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The Thesis
Bezos left a lucrative Wall Street job because he calculated that the internet was growing at 2,300% per year and books were the perfect product to sell online due to their catalog size and uniformity.
The Story
In 1994, Jeff Bezos was a 30-year-old VP at the hedge fund D.E. Shaw when he noticed that internet usage was growing at 2,300% per year. He created a list of 20 products that could be sold online and concluded that books were the best starting point — there were 3 million titles in print, far more than any physical bookstore could carry, and books were uniform products that didn't need to be tried on or tested. He drove from New York to Seattle, writing Amazon's business plan in the passenger seat.
Amazon launched in 1995 and went public in 1997 at $18 per share. Bezos reinvested every penny of profit into growth — new categories, warehouses, technology infrastructure, and eventually AWS (cloud computing), which became the most profitable part of the business. A $1,000 investment in Amazon's IPO would be worth over $2 million today. Bezos's "regret minimization framework" — he left Wall Street because he knew he'd regret not trying — and his long-term thinking created one of the most valuable companies in history and made him one of the wealthiest people to ever live.
Key Insight
Use the 'regret minimization framework' — when you're 80, will you regret not taking this risk? If yes, take it. The risk of inaction is usually greater than the risk of action.
“I knew that if I failed I wouldn't regret that, but I knew the one thing I might regret is not trying.”
Jeff Bezos
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See how Glen Bradford applies these principles to his own investing. Long Fannie Mae & Freddie Mac junior preferred — conviction meets patience.