The Dot Com Bubble
• Companies’ stock prices shot up simply by
adding “.com” or “e-” to their name.
• Tons of startups
running into the
ground with giant
• Most companies crashed; Amazon didn’t.
Foundation of Amazon
• Created business
plan on cross-
• Like other dot-com
operate at a loss
for the first few
Surviving the Bubble Burst
• No agreed-upon one reason for survival, but several
factors may have helped:
o 1999 patent of “1-click shopping”
Previously, online shopping done in “shopping cart” model,
where items were abandoned in carts.
1 Click shopping eliminated “abandoning” and buyer confusion
Patent lawsuit temporarily forced Barnes-And-Noble, who
was using a similar system, out of business at Christmas
o Customer Service: “The competition is watching us, and
we’re watching the customers.”
One of the first to encrypt credit card numbers
Built distribution centers with money most companies used to
Amazon had a reputation left standing after bubble burst
crashed advertising capital.
Moving On: The New
Making Startups Easier than Ever
• Elastic Compute Cloud:
o Sells server power
o Very economic: Amazon
normally only uses 10% of
potential server power (other
90% reserved for spikes)
o Sells unused warehouse space
o Automates everything: As soon
as buyer orders are sent,
warehouse automatically ships
New Innovations cont.
Task Distribution Management
• Amazon Mechanical
o Some tasks are just
better done by humans
instead of computers
(image recognition, etc.)
o People post these tasks
on AMT and other people
complete these tasks,
sometimes for money. The Original Mechanical Turk: A chess
o Rewards really not that playing “machine” secretly operated by a
large: ~10 cents hidden person inside.
It’s how Amazon’s Mechanical
Turk produces human-like results;
because work is done by unseen humans
The Fight for the Web 2.0
• Web 2.0 is about platforming: providing the basic
layer for website-building.
• Google has been leading this, but:
• ECC, AMT, Fulfillment have attracted big
customers: Microsoft, Linden Labs, etc.
• So the Big Question is:
Will Amazon be the New
• Bezos, Jeff (1964-). Hutchinson Unabridged Encyclopedia. Helicon
Publishing. 2005. eLibrary. ProQuest LLC. ITHACA HIGH SCHOOL.
28 Sep 2009. http://elibrary.bigchalk.com
• Chris Woodyard and Lorrie Grant. “E-Tailers Dash to Wild, Wild
Web.” USA Today Jan. 13, 1999: 1B-2B. SIRS Researcher. Web. 28
• Henry Petroski. “Shopping by Design.” American Scientist Vol. 93, No.
6 Nov./Dec. 2005: 491-495. SIRS Researcher. Web. 28 September,
• “Jeff Bezos’ Risky Bet” (Cover Story, Nov. 13, 2006). Business Week.
20 Nov 2006. 22. eLibrary. ProQuest LLC. ITHACA HIGH SCHOOL.
28 Sep 2009. http://elibrary.bigchalk.com.