Tren Griffin+ Your Authors @trengriffin I work for Microsoft. Previously I was a partner at Eagle River, a private equity firm established by Craig McCaw. I am on the board of directors of Kymeta. Apr. 17, 2020 1 min read + Your Authors

I remember exchanging emails with my late friend Keith Grinstein on the evening of November 2, 2001. AMZN closed at $6.78 that day. There are people on Twitter who will read this tweet who were CC'd on those emails. We were writing about cash flow that night and the AMZN bonds.

"About 20 to 22 investors in Amazon put in small checks of about $50,000 apiece, for a total seed stage investment of around $1M. In exchange, those combined investors got about 20% of the company. Most of those investments happened through 1995 and 1996."  https://www.google.com/amp/s/www.businessinsider.com/jeff-bezos-on-early-amazon-investors-2016-10%3famp 

More than one person on that email thread about Amazon that night in 2001 was a seed stage investor in Amazon($1M for 20%). As I said previously, people who follow me on Twitter can confirm this conversation actually happened. Keith unfortunately passed away. I miss him a lot.

4/ What was going on in November 2000? One thing happening was Lehman analyst Ravi Suria who didn't understand Amazon's business model. He claimed AMZN had: "operational and cash flow characteristics of a normal retailer, despite its 'virtual' pedigree."  https://www.zdnet.com/article/amazon-cash-to-run-dry-by-2001/ 

5/ "Marketplace, Amazon’s platform for third parties to sell used books (later lots of other stuff) launched in November 2000."

"Amazon had a negative cash conversion cycle- it received payment for the things they sold before they had to pay for them"  https://online.hbs.edu/blog/post/how-amazon-survived-the-dot-com-bubble 

6/ Because AMZN hit an all time high yesterday, it is perhaps interesting to think about November of 2000 and the seed round in 1995.

"Amazon has generated free cash since 2002."  https://www.barrons.com/articles/amazon-is-a-free-cash-rocket-ship-time-to-jump-on-board-51578099601 


You can follow @trengriffin.



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