake in the company, and valuing it at $60 million. Kleiner wanted to put a junior member of the firm on Amazon’s board of directors but, as a condition of the deal, Bezos insisted that Doerr himself take the position. Doerr’s direct involvement was a public vote of confidence for any technology startup.
In the circuitry of Bezos’s brain, something then flipped. Budding optimism about the Internet in Silicon Valley was creating a unique environment for raising money at a historically low price in ownership. Doerr’s optimism about the Web mixed with Bezos’s own bullish fervor and sparked an explosion of ambitions and expansion plans. Bezos was going to do more than establish an online bookstore; now he was set on building one of the first lasting Internet companies. “Jeff was always an expansive thinker, but access to capital was an enabler,” Doerr says. James Marcus, an editorial employee, saw it too, writing in his 2004 memoir Amazonia that “the cash from Kleiner Perkins hit the place like a dose of entrepreneurial steroids, making Jeff more determined than ever.”12
Employees soon learned of a new motto: Get Big Fast. The bigger the company got, Bezos explained, the lower the prices it could exact from Ingram and Baker and Taylor, the book wholesalers, and the more distribution capacity it could afford. And the quicker the company grew, the more territory it could capture in what was becoming the race to establish new brands on the digital frontier. Bezos preached urgency: the company that got the lead now would likely keep it, and it could then use that lead to build a superior service for customers.
Of course, that meant everyone at Amazon would have to work even harder. The assumption was that no one would take even a weekend day off. “Nobody said you couldn’t, but nobody thought you would,” says Susan Benson. Eric Benson adds, “There were deadlines and death marches.”
In the warehouse, an expanding and eclectic group raced to keep up with the surge of customer orders. An Amazon representative even told a temp agency, “Send us your freaks.” The bejeweled, tattooed, hair-dyed crew that responded to the call worked day and night in the warehouse next to the Pecos Pit and took turns selecting the music that played on a boom box. Their ranks included a three-hundred-pound baritone who would skip through the room belting out Russian arias.
Christopher Smith, a twenty-three-year-old warehouse temp with tattoos of Chinese characters on his forearms, began working at Amazon, and he would stay with the company in various roles for fourteen years. He started his typical day at four thirty in the morning, biked to work and let in the deliveryman from Ingram at six thirty, and usually stayed past midnight, packing furiously and answering customer e-mails before drinking a few beers in the warehouse and biking back home. “The dominant image in my mind is just… running. And scads of cardboard and packing material flying,” he says.
Smith worked so tirelessly over one span of eight months that he forgot about his light blue Peugeot station wagon that he’d parked near his apartment in Seattle’s Capitol Hill neighborhood. The fate of the car would later be revealed in the piles of mail that stacked up inside his front door. When he finally opened the mail in that pile, Smith found, in succession, several parking tickets, a notice that the car had been towed, a few warnings from the towing company, and finally a letter informing him that the vehicle had been sold at auction for seven hundred dollars. He still owed eighteen hundred dollars on his car loan, and the incident dinged his credit rating. He doesn’t recall caring much at the time.
“Life just stopped,” Smith says. “You were stuck in amber. But inside that amber was frenetic activity that no one else could see.”
Eric and Susan Benson didn’t come to Amazon alone every day—they brought their dog Rufus, a Welsh corgi. Because the two would be working such long hours, Bezos had promised they could always bring Rufus to the office. That was no problem in the SoDo building
s, but then Amazon moved yet again, late in the summer of 1996, to a building downtown, and the company had to write Rufus into the lease with the new landlord. The dog, an amiable presence who liked to park himself in meetings and occasionally suffered gastric distress from being overfed by employees, became the startup’s mascot. There was a superstitious belief that his paw tap on the keyboard was required to launch a new feature, and even today, though Rufus is long gone, there’s a building named for him on Amazon’s Seattle campus. (Bezos, it seems, has a nostalgic streak; one building is called Fiona, the code name of the original Kindle, and another is Obidos, which is what Shel Kaphan dubbed the company’s original computer infrastructure, after a town in Brazil where the tributaries of the Amazon River converge.)
Amazon was now nearing a hundred and fifty full-time employees, less than a third of whom were in the warehouse. A few months later, the warehouse also moved, to a larger, ninety-three-thousand-square-foot facility on Dawson Street in South Seattle (another current Amazon building: Dawson). The new downtown digs weren’t exactly high-class. Amazon took over the Columbia Building on Second Avenue in a seedy downtown neighborhood full of strip joints that was two blocks from touristy Pike Place Market. On the day the company moved in, a homeless man who’d been sleeping near the front door showed employees how to use their new key cards to gain access to the lobby.
The building itself was across the street from a needle-exchange program and methadone clinic and a wig store that attracted the transvestite trade. Kay Dangaard, a New Zealander who had moved through careers as a reporter and an advertising executive, joined the company as its first publicist, and from her office in the new building, she could stare out the window across the alley and into the apartment of a prostitute who practiced her trade early every evening under a flickering, low-wattage lamp.
