Amazon Became What It Is Today Due To This Secret Investment Bezos Made.

He kept it under wraps for years until he legally couldn’t.

His shirt is incomplete. I can’t stop thinking about this…

Actually, ignore the article. Look at it. JUST LOOK at it… It’s quite disturbing, isn’t it?


Me: “Hey, what up?”

Friend: “All good, watching lord of the rings on amazon prime video.”

Me: “Oh, do you know how Amazon grew and became famous?”

Friend: “Geek alert…Can I just watch in peace?”

Me: “But… Bezos?”

Friend: “Let it go, just let it go…”

He doesn’t want to know, but I can ask you, the reader, and start answering immediately, and you can do NOTHING about it. So here goes.

Hey reader, do you know how Amazon rose to greatness? I’m expecting you to say, “Of course, it was an online bookstore, then it expanded to selling everything.”

You’re wrong. This is why they went from stage zero to stage one. But how did they go from stage one to stage thousand? It was AWS-ome. (Get it? It’s exceptionally geeky and lame, if you do know what I mean. If not, let me elaborate on my geekiness.)

Amazon was not profitable for a very long time.

Let’s talk business basics. If you decide to start a bakery, you’ll be looking to get customers, correct?

Alright, let’s say you get one hundred customers per day who order a $5 cheesecake (because cheesecakes are awesome.)

You’ll be making a revenue of $5 x 100 customers x 30 days = $15,000 per month. Look at you, proudly making a living here.

Now let’s say you have to pay the barista (unless ChatGPT is doing that for you… haha? Nope..)

The barista is asking for $5000 per month.

The cheesecake maker charges $2.5 per cheesecake ($2.5 x 100 x 30 = $7500)

The electricity and costs of running your bakery are around $5000 per month.

Let’s assume you have no additional costs. At this stage, your running costs are $17,500.

But you only made $15,000? Oh, so you have revenue, but you are not profitable. Maybe next month, when you sell coffee with your cheesecake, you will become profitable.

Is it bad not to be profitable? Well, you’re not making money. You’re actually losing money. So it’s technically not good for a financial sheet.

But it’s almost an ultimatum in the world of business. Most companies are not profitable instantly. Some take months, some take years, and Amazon took nine years.

So, here I am, reading this book — Amazon Unbound: Jeff Bezos and the Invention of a Global Empire, to fully understand how a startup now has a market cap of over $1 trillion.

Now there are a lot of things that made Amazon giant. However, the conversation here is about a specific product that, according to the book, Bezos and Amazon kept under wraps for a very long time.

Bald head in the clouds.

In 2006, they had a small project that Bezos highly believed in — cloud computing. They believed that there are many startups like Snapchat that need reliable servers and would pay for such a service.

You have to understand that in 2006, cloud computing was not “the cloud” you hear about nowadays. Actually, I’ll make it easier. In 2006, there was no iPhone yet.

So Bezos started investing in Amazon Web Services (or AWS) and did not tell the world how much money AWS is making. They’re legally allowed to do that until they reach a certain level.

The fear was that Google and Microsoft would be aware that Amazon is highly investing in this industry and that they should worry.

Bezos knew that the demand for this product was going to be phenomenal. Nevertheless, Google created its cloud in 2008 and Microsoft in 2010.

Still, if you were managing Google or Microsoft, you would have no idea how much Amazon is making from this cloud computing service they’re offering. You know it’s a good amount. But you also know that Amazon is an online shop, and that’s what they’ll focus on…

They were wrong, all of them except Bezos.

It’s time to reveal.

In 2015, they started to reveal the revenue AWS was getting in. At that moment, two things were obvious:

Bezos was right to bet on cloud computing and keep it a secret.

Amazon is ahead in this race.

They did not slow down. Nowadays, let me tell you a few companies that rely on AWS.

  • Netflix
  • Airbnb
  • Twitch

But that’s not all. Remember how I told you that Amazon was not profitable for nine years? Here’s essentially the most important graph in this article.

This graph tells you that in 2021, 74% of Amazon’s profit was from AWS. If they hadn’t invested in AWS the way they did, this 74% might’ve been non-existent.

Take this home with you.

AWS did not create Amazon. But it helped elevate the giant to its $1 trillion market cap. Was this due to secrecy of Bezos? Maybe, we’ll never know until someone invents a time machine (they might host the time machine software on AWS, though.)

Without AWS, Amazon would’ve still been profitable, but it wouldn’t have been impressive. Of course, they might’ve invested in something else back then that could’ve returned them an even bigger amount (Like… crypto? No? Ok.)

Bezos is far from perfect when it comes to the world of business. I’m speaking of one of his successes. But here’s a glimpse of some of his failures:

  • Launching the fire phone and losing $170 million.
  • Failing with Amazon in China — In 2011, Amazon’s market share in China was approximately 15%. In 2019, it was around 1%.
  • Not paying more to convince Netflix’s founder to sell their business to him. He pitched around $15 million, which was quite fair. But what if he had pitched $30 million (Amazon at that time had over $100m in revenue)? He might’ve owned Netflix with a market cap of $156 billion (and saved billions rather than invest in Amazon Prime Video).

Some of those he could’ve controlled. Others were out of his control. However, the ultimate truth is that each and every decision he made in the above scenarios made him make some ultra-smart investments like AWS.

So to you, my fellow reader, you might be screwing up with your startup. You might’ve made twenty mistakes. But remember, you might be investing in your own AWS right now, which will make you proud in the future.

Let’s get some engagement in here — Do you have your own AWS (don’t spill the beans, if so.)? What do you think of secrecy when it comes to your competitors? Are you one of those people who would force an NDA whenever you have a conversation? Are you going as extreme as Theranos? (God, I hope not.)

Author – Al Anany