netrashetty
Netra Shetty
Leadership Style at Amazon.com : Amazon.com, Inc. (NASDAQ: AMZN) is a US-based multinational electronic commerce company. Headquartered in Seattle, Washington, it is the largest online retailer in the United States, with nearly three times the Internet sales revenue of the runner up, Staples, Inc., as of January 2010.
Jeff Bezos founded Amazon.com, Inc. in 1994 and the site went online in 1995. The company was originally named Cadabra, Inc., but the name was changed when it was discovered that people sometimes heard the name as "Cadaver". The name Amazon.com was chosen because the Amazon River is one of the largest rivers in the world and so the name suggests large size, and also in part because it starts with "A" and therefore would show up near the beginning of alphabetical lists. Amazon.com started as an online bookstore, but soon diversified, selling DVDs, CDs, MP3 downloads, computer software, video games, electronics, apparel, furniture, food, and toys. Amazon has established separate websites in Canada, the United Kingdom, Germany, France, Italy, Japan, and China. It also provides international shipping to certain countries for some of its products.
Jeff Bezos: Raising Capital for Amazon.com
It's been a rough ride for Amazon.com since it raised $54 million in 1997 in one of the earliest blockbuster Internet initial public offerings. The e-commerce pioneer saw its market capitalization soar to $32.1 billion and then plummet to $8.9 billion when the Internet bubble burst; it watched brick-and-mortar retailers stream online to compete on its digital turf; and it lost billions of dollars over a span of six years, to the point where some dismissed the site as "Amazon.org" because, as the joke went, it appeared to be a not-for-profit company.
Yet according to Jeff Bezos, Amazon.com's 39-year-old founder and CEO, his biggest challenge came in 1995 when he tried to raise $1 million in seed capital to launch his company and keep it operating for at least two years. "There was a time there when the whole enterprise could have been extinguished before it had even gotten started," he says.
During the now legendary trek from New York to California in 1994, Bezos' wife McKenzie drove while he used his laptop to write a business plan for a bookstore that would use the power of an emerging networking technology - the Internet - to revolutionize retailing.
If it had taken him just another year or two to reach Silicon Valley, he would have found investors clamoring to fund his idea, Bezos says. But the investment frenzy that sparked the go-go days of the Internet bubble wouldn't kick in until 1997. Then, he adds, "people were raising $60 million with a single phone call."
Serial entrepreneurs - those who have a track record of starting up several companies - usually find venture capitalists' doors wide open, but Bezos had no such base from which to raise $1 million. The amount itself was too low to pique investors' interest. He did, however, have a $100,000 investment from his parents, the "classic seed round that comes from people who are betting on the entrepreneur rather than on the startup idea," Bezos notes.
Banking on a few contacts he had from his days working on Wall Street, Bezos managed to line up meetings with several angel investors in Silicon Valley. "I talked to all the people I knew who I thought could afford to invest $50,000," he says. Over a six-month period in early 1995, Bezos met with about 60 private investors. At the same time, he was also recruiting programmers to develop the web site and working out the details of starting a company that, as yet, had no precedent. Raising the money "was more difficult than we expected," he says. "It is hard to get people to invest $50,000 because the worst case outcome is not that unlikely; and the worst case outcome is that you lose your entire investment."
Although no "capital crunch" existed in 1995, investors were still in the habit of carefully evaluating each business plan before opening their checkbooks. With little understanding or faith in the Internet's potential, they were skeptical. "We got the normal comments from well-meaning people who basically didn't believe the business plan; they just didn't think it would work," Bezos says. During his visits to investors, he recalled being told things like: "You can special order these books" … "Why would someone buy them online?" … "If you're successful, you're going to need a warehouse the size of the Library of Congress."
What made Bezos' challenge so difficult was that he needed to raise the entire $1 million at one time. He didn't have the luxury of getting $50,000 one week and then another $50,000 several weeks later. If somebody puts in $50,000, they worry that an entrepreneur might fritter away that money "before it could be combined with the rest for maximum benefit," Bezos says. "So toward the end of the process, it has to be synchronized."
Bezos never considered lowering the amount of capital he was seeking. "It wasn't a practical solution." If he had suddenly settled for $500,000, investors would have looked askance. "They would have said, 'What has changed so that now you only need $500,000, and is my $50,000 going to be at risk because you didn't raise the $1 million?'"
But a few prescient investors sensed that Bezos was ready to capitalize on a seismic shift that would revolutionize nearly every aspect of the business world. Other companies that would later attain legendary status - like Netscape, which created the Web browser for non-technical Internet users, and Yahoo, which cataloged the exploding number of web sites - were appealing for seed money as well. The excitement about the web's potential was quietly beginning to percolate.
Bezos had more than just his persistence to help convince these wary private investors. Using research from John S. Quarterman, one of the earliest people to collect Net usage data, Bezos reported to his investors that the web was growing at 2,300% a year. "Things growing at 2,300% are invisible today and everywhere tomorrow," he told them. The business plan he had typed on the cross-country drive envisioned an online retailer focused on selling books - a "bookstore with more than 10 times the selection of even the largest physical superstores." He explained that he was going to build something unique online that could not be replicated in the physical world or through catalogs.
Investors began to realize that he had planned well into the future. Bezos, for example, talked about connecting the power of the Internet with that of databases. He proposed a "personalization" service that could highlight products to a shopper based on his or her previous purchases. (This service launched in 2000.) "Ultimately that $1 million was raised, $50,000 at a time, with about 20 angel investors," Bezos says. A year later, venture capitalists began to line up outside Bezos' door. The blue chip venture capital firm Kleiner Perkins Caufield & Byers was among those that pumped $8 million into the company, a move that paid off handsomely when the e-tailer went public.
Pizza Teams and Terabytes
Amazon's headquarters look much more prosperous and mature than they did in the late 1990s, when Bezos was fighting the "dot-toast" prediction. Back then the company was on Seattle's skid row. Its old brick building shared a dismal block with a needle exchange and a defunct pawnshop. Bezos flaunted his frugality. He got plenty of flattering press for living in a small downtown apartment and driving a Honda even though his startup had already gone public and he was worth $500 million on paper.
Now Amazon has become a shining city on a hill. As you drive into Seattle, you can look up at its current HQ, a sprawling, ornate, 1920s art deco structure that stands alone atop a leafy ridge. From this high lookout, Amazon's employees enjoy views of Puget Sound and the port, the downtown skyline, the two new stadiums built with the help of Microsoft money, the green hills of Seattle's residential neighborhoods, and the calm blue surface of Lake Washington, where Bezos lives on the Medina waterfront near Bill Gates's enormous $100 million house. Bezos, now worth $5 billion, has shed the modest lifestyle for the mogul lifestyle. Last year his lawyers successfully fought the town's effort to limit house sizes and expansions there, saying that it might restrict his plans. Bezos also owns three linked apartments in the Century, the landmark art deco tower on Manhattan's Central Park West, which he bought from Sony Music mogul Tommy Mottola for $7.7 million.
Bezos's minions are careful to point out symbols of the company's continued frugality despite the pleasantness of the surroundings. The building was a mostly vacant Veterans Administration hospital before Bezos converted it. And all the desks are still modeled after the one Bezos built for himself in the early days (and still uses): a cheap wooden door as the top, connected by metal brackets to sawed-off two-by-fours as the legs. Bezos believes in "conserving money for things that matter," he explains. "If you look at this building, you can open the windows and get fresh air and natural light. Those things actually matter to people. Having a mahogany credenza does not." He laughs powerfully. "There are no mahogany credenzas here. There's no art on the walls. The building is shaped like a T so it has lots of windows. As buildings get bigger, naturally they have more interior volume than they have surface area. That's an unavoidable consequence of geometry!" This is incredibly funny to Bezos. What could be funnier than math? "If you shape a building like a T, or if all the pieces are narrow, you keep the surface area high. That's a great thing about this building."
Amazon still hangs whiteboards in the elevators, as it did back in the skid-row days, when the barely postcollegiate employees were so overcaffeinated and hyperactive that they amused themselves by scribbling away between floors. But Amazon's people are getting older and finally growing up. A large room adjacent to the company cafe, which used to be where employees went to play an array of arcade-style video-game consoles, is now a storage space for old PCs. On Take Your Children to Work Day, the office was filled with kids. Bezos himself, the famed boy wonder, turned 40 this year, and he has two sons, ages 2 and 4, with his wife, MacKenzie. She's a fiction writer; HarperCollins will publish her first book next year. A family friend describes Jeff and MacKenzie as "very playful people," and not just with their sons: The highlight of their wedding reception was outdoor playtime for adults, complete with water balloons.
Bezos dresses in a uniform of blue jeans and a pale-blue button-down shirt. He looks the same at 40 as he did at 30: as bald as a retiree and as thin as a teenager. The laugh seems even larger now than in Amazon's early days, as though he amplified it, consciously or not, in response to the press he got for it. Bezos's personality is "turned up a notch" in public, but it's still authentic, according to Risher, who spent six years at Amazon, the last three as senior vice president for marketing, and currently teaches business at the University of Washington.
If Bezos's personality is decidedly noncorporate, so are some of his ideas about how to run a large organization. One of Bezos's more memorable behind-the-scenes moments came during an off-site retreat, says Risher. "People were saying that groups needed to communicate more. Jeff got up and said, 'No, communication is terrible!' " The pronouncement shocked his managers. But Bezos pursued his idea of a decentralized, disentangled company where small groups can innovate and test their visions independently of everyone else. He came up with the notion of the "two-pizza team": If you can't feed a team with two pizzas, it's too large. That limits a task force to five to seven people, depending on their appetites.
Amazon.com was founded by Jeffery Bezos in 1994. Although Amazon started out as an on-line bookstore, over time it diversified into other products such as video games, furniture, CDs, MP3s, health, family products, etc. According to industry analysts, the growth and success of Amazon.com could be attributed to the leadership style of Jeffrey Bezos, the CEO of Amazon.com. In the late 2000s, Bezos devised a unique strategy for the company which allowed other sellers to put up their products for sale on the Amazon.com site. However, since this move inflicted a risk on the company, of losing its customers to its competitors, most analysts viewed this as a reflection of poor strategy on the part of Bezos. Bezos, however, defended his position by saying that his strategy was aimed at giving the customer a better buying experience. According to him, the customer was more important than the competitor. While some industry experts felt that this was one of Bezos' winning customer-centric strategies, others pointed fingers towards Amazon.com's declining income and questioned the sustainability of Bezos' leadership style.
To understand the company background and growth strategy of Amazon.com
To analyse the leadership model of Jeffrey Bezos, the founder and CEO of Amazon.com
To understand the role of leadership in an organisation's business strategy and legacy.
To ascertain the success quotient of Bezos' leadership style and determine whether or not it would be successful in the long run.
Jeff Bezos founded Amazon.com, Inc. in 1994 and the site went online in 1995. The company was originally named Cadabra, Inc., but the name was changed when it was discovered that people sometimes heard the name as "Cadaver". The name Amazon.com was chosen because the Amazon River is one of the largest rivers in the world and so the name suggests large size, and also in part because it starts with "A" and therefore would show up near the beginning of alphabetical lists. Amazon.com started as an online bookstore, but soon diversified, selling DVDs, CDs, MP3 downloads, computer software, video games, electronics, apparel, furniture, food, and toys. Amazon has established separate websites in Canada, the United Kingdom, Germany, France, Italy, Japan, and China. It also provides international shipping to certain countries for some of its products.
Jeff Bezos: Raising Capital for Amazon.com
It's been a rough ride for Amazon.com since it raised $54 million in 1997 in one of the earliest blockbuster Internet initial public offerings. The e-commerce pioneer saw its market capitalization soar to $32.1 billion and then plummet to $8.9 billion when the Internet bubble burst; it watched brick-and-mortar retailers stream online to compete on its digital turf; and it lost billions of dollars over a span of six years, to the point where some dismissed the site as "Amazon.org" because, as the joke went, it appeared to be a not-for-profit company.
Yet according to Jeff Bezos, Amazon.com's 39-year-old founder and CEO, his biggest challenge came in 1995 when he tried to raise $1 million in seed capital to launch his company and keep it operating for at least two years. "There was a time there when the whole enterprise could have been extinguished before it had even gotten started," he says.
During the now legendary trek from New York to California in 1994, Bezos' wife McKenzie drove while he used his laptop to write a business plan for a bookstore that would use the power of an emerging networking technology - the Internet - to revolutionize retailing.
If it had taken him just another year or two to reach Silicon Valley, he would have found investors clamoring to fund his idea, Bezos says. But the investment frenzy that sparked the go-go days of the Internet bubble wouldn't kick in until 1997. Then, he adds, "people were raising $60 million with a single phone call."
Serial entrepreneurs - those who have a track record of starting up several companies - usually find venture capitalists' doors wide open, but Bezos had no such base from which to raise $1 million. The amount itself was too low to pique investors' interest. He did, however, have a $100,000 investment from his parents, the "classic seed round that comes from people who are betting on the entrepreneur rather than on the startup idea," Bezos notes.
Banking on a few contacts he had from his days working on Wall Street, Bezos managed to line up meetings with several angel investors in Silicon Valley. "I talked to all the people I knew who I thought could afford to invest $50,000," he says. Over a six-month period in early 1995, Bezos met with about 60 private investors. At the same time, he was also recruiting programmers to develop the web site and working out the details of starting a company that, as yet, had no precedent. Raising the money "was more difficult than we expected," he says. "It is hard to get people to invest $50,000 because the worst case outcome is not that unlikely; and the worst case outcome is that you lose your entire investment."
Although no "capital crunch" existed in 1995, investors were still in the habit of carefully evaluating each business plan before opening their checkbooks. With little understanding or faith in the Internet's potential, they were skeptical. "We got the normal comments from well-meaning people who basically didn't believe the business plan; they just didn't think it would work," Bezos says. During his visits to investors, he recalled being told things like: "You can special order these books" … "Why would someone buy them online?" … "If you're successful, you're going to need a warehouse the size of the Library of Congress."
What made Bezos' challenge so difficult was that he needed to raise the entire $1 million at one time. He didn't have the luxury of getting $50,000 one week and then another $50,000 several weeks later. If somebody puts in $50,000, they worry that an entrepreneur might fritter away that money "before it could be combined with the rest for maximum benefit," Bezos says. "So toward the end of the process, it has to be synchronized."
Bezos never considered lowering the amount of capital he was seeking. "It wasn't a practical solution." If he had suddenly settled for $500,000, investors would have looked askance. "They would have said, 'What has changed so that now you only need $500,000, and is my $50,000 going to be at risk because you didn't raise the $1 million?'"
But a few prescient investors sensed that Bezos was ready to capitalize on a seismic shift that would revolutionize nearly every aspect of the business world. Other companies that would later attain legendary status - like Netscape, which created the Web browser for non-technical Internet users, and Yahoo, which cataloged the exploding number of web sites - were appealing for seed money as well. The excitement about the web's potential was quietly beginning to percolate.
Bezos had more than just his persistence to help convince these wary private investors. Using research from John S. Quarterman, one of the earliest people to collect Net usage data, Bezos reported to his investors that the web was growing at 2,300% a year. "Things growing at 2,300% are invisible today and everywhere tomorrow," he told them. The business plan he had typed on the cross-country drive envisioned an online retailer focused on selling books - a "bookstore with more than 10 times the selection of even the largest physical superstores." He explained that he was going to build something unique online that could not be replicated in the physical world or through catalogs.
Investors began to realize that he had planned well into the future. Bezos, for example, talked about connecting the power of the Internet with that of databases. He proposed a "personalization" service that could highlight products to a shopper based on his or her previous purchases. (This service launched in 2000.) "Ultimately that $1 million was raised, $50,000 at a time, with about 20 angel investors," Bezos says. A year later, venture capitalists began to line up outside Bezos' door. The blue chip venture capital firm Kleiner Perkins Caufield & Byers was among those that pumped $8 million into the company, a move that paid off handsomely when the e-tailer went public.
Pizza Teams and Terabytes
Amazon's headquarters look much more prosperous and mature than they did in the late 1990s, when Bezos was fighting the "dot-toast" prediction. Back then the company was on Seattle's skid row. Its old brick building shared a dismal block with a needle exchange and a defunct pawnshop. Bezos flaunted his frugality. He got plenty of flattering press for living in a small downtown apartment and driving a Honda even though his startup had already gone public and he was worth $500 million on paper.
Now Amazon has become a shining city on a hill. As you drive into Seattle, you can look up at its current HQ, a sprawling, ornate, 1920s art deco structure that stands alone atop a leafy ridge. From this high lookout, Amazon's employees enjoy views of Puget Sound and the port, the downtown skyline, the two new stadiums built with the help of Microsoft money, the green hills of Seattle's residential neighborhoods, and the calm blue surface of Lake Washington, where Bezos lives on the Medina waterfront near Bill Gates's enormous $100 million house. Bezos, now worth $5 billion, has shed the modest lifestyle for the mogul lifestyle. Last year his lawyers successfully fought the town's effort to limit house sizes and expansions there, saying that it might restrict his plans. Bezos also owns three linked apartments in the Century, the landmark art deco tower on Manhattan's Central Park West, which he bought from Sony Music mogul Tommy Mottola for $7.7 million.
Bezos's minions are careful to point out symbols of the company's continued frugality despite the pleasantness of the surroundings. The building was a mostly vacant Veterans Administration hospital before Bezos converted it. And all the desks are still modeled after the one Bezos built for himself in the early days (and still uses): a cheap wooden door as the top, connected by metal brackets to sawed-off two-by-fours as the legs. Bezos believes in "conserving money for things that matter," he explains. "If you look at this building, you can open the windows and get fresh air and natural light. Those things actually matter to people. Having a mahogany credenza does not." He laughs powerfully. "There are no mahogany credenzas here. There's no art on the walls. The building is shaped like a T so it has lots of windows. As buildings get bigger, naturally they have more interior volume than they have surface area. That's an unavoidable consequence of geometry!" This is incredibly funny to Bezos. What could be funnier than math? "If you shape a building like a T, or if all the pieces are narrow, you keep the surface area high. That's a great thing about this building."
Amazon still hangs whiteboards in the elevators, as it did back in the skid-row days, when the barely postcollegiate employees were so overcaffeinated and hyperactive that they amused themselves by scribbling away between floors. But Amazon's people are getting older and finally growing up. A large room adjacent to the company cafe, which used to be where employees went to play an array of arcade-style video-game consoles, is now a storage space for old PCs. On Take Your Children to Work Day, the office was filled with kids. Bezos himself, the famed boy wonder, turned 40 this year, and he has two sons, ages 2 and 4, with his wife, MacKenzie. She's a fiction writer; HarperCollins will publish her first book next year. A family friend describes Jeff and MacKenzie as "very playful people," and not just with their sons: The highlight of their wedding reception was outdoor playtime for adults, complete with water balloons.
Bezos dresses in a uniform of blue jeans and a pale-blue button-down shirt. He looks the same at 40 as he did at 30: as bald as a retiree and as thin as a teenager. The laugh seems even larger now than in Amazon's early days, as though he amplified it, consciously or not, in response to the press he got for it. Bezos's personality is "turned up a notch" in public, but it's still authentic, according to Risher, who spent six years at Amazon, the last three as senior vice president for marketing, and currently teaches business at the University of Washington.
If Bezos's personality is decidedly noncorporate, so are some of his ideas about how to run a large organization. One of Bezos's more memorable behind-the-scenes moments came during an off-site retreat, says Risher. "People were saying that groups needed to communicate more. Jeff got up and said, 'No, communication is terrible!' " The pronouncement shocked his managers. But Bezos pursued his idea of a decentralized, disentangled company where small groups can innovate and test their visions independently of everyone else. He came up with the notion of the "two-pizza team": If you can't feed a team with two pizzas, it's too large. That limits a task force to five to seven people, depending on their appetites.
Amazon.com was founded by Jeffery Bezos in 1994. Although Amazon started out as an on-line bookstore, over time it diversified into other products such as video games, furniture, CDs, MP3s, health, family products, etc. According to industry analysts, the growth and success of Amazon.com could be attributed to the leadership style of Jeffrey Bezos, the CEO of Amazon.com. In the late 2000s, Bezos devised a unique strategy for the company which allowed other sellers to put up their products for sale on the Amazon.com site. However, since this move inflicted a risk on the company, of losing its customers to its competitors, most analysts viewed this as a reflection of poor strategy on the part of Bezos. Bezos, however, defended his position by saying that his strategy was aimed at giving the customer a better buying experience. According to him, the customer was more important than the competitor. While some industry experts felt that this was one of Bezos' winning customer-centric strategies, others pointed fingers towards Amazon.com's declining income and questioned the sustainability of Bezos' leadership style.
To understand the company background and growth strategy of Amazon.com
To analyse the leadership model of Jeffrey Bezos, the founder and CEO of Amazon.com
To understand the role of leadership in an organisation's business strategy and legacy.
To ascertain the success quotient of Bezos' leadership style and determine whether or not it would be successful in the long run.
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