0:00

hey, quiet, listeners in the time

0:02

between when we recorded this episode, and

0:04

now when we're releasing it, longtime

0:07

amazon board member and madrona

0:10

venture founder tom wahlberg that

0:12

we passed away and we wanted to

0:14

instead of our usual funny

0:17

cold opener here take a a moment and

0:19

dedicate this episode to

0:21

tom tom

0:22

had put a huge impact on david

0:25

my careers tom also such

0:27

a huge impact on seattle and

0:29

really the whole technology ecosystem helping

0:31

to build the law firm perkins gooey in

0:33

the telecommunications firms western wireless

0:36

and mccall cellular that really

0:38

make up a large part of the infrastructure

0:40

we all use for our phones today

0:43

we also were lucky enough to our have

0:45

time on acquired and it was really wonderful

0:47

getting to spend the time in person with him

0:49

gosh for five years ago now david

0:52

i am was the longest

0:54

serving amazon board member other

0:56

than just himself i believe

0:58

twenty three years was the lead

1:01

independent directors and had a huge impact

1:03

on the company

1:04

the course on us all remember tom

1:06

he gave back in so many wonderful

1:09

ways in this episode is

1:11

dedicated you tom all birds thank you

1:30

welcome to season eleven episode

1:32

to have acquired the podcast about great

1:34

technology companies and the stories and playbooks

1:37

behind them i bend gilbert and i am the

1:39

cofounder and managing director of seattle based

1:41

pioneer square labs and are venture fund

1:43

p s l ventures and i'm david

1:45

rosenthal and i'm an angel investor based

1:48

in san francisco and we are

1:50

your hosts are story today

1:52

is probably the single most

1:55

interesting business of the past thirty

1:57

years for the longest time david

1:59

an i resisted doing an amazon episode

2:01

because it almost felt like a trope

2:04

or that we needed to do something maybe more

2:06

unexpected we've tackled bits

2:08

and pieces like our interview with former

2:10

board member tom all birds in the amazon

2:13

i p o episode or episode hooker

2:15

alfred lynn on zappos and

2:17

of course by referencing be those his famous

2:19

two thousand and nine speech about outsourcing

2:22

anything that does not make your beer tastes

2:24

better over and over over

2:27

again and over but

2:30

we decided that no self respecting technology

2:32

business historians like ourselves could skip

2:34

over this incredible sumwalt us

2:36

death defying and defying and very

2:38

very successful story today

2:41

will be tackling amazon.com

2:44

the website that sells books and

2:46

now everything else on the world wide web

2:49

as you know amazon is also

2:51

one of of the rare companies that build a completely

2:53

separate and dominant business and

2:55

amazon web services and we'll save that for

2:58

our next episode this

3:01

this is for long-time

3:03

students of amazon and newcomers

3:05

alike so, while you may be familiar

3:07

with jeff's flywheel diagram or

3:10

the themed door desks, or the barons

3:12

article from the dot com bust headlined

3:14

amazon dot bomb i

3:16

can tell you from staring at my mountain of notes

3:19

that a there are some details in here that

3:21

i certainly didn't know and you may not have

3:23

known either a

3:26

good story too

3:28

yeah

3:28

i'm so glad we did walmart the first

3:31

we almost didn't

3:32

it it is perfectly sets the

3:34

stage for amazon oh

3:36

yeah yeah the big thing that we're

3:38

doing today is we're going to try and answer the question

3:41

how it at amazon succeed to such an

3:43

incredible degree that it has were

3:45

so many of their dot com siblings

3:47

burst into flames the

3:50

first we have some big big news

3:52

here at acquired world hq

3:54

after seven years of beating

3:57

back requests we are finally launching a

3:59

merge store we've been holding onto this

4:01

bit for a while because we can think of know better episode

4:03

to launch our internet storefront

4:05

than here and the amazon episode so we're partnering

4:08

with what i think is the single highest

4:10

quality merchandise platform on the internet

4:12

cotton bureau they make really nice stuff

4:14

that i have tons of in my closet we're launching

4:17

with men's and women's t shirts

4:19

sweatshirts tanks and even one

4:21

sees if you like david

4:23

have a little one at home and

4:25

die if you decide to be first in

4:27

this first wave of people to

4:30

support the fashionable acquired merged you

4:32

should tweet out us out acquired fm and

4:34

we will read tweet some of our favorite

4:36

so the linked is in the show notes or you can go to

4:38

acquired dot a family slash

4:41

store well for are presenting

4:43

sponsor this episode we have a company that we're very

4:45

excited about fund rise on

4:47

the walmart episode they broke some news right

4:49

here on acquired about a fascinating new

4:51

product called the fund rise innovation

4:53

fund this enables their customers

4:56

to not only invest in real estate

4:58

on the platform but also now private

5:00

late stage growth tech companies

5:03

this is obviously interesting because

5:05

that's not an asset class that retail investors

5:08

previously had access to you had to wait until

5:10

the ip oh and now they've democratize

5:12

that and opened the asset class to lots

5:14

and lots of people just like

5:16

they funded fund rise itself it

5:19

is also a great news for pounders

5:21

as well because retail capital

5:23

is a great source of capital if you're

5:25

late stage private company the

5:28

we're back here today with ben miller at the

5:30

ceo and cofounder of fund rise

5:32

to bend can you share some more info for listeners

5:35

on the innovation fund crab me guys

5:37

snow wonder you guys out like our story

5:40

because in building sunrise we unintentionally

5:42

created an alternative venture capital the

5:45

chat in everybody has a love hate relationship

5:47

was in two thousand twelve

5:49

thousand twelve the idea of raising money

5:52

for real estate on the internet

5:54

and within a few years we had a hundred and fifty

5:56

copycats one hundred fifty different companies trying

5:59

to do what we're doing with a billion dollars

6:01

you venture funding so then

6:03

roll for eight years to now

6:06

all of those companies

6:08

we we got our business the what

6:10

happened do we have like a lot better strategy

6:13

to be have their execution like i'm saying

6:16

the main reasons they were venture

6:18

funded and we weren't and

6:21

a venture funds ran their standard playbooks

6:24

basically ran those companies out of business success

6:27

for look for evocative here suzuka they totally

6:29

different pass we didn't think we wanted to resist

6:32

jerusalem as your money was my years fancier

6:34

how we could do something the severn one

6:36

of our innovations is ramos or innovation

6:38

and we work with the as you see you lot a new ideas

6:41

there we figured out a way to raise money from

6:43

the public but stay private

6:46

and since then sunrises raised a hundred

6:49

and fifty five million dollars from

6:51

the public the state and

6:53

private company the we figured out

6:55

a way to do and we did it scale the

6:58

innovations like a hybrid being public

7:00

and private it's more passes is

7:02

more aligned as lower costs

7:04

because we will have a twenty percent carried interest

7:07

that we have to pay venture funds

7:08

then what are the terms for investors

7:10

on the sand one right doesn't

7:12

take a carried interest it's just one

7:15

point a five percent atmosphere

7:17

year which is much less than the

7:19

to and twenty of a typical venture fund

7:22

we basically became when the biggest will say

7:24

investors in the world work today

7:26

by deployment or top twenty in the world

7:29

so we wondered basically

7:31

okay we're doing real estate what's next could

7:33

we do for other tech companies like other private

7:35

tech companies and , we

7:37

went back to the as he seized on a couple years with

7:39

them and

7:41

figured out how do it and are launching the

7:43

sunrise innovation fund

7:45

which is a registered find that raises money from

7:47

the public but invest in private

7:49

tech companies it's gonna be available to all

7:52

us investors anybody in

7:54

the us

7:55

then invest in it and ten dollar minimum

7:58

it's a totally democratize the access the

8:00

hope is basically we had to disrupt venture capital

8:03

the wayward disrupted real state private equity

8:05

we're launching the sunrise innovation

8:08

fund at the bottom the

8:11

the economic cycle

8:14

my experiences you can't disrupt our financial

8:16

sector except for in a downturn

8:19

the knitting

8:21

it's a crossover fund so

8:23

we'll own public and private tax so

8:25

if you go public

8:27

i'm going to sell all your shares so

8:29

we basically or a much more long

8:31

term investor because of the structure

8:34

of the fun i think it's the future

8:36

of venture capital

8:37

the were the first direct to consumer

8:40

the see that allows the public to invest

8:42

into private tech companies

8:44

we won't be the last

8:46

this is a mega trend i'm

8:48

a bet you that within a five years the

8:50

likes of address and hurwitz sequoia

8:53

also launched funds just like this

8:55

fascinating well listeners if you

8:57

are considering a growth round of capital if you're

9:00

an entrepreneur thinking in the next year i'm gonna

9:02

raise a around you should definitely definitely

9:04

explorer raising some of it with the fund

9:06

rise innovation fund just shoot

9:08

an email to not v c at

9:11

fund rise dot com that's n o t v

9:13

c at fund rise dot com and

9:15

if you're an individual looking for exposure

9:17

to growth stage tech companies especially

9:20

in this new climate we are in you can go

9:22

to fund rise dot com slash innovation

9:24

and are huge thanks to fund rise well

9:27

after you finish this episode go check out the lp

9:29

show by searching acquired lp show in

9:31

the podcast player of your choice our

9:34

next episode will be an interview with austin for

9:36

dera who many many of you know

9:38

from the acquired slack where he's

9:40

been a member since like twenty sixteen

9:43

austin is at the salon of foundation

9:45

very deep in the world of web three and crypto

9:48

and gave us a great great primer

9:50

on the world of web three today

9:53

so check that out and if you want early access

9:55

it's already live for paid acquired lps

9:58

at acquired data from slash

9:59

p

10:01

right now without any further

10:03

ado david onto

10:05

our story and listeners the show is not

10:07

investment advice david and i may have investments

10:10

at certainly have investment is certainly

10:12

a companies were the biggest this time do

10:14

your own research and this is for entertainment purposes

10:17

only ah man amazon who

10:19

is my not only my idea

10:21

dinner peck at the arena

10:23

so has

10:25

been like my favorite company and

10:27

stock in number one position in my portfolio

10:30

for at least ten years

10:32

now i think more than ten years

10:35

credible company

10:36

i have some conversation with you

10:38

in maybe twenty fourteen

10:41

about how you basically

10:43

one day amazon stock by owning seattle real estate

10:46

and you are doubly long amazon with your very

10:48

concentrated holdings in the company and owning

10:50

your house in seattle that's the only time i've

10:53

ever sold any meaningful amount was

10:55

to buy our first seattle house because

10:57

of a i needed the capital for the down payment and

10:59

i figured i was like essentially getting a tracking stuck

11:02

on amazon

11:04

the

11:05

right well we start i'm

11:08

very fun place today which

11:10

is the end of

11:12

the most recent acquired upset on what

11:15

then i realized i could have sworn that

11:18

we said this on the episode but i went back

11:20

and read the transcript we didn't you

11:22

tweeted about they the

11:25

end of made in america

11:27

sam rates in nineteen

11:30

eighty two literally as he lay

11:32

dying see him weldon rates

11:34

of the end of the biography could

11:37

a walmart type story still

11:39

occur in this day and age

11:41

of course

11:43

somewhere out there right now there's

11:45

someone with good enough

11:47

ideas to go all the way

11:50

providing that someone

11:52

wants it badly enough to do what

11:54

it takes

11:56

oh such a good quote and he was writing that

11:58

in nineteen eighty two well just those

12:00

with id aiding on what ideas

12:02

could work on the internet while working at

12:04

the he saw oh my god

12:07

if he only knew it was like the profits

12:09

speaking yes he

12:11

was describing

12:13

reality in history as it was happening

12:15

and he had no idea amazing

12:18

yeah

12:19

well speaking of books we have a

12:21

big thank you that

12:24

we go the brad's down and

12:27

the everything store brad is just the

12:29

best we've done episodes with brad in

12:31

the past the everything stories

12:33

the canonical history of the first

12:35

twenty years of amazon for sir we

12:37

actually talks to brad the other week

12:39

okay preparing for this we had to

12:42

it was both a question of like okay with ten

12:44

years or whatever it's been of history what else would

12:47

you want to say that wasn't in the everything store

12:49

in also give some context around it no

12:51

doubt in my mind it is one of the best

12:53

isn't his books written know the last twenty

12:56

years in order to down and for sex how it's a thriller

12:59

yeah actually said this when we're talking to him is

13:01

like there's two reasons to write a

13:03

business but one is it's a thrill or the

13:05

other is it's a how to manuals and

13:08

the everything stories both of those

13:11

right

13:13

we jump

13:14

from nineteen eighty two in

13:16

bentonville arkansas to

13:20

albuquerque new mexico

13:23

on january twelve

13:25

nineteen sixty four

13:27

where

13:28

wine and jeffrey

13:30

christine jorgensen

13:33

there

13:34

many people listening especially if you've read

13:36

that book you know the story but

13:39

it's pretty amazing

13:41

when young jeffries mother

13:44

became pregnant she was sixteen

13:47

his father ted jorgensen was

13:50

eighteen the went to the

13:52

same high school in albuquerque and they

13:54

were dating at the time turns

13:56

out their fathers actually worked

13:59

together and if the story

14:01

there was a very specific reason

14:03

why both of their families lived in

14:06

albuquerque and that is because

14:09

their fathers worked together at

14:12

sandia national laboratories

14:15

which for folks you don't know that laboratory

14:17

was established i sync because it played

14:19

a huge part in the nuclear programs

14:21

development for united states though

14:24

los alamos new mexico which i think

14:26

is laker hour hour and a half

14:28

north of albuquerque i think that's

14:30

where the manhattan project happened in that's

14:32

where the atomic bomb was developed

14:35

after world war two though

14:38

quite a while after world war two the government

14:40

split the us nuclear

14:42

program

14:43

the into like research and

14:46

dot was los alamos in a bunch other labs

14:48

around the country and an actual lake

14:51

management of the weapons history

14:53

like nuclear research a nuclear energy and

14:55

there's nuclear weapons though

14:58

the india is the organization

15:01

the belt by the government and

15:03

it's actually private operation now that

15:05

manages nuclear weapons and so

15:07

both

15:08

the up a this is biological grandfather's

15:11

work there together and yes

15:15

mom jackie heard

15:17

the ad was named lawrence pressed

15:19

in dc eats pop he

15:21

went by poppy seed the actually not

15:23

only work at sandia

15:25

he was the head with of sandia oh

15:28

wow he ran the

15:30

you has nuclear weapons program

15:33

and before that he was one of the original members

15:36

of darpa whoa the encourage the

15:38

development of the arpanet the internet but

15:40

are battalions obviously there was much after

15:42

his i'm fat man you can't

15:44

make this stuff up that crazy

15:46

yeah

15:47

though their kids managed to get

15:49

pregnant in high school and

15:52

, and jackie decide to

15:54

get married before baby is born

15:56

which they do the marriage

15:59

doesn't last the of it's not really

16:01

set up for success here and

16:03

when jeff is about eighteen

16:06

months old the end up getting

16:08

divorced jackie just

16:10

mom take the baby moves back

16:12

in with her parents consists mostly

16:14

like eighteen or nineteen years old at this point

16:17

eventually a couple years later when jeff

16:19

it's for jackie remarries

16:21

and moved in with her new husband who

16:23

is a petroleum engineer for

16:26

exxon and her

16:28

new husband's name is mcgill

16:30

and yell

16:32

they those parents

16:33

the day he goes by mike mike

16:36

davis yeah jeff bezos is

16:38

adopted father and his story

16:40

is incredible and actually

16:43

sort of touches or stories in a very

16:45

small a half make

16:47

and from cuba

16:49

and he was a student

16:51

at our like elite private high school

16:53

in cuba when the revolution happening caster took

16:55

over and his parents

16:57

were able to get him out and send him

17:00

to miami wasn't there some like

17:02

xl tracing programs through the church

17:04

for gifted youngsters there was

17:06

might was part of it so

17:09

he can shift , miami

17:12

the know anybody in america doesn't

17:14

speak english he ends up

17:16

from miami getting shipped

17:18

to wilmington delaware where

17:20

he lives in a group home

17:23

home he attends silly

17:26

the end of highschool which added that probably

17:28

doesn't mean is imbued with your high school and bloomington

17:30

like i did but i played sports against sally

17:32

guy add this guy

17:34

awesome he and jackie last year to steve a twelve

17:37

million dollar donation

17:39

to silly the animal which i

17:41

think might be like the largest single

17:44

donation to a catholic high school

17:46

in america wow mike and

17:48

jackie must have really made some smart

17:50

investment decisions as well as to be automatic

17:53

canada investments oh

17:55

we will get into it david how does

17:57

every single episode have some tied as se

17:59

and so you know delaware i know addict were taken

18:01

favorites here we totally though

18:04

make is super smart he quickly learns

18:06

english and by the next year

18:09

when he graduates from philly the animal

18:11

skins of getting a full scholarship to

18:13

go to university of

18:16

study and and while

18:18

he there he pays his living expenses

18:21

the working his way through college by working

18:23

at a local bank where he meets on

18:27

my the get married make adopts

18:29

gf is his adopted son the

18:32

gonna have to my children's and when mike

18:34

graduates he gets a job

18:37

with x and you'd end up working his whole

18:39

career had x on and becoming

18:41

like i'm pretty senior executive or a very

18:43

senior executive so see hear them capital

18:46

to invest a few years later the to we will

18:48

get indians and they moved the family

18:51

you houston a make

18:53

story is just amazing be

18:56

those grew up for his dad worked

18:58

for exxon like standard oil slicks

19:01

there's , connection right and grew up in houston

19:04

around the space program me where i couldn't

19:06

get into blue origin on this episode but i

19:08

think the last time we would have

19:10

sort of talked about just space

19:13

roots would have been i

19:15

sync on the virgin galactic

19:17

episode we're talking about the development of the

19:19

x prize and sen

19:21

that college organization for students

19:24

for these think it's exploration and development

19:26

of space something like that but basically

19:29

this college space clubs jeff was

19:31

the head of that club the president of the one and

19:33

maybe the founder of it at princeton and

19:35

so there's is very clear through line from

19:38

spending time during his childhood

19:40

in houston through that and

19:42

obviously blue origin

19:44

i didn't think about that definitely

19:46

pop dc his grandfather has a

19:48

big influence on jeff which will talk

19:50

about him on sex and introduces him the

19:52

science fiction and space he was

19:54

involved was involved data darpa but

19:57

since other yet grew up in

19:59

houston during the apollo era

20:01

this is the heyday of nasa the

20:04

record so just goes to a montessori

20:07

preschool in houston and he

20:09

gets put into a new

20:12

program for gifted young students

20:14

in the houston elementary school system

20:17

greedy and at the time there

20:19

was a woman named julie ray

20:21

who was writing a book about this whole

20:24

new concept of way or the street streams

20:26

in elementary school education the

20:28

and houston is one of the kind a leading

20:31

school systems it's doing this so she

20:33

goes demonstration and to say hey

20:35

there you know the student

20:37

at i could shadow and like

20:39

see how gifted education

20:42

is workings and they like we have exactly

20:44

the student for you jeffery

20:47

basis i mean there's a number

20:49

of ways we can highlight how special it

20:51

just was even as a very

20:53

very young child by

20:56

this is a pretty darn good one he was

20:58

v student chosen for the person

21:01

writing the book on this type of special

21:03

programs in the school

21:05

selected for special gifted programs

21:08

and he was like one of one of one and he would go

21:10

on to be valedictorian of many things

21:12

in his life but here's sort of a first

21:14

or proxy for that

21:15

super go there is a quote in the book so it's

21:18

a written under either pseudonymous could

21:20

go tim in the book to protect

21:22

the identity as a child who can't yet pick if

21:24

they want publicity right told lebanese

21:26

in elementary school so this is quoting

21:28

there where'd you lead author

21:31

asks the him

21:33

and deaf teacher what grade level

21:35

he's performing at so he must be

21:37

and like second or third grade at this can

21:40

a teacher says i really can't say except

21:42

that there's probably no limit to

21:44

what he can do given a little guidance

21:47

foreshadowing so

21:49

right around the time when the family moved to houston

21:52

part

21:53

retires from see india and

21:56

he n just grandmother move

21:58

back to back big i'm

22:00

in west texas and by

22:02

big grants i mean a twenty

22:05

four thousand acre ranch

22:08

in west texas that is one

22:10

hundred miles

22:11

the the nearest

22:13

retail outlet and starting a defined

22:15

the just for when this happens

22:17

yasmin every summer

22:20

on the ranch living with his

22:23

remember as a hundred miles from

22:25

the nearest store and he

22:27

just hanging out with his grandparents as pretty four

22:29

minutes and in a number of ways one of which is

22:32

that his grandpa well one

22:34

his remote and so you can go buy anything any

22:36

d be unbelievably self sufficient but like what

22:38

an interesting playground for the mind being around

22:41

his hyper intelligent grandfather

22:43

and having sort of just have nothing but time

22:45

and space

22:46

the rat race got this new book bit and

22:48

jeff talks about this to like i think this is

22:50

one of the most formative experiences

22:54

of the person that becomes jeff

22:56

bezos

22:57

because for the month studies there every summer they have

22:59

to do everything would be build their own

23:01

tools this perform their

23:03

own veterinary work is a story

23:05

about performing surgery on one of

23:07

the bird dogs tales it's

23:10

crazy the rebuilding

23:11

farm equipment when it breaks how

23:14

have we had we went to earn fifty episodes

23:16

without a bird dog never coming up and now two episodes

23:18

in a room in or out in bird dogs i don't either

23:21

clearly there's a there's a connected he has

23:23

great retailers growing up around bird dogs

23:25

yeah like you said man

23:27

not like you just doing manual labor

23:30

out , the countryside he's doing

23:32

it with this guy who ran

23:34

the nuclear weapons program for america america

23:37

it's so a hard to do a podcast

23:39

about amazon and jeff bezos now because

23:42

the company and jeff as a person

23:45

or a symbol for so many different things

23:47

to so many different people but i think

23:49

one of the service things

23:52

that hit me when he of course i follow

23:54

jeff on on instagram and you see him and

23:56

sort of his cowboy boots with the blue origin rockets

23:58

and arab origin when i first saw that was before really understanding

24:01

his pass i was like once or a disingenuous

24:03

like tech billionaire guy throws on as cowboy

24:05

boots and heads to west texas and he's like

24:08

acting like i'm one of the locals

24:10

but like but that's what it grew up doing

24:12

on the farm yeah yeah i'm the

24:15

ranson van horn texas

24:17

and introduce new were

24:19

both blue origin the unreason

24:21

to be so young

24:22

they could make that white in west texas and

24:24

there's a lot of space spring replace launch rockets there's

24:27

literally space to

24:29

launch a euro hurry the only

24:31

are and so when

24:33

just a teenager for i called on

24:36

my dad to florida

24:38

first to pensacola and then to miami and

24:40

is linked to get of so cool that on tap

24:42

for this episode to make stories he comes

24:45

back to miami heat all these years later

24:48

this big time executive at x on which i

24:50

think was the largest company

24:52

in america at that point in time had

24:54

to be yeah because from like literally

24:56

steps off the plane to miami has nothing

24:59

and now he brings his family back to miami

25:02

with so much so cool

25:04

the yeah

25:05

have you said graduates high school

25:07

has valedictorian and like all

25:10

great talented high school graduates goes on

25:12

to princeton bias

25:15

, course a few of his fellow

25:17

prince donations while he's in

25:19

college studying that really what they had a you say

25:21

it matters is it yes the i'm a prince

25:23

tony and crazy or or

25:25

a tiger for being assessed pretenses

25:28

here a couple of his fellow tigers while

25:30

just studying computer science at

25:33

princeton

25:34

michelle obama

25:37

jeff wilkie is also there

25:39

at the same i'm i don't think be i don't think they were friends

25:41

jeff was a couple years behind but they were there at the same time

25:45

getting so when the of graduates

25:47

from college in eighteen

25:49

eighty six he does not

25:52

going to finance railway or he goes

25:55

and works for a start up he works

25:57

as company outside tell which

26:00

been founded by a couple columbia

26:02

computer science professors and

26:05

was developing like up very

26:07

very early network

26:10

technology for high speed treating applications

26:13

ah they were like tech for

26:15

our noses exactly like today

26:17

all the stuff is co located in data centers

26:19

with the nasdaq and that it's new york stock

26:21

exchange kind of a precursor to that

26:24

then he did that for two years

26:26

and then in nineteen eve he's like

26:28

he's like i'm see this working for

26:31

the start up building the

26:33

infrastructure for this then

26:35

completely new the

26:37

point of finance of like quantitative trading

26:40

and finance those guys our customers

26:42

are actually making a lot more money yeah

26:45

it's gonna work for them

26:46

it is pretty good devin great experience

26:48

at that point in time being around

26:51

early network computing was

26:53

pretty beneficial to give him not

26:55

just the sort of like basic understanding

26:58

of how it works but also like one

27:00

all the numbers mean like when i'm watching bits

27:02

and bytes fly back and forth or i'm looking at pack

27:04

accounts or i'm looking at what hard work and support

27:06

what bandwidth what are the practical

27:09

implications so you can sort of seal

27:11

the types of applications you could build using

27:14

infrastructure

27:15

the day the reason we're spending so much time

27:17

on the early years and

27:19

now wouldn't spend a lot of time on this chapter it's

27:22

, like one of these steve jobs things

27:24

like you can connect the dots looking for a but

27:26

when you look back to just

27:29

passed to duffy who will talk about actually

27:31

has like this quote that he gives them breads don't

27:33

like if we got three y

27:35

m c you know from birth to

27:37

jeff bezos today like it makes total

27:40

sense

27:41

it's really hard to cover amazon as a business

27:43

without it being a jeff bezos biography

27:45

because in so many ways amazon

27:47

isn't an extension of jeff bezos

27:49

his brain like it really is a company

27:51

made in his image and that's kind of the case

27:54

for a lot of these types of people like

27:56

you look at apple does very much the case for steve

27:58

jobs also by the way and adopted

28:00

son of immigrants the i've

28:03

always found that interesting but in

28:05

some ways i'm thinking okay cool let's get

28:07

to the amazon story but even

28:09

though it's called amazon at

28:11

least for a very long time cohen it's first

28:13

decade it really is just jeff bezos

28:16

at scale

28:17

probably arguably for longer than that i mean

28:19

until recent times yup

28:21

so in nineteen eighty nineteen eighty

28:23

leaves site l the stardom

28:26

any go to work actually been begging

28:28

i believe almost surely i don't know for certain

28:30

i can't imagine he's not doing

28:33

quantitative trading and finance like either

28:35

technical guys a computer science graduates

28:37

he had been working in this sort

28:39

of network operations for early

28:41

stage client finance

28:43

as probably what he's doing so he goes to the

28:45

investment bank bankers trust

28:48

way to endure series of murders as always

28:51

happens on our streets becomes part of

28:53

going to be interested in database coming

28:55

back up later in the episode yup

28:57

yup he's smart and start of see you

29:00

computer science like you've got this entrepreneurial

29:02

kana bug so on

29:04

the side he became friends

29:06

with a guy named whole the minor

29:09

what sir probably bunch

29:11

of bell to go off and they almost

29:14

start a start of together

29:16

at this point time the idea was it was gonna be a financial

29:18

news letter idea but they become buddies

29:21

that doesn't work out but

29:23

whole the you like right around this time right after that

29:25

goes on to start seen at crazy

29:28

the internet was so freaking small then

29:31

and also like if you were to squint in

29:34

describe seen editor really high level

29:37

it's like distributing the written word

29:39

over this budding worldwide web which

29:42

is sort of what amazon death yeah ultimately

29:44

at distributed them through an abstraction layer

29:46

where you print the words on paper first and then you ship

29:48

the paper but they would go on to start

29:51

businesses riding the same ways

29:53

and i think the remain friends for

29:56

what unsettling for a while if cannot still

29:58

to this day and

29:59

those those always sort of chuckle at that where

30:02

people with they wait you're starting this business

30:05

is meant to take advantage of this new piece of technology

30:07

and the new pizza technologies particularly good at distributing

30:10

hypertext over a globally available

30:12

networks and the way that you're doing that is

30:14

specifically not by putting the text in

30:16

the browser which can read the hypertext directly

30:19

onto a screen rent a does always tackle

30:21

about that but it's funny to this day

30:24

you still can't really search books you

30:27

google search something you're going to get websites

30:29

you're not going to get books and despite

30:31

amazon and google and everyone trying the

30:34

book publishers have sort of very

30:36

physically drm these books such

30:39

that you cannot

30:40

search them and a very digital natives

30:43

internet way yeah funny even

30:45

today though

30:47

the ninety ninety

30:49

the after the fateful call

30:52

from a head on her the happy

30:54

where he is he was thinking about starting the start then

30:57

this is jeff to go interview the

31:00

new

31:01

from financial for that has been

31:03

started a couple years earlier

31:06

on be he saw

31:09

and

31:11

yeah i think unexpectedly

31:14

completely false and lot

31:16

of folded levy many levy many

31:19

and answer so and

31:21

history on the he saw for fucks you don't

31:23

know i didn't know lot of this so

31:25

the founder he

31:27

saw was a stanford

31:29

computer science phd from

31:32

the eighties who then went on to become

31:34

the computer science professor at columbia

31:37

university i assume with some

31:39

other professors you went on to go

31:41

found by tell that just originally

31:43

where hillary yeah he's like a serious

31:46

is a serious academic

31:49

he's actually back in academia now he

31:51

won the gordon bell private lama is

31:53

back in academia yeah oh wow not

31:56

at our institutions but he's a member of the national

31:58

academy of engineering and the nasa academy

32:00

of sciences like he's the real the that's

32:03

father when he was growing up with

32:06

a finance professor if you feel it

32:08

since we'd always kind of been interested in signing

32:10

his but had studied computer science

32:12

and was an academic in nineteen eighty

32:14

six he laughs

32:17

columbia to join morgan stanley and

32:20

then started d e shaw in nineteen

32:22

eighty and i think his model

32:24

for this was jim simons

32:27

who in nineteen eighty two

32:29

started

32:30

renaissance technologies and renter i

32:32

bet actually a lot of people listening don't know like

32:34

i just said that name and a lot of people like know when

32:37

you're out a grade what are these guys talking about

32:39

the it won't hit you as like

32:41

oh right the from that consistently produces

32:43

the greatest returns of all time but they're not taking

32:45

any more capital and so you can get or capital

32:48

in dude rented

32:50

simon is on real

32:52

i'm pretty sure they are the best performing

32:54

investors of all time full

32:57

stop pure he insists we

32:59

should do an episode on rent acts if we can

33:01

get any information i mean that's the interesting thing about

33:03

rent act as like it's a fortress

33:05

though supposedly the

33:08

core medallion fund which is

33:10

now all private capital of

33:12

rent tech employees and simon's himself

33:15

like is no outside investors in who

33:17

averaged a sixty six point

33:19

one percent annual return

33:22

from nineteen eighty eight to two

33:25

thousand and eighteen thirty dear

33:27

lights at sixty six percent

33:29

compounding nobody's ever beaten that we

33:32

may need to go read grade rr berkshire

33:34

hathaway epic yes seriously seriously

33:36

but that was the inspiration for t saw and

33:38

d saw has not perform that well but of

33:41

hedge funds today that people can actually

33:43

invest in like these on a

33:45

couple others

33:46

the legacy of that right and

33:48

well this was the business model of the esau

33:51

being a coin hedge fund they

33:53

always resisted the idea that that's what

33:55

the find them they very much thought of themselves

33:58

as the sort of group bugs credence

34:01

artisans who you know invest

34:03

in a businesses started businesses and came

34:05

up with new ideas and viewed the world through

34:07

different lenses and sure this is how they make money

34:09

but desk our d s

34:12

co that was so much more than that

34:14

the whole or and i think this is what yes

34:17

level as to about the from and

34:19

about david so jeff joins

34:22

he rises to the ranks super quickly

34:24

he becomes a fourth senior

34:27

vice president at the farm so like highest

34:29

level below david and

34:31

i assume by far the youngest

34:34

music in his mid to late twenties at this point

34:36

he's like the future like a rising star

34:39

had these then he and david

34:41

become super close now

34:44

there's not a lot written about the as who

34:46

it's your maybe see why in a second but

34:48

like we were very close and and i gotta imagine

34:50

the david and i saw himself as

34:53

a the mentor yeah

34:55

oh for sure so just

34:57

loves it there he's involved in recruiting

34:59

bringing in all these super smart people

35:01

of all disciplines in the d saw

35:04

and ammo was kinda like we just want

35:06

to find the smartest people in the world

35:09

it doesn't matter if they know nothing about business

35:11

and finance is telling bridgewater

35:13

today these canada inheritor of this leads

35:15

to bring a mean he earth and will figure

35:17

out stuff for them to do so a

35:20

bunch of people who become really key

35:22

early amazon employees jeff hold

35:24

and i believe bassist is involved in recruiting

35:27

to would later of course join amazon or right

35:29

around two years after it sounding amazing

35:31

how that happens conspicuously close to

35:34

two years exactly after just left

35:36

isa he have at me like there's a non

35:38

compete or something not

35:40

solicit nicholas lovejoy

35:42

in another

35:45

in grad who joined the firm henry

35:48

scott oh and

35:51

that's what we were referring to have just falling

35:53

in love with he saw in more ways

35:56

than one catch up and mckenzie

35:58

would get married

35:59

i think technically mckenzie was the

36:02

first amazon play yes

36:04

it's interesting i don't know technically in

36:06

terms of like literally where she the first

36:08

person to become a w tude

36:10

employee but certainly she was already

36:13

doing work i think particularly

36:15

on accounting working with legal

36:17

and a setting up operations of the business

36:19

before just hired shall cap and who was

36:22

the first field engineer of the first sort of full

36:24

time hire other than here mckenzie

36:26

jim bob mckenzie was like

36:28

w like an employee of the bit as doing

36:30

work on the bus as the so within

36:34

the saw a kind of like you said do

36:36

this quite trading firm and like yeah that's how they make the money

36:38

but they view themselves as being an

36:40

entrepreneurial and starting these other businesses

36:43

and doing stuff and sir david has jeff

36:46

, on a bunch of this stuff first

36:48

project he leads his building

36:50

out he called the third market business

36:52

and there was an idea that's decree

36:55

that sort a separate market from

36:57

the exchanges were retail

36:59

investors could trade without paying

37:02

get that time you're paying a lot and commission's

37:04

to your burgers and us typical

37:06

which by way this feels like it's probably the predecessor

37:09

to dark pools oh

37:11

i mean if they're making transactions off exchange

37:14

and then bad shipping them to exchanges

37:16

shipping get lower fees that is sort

37:18

of the financial world that we live in today were lots

37:20

of transactions have transactions aussie exchange than that's

37:23

sort of the predecessor term pain afford

37:25

predecessor term minute they were at the early days of all

37:27

the stuff and robin hood and citadel

37:29

and all that or they definitely were of because

37:32

at the same time the internet is it

37:34

so early know we're in like earlier

37:37

you know mosaic netscape

37:39

days like ninety two ninety three by

37:41

david and def given their backgrounds

37:44

and like david having done his phd at

37:46

stanford the know all these people that

37:48

are starting the internet anything

37:51

basis and south and the when he was think

37:53

in college he had

37:55

use the internet when it was fully just

37:57

command prompt based and there was

37:59

gooey there was just a very basic

38:02

protocols and a unix command terminal

38:04

and you can maybe tell that

38:06

was around at that point but yet there was

38:08

no world wide web yes

38:10

though david ingested really excited about

38:13

and david kind of resigns

38:16

jeff as one of the most senior people in the from

38:19

that the two of them are gonna work together

38:22

a come up with business plans that they're

38:24

gonna start the internet opportunities

38:27

within the saw so i

38:29

think the first one that they do is

38:32

a online retail

38:34

brokerage for financial training like a tree

38:37

is a competitor he trades and i don't

38:39

know for sure but i'm wonder if that may be

38:41

the third market business but just once working

38:44

on my might have like transformed into

38:47

this because it makes so much more sense over

38:49

the internet yeah totally agree they

38:51

also started juno west that

38:53

begin reasonably successful like i remember seeing

38:55

commercials for i didn't see these for it and

38:57

that was like really email

39:00

juno was one of the first three

39:02

the email services that's right on the web

39:05

and then they merged with net zero

39:07

and became and i s p n

39:09

an email provider yeah

39:12

but it was started by jeff

39:14

in david within these ali both of

39:16

these silly that's what they're

39:18

doing during these years i think that

39:21

sleep just main job is the

39:23

to them would me every week they would

39:25

brainstorm ideas jeff

39:28

we didn't go off for the rest of the week and like

39:30

research seat at the feasibility the ideas and

39:32

then like work on them with employees

39:35

with into you saw on and it wants them and

39:37

they didn't this the couple

39:39

this is and they were they only

39:41

ones doing this it's interesting how there are

39:43

other people who observed oh

39:45

my god the internet and it

39:47

was like okay cool like this is clearly

39:49

the next technology wave like we had the pc

39:52

what do we do with this thing and microsoft is

39:54

one that comes to mind this is the rich barton

39:56

story with expedia so that raise a

39:58

division of microsoft looking

39:59

the internet

40:01

potential businesses and saying

40:03

how do we start them and of course i think

40:05

long term listeners will know that the way expedia

40:08

ended up happening is rich basically said hey

40:10

this online travel agency thing needs to happen

40:12

if we keep it in microsoft too long it's going to kill

40:14

or i found it out brokering that deal d

40:16

e shaw i think was actually before microsoft

40:19

in realizing okay the internet is going to be huge

40:21

by a handful of years but the

40:23

thing that sort of led to the dot com mania was

40:26

people realizing all at once oh

40:28

my god the title wave is coming

40:31

your the were ahead of the pack row

40:33

sure there were not many folks that we're recognizing

40:36

this at this point i'm so

40:39

they've , the the online trading

40:41

saying that you trade competitor that ended

40:43

up getting acquired by merrill lynch they

40:45

did you know and

40:48

, a brainstorming all these other ideas

40:50

and did he come up with an

40:52

idea that they both get are

40:55

you excited about and has brad

40:57

writes about in the book the

40:59

name for the idea is

41:02

the everything store which ends up

41:04

being a pretty great name for name book the

41:06

concept was in one way

41:09

amazon dot com exactly

41:13

there will also a pretty fundamental

41:15

difference in the idea at this

41:17

point

41:19

the idea

41:20

with that you could you the internet to build

41:23

a whole new intermediary

41:25

layer between consumers

41:27

and manufacturers that would bypass

41:30

traditional retail so you know the

41:32

discounters while my team are you know sears

41:35

spell that physical stuff you're gonna cut them all

41:37

out and this kind

41:39

of beautiful internet businesses

41:41

this businesses this be discovered

41:43

an algorithmic matchmaker between

41:46

customers that wanna buy stuff and

41:49

manufacturers who makes the us and that sort

41:51

of what amazon is there's definitely this

41:53

like well you know the internet is gonna change

41:56

so much that factory

42:00

we'll just be able to sell right to consumers online

42:02

and it's sort of like rounding away all

42:04

the yup messy middle or that

42:06

we talked about on our episode with jeremy from italic

42:09

of like you've got the manufacturers

42:11

you've got the product designers you've got the distributors

42:14

you've got the brand than you've ultimately

42:16

out retail and maybe you can own two

42:18

parts of that but you're probably not going to own all

42:21

of that yeah it was like this sort of very

42:24

low rez picture of the way that retail

42:26

landscape worked this totally

42:28

reeks of like

42:30

nineteen ninety nine era m

42:32

b a business plan like

42:34

you know how many drop out a h b s

42:36

it got his start of idea of his his plan

42:38

going to get funded and go you know that

42:41

to their credit they were a few years ahead of this

42:43

and league nobody knew at the time the nobody actually

42:45

knew how the internet was gonna play out yep

42:48

the seemed may be possible

42:51

even if it would work your be beautiful

42:53

right like you wouldn't have to actually do anything

42:56

he tries sit in the middle and take

42:58

a tax on transactions

43:00

and so the idea was that the manufacturers would

43:03

drops hit us visa

43:05

, directly with customers

43:08

of add right out of their factory which is

43:10

totally which is competencies yeah totally i

43:12

got skin or it's but importantly

43:14

it well jeff is still at the

43:16

he saw any sort of regularly

43:18

doing this i'd eating he starts to dive

43:20

really deep on what categories could make

43:23

sense for this as a starting place yes

43:25

so the to them they're both very excited

43:27

about this as they should be commerce

43:30

pretty big market has the that turns out

43:32

like resale in the america is may

43:35

be other than

43:36

us real estate maybe the biggest market in

43:38

the world yeah auto i

43:40

think and maybe food so

43:42

they like you said benny he quickly

43:45

realize okay we're going to do the as he

43:47

can to start with the everything store you

43:49

need to pick one category

43:52

build that build the consumer

43:54

brand consumer brand the website and the traffic

43:57

and then you can add categories overtime

43:59

stop it out for jeff goes off you know

44:02

during his weekly research activities

44:04

new research is nice sides and

44:06

books the ideal category for

44:08

a few reasons one they

44:10

are perfect commodities

44:12

so like a paperback copy of books

44:14

tax is a paperback copy

44:16

a book x doesn't matter where you bought it how

44:19

you bought it to the customer experience it's

44:21

basically the same thanks the up to

44:25

there are only two

44:27

major

44:28

the actual distributors of physical books

44:31

in a marietta the many publishers

44:33

but distributors you actually like have

44:35

the inventories the books ingram

44:38

and baker and taylor and do you

44:40

know where ingram is located in

44:42

oregon right

44:43

yeah roseburg oregon a convenient

44:46

one day drive or less have a drive

44:48

from seattle the other def with not thinking

44:50

about that at the time now not

44:52

yet they'll be the next there was actually

44:54

pretty easy to internet markets

44:56

because all you need to do is establish accounts

44:59

with ingram in maker

45:01

and taylor and then you get the vast majority

45:03

of the commercial market for commercial bucks

45:06

you have access to humans

45:08

there are a few other things too like especially

45:11

books are great because when you compare i'm you know with music

45:13

there's six different record

45:15

labels that you'd have to get each of them on

45:17

borthwick he considered music because obviously shipping

45:20

books and shipping cds pretty

45:22

comparable experience from adds

45:25

weight perspective and packing perspective

45:27

and all that so to the extent that it's gonna be shipping to people

45:30

then you sort of have to just look at the industry dynamics

45:32

of isa those because just like books cds

45:34

are perfect copies perfect

45:36

commodities are many dimensions they're better

45:38

than but lighter weight to saved

45:40

the internet packaging and sara yes

45:43

but with books on like were music

45:45

now we talked about know taylor swift episode their six

45:47

labels there are forty two hundred

45:50

book publishers so well you can

45:52

sort of very quickly get the whole catalog

45:54

of the to distributors

45:56

if you end up actually negotiating with publishers

45:59

through the whole lot

45:59

of individual publishers and all

46:02

these small publishers actually do matter

46:04

because there's three million different

46:06

books that are active and in print worldwide

46:09

hand the long tail matters the of it's

46:11

not just like everyone wants to

46:13

listen to taylor swift and books there are

46:15

lots of rare

46:17

or out of print books that people totally

46:19

want the genre is there's no choose

46:21

his yeah and the status quo is going

46:23

to barnes and noble and special ordering something and

46:25

paying a bunch of extra money for that so it can

46:27

arrive in a month

46:29

think david and jeff considered

46:32

music and cds as well a

46:34

i suspect this suspect this the reason they decide

46:36

to go with bucks actually ran

46:39

out staff in the everything

46:41

starts could with that huge

46:43

diversity of products three million

46:45

bucks imprints you could build

46:48

a store online at that simply could not

46:50

exist in any other way you

46:52

could build a true superstore

46:54

with exhaustive selection and customers

46:57

value selected borders

46:59

and barnes and noble they'd like say their

47:01

books superstores births i think

47:03

the only stopped lakes eighty thousand

47:05

or so maybe titles like which is a lot

47:07

but it's not three million it's not the infinite

47:09

shelf space of the internet's also worth

47:12

noting barnes and noble and borders each

47:14

only had less than twelve percent of

47:16

the retail market each so it's not like

47:18

there was somebody who already had eighty percent market

47:20

share that you had to go fights you ostensibly

47:23

could

47:24

reasonably quickly become barnes and noble

47:26

or border scale the

47:29

even if it's important they are which is that only

47:32

with the internet could you really build this

47:34

true superstore and bezos

47:36

keys on this very quickly in the very

47:38

first interview that he gave with willing

47:41

to in the the sources it was actually

47:43

at a our conference in seattle

47:45

someone sort of just interviewed him right outside the conference

47:47

and i think people as price seen the city or

47:49

screenshots of this video it's worth watching the whole

47:51

few minutes because it's unbelievably prescient

47:54

he basically points out if

47:56

you can do something in the old paradigm

47:59

you should and when there's a new paradigm like

48:01

the internet

48:03

you basically want to find things that

48:05

you could not do any other

48:07

way you i love that in order

48:09

to really exploit the power

48:11

of the new paradigm oh that such agree

48:13

playbook theme and we did highlight here

48:16

like of i mean i'm thinking about with three gray

48:18

later

48:19

i like it's so obvious yeah you

48:21

can build stuff in web three that you can

48:23

do in web to and like a certified

48:25

and partly , you want to stuff

48:27

you wanna find stuff that you can't do as

48:32

don't go create the banner ad and

48:34

slap it on the internet and be like see it's like a magazine

48:36

but on the internet you know invent the feed format

48:39

totally oh that's so great i hadn't seen

48:41

that interview that's awesome so

48:43

jeff you know like we've been sailing he just

48:45

keeps getting more and more excited about this the more

48:47

he digs in and he in a couple other

48:49

employees at the shah and they start researching

48:52

competition because there were other

48:54

online bookstores at this point in time there was books dot

48:56

com a few kind

48:58

of local physical the noise

49:00

around the country had started up ecommerce internet

49:02

storefronts you could buy books from

49:05

x y de local bookshop around the country and have

49:07

them shipped to you and the so they start experimenting

49:09

with competition they realize

49:11

that nobody's got the

49:14

whole catalog so to speak the infinite selection

49:16

it's still all in this gonna

49:19

old school physical paradigm like yeah

49:21

we'll put up an ecommerce storefront will put up a

49:24

web sites that were just selling our inventory

49:26

out of the cedar what we got in the back here

49:28

and importantly at it was basically was basically the

49:31

notion of a web server was

49:33

a very new saying they were html

49:35

pages and you could put those up on

49:37

add a server so that somebody using

49:40

a browser could hit it and get that

49:42

static page backs but this notion of like

49:45

code executes when you had

49:47

a u r l to dynamically generated page

49:49

that really wasn't happening yes and

49:51

so are you could ever do as fetch the static sites

49:54

and so it can i just relied

49:56

on whenever bookstore put up that

49:58

page to make sure was updated with what's that

49:59

in store

50:00

so definitely

50:02

there

50:03

the big idea

50:05

there is a window to go do this

50:07

right now oh somebody's going to figure this out

50:10

you know the stats on internet gross

50:12

oh yes to get the wrong rate

50:14

i think that stat is that

50:16

who as just looked at two different

50:19

research reports and basically approximated

50:21

the middle what he was analyzing was basically

50:23

the amount of traffic

50:25

the number of packets sent over

50:28

the internet web packets sent

50:30

over beer of ninety ninety three he

50:33

grew twenty three hundred percent

50:36

in that single year i noted

50:39

and ask this is the error the

50:41

over it's about in the bucks it grew

50:43

twenty three hundred

50:45

from january first

50:47

nineteen eighty three to

50:50

january first nineteen ninety four way

50:52

he was off by a hundred yes

50:54

we have used to hundred and thirty

50:56

thousand percent what

50:59

seminal i miss that guy he would later

51:01

quote and speeches that he read this report and

51:04

he saw the traffic was growing twenty

51:06

three hundred percent and like insulted

51:08

him out of his complacency and realize this ideas

51:10

huge i gotta go like do this on my own

51:13

holy crap now i'm it's i

51:15

was going to make the point of like if you see

51:17

anything growing twenty three hundred percent

51:19

you should start a business on top of it but

51:21

i didn't realize that i was with

51:23

the outdated stat there's a minimum threshold

51:26

at which you should stop doing whatever you're

51:28

doing something like the recess and

51:30

go do that

51:31

that threshold is below twenty three hundred

51:33

percent but if you see something that's going to

51:35

hundred and thirty thousand

51:38

percent in one year you

51:40

really gotta quit your job and

51:42

go dude as it is crazy like you

51:44

know being and venture we sort of look for like

51:46

out what's the next technology wave

51:48

and what's the next paradigm and is it web

51:51

three and is it some form of

51:53

the vr a are assume you

51:55

and i have never seen this in our professional lifetimes

51:57

we have never witnessed this know we've never

51:59

seen anything within an order of magnitude

52:01

of this mobile didn't happen this quickly

52:04

there was no single year in mobile that was

52:06

nearly as fast as the rapidity

52:08

of the internet adoption and so

52:11

a lot of us inventor and and start up land right

52:13

now are starting businesses and investing in businesses

52:15

that it's innovating around the edges

52:18

and it's innovating on stuff that's pretty much sure

52:21

there's nothing that is de ser a session

52:23

a barrel opportunity of suddenly

52:25

everyone appeared over there are using

52:27

garbage tools and all we have to do is make a pretty

52:29

good tool and everyone's already on the thing

52:32

yeah i think reasons

52:34

cause the episode right now and highlight everything

52:36

comes from dislike all we're doing

52:38

now is lake capitalizing

52:41

, the ripple effects or the aftershocks

52:44

of this giant earthquake of which we

52:47

will probably never see another one in

52:49

our lifetimes the internet

52:51

it is all the internet and

52:53

this is the beginning everything now is still

52:55

does derivative of the internet

52:58

yeah the idea that suddenly everyone is

53:00

networked together and can obtain any information

53:02

very quickly there wasn't even really an interaction

53:04

model yet it was just about obtaining information

53:07

yup there were get requests but there weren't post

53:09

requests and are of that's technically true but

53:11

that's one reasonable way to think about it is you

53:13

can load any web page but there weren't a whole lot of

53:15

forms you could take things into to send information

53:17

back to those companies of those servers

53:20

you know in just head and lived experiences

53:22

all like happening at once he's been working on the internet

53:24

stuff

53:26

there's this new idea that they're working on

53:28

that

53:29

i'm more excited about in any the other ideas

53:32

he reads these reports you know it dot

53:34

amount of complacency feeling then

53:37

i've got this really cozy job here at

53:39

the you saw but i might need to leave

53:42

and go do this on , own

53:45

what happens next is sort of ah open

53:47

for debate mean

53:50

, jeff wrestles with this decision for

53:52

a little bit team mckenzie they just get

53:54

married they love their lives in love

53:56

d saw the love living in new york

53:59

jeff really

53:59

kennedy heir apparent to take over

54:02

saw and actually like i said it just

54:04

a few years later in two thousand and one

54:07

david ayers goes back

54:09

to peter science research leaves

54:12

the from in the hands of other people like very

54:15

reasonable that that could have been jazz if

54:17

he hadn't left yeah absolutely

54:19

just cause of his parents called up make jackie's

54:22

as like what's a d or nearly all

54:25

you should stay a d so i of

54:27

course very successfully a great salary

54:29

your well thought of and your industry

54:32

how many twenty eight year old thirty

54:34

year olds have the kind of

54:36

success an opportunity that youtube many

54:39

just thinking about what to do any talks about his

54:42

later he comes up with this framework

54:44

for making the decision that he calls

54:47

the regret minimization framework

54:50

minimization love this really this it's such a beautiful

54:52

way to think about big life decisions

54:54

like this i've used it it's really great

54:57

absolutely me too framework for people

54:59

who don't know is

55:01

, i'm eighty years old and

55:03

i'm looking back back my

55:05

life if i look back at this fork

55:07

in the road here which her

55:11

am i going to regret the least what

55:15

will caused the least amount

55:17

of regret when i am eighty and

55:19

i'm looking back and like and like that decision

55:21

and do i regret it more or

55:23

less than what the alternative would have been

55:27

and when you look at it that way the answer

55:29

is to brain dead obvious when

55:31

he's a d looking ,

55:33

and he's like well well could

55:35

have built have but i

55:37

stayed a d saw that can be some

55:39

serious reader and and he really any system

55:42

entrepreneur it ultimately wasn't really

55:44

a choice because he wasn't

55:46

gonna take over this thing and be a manager

55:48

of someone elses vision that holy

55:50

on basis which is funny to i've actually

55:53

been coming to think like i've used the regret minimization

55:55

framework to make decisions for

55:57

thinking about preparing

55:59

to the epa

55:59

the

56:01

i would have made all those decisions anyway to the

56:03

justification people are gonna do

56:05

what is in their blood to do as

56:07

and and you're so right this was

56:09

in his blood he was gonna do this

56:12

no

56:14

he goes to tell

56:15

the even

56:17

you can leave picking to build the everything

56:20

store on his own he had not

56:22

only am i gonna leave to be an entrepreneur to capitalize

56:24

on the internet i'm gonna do

56:26

the exact thing that we've been the most excited

56:28

about

56:29

that i've been working on on your

56:31

time heat yes this is where

56:34

the legend is david like

56:37

what go for walks and they

56:39

go off from the skyscraper office

56:41

in midtown manhattan go , a walk

56:43

through central park friendly to three hours

56:46

they talk to at all and

56:49

david supposedly says to death

56:51

look you got a future here i

56:53

very much want you to stay and build this

56:55

within the he saw

56:58

i will compensate you appropriately it

57:00

will be worth your time but

57:03

i also understand the

57:06

, impulse like i left morgan

57:08

stanley to start the esau i

57:10

get it i've been in your shoes

57:13

and if you leave in and leave in this on your

57:15

own like i'll regret it but you have

57:17

my blessing

57:19

that's the legend of our went whether

57:21

that actually is what happened i got i genuinely

57:23

don't know but it's a very nice legends

57:26

let's put it that way you're suggesting that it could

57:28

be a little bit more adversarial

57:30

or that there could be a little bit of the

57:33

of ill will have hey i thought you were working

57:35

on this under the umbrella of the saw

57:37

right well the

57:39

have go to raise money for amazon and he

57:41

doesn't raise it from david yeah right like

57:43

that would be an obvious source of capital and

57:46

it's not like just magically had a check waiting

57:48

for him just , up taking

57:50

the better part of a year to

57:52

raise one measly million dollars

57:56

over sixty meetings ultimately

57:58

from twenty two different investor the

58:00

to sell twenty percent of the company

58:03

he ordered her is that first million if

58:05

it was an option for him to call david and shortcut

58:07

that

58:08

you would think he would have and the end of the day

58:10

none of this first because i

58:13

am one hundred percent convinced

58:15

there is no doubt in my mind nor i think said

58:18

there be in anybody's that had just

58:20

stayed

58:21

do you saw there would be no amazon regardless

58:23

of it being worth just time or compensation

58:26

like this is the beauty of venture capital

58:28

and the american entrepreneurial system usually

58:31

building things that are great are hard

58:33

and usually when things are

58:35

hard if you are just an employee making

58:37

employee making and somebody else owns the

58:39

company you don't have level of maniacal

58:43

progress yes that

58:45

amazon didn't until it is certainly

58:47

certainly did so we're gonna talk about

58:49

so and the idea would completely

58:52

flawed like the business plan was worthless

58:54

because lots of people had their business

58:56

plan see their own it was completely unrealistic

58:59

right

59:01

it is interesting thinking about who

59:04

the internet appealed to at this moment

59:06

and it appealed to jeff

59:09

worked with on jeffs radar because

59:11

just as a nerd yes he has

59:13

a cs background he was really into star

59:16

trek he loved obscure novels

59:18

he loved storytelling and

59:21

the internet appealed

59:23

to technical librarians at

59:25

this point in history that's probably the best way to describe

59:29

the cult following that bootstrap

59:31

to the original network of the internet it was academics

59:34

and it was people who loved libraries

59:36

and programming it was also the counterculture

59:39

movement for the legacy of the counterculture

59:41

movement which is kind of died down and morphed into

59:43

this out in california for sure

59:46

so this is the sort of thing that put it on just

59:48

radars it's also the sorta thing

59:50

that really defined

59:53

who would be willing to join jeff

59:55

on this crazy adventure it wasn't

59:57

that he was going and recruiting right away

1:00:00

the the very sort of best and

1:00:02

brightest out of the top institutions

1:00:04

with the shiny as resumes and who could really

1:00:06

do anything it was people whose heart

1:00:08

burned for i want to make it easier

1:00:10

for the world to consume knowledge

1:00:13

i want to make it easier to find rare out of

1:00:15

print books

1:00:16

that was the sort of seed

1:00:18

of the original culture of the people who are

1:00:20

attracted to amazon both as customers and employees

1:00:23

which was not the shaw know

1:00:26

and i think this is also another reason why jeff really struggled

1:00:29

with it because he

1:00:31

loved esau he met his wife or

1:00:33

right he loved those people eventually

1:00:35

that dna would come into amazon but yeah

1:00:37

let's talk about sell captain and

1:00:40

the first non mackenzie employee

1:00:42

the amazon

1:00:44

the move the story along so he decides is doing this

1:00:46

he decides okay i need to incorporate

1:00:49

the company he picks a few candidates

1:00:51

cities that he could operate the business

1:00:53

end because manhattan is not a wonderful

1:00:55

place to be running a sort of bootstrap

1:00:58

start up at the time by this point

1:01:00

time i think he had finally figured it out the

1:01:02

suit i might actually have to

1:01:05

the delivery of comedies buxton and ship i'm back

1:01:07

out the customers and midtown manhattan

1:01:09

is

1:01:10

not agree place for that right when

1:01:12

he starts sort of narrowing it down there's three cities

1:01:14

on the list seattle's obviously one

1:01:16

of them have a candidate city in part because

1:01:18

of it's proximity to roseburg oregon

1:01:21

i believe the second candidate city was

1:01:23

boulder but anyway they end up deciding

1:01:25

on seattle and of course part

1:01:27

of it is that proximity reasons the other part

1:01:29

is related to the sort of tax

1:01:32

environment of washington state as folks

1:01:34

know there is no state income tax in washington

1:01:36

state much like florida or texas

1:01:39

but you would think even just history florida

1:01:41

history texas would write mcmurray nice

1:01:44

but there's another big one too

1:01:46

the tumor big ones one of them as the access

1:01:48

to technical talent yes

1:01:50

microsoft was just absolutely in its heyday

1:01:53

and jeff respected what bill gates

1:01:55

and crew had built and thought you know what opening

1:01:57

up a business right next to microsoft if i'm going

1:01:59

to be attracting [unk] gamers seems a a good idea

1:02:02

and what's the fourth

1:02:04

well the for after

1:02:07

rewind a little bit to the recruiting of sell

1:02:10

sell , jeff can

1:02:12

introduce to actually to reduce our colleague

1:02:15

and sell whether engineer

1:02:18

a programmer who lived in

1:02:20

santa cruz california and it worked for a bunch

1:02:22

of kenneth early silicon valley start ups

1:02:25

in a moody amy stored

1:02:27

brand and the whole earth catalog

1:02:30

oh yeah absolutely

1:02:31

yeah at the whole earth drugstore

1:02:34

in menlo park

1:02:35

which is like a rare books retailer

1:02:38

right he was counterculture with seventy

1:02:40

was like curiosity is that stewart

1:02:42

thought was cool and would be in the whole earth catalog

1:02:45

and and they sold him out of the back of a track in

1:02:47

menlo park perfect and

1:02:49

for listeners who are like whole earth catalog stewart

1:02:51

brand what are you talking about well there's

1:02:54

one other element us

1:02:56

tech history which will quickly sort

1:02:58

of job you out of your seats and

1:03:00

go oh that's what we're talking about here

1:03:03

when steve jobs who is sort of

1:03:05

widely attributed to

1:03:07

the quote stay hungry stay foolish

1:03:10

when foolish when invoked that he

1:03:12

was citing stewart brand and

1:03:14

it was printed in the cover i think

1:03:17

the inside cover of the whole

1:03:19

earth catalog it was of the last issue

1:03:21

the last issue from when they start publishing

1:03:23

it to the phone to the iconic photo from

1:03:26

outer space of

1:03:28

the earth as seen from outer space and

1:03:31

that said stay hungry stay for this and

1:03:34

will get hotel inspiration for steve jobs

1:03:36

get some cel was working there which

1:03:38

is so cool cause then stewart sort of

1:03:40

gets woven into the amazon story and in

1:03:43

this way of course but then bezos also

1:03:45

has reverence for the whole earth catalog

1:03:47

and gets to spend time with sort brand and a bunch of those

1:03:49

folks down the line to

1:03:51

yeah i know they work on them

1:03:53

o'clock of along now i think it is

1:03:55

that and doesn't your clock which has a investment

1:03:57

firm basis expeditions i think it's a it

1:04:00

was one of the earliest sort of projects

1:04:02

that he backed when he became individually wealthy

1:04:05

hm oh how did jeff become

1:04:07

individually wealthy hm hm

1:04:09

hm it wasn't necessarily from selling his amazon

1:04:12

shares will get to that yup you're not going to

1:04:14

believe it when we tell that story how jeff bezos

1:04:16

became a billionaire it had nothing to do with amazon

1:04:18

dot com that'll be the clickbait if we were

1:04:20

like a youtube native podcasts

1:04:22

that would be the title of the episode in fact

1:04:25

maybe will clip this into a segment and put her on the acquired

1:04:27

stories channel we

1:04:29

do a photo shoot of us in like crazy put like

1:04:32

oh my god my final third

1:04:34

asks you to bro mance

1:04:36

right so

1:04:38

the jacket synergies to shell

1:04:40

the old part of this deep legacy of

1:04:42

everything so much valley start ups you

1:04:44

know what becomes the internet i believe

1:04:47

the original intention was just some attendee we're gonna

1:04:49

move out santa cruz and they're going to build

1:04:52

amazon in silicon valley like dot a why wouldn't

1:04:54

you yeah maybe a little further to

1:04:56

oregon to ingram spent like that that much

1:04:58

farther fights but i

1:05:00

didn't realize how recent this

1:05:02

had happened like this all the same time in

1:05:05

nineteen ninety two the

1:05:07

supreme court has ruled

1:05:09

on a decision that retail

1:05:11

companies do not have to

1:05:13

collect sales tax

1:05:16

in states where they don't have

1:05:19

the goal

1:05:20

it's like operations right now it

1:05:22

doesn't mean that customers

1:05:25

don't have to pay sales tax

1:05:27

when they buy items from a retailer

1:05:29

that is not physically located in the city means

1:05:32

that the burden is on the customer instead the

1:05:34

return not on the retailer

1:05:36

which of course every individual's going out and saying what

1:05:38

purchases did i make last year that i should

1:05:41

be paying sales tax on that may not

1:05:43

have been charged to me by the over getaway

1:05:45

trip their taxes yeah people pay taxes

1:05:47

if is easy they one of it's hard

1:05:49

they're just find that read about this is

1:05:51

like oh no no nanette and we

1:05:54

can not be this company in california not

1:05:56

new york not new york not texas

1:05:59

from

1:05:59

we now florida what

1:06:02

is the venn diagram of like close

1:06:04

to book distribute or has

1:06:06

access to technical talent not

1:06:08

to populace but enough technical

1:06:11

people i can hire but not so much

1:06:13

that i'm cannibalizing cutting out a huge

1:06:16

swath of my market seattle

1:06:18

is the obvious choice which you

1:06:20

wouldn't pick today because

1:06:22

this self perpetuating thing because

1:06:24

of amazon and the

1:06:27

ecosystem that they and microsoft word jointly

1:06:29

create here seattle's population

1:06:31

has been going crazy especially

1:06:34

with people with unbelievably high disposable

1:06:36

income and so you would not

1:06:38

want to in this day and age make that

1:06:40

same decision execute their strategy

1:06:42

and make that decision about washington state but

1:06:45

totally jeff angeles hadn't created amazon yet and

1:06:47

so therefore it was a perfect place actually

1:06:49

i can resume with this my own personal story

1:06:52

the head zero connections

1:06:54

to see allina know anybody i was exactly

1:06:56

the same way when i came to seattle and due to with the

1:06:58

place where you got of easy job offer and you are like

1:07:00

i want to be a b c the land of opportunity

1:07:04

and you will the land of opportunity for jeff

1:07:06

basis you know the lead in is that

1:07:08

he and mackenzie you're driving across country they realize

1:07:11

this they like veer hard to the

1:07:13

raid in texas and said ago and

1:07:15

us to california they go northwest

1:07:17

to seattle meanwhile i think they've been on

1:07:19

the phone with lawyers are a lawyer

1:07:22

incorporating the business while they have been driving

1:07:24

out and that's the whole thing

1:07:26

about the name at prior story

1:07:28

worth telling

1:07:29

definitely the veering

1:07:31

to the rate while driving that didn't happen

1:07:34

but , a good sorry but i think a thing that did happen

1:07:36

while mckenzie is driving and jeff is

1:07:38

sort of working on the drive outs is

1:07:41

just on the phone with a lawyer he's like incorporate

1:07:43

the business incorporate the it to be called

1:07:45

cadaver ah cadaver oh i go

1:07:47

it's magic i can get you know whatever

1:07:49

i want anything i want whenever i want

1:07:52

and you know just like yeah

1:07:54

cadaver ah and he's like to dapper and

1:07:56

so that was like the first sign of us this

1:07:58

may not be the best name he would have a

1:08:00

series of other potentially bad names

1:08:02

to in greeley bad relentless

1:08:05

dot com relentless dot com which

1:08:07

still goes to amazon redirects to amazon

1:08:09

yeah supposedly he and mackenzie both really

1:08:12

liked relentless dot com

1:08:14

yeah this may be completely

1:08:17

also like you know don't hold me to this

1:08:19

but i wonder if that's a little subtle

1:08:21

dig a d saw of like i'm

1:08:23

an ego be an entrepreneur relentless

1:08:26

like wouldn't be relentless if iran a cushy

1:08:28

skyscraper in manhattan it's

1:08:30

not a very customer centric name know

1:08:33

it's definitely not it's a very much like

1:08:35

i'm in a comment you competitors who that's

1:08:37

i'm wondering where did that come from yeah i mean

1:08:39

you would you would use it to describe just personality

1:08:42

but it's an odd name for the business definitely

1:08:45

so eventually friend convince

1:08:47

them that relentless found

1:08:49

kind of sinister and

1:08:52

the story goes just starts looking in the dictionary

1:08:54

add a words no i don't know if he was

1:08:56

specifically looking at

1:08:59

a words if so he was very

1:09:01

smart because they names are

1:09:03

name starting with the letter a he actually was

1:09:05

because sites like yahoo like

1:09:07

portal sites directory sites listed

1:09:10

alphabetically total mm dislike

1:09:12

we've been such a beneficiary of this had acquired

1:09:14

visits i see greens i guess or not the last

1:09:16

vestige of the old internet totally

1:09:18

because things are listed alphabetically on well

1:09:20

we will talk about yahoo he's ,

1:09:23

at a names and he's going through the

1:09:25

list and he sees amazon perfect

1:09:27

earth's largest river earth's

1:09:30

largest selection on amazon dot com

1:09:32

ada z how could it be any

1:09:35

more perfect so perfect they

1:09:38

didn't need one more thing

1:09:39

it hired sell at this point use moving

1:09:41

up to seattle they rent a house in bellevue

1:09:44

famously you actually backed by

1:09:46

it the other day rights i did as

1:09:48

in the neighborhood and neighborhood was listening to

1:09:51

a great podcast on the internet

1:09:53

history podcast with friend of the show brain mccoll

1:09:55

us he was interviewing cel

1:09:57

about the early days about this

1:09:59

you know

1:09:59

was the jeff mckenzie lived and they have the garage

1:10:02

retrofitted to be and office

1:10:04

amazon first office and showers programming

1:10:07

sitting in that garage and i look

1:10:09

in as a few blocks from me as i can get

1:10:11

a ride by he texted me to photo

1:10:13

i was so so jealous which felt

1:10:15

wrong you know someone lives there and all that but

1:10:17

it is a historical landmark in the world leading

1:10:19

go knock on the door or now and now

1:10:22

i think that's for him so they just need more thing

1:10:25

which is capital in

1:10:27

a jiffy mckenzie it and great it these are

1:10:29

so they put in ninety

1:10:32

five thousand dollars to start shell

1:10:35

himself points in five thousand dollars

1:10:38

this takes me back to the walmart episode and costs

1:10:40

so smart of like having your employees actually

1:10:43

invest dollars in the business jeff

1:10:46

parents

1:10:47

i can jackie put in another

1:10:49

hundred thousand dollars to have two hundred thousand dollars

1:10:51

that's and us to hire a couple

1:10:53

more engineers to work with cel start

1:10:56

building our the same goes

1:10:58

and starts working on relationships with ingram

1:11:01

and baker and taylor mckenzie doing

1:11:03

all the bookkeeping and the same like the first cf

1:11:05

over the company yes this

1:11:08

this also echoes of sam walton's

1:11:10

did you read about this how he goes

1:11:12

down and takes a course

1:11:15

in bookselling down in portland

1:11:17

yes

1:11:18

the an awesome

1:11:19

at like the national booksellers or book

1:11:21

retailers association right totally are

1:11:23

so smart i assume that's how he starts to build

1:11:25

relationships in the industry and good

1:11:28

baker until earning them to take him seriously

1:11:30

the great

1:11:32

it's worth pointing out at this point so it you know we sort

1:11:34

of glazed over like are i shall get tired and he

1:11:36

starts programming there's very interesting

1:11:39

set of technology choices that are made here

1:11:41

and sell turns out to be the perfect

1:11:43

higher just got very lucky

1:11:46

i don't think amazon would exist today if

1:11:48

it weren't for shell and i think that's sort of a widely

1:11:50

acknowledged thing among the early team including

1:11:53

just but there's not

1:11:55

really like a spec just i think

1:11:57

coated up the first html and paid himself

1:11:59

as white one with the a with the amazon

1:12:01

river running through it's that predates the logo

1:12:04

but when he starts describing it's a shell cells pretty

1:12:06

much like okay cool like i

1:12:08

know what to build it's gonna be a store

1:12:10

and there's not like a lot of his yeah but like it's a website

1:12:12

where you can buy stuff online great and he just sort

1:12:15

of starts coding and there's

1:12:17

a couple interesting things here one of which is

1:12:19

the technology choice of databases and

1:12:22

do you know what database

1:12:24

they would eventually sort of choose to standardize

1:12:27

on because cel was not a database guy before

1:12:29

this

1:12:29

i am tempted to say oracle definitely

1:12:32

oracle die interesting

1:12:34

it was a bake off between two and

1:12:36

shell basically was like okay cool

1:12:38

what database software am i going to procure and

1:12:40

the choices were sybase an oracle and

1:12:43

sybase did not return shells

1:12:45

call and so he chose

1:12:47

oracle yeah

1:12:50

doug about frigging foreshadowing here

1:12:52

like if you are an enterprise

1:12:55

technology company you ignore

1:12:57

startups at your own peril absolutely

1:13:01

, love that story a that's amazing

1:13:04

there's a couple of other interesting things here

1:13:06

in anybody who's been a pm or an engineer

1:13:08

working on like an engineer p m team or a business

1:13:10

guy tech guy team will sort of know this

1:13:12

feeling and remember the internet at

1:13:14

this point says very very

1:13:17

pathetic like it's just not the internet as you

1:13:19

think about it today in terms of speed

1:13:21

or graphics web interface or trust

1:13:23

or anything especially trust her on

1:13:26

credit cards like people were not yet comfortable

1:13:28

entering credit cards on the internet the internet more

1:13:30

people were comfortable entering credit cards via email

1:13:32

even though it was no more secure than they actually

1:13:34

at more people emailing them their credit card from a sense

1:13:37

and they had a way in which you can do stuff like enter

1:13:39

just five digits of your credit card and then call

1:13:42

us and then we would get the rest of it from

1:13:44

you and matched up with the five you had entered on your

1:13:46

order but just tells

1:13:48

shell hey people

1:13:51

are gonna wanna access

1:13:53

this door vs two

1:13:55

different

1:13:56

methods one of mom is

1:13:59

the web which is of course up and coming

1:14:01

the other which is email which people seem to trust

1:14:03

a lot soaps build to storefronts

1:14:05

one the successful via email and one that's accessible

1:14:07

via web and ,

1:14:10

kind of just ignores the email thing he's like

1:14:12

ah ah i'm

1:14:14

in this technology ally i don't think it's gonna be an email

1:14:16

base store and it's store good thing that he

1:14:18

started with web and by the time they had sort

1:14:20

of gotten that stood up it was clear that

1:14:22

jeff had sort of lost interest of lost email they store

1:14:25

but it was almost like a poster is type approach

1:14:27

where they're like what if you could browse and by

1:14:29

from your email that how crappy the web

1:14:31

was is it wasn't clear that that was a better

1:14:34

form factor than email embeds

1:14:36

book i get the sense of that very typical of

1:14:38

early jeff management style of

1:14:40

we gotta go do this and them you

1:14:42

know some of them like he actually got to do than

1:14:44

summer you're like well if i ignore this for a little while

1:14:47

yeah we're going to do the right thing here yeah

1:14:50

it also became clear in listening

1:14:52

to a lot of these interviews with early engineers

1:14:54

that they use the words

1:14:57

front end engineer and back and engineered differently

1:14:59

than we do today do today we say front

1:15:02

and back and that means front end being like

1:15:04

client side javascript

1:15:06

typically stuff that executes in your browser which

1:15:08

of course did not really work or exist

1:15:11

then and back and meant server side but

1:15:13

what was clear at amazon and the early days was

1:15:15

front end meant consumer facing

1:15:17

and back and meant warehouse

1:15:20

ceasing to numb and

1:15:22

it was basically all server side in

1:15:25

fact there weren't even cookies yet and

1:15:27

so shell had to basically invent this

1:15:29

way for users to maintain

1:15:31

saver did items or a shopping carts

1:15:34

without leaving a cookie and

1:15:36

so how do you do that without cookies or sessions

1:15:39

he invented this really

1:15:41

insane engine is basically

1:15:43

a rendering engine called obey dose

1:15:45

which if anybody knows their south

1:15:48

american geography it's a tributary

1:15:50

to the amazon right yeah and

1:15:52

for people who remember browsing amazon

1:15:54

in the early days you'd go to like amazon dot

1:15:56

com slash exact slash obey dose

1:15:59

flash something

1:15:59

something something hi def we didn't do this

1:16:02

this is awesome it was a part

1:16:04

of the world

1:16:05

so what ob das did was

1:16:08

could upend i

1:16:10

d's to the u r l and

1:16:13

pass them through so that the

1:16:15

back end as we know and today's prone

1:16:17

said that the server could match up

1:16:19

oh this customer just added this other thing to their

1:16:21

cart and so dynamically

1:16:24

generate a new web page for them

1:16:26

that includes that other thing in

1:16:28

their cart or what would go on to be

1:16:31

include you may also like

1:16:33

or similar products are recommended personalized

1:16:35

products ah so cool

1:16:38

this was the very first thing that allowed

1:16:40

the amazon to be like a dynamic web application

1:16:43

without the use of cookies and it was just

1:16:45

passing these ideas through

1:16:47

the u r l and it was all

1:16:49

this ob dose sort of dynamic

1:16:52

web serving engine that cel built

1:16:54

limit our it that's so cool

1:16:58

oh yeah michelle is

1:17:00

a year so right like you

1:17:02

in the right guy for the job yeah this

1:17:05

was a grizzled sort of veteran

1:17:08

of , software systems

1:17:11

that could work on the internet

1:17:13

they were not many people who could do that at

1:17:15

that point to know and in fact in job postings

1:17:18

i think pesos put things like experience

1:17:20

with web sites would be a bonus

1:17:22

but not required to like there weren't

1:17:24

web developers because there weren't web applications

1:17:27

the would think about it like hey i need someone

1:17:29

who can write some c code and then figure out

1:17:31

the glue to make it so that that

1:17:33

interfaces with the html the kids generated

1:17:36

but that was all sort of like brand new

1:17:38

at the time he an amazing so

1:17:41

no and the

1:17:43

early team of engineers that

1:17:45

the ring on working together they

1:17:47

, a bead a bill like pretty fast

1:17:50

really fast it was summer of ninety

1:17:52

four when jeff and mckenzie

1:17:55

leave esau and then

1:17:57

it takes then it months top figure hold of stuff out

1:18:00

whereas in bellevue in april

1:18:03

of nineteen ninety five they

1:18:05

should a beta version of the things they send

1:18:07

out a link their friends and family like try

1:18:09

it out you can buy any book you want [unk]

1:18:12

, friend john wayne rate

1:18:14

makes the first purchase on april third nineteen

1:18:17

ninety five a book called

1:18:19

fluid concepts and creative analogies

1:18:22

by douglas hofstadter

1:18:24

doghouse debtors awesome he wrote girdle

1:18:26

escher bach oh it's

1:18:28

super cool i think it's all lake about

1:18:30

the nature of consciousness and like like

1:18:33

carve out for another day yeah but

1:18:35

super bowl and very apt geeky

1:18:38

first purchase on amazon

1:18:40

dot com again illustrating who the

1:18:42

types of people who are interested people who and

1:18:44

the movement at the time where and

1:18:47

then shortly after that july sixteenth

1:18:50

nineteen eighty five the

1:18:52

wants to say to the public i totally

1:18:54

understand now what mark

1:18:56

injuries and was saying when he was like

1:18:59

a freakin missed it somebody gets mark was part

1:19:01

of starting this wave of he was talking

1:19:03

about the previous wave but like me

1:19:05

now looking back i'm like we freakin mr

1:19:07

benn i've former you have some

1:19:09

oh yeah it never happened today the

1:19:12

launched people game

1:19:14

people loved reagan reagan work immediately

1:19:18

yeah and it went very quickly

1:19:21

from like are thing that obscure nerds

1:19:23

wanted to

1:19:25

the has a good enough user experience where

1:19:27

regular people are using it quickly

1:19:29

and deriving real value it's not

1:19:31

just like it had growth rates of a bunch

1:19:33

of boss interacting with each other and therefore the volume

1:19:36

of hi boss this is very real

1:19:38

people the who are

1:19:40

one or two clicks out from the early adopters

1:19:43

solving real problems that they had before

1:19:45

and it's just everybody down

1:19:47

their friends in fact i think there's a stats

1:19:49

the entire first year after the public

1:19:52

launched they spent zero marketing dollars

1:19:54

and it was all word of mouth and inbound

1:19:56

media inquiries because what they were doing was so

1:19:58

novel and so

1:19:59

thought you didn't the mass market consumer

1:20:02

oh inbound media inquiries okay

1:20:05

they wanted the first two

1:20:07

weeks they , twenty five thousand dollars

1:20:09

in revenue for the people tell their friends can

1:20:11

do that to daily twenty five thousand nine revenue

1:20:13

like two weeks you'll want something today

1:20:16

today going to use it and

1:20:18

then they get an inbound media

1:20:21

inquiry the weeks after they wanted

1:20:24

from david fi

1:20:26

low and jerry yang saying

1:20:29

hey

1:20:30

the heard about your site

1:20:32

amazon it looks pretty good the mind

1:20:34

if we feature it on our

1:20:37

homemade i'm just like

1:20:39

wait a minute your home page think a lot of people

1:20:42

good about the net will be brand new

1:20:45

the point lead literally brand new yeah

1:20:47

yeah i'm dot com david

1:20:50

and jerry of course had started there guide

1:20:53

to the web of when they were lampard

1:20:55

grad students the year before in nineteen

1:20:58

eighty four and had just incorporated

1:21:00

raise money from sequoia capital turn

1:21:03

it into an actual business

1:21:05

and created yahoo only in

1:21:07

march of nineteen ninety five

1:21:10

wow

1:21:10

it's all happening all at once gotta assume

1:21:13

it was the first place to buy books featured

1:21:15

on be front page with the letter a

1:21:18

on yahoo dot com oh heck

1:21:21

no avail as we get the email and had they raised

1:21:23

their seed round their million dollar homes around yet

1:21:25

no no no so ah other

1:21:28

context you had ansel all this makes so much

1:21:30

more sense now i , he was just being

1:21:32

conservative but he knows what he's doing to

1:21:34

get the email and they're all talking

1:21:36

about what to do and cells like guys

1:21:40

i don't think we're ready for this since i

1:21:42

don't think we can handle what's

1:21:44

about to happen here because

1:21:46

he's only been at startup the didn't really work

1:21:49

yes he made stuff functional

1:21:51

and he was thinking of a certain scale but he wasn't

1:21:53

thinking like million scale

1:21:56

of course jeff being jeff is like

1:21:58

the damn the torpedoes like

1:21:59

full speed ahead were doing this we're

1:22:02

going to say yes to yahoo so

1:22:04

they do it within the next

1:22:06

two weeks so we're just four

1:22:09

weeks after launch here we ,

1:22:11

sold books to people in all fifty states

1:22:13

in the country and forty five

1:22:15

countries around the world there

1:22:18

by there end of this week they are doing twenty thousand in sales

1:22:21

the week on books the

1:22:23

think costs like twenty or thirty bucks each and

1:22:26

people don't read books ssssss

1:22:28

new yeah there's barnes and noble importantly to the

1:22:30

read books they meet all their money on dvd

1:22:32

even cds nobody read the books we

1:22:35

read you and me and the acquired continuous we read

1:22:37

books and were a vast minority most

1:22:39

americans read one book a year

1:22:41

i think that's like the mode of number

1:22:44

of books per year per person

1:22:45

holy so that first half year

1:22:48

that the saved his life to the public they

1:22:50

do half do half dollars in revenue and

1:22:52

six months with the two hundred thousand dollars

1:22:54

and friends and family funding in

1:22:56

the initial insight is like pretty perfect

1:22:59

product market fit right out again i'm a as

1:23:01

one of these situations is like a new bar or a twitter

1:23:03

where you have this idea and then you put

1:23:05

up and then that's exactly the thing that people

1:23:07

want i'm sure there will come and

1:23:09

eat again like this but in some

1:23:11

way shape or form but i can't stress enough to

1:23:13

get that happened today right

1:23:16

i'm feeling the former the

1:23:20

question is david would you have recognized it

1:23:22

right that's the thing we all us to be intellectually

1:23:24

honest with ourselves or rights will we be hanging

1:23:27

out in these circles with

1:23:29

these people and truly

1:23:32

believing like they did not

1:23:34

in nineteen ninety six that the internet was gonna be

1:23:36

a saying in nineteen ninety three that the internet

1:23:38

was going to be a thing yup we sorted

1:23:40

into this a little bit

1:23:41

not

1:23:42

intentionally with a casting

1:23:45

i think and acquired yeah

1:23:47

a little bit we got a similar type

1:23:49

with rights honestly

1:23:52

though judging by what you and i were doing a few years

1:23:54

later i do actually think we would

1:23:56

have had the personality characteristics and the interests

1:23:59

if we were now

1:23:59

young children at this time to

1:24:02

be in on the caught up in all this

1:24:04

oh yeah in some ways i'm feeling the massive

1:24:07

for well as like dot if i was just warrants

1:24:09

five or ten years earlier the

1:24:12

i mean it

1:24:13

this is who we are and , imagine

1:24:15

who many of our listeners are to yeah i

1:24:17

imagine if you were listening to three hour podcast then

1:24:19

you're the type of person who wanted to buy an obscure

1:24:21

book from someone on the internet or you had to

1:24:23

call in your credit card number the infrastructure

1:24:25

is just completely falling apart one thing they

1:24:28

did do right in the infrastructure though because by the way

1:24:30

very quickly they became oracle's

1:24:32

largest ever instance by traffic

1:24:35

the oracle people were like oh my god we can't

1:24:37

help you but no one else is seeing this many

1:24:39

reader writes per second so let us

1:24:41

make a new version for you but

1:24:44

one thing that was very clear is that

1:24:46

shell on the team were building things at

1:24:48

building things low level of abstraction

1:24:50

i mean they were building everything and basically

1:24:53

a quick up from assembly most of the stuff was in see

1:24:55

some of it was in pearl but they're not

1:24:57

really writing and high level languages or

1:24:59

using sort of high level frameworks so

1:25:03

even though

1:25:04

the technology at the time sucks i mean there

1:25:06

was no bandwidth compute was really

1:25:09

really really hard to come by you

1:25:11

had to be unbelievable efficient as you're starting

1:25:13

to roll out things like and i know we'll get to this

1:25:16

reviews and the

1:25:18

collaborative filtering staff were it was like you may

1:25:20

also like people who bought this also bots

1:25:22

the algorithms mattered a lot but the

1:25:24

environments that you are writing them in the

1:25:27

low level languages were really important

1:25:29

yup and they basically to take advantage of these

1:25:31

early internet technologies before the been with

1:25:33

and compute was really ready for most

1:25:36

people to develop applications for them holy

1:25:38

right i guess a sort of men technology

1:25:41

to some extent attack in infrastructure

1:25:44

i meant more like the garage here's the kicker

1:25:46

of why this is never would have worked with

1:25:48

indies us it's typically can't

1:25:50

drop shipping amazon gotta handle

1:25:53

the logistics themselves to make

1:25:55

this work and the way they were doing that was not

1:25:57

take inventory at the time they were ordering

1:26:00

retail first from other bookstores

1:26:02

and then reselling it and just eating the margin as

1:26:04

the proof of concept but then they were moving

1:26:06

to this world where they were just order from the distributor

1:26:08

as soon as they got an order and it was taking

1:26:11

obviously forever to actually get that to the customer

1:26:13

the distributors had minimum order

1:26:16

sizes to the who are ordering a big

1:26:18

boxes as stuff

1:26:20

i'm a nigger as you know the heck let's

1:26:22

say they ordered a popular books were

1:26:24

pretty quickly you could get to eat at a ten was a

1:26:26

the minimum worse i was ten they'd wait to get two

1:26:28

more i think it was ten yeah and

1:26:31

that way they could place an order with the distributor the

1:26:33

hack while if

1:26:35

it's sort of an obscure book and they know we're never gonna

1:26:37

get to ten they would take

1:26:39

that one book and they would order nine

1:26:42

of a book that they knew was

1:26:44

not in stock the system

1:26:46

would let them make the order since

1:26:48

ten bucks can be shipped out and then of

1:26:50

course they would get the rejection of hey this books

1:26:52

out of stock so that was there has to

1:26:54

make us of the distributors would actually send them the

1:26:56

one copy of the one book that they wanted the

1:26:58

sales levels were talking about food a lot

1:27:01

of boxes come in and going out

1:27:03

of the garage yes so quickly be get a warehouse

1:27:05

and soto in the can industrial

1:27:08

neighborhood down by the king dome at that

1:27:10

point in time they start staffing and up

1:27:12

with temp workers famously

1:27:14

be tell the staffing agency to quote send us

1:27:16

your freaks which made it through

1:27:18

to print to print article and of course that was

1:27:21

the sort of click bait thing that everyone anchored on

1:27:23

this is beer of grounds in seattle's all

1:27:25

these guns club musicians early

1:27:27

were going in amazon warehouses after their gigs

1:27:29

typical famously

1:27:32

nick lovejoy from d saw he

1:27:34

comes up with the idea of packing tables

1:27:37

this becomes like amazon lower your first

1:27:39

they're literally just reassembling you know enduring

1:27:41

sipping does like on their hands and knees on the floor

1:27:45

is like you visited them tables to do

1:27:47

this up of other floor yeah

1:27:49

and on the send us your freaks thing there's

1:27:51

this great interview with seen flayed that brain mccullough

1:27:53

dad where she's the one who gave

1:27:55

the quote in that interview about send us your freaks

1:27:58

and she said that because the temp agency was like

1:28:00

sending them all these people that were

1:28:02

basically professionals they would expect to use

1:28:05

modern tools and an amazon

1:28:07

the low level software thing wasn't just

1:28:09

for their infrastructure they expected their customer

1:28:11

service people to like use unix terminals

1:28:14

and right command so that was high end

1:28:16

there like where's my order like everything's on command line

1:28:19

and so jades using that to try to articulate

1:28:21

to the temp agency here's the profile of

1:28:23

person that we need because all

1:28:25

these people are kind of useless to assess

1:28:27

the expects a bunch of very good

1:28:30

tools to do their job ah i

1:28:32

didn't know that context but i'm

1:28:34

with cool here is these are quaint stories

1:28:36

been this is the beginning

1:28:39

the competitive advantage and the most

1:28:41

votes amazon starts

1:28:44

to build them we are going to talk about ebay in

1:28:46

a minute here but it's just like

1:28:48

the walmart story and fighting

1:28:50

against kmart and other people like amazon

1:28:52

now

1:28:54

the building

1:28:55

the native logistics

1:28:58

supply chain and distribution and for

1:29:01

ecommerce the

1:29:03

they are going to own and operate that

1:29:05

, else literally nobody

1:29:07

else in the world is doing this not walmart

1:29:10

not kmart not barnes and noble

1:29:12

know they all have their own incredible logistics

1:29:14

systems but their tuned

1:29:17

for i've got this book superstore

1:29:19

of eighty thousand titles and i've got thousands

1:29:21

of them across the country amazon's

1:29:24

building distribution for distribution

1:29:26

have millions of customers

1:29:29

across the world and basically

1:29:31

no to orders are the same so i

1:29:33

always need to put a unique brand

1:29:35

new combination of books into a box every

1:29:37

single time as a totally

1:29:39

different com notorious problem to solve

1:29:42

than the walmart thing of hey we need to make sure

1:29:44

that a truck goes from this distribution center to this

1:29:46

store once a day with about this stuff

1:29:48

and you know maybe there can be a little variance it's

1:29:50

completely new and so amazon needed

1:29:53

to fail completely invent something

1:29:55

new tailored to their use case and

1:29:57

then suddenly be the industry leader

1:29:59

for the way you do that thing on the internet

1:30:02

and packing tables is such a great first

1:30:04

paradigms of oh

1:30:07

our warehouses will need these but other

1:30:09

distribution centers in the walmart land

1:30:11

and that old school world don't know

1:30:14

and that would just happened ten thousand times

1:30:16

again compound and compound and compound well

1:30:19

with cause like yeah bear big

1:30:21

difference was between the walmart supply chain and the barnes

1:30:23

and noble supply chain and amazon ebay

1:30:25

sure as hell isn't building packing tables

1:30:28

though the needs more money to capitalize

1:30:31

on this subject goes out to raise their first

1:30:33

seed rounds that we did whole episode

1:30:35

with tom ahlberg about back

1:30:37

in philly acquired days on is

1:30:39

just the best time is the best i

1:30:42

realist into that episode and i was thinking

1:30:44

like owes me terrible this was like very early

1:30:46

and acquired it so not and

1:30:48

it's very list symbol and

1:30:50

most of that is because tom as an unbelievable

1:30:53

guest is kind and he also

1:30:55

is so earnest bubble lived the whole

1:30:57

thing i mean he was an

1:30:59

early check and amazon and that one

1:31:01

million dollar million five million dollar post

1:31:03

money round and stayed the course

1:31:05

with jeff all the way through the late twenty tens

1:31:08

as a board member and longest serving

1:31:10

board member and amazon history other than

1:31:12

death so cool

1:31:14

though there is that one million dollar

1:31:16

round from a bunch of kind of local business

1:31:18

folks in seattle of which thomas

1:31:21

one and one of the most involved

1:31:23

in the company nick can our a bunch of local

1:31:26

business folks here so in

1:31:28

nineteen ninety six remember they did half

1:31:31

a million in revenue for the half year

1:31:33

of nineteen ninety five that they're alive

1:31:35

they do fifteen point seven million

1:31:38

in revenue and nineteen ninety six

1:31:40

be have a tiger by the

1:31:42

tail here you'd have to be accelerating

1:31:44

so much to go from right whatever

1:31:47

the runway was in december as ninety

1:31:49

five so they about sixty next and

1:31:51

their first year but they city next off a base

1:31:53

of five hundred thousand it's not like wealth of nothing

1:31:56

yeah didn't go from like five to

1:31:58

one hundred or something like when i'm looking

1:31:59

that companies i'm like oh my god you quadrupled

1:32:03

that's like nearly unheard of if good

1:32:05

companies triple and then you're getting

1:32:07

it's like he went from twenty two year or two

1:32:09

one hundred eighty or right and

1:32:11

mrs yeah wow five hundred k

1:32:13

in six months to fifteen point

1:32:16

seven the following year okay that's ninety ninety

1:32:18

six that's ninety ninety six so as

1:32:20

this rise is happening obviously more

1:32:22

and more people are paying attention

1:32:25

and windowless new the whole episode bus

1:32:27

com tells the story on our episode where

1:32:29

them on com from time here so

1:32:31

i come home one night after work at like

1:32:33

six pm or something and my wife

1:32:35

says you know some

1:32:37

guy named john door and

1:32:41

i said well actually i do she

1:32:43

said well he calls every fifteen

1:32:46

minutes and keep saying he needs to talk

1:32:48

soon now and then times as it

1:32:51

was one of down the great strengths which

1:32:53

is his persistence tells you

1:32:55

something about how to sell yourself and

1:32:57

so your interests and

1:32:59

of course that is be legendary john

1:33:02

doerr of kleiner perkins

1:33:04

it's been many years and so there's lots

1:33:06

there's names of key folks at the coil

1:33:09

and at benchmark and andreessen horowitz

1:33:11

that's what we think of as like while these incredible

1:33:13

venture capitalists john doerr was pretty

1:33:16

widely known to be the greatest of all time

1:33:18

at this point in history he was like all of

1:33:20

today's of stars in venture capital within

1:33:23

the industry and among founders if

1:33:25

you aggregate all of those all stars

1:33:28

into , single person that

1:33:31

would have been john door at that point in time

1:33:33

so this shows you shows much

1:33:36

clout the on at what

1:33:38

age the hustle the persistence even though he

1:33:40

was a legendary done door he'd calling tom

1:33:42

though every fifteen minutes going comes wife's

1:33:45

to get a lead on the deal amazon

1:33:47

and choosing coin

1:33:49

or to leave their series a eight

1:33:52

million dollars at a sixty million dollar

1:33:54

post money valuation i

1:33:56

think there were competing and general atlantic

1:33:58

many firms in reading general atlantic

1:34:01

which was the first runner up now there

1:34:03

is some structure to the deal so it wasn't like

1:34:05

a clean the cleaner terms he was clean

1:34:08

i , remember exactly what the structure was become

1:34:10

refers to the center opposite they were a new york

1:34:12

from he doesn't have a system but

1:34:15

they were offering like double the valuation

1:34:18

close to double i thank style and

1:34:20

amazon and def went with john

1:34:23

the finer

1:34:24

they heard you're an incline or snooze a fun little

1:34:26

sidebar of downwind to deal with this is

1:34:28

can his playbook at the time great

1:34:30

innominate be involved but the got this greed associate

1:34:33

tsunami in it was having to put

1:34:35

on your board and it's gonna be great really

1:34:37

still do this today jeff wasn't too happy

1:34:39

about this he goes to talk to tom like what's i do

1:34:41

about this and the , they

1:34:43

come up with idea and jeff calls to

1:34:45

on back and is like i'm

1:34:48

really sorry i really wanted to work with kleiner

1:34:50

perkins and but perkins guess we're going to be going with

1:34:52

general atlanta hes not going to join my

1:34:54

board that was really the appeal for me to

1:34:57

yell and john's like out of the bayless i've been

1:34:59

to many other boards right now he's got a

1:35:01

what netscape netscape

1:35:03

compaq sun microsystems

1:35:06

into it this is before

1:35:08

google we will definitely talking about

1:35:10

google in a minute but he's a little busy nothing

1:35:12

to sneeze at by this

1:35:14

is such a hard deal and jeff was so persuasive

1:35:17

that the on made an

1:35:19

essence i think he's probably glad

1:35:21

the humid to join the board though

1:35:25

the read this my firm kleiner jess

1:35:27

does two things and this was seven

1:35:30

million

1:35:31

the building

1:35:32

eight million so far in the lifetime

1:35:34

of the companies raise nine million dollars a little

1:35:36

more than nine because there was the friends and family money the

1:35:38

beatles family as a whole nine

1:35:40

to air is actually more like mine for cause

1:35:42

the bees as family as a whole not

1:35:45

just just parents jackie

1:35:47

might but also his siblings put

1:35:50

a little more money and before the clanger ground

1:35:53

that was when we were leading to the being in a show us

1:35:55

ashram might attack you they

1:35:57

must have done some good investing which is

1:36:00

when he could like that spaces his siblings having

1:36:02

some of the greatest investment returns of

1:36:04

all time a cruise venture capitalists

1:36:06

access access access oh

1:36:08

i cannot wait to talk about how to a fetus

1:36:10

and mckenzie got wealthy can we just a little bit

1:36:12

longer than we little wonder at or it so

1:36:15

def the two things after your is is around

1:36:17

firm kleiner i didn't return the corporate somebody

1:36:20

who the moment company that point said something like

1:36:22

jeff viewed the stamp of

1:36:25

in permits her from finer and done

1:36:27

door as like as saddest arrowheads into

1:36:29

himself and the company it's certainly

1:36:31

emboldened his vision he

1:36:34

sort of use this as like someone waving the flag

1:36:36

of like go like go go he should feel

1:36:38

free to have a much much more ambitious

1:36:40

plan i don't think is

1:36:42

the kind of person who ever felt like he needed permission

1:36:45

but to be extent he did feel like he needed

1:36:47

permission or that the right thing to do was