How Jeff Bezos built his empire from Amazon to Washington Post
Jeffrey Preston Bezos went from being a boy with a love for how things work to being the man who built Amazon.com into an online retail powerhouse. Now he is buying The Washington Post for $250 million, at a time when the print publishing industry is enduring steep declines in revenues and readership.world Updated: Aug 06, 2013 17:36 IST
Jeffrey Preston Bezos went from being a boy with a love for how things work to being the man who built Amazon.com into an online retail powerhouse.
Over nearly two decades, he built Amazon.com from a scrappy online bookseller into an e-commerce empire, shook up the print publishing world with the Kindle e-reader and even started a space travel company.
Now he is buying The Washington Post for $250 million, purchasing one of the most celebrated US newspapers at a time when the print publishing industry is enduring steep declines in revenues and readership.
The question is, what happens now?
"There will of course be change at The Post over the coming years," Bezos wrote in a memo to Post employees published Monday on the paper's website.
"The Internet is transforming almost every element of the news business: shortening news cycles, eroding long-reliable revenue sources, and enabling new kinds of competition, some of which bear little or no news-gathering costs," he wrote.
"There is no map, and charting a path ahead will not be easy. We will need to invent, which means we will need to experiment."
With Amazon, Bezos built an e-commerce empire that changed how we buy everything from books to toilet paper - first on the Web, and more recently on our phones.
He is also a driving force behind the rise of digital content, launching the first e-reader that gained mass acceptance and challenging market leader Apple with the sale of downloadable music and movies.
It's not clear what Bezos will do with the Post. He told the newspaper in an interview that he doesn't want to imply that he has a specific plan.
"This will be uncharted terrain," he said.
Bezos's penchant for experimenting reportedly dates to such a young age that one widely-recounted story tells that while just a toddler he tried to dismantle his own crib.
His mother was a teenager when she gave birth to "Jeff" in Albuquerque, New Mexico, on January 12, 1964.
She remarried when her son was about four years old, and he was legally adopted by his Cuban immigrant step-father who worked as an engineer at a major petrochemical company.
His mother's family had been settlers in Texas, where Bezos spent many a summer working at a ranch owned by a grandfather who had retired from a job as a regional director at the US Atomic Energy Commission.
Bezos was enchanted by computer science when the IT industry was in its infancy and he studied engineering at Princeton University.
After graduating he put his skills to work on Wall Street where by 1990 he had risen to be a senior vice president at investment firm DE Shaw.
He surprised peers by leaving his high-paid position in about four years later in 1994, to open an online bookseller called Amazon.com, which has grown into a massively successful online retail empire and made Bezos a multibillionaire.
Bezos is said to have been intrigued by US law exempting online sellers from collecting sales tax in states where they don't have real-world shops or facilities.
He and his wife, MacKenzie, whom he married in 1993, set out on road trip to Seattle, a city with an abundance of tech talent and proximity to a large book distributor in Oregon. While MacKenzie drove, Bezos wrote up the business plan that would become Amazon.com.
With Bezos's parents and a few friends as investors, Amazon began operating out of the Bezos' Seattle garage on July 16, 1995. The first book sold on the site was no "Harry Potter" or "Fifty Shades of Grey."
It was Douglas Hofstadter's "Fluid Concepts and Creative Analogies: Computer Models of the Fundamental Mechanisms of Thought."
The business grew much more quickly than anyone expected. During the first month, Amazon sent out orders to eager buyers in every state and in 45 different countries, and customers were soon clamoring for more than just books.
"We actually started to get emails from customers saying, 'Would you consider selling music, because I'd really like to buy music this way, and DVDs, and electronics?'" Bezos told the AP in 2005.
Amazon began trading publicly in May 1997, despite never having turned a profit. It took five more years and the addition of products such as compact discs, toys and consumer electronics before the company reported any net income.
Today, Amazon.com Inc. remains the world's largest online retailer, and Bezos has amassed a $25 billion fortune, based on the most recent estimates by Forbes magazine. In 1999, he was named as Time Magazine's "Person of the Year."
At Amazon's helm, Bezos has been instrumental to the growth of e-books and other digital content.
The first Kindle came out in 2007. It was not the first e-reader, but it was the first to gain mass-market acceptance, and it paved the way for an entire family of Kindles that the company now offers.
Bezos has been a regular at prestigious TED gatherings of where the brilliant, successful, famous and influential gather to explore perspective-bending "ideas worth spreading."
Bezos has also pursued a long-time interest in privatizing space exploration.
By the time he headed off to college, he was already disenchanted with damage being done to the Earth and curious about the potential for humans to build a future elsewhere in the cosmos.
In 2000, he founded a company called Blue Origin to develop a vertical takeoff and landing rocketship that would fly passengers to suborbital space.
"We're working, patiently and step-by-step, to lower the cost of spaceflight so that many people can afford to go and so that we humans can better continue exploring the solar system," Bezos said in an early blog post at the Blue Origin website.
"This is a long-term effort, which we're pursuing incrementally, step by step."
The Blue Origin team pulled off the first test of a suborbital Crew Capsule in October of last year, Bezos said in a blog post.
Bezos also funded an undersea mission to retrieve engines used to launch the Nasa Apollo 11 moon mission in 1969, and is spending tens of millions of dollars on a 10,000-year clock.
The clock being built inside a Texas mountain is meant to encourage people to break from typically short-sighted thinking to view actions and decisions in terms of what they will mean over millennia.
"He is a premier disruptor," said Forrester Research analyst Susan Bidel. "If someone is going to think outside of the box and figure out a way for newspapers to thrive, then maybe he will be able to do it."
Many are now anxious to see what can Bezos can do for the media industry, after he announced he is buying The Washington Post and other newspapers for $250 million.
This news came as a shock to observers, many of whom thought the Graham family would never sell. It also sparked hope among the ranks of reporters beset by seemingly endless cutbacks.
Among his champions are the members of the family selling the paper, including Katharine Weymouth, who promised to stay on as publisher.
As some journalists shed tears, others expressed optimism.
"Jeff Bezos seems to me exactly the kind of inventive and innovative choice needed to bring about a recommitment to great journalism," said Carl Bernstein, whose co-reporting of the Watergate scandal that brought down President Richard Nixon in the 1970s cemented the newspaper's identity as a political watchdog.
"Mr. Bezos knows as well as anyone the opportunities that come with revolutionary technology when we understand how to make the most of it," Weymouth said in a letter to readers. "Under his ownership and with his management savvy, we will be able to accelerate the pace and quality of innovation."
The news surprised industry observers and even the newspaper's employees.
"I think we're all still in shock," said Robert McCartney, one of the newspaper's Metro columnists and a 31-year veteran. "Everybody's standing around the newsroom talking about it. ... I don't think much work's getting done."
To observers, the Amazon chief is eminently qualified to be a newspaper owner: He's rich, he's innovative and he's willing to live with slim profits. That's proven by his running of Amazon since its foundation. In July, Amazon.com reported an unexpected loss in the April-June quarter even though revenue grew 22% to $15.7 billion.
Besides The Washington Post and its website, Bezos is taking the Express newspaper, The Gazette Newspapers, Southern Maryland Newspapers, Fairfax County Times, El Tiempo Latino and Greater Washington Publishing.
Alan Mutter, a media consultant and former newspaper editor, said this deal marks the first time a newspaper has been bought by a "digital native," not someone entrenched in the print medium.
"Here's a guy who's going to re-envision the newspaper from top to bottom and we'll see what we get," Mutter said.
(Inputs from AP, AFP)
First Published: Aug 06, 2013 09:43 IST