Jefferson, who had called Jaesung aside, still had his innocent Bogus-like face with a widening forehead, but his eyes flashed with the sharp glint that would evolve into the bald Terminator era of the future.
“What’s the matter? Is the preparation for Amazon.com going well?”
“I’ve been preparing so hard that it feels like my forehead is getting wider.”
He wanted to say it wasn’t a feeling but a fact, but he decided to protect the remaining pride of the man.
Still, Jefferson had a nicely shaped head, so baldness would suit him well, and it wasn’t a big worry.
“It’s nothing else, but I’m planning to launch Amazon.com in the middle of this year, and the books are more expensive than I thought.”
“Isn’t it because Jefferson is collecting rare editions and out-of-print hard-to-find books?”
“If there are books hard to get offline, won’t customers come looking? And the consumers who buy these books keep coming back once they purchase.”
A book distribution expert had advised Jefferson to start Amazon.com with 300,000 titles, but Bezos greedily launched the business with an overwhelming 2 million books.
Thanks to that, he advertised with the title of the bookstore with the most books in the world, but the initial investment costs ballooned accordingly.
For most general books still in print, the system was to order from suppliers when site orders came in, receive them, and ship directly, but hard-to-find books were personally acquired and stockpiled in the garage.
Choosing books as the first item was a wise decision.
In the future, it would expand into various business sectors and grow into an online shopping mall site, but with capital limitations now, books were the most manageable item.
No expiration date made storage easy, and shipping was more convenient than other items. The one drawback was that there were so many types that management wasn’t easy, but that would be solved as the business expanded, and it was proof of a correspondingly large market.
“So, what I’m saying is, do you have any thoughts about investing more in Amazon.com? You’ve been watching from the side and helping build it, so you know well that the chances of success are high.”
The cunning Jefferson Bezos knew that during winter break, Jaesung had stayed at the home of Walmart founder Sam Walton and overhauled the headquarters’ logistics system.
His mother had brought gifts for the Bezos children when returning to Seattle, and while talking about life in Arkansas, she naturally revealed how much Jaesung had earned.
“I can invest, but how much do you need? And how much equity will you give?”
Before Amazon truly started, he had invested $500,000 and received 19% equity, but if he got another 19%, it would become 38%, a burdensome proportion.
“We’ve secured a lot of space in the meantime, and a lot of funds have been invested, so I can’t offer the same terms as before. I can give 10% equity for $1 million, and if the business goes as planned, it could be a tremendous opportunity.”
The investment amount doubled, and the equity received was nearly halved, but as Jefferson said, considering Amazon.com’s future, not accepting this would make one a fool.
Amazon.com, starting business in July this year, would generate $15,000 in sales in the first month and hit it big.
Afterward, recording over 200% growth annually until 2000, Amazon.com would become the first internet e-commerce site to have over 10 million members in just one year.
And in May 1997, it would list on Nasdaq with over 900% growth, and in 1999, Jefferson Bezos would be selected as Time magazine’s Person of the Year.
At that time, Bezos’s wealth would exceed $10 billion, making him the 19th richest in America, but a massive crisis would arrive the following year.
Riding the dot-com bubble, it acquired several companies that would fail, and got directly hit by the bubble collapse.
Stock that had exceeded $100 per share would plummet to $6, and Jefferson’s wealth would shrink to $1.5 billion.
Jaesung planned to liquidate his stocks when Amazon.com’s share price approached $100, likely selling most of his equity back to Jefferson, which could make the damage he suffered even greater.
Still, since it survives the end of the bubble and builds a real online empire, I should help again when it crashes.
He had already planned to liquidate his equity due to opinion clashes when Jefferson frantically conducted strange M&As at the tail end of the bubble.
“Okay. As Jefferson says, Amazon.com seems like it will succeed, so I’ll take 10% equity for $1 million. I especially liked the flywheel theory.”
“Haha. That’s the engine and core of business growth. It’s a strategy even businessmen find hard to understand, but James is different as expected.”
The flywheel model, also called the napkin sketch because Jefferson drew it on a napkin during a meal, was a diagram showing how customer experience and customer growth create a virtuous cycle that impacts company growth.
The flywheel had two circulating wheels: the first started with product selection (Selection) creating customer experience (Customer Experience), increasing traffic (Traffic), which increased sellers (Sellers), circulating and growing the company.
The second wheel was company growth creating a lower cost structure (Lower Cost Structure), leading to lower prices (Lower Price), connecting back to customer experience (Customer Experience).
This virtuous cycle structure drove company growth, and the model would be used as a textbook by countless startups.
Jefferson really wasn’t ordinary. Amazon.com was also the first to introduce personalized recommendations using big data.
Now he was a poor startup CEO scrimping on desk money in his home garage, using a desk he made by dismantling a door himself, but in the future, he would become the man who paid the world’s largest alimony.
He gets along so well with MacKenzie now—do men automatically stray when they get rich?
He recalled the future bald Jefferson facing fierce resident backlash while renting out all of Venice for a grand wedding.
Jaesung decided to watch his changing appearance up close and use it as a negative example.
“The contract can just change the amount and equity from the previous one and keep the rest the same, right?”
“There are no additional special clauses. Don’t forget that when liquidating equity, I am the primary buyer.”
Having decided on the investment, Jaesung called his father and explained the progress.
His father, now accustomed to signing contracts on his behalf, accepted Jaesung’s opinion without much comment.
This time Jefferson had approached first for investment, and Jaesung, acquiring 29% of Amazon.com equity for a mere(?) $1.5 million, danced a joyful jig.
“Oppa, what are you doing?”
“I tried copying the dance you usually do.”
Expressing joy as a major shareholder of Amazon, his sister, instinctively sensing dance energy, opened the door and came in.
“That’s not how you do it. I’ll show you.”
In Jaesung’s memory, it was clearly a move future idols would dance, but Jaeeun was creating difficult choreography herself.
He briefly wondered if his sister had also regressed, but judging from her usual behavior, it seemed not.
Quickly letting go of the thought, he danced with his younger sister as an excellent older brother.
Their mother passed by, saw the two dancing, and secretly filmed it on home video, but Jaesung, in a good mood from easily increasing his Amazon equity, didn’t notice.
Funds depleted from the Arkansas trip had comfortably replenished, Amazon equity had increased, and with a happy winter break, the day to return to school approached.
“Let’s see. There should be companies worth investing in now.”
Since it was right before the dot-com bubble fully started, surprisingly few investment-worthy sites stood out.
While scouring internet sites, he spotted prey.
“Right. This one existed. Why didn’t I think of it?”
He found a company he liked, but since he couldn’t visit directly, he called the listed number.
“Hello. This is Mosaic.”
“Hello. I’m calling because I want to invest in the web browser your company made. Are you accepting equity investments?”
When he expressed investment intent, the other side paused to think before answering.
“We’ve already agreed to receive $5 million from Perkins Caufield. We should be financially comfortable for now.”
Hearing they had agreed to investment from Perkins Caufield, Jaesung’s good mood evaporated.
For Jaesung, who had returned to the past and was preemptively investing in future successful companies, the biggest enemy was the venture capital firm Perkins Caufield, founded in 1972.
Perkins Caufield, mainly investing in seed and early rounds, had the world’s largest assets under management and, based in Silicon Valley, led startup culture.
Perkins invested in Google, Amazon.com, AOL, Twitter, and many other successful companies.
Since Jaesung was an individual and a middle schooler, competing with a decades-old firm was difficult.
But giving up would be a shame for the returns.
Even Perkins Caufield doesn’t succeed in every investment. I have a 100% win rate, so I’m in a much more advantageous position.
There was still opportunity, so Jaesung decided to invest at least partially.
“$5 million from Perkins— you got a lot from a firm that’s hard to receive investment from. How much equity did you give?”
Usually specific figures aren’t disclosed, but it was still an era when startup founders were soft, and surprisingly, they readily revealed confidential information.
Besides, it would be public upon IPO anyway, so they weren’t too concerned.
“We agreed to give 49% equity.”
“Half—that seems like too much. Perkins will provide that much support, but they’ll take a lot too.”
As a venture capital firm, Perkins Caufield extracted more from novice entrepreneurs. The higher probability of business failure was natural from Perkins’ perspective, but Jaesung, knowing the company wouldn’t fail, could offer better terms.
“I know well that developing a web browser doesn’t require that much money. How about I invest $3 million for only 30% equity?”
“I’m interested, but it’s not something to decide over the phone. If it’s okay, we’d like to visit in person.”
“Then I’ll send the address, so please come. It’s Seattle, so not too far from San Francisco.”
“Understood. Please let me know the address and a date for a meeting, and we’ll discuss and contact you.”
Marc Andreessen, CEO of the internet web browser company Netscape Navigator, felt slight doubt at Jaesung’s young voice but, hearing such professional content, didn’t think he could possibly be a middle schooler.
The following weekend, Marc Andreessen and Jonathan Clark, co-founders of Netscape Communications, came to Seattle.
“This is definitely the address, right?”
“This is a home garage? Did we come to the wrong place?”
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