How Did Jeff Bezos Make His Money?

Did Bezos Get a Loan From His Parents to Start Amazon?

Jeff Bezos borrowed $250,000 to $300,000 (reports differ) from his parents to start Amazon. This wasn’t a small amount of money for Mark and Jackie Bezos.

Jackie Bezos (nee Gise) had him when she was still in high school. The young mother would soon get married to Jeff’s biological father, Ted Jorgensen, but his heavy drinking convinced Jackie to file for divorce. She continued her education at a night school in Albuquerque, often taking Jeff to class with her.

Jackie met her next husband, Miguel “Mike” Bezos, while going to college. He was a Cuban immigrant studying at the University of Albuquerque on a scholarship.

Mike graduated with a degree in computer science, a relatively new field in the mid-1960s. After earning his degree, he took a job at Exxon.

As one of the few professionals trained in computer science, Mike Bezos probably made a good salary from Exxon. The money would never make him wealthy, though. Letting his wife’s son borrow nearly a quarter-million dollars, therefore, was a big gamble.

That gamble paid off more than anyone could have guessed. Today, Amazon has a $1.23 trillion market capitalization and generates over $500 billion in revenue annually.

Jeff Bezos used the money from his parents to help him buy a house in Bellevue, Washington. He also purchased books that he planned to sell via mail, using his garage as a warehouse. While $250,000 might not seem like a lot of startup capital, Jeff Bezos took a frugal approach that made Amazon successful.

How Did Jeff Bezos Make His Money?

When Bezos started Amazon, he and his then-wife MacKenzie Scott did most of the work themselves. Eventually, they hired a few people to help fill online orders.

Interestingly, Jeff Bezos doesn’t earn a high salary from his position as Amazon’s executive chairman. In 2022, he received $81,840 in base pay. However, he ended up getting paid $1.7 million that year from other types of compensation.

Realistically, it doesn’t matter how much Jeff Bezos gets paid because most of his wealth comes from Amazon shares. Even after going public, he owns about 10% of the company, making him the majority shareholder. That means approximately $140 billion of his $149.5 billion net worth comes from Amazon stock.

As long as Amazon remains a profitable company that people want to invest in, Bezos will retain his position as one of the world’s wealthiest people.

What Did Jeff Bezos Do to Get So Much Money?

Jeff Bezos made his money by starting small and evolving aggressively. He probably always knew he would take Amazon beyond the world of book sales. That’s why it made sense for him to establish Amazon in the Seattle area, where he could tap into a large pool of talented engineers.

Not surprisingly, Amazon makes most of its money from online retail sales. The retail platform commands nearly 38% of the market share for ecommerce retail companies. Its biggest competitor, Walmart, owns a little more than 6% of the market share.

Amazon does much more than help consumers find low-priced goods, though. The company’s AWS (Amazon Web Services) division is its most profitable segment.

Currently, three companies control most of the cloud services industry. Amazon serves about 32% of cloud services clients. Microsoft Azure serves approximately 23%, and Google has about 10% of the market share. The other 35% comes from much smaller companies.

In 2021, AWS accounted for 74% of Amazon’s operating profits. As more companies move their IT infrastructures and products to the cloud, AWS should become increasingly profitable.

Some experts believe the cloud market could reach $1.5 trillion by 2030. If that happens and AWS retains its market share, Amazon could generate about $500 billion annually.

Where Did Jeff Bezos Make All His Money?

If you had to pick one place where Bezos made his money, you would probably choose “the internet” as your answer. Bezos grew up with a father who worked as a computer scientist, which likely exposed him to computing concepts most people didn’t know existed.

He didn’t jump into e-commerce on a whim, though. While working as a hedge fund manager, Bezos learned that internet usage was growing at a 2300% rate.

A lot of entrepreneurs wanted to take advantage of that growth in the mid-1990s, but Bezos had a rare combination of skills that included computer science, electrical engineering, and, critically, finance. It certainly didn’t hurt that his then-wife, MacKenzie Scott, also had experience working in finance at D.E. Shaw, whether the two met and began dating.

Why did Bezos succeed while so many tech companies failed during the dot-com bubble’s bursting? Several factors probably contributed to his success.

Unlike many tech companies in the 1990s, Amazon sold real products to consumers. Taking this strategy meant the company could start generating revenue almost immediately.

Bezos also took a frugal approach to starting his business. He minimized costs as much as possible. He even considered incorporating Amazon on a reservation outside of San Francisco to avoid paying taxes. While he didn’t follow that plan, he did find ways to cut costs so he could direct all revenue toward growth.

Perhaps most importantly, Bezos has a keen sense of how the tech sector is evolving. He wisely moved Amazon into web services before cloud computing became a standard practice. Instead of fearing change, he embraces it and looks for new ways for Amazon and his other companies to profit. That approach has made him one of the world’s wealthiest persons.

What Jobs Did Jeff Bezos Have Before Amazon?

Jeff held a few jobs before founding Amazon and dedicating his attention to growing the company.

While in high school, he started a small business called Dream Institute. Dream Institute was an academic summer camp for younger students. It didn’t earn much money, but it taught him important lessons about entrepreneurism.

He graduated summa cum laude from Princeton with dual degrees in electrical engineering and computer science.

What Does Jeff Bezos Make Hourly?

If you include all of his income sources, including stocks and real estate, Jeff Bezos earns about $1.43 million per hour. At that rate, he makes $23,833 every second!

It takes him four seconds to earn more money than the median American household makes in a year ($74,580).

How Old Was Jeff Bezos When He Became a Millionaire?

Jeff Bezos was 33 years old when he became a millionaire in 1997.

That’s the year Amazon’s IPO raised $54 million.

As Amazon’s share price skyrocketed over the next two years, Bezos became a billionaire.

How Many Companies Does Jeff Bezos Own?

Jeff Bezos doesn’t technically own subsidiaries of Amazon, but he does own several companies independent of his biggest success.

Blue Origin

Bezos founded his spaceflight company, Blue Origin, in 2000. Blue Origin develops launch vehicles, rocket engines, and related technologies.

The company has had 22 successful consecutive launches. Only two are considered failures. Bezos has been a crew member in at least one of Blue Origin’s launches.

Blue Origin’s success has led to partnerships with NASA and other government-funded space exploration agencies.

Washington Post

Bezos purchased the Washington Post in 2013 for $250 million. The newspaper lists its owner as Nash Holdings.

In reality, Nash Holdings is a limited liability company solely owned by Bezos, which makes Bezos the sole owner of the Washington Post.

Bezos Expeditions

Bezos Expeditions might sound like another spaceflight company focused on exploring other worlds. Actually, it’s an investment firm started by Bezos in 2005.

Bezos Expeditions manages the Bezos fortune, largely by investing in early stage ventures with significant growth potential.

Some notable investments managed by Bezos Expeditions include Airbnb, Basecamp, Nextdoor, Rescale, Stack Overflow, Uber, Twitter, and Unity Biotechnology. Perhaps not surprisingly, it also invests in Bezos companies, including Blue Origin and the Washington Post.

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