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Nick Hanauer

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171
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2015-06-21
most recent
2015-06-21
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1
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  1. “Yeah, so I was his first investor, you know, I mean, you know, when Jeff decided to start Amazon, as luck would have, he was living in New York City and D.E. Sure. He was working at a hedge fund working at DE Shaw. And I know Jeff because he was dating a very, very close friend of mine named Anne Dinning, who was another vice president at DE Shaw. And, you know, among other reasons, I suppose because I begged him to ended up starting Amazon in Seattle. And there were some very good reasons to do it because it was close to Microsoft where there were lots of developer talent and it was close to a large book distribution center, which was in Roseburg, Oregon at the time. And, you know, so he ended up sending us stuff from New York to my house and off we went. And so I was not actually formally on the board. I was a board advisor for the first six or seven years of the company's existence until 2000 or something like that. So, yeah, in the early days.”

    2015-06-21 · Masters in Business · Second Avenue Nick Hanauer: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source

  2. “Video and other stuff. But we did that quite quickly afterwards. I'll never forget we had this, I remember a conversation in Jeff's office. Wait, back up.”

    2015-06-21 · Masters in Business · Second Avenue Nick Hanauer: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source

  3. “Everybody was familiar with pure Absolutely. The Selection mattered, but it was a pure commodity. It was a very unusual combination. I don't think people...”

    2015-06-21 · Masters in Business · Second Avenue Nick Hanauer: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source

  4. “And a copy of War and Peace is a copy of War and Peace. You know exactly what you're going to get. And in the early days of the internet, people didn't trust what they'd get. So it was much easier to get people to purchase books than it was a suit or a pair of shoes or something like that.”

    2015-06-21 · Masters in Business · Second Avenue Nick Hanauer: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source

  5. “Both. It's both. And there are no extraordinarily rich people who weren't also extraordinarily lucky. For every extraordinarily rich, talented person, there's another equally talented person that just didn't have the breaks. And my favorite story to prove that point about myself is that I had this very early interest in the internet and I had two incredibly talented friends who simultaneously started internet retail businesses. One was Jeff Bezos, who started Amazon.com, focused on books, and another was an equally talented guy named Jeff Tauber, who was a divisional merchandise manager at Bloomingdale's, which at that time was the number one retailer in the country, who started an online superstore. Yeah, was it online department store? And to make a very long story short, books are a pure commodity.”

    2015-06-21 · Masters in Business · Second Avenue Nick Hanauer: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source

  6. “Yeah, so I talk a lot about how I became successful and stuff like that. And, you know, I feel very strongly that it's been my experience, certainly my case, and in the case of almost everyone I've ever met, that the extraordinary success is usually a confluence of extraordinary skill and extraordinary luck.”

    2015-06-21 · Masters in Business · Second Avenue Nick Hanauer: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source

  7. “Less than the suggested price, so almost half of what you would have to pay at a normal retail store. And you don't have to drive there. You don't have to use your time, take your car, park and go do it. And so it was very clear that we were offering consumers who were looking for books, an immense amount more value than they could get using the usual channels. And as a consequence, from the first day onward, sales exceeded our wildest expectations that people really, really appreciated the value we delivered to them and they preferred to buy books in that way and the rest is history.”

    2015-06-21 · Masters in Business · Second Avenue Nick Hanauer: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source

  8. “Find the right section, find the right shelf, find the right book. And so Amazon.com comes along and the day we open, we offered, I'm going to get this slightly wrong, but over a million titles. So 10 times the selection that you could find at the biggest superstore if you lived in a big city, we sold them for, I think, 40%”

    2015-06-21 · Masters in Business · Second Avenue Nick Hanauer: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source

  9. “Really built an extraordinary franchise. They start with what I call transformational value, which is the ratio of the benefits they deliver the consumer to the cost is someplace between 10 and 100 times higher than the alternatives. An order of magnitude. And one to two orders of magnitude higher. So let me give you an example. So Amazon.com. So when Amazon.com came along, the best way to buy a book in the world was to go to a superstore where perhaps there were 50 or 75 or 100,000 titles and you would have to get in your car. You have to drive to that store. You have to paw through that.”

    2015-06-21 · Masters in Business · Second Avenue Nick Hanauer: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source

  10. “Yeah, they are unrelated. And, you know, I can't prove beyond a shadow of a doubt that it is wise to invest in a broad array of companies and industries. It certainly seems interesting. It's super interesting to do. And, you know, my thinking about investing is fairly simple. And what I try to follow is what I call Nick's rule of transformational value. And that is that my view is that all transactions, all consumers seek to maximize the value of the products that they buy. And value really is best understood as a ratio of the benefits the product delivers divided by the cost. And things that have high value have a high ratio of benefits to cost versus the alternatives. And it's been my experience that in every case where you find a breakout investment, a company that”

    2015-06-21 · Masters in Business · Second Avenue Nick Hanauer: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source

  11. “You know, a broad variety of things and the beauty of the model is that we don't have to persuade somebody that we were expert in something and focus our attention on that. What we can do is simply look for really, really interesting opportunities. So we've made investments in UAV technology, unmanned aerial vehicles very successfully and internet software and medical services and all of it somehow magically works.”

    2015-06-21 · Masters in Business · Second Avenue Nick Hanauer: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source

  12. “Pension funds and stuff like that. And by only deploying our own capital gives us the freedom to be, frankly, more experimental long-term horizon. So how does that”

    2015-06-21 · Masters in Business · Second Avenue Nick Hanauer: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source

  13. “There's no outside investors Right. And to do whatever we want. And what we didn't want to do is go to work for the man, which is where you're doing. Now you are the man. Exactly. We didn't want to go to work for the man, which is what you're doing if you're raising a pot of money from insurance companies.”

    2015-06-21 · Masters in Business · Second Avenue Nick Hanauer: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source

  14. “Yeah, so Second Avenue Partners is an early stage. We're a venture capital business, although it's slightly different from the conventional model because my partners, Pete Higgins and Mike Slade and I only invest our own money. We didn't raise a fund. No limited public.”

    2015-06-21 · Masters in Business · Second Avenue Nick Hanauer: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source

  15. “So there was a point at which I probably knew more about the competitive dynamics of retail buying. Unbelievably obvious that the internet was going to be an enormously powerful channel of distribution for goods and services. And so I started looking around for a way to exploit that awareness. And as luck would have it, a friend of mine had the same insight, and his name was Jeff Bezos.”

    2015-06-21 · Masters in Business · Second Avenue Nick Hanauer: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source

  16. “Hotels, retail. Yeah, exactly, precisely. So we sold the wholesale clubs, mass merchandisers, department stores, specialty stores. Mail order catalog, so on and so forth. And what I did is I reasoned that every single one of those companies basically deployed a different kind of strategy to connect themselves profitably with customers. And if I customized our approach by channel, we could deliver more profit for those companies than our competitors could. And so we stopped really selling pillows and started selling profit. And what that process did is it taught me more about the dynamics of retail than you could ever believe. And the beautiful thing about pillows is that there are little white squares. So, what's happening in the retail channel really, really matters.”

    2015-06-21 · Masters in Business · Second Avenue Nick Hanauer: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source

  17. “Yeah, so that's actually a great question. So you wouldn't think that running sales and marketing for a pillow company would lead you to the internet, but in a very strange way it did because when I led sales and marketing for the company, what I did is I broke our customers up into groups of companies that had the same strategy. And so”

    2015-06-21 · Masters in Business · Second Avenue Nick Hanauer: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source

  18. “My brother, who sadly passed away in a car wreck a long time ago, and I transitioned out of the business when the internet stuff came around. I'm co-chairman of the board today.”

    2015-06-21 · Masters in Business · Second Avenue Nick Hanauer: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source

  19. “Both outside the business and also within the business, we started diversifying and I helped run a retail business that we ended up buying and a bunch of other things. And so I started working for the family business when I was seven years old. I ran every machine and the factory. I worked all through junior high school, high school, college. And so I just had this foundation that was very, very broad. So you become”

    2015-06-21 · Masters in Business · Second Avenue Nick Hanauer: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source

  20. “Well, I mean, you know, today I devote myself to, you know, a lot of my time is devoted to civic issues, policy, politics, philanthropy, and so on and so forth. But in my work life, I'm a serial entrepreneur and venture capitalist. And I was fortunate enough to grow up in a family business. The family pillow business, Pacific Coast. And my dad was a great mentor. And my dad hired another guy to run the company, frankly, named Roy Clothier, who was an incredible mentor to me and my brother. And so I had that great experience. But my folks were very supportive. And so I started starting other companies in my early 20s.”

    2015-06-21 · Masters in Business · Second Avenue Nick Hanauer: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source

  21. “Well, my family's been in the business since 1884, but my great grandfather and my great-uncle bought Pacific Coast out of bankruptcy in 1940 after moving from Germany to the United States. Got it.”

    2015-06-21 · Masters in Business · Second Avenue Nick Hanauer: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source