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Jeff Bezos' costliest mistakes: A brief history - Metro US

Jeff Bezos’ costliest mistakes: A brief history

Jeff Bezos MacKenzie Bezos
Amazon founder Jeff Bezos and MacKenzie Bezos at the Vanity Fair Oscar party in March 2018. (Photo: Getty Images)

When Amazon CEO Jeff Bezos and his wife, MacKenzie, announced they were divorcing after 25 years of marriage, the common reaction was a gasped, “What about the stock?” Any divorce settlement will likely halve Bezos’ $137 billion fortune, much of it in Amazon shares, knocking him from his perch atop the World’s Richest Men list while vaulting MacKenzie Bezos to Numero Uno among women. Although there is no indication, so far, that the divorce will be anything but amicable — and MacKenzie may end up with new clout at Amazon but is not expected to challenge Bezos’ ownership, it is undoubtedly Jeff Bezos’ most money-losing decision. And he’s made many of them at the helm of Amazon — ill-fated products, launches, or hunches that turned into expensive boondoggles that may have had some investors searching for the exits. Here are some of the most infamous.

1. Fire Phone: $170 million
Intended to be Amazon’s answer to the iPhone, which would increase Amazon customer loyalty, the Fire was Bezos’ biggest product failure. It launched with a price of $199, a two-year contract and the sound of crickets. The price was eventually slashed to 99 cents. When the original stock ran out in 2015, the phone died a quiet death, and Amazon wrote off $170 million in losses.

2. Amazon Prime shipping: $558 million in one quarter
In 2011, Amazon’s stock lost $16 billion in value in one day, and Bezos personally lost more than $4 billion. Neither the economy nor a negative Trump tweet were to blame. It came on the heels of a report that the company’s net income had nosedived 73 percent year-over-year. A Bloomberg story illuminated why: Tons of people were signing up for Amazon Prime, which offered unlimited two-day shipping for $79 annually, and it was costing Amazon a bundle. One analyst noted that Amazon’s shipping fees generated $360 million in the third quarter, obliterated by $918 million in shipping expenses. Experts say Amazon has continued to lose money on its retail business to the present day, just not at those numbers.

3. Junglee: $170 million
The earliest days of Amazon brought about one of its biggest missteps. Junglee was the first comparison-shopping site on the web, and Bezos acquired it in 1998 for $170 million in Amazon stock. It became the Shop the Web feature on the Amazon site, allowing you to see what items cost on other sites. But when Amazon execs realized that they were sending users away from Amazon and to the competition, Shop the Web vanished within months. “A total tissue rejection,” is how Junglee’s COO described it.

4. LivingSocial: $231 million
Daily deals were an online craze for about a hot minute; business-wise, the category never paid off (or even paid for itself), but many CEOs didn’t know when to let go. Bezos was one of them. Amazon invested $175 million in the daily deals site LivingSocial in 2010. Two years later, it wrote down the entire investment. For some reason, Bezos went back for more, investing $56 million in 2013, then writing down that entire amount the next year. In 2011, Bezos had launched Amazon Local, its own daily deals platform; it expired in 2015.

5. Kozmo.com: $60 million
By the year 2000, Bezos had reportedly become fixated on shipping speed, seeing it as a potential competitive advantage. His first run at Amazon Prime came with Amazon’s eight-figure investment in Kozmo, a delivery service that brought food, DVDs, books, office supplies and Starbucks to customers’ doors within one hour — for free! The business model proved untenable, and Kozmo folded in 2001, losing Amazon $60 million in one year. 

6. Pets.com: $50 million
One of the early internet’s most notorious failures, the business that gave us an excuse to look at a cute sock puppet died in 2002. Three years earlier, Bezos had bought a 50 percent ownership stake and contributed to a $50 million round of financing. “I’ve made billions of dollars of failures at Amazon.com,” said Bezos in 2014. “Literally, billions of dollars in failures. You might remember Pets.com or Kozmo.com. It was like getting a root canal with no anesthesia. None of those things are fun. But they also don’t matter.”

7. Another marriage: ?
Simultaneous to Bezos’ divorce announcement came reports that Jeff Bezos had begun dating former TV anchor turned helicopter pilot Lauren Sanchez. Immediately, gossip columns tastefully began speculating on the potential price of a second marriage. On Jan. 16, “Page Six” interviewed a “longtime pal” of Sanchez, reporting that she said, “Jeff Bezos is seriously stupid if he’s thinking of marrying her. He’s already seriously stupid for giving up half his fortune for her.” It looks like Bezos-related tabloid drama is one of 2019’s hottest growth stocks, although it’s unclear if Amazon investors will be pleased.

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