Jeff Bezos started Amazon in 1994 by quitting his job as a vice president at a New York hedge fund, driving across the country to the Seattle suburbs, and building an online bookstore out of a rented garage. He was 30 years old, had no retail experience, and bet his career on a hunch that the internet would change how people buy things.
From Wall Street to the Garage
Before Amazon existed, Bezos worked at D.E. Shaw, a hedge fund in New York City. He joined when the firm was only two years old and made vice president within four years. In that role, he was tasked with researching new business opportunities on the internet, which was still a niche technology in the early 1990s. What he found was staggering growth. Web usage was expanding at a pace that made almost every other industry look stagnant.
Bezos later said he knew he “might sincerely regret not having participated in this thing called the Internet” if he stayed on the sidelines. He framed the decision using what he called a “regret minimization framework”: he imagined himself at 80 years old looking back and asked which choice he’d regret more. Staying in a comfortable finance job and wondering “what if” felt worse than trying and failing. So he quit.
Why He Picked Books
Bezos didn’t start with a vague plan to sell everything online. He researched product categories methodically and landed on books for a specific reason: sheer catalog size. There were more than 3 million different books active in print worldwide at any given time, with over 1.5 million in English alone. Music, the next largest category, had roughly 200,000 active CDs. No physical bookstore could stock even a fraction of what existed, but a website could list all of it.
That gap was the key insight. Bezos described it as an “incredibly unusual benefit.” You could build a store online that simply couldn’t exist in any other form. He also recognized that the internet was still an infant technology, and people needed a compelling reason to shop online instead of walking into a store. A selection 10 or 20 times larger than the biggest physical bookstore was that reason.
Setting Up in Seattle
Bezos chose the Seattle area, not Silicon Valley or New York, for practical reasons. Washington state had a smaller population, which meant Amazon would have to collect sales tax from fewer customers (at the time, online retailers only owed sales tax in states where they had a physical presence). Seattle also sat near a major book distribution warehouse in Oregon and had a deep pool of technical talent.
He rented a three-bedroom house in Bellevue, Washington, and converted the garage into a workspace. His wife, MacKenzie, helped with early operations. They set up desks made from doors and began writing the code that would become Amazon.com.
The First Team
Bezos didn’t build the site alone. His first hire was Shel Kaphan, a programmer who became Amazon’s foundational engineer. Kaphan and other early team members worked long hours, sometimes hacking away on code late into Friday nights with rockabilly music blasting in the background. Paul Davis, the fourth employee, led the back-end development of the website and was critical to getting the technical infrastructure working before launch. Tom Schonhoff, the fifth employee and a recent computer science graduate from the University of Washington, built the entire customer service department from scratch and worked with Bezos to establish a customer-first philosophy that would define the company for decades.
Other early hires wore multiple hats. Nick Strauss answered customer service calls, wrote code, packed books, and gave presentations. Susan Benson joined the editorial staff, where employees wrote all of Amazon’s first book reviews and crafted personalized product recommendations by hand, a job that eventually became obsolete once Amazon built algorithms to do it automatically. Eric Benson, an engineer, built a preliminary version of the site’s book recommendation system in just two weeks.
Funding the Company
Bezos initially funded Amazon with his own savings. But the biggest early investment came from his parents, Jackie and Mike Bezos, who put $245,573 into the company in 1995. That figure came from a 1997 SEC filing. It was a significant bet for a family backing their son’s unproven startup. Bezos has said he warned his parents there was a 70% chance they’d lose their entire investment.
He also raised money from a small group of angel investors, pitching roughly 60 people and closing investments from about 20 of them. Most of these early backers were investing in Bezos himself, since the concept of buying books on the internet was foreign to almost everyone in 1994.
Launch and Early Growth
Amazon.com went live in July 1995. Orders came in faster than Bezos expected. In the first weeks, employees packed and shipped books themselves from the garage, working on their hands and knees on the floor. Bezos reportedly suggested they get kneepads to make the process more comfortable, and one of his employees countered with the more practical idea of buying packing tables.
Within the first 30 days, Amazon had shipped books to all 50 states and 45 countries. The company had no advertising budget to speak of. Growth was driven largely by word of mouth and the novelty of being able to search and order from a catalog of over a million titles without leaving your house. By 1997, Amazon went public, and its IPO raised $54 million. The stock was priced at $18 per share.
What Made the Difference
Several decisions in the earliest days shaped Amazon’s trajectory. Bezos prioritized selection over everything else, understanding that the internet’s advantage was infinite shelf space. He obsessed over customer experience from the start, building the company’s culture around that principle with Schonhoff and others before the site even launched. And he chose to reinvest revenue into growth rather than pursue short-term profits, a strategy that frustrated Wall Street analysts for years but ultimately allowed Amazon to expand from books into music, electronics, cloud computing, and nearly every other category imaginable.
The company that started with a single product category in a suburban garage now generates hundreds of billions in annual revenue. But the origin story is remarkably simple: one person noticed a massive shift happening on the internet, picked a product category where online shopping had a clear advantage over physical stores, hired a small team of talented engineers, and shipped books off the floor of a garage until the operation outgrew it.