It was the autumn of 1996. Jeff Bezos had just raised eight million dollars, putting Amazon’s valuation at around sixty million. Revenue that year was $15.7 million, small yes, but growing at a huge rate and it had caught the attention of two men who’d built an empire out of books the old-fashioned way — Leonard and Stephen Riggio, founders of Barnes & Noble.
Their chain was the heavyweight of American bookselling: hundreds of superstores, nearly two billion dollars in annual sales, and a reputation for crushing smaller rivals.
That autumn, the Riggio brothers invited Jeff Bezos to dinner in New York for what was described as a frank but cordial conversation. They told him they admired what he’d built, acknowledged that Amazon had the early lead online. But, they said plainly, if Barnes & Noble launched its own e-commerce site, their scale and publisher relationships would allow them to “surpass Amazon easily” in both selection and price.
They floated alternatives — a partnership, maybe a strategic alliance, maybe for Bezos to lead Barnes & Noble’s online strategy.
Bezos declined. Steve Riggio left the dinner unconvinced and said after the meeting, “That purely virtual model won’t cut it in the long term.”
Now… to understand how Bezos ended up across the table from the biggest booksellers in America just over a year after setting up Amazon, you have to go back to where it all began.
Jeffrey Preston Bezos was born on the 12th of January 1964, in Albuquerque, New Mexico. His mother, Jacklyn, was just seventeen, still in high school. His father, Ted Jorgensen, was nineteen.
The young couple married before Jeff was born but divorced after seventeen months. Jorgensen ceded custody and soon lost contact entirely.
In 1968, Jacklyn remarried. Her new husband was Miguel — “Mike” — Bezos, a Cuban immigrant who had come to the United States alone at fifteen as part of Operation Pedro Pan. That programme, set up in the early 1960s, had flown more than 14,000 Cuban children out of Castro’s Cuba to begin new lives in America.
Bezos never saw his biological father after he left, and he had this to say about Mike Bezos — “The reality, as far as I’m concerned, is that my Dad (referring to Mike Bezos) is my natural father.”
The family moved to Houston, Texas, where Mike began his career as a petroleum engineer at Exxon, and a few years later his job took the family to Florida.
Now Bezos’ maternal grandfather had been a regional director at the U.S. Atomic Energy Commission and owned a 25,000-acre ranch near Cotulla, Texas. Young Bezos spent summers there fixing windmills, building fences, repairing heavy machinery, and apparently castrating cattle — I just can’t see Jeff Bezos doing that — but one thing that became noticeable from a very early age was Bezos’ mechanical streak. Family stories tell of him dismantling his crib with a screwdriver because he didn’t want to be confined. Later, he built an electric alarm for his bedroom door using Radio Shack parts — a DIY security system to keep his younger siblings out — because Jacklyn had two children with Mike Bezos, Mark and Christina.
I suppose you could call Bezos a gifted child because a book on gifted education from 1977 featured a Houston sixth-grader, “Tim,” described as a prodigious reader with intense scientific curiosity. Author Brad Stone, who has written two great books on Bezos and Amazon, revealed that “Tim” was Jeff Bezos.
His teachers remembered him clearly. Here's a quote from one: “Even when he was in high school, all the teachers who taught him knew Jeff was something special and that he would be going places.”
By his teens, Bezos’ fascinations had widened to science fiction and space. Summers with his grandfather coincided with NASA’s Apollo era, and those televised launches left a mark. He devoured sci-fi books.
In June 1982, he graduated valedictorian of a class of 689 — I had to double-check — like how big are the schools in America? There were about 60 in my year — two classes of about 30 in each. And that summer he launched his first entrepreneurial experiment — a ten-day camp for local kids called The Dream Institute. He and a friend charged $600 a head and taught everything from Gulliver’s Travels to black holes and nuclear war.
That autumn, Bezos enrolled at Princeton University intending to study physics. He soon found the reality more humbling. One classmate solved in minutes a math problem that had taken Bezos hours, so he switched into Electrical Engineering and Computer Science.
Bezos later described himself as “a nerdy student,” so immersed in computers and labs that he missed out on wider campus life. So of course, academically he excelled and graduated summa cum laude in 1986 with a Bachelor of Science in Engineering.
The timing was ideal. The mid-’80s were the dawn of the personal computer boom, and Wall Street firms were snapping up top technical graduates.
Bezos had offers from Intel, Bell Labs, and Andersen Consulting. But he turned them all down. Instead, he joined a small fintech startup called Fitel that was trying to build a digital network for international trade — a kind of communications platform before the Web existed. Bezos was tasked with setting up operations and earned a reputation for problem-solving and within a year, he was promoted.
But Fitel never quite took off, and two years later in 1988, he joined Bankers Trust in New York as a product manager, building software to manage the firm’s portfolio of pension funds and other investments. Again Bezos thrived.
Within two years he was a Vice President — one of the youngest in the company’s history.
In 1990, Bezos was headhunted by D. E. Shaw & Co., a hedge fund that had only been founded the year previously by David Shaw, a Columbia computer science professor, and it was gaining a very strong reputation on Wall Street for its pioneering use of algorithms and computing. It was a culture of scientists and mathematicians applying data to commerce — a perfect fit for Bezos.
Shaw recognised something in Bezos — and he later described Bezos as “sort of an entrepreneurial odd-jobs kind of a person,” he had a knack for spotting problems and devising creative solutions in any area.
Interestingly, while Bezos was at D. E. Shaw, a consultant administered a personality test to the executive team, finding they were all introverts. The “least introverted person on the team,” and thus the “token extrovert,” was Bezos. Another interesting story from that time is that Bezos kept a sleeping bag in the office.
Again Bezos was promoted quickly to Senior Vice President by 1992, one of the firm’s top four executives, and the youngest. So you have this pattern of Bezos outperforming and impressing — one of those people that stands out.
While there, he met MacKenzie Tuttle — a fellow Princeton graduate working as a research associate. She asked him out first. They married in 1993.
By then, Bezos was comfortable — well paid, well regarded, and looking forward to a very successful career on Wall Street. Then a single statistic changed everything.
In the spring of 1994, he discovered that Internet usage was growing by 2,300 percent a year. That number stopped him in his tracks, and here’s a quote from him: “Things just don't grow that fast. It's highly unusual, and that started me thinking, What kind of business plan might make sense in the context of that growth?”
With Shaw’s approval, Bezos began mapping out possible Internet businesses for the firm to invest in. He listed around twenty products that might sell well online — and books stood out.
There were millions of titles in print, but no bookstore could carry them all. Crucially, big distributors already had electronic catalogues. The infrastructure existed; it just hadn’t been joined up.
Bezos realised that there was a huge opportunity here and he wanted to go for it. He went to talk to David Shaw — his boss, mentor, and by all accounts one of the sharpest minds on Wall Street. Shaw suggested they take a walk, so the two of them spent a couple of hours circling Central Park, talking through the idea.
Shaw understood the impulse — that entrepreneurial pull — but he also spelled out the stakes. Bezos had a great job. He was earning a six-figure salary, and that would increase to seven figures given Bezos’ career trajectory. Shaw told him to take forty-eight hours to weigh up his options.
To help him make up his mind, Bezos used a system — or a device or whatever — called the “Regret Minimization Framework.” This is basically a very good and easy-to-implement decision-making strategy that involves projecting yourself into the future, typically to age 80, to determine which potential actions you would most regret not taking. As Bezos said himself: “I want to have lived my life in such a way that when I’m 80 years old, I’ve minimized the number of regrets that I have.”
And that mindset — and that obsession, or maybe focus on the long term — didn’t just help him make up his mind about whether or not to start up a new business, it would define everything that followed. Here’s another quote from Bezos: “If you think about the long term... you can really make good life decisions that you won't regret.”
And so in July 1994, at age thirty, Bezos resigned from D. E. Shaw. He and MacKenzie packed their belongings into a 1988 Chevy Blazer — a gift from his dad — and drove from New York to Seattle. He chose Seattle as his base because of its proximity to major book distributors and it had a rich tech talent pool.
The working name was “Cadabra,” as in abracadabra. But when his lawyer misheard it as “cadaver,” Bezos knew he had to change it.
He wanted something memorable — and something starting with ‘A,’ because early web directories were alphabetical. Flipping through a dictionary, he stopped at “Amazon.” The largest river in the world. As Bezos said, “It blows all other rivers away.” That was the scale he wanted. And this thing about scale is important — books were just going to be the first product — Bezos always intended Amazon to be more than books.
His parents were early believers, and you’ve got to give them credit — they put in nearly $250,000 — a very significant portion of their life savings. Bezos warned them they could lose it all. They backed him anyway. And it paid off. The exact value of their stake hasn’t been confirmed since 1999, but it is believed that they’ve held onto a good chunk of their shares long term — it’s impossible to get an accurate figure, but most reports put their net worth at $30 billion. Now his brother and sister, Mark and Christina, were also early investors, putting in $10,000 each. I couldn’t find when or if they sold any or all of their shares — the only figures I could find were from a Bloomberg report from 2018 that put both of their net worths at around $600 million — so good on them for giving their older brother money. They seem like a very close and loving family — Jeff describes Mark as his best friend, and Mark actually was part of the very first Blue Origin crew that went into space in 2021.
Getting back to business, Bezos and a handful of early employees were working out of a cramped garage, building everything from scratch — the website, the systems, even the desks — because resources were so minimal that Bezos bought cheap solid-core doors from Home Depot and bolted on 4×4 lumber legs. The “door desks” turned into legend, and recent photos show that Bezos continues to use a door desk as a reminder about the importance of penny pinching.
On the 16th of July 1995, Amazon.com launched.
Now, just as a side note — Bezos wasn’t the first to sell books online. A Cleveland entrepreneur, Charles Stack, launched the first online bookstore three years earlier as a dial-up service called Book Stacks Unlimited. He moved it to the web in 1994 with the brilliant URL “Books.com.” But it remained relatively small and was later acquired by Barnes & Noble in 1996 for $4.2 million.
In the first week, with almost no advertising, orders totalled $12,000. The second week brought another $14,000, and the numbers kept accelerating.
So how did it get sales in the door from the get-go — because it didn’t even have a marketing budget? Its earliest customers came from Bezos and the early team interacting directly with online communities where book lovers, academics, and programmers were already talking to each other. People would ask things like, “Does anyone know where I can find a hard-to-get copy of X?” and the Amazon team would simply reply, “We’ve built an online bookstore — we ship anywhere — here’s the link.” And it spread fast because these users were natural sharers and there was also a big wow factor — here’s an online bookstore promising over one million titles, which was unheard of. But of course Amazon held almost no inventory. If a title was ordered, someone would race to buy it from a distributor or publisher, then pack it and ship it. Much of the packing happened on the concrete floor of the garage, with Bezos himself taping boxes late into the night.
And the customers that they got stayed and kept buying because of the experience. Amazon replied to emails the same day — sometimes Bezos himself — and they sent updates on every order so the customer always knew what was happening. At a time when buying online felt risky, Amazon felt reliable.
Amazon priced most books at 10% below list and bestsellers at 40% off. In brick-and-mortar retail, that kind of margin sacrifice would be unthinkable.
In the office, they’d wired a bell to chime each time a customer clicked “Purchase.” Within weeks it rang so often they had to switch it off.
The real breakout moment came when Amazon was added to the Yahoo! directory homepage, which in 1995 was effectively the front page of the internet, and overnight that brought a flood of new traffic.
By the end of 1995, after just over five months in business, Amazon had more than half a million dollars in revenue, had shipped to every state in the U.S. as well as other countries, and the company needed more money to fund its expansion.
A local angel investor set up meetings with Bezos and dozens of investors around Seattle and Silicon Valley. But it wasn’t as easy as you might think — Netscape had gone public in August 1995, and while many point to that as the beginning of the Internet boom, it still took a little longer for investors to cotton on to what was happening. The Internet still felt speculative and they balked at Amazon’s $6 million valuation. Bezos said of this fundraising round: “It was the hardest thing I’ve ever done.” He did roughly 60 pitches that went nowhere. Ultimately, he cobbled together a syndicate of 22 angel investors — friends, former colleagues, local businesspeople — putting in around $50,000 each by early 1996. The seed round totalled $1.1 million for about 20% of the company.
Now, it was impossible to track when these early investors cashed out — I’m guessing a lot would have cashed out at the IPO, and if they did, then that $50K turned into somewhere between $4–5 million — a brilliant ROI.
As revenue kept growing in 1996, and the hype around the Internet was taking hold, Bezos approached larger VCs. General Atlantic offered a deal that valued the company at around $10 million. Bezos used it as leverage and approached Kleiner Perkins, the premier Silicon Valley firm where John Doerr had backed Netscape and Sun. Doerr flew to Seattle and said he was blown away by Bezos’ drive and the scale of his ambition (in other words, Amazon is not just about books), and so Kleiner invested $8 million for a 13% stake at a $60 million valuation. Bezos had one condition: that John Doerr join Amazon’s board — Bezos wanted Doerr’s clout as well as his counsel. Doerr readily agreed.
Doerr is a fascinating character and is perhaps one of the most influential investors of the last 50 years — I’m definitely going to do an episode on him.
So with $8 million in fresh capital, Bezos made the strategy explicit: “Get Big Fast” and while this was very much the mantra of lots of B2C online companies at that time, unlike most of the others, Bezos had the vision and I think the strength of character to ensure that he wasn’t going to be bullied or pressured into compromising on this. This is a quote from Bezos to the New York Times: “We could be profitable now. It would be the easiest thing in the world to be profitable. It would also be the dumbest.” He knew he was in a land grab, and to succeed he knew he’d have to stick to his guns — and he did.
By late 1996, growth had drawn the attention of the industry’s Goliath, Barnes & Noble, and I described that meeting at the start, Bezos politely declining their offer to be absorbed and Steve Riggio saying “That purely virtual model won’t cut it in the long term.”
Bezos declined not just because he was fiercely independent, he was convinced Amazon’s speed and technology focus could out-innovate Barnes & Noble’s online efforts.
So 1996, with 180,000 customer accounts, $15.7 million in revenue, and as we go into 1997 revenue is set to increase almost tenfold and — Amazon announced they were going to float. In their IPO filing Bezos made it quite clear: Amazon would forgo short-term earnings to capture market share aggressively. I know I keep repeating this point but I believe it’s a vital piece in understanding not only how Amazon succeeded but also in understanding Bezos — by consistently coming out and letting people know what his strategy was, he was reinforcing not only his strategy, but also letting Wall Street and investors know that he wasn’t going to be pressured into deviating from that, and that he was the boss — he took a real strong leadership position.
He also made it clear in the filing that books were just the start: “Our vision is to be the world’s most customer-centric company. The place where people can find and discover anything they might want to buy online.”
On 15 May 1997, Amazon went public, valuing it at roughly $438 million. It was one of the first pure internet IPOs, and its strong reception helped open the gate for dozens more dot-com listings over 1997–98.
By the end of 1997, sales had rocketed to $148 million. The customer base hit 1.5 million accounts across more than 100 countries. In 1998 Amazon launched their German and UK sites, having bought leading online booksellers in both countries, and they also bought IMDB (the Internet Movie Database) for $55 million. Now the IMDB acquisition, while it’s pretty small in many ways and is largely forgotten — to me it stands out as being very significant:
They bought IMDB because it gave them something they couldn’t build quickly themselves — the world’s most complete catalogue of films and audience tastes. Millions of people were already using it every day. At that point, Amazon was starting to move into music and video.
So the prize here was the data — what people watched, what they liked, what they searched for but didn’t buy. Bezos has always leveraged data.
And so between June and August 1998 they launched music and videos/DVDs and by Christmas of that year the bet was paying off with sales of $610 million — a twentyfold jump in two years. More importantly, it proved Amazon could enter new categories and win. As Bezos told employees: “We’re not in the book business or the music business. We’re in the customer business.”
And it’s fair to say that customers loved Amazon — but what about the people who worked there in those early years?
Former engineer Steve Yegge, who worked there from 1998 to 2005, once described the culture as “horrible.” But he said Bezos himself was difficult to dislike, and I quote: “It’s hard not to like a person who’s that smart. He had this electric presence. A magnetism to him that was unmistakable.”
Yegge said that Bezos challenged people constantly, but he never saw Bezos lose his temper, never heard him swear, not once in almost seven years.
Now, that was one view. But Brad Stone’s 2013 book The Everything Store painted a slightly different picture — of a leader with a sharper edge. Bezos, he wrote, was known for deploying “withering put-downs” in meetings. He’d fire off lines like, “Are you lazy or just incompetent?” or “Why are you wasting my life?” And if an employee failed to impress, he might simply pull out his phone mid-meeting — or leave the room entirely. So he was demanding, impatient, but I think that’s expected if you’re trying to build the biggest online company and you’re growing at such a fantastic and fast rate. It must have been exhilarating and I can totally understand why Bezos might have been a bit short with some people — it’s not an excuse, I don’t think I’d act like that, but I think it’s understandable. Now there are definitely other issues with Amazon’s treatment of employees, especially in the warehouses — but that doesn’t really feature until much later, so I’ll leave that for another episode — I’m just covering up to 1999 in this episode.
Bezos’s own paper wealth surged; by 1999, at 35, he was worth roughly $10 billion. And yet, he still drove a 1996 Honda Accord — a deliberate message that cash would fund growth, not perks.
In early 1999, Amazon raised $1.25 billion in convertible debt — at the time, the largest such issue by an internet company. It gave Bezos years of runway to push expansion without fretting over quarterly losses. In April 1999, Amazon launched Auctions, a direct challenge to eBay — and while auctions never took off, it evolved into Amazon Marketplace, which became one of Amazon’s biggest growth engines.
And to cap it all, at the end of 1999 as revenues hit $1.64 billion, Time named Bezos Person of the Year and dubbed him “the king of cybercommerce.”
What a ride — within four years Amazon had gone from zero to a $30 billion company.
So where are we — what are my thoughts on Jeff Bezos?
There are still a few more chapters to come in this story, which I’ll cover over the years — and I’m sure I’ll be pretty critical of many things, especially their treatment of warehouse staff, but looking at early Amazon up to 1999, what stands out is a founder who’s driven, with a huge vision, and in a massive rush because he knows timing is everything — it’s a land grab.
Yes, he’s impatient. He can be sharp with employees. But I get that. That kind of drive, that obsession you have as a founder, can lead to a bit of steamrolling. I’m not excusing it, but anyone who’s started a company knows that feeling.
I balance that with a guy who comes from a loving family and has their full support. To me, that suggests someone grounded, despite his intelligence — someone who values family. And that says a lot.
We’ve also got a young Bezos who spotted the potential of the internet very early and went for it 100%. There’s a real steeliness there. He knew the prize was huge and that to win, he’d have to sacrifice short-term gains. He was playing the long game from the start.
So Jeff Bezos, 1999 — I like and admire him. He makes for a cracking story.
Which brings me to listener emails. I’ve got one from Lucas, who’d love to hear the story of Enzo Ferrari. Believe it or not, he wasn’t on my list — but now he is, and I can’t wait to cover it.
Thank you, Lucas. And remember, if you’ve any comments, corrections, or story ideas, email me at info@gbspod.com.
All the best, folks.