As a small business consultant who assists entrepreneurs in starting and growing companies, I‘m often asked about the origins of Amazon. Aspiring founders are curious about how Jeff Bezos went from working on Wall Street to launching one of the most disruptive companies in history. They want to know how Amazon transitioned from an upstart online bookseller to the e-commerce behemoth it is today.
In this comprehensive guide, I‘ll share key insights on Amazon‘s origin story, early days, and evolution into a trillion-dollar conglomerate. Understanding this remarkable journey can provide valuable lessons for entrepreneurs looking to start the next high-growth business.
Before Day 1: Jeff Bezos‘ Inspiration for Amazon
Most startup stories begin with a flash of insight or an "aha" moment from the founder. Jeff Bezos‘ idea for Amazon was more methodical than that. He came up with the concept of an online bookstore after deliberately researching which products were best suited for internet sales.
In early 1994, Bezos was working as a senior vice president at D.E. Shaw, a Wall Street hedge fund. Fascinated by the rapid growth of internet usage, he began researching potential business opportunities. After making a list of 20 product categories, Bezos determined that books were ideal for internet retail due to their low cost and universal demand.
With that insight, he wrote up a business plan and began the process of founding what would become Amazon.com. Bezos quit his lucrative finance job, moved to Seattle, and funded Amazon‘s launch with around $300,000 of his own savings.
Amazon‘s Garage Startup Days
Amazon began coming to life in Jeff Bezos‘ Seattle garage in early 1994. While building out the initial website, Bezos also had to tackle logistics challenges that would make or break the business.
Bezos and his small team needed to establish relationships with book distributors and publishers to stock Amazon‘s catalog. They also had to figure out how to package and ship orders, and develop Amazon‘s customer service infrastructure.
This garage startup phase was critical for laying the groundwork to support Amazon‘s official launch in July 1995. Bezos has said those early days "required working 14 hours a day, seven days a week, and it lasted for over two years." That tireless work ethic remains core to Amazon‘s culture today.
Amazon‘s Website Launch – July 16, 1995
After months of preparation, Amazon.com went live to the public on July 16, 1995. The company had raised additional funding through a second round of angel investment in early 1995.
Amazon‘s website was relatively simple at launch, but carried a vast selection of books – over 1 million titles. That inventory was over 10 times larger than a typical bookstore‘s, giving Amazon a key competitive advantage right out of the gate.
In the first month, Amazon received orders from all 50 states and 45 countries without paid advertising or PR. By September 1995, sales had reached $20,000 per week. It was clear Bezos‘ concept for online bookselling showed promise.
Below are some key stats on Amazon‘s early growth:
- Within 30 days: Orders shipped to all 50 U.S. states and 45 countries
- By September 1995: Sales over $20,000 per week
- By December 1995: Sales over $600,000 per month
- Inventory over 1 million titles at launch
Amazon‘s Watershed IPO – May 15, 1997
Amazon went public just two years after its website launched, highlighting the company‘s staggering early growth. The initial public offering (IPO) took place on May 15, 1997 at $18 per share under the stock ticker AMZN.
The IPO raised $54 million for Amazon, but skeptical analysts doubted if the company could ever turn a profit. Amazon silenced the skeptics – its stock price closed at $23.50 on day one and ended 1997 at over $47 per share.
Going public provided crucial capital for Amazon to continue its rapid expansion. It also gave Bezos even more leverage in steering the company towards long-term market leadership rather than short-term profitability.
Diversifying Beyond Books – Late 1990s
While Amazon started out selling only books, the company diversified quickly to cement itself as a one-stop e-commerce destination:
May 1997 – Launched online music store. Amazon later dominated digital music sales with the launch of the Kindle and its acquisition of Audible.
August 1998 – Acquired Internet Movie Database (IMDb), expanding into entertainment industry data.
September 1998 – Began selling DVDs and videos, laying groundwork for Amazon Prime Video.
April 1999 – Invested in online grocery delivery service HomeGrocer.com, foreshadowing the Whole Foods acquisition.
November 1999 – Launched consumer electronics store as Amazon expanded beyond media into general retail.
This early diversification was key in established Amazon‘s playbook of aggressively expanding into myriad categories and product verticals.
Acquisitions and Strategic Investments Power Growth
In addition to internal innovation and category expansion, Amazon has grown through key acquisitions and strategic investments:
August 1998 – Purchased IMDB for $55 million, providing valuable entertainment industry data.
October 1998 – Led a $60 million investment in expansion-stage online retailer Drugstore.com.
April 1999 – Paid $42 million for a minority stake in HomeGrocer.com to enter online grocery.
August 2017 – Acquired Whole Foods for $13.7 billion, giving Amazon physical grocery stores.
April 2019 – Purchased mesh wi-fi pioneer Eero for $97 million to expand into smart home.
These deals gave Amazon strategic footholds in new markets while also acquiring talent and technology.
The Launch of Amazon Web Services – Driving Profitability
In 2006, Amazon made a game-changing move by launching Amazon Web Services (AWS), its cloud computing platform. AWS provides on-demand cloud services and infrastructure to businesses and now generates enormous profits.
In Q1 2022, AWS brought in $18.4 billion in revenue. While that‘s just 16% of Amazon‘s total sales, AWS delivered over 60% of the company‘s operating income. Cloud services generate much higher margins than Amazon‘s low-margin retail operations.
The success of AWS highlights Amazon‘s willingness to diversify beyond its core business model when it sees potential in a new market.
Amazon Today – The Everything Company
Amazon has come a long way since its inception inside Jeff Bezos‘ garage. The company now has over 1.6 million employees and over 200 million Prime members worldwide.
However, Amazon still adheres to many core principles established at its founding:
- Customer obsession – Making decisions based on what‘s best for the customer comes first.
- Long-term focus – Amazon is willing to sacrifice near-term profits for long-term domination.
- Innovation – Bezos fosters a culture of innovation by empowering small teams and quickly experimenting.
- Bold bets – Entering new markets aggressively is embedded in Amazon‘s DNA.
For entrepreneurs looking to start the next Amazon, this innovation-focused and customer-centric cultural DNA is an example worth studying. Very few companies make it from garage-based startups to trillion-dollar behemoths, but Amazon provides a blueprint for rapid growth that other founders can learn from.
