Two decades ago, Amazon went public as “Earth’s biggest bookstore” — a description bold enough to draw a lawsuit from Barnes & Noble, which claimed that Amazon was inaccurately calling itself a store.
“Barnes & Noble was looming as a big competitor,” said Tom Alberg, an Amazon board member who invested $50,000 in 1995, shortly after Jeff Bezos launched the website. “Amazon was an interesting start-up, but it was still very much a start-up.”
As Amazon celebrates the 20th anniversary of its IPO on Monday, the company is worth more than all but three U.S. companies and is 800 times more valuable than Barnes & Noble. Alberg, who bought his shares at 33 cents apiece, has seen them appreciate to $961.35 as of Friday’s close — and that doesn’t account for multiple stock splits.
Nothing about Amazon’s growth has been typical. From intentionally operating without much profit while whacking every retailer, to turning itself into a major force in enterprise computing and simultaneously creating a voice-powered home assistant, Bezos has made it clear that virtually nothing is off limits.
Way back when Bezos was taking the company public, he was already defying convention.
In early 1997, Amazon was coming off a year in which it generated less than $16 million in revenue. But in March of that year, Bezos gathered his top brass as well as the underwriters and lawyers together in Seattle to get an IPO rolling.
‘You could feel the excitement’
For the next 12 days, lawyers for Amazon and for the bankers spent every waking hour drafting the S-1 prospectus in Palo Alto, and filed the document with the SEC on March 24. That process normally takes six weeks, said David McShea, a partner at Perkins Coie, the firm that represented Amazon.
“Even at the time, they were intent on moving very quickly,” said McShea. “You could feel the energy, excitement and intensity. That was part of the culture.”
McShea recalled a day during the drafting process when he was chatting with Bezos, who was very involved in every detail. They were at the financial printer’s office, and the TV on the wall was airing a commercial for the server company Digital. The entire 30-second clip featured Bezos talking about the growth of the internet.
“I thought, wow, they haven’t even filed to go public yet and the CEO is shown in TV ads for another technology company,” McShea said.
“[Jeff Bezos] was reading every page of the S-1 making sure it was right. He was never operating at 30,000 feet but was always in the weeds.”
Rob Tarkoff, the CEO of software developer Lithium, was a second-year associate with Wilson Sonsini Goodrich & Rosati. At that time, the firm was representing Frank Quattrone and his underwriting team at Deutsche Morgan Greenfell.
Tarkoff worked on a bunch of IPOs in the mid to late 1990s as the Internet market was heating up, but he said Bezos was one of the few CEOs that was side by side with the lawyers.
“He was reading every page of the S-1 making sure it was right,” said Tarkoff. “He was never operating at 30,000 feet but was always in the weeds.”
On May 15, 1997, Amazon shares debuted at $18 and rose to $23.50 by the close, valuing the e-tailer at $560 million. From the split-adjusted close of $1.96, the stock has since multiplied by 490 times.
Amazon CFO Brian Olsavsky is ringing the Nasdaq opening bell on Monday, alongside some employees and customers. Bezos’s absence is no surprise. Despite previously enjoying a long career on Wall Street, he doesn’t participate in earnings calls.
Shareholders don’t seem to care. Like the angel investor Alberg, they’re enjoying the ride.
“I certainly didn’t and I don’t think the others realized what it could become,” said Alberg, the co-founder of Madrona Venture Group in Seattle. “Even though we were highly enthusiastic and positive, it’s very difficult to say I or anybody else saw this.”