It may be the most successful venture investment of all time.
In 1995, Jackie and Mike Bezos ploughed US$245,573 (RM997,701) into their son’s fledgling e-commerce website, according to a prospectus two years later. It was a big gamble, Mike Bezos, the stepfather of Amazon.com Inc founder Jeff Bezos, recalled onstage during a 2015 event at the National Constitution Centre in Philadelphia.
“I want you to know how risky this is,” the son told his parents, “because I want to come home at dinner for Thanksgiving and I don’t want you to be mad at me.”
He’s probably welcome to extra helpings of turkey – and all the gravy. One IPO and three stock splits later, his parents’ stake could be worth almost US$30bil (RM121.88bil) today. That would make them wealthier than Microsoft Corp co-founder Paul Allen, the 30th-richest person on the Bloomberg Billionaires Index.
The parents’ holdings haven’t been publicly disclosed since the end of 1999. While it’s unclear how much they still own, continuing donations of Amazon stock to their charitable foundation suggest they still control a healthy chunk of the world’s second-most valuable company.
They’ve donated 595,027 shares to the Bezos Family Foundation from 2001 through 2016, according to filings available on GuideStar, which collects data on non-profits. The 25,000 shares they gifted in 2016 were worth about US$20mil (RM81.25mil) at the time. The foundation focuses on education for young people.
If they haven’t sold or donated anything else, the pair would own about 16.6 million shares, or 3.4% of the firm, making them the second-biggest individual owners after their son.
Their total return in that case would be about 12,000,000%, a performance that would make even the most celebrated venture capitalists blush. SoftBank’s US$20mil (RM81.25mil) bet on Alibaba has returned about 720,000% since 2000, according to calculations by Bloomberg. Sequoia Capital’s WhatsApp investment returned roughly 36,000% by the time Facebook Inc bought the messaging service for US$22bil (RM89.38bil) in 2014.
“We were fortunate enough that we have lived overseas and we have saved a few pennies so we were able to be an angel investor,” Mike Bezos, a Cuban immigrant who also goes by Miguel, said in Philadelphia. “The rest is history.”
He bought 582,528 shares in February 1995, according to the 1997 prospectus. Five months later, Jackie Bezos bought 847,716 shares. The wider Bezos family held this stock through four trusts at the end of 1999, another filing shows. The Jacklyn Gise Bezos 1996 Revocable Trust held 8.9 million shares, followed by the Miguel A. Bezos 1996 Revocable Trust with 4.8 million shares, while the Bezos Family Trust and the Bezos Generation Skipping Trust held 2.9 million and 675,000, respectively.
Any self-respecting wealth adviser likely would have pressed the family to diversify their holdings given the “heightened consequences of such extreme individual company exposures”, according to Eduardo Gruener, co-founder of Miami-based multi-family office GFG Capital.
After applying historic selling patterns and accounting for the disclosed donations, Jackie and Mike Bezos would still control US$10bil (RM40.62bil) of shares, according to an analysis by the Bloomberg Billionaires Index. That’s on top of their son’s US$147bil (RM597.22bil) fortune, which easily makes him the world’s richest person.
Even if they had unwound all of their Amazon holdings at the lowest possible price, they still would have reaped about US$100mil (RM406.27mil).
The filing also suggests a windfall for Jeff Bezos’ siblings Mark and Christina. They each bought 30,000 Amazon shares for US$10,000 (RM40,624) in 1996. If they haven’t sold any of those shares, their stakes would be worth about US$640mil (RM2.59bil) apiece.
The Bezos Family Foundation didn’t respond to email and telephone messages requesting comment. Amazon declined to comment.
With Amazon, Alphabet Inc and Apple Inc approaching market values of US$1tril (RM4.06tril), the world could have myriad unknown tech billionaires. Only corporate insiders or shareholders with stakes exceeding 5% are required to report their interests. In the case of Apple, that means individuals with positions up to US$46.7bil (RM189.71bil) wouldn’t be required to disclose their holdings.
Apple co-founder Steve Wozniak held a 7.9% stake in 1980, which shrank over time as he sold options at low prices to mid-level employees and gifted shares to those he felt had been shortchanged. His remaining stake is thought to be in the millions rather than billions.
Or take Google parent Alphabet. An early investor was reportedly none other than Jeff Bezos, who put US$250,000 (RM1.01mil) of his own money into the Internet-search startup in 1998, according to the New Yorker. Those shares, valued at about US$280mil (RM1.13bil) at the IPO, would be worth more than US$8bil (RM32.49bil) today.
That pales in comparison to the returns potentially reaped by his parents, who hit the jackpot backing their boy.
“Extraordinary returns don’t come around often,” said Gruener, the wealth adviser. “Replace Amazon with nearly any other name in the market and the ending may have turned out as a nightmare.” — Bloomberg
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