Your garage holds more than just your cars and rarely-used power tools. It holds the potential for greatness. The wide-open floorplan and separation from the rest of the house mean that the garage is the perfect room for making noise, as countless hobbyist handymen or teenage bands have discovered. It should come as no surprise, then, that many of the greatest companies in the world got their starts in garages.
Join us as we explore these achievements through a running blog series, updated every Monday. We’re interested in learning all there is to know about the creativity produced in the most pivotal garages in history, and we’ll bring all of our findings straight to you.
Welcome to Garage Greatness.
Amazon.com is the largest Internet-based retail company in the United States, and the 6th-most-visited website in the world, but it hasn’t gotten to that lofty position without some growing pains. Amazon in one of the newest companies we’ll be covering in Garage Greatness, since they made their first sale in 1995, a mere twenty years ago. In those twenty years, Jeff Bezos, the manically-driven mastermind behind Amazon’s record-shattering success, has moved his business from a garage-based bookseller to a household name and competitor in nearly every industry and country around the globe. At the beginning, however, it began in a garage.
Bezos’s name is perpetually and inseparably connected to that of Amazon, but Bezos didn’t found the company until he was thirty years old. His early life was influential on his eventual success. He learned self-reliance from his grandfather, a rancher who’s property Bezos visited every summer. Bezos learned to fix problems himself, with a stubborn tenacity and focus that would, later in life, make him an infamously uncompromising boss.
By 1994, Bezos was Vice President of D.E Shaw, a financial firm. He saw a statistic that year that would change his life, and the lives of millions of people around the world. In the Spring of 1994, web usage was growing at an alarming 2300% a year. The growth rate seemed absurd to Bezos, but he resolved to get involved with the early growth of the web before he was left behind. Bezos knew that he would regret not getting involved with something as revolutionary as the web, so he quit hisWall Street job and moved out to Seattle with his wife MacKenzie.
Originally, Bezos wanted to name the company “Cadabra,” a spoof of the magician’s phrase “Abracadabra”, but when he was misheard over the phone as having said “Cadaver,” he decided to find a new name. Amazon satisfied his desire to have a unique and exotic name, while still evoking the size and reach that he knew Amazon would one day have. His initial funding mostly came from his parents, neither of whom were knowledgeable about what the Internet was. Although they didn’t understand his idea, they believed in their son’s dream and gave him most of their life savings.
At first, Bezos compiled a list of 20 products that could sell well online. He identified that “hard goods,” items like electronics and books that consumers don’t have to touch, smell, or feel before buying. Although nowadays buying perishable items like food or plants online doesn’t seem impossible, electronic commerce was still a young industry without very much consumer trust. On the drive to Seattle, Bezos had written out much of his plan for the company, and he had decided to sell books. Books were universally desired but not universally available, so he decided to offer a wider selection of books that local booksellers, at more competitive prices. Using his shipping infrastructure and lack of overhead, Bezos hoped to corner the textbook and literature markets.
Amazon was a quick success. Bezos and his wife were running the company out of their two car garage, using so much electricity with the servers running amazon.com that they couldn’t run a hair dryer or vacuums without blowing a fuse. Amazon, at the time just an online bookstore, drove competitors out of business and claimed the majority of internet booksellers before competitors had even established their websites. the site was actually implemented so quickly that it was rife with bugs, such as the amusing fact that customers could purchase negative books, which would cause their accounts to be credited.
In fact, Bezos and his wife had moved into their home specifically because it had a garage.
Bezos wanted a story similar to other silicone-valley legends like Hewlett-Packard, a story of being founded in a garage. Quickly, the space because too small for his growing operation. At first, a bell was rigged to the computer so that it would ring whenever someone made a purchase. It wasn’t long before the orders were so regular and quick that the bell became incredibly annoying and was silenced. Within the first month of sales, Amazon had already shipped packages to all 50 states and 45 different counties.
Moving out of the garage, Amazon was relocated to an industrial neighborhood and set up office space made from doors and sawn-off two-by-fours, a trend that is honored today with many of Amazon’s desks still being made from old doors. During this early time in the company’s history, the space used as a warehouse could only hold a couple hundred books and daily orders were still in the single digits. This would not be the case for long, as Yahoo noticed Amazon’s new presence and offered to showcase the fledgeling company on the “What’s Cool” page that Yahoo curated. This offer came just three days after Amazon’s launch, and although Bezos was at first weary of flooding his small team with new orders, he established a trend by jumping in headfirst and adopting a decided policy of worrying later.
That week, Amazon sold $12,000 worth of books. The next week, it was $15,000. The sales poured in and the team ended up working until two or three every morning, sitting on their knees on a concrete floor labeling books for shipping. Bezos’s reaction was to suggest that everyone wear knee pads.
It took less than a year for Amazon to reach the point of selling 100 books an hour, with virtually no advertising. Bezos handled customer service for the company as long as he could keep up, but eventually ended up hiring a team of 500 people by 1999.This group is rife with stories of Bezos’s high expectations and uncompromising leadership, such as when the staff fell a week and a half behind answering emails and the manager received a call from Bezos himself, complaining about the backlog. After the manager told Bezos that her team was already answering a dozen emails a minute and couldn’t work any harder, he told the team to finish the backlog over a weekend. Every employee worked 10 hours or more over their normal shifts, earning an extra $200 for every thousand messages they answered. By Monday, the backlog was cleared. Bezos regularly expected employees to work 60+ hours a week, and the business practices of Amazon continue to be a source of criticism for the company.
Amazon had, by this point, grown to sell far more than Books. Bezos instituted the transformative change of allowing reviews to be posted on the site, even negative reviews, but change only served to build consumer confidence and lead to the entire e-commerce industry shifting to this model of sales and reviews. Amazon has acquired several other companies that were either folded into Amazon’s operations or allowed to continue running independently, such as A9, Alexa, Audible, Goodreads, IMDb, Junglee, Twitch, and Zappos. Bezos acquired the Washington Post in 2013.
Reviews were far from Bezos’s strangest decision, however. Many objected to his business plan, which was geared around reinvesting almost all the money Amazon was generating into the company and led to the company not turning an actual profit until fourth quarter 2001, and even then the profit was a pitiful five million dollars, about one cent a share, in spite of the company’s revenue totaling more than a billion dollars during the same quarter. Another unpopular aspect of Bezos’ leadership is his firm stance against communication – he has been quoted as saying “Communication is terrible!” and “Communication is a sign of dysfunction. It means people aren’t working together in a close, organic way. We should be trying to figure out a way for teams to communicate less with each other, not more.”
Bezos believes in decentralizing the company so that employees continue to have original thoughts instead of just falling into patterns or group think, and there are rules at Amazon about keeping teams below a specific size – in particular, below the size that two pizzas will satisfy. The “two-pizza team” idea is widely unpopular among employees but is still practiced today, and tends to keep teams under ten people.
There is no disputing that today Amazon is one of the world powers of retail, rivaled in America only by mega-giant Walmart, and in spite of Bezos’s unpopular leadership decisions the company is still growing and succeeding on every front, perhaps validating his unconventional viewpoint. Bezos intentionally founded Amazon in a garage, specifically to have this story, but that doesn’t make Amazon’s rapid rise to global prominence any less impressive.
This is not an isolated story; great companies and inventions seem to naturally find their starts in garages. Next Monday, Garage Greatness will look at the origins of Hewlett Packard, usually credited as the garage that created silicone valley. HP’s first creation, built in a tiny garage behind the home they were sharing, was the HP200A, an audio oscillator, some of which were sold to the fledgeling Walt Disney Studios. Read all about how David “Dave” Packard and William “Bill” Hewlett took their electrical engineering degrees and founded a technology and hardware company that would define the cutting edge of innovation for decades to come, next week, on Garage Greatness!