Maçon—The Entrepreneurship Cell of IBS
"If you double the number of experiments you do per year you’re going to double your inventiveness." - Jeff Bezos
TALE OF THE BIGGEST ONLINE RETAIL ASHAY DESHPANDE
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ver heard of the term bootstrap? It refers to the finance of a business which is neither from equity financing nor from venture capital. It is when YOU from your personal wealth pull out the capital needed for your start-up or even via the operating revenues of your new venture. Similar was the case with Jeffrey Preston Jorgensen who is today known as ‘Jeff Bezos’ – the founder & CEO of Amazon.com! He approached his parents for the initial investment towards his start-up and the only question that his dad asked him was ‘Son, what is the internet?’
(there were some more in consideration earlier that included CDs, hardware & software). What was the reason behind it? It was mainly due to its collective worldwide demand and also the cost-effectiveness of books. They had kept a bell in the office – not a doorbell of course – a bell that would ring once someone made a purchase via ‘Amazon.com’. And funnily, the employees often checked if the purchaser is someone they knew. In due course of course they had to turn off the bell since it rang quite often because the site was gaining huge popularity and traffic. And to manage this traffic, the servers took so much power that Bezos and his wife wouldn’t be able to operate even a vacuum in the house without blowing a fuse. However, as you know, people in all 50 states of USA as well as people from 45 different countries bought books from the site within the first month itself.
That question shouldn’t surprise you considering that it was the year 1994. Today the global percentage of internet users is close to 40% but during 1994 it was less than 1%. Now you realize that the question raised by Bezos’ dad is totally justified. Even after warning his parents that there is close to 75% chance that their money would go waste, they still believed in their son and took the risk. The rule of high risk – high return is true in not only business but any field for that matter.
Problem solving ability is one strong pre-requisite when it comes to sustaining a business. And that is what Amazon did to save itself from going insolvent. What was this situation? It was that time when Amazon wasn’t in the need of much inventory and nor did have much money - but Book Distributors kept a mandate for the retailers to order 10 books at a time. Consequently, Amazon’s smart squad found a gap. Even if the suppliers mandated that Amazon ordered ten books, the company didn't require ‘taking delivery’ of that many. Hence, they would place an order of the one book they genuinely needed, and nine copies of an ambiguous lichen book, which was continuously out of stock.
To begin with, Bezos had jotted down a list of 20 effective products that could do well on the internet. Although later on, ‘Books’ was the only product that he circled upon and put a green tick mark
Every company was once a start-up and every startup faces huge problems. Amazon.com was once upon a time tremendously understaffed wherein some no circumstances have a dearth of workforce to ! 12