The Dot Com Boom: Bezos Sees the Wave, Rides the Crest, Survives the Crash (Part 3)

Technology waves are easy to see in hindsight, but often hard to see before they arrive. It’s even harder to build enough conviction to take a risk, ride the wave, and build something great.Jeff Bezos did just that. And while the Amazon story has been told many times, it’s fascinating to think about what he saw that gave him the confidence to leave his comfortable Wall Street job to start Amazon.How did he see the wave before most people, and what gave him the conviction to go for it? We cover his key relationship with David Shaw, his market research, and his regret minimization framework.Famously, Amazon focused on books and grew like a rocket ship. How did they navigate the hype cycle and the dot com mania? Was their approach to investing during the boom the right approach? What can we learn from how they navigated the crest at the height of the bubble?Finally, we ask maybe the most important question of all—how did Amazon survive? What were the market conditions they had to navigate? Did they do anything specific to position themselves or did they just get lucky?Chapters(01:20) Increasing return games(05:38) Jeff Bezos’s background(10:27) Market backdrop in the late 1980s, early 1990s(13:54) Jeff Bezos meets David Shaw(16:47) How Jeff Bezos sees the wave and builds conviction(32:22) How Amazon navigates the wave(35:25) Joy Covey hired as CFO(36:27) Amazon’s investment philosophy during the boom(42:40) How Amazon survives the crash(44:25) Amazon’s financings(49:41) The market crash and Amazon’s reaction(52:50) Why did Amazon survive?(57:50) See the wave, ride the crest, survive the crashReferencesThe Everything Store: Jeff Bezos and the Age of Amazon by Brad StoneInvent & Wander: The Collected Writings of Jeff BezosAmazon SEC filings & shareholder letters from 1996-2002“Riding the Perilous Waters of Amazon.com” by Peter de Jonge, New York Times Magazine, published on March 14, 1999 (link)Increasing Returns and the New World of Business by W. Brian Arthur (link)2,300x web growth from ‘93-’94, John Quartermann, Matrix News, Vol. 4, No. 2 (link)Acquired Episodes (History, Tom Alberg) This is a public episode. If you would like to discuss this with other subscribers or get access to bonus episodes, visit www.backtestpodcast.com