Investopedia/Shoshanna Delventhal: How Jeff Bezos Got to Be the World's Richest Man

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How Jeff Bezos Got to Be the World's Richest Man
By Shoshanna Delventhal Updated March 6, 2018 — 10:03 AM EST
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Jeff Bezos is officially the richest person that has ever walked this earth, with his personal fortune eclipsing the wealth amassed by legendary investor Warren Buffet and Microsoft Corp. (MSFT) co-founder Bill Gates. Bezos made the top spot of Forbes magazine's 2018 World Billionaires list with a net worth of $112 billion.

The founder and chief executive officer (CEO) of global e-commerce behemoth Amazon.com Inc. (AMZN) is responsible for running a platform that accounted for 4% of all U.S. retail sales in 2017 and a whopping 44% of digital spend. As digitalization reshapes human behavior and the cloud computing revolution does the same to enterprise, the leader in online retail, with its high-flying cloud computing platform Amazon Web Services (AWS) is only forecasted to propel higher—spelling more good news for its CEO.

When Bezos had his idea for "the everything store," his well-intentioned friends and family tried to talk him out of quitting his "stable job" in finance. Yet Bezos, raised by his teen mom and later his Cuban immigrant stepfather, always dreamed of creating something different, once telling his school teacher that "the future of mankind is not on this planet."
Beyond Books

The tech visionary graduated from Princeton with a major in computer science and electrical engineering. Upon graduating, he turned down job offers from companies such as Intel and Bell Labs to join a startup called Fitel. He went on to launch a news-by-fax service company with Halsey Minor, the founder of CNET. After the venture failed, Bezos become the youngest senior vice president at a hedge fund called D.E. Shaw, working his way up the ranks in just four years.

Bezos could have stayed on Wall Street for the rest of his career if he hadn't been enthralled by the internet's mind-boggling 2,300% surge in 1994. Soon enough, his idea for Amazon was born, and the CEO began making a list of 20 possible product categories to sell online.

Amazon.com, then a platform for selling books, grew in its early stages out of a garage with a pot-belly stove. Bezos, who put his own $10,000 in the company comprised of himself, his wife and two programmers, ironically conducted most of his meetings at the neighborhood Barnes & Noble. Within its first month after launch in July 1995, Amazon sold books in every state in the U.S. and 45 countries around the world.
Beating Expectations

During Amazon's first year, Bezos tried to raise money by predicting $74 million in sales by 2000, far underestimating the reality: $1.64 billion. He managed to gather $1 million in seed funding from angel investors after using up investment from his family, primarily from his parents, who chipped into a significant portion of their life savings. According to the CEO, the first 20 or so outside investors in Amazon put in about $50,000 each for a stake of less than 1%. Each investment would now be worth around $6 billion, representing an 120,000 times return, given the investors held onto their entire stakes and that they had never been diluted by later investors. In June 1996, Amazon raised another $8 million in Series A from venture capital firm Kleiner Perkins. (See also: Amazon Forces Suppliers to Play By Its Rules.)

Amazon went public in May 1997 and turned out to be one of the few startups that survived the dot-com bust. As the platform diversified its product offerings and solidified itself as a market leader and pioneer, annual sales skyrocketed from $510,000 in 1995 to over $17 billion in 2001. In 2013, Bezos revealed his first plans for the company's revolutionary Amazon Prime subscription business, with Amazon Prime Air, which would use drones to deliver to customers.

In 1998, Bezos also became an early investor in Google. While he has not revealed what he has kept of the stock after its initial public offering in 2004, his $250,000 investment would be worth north of $6 billion today. In August 2013, the business mogul bought The Washington Post for $250 million. Since then, its audience and traffic has exploded, surpassing The New York Times in terms of U.S. unique web viewers in October 2015.
Rocket Man

With his booming wealth, Bezos is now able to fulfill his childhood dream of becoming a space entrepreneur. Each year, he commits $1 billion to his space-exploration company, Blue Origin, which in 2016 became one of the first commercial companies to launch a reusable rocket.

After the release of better-than-expected Q4 2017 earnings on February 1, 2018, the shares of Amazon.com Inc. (AMZN) rocketed, which temporarily boosted Bezos' total net worth up to above $120 billion. AMZN, which has gained around 81.6% in the past 12 months versus the S&P 500's 14.74% increase over the same period, is already up 31% year-to-date (YTD).

An SEC filing in November 2017 showed that the CEO sold 1 million shares of his company for $1.1 billion, recently having sold $940 million in May. Following the sale, Bezos still owned about 16.4% of his 23-year-old company.
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