Today, Amazon’s market value is around US$2.38 trillion, and founder Jeff Bezos is one of the richest men in the world, with an estimated net worth of US$236.1 billion. But three decades ago, in 1995, raising the first million dollars in seed money for Amazon was more taxing than any challenge that would come later.
A year ago, at the Dealbook Summit in New York, Bezos told Andrew Ross Sorkin that those initial fundraising efforts were a real ordeal, with dozens of meetings with angel investors — the vast majority resulting in “noes” after a lot of hard work.
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“I had to do 60 meetings,” said Bezos, referring to the effort required to convince angel investors to invest tens of thousands of dollars in his company. “It was basically the hardest thing I’ve ever done.”
The structure was simple: Bezos said he offered 20% of Amazon, considering the company had a $5 million valuation. He ended up getting about 20 investors, each putting in about $50,000.
But in 60 meetings he held during that period, 40 investors said no — and those 40 “noes” were particularly devastating because, before getting a response, each exchange of conversations required “multiple meetings” and substantial effort.
Bezos said he had trouble convincing investors that selling books online was a good idea. “The first question was: what is the internet? Everyone wanted to know what the internet was”, he recalled.
Few investors had heard of the World Wide Web, much less understood its commercial potential.
Still, Bezos admitted that his brutal honesty with potential investors may have contributed to so many rejections.
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“I always told people I thought there was a 70% chance they would lose their investment,” he said. “In retrospect, I think that may have been a little naive. But I believe it was true. In fact, I think I was giving myself better odds than the real odds.”
Bezos said getting these investors on board in the mid-1990s was absolutely crucial. “The whole enterprise could have ended there,” he said.
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