Jeff Bezos is now the richest person on earth, with his personal fortune eclipsing the wealth amassed by legendary investor Warren Buffet and Microsoft Corp. (MSFT) co-founder Bill Gates. Bezos made the top spot of Forbes magazine's 2018 400 Richest in America list with a net worth of $160 billion. Jeff Bezos has literally dozens of ideas that span a broad range of investments, all the way from real estate to the retrieval of rocket ship engines from the ocean floor.
The founder and chief executive officer (CEO) of global e-commerce behemoth Amazon.com Inc. (AMZN) is responsible for running a platform that accounted for 4% of all U.S. retail sales in 2017 and a whopping 44% of digital spending. As digitalization reshapes human behavior and the cloud computing revolution does the same to enterprise, the leader in online retail, with its high-flying cloud computing platform Amazon Web Services (AWS) is only forecasted to propel higher — spelling more good news for its CEO.
When Bezos had his idea for "the everything store," his well-intentioned friends and family tried to talk him out of quitting his "stable job" in finance. Yet Bezos, raised by his teen mom and later his Cuban immigrant stepfather, always dreamed of creating something different, once telling his school teacher that "the future of mankind is not on this planet." Bezos even has a website, BezosExpeditions.com, that provides a rundown of 20 or so of his major investments and charitable donations. The name "expeditions" is appropriate since Bezos' investments are not concentrated in just one or two industries or even market sectors; rather, they represent a far-flung exploration of many different business areas and ideas, including media, virtual reality, cloud computing, and homespun arts and crafts.
- Jeff Bezos is perhaps most well known as the founder and CEO of internet giant Amazon.com.
- His net worth has now surpassed $150 billion, making him not only the current world’s richest person but wealthier than anyone else on the planet dating back to at least 1982.
- Just how did Bezos and Amazon become so successful? Let's find out.
Amazon: Beyond Books
The tech visionary graduated from Princeton with a major in computer science and electrical engineering. Upon graduating, he turned down job offers from companies such as Intel and Bell Labs to join a startup called Fitel. He went on to launch a news-by-fax service company with Halsey Minor, the founder of CNET. After the venture failed, Bezos became the youngest senior vice president at a hedge fund called D.E. Shaw, working his way up the ranks in just four years.
Bezos could have stayed on Wall Street for the rest of his career if he hadn't been enthralled by the knowledge that by 1994, the internet was growing at the rate of 2,300% annually. Soon enough, his idea for Amazon was born, and the CEO began making a list of 20 possible product categories to sell online.
Amazon.com, then a platform for selling books, grew in its early stages out of a garage with a pot-belly stove. Bezos, who put his own $10,000 in the company comprised of himself, his wife and two programmers, ironically conducted most of his meetings at the neighborhood Barnes & Noble. Within its first month after launch in July 1995, Amazon sold books in every state in the U.S. and 45 countries around the world.
During Amazon's first year, Bezos tried to raise money by predicting $74 million in sales by 2000, far underestimating the reality: $1.64 billion. He managed to gather $1 million in seed funding from angel investors after using up investment from his family, primarily from his parents, who chipped into a significant portion of their life savings. According to the CEO, the first 20 or so outside investors in Amazon put in about $50,000 each for a stake of less than 1%. Each investment would now be worth around $6 billion, representing a 120,000 times return, given the investors held onto their entire stakes and that they had never been diluted by later investors. In June 1996, Amazon raised another $8 million in Series A from venture capital firm Kleiner Perkins.
Amazon went public in May 1997 and turned out to be one of the few startups that survived the dot-com bust. As the platform diversified its product offerings and solidified itself as a market leader and pioneer, annual sales skyrocketed from $510,000 in 1995 to over $17 billion in 2001. In 2013, Bezos revealed his first plans for the company's revolutionary Amazon Prime subscription business, with Amazon Prime Air, which would use drones to deliver to customers.
In 1998, Bezos also became an early investor in Google. While he has not revealed what he has kept of the stock after its initial public offering in 2004, his $250,000 investment would be worth well over $6 billion today. In August 2013, the business mogul bought The Washington Post for $250 million. Since then, its audience and traffic has exploded, surpassing The New York Times in terms of U.S. unique web viewers in October 2015.
The company's share price reflects this phenomenal growth. The stock has given an over 523% return over the past 5 years and is up 67.7% year-to-date as of October 3, 2018. Bezos owns about 16.3% of the 24-year-old company, making it the biggest source of his wealth. A Securities and Exchange Commission (SEC) filing in November 2017 showed that the CEO sold 1 million shares of his company for $1.1 billion. The last filing, dated August 2018, shows Bezos owning 78.8 million shares.
Amazon boasted of $142 billion in sales in FY 2018.
Bezos also has substantial holdings in more traditional investments such as real estate. His 165,000-acre Corn Ranch in Texas was acquired as the base of operations for his aerospace company, Blue Origin, and serves as the test site for the vertical-landing manned suborbital New Shepard rocket.
His personal real estate includes holdings on both the east and west coast. Bezos has two multi-million dollar homes in Beverly Hills and a 10,000-square-foot apartment in the Century Tower in Manhattan that cost him just under $10 million. Bezos' New York presence is reported to have boosted Century Tower property values even higher, with space selling for $2,000 to $3,000 per square foot. He also has a lakeside property in Washington State, on which he spent $28 million to increase the living space to almost 30,000 square feet.
In 2012, Amazon bought its own South Lake Union headquarters building in Seattle for $1.5 billion, instantly making the company one of the city's largest commercial property owners. Amazon took possession of nearly a dozen buildings, almost 2 million square feet of office space and approximately 100,000 square feet of retail space. Also in 2012, the company spent about $200 million to purchase a three-block area in downtown Seattle that is being developed as office tower space. In 2014, Amazon spent another $50 million to pick up one more square block. In August 2017, the Seattle Times reported that Amazon had just as much office space as Seattle's next 40 largest employers combined.
Bezos has also invested very sizable sums in giving back through charitable donations. In addition to the Bezos Family Foundation that funds several education projects, Bezos has made individual multimillion-dollar charitable contributions to the Seattle Museum of History and Industry, as well as to his alma mater, Princeton University.
In January 2018, Bezos and his wife, MacKenzie, announced a $33 million dollar donation to TheDream.US, an organization working to improve college access for undocumented immigrant youth who were brought to the United States as young children. The grant will provide college scholarships to 1,000 US high school graduates with DACA status.
Media, High Tech, Glass, and Travel
Bezos has an affinity for the technology sector, for media and communication services that facilitate connecting people, and also for just what he considers to be potentially profitable investments. In the media and communications sector, Bezos has invested in Twitter, Inc. and has committed nearly $50 million in venture capital to the popular business news website Business Insider. He acquired The Washington Post in 2013 for $250 million. TeachStreet, Inc., ZocDoc, Inc., and Nextdoor are all platforms for connecting people in which Bezos has invested. Bezos Expeditions has also invested in UNITY Biotechnology, Inc., a healthcare startup targeting diseases related to aging.
In the travel sector, Bezos has invested $112 million and $35 million, respectively, in series B financing of Airbnb and transportation service Uber. Bezos is a big believer in the cloud, as evidenced by Amazon's major push into providing cloud computing services. However, his investment interest does not end with his own company. One of his notable investment successes is Workday, Inc., a company that provides human resource services in the cloud. Shortly after Bezos' venture capital investment in the company, it went public in an initial public offering (IPO) that garnered $684 million. In the sphere of a more traditional retail business, Bezos has also invested in Glassybaby, a company that makes glass-blown holders for votive candles.
The Way-Out-There Ideas
Two of Bezos' investments that engender a lot of discussion and that are considered a bit off-the-wall are the 10,000-year clock and the F-1 engine retrieval project. The 10,000-year clock project is an effort to build a clock into the side of the Sierra Diablo mountain range in Texas, a clock that literally keeps on ticking for 10,000 years. The clock is planned to have a chime generator that generates a different chime sound for each day. Just coming up with 10,000 x 365 different chime sounds like a pretty daunting challenge. Bezos explained the need for the clock by saying today's global problems require "long-term thinking."
The F-1 engine retrieval project is an effort to salvage the engines that powered the Apollo 11 flight to the moon from the ocean floor. Bezos assumes NASA would likely donate the engines to the Smithsonian.
With his booming wealth, Bezos is now able to fulfill his childhood dream of becoming a space entrepreneur. Each year, he commits $1 billion to his space-exploration company, Blue Origin, which, in 2016 became one of the first commercial companies to launch a reusable rocket. on July 18, 2018, Blue Origin sent spacecraft "New Shepard" into high altitude order to test its safety systems, which worked.