Shel Kaphan (Annie Laurie Malarkey Photo)
Shel Kaphan (Annie Laurie Malarkey Photo/GeekWire)

You know the story of Jeff Bezos, the Wall Street computer science guru with the Texas-sized laugh who founded Amazon.com after a cross-country voyage from New York to Seattle in 1994. That move transformed Seattle’s tech landscape as we know it, perhaps on par with the move of Microsoft from Albuquerque to the Seattle area in 1979.

But what happened to those very first Amazonians?

Business Insider takes a look at seven of the first Amazon.com employees, from University of Washington software engineers Paul Davis and Tom Schonhoff to recruiter Nicholas Lovejoy (a former Seattle high school math teacher who worked with Bezos as D.E. Shaw) to engineer Eric Benson (who was known for bringing his dog Rufus into the office. Rufus 2.0 is now the code name of a building project in Amazon’s expanding office complex in Seattle).

The Amazon birthplace in a Bellevue home. The oversized mailbox was used by Jeff Bezos to get large book catalogs.
The Amazon birthplace in a Bellevue home. The oversized mailbox was used by Jeff Bezos to get large book catalogs.

We ran a detailed Q&A with Amazon.com’s first employee — former CTO Shel Kaphan — in 2011 in which he described some of the early history of the online retailer. “Nobody at the beginning had any clue how big Amazon could become,” said Kaphan, who is doing philanthropy and dabbling with some other projects.

All of the early employees at Amazon have since moved on. But what’s most interesting about the mini-profiles in Business Insider is how many of them have taken on philanthropy, retired or simply moved on to much lower-key pursuits.

Susan Benson, who ran the editorial operations at Amazon, retelling stories of how early staffers worked through weekends, is now on the board of Seattle community center Town Hall.  Her husband, Eric Benson, a former engineer at Amazon, is now retired. Davis is now a lecturer at Berlin’s Technische Universitat, and founder of Linux Audio Systems. 

Amazon — despite its growing employee base, power in the tech industry and hard-charging entrepreneurial culture — is an interesting company. For whatever reason, it has not spun out as many angel investors or entrepreneurs in the Seattle area. (Contrast that with RealNetworks — a company started by former Microsoft exec Rob Glaser — whose alumni started companies such as Big Fish, Isilon, FlowPlay, Smilebox, and many more).

I asked Seattle angel investor and former Amazon.com attorney Rudy Gadre about this entrepreneurial and investment gap a few years ago, and here’s what he said:

“I think we missed the boat to some extent. The dot-com crash sort of derailed the people who would have been the (angels and entrepreneurs). At Microsoft, with Rich Barton and Rob Glaser, you got some people who came out of the earlier days. But now anyone who is at Amazon or Microsoft is there presumably because they like being in a big company. And so the people who would have left Amazon to found those things, their opportunity was sort of derailed by the dot-com crash because of the time they would have been leaving Amazon to found new companies, there wasn’t funding available … and then by the time the thing recovered, that early-generation of people who were pioneering at Amazon probably missed the window to some extent. They have family responsibilities. That’s my working theory.”

Gadre paints an interesting picture of Amazon, and his theory appears to be on the mark.

In covering the startup beat here in Seattle, I often wonder: Where are the Amazon entrepreneurs? Where are the Amazon angels?

There are exceptions, of course. Gadre being one. Jesse Robbins, the founder of fast-growing Chef, being another.

But look over the GeekWire 200 list of privately-held tech companies in the Northwest, and trace how many have Amazon roots? It’s an interesting conundrum. One of the world’s most prolific and important technology companies just doesn’t spin off as much money or talent into the startup ranks of Seattle as you’d think.

Comments

  • http://www.extendedresults.com/ Patrick Husting

    It interesting to see a lot of the early employees whether at Microsoft or Amazon, when they made their money, they basically GET OUT of tech.

    • Bob Z

      Amen to that . . .my guess . . .they are fried when they get out of the Amazon bee hive.

      • johnhcook

        That’s an interesting theory too. Perhaps.

    • johnhcook

      It is really perplexing, and has baffled me for some time.

      There’s a lot of money and wealth creation in the NW. But it tends to get recycled in philanthropy, not in the startup ecosystem. Why is that?

      I’m not saying the philanthropy efforts aren’t warranted and they do make our community a better place. Just seems to me a higher % of dollars flow to non profits here.

      Contrast that with SIlicon Valley where there is certainly a culture of giving back — by pumping money into startup ventures.

      Seems like a cultural thing.

      • balls187

        Is that true? How many early Apple and SV .com era employees who made wealth have given back as angels?

        My hunch is that Seattle mirrors SV but at a smaller scale.

        It would be interesting to see the data on angel investments–my gunt tells me it correlates with early employees from Google era companies onwards.

        This would be aligned with what Rudy was saying.

      • http://www.extendedresults.com/ Patrick Husting

        I don’t see it as a cultural thing.

        The audience for people that love to create software is actually very small, but there are A LOT of people working in Tech. You need that, but they are not creators of software and don’t have that passion.

        People who like to create software do it as an expression of their creativity and problem solving minds and not always for money. It is a challenge and something they love to do and will do it early in the morning or late in the evening. Maybe that is a dieing breed of software innovators.

        I wonder how many people just write software for fun anymore?

      • Lloyd A Ball

        Investing in local startups is a form of philanthropy IMO. Allowing people to live their dreams, creating jobs, empowering Seattle entrepreneurs, etc… It probably needs to be repositioned that way.

        Some high net worth individuals would approach it differently if they thought they were giving & investing vs solely investing. With investing there is a risk that one could be a failure… but when coupled w/ philanthropy that could never be the case. I’m not saying that investors should throw money at the undeserving or forego participation in the upside… I’m simply saying that there could be 2 benefits to startup investing.

        • johnhcook

          Agreed. I think Rudy Gadre operates from this mindset, but not everyone does.

      • Kevin McCarthy

        Geekwire itself is funded as a result of this startup ecosystem that you speak of….seems to be working just fine to me.

        • johnhcook

          That’s true. We did take a small seed round from investor Jonathan Sposato (non-Amazon money) to get us off the ground.

          With this story, I am simply expressing my surprise that more money and entrepreneurial talent hasn’t come out of Amazon, given the size of the company and its entrepreneurial culture.

          That’s what is perplexing to me.

          • Kevin McCarthy

            I hear ya.
            You’ve come at the lack of angel funding angle from several different points, why not come at it from the entrepreneurs point of view? IE, to illustrate the problem that you think you see, find an entrepreneur (or 5) who spent a year or two desperately trying to raise funds in Seattle, down to his last penny, went broke and closed up shop without ever raising the funding she needed. That would be a much more interesting story because you would have concrete examples of business(es) that didn’t get funded, and perhaps they didn’t deserve to get funded, or perhaps they did and your theory is spot on.
            Just because you bemoan the lack of X doesn’t mean that X doesn’t actually exist, particularly when your business is a result of X.
            Just some thoughts for you…

  • Dave

    My Amazon conclusions are very different than my Microsoft conclusions.

    Amazon, while some left burnt out, among the people I know:
    -Amazon did an amazing job of keeping things interesting. Regularly moving people around (every three years max if you are in most business roles) kept things fresh

    -Amazon is focused on being innovative. If you wanted to be innovative and were willing to work really hard, you could stay at Amazon, get great resources, still run a small team, keep your stock vesting and continue to make great money. For some I know, it was like having a startup with huge dollars behind you but without the Microsoft bureacracy
    -If you wanted to run something big, but less innovative, you could stay at Amazon and be successful there as well
    -Back loaded vesting schedules, continuing stock grants and increasing stock prices, made it very lucrative to stay
    -As a consequence of all of the above, Amazon seems to have done the best job of retaining high quality people of any large company where I have a lot of data points, other than maybe Google

    Microsoft
    -It has been nearly 15, maybe 20, years since Microsoft was entrepreneurial in a true sense.
    -If you remember, lots of Microsofties tried to start companies or were hired away as senior executives for smaller companies circa 1999-2003. Nearly all failed, as a consequence Microsoft stopped being a great executive recruiting ground for most of the investors I know of. More than a few years at Microsoft became a negative, not a positive, for early stage investors.
    -Microsoft became big, bureacratic and extremely political early on. Entrepreneurial types really stopped going there. Even by ~2000-2003 you have largely people who selected into a large company environment, very few true entrepreneurs.
    -The highly political, less entrepreneurial, but very distinct culture of Microsoft yielded highly qualified, very smart people who were uniquely qualified for Microsoft and often unqualified for anywhere else. Great people, but very “big company”. It isn’t surprising that those people generally were not focused on starting the next great company or being angel investors. It is akin to asking why GE doesn’t produce a ton of angel investors, despite having a lot of highly talented people.
    -Microsoft’s stock price hasn’t generated any new serious wealthy people in 15+ years

    • http://twitter.com/chrisamccoy Chris McCoy

      +10 to the original question and to this response.

      I’ve too thought around this a lot both as as fan of Seattle technology and as a local entrepreneur.

      It has been sad to see so little of the Amazon wealth engine be recycled back into the local early-stage technology community but the reality is 1/ Amazon has excelled at retaining its top 20%; 2/ Stock price moving up and to the right and Bezos has brilliantly engineered the use of hand cuffs; and 3/ Amazon is the big bull dozer next to a mid-sized pond in SLU with little incentives to support the early stage technology ecosystem around it.

      A few key follow-up questions I’m interested in hearing what others think:
      – What are their incentives for Amazon to support the local early-stage technology scene vs. swallowing it?

      – So far, how supportive have they been, on a measured 10 scale?

      – How successful have early-stage companies recruited directly out of Amazon? At what cost above market comps?

      – Is Amazon a net positive for early stage technology in Seattle?

    • HelloTygerlily

      Really? “As a consequence of all of the above, Amazon seems to have done the best job of retaining high quality people of any large company where I have a lot of data points, other than maybe Google” I think not. Amazon has the highest turnover I have ever experienced at any company. At Microsoft people were loyal to their products and stayed on for years and years, at Amazon they move up or over to another group, or they are let go. Something like 18% of the company is on a PIP at any time. The average former MS employee makes it a year before going back. There are lifers at Amazon, and there are grist for the mill.

      I’ve been at Amazon for 3.5 years, and that is longer than 85% of my colleagues.

  • Brian Goffman

    I disagree with the thesis of this article. There are many, many entrepreneurs and executives with Amazon backgrounds.

    Amazon does an excellent job of training general managers due to their cross-functional leadership roles. Examples: Jason Kilar, CEO of Hulu, and Jeff Holden, who was Co-Founder and CEO of Pelago and now leads products at Uber. Amazon engineers are close to the customer and can work independently. Many are core to the success of Seattle offices of companies including Groupon and Zulily.

    While some Amazon employees have have left the Seattle scene, they didn’t as a rule leave tech and many are working on very large projects.

    • johnhcook

      Thanks Brian. You are actually hitting on another column idea I’ve been contemplating, but have not written. I’ve been struck by the number of ex-Amazon folks who’ve started or been involved in startup companies outside of the Seattle area, or have gone elsewhere to pursue their companies.

      Most recent example: GemShare. San Fran based.

      http://www.geekwire.com/2014/gemshare/

      And just to be clear, I know there are plenty of ex-Amazon engineers and developers working at tech companies and startups around the city, playing key roles. I was writing more about founders and angel investors here.

      Look at the GeekWire 200 and see how many folks from Amazon are the founders of companies on the list. Not many.

      That’s just surprising to me.

      • Brian Goffman

        Thanks for clarifying. The geography question would be an interesting angle for an article.

        I think the best investors and startups are pretty fluid between Seattle and the Bay Area. Many companies, including early stage, have a presence in both places.

        There’s no doubt Amazon is a developer of startup talent. They recruit great people and give them lots of leeway.

  • ij

    The more interesting question is how many such folks have supported startups – especially as investors. You’ll find that a lot of people from Msft have done so.

  • Chris Livdahl

    I’d also be interested to know how the culture of origin affects one’s motivation to be entrepreneurial. There are a large percentage of foreign born employees at Microsoft and Amazon. Do they bring with them certain notions about work and business? In China or India (or even certain regions from within those countries), is there less emphasis on creating new businesses versus sticking with the same company for a long career? Anecdotally, I’ve heard about the crazy amounts of bureaucratic red tape acting as friction against creating a new business in India, for example. So, does an Indian employee moving here carry over that notion of the difficulty of creating a startup? Also, is there a difficulty for that foreign-born worker to maintain their work status here if they launch out as a startup?

  • PaulDavisTheFirst

    Just for reference sake, I (Paul (Barton)-Davis) am not a lecturer at the TU in Berlin. I was a guest professor there for 6 months in the winter of 2008-2009. I continue to work on realtime audio software, primarily the Ardour project (http://ardour.org/). I left Amazon to become a stay at home parent – starting a company was never on the agenda. I only got back into programming full time as my daughter grew older.

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