Jeff Bezos: "Nerd of the Amazon" | 60 Minutes Archive

60 Minutes rewind. Who would have guessed that one of the hottest stocks of all time, one of the fastest growing companies in history, would be a bookstore? That's right, books—one of the oldest products made by man. We didn't. That's because we didn't predict the revolution led by 35-year-old Jeff Bezos, a self-described nerd who almost overnight has become one of the richest men in the world and made many of his investors instant millionaires. That's because his revolution created a new way of buying things by computer over the internet.

And we have been lining up by the millions. He calls his company Amazon.com, Earth's biggest bookstore. You can't drop by— not in person anyway. For the customer, Amazon exists only on the computer screen. But Bezos does have an office, so we wangled an invitation. Where’s Amazon's headquarters? The public relations people told us to come to 15162 Avenue between Pike and Pine in Seattle.

But when we passed the pawn shop and the porno parlor, the wig store, and the down-market teriyaki joint, we didn't see anything that looked vaguely cutting edge. No corporate drives or office towers, just a heroin needle exchange and an old building called Columbia. But it had the number 1516, so we walked inside, and there it was—the logo known to every web shopper in the world.

Upstairs, it doesn't look very high-tech either, more like a college dorm than a corporate headquarters. And then there’s the boss. You generally hear him before you see him; it’s the earpiercing laugh of billionaire Jeff Bezos.

"Now I've heard a lot about your desk—it's a door with 4x4s. Come on, what? I mean, you can afford a better desk than that."

"It's a symbol, yeah, of spending money on things that matter to customers and not spending money on things that don’t. And you don’t need clean carpets."

"What are these things on the floor?"

"Uh, well, these are, um, these are, you know, sticky balls."

"They're obviously—they work."

"Yeah, yeah, that's great; that's very impressive."

Remember, this man is a titan of our time, a giant.

"What kind of kid were you?"

"Well, I was a good student. I always worked really hard. I was nerdy."

"You were nerdy?"

"I was nerdy. That hasn't changed."

"By the way, did you realize it back then?"

"My watch updates itself from the atomic clock 36 times a day, if that gives you any indication."

"Really? I'm afraid so."

"But you did really well, huh, in school?"

"Yeah, I was always a good student."

Bezos went to a Montessori school when he was three. By third grade, teachers knew he was gifted. A year later, he started playing with computers. In high school, he was valedictorian of his graduating class.

"Socially?"

"Socially, I was a little awkward. I think would be one way to put it. Blind dates? Not until I didn’t really date much until like my last year of college, which was at Princeton. Actually, I set up sort of a formal plan to date—I had all my friends set me up on blind dates. None of them worked out very well."

"Maybe it was his intensity?"

“Or maybe it was the way he talks. Listen to the way he describes his company's business plan."

"We believe that this is a critical category formation time."

Bezos uses the same kind of Wall Street wonk talk when he talks or thinks about almost anything, including what he wants out of life.

"The way I made the decision to leave Wall Street and do this was, you know, it sounds geeky to you, but, um, it was a regret minimization framework."

“So this is how I actually made it. If I understand it, if I can translate that into English, does that mean—um, I want to live my life so that in a few decades from now, I'm not going to regret it?"

"That's exactly right. I want to have lived my life in such a way that when I'm 80 years old, I've minimized the number of regrets that I have. And I think actually a lot of people do that. I think they—even if they don’t, you know, call it something as dorky as regret minimization framework—they behave that way anyway; they think that way."

"And but for you it was not carpe diem—it was not wine, women, and song?"

"No, no, no, no. I don’t go in for carpe diem; I go in for regret minimization framework."

Absolutely. When Bezos left that Wall Street job in 1994, he followed that old American edict: Go West, young man. He and his wife didn't know where they were going. In fact, the movers packed their things and were already on the road when Bezos phoned them to say he had decided on Seattle. His other big decision? Books! Sell books—not in stores, but over the Internet.

The company took off like a rocket.

"Did you read the Times this morning?"

"New York Times? Yeah, I saw the Times this morning."

"At one point on Friday, amazon.com's total stock market value surged past $30 billion, making it worth more than a major industrial company like Texaco. That didn't blow your mind when you read it?"

"Well, I think if you're asking for sort of an emotional response, I think it’s very humbling and it creates a sense of responsibility. According to my calculations, you yourself are worth somewhere in the vicinity of $91 billion today."

"I only say that because I've got a follow-up question. Okay, what's with the Honda?"

"This is a perfectly good car."

In July of 1995, from this modest ranch house outside Seattle, Bezos sold his first book. Today, he has five huge warehouses in the United States and Europe packed not only with books, but with CDs and movies. Last year, Amazon sold more than $600 million worth of merchandise over the internet. Local final— that's UC93! It's coming back, and the stock—if you'd bought a $1,000 worth of Amazon stock in 1997, it would be worth between $30,000 and $60,000 today.

Bruce Smith is an analyst for Jeff and Company in New York.

"Is this investing or is it gambling?"

"Uh, right now, with the frenzy we've had, to me it feels much more like gambling because it’s crazy. Well, I don’t find it rational, to be honest with you. It went up almost 400% last year. When have you seen anything comparable? Nothing. But there are huge risks. The internet is real. Real money is being spent; it’s not going to stop. But what you could have is a decline in these stocks of 50-75%."

"But investors keep flooding in."

"Why? Amazon snagged almost 2 million new customers at the end of last year. And like other internet companies, it's growing much faster than those old Blue Chips. For example, internet giant Yahoo is worth more on paper than the total value of Kmart, Hilton Hotels, and Delta Airlines combined. Call it the Revenge of the Nerds. The computer nerds. And the fastest moving titles are over here. Well, here's Stephen King; there's Danielle Steel; sexual McCarthyism—there you go, title of the day. There's no dress code and no hair color code in a place the customer will never see—the Amazon warehouse."

"Computers do everything here."

"Australia, Japan, California—customers generally get their books very quickly. But you can't do this; you know, you can't touch the book, you can't hear the binding creak, you can't smell the paper—and it's a great smell."

"And it is, and I—and that's why it's a very different experience."

With his computers, Bezos used to sell a lot of computer books to computer nerds. These days, Amazon goes everywhere.

"In the last hour, the bestselling book at amazon.com has been The Greatest Generation by Tom Brokaw."

"You think we're going to put that on television?"

"I don’t know; it'll be a test of your credibility. The story will continue after this."

"A while ago, I bought a few books from Amazon. This time, after I logged on, the computer greeted me back, welcoming me by name."

"Is this you?"

"That's you; that's me."

"Okay. The computer also remembered my past orders, and after comparing me with other customers who bought the same books, it calculated which new books I might like to buy—The Untouchable, The Comfort of Strangers, Death and Summer, Breakfast on Pluto, I Married a Communist."

"That's awfully good. I mean, Franklin, that’s very good because I've already bought two of those books in bookstores."

"That's because people who have your same sort of buying profile—that electronic soulmate. This is scary! I've read a lot of these books and bought many of the others."

"Now every time I use your website, you learn more about me?"

"Yes."

"One of your employees has said that you collect half a gigabyte—whatever that is—of information on your customers every day. That's about 350 floppy discs worth. What do you do with that information?"

"That's the data that allows us to predict or try to predict what, you know, what books and videos and music that you would like that you don't, that you haven't discovered yet. All of that data, information about the likes and dislikes of millions of customers is stored here on well-guarded, ultra-secret, dust-free, and very expensive computers."

"Bezos refuses to rule out selling the valuable information to other companies in the future, but he doesn't think his customers are concerned about the issue. And Wall Street isn’t concerned that Amazon has never made a profit—not a dime. In fact, it lost $125 million last year. The company says it's investing for the future. Skeptics say it would have to sell every book being sold in the world today to justify its stock price."

"I think my generation grew up with Sears, and Amazon is worth 20% more than Sears is worth in market capitalization. How do you view that phenomenon that Amazon today is worth more than Sears?"

"Investors are focused on the future. Amazon has growth potential that Sears doesn't. A couple of geeks who sketched out some software could destroy Sears."

"Rob Book— that's the beauty of technology and the microprocessor. We've never seen anything like it."

"But his has seen revolutions before. One thing supplanting another—could Amazon and its tributaries be flowing towards the shopping mall and eventually drown it out?"

"If you were running Walmart today, would you feel threatened by Amazon?"

"Absolutely. Would you decide to go after them?"

"Absolutely. As a matter of fact, they already are. Walmart is suing Amazon for hiring away some of its top executives. As for Barnes & Noble, its stock is worth much less than Amazon's, but in a down and dirty negative ad campaign, Barnes & Noble is reminding readers it has many more books to offer than Amazon."

"It's getting really nasty out there. It seems to me the online bookstore, the Barnes & Noble bookstore, is so big it makes amazon.com look tiny. Seems to me that this is almost a declaration of war."

"Well, it's not just Barnes & Noble, but one of the things—Walmart is suing you."

"That's right, and you're surrounded by enemies. People want to get you. Establishment is big and powerful. Do you ever get scared?"

"Well, I tell people around here to wake up petrified and afraid every morning."

"Do you?"

"I do."

But if Bezos has a case of the jitters, he wasn't showing it last month. He was throwing his annual masquerade ball for the 2,100 Amazon employees he calls his fellow entrepreneurs, his fellow nerds. Behind their masks, they're worth millions of dollars, thanks to generous stock options.

As for Bezos, on paper he's worth more than Ross Perot, Rupert Murdoch, even David Rockefeller.

"It is not uncommon for people who have achieved the kind of startling success you have in such a short period of time develop a pretty strong fear about losing it all. Are you afraid of that?"

"I know we can lose it all. It's not a fear; it's a fact."