Jeff Bezos wanted to start Amazon and needed seed capital. His parents gave him their entire savings – even though they hardly understood what it was about. Three decades later, this initial investment has turned into a fortune of over 40 billion dollars.
What exactly did Jeff Bezos ask his parents? In 1995, Jeff Bezos announced his secure job on Wall Street to pursue a risky idea: an online business selling books. At a time when most people hadn’t heard the term “Internet” or thought of it as a mere toy, he asked his parents for their entire savings – about 250,000 US dollars.
Selling books through a website was a rather risky idea at the time, and the prospects were not necessarily promising. Even Bezos was supposedly unsure if it would work.
Author Brad Stone claims in his book The Everything Store: Jeff Bezos and the Age of Amazon about the founding period of Amazon that Bezos told his parents there was a 70 percent chance they would never see the money again (via The Everything Store, p. 29).
“What is the Internet?”
How did his parents react – and what happened to the investment? When Jeff Bezos asked his parents for their entire savings, his adoptive father, Miguel Bezos, responded with a question characteristic of the time: “What is the Internet?”. Despite this ignorance, the parents decided to trust their son. They invested not only in him but also in his vision – unknowingly laying the foundation for a billion-dollar fortune.
According to the U.S. Securities and Exchange Commission (SEC), the Bezos family’s investment began with the acquisition of 582,528 Amazon shares. A few months later, they increased their stake by purchasing an additional 847,716 shares (via SEC). Altogether, this package amounted to 1,430,244 shares, acquired at about 17 cents each – totaling approximately 243,141.48 dollars.
As Bloomberg reported, this was a significant amount for a couple consisting of a single mother financing her education with a very low income and a Cuban immigrant who had come to the USA at the age of 16.
How do they manage their wealth today? Given the size of their fortune, Jeff Bezos’ parents established their own asset management company called Aurora Borealis.
This is now to be led by a professional CEO, further institutionalizing the family model (via Times of India).
The goal is to manage the estate, preserve the wealth, and continue investing.
The story of the beginnings of Amazon shows, in a way, how much is possible when luck, trust, timing, and entrepreneurial instinct come together. What happens when a billionaire like Jeff Bezos suddenly has no connection to a sewage plant on his own island, read here: Jeff Bezos and other billionaires live on an island without sewage: now they want to send their waste to their neighbors without paying for it
