Bezos article
http://www.alwayson-network.com/comments.php?id=10754_0_3_1_C
Jeff Bezos Reaches for the Stars
Jeff Bezos has just launched a brand-new company, and nothing about it—not the product, not the approach—is like Amazon.com.
Jeff Bezos [Amazon.com] | POSTED: 07.13.05 @07:30
This past fall, Amazon.com's founder and CEO, Jeff Bezos, sat down for an interview with Josh Quittner of Business 2.0. The meeting was part of the Churchill Club's annual "Dinner with Jeff Bezos." At this year's event, Mr. Bezos talked about how he went about building up Amazon.com, and why he's taking an entirely different approach with his new venture. Part Six of nine.
Quittner: If you were starting a business today, what would it be? I love the story about how you came upon online retail and you did it in a very methodical way. If you applied that same set of structures to what you see going on around you today, where would you say the big opportunity is?
Bezos: This isn't really an answer to that question exactly in the way you intended, but I am funding a new company today. And I'm going about it pretty much in the opposite way of how I started Amazon.com. With Amazon, I made a list of 20 different products and ranked them by a bunch of different criteria. It was extremely analytical.
Quittner: Why don't you tell us that story? You were at D. E. Shaw.
Bezos: I was, and I came across the fact that web usage was growing 2,300 percent a year. This was in the spring of 1994. Now, very few things grow at 2,300 percent a year, so I was very skeptical of the claim and asked a methodological guy to look into it. His name was John Quarterman—
Quittner: He didn't know what baseline web usage was.
Bezos: But he could measure the growth rate because he had sniffers at certain key internet hubs and he could watch how many packets were flowing by in web format; and so he could just measure the growth rates without even knowing the baseline usage. So once I believed that it was really growing that fast, then it was pretty clear that anything growing that fast—even if it had a fairly small baseline usage at the time and was fairly invisible, as it was for most people in 1994—would someday be everywhere. The question in my mind was: is there a business plan that makes sense in the context of this very rapid growth rate? I just started to delve into this. I thought "Wow, I'm one of the few people in the world who knows that the web is growing at 2,300 percent a year."
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Quittner: Even though [that fact] was actually published on the web.
Bezos: Even though it was published on the web in the spring of 1994. So of course, there were a lot of people working on a bunch of related stuff. There were people thinking of the software tool space. Mark Andreessen and Jim Clark were already hard at work on what would become Netscape Communications. They called it Mosaic at the time. You looked around and there were a lot of people working on this.
But one of the things that was still very early and very rudimentary, although there were some early efforts, was e-commerce. There were actually rules at that time which prohibited commerce on the internet because it was a government-funded entity, but already those rules were being broadly flouted. It was also clear that they already had plans to open it up to commerce within the next year. All those things were moving in the right direction, and so the question that I asked was: "What's the first, best product to sell online?"
I went to the Direct Marketers Association and got the list of all the things that were sold remotely. Apparel was the number one remote sales category. Gourmet food was number two. Way down at the bottom of the list were books, and the books category was only on there because of things like the Book of the Month Club, because there really are no paper catalogs to speak of that sell books.
I was sorting through these things. If you used the web in 1994, with the primitive browsers and the technology that was available at the time, it was a pain. The browser was always crashing and things didn't work right and your bandwidth was tiny, even if you had the best modem available at the time.
I concluded that if you could do something any other way, that other way would be preferable to doing it on the web. You didn't want to do apparel on the web, even though it was the best category, because apparel you could do very effectively through catalogs and through stores. This was my criteria: picking a category where you could substantially improve the customer experience along a dimension that could only be done on the web.
It turns out that selection is a very important customer experience driver in the book category. It also turns out that you can't have a big, paper book catalog; it's totally impractical. There are 50,000 new books published every year and you can't even have a big superstore. The biggest superstores have 175,000 titles and there are only about three that big. So that became the idea: let Amazon.com be the first place where you can easily find and buy a million different books.
Quittner: So using that same kind of logic today?
Bezos: As I said, I am funding a new company and I'm using the opposite logic.
Quittner: This one didn't work out so badly.
Bezos: Yes. But now I'm funding a company called Blue Origin that is building a space vehicle. This is just something I've wanted to do since I was five, so there was no analytical process involved in making that decision whatsoever.
Quittner: And you're doing it near the ranch where you used to summer?
Bezos: It's in Texas, but it's actually not that near my grandfather's ranch. This is in West Texas. We chose the location there in West Texas to do the launches from because it is such a remote place.
Quittner: I read somewhere that you get a phenomenal number of people applying for jobs there every year.
Bezos: You know, space is one of those things that a lot of people are very passionate about. I'm a defender of NASA because I look around, and I can't find any other government organization that inspires five-year-olds. At least they win on that count. That's actually a pretty big deal.
Part One: Bezos Admits His Mistakes
Part Two: No TV Ads for Amazon.com
Part Three: Way Beyond Books
Part Four: Google is No Threat
Part Five: Back from the Dead
Jeff Bezos Reaches for the Stars
Jeff Bezos has just launched a brand-new company, and nothing about it—not the product, not the approach—is like Amazon.com.
Jeff Bezos [Amazon.com] | POSTED: 07.13.05 @07:30
This past fall, Amazon.com's founder and CEO, Jeff Bezos, sat down for an interview with Josh Quittner of Business 2.0. The meeting was part of the Churchill Club's annual "Dinner with Jeff Bezos." At this year's event, Mr. Bezos talked about how he went about building up Amazon.com, and why he's taking an entirely different approach with his new venture. Part Six of nine.
Quittner: If you were starting a business today, what would it be? I love the story about how you came upon online retail and you did it in a very methodical way. If you applied that same set of structures to what you see going on around you today, where would you say the big opportunity is?
Bezos: This isn't really an answer to that question exactly in the way you intended, but I am funding a new company today. And I'm going about it pretty much in the opposite way of how I started Amazon.com. With Amazon, I made a list of 20 different products and ranked them by a bunch of different criteria. It was extremely analytical.
Quittner: Why don't you tell us that story? You were at D. E. Shaw.
Bezos: I was, and I came across the fact that web usage was growing 2,300 percent a year. This was in the spring of 1994. Now, very few things grow at 2,300 percent a year, so I was very skeptical of the claim and asked a methodological guy to look into it. His name was John Quarterman—
Quittner: He didn't know what baseline web usage was.
Bezos: But he could measure the growth rate because he had sniffers at certain key internet hubs and he could watch how many packets were flowing by in web format; and so he could just measure the growth rates without even knowing the baseline usage. So once I believed that it was really growing that fast, then it was pretty clear that anything growing that fast—even if it had a fairly small baseline usage at the time and was fairly invisible, as it was for most people in 1994—would someday be everywhere. The question in my mind was: is there a business plan that makes sense in the context of this very rapid growth rate? I just started to delve into this. I thought "Wow, I'm one of the few people in the world who knows that the web is growing at 2,300 percent a year."
-- ADVERTISEMENT --
Quittner: Even though [that fact] was actually published on the web.
Bezos: Even though it was published on the web in the spring of 1994. So of course, there were a lot of people working on a bunch of related stuff. There were people thinking of the software tool space. Mark Andreessen and Jim Clark were already hard at work on what would become Netscape Communications. They called it Mosaic at the time. You looked around and there were a lot of people working on this.
But one of the things that was still very early and very rudimentary, although there were some early efforts, was e-commerce. There were actually rules at that time which prohibited commerce on the internet because it was a government-funded entity, but already those rules were being broadly flouted. It was also clear that they already had plans to open it up to commerce within the next year. All those things were moving in the right direction, and so the question that I asked was: "What's the first, best product to sell online?"
I went to the Direct Marketers Association and got the list of all the things that were sold remotely. Apparel was the number one remote sales category. Gourmet food was number two. Way down at the bottom of the list were books, and the books category was only on there because of things like the Book of the Month Club, because there really are no paper catalogs to speak of that sell books.
I was sorting through these things. If you used the web in 1994, with the primitive browsers and the technology that was available at the time, it was a pain. The browser was always crashing and things didn't work right and your bandwidth was tiny, even if you had the best modem available at the time.
I concluded that if you could do something any other way, that other way would be preferable to doing it on the web. You didn't want to do apparel on the web, even though it was the best category, because apparel you could do very effectively through catalogs and through stores. This was my criteria: picking a category where you could substantially improve the customer experience along a dimension that could only be done on the web.
It turns out that selection is a very important customer experience driver in the book category. It also turns out that you can't have a big, paper book catalog; it's totally impractical. There are 50,000 new books published every year and you can't even have a big superstore. The biggest superstores have 175,000 titles and there are only about three that big. So that became the idea: let Amazon.com be the first place where you can easily find and buy a million different books.
Quittner: So using that same kind of logic today?
Bezos: As I said, I am funding a new company and I'm using the opposite logic.
Quittner: This one didn't work out so badly.
Bezos: Yes. But now I'm funding a company called Blue Origin that is building a space vehicle. This is just something I've wanted to do since I was five, so there was no analytical process involved in making that decision whatsoever.
Quittner: And you're doing it near the ranch where you used to summer?
Bezos: It's in Texas, but it's actually not that near my grandfather's ranch. This is in West Texas. We chose the location there in West Texas to do the launches from because it is such a remote place.
Quittner: I read somewhere that you get a phenomenal number of people applying for jobs there every year.
Bezos: You know, space is one of those things that a lot of people are very passionate about. I'm a defender of NASA because I look around, and I can't find any other government organization that inspires five-year-olds. At least they win on that count. That's actually a pretty big deal.
Part One: Bezos Admits His Mistakes
Part Two: No TV Ads for Amazon.com
Part Three: Way Beyond Books
Part Four: Google is No Threat
Part Five: Back from the Dead
posted by Iven Frangi at 11:19 PM
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