Forum On Leadership: A Conversation With Jeff Bezos

Jeff Bezos, Chairman and CEO of Amazon, was the featured speaker at the April 20, 2018 Closing Conversation of the George W. Bush Presidential Center’s Forum on Leadership, in partnership with SMU.

Introduction by Dr. Gerald Turner, President of SMU. Moderated by Kenneth Hersh, President and CEO of the Bush Center.

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Forum On Leadership: A Conversation With Jeff Bezos


You know in those days when we had I don't know when who started the company and it was just one person. And then there were 10 people and today there are almost 600000 people. So there's a lot of change. But back in that time we were still pretty small company by most standards. But we were were growing fast and it was very exciting. You know I had when I started I was driving all the packages to the post office myself. I knew the U.P.S. guy so well that he would let me in even like five minutes after closing. So it was I hoped one day we'd be able to afford a forklift. It was that kind of operation. We were so inefficient with our operations and logistics in those early days when there were just 10 of us that I didn't have packing tables. We were packing on the floor on our hands and knees and I said to one of the software engineers who was packing alongside me you know we should do we should get kneepads. And he looked at me like I was the dumbest guy he'd ever seen in his life. And you said Jeff we should get packing tables and we next day I got packing tables and it doubled our productivity. And so by the area you're talking about we had we'd gone public. And you're right at a split adjusted basis it's a dollar fifty a share in today's terms and the market became very quickly a kind of an Internet bubble kind of market and the stock prices went up very very high.

When I raised the initial funding for Amazon I had to talk to 60 prospective investors to raise a million dollars and I raised a million dollars from 22 different investors. Fifty thousand dollars at a time. And they got 20 percent of the company for a million dollars. And that was in 95. But just three years two or three years later you know Stanford MBA with no business experience could raise 25 million dollars from a single phone call. If they had a internet business plan. So the whole thing is just two or three years the excitement really is as we could would shortly see when the bubble burst in the year 2000 the hyperbolic excitement about the Internet had infected everybody and I was I knew that there was that we had to fund like our business and I liked the fundamentals of our business but I also knew that the stock price was disconnected from what we were doing on a day to day basis and so I was always preaching we would have all hands meetings and there was a small number of employees at that time but you know probably a C in 97. I think we would have had a few hundred employees we would have all hands meetings and I would say look you know you got to remember the great quote from Benjamin Graham that in the short run the stock market is a voting machine in the long run. It's a weighing machine. So don't think about the daily stock price who's going up every day. Stock prices go up and I didn't want all the employees had stock options and I didn't want them counting their success that way.

And so I said look when the stock is up 30 percent in a month don't feel 30 percent smarter because when it's down 30 percent in a month then you're going to have to feel 30 percent dumber. And it's not going to feel good. Right. And it was good that I kind of laid that groundwork because you know sure enough in the year 2000 the whole thing came tumbling down. I think Amazon when I have six dollars went down to six dollars and that I don't even know if that's on a split adjusted basis. I think that's probably that was built on a split adjusted basis probably blow it all out. So and you know ever doubt the business model at that point no. So I you know it's very interesting to me because I had all the internal metrics on how many customers we had and it was growing and I could see people thought we were losing money because we were selling dollar bills for 90 cents. Well we were very clear that we were not we were we had high fixed costs and we had a contribution margin positive contribution margin. And I just knew that it was a fixed cost business and as soon as we reached the sufficient scale we would have a very good business. And so that was that understanding of the fixed nature of our expenses relative to physical world retail is what led us to have the get big fast strategy. We knew that it would be our economics would be very much improved if we could have a sufficient scale. So we worked hard and so.