When Amazon was young: the early years

Originally known as "Cadabra," Amazon was doing $20k in sales a week two months after launch

As our readers know, Vator has started a series called When they were young.

It's a look back at the modest days of startups, what traction they had in their first few years, and how they evolved. In the end, we hope to provide a glimpse into what great startups looked like in their first three years.

Stories like these are always well received because it reminds us that anyone, regardless of pedigree and environment, can rise above the noise and have great influence. They show us the value of being resilient, persistent, and committed. If we can follow their footsteps, maybe we too can have similar success.

My last segment in this series focused on Square. This segment is on Amazon.

Amazon's First Year ------ 

Founded: On July 5, 1994, Jeff Bezos subscribes for 1,700,000 shares of the common stock of Cadabra, Inc., and agrees to pay the sum of $10,000. It initially operates out of Bezo's house in Seattle.

Founders (ages at the time): Bezos (30)

Initial product description:  Amazon is originally known as 'Cadabra," a play on abracadabra, but the name is changed for sounding too much like "Cadaver." Bezos renames it Amazon for two reasons: first, because it's the world's biggest river, and, second, at the time websites were often listed alphabetically. 

The company's original tagline is, "Earth's biggest book store."

"Our timing was good, our choice of product categories -- books -- was a very good choice. And we did a lot of analysis on that to pick that category as the first best category for E-commerce online, but there were no guarantees that that was a good category. At the time we launched this business it wasn't even crystal clear that the technology would improve fast enough that ordinary people -- non-computer people -- would even want to bother with this technology. So, that was good luck," Bezos said in an interview in 2001. 

Traction, at nine months: On April 3, 1995, John Wainwright buys the first book sold on Amazon: "Fluid Concepts & Creative Analogies: Computer Models of the Fundamental Mechanisms of Thought," by Douglas Hofstader. 

"I was a very close friend of the founding engineer of Amazon, and was working at an Apple/IBM joint venture called Kaleida Labs. Shel Kaphan [widely noted as Amazon’s first employee] worked at Kaleida Labs and in 1994 he decided to leave to work on this crazy idea of an online bookstore. We all thought he was crazy to do that. He kept me up to date on what he was doing. He sent me an email and said, ‘Create an account and order some books.’ I thought I was going to get some free books out of it. But they took my credit card and charged it!" Wainwright said in an interview in 2015. 

Amazon's Second Year ------ 

Launch, at one year after founding: After being in beta for a year, with 300 test users, Amazon goes live on July 16, 1995.

Traction, at one year and two months after founding, two months after launch: In its first two months of business, Amazon sells to all 50 states and over 45 countries. By the end of August, its sales are up to $20,000 a week.

Revenue, at one year and five months after founding, five months after launch: By the end of 1995, Amazon has done $511,000 in sales. Average daily visits are 2,200.

First funding, at one year and 11 months after founding, 11 months after launch: In June 1996, Kleiner Perkins Kaulfield and Beyers invests $8 million in Amazon.

"There are a lot of VC firms that can add value," but Kleiner and Doerr "are the gravitational center of a huge piece of the Internet world," Bezos tells the Washington Post in October 1996. "It's the equivalent of prime real estate, and we can get a lot of value from that," 

Amazon's Third Year ------ 

Revenue, at two years and five months after founding, one year and five months after launch: By the end of 1996, Amazon has done $15.7 million in sales.

Press coverage, at two years and six months from founding, one year and six months from launch: on January 5, 1997, Bezos is interviewed by CNET, where he gives a tour of the company's warehouse, which is not yet automated. 

Traction, at two years and eight months from founding, one year and eight months from launch: In March 1997, average daily visits are 80,000.

IPO, at two years and 10 months from founding, one year and 10 months from launch: on May 15,1997 Amazon IPOs at $18.00 per share, raising $54 million.

Revenue, at three years and five months after founding, two years and five months after launch: by the end of 1997, Amazon sees sales grow 838 percent to $147.8 million, according to a shareholder letter from Bezos. Accounts grow 738 percent to 1.5 million.

Amazon's Fourth Year ------ 

First acquisitions, at three years and 9 months from founding, two years and 9 months from launch: on April 27, 1998, Amazon announces its first three acquisitions.

It buys the Internet Movie Database, a comprehensive repository for movie information on the Internet; Bookpages, one of the largest online bookstores in the United Kingdom; and Telebook, which is Germany's number one online bookstore.

"These acquisitions will enable Amazon.com to quickly offer European consumers the same combination of selection, service, and value that we now provide our U.S. customers," Bezos says. "I'm excited about these companies because each has a relentless focus on customer service, an unwavering commitment to Internet commerce, and a smart, innovative management team."

Product, at three years and 11 months from founding, two years and 11 months from launch: In June 1998, Amazon opens its music store, its first product line to expand beyond books.

Amazon's Fifth Year ------ 

Product, at four years and four months from founding, three years and four months from launch: In November 1998, Amazon opens its third product line with the launch of its video store. It also opens a holiday gift store. 

Traction, at four years and six months after founding, three years and six months after launch: Thanks to a strong holiday season, Amazon announces that its fourth quarter sales in 1998 were approximately $250 million, more than three and one-half times 1997's fourth quarter sales of $66 million.

Based on fourth quarter sales, Amazon achieves a $1 billion annualized sales level in 1998. 

First investment, at four years and seven months after founding, three years and seven months after launch: In February 1999, Amazon makes its first investment in Drugstore.com, which offers more than 15,000 brand-name personal healthcare products, extensive product information, and a licensed pharmacy.

Amazon takes a 46 percent stake in the company.

Product, at four years and eight months after founding, three years and eight months after launch: In March 1999, Amazon launches Auctions, its online auctions site.  

Amazon today

In its most recent quarterly earnings, Amazon saw $32.7 billion in sales.

The company's stock is trading at $740.34 a share, with a $350.22 billion market cap. Earlier this year, it passed Exxon Mobile to become the fourth most valuable company in the world.