Amazon – full of contradictions, fanatically loyal to the client, cruel to their own employees. Throughout the years of its existence, analysts are predicting bankruptcy. Since its appearance, Amazon has evolved so fast that It could hardly keep up with its own growth. This led to chaos within the company, which was difficult to tame at this speed. The paradox is that, in spite of the constant hustle and bustle, the need to take decisions “on the fly”, and to cope with the huge amount of work, Amazon managed to constantly invent and implement great ideas, which were adopted by many Internet companies. User comments for commodities, personal recommendations based on the previously selected products, auto-complete of the order form, fast delivery – hard to believe, but all these familiar things were invented in the Amazon. From a garage start-up, it has become a multi billion-dollar business. The company has 90,000 employees and annual revenues exceeding $ 74 billion.
How did everything start
Jeff Bezos was 29 years old when the idea of ”on-line shop where you can buy everything in the world” came to him. It was 1994, and that the future was in the internet, wasn’t yet an obvious idea. Bezos was vice president of a very unusual hedge fund D. E. Shaw & Co., which by thinking of its founder was to be a universal technological laboratory, attracting the best minds that can “use the computer knowledge to solve various problems.” In fact, it was a smithy startups. Bezos got the idea to create a “store of everything”, but did not want the fruits of his labor in the end belong to D. E. Shaw, so he decided to go free and set up a company from scratch.
For the first time there was a project called Cadabra. This is a typical startup: a few programmers working in the garage, where the desktop has been made out of the door. They were helped by the wife of Bezos, who became the first company accountant. It is believed that the initial investment in the company was 10 thousand dollars from Bezos, and after a while it was supported by parents, who invested their own savings in the amount of 100 thousand dollars.
Jeff knew that he cant set up shop with a wide range of products, so he decided to first focus on a single product: books. They are ideal, because they were simple and straightforward product which people were not afraid to buy on the Internet. At that time, there were already a few small companies that sold books: Orders shipped from two weeks to a month and when it shipped, the package was nearly destroyed. Bezos decided that the benefit of his company will be high quality service and the ability to leave comments on the webpage were book was sold.
The problem of the growth
The first version of the website appeared in spring of 1995. They say it was ugly and unusable, but in those days no one expected much from the websites. The Amazon office established a ring on one of the computers, which was triggered once a new order came in. Every time it rang, everybody ran to look, if they knew the name of the person who made the order. A week later, the ring had to disabled because it rang incessantly.
While the company did not have their own warehouses. It worked with two book-distributors, having received the order, it would send it to them. The book was shipped to the customer in less than a week. Orders increased, and one month after the opening, the company sold books across the United States and in other 45 countries. There were not enough hands and Bezos himself had packed parcels while sleeping on the job. Too rapid growth – a problem that Amazon will face over the next ten years. In order to somehow cope with the volumes, the company needed money. Bezos offered sixty investors to invest 50 thousand dollars to eventually collect one million. Bezos fascinated investors global plans, and the money was quickly assembled.
Great and terrible
Even then it was clear that Bezos is no ordinary businessman. Leader by nature, he felt like a fish in the competitive environment. Since childhood he loved to win, his favorite word was “courage.” Being an inveterate workaholic, he always kept a sleeping bag and a couple of eggs in the office, to prepare breakfast. Impulsive, energetic extrovert who is constantly laughing, but his laughter sometimes frightens. Bezos never believed in the possibility of a balance between work and personal life – he thought that he and the staff should give the company all their strength. Everyone had to work with a lot of tension, and if someone did not meet these requirements, he fired him.
From the beginning, Amazon began to emerge painfully hysterical style of work. Bezos required employees to work more than 60 hours a week, seven days a week, without giving any bonuses. He is generally known for his stinginess – even coffee was an extra charge in the company’s office. Bezos made him self fearful and disliked. It is believed that no one had ever worked with him, only for him. Many senior managers couldn’t stand explicit dominance of Bezos, and left the company. But Bezos entrepreneurial charisma allows him to constantly attract new talent to the team.
The company grew, a year later it employed 150 people. In 1996, Amazon focused on making personal settings and recommendations for individual users, and partnership agreements with major sites which would redirect visitors to buy books on Amazon’s website. The company has become a significant market in the next year entered the IPO. Then they faced their first serious competitor – the largest offline bookseller, the company Barnes & Noble, which initially offered to buy Amazon, and then, when Bezos has refused, has created its own online store. Management of B&N believed they can easily eat Bezos small startup. However, the structure of the company was so sharpened by retailers and not suited to online sales, resulted in loss – Barnes & Noble wasn’t able to assume online sales.
Not only books
By 1998, Amazon is so strong that Bezos had decided to expand the range of products. At first at the expense of music CDs and video cassettes, and then toys and electronics. New directions were not very smooth. Unlike the book business, which was enough to conclude a contract with the wholesaler and two largest distributors. Here Amazon dealt with a lot of vendors, begging each for a discount. At this point, the concept of value for the proposed Amazon Bezos was: “The lowest prices, the highest quality of customer service.”
Bezos refused to sell goods at normal prices – not all companies agreed to go to meet him and make allowances, as a result of the range of quality suffered. In front of Bezos eBay became popular, offering customers themselves determine the price of goods, and it alerted the entrepreneur. In order not to lose a company with such a concept, he decided to develop Amazon site where each user can sell their books. Publishers were against: they accused Bezos is that he creates them books resale market. For Bezos, as always, a single value representing the interests of his own customers. He did everything to make buying on Amazon bring people the maximum benefit. Those were the years, when system of auto completion of fields in a single click was developed, free delivery for those who ordered the books to a certain amount, and other customer-oriented innovations.
All this time, Amazon grew steadily, but was not a profitable company. Investment picked up during the dotcom boom, the company has not followed its expenditures. Then, in the early 2000s, there was a crisis, which, surprisingly, had a beneficial effect on the company’s business. On one hand, Amazon shares fell sharply, but on the other – it made Bezos think about optimization of the company, focus on reducing costs and clarifying business model.
In January 2002, Amazon reported its profitable quarter. In those years, Bezos finally formulated for himself the concept of the company. First, he refused to call Amazon a retail company, considering its processing. Secondly, he called amazon “antiretail”. This meant that his company is not subject to traditional laws retail trade, because the company only cares about the interests of customers, rather than on their own. Therefore, it offers the lowest price, to allow leaving both positive and negative feedback for books, makes it possible to choose between new and second-hand goods.
Like many major technology companies, Amazon has a secret department dedicated to experimental development. In 2004, Bezos has set Lab126 with a task: Amazon to undermine a successful business selling paper books with the help of e-book reader device. This decision of Bezos can probably enter in business history. Feeling that the world is changing and these changes certainly may kill his company, the entrepreneur decided to kill it himself. Kindle appearance was associated with many scandals and re-divisions of the market and dramatically changed the book industry. Bezos did not stop and continues to make unusual decisions – He created aerospace company, bought the Washington Post newspaper. People around him continue at the same time dislike and admire him.