1 00:00:01,476 --> 00:00:12,918 >> Hi there. Who are you? ≫> I'm Jeff Bezos. ≫> And what is your 2 00:00:12,918 --> 00:00:17,226 claim to fame? ≫> [laugh] I'm the founder of Amazon. Com. ≫> Where did 3 00:00:17,226 --> 00:00:21,065 you get an idea for Amazon. Com? ≫> Well, three years ago, I was in New York 4 00:00:21,065 --> 00:00:25,081 City, working for a quantitative hedge fund. When I came across the startling 5 00:00:25,081 --> 00:00:29,288 statistic that web usage was growing at 2300 percent a year. So I decided I would 6 00:00:29,288 --> 00:00:33,432 try and find a business plan that made sense in the context of that growth. And I 7 00:00:33,432 --> 00:00:38,832 picked books as the first best product to sell online for making a list of, like 8 00:00:38,832 --> 00:00:42,865 twenty different products that you might be able to sell. And books were great, as 9 00:00:42,865 --> 00:00:47,212 the first best because books are incredibly unusual in one respect, and 10 00:00:47,212 --> 00:00:51,376 that is that there are more items in the book category than there are items in any 11 00:00:51,376 --> 00:00:56,278 other category by far. Music is number two. There are about 200,000 active music 12 00:00:56,278 --> 00:01:00,246 CDs at any given time. But in the book space there are more than 3,000,000 13 00:01:00,246 --> 00:01:04,759 different books worldwide, active and in print in any given time across all 14 00:01:04,759 --> 00:01:08,708 languages, more than one and a half million in English alone. So when you have 15 00:01:08,708 --> 00:01:13,409 that many items it literally build a store online that couldn't exist any other way. 16 00:01:13,409 --> 00:01:18,262 And that's important right now because the web is still an infant technology. 17 00:01:18,262 --> 00:01:22,538 Basically, right now, if you can do things using a more traditional method, you 18 00:01:22,538 --> 00:01:26,729 probably should do them using the more traditional method. ≫> What kind of 19 00:01:26,729 --> 00:01:30,830 inventory do you keep? ≫> We inventory the best-selling books at any 20 00:01:30,830 --> 00:01:35,044 given time worth inventorying in our own warehouse, only a couple of thousand 21 00:01:35,044 --> 00:01:39,717 titles. And then have, we do almost in time inventory for another 400,000 titles 22 00:01:39,717 --> 00:01:44,243 or so. We get those from a network of electronic, we order, order electronically 23 00:01:44,243 --> 00:01:47,992 from a network of wholesalers and distributors. We order those today, 24 00:01:47,992 --> 00:01:52,751 they're on our loading dock the next morning. Then for another 1.1 million 25 00:01:52,751 --> 00:01:57,475 titles, we get those directly form 25,000 different publishers, and those can take a 26 00:01:57,475 --> 00:02:01,564 couple of weeks to get. And then the there, there are million of out-of-print 27 00:02:01,564 --> 00:02:06,328 books in our catalog. We have a catalog of two one-half million books altogether. 28 00:02:06,328 --> 00:02:10,750 Those million out-of-print books, some of them we can get., some of them we can't. 29 00:02:10,750 --> 00:02:15,376 But we find them if we can and then we ship them to our customers. We do kind of 30 00:02:15,376 --> 00:02:19,183 a search on those. ≫> What's the almost-in-time inventory? ≫> 31 00:02:19,183 --> 00:02:23,806 Almost-in-time inventory is the phrase we use to describe the whole selection of, of 32 00:02:23,806 --> 00:02:27,777 books that we offer. It's basically the things that you know, below the 2000th 33 00:02:27,777 --> 00:02:32,066 best selling book up to the 400,000th best selling book. Those are the titles we can 34 00:02:32,066 --> 00:02:36,443 get from a network of more than a dozen different wholesalers. So if a customer 35 00:02:36,443 --> 00:02:41,001 orders a book from us today, we order that book from our wholesalers today and that 36 00:02:41,001 --> 00:02:45,498 book shows up on our loading dock the next morning. And then we can ship it to the 37 00:02:45,498 --> 00:02:49,619 customer. ≫> They say one of the toughest things to do on the internet is 38 00:02:49,619 --> 00:02:53,013 to capture mindshare. What was your secret? How did you do that? ≫> 39 00:02:53,013 --> 00:02:57,762 Yeah, even more generally, I agree with you that, you know capturing mindshare on 40 00:02:57,762 --> 00:03:02,007 the internet is extremely difficult. You know more generally, it's the late 41 00:03:02,007 --> 00:03:06,608 twentieth century, not just the internet. You know, capturing attention. Attention 42 00:03:06,608 --> 00:03:10,183 is a scarce commodity of the late twentieth century. And, we, one of the 43 00:03:10,183 --> 00:03:14,959 ways that you can do that, and it's the way that we did it, was by doing something 44 00:03:14,959 --> 00:03:19,243 new and innovative for the first time that actually has real value for the customer. 45 00:03:19,243 --> 00:03:23,514 That's a hard thing to do. But if you do, do that, then newspapers will write about 46 00:03:23,514 --> 00:03:27,488 you, what you're doing. Customers will tell other customers. And the, you'll get 47 00:03:27,488 --> 00:03:31,056 a huge word of mouth fanout. And, and that can really drive and accelerate 48 00:03:31,056 --> 00:03:34,568 businesses. And that's what happened with us. In the first year of opening 49 00:03:34,568 --> 00:03:39,577 Amazon.com to the public we didn't do any paid advertising and all of our growth was 50 00:03:39,577 --> 00:03:43,067 fueled by word-of-mouth and media exposure. ≫> I saw little ads at the 51 00:03:43,067 --> 00:03:47,045 bottom of the column of the New York Times. ≫> That was our very first 52 00:03:47,045 --> 00:03:51,338 advertising. We don't do that any more but at the very, at the very beginning we did 53 00:03:51,338 --> 00:03:56,016 little tiny ads at the bottom of the front page of the New York Times. ≫> I 54 00:03:56,016 --> 00:04:00,059 thought that was very clever. It's sort of using a URL as a macro because I, I read. 55 00:04:00,059 --> 00:04:03,101 ≫> And it expands. ≫> We're a bookstore, click here. ≫> Right, 56 00:04:03,101 --> 00:04:07,087 that's a great way to think of it. ≫> And it worked very well 57 00:04:07,087 --> 00:04:10,959 apparently. ≫> I don't know, you know. The problem with that kind of 58 00:04:10,959 --> 00:04:16,442 advertising is it's extremely difficult to track. ≫> Put a different URL for 59 00:04:16,442 --> 00:04:21,599 every [laugh]. ≫> That's the problem, you want people to start to learn 60 00:04:21,599 --> 00:04:26,327 your URL. So you don't wanna actually use a different one. And, it's very easy. One 61 00:04:26,327 --> 00:04:30,344 of the great things about online ads. We do advertising today in maybe 40 62 00:04:30,344 --> 00:04:36,271 different, on, on different websites, we do banner ads and that advertising is very 63 00:04:36,271 --> 00:04:40,075 easy to track in terms of knowing how effective it is. So we know, for each 64 00:04:40,075 --> 00:04:45,245 piece of creative in each venue, not only how many click throughs we get, but how 65 00:04:45,245 --> 00:04:49,097 many sell throughs we get, how many dollars of revenue it generates per ad 66 00:04:49,097 --> 00:04:53,571 dollar spent on that creative and that venue, and that is a sort of a marketer's, 67 00:04:53,571 --> 00:04:57,828 you know, Nirvana in a certain sense. ≫> Well, it's an exciting place to 68 00:04:57,828 --> 00:05:01,386 be on the web right now. ≫> Oh, it absolutely is. I mean It's just 69 00:05:01,386 --> 00:05:05,604 incredible. This is. What's really incredible about this is that this is day 70 00:05:05,604 --> 00:05:10,011 one, this is the very beginning, this is the kitty hawk stage of electronic 71 00:05:10,011 --> 00:05:14,605 commerce. We're moving forward in so many different areas and lots of different 72 00:05:14,605 --> 00:05:20,981 companies are as well. In the late twentieth Century it's just a great time 73 00:05:20,981 --> 00:05:27,815 to be alive. You know, we're gonna find out that, I think, a millennium from now, 74 00:05:27,815 --> 00:05:34,845 people are gonna look back and say, wow, the late twentieth Century was really a 75 00:05:34,845 --> 00:05:38,297 great time to be alive on this planet.