[HN Gopher] Jeff Bezos convinced 22 investors to back his new co...
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Jeff Bezos convinced 22 investors to back his new company Amazon in
1994 (2018)
Author : simonebrunozzi
Score : 60 points
Date : 2020-08-22 18:01 UTC (4 hours ago)
(HTM) web link (www.scmp.com)
(TXT) w3m dump (www.scmp.com)
| bluedevil2k wrote:
| He valued his idea at $5M before he had even sold a book and
| managed to convince 22 people to invest at least $50k in him.
| That's quite the story, especially back before he internet was a
| staple in all our lives. Kudos to those who held on the stock.
| Moral of the story, as is usual in investing, never sell.
| ISL wrote:
| I still have Sun Microsystems stock certificates, purchased in
| ~1999. They are more valuable as curiosities or as recycled
| paper than as a tradeable security.
|
| You have to know when to hold 'em, know when to fold 'em, know
| when to walk away, know when to run.
| SilasX wrote:
| They still did paper stock certificates in 1999?
| ISL wrote:
| They were a gift from a relative who liked to hold physical
| certificates. They do give the holder a feeling that a
| small chunk of the company is truly theirs.
|
| I didn't redeem the (very low-value) shares because I
| didn't want a tiny slice of Oracle or a few dollars; I'd
| rather have an actual chunk of Sun.
|
| Looks like it became very difficult to get physical
| certificates beginning in the late 2000s (see right
| sidebar):
| https://www.giveashare.com/stockcertificates.shtml
| JumpCrisscross wrote:
| > _it became very difficult to get physical certificates
| beginning in the late 2000s_
|
| For publicly traded shares, yes. In private equity, we
| still get to play "who tore the stock certificate."
| anm89 wrote:
| I think it was more of a novelty thing for when you
| gifted someone else stock but yes, they did.
| SilasX wrote:
| Aren't those ornamental at this point, though? Like I
| thought they use some other record-keeper as the source
| of truth on who owns the stock, rather than whether you
| hold a certain piece of paper (bearer shares).
| bananapear wrote:
| Certificates are still perfectly valid, but most stock is
| "dematerialised" and held at a central securities
| depository, like DTC -
| https://en.m.wikipedia.org/wiki/Depository_Trust_Company
|
| This allows transfer by "book entry" rather than mailing
| the physical documents - much like an electronic bank
| transfer.
| zorpner wrote:
| ...and the best that you can hope for is to die in your
| sleep.
| quicklime wrote:
| My brother blew what would've been a few million dollars worth
| Bitcoin on pizzas and some other frivolous crap back when the
| novelty of doing that was worth more than the Bitcoin itself.
|
| Whenever I heard these kinds of stories, I remind myself that
| loss aversion is a cognitive bias that we all share.
|
| Sure, maybe some people passed on an opportunity to invest in
| 1994, but the general public had the opportunity to invest in
| Amazon any time after Amazon's IPO in May 1997. Someone who
| invested $50k then would be holding shares worth $95 million
| today. It's not quite billionaire territory, but it's still a
| very successful investment by anyone's standard.
| anm89 wrote:
| Yeah it took me a while to accept this. There are 50 different
| ways you could be a multi millionaire in a month if you were
| willing to place big bets but the reality is this a pretty
| insane way to act for most people on most circumstances.
|
| I guess in some cases it feels more tangible like if you
| specificly had the chance to invest but it really isn't much
| different than all those other things you could have done.
| MrQuincle wrote:
| This is not just about loss aversion. What if you give your
| family and friends now such an opportunity. Some of them will
| win some of them lose.
|
| It's quite hard emotionally I guess. To see some of them who
| just by pure chance got rich and others who are poor. You can't
| give it afterwards. Money at times is just a gift from the
| devil in disguise.
| LegitShady wrote:
| I sold 4 Bitcoin when they hit 1000 and I'm not even mad. I
| liked them in a Dell laptop with a discrete laptop graphics
| card back when that was possible using pools.
| ISL wrote:
| For much of Amazon's early history, it was something of a
| laughingstock, as the company had clearly stated that it didn't
| plan to make money in the foreseeable future, if ever. At a
| minimum, it made the company difficult to value (and still
| does).
|
| One of Amazon's important achievements was to attract and
| retain investors willing to go along for the "their margin is
| our opportunity" inexorable slow-boat ride to dominance.
| wnevets wrote:
| >For much of Amazon's early history, it was something of a
| laughingstock, as the company had clearly stated that it
| didn't plan to make money in the foreseeable future, if ever.
|
| I still remember John C. Dvorak saying how awful amazon is
| and that it will never make money just ~10 years ago.
| an_opabinia wrote:
| Another way of looking at this is, stock value doesn't just
| not mean what reasonable people think it means - the
| meaning of prices is 200% wrong.
|
| Another way of looking at this is, no one is going to be
| able to redeem all the Amazon stock there is for cash at
| this price, that only mark-to-market is wrong.
|
| Another way of looking at this is, Jeff Bezos was happy
| doing what he was doing for peanuts throughout Amazon's
| early lifetime, so would wealth taxes or CEO compensation
| caps or whatever boogeyman really have dissuaded him from
| taking other people's money?
| mobilefriendly wrote:
| A wealth tax would have limited the amount of early
| investment available to Amazon (and the start-up
| ecosystem as a whole), and it very well might have forced
| liquidation of shares at critical points in the company's
| early history when Bezos was wealthy on paper as an
| Amazon shareholder.
| graeme wrote:
| > Another way of looking at this is, no one is going to
| be able to redeem all the Amazon stock there is for cash
| at this price, that only mark-to-market is wrong.
|
| Maybe, maybe not. Amazon's daily trading volume is about
| 3 million shares, and there are around 500 million shares
| outstanding. In 150 days the entire market value of the
| company trades.
|
| It would be weird if the whole thing was sold at once,
| but there would be people interested in buying. The
| company has real value.
|
| https://finbox.com/NASDAQGS:AMZN/explorer/volume_avg_3m
|
| https://ycharts.com/companies/AMZN/shares_outstanding
| PaulDavisThe1st wrote:
| I persuaded my (then) in-laws not to invest in Amazon at this
| stage (I was the 2nd employee at the company). They would have
| certainly put in $50k or so. Fortunately, they are lovely Quaker
| people and as far as I know have never held a grudge against me
| because of this (incorrect) advice.
|
| There are some inaccuracies in this article, too. Most of the
| investment window described here actually took place in 1995 -
| Jeff had enough cash to see things through the end of 1994. He
| and Mackenzie did not live in a 1 bedroom apartment that they
| "rented when they moved to the city" - they rented a house in
| Bellevue and the already-converted garage was the first Amazon
| office. They may well have moved to 1 room apartment later, as it
| became clear that the company would definitely be in Seattle
| itself.
| davnicwil wrote:
| Apologies for the kind of tangental question but just really
| curious.
|
| In the really early days of Amazon, did the company and/or the
| group of people feel like something really special, or did it
| feel like a totally regular bunch of people just working on
| some idea that was half decent? Was there any sense at all of
| the type of company it could become?
| PaulDavisThe1st wrote:
| Both.
|
| For most of the time that I worked at amzn, it was really
| just Jeff, Shel (Kaphan) and myself, with Mackenzie
| apparently do the accounting somewhere else. The three of us
| were a tight threesome back then, and we knew that we were
| building something very new and quite possibly momentous (in
| particular, the idea of what we called "almost in time"
| retail, aka "we don't have it in stock but we can it for you
| really quickly"; of course, that idea has largely gone away
| these days).
|
| Jeff had much bigger dreams from day zero than most people
| acknowledge (basically, to be the Sears of the 21st century),
| and Shel and I both knew that.
|
| On the other hand, day to day work involved mostly the same
| old problems, there were the same conflicts (i excused myself
| from all discussions about website design because it was
| clear that Jeff and I were never going to agree about almost
| any of it), and the whole thing felt as if it could have
| folded up at any moment before about (say) October of 1995.
| After that, there were more people on board, sales were
| skyrocketing, and it was clear that it was a thing.
|
| I left amzn for many reasons, but in part because it was
| obvious to me by the fall of 1995 what kind of company it was
| going to become, and I wanted nothing to do with that. I
| still don't, which is why I've spoken out a bit more
| publically about the company over the last year or two.
| davnicwil wrote:
| Thanks for this detailed and interesting answer, appreciate
| it!
| skinnymuch wrote:
| How long did you stay at Amazon?
|
| Thanks for some insights.
|
| If yiu have time, any more?
| adammunich wrote:
| Yeah I'd love to hear some stories too!
| PaulDavisThe1st wrote:
| 14 months.
|
| My favorite, very fuzzy memory of "early investors in amzn"
| concerns someone who appears to have successfully dropped off
| the map. We had hired a guy called who had graduated from a
| college in OR known for being a bit "wooly" but nevertheless
| generated high quality grads. Jeff wanted to hire some more
| people from the school, and asked the guy for suggestions. We
| ended up hiring (among others) a philosophy grad who was also
| a carpenter and cycling fiend. This guy designed and built
| the first specialized packing tables for the company. He was
| a gentle, reflective soul, not really into computers or tech
| or startups or any of what amazon was about, as I recall.
|
| When he heard that Jeff was looking for "angel" investors (as
| opposed to VC money, which he wanted to avoid as much as
| possible), the carpenter went to see Jeff about putting his
| life savings into the company. My recollection is that he
| might have had about $35k saved up (he was a deeply frugal
| person, too). Jeff told him twice that it was a terrible
| idea, that the company was still incredibly risky, and it was
| insane for someone so young. The third time, Jeff relented,
| and allowed him to buy a bunch of stock.
|
| Based on the article, if he had held onto his stock, it would
| have been worth about $5BN. More likely, he sold it along the
| way, and probably netted somewhere in the 10s to 100s of
| millions.
|
| I have no idea what happened to the carpenter, but I hope
| that he's happy somewhere with some beautiful handtools in a
| woodshop he built himself, riding one of many custom made
| bicycles across a lovely landscape. Based on what I knew of
| him back then, definitely the most deserving and
| philosophically appropriate winner at the amazon stock
| roulette game.
| Vinceo wrote:
| Thanks for this beautiful story:)
| simonebrunozzi wrote:
| I can try to imagine how someone might feel to have passed on the
| opportunity to invest. Yes, money is not everything in life...
| But missing on a billion dollar might not be easy to process for
| most of us.
| agency wrote:
| Reminds me of Ronald Wayne, the third co-founder of Apple who
| sold his 10% stake for a total of $2,300 USD. Rough.
|
| https://en.m.wikipedia.org/wiki/Ronald_Wayne
| Krizzu wrote:
| And that reminds me of Andrzej Sapkowski and CD Project Red
| deal
|
| https://www.polygon.com/2018/10/2/17927916/the-witcher-
| autho...
| cauthon wrote:
| > "I was stupid enough to sell them rights to the whole
| bunch," Sapkowski said at the time. "They offered me a
| percentage of their profits. I said, 'No, there will be no
| profit at all -- give me all my money right now! The whole
| amount.' It was stupid. I was stupid enough to leave
| everything in their hands because I didn't believe in their
| success. But who could foresee their success? I couldn't."
|
| Do you think he would have returned the lump sum if the
| game failed and they went broke?
|
| You give up risk when you ask for a lump sum
| oblio wrote:
| Why not split the difference? A lump sum and a smaller
| percentage.
| skinnymuch wrote:
| For the author? Since he didnt believe in it, any slice
| would have been timny. His regret and words would likely
| be close to the same.
| megablast wrote:
| CD Projekt Red is a computer game company who created a
| game based on sapkowski's books. The games and company did
| very well.
| uep wrote:
| That's the point. He gave up royalties for a lump sum,
| when the game seems to currently be the 23rd best-selling
| game of all time.
|
| https://en.wikipedia.org/wiki/List_of_best-
| selling_video_gam...
| dogma1138 wrote:
| Bezos works on wall street before Amazon I think most of his
| F&F were quite well off already, anyone who can easily dump
| $50K into a friends project doesn't have money problems.
|
| One trait successful investors share is that they don't cry
| over missed opportunities.
| true_religion wrote:
| Being well off doesn't make you a successful investor. You
| could simply be have inherited your wealth, or worked in a
| profitable industry.
|
| Lots of people on HN could quality as accredited investors
| just from having being a part of a double income couple,
| getting paid tech worker salaries.
| one2know wrote:
| Exactly. If I were to ask my F&F for money they would ask me
| if I'm in trouble, what's wrong, and if I can pay this
| month's rent. All in who you know whether your business
| launches or not.
| ISL wrote:
| Decisions can only be evaluated in the context in which they
| were made.
|
| A friend invested much of his savings equally in ~5 promising
| Seattle-area businesses in the early 2000s. Four went to zero,
| one was AMZN. Had he chosen only slightly differently, five
| might have gone to zero.
| cheez wrote:
| In the last 10 years (well... even the last year) I have passed
| up many multi million dollar ideas. All that means is there
| will be another.
| hashtagmarkup wrote:
| Who is "us"? Who here didn't know about bitcoin 10,000X ago?
| Probably most were aware 100,000X ago. You didn't have $10,000
| to invest?
| PaulDavisThe1st wrote:
| I left amzn after 1 year of my options vested. Compared to
| almost all Americans, it made me rich. It let me spend 10 years
| as an at-home parent raising my daughter. Had I stayed the full
| term, I'd have owned 1% of the company (I got ripped off in my
| initial negotiations with Jeff :).
|
| Occasionally I wonder what I'd have done with all that money,
| but very rarely. I don't miss the billions. The $1M (plus or
| minus) that I got out of it was more than enough to count
| myself deeply fortunate. Nobody "earns" that much money - I
| just got lucky.
|
| I prefer the path I took - a great life, much happiness, low
| stress, and for the last 20 years, the fun and games of
| building one of the most successful libre software projects
| around.
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(page generated 2020-08-22 23:00 UTC)