Business models

Bezos Started Amazon Based on Math Error

Before Amazon, there was the Online BookStore (OBS), now Open Book Systems (OBS). We maintained a list of all the publishers who had online presences; it took up about half a computer screen in 1994. Before starting the Online BookStore, our company packaged books for publishers, one of which was John Quarterman’s The Matrix (Digital Press, 1989), the first book about the new worldwide internet. After the book, Quarterman continued to publish his research and opinions about the internet in “Matrix News,” focusing often on possible commercial uses of the network of networks. Apparently a copy of this newsletter found its way to Jeff Bezos, who, according to Quarterman, made a business decision to start Amazon based on Quarterman reporting in his newsletter that “the number of bytes—a set of binary digits —transmitted over the Web had increased by a factor of 2,057 between January 1993 and January 1994… (Bezos also liked to say in speeches during Amazon’s early years that it was the Web’s ‘2,300 percent’ annual growth rate that jolted him out of complacency. Which makes for an interesting historical footnote: Amazon began with a math error.)  I’m also notoriously bad at computing percentages,” notes Quarterman. Rounding error or not, by selecting for his online store the metadata-rich product of books—librarians with their card catalogs had done so much of his work for him for free!—Bezos opened up a global bookstore with infinite shelves, and the prospect of becoming a drone-driven “everything” store that reduces all terrestrial retailers’ foothold on the future.

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