It feels like through out this year, Amazon and its visionary founder Jeff Bezos have been in the news pretty much round the clock. The company has been hitting new highs on the market, pushing Bezos up to the second richest person in the world and fast gaining on the richest. It’s launching in India, expanding its web services, increasing Prime, moving into air and drone and being all round bad ass.
I can’t say I didn’t see this coming since as far back as 2012/3 I marked Bezos as my next favorite CEO after the death of Steve Jobs
Recently I started reading the seminal book on Amazon’s history “The Everything Store” x Brad Stone to get more insights on the Amazon story and it’s been such fun. The book is full of anecdotes and insights into how the company we see and know today came to be and it’s a worthy and highly recommended read.
Jeff Bezos was brilliant and gifted from a young age. He was a voracious reader, introvert, showed great initiative and maturity in carrying out personal projects and aced every IQ test out there, So you know he was already primed for great things.
Before he founded his own company, Jeff Bezos worked at Wall Street for David Shaw who ran his eponymous hedge fund, D E Shaw. The hedge fund was one of the earliest quant hedge funds, hiring Math, stats and computer science geeks who used computer algorithms to design and execute trades. The hiring and culture was unashamedly elitist talent wise but laid back culturally and Jeff flourished there. At some point, David Shaw realized the potential of the Internet phenomenon and asked Bezos to identify businesses that could leverage the internet. They came up with, launched and eventually sold a couple Internet based companies but Bezos got stuck on the idea for an ‘everything store’: a store that took advantage of the Internet’s unlimited bandwidth to stock everything imaginable, while simultaneously customizing the site to each customer’s purchase history. The idea proved to be too big to simply run within DE Shaw so Bezos had to leave to start it on his own.
Settling for Seattle, Jeff launched his new company and after circling through several names, landed at Amazon.com
They started with books, branched into music, movies, toys, tools, electronics and so on. Along the way, they fended off competition from Barnes & Noble, Walmart, eBay and co. They went public, patented 1Click technology, launched Prime and expanded agressively across countries and businesses.
24+ years later, they’re the 4th most valuable company on earth and are still growing 16% a year which is astonishing. Plus, they’re still slightly undervalued Even at $995 since I believe their current intrinsic value to be close to $1,100-$1,200 range and still growing.
Even after climbing 35% since I recommended it in January, I think it’s still a buy. I wish they’d split their stock to make it easier to purchase but Bezos has said they have no plans to do so. Oh well.
It remains to be seen what the future holds for the company but if it looks anything like the past, it’s incredible indeed. And even if it isn’t, the company has already certified itself as one of the companies defining the future by inventing it themselves.
It’s so amazing to have witnessed this. Truly.
Anyways, that’s all I have to say on that. I might drop a more technical post on freecash flow next (and maybe highlight how that has been instrumental to Amazon’s rise) so be on the look out.