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Back in 1995 financial analyst Jeff Bezos decided to try taking advantage of the fact that internet usage was growing at the rate of 2,300 percent a year. He came up with the idea of selling books online, and thanks to investments from friends and family, he launched an online business from Seattle. He called it Amazon. Just eight years later Bezos had the wealth to seriously investigate pursuing a life-long interest in making space tourism possible. Five years on from that, Bezos is worth an estimated $8.2 billion, head of a company that recently offered a 134.8 percent return to shareholders. But Wall Street remains wary.
Over the years financial analysts have had a difficult time deciding what to make of Amazon. When the bubble burst on the dotcoms, they said the company was over. Amazon would just never be able to stand up to the likes of Wal-Mart and Target once they started selling online efficiently. Indeed, the stock price drastically plummeted. Then in 1999 when Bezos insisted on pouring a huge amount of capital into developing five automated warehouses instead of the advised four, many people said his decision was just too risky. He had $1 billion in sales and invested $300 million on fulfilment centers, and analysts got predictably jittery. In both cases, however, Bezos's instincts have been right, stock prices have soon gone up and up, and Amazon is now the biggest retailer online.
Bezos's confidence despite scaremongers stems at least in part from the fact that his company philosophy has not changed since back in 1995. He has three things in mind at all times, and every decision is made with them as a starting point. They all revolve around the customers and their demands: the best selection, the lowest prices, and cheap, convenient delivery options. Though Amazon's product line has developed into a much wider remit than the original plan, now including everything from electronics to gardening tools to jewels, nothing is added that does not meet the three criteria.
Awareness of which products can be made profitable and which are more difficult has been about trial, research and instinct, but is also thanks to Bezos's ongoing nerve....