Understandably by Bill Murphy Jr.

Understandably by Bill Murphy Jr.

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Understandably by Bill Murphy Jr.
Understandably by Bill Murphy Jr.
Loophole

Loophole

Long drive, a lot to think about, and a long ago hack. Also, 7 other things worth your time.

Bill Murphy Jr.'s avatar
Bill Murphy Jr.
Nov 29, 2021
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Understandably by Bill Murphy Jr.
Understandably by Bill Murphy Jr.
Loophole
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An origin story and a lesson today. It’s about Amazon. I was thinking about it while my wife, daughter and I did the five-hour drive back from New England, after a fantastic four-day Thanksgiving celebration with family.

Maybe you know this story? I don’t think most people do. It’s about how Amazon overcame a supposedly insurmountable problem in its very earliest days, by exploiting a loophole other people just didn’t think of.

Amazon is now worth $1.78 trillion (as of Friday), but we’re talking here about the very early version of the company, when it was just one of many fledgling Internet bookstores, and it was funded basically with a friends-and-family round that included a big portion of Bezos’s parents’ retirement savings.

Let’s set the stage with a very short passage from a contemporaneous (1996) article that ran in Fortune magazine, explaining their business model back then:

Orders in hand, Amazon requests books from a distributor or publisher, which delivers them to the company'…

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