Pets.com (defunct) vs Amazon.com

Greg McLemore founded Pets.com in 1998 during the height of the dot-com boom with a simple premise: selling pet food and supplies online. The business model had a fundamental problem visible to anyone who examined it: Pets.com was selling 50-pound bags of dog food below cost and shipping them for free. Every sale lost money. The plan was to build market share first and figure out profitability later — a strategy that had worked for Amazon, and that Pets.com's investors apparently believed would work equally well for commodity pet supplies.

Amazon invested in Pets.com in 1999, lending the company enormous credibility. Venture capital followed. Pets.com raised $82.5 million across multiple funding rounds. The company launched a national advertising campaign featuring a sock puppet dog that became one of the most recognisable mascots in America — appearing on Good Morning America, in a Macy's Thanksgiving Parade balloon, and at the Super Bowl. The sock puppet was significantly more famous than the product it was advertising.

Pets.com spent $11.2 million on a Super Bowl XXXIV advertisement in January 2000 — one of the most expensive commercial buys in television history at the time. Three weeks later, the company raised $82.5 million in an IPO. On November 7, 2000 — exactly 268 days after the IPO — Pets.com announced it was shutting down. It had burned through its cash, could not raise additional funding as the dot-com bubble deflated, and had no path to profitability. The sock puppet mascot was sold at auction. The domain was eventually acquired by PetSmart.

The Pets.com collapse was used for years as a cautionary tale about irrational exuberance and the danger of growth-over-profit business models. Then, in 2011, Chewy.com was founded — another company that sold pet supplies online. Chewy focused obsessively on customer service, built genuine loyalty, and figured out how to make the economics work. It was acquired by PetSmart for $3.35 billion in 2017 and went public at an $8.8 billion valuation in 2019. The business model that Pets.com had failed to execute was viable. Pets.com had simply executed it very badly — and very publicly.

Jeff Bezos quit his well-paying job at hedge fund D.E. Shaw in 1994 to sell books online. His boss thought he was crazy. Bezos drove from New York to Seattle while his wife drove — he typed the business plan on a laptop in the passenger seat. He made the decision using a "regret minimisation framework": at 80, he knew he'd regret not trying far more than failing.

Amazon went public in May 1997 at $18 per share. Barron's ran a cover story calling it "Amazon.bomb," arguing the company could never generate enough profit. Amazon lost money for nine consecutive years. Bezos kept investing in fulfilment, technology, and selection. The analysts were right about the losses — and completely wrong about everything else.

Amazon Web Services launched in 2006 as an internal tool to help Amazon's own engineers deploy infrastructure faster. The company realised other businesses needed the same thing and opened it to the public. AWS is now responsible for the majority of Amazon's profit, despite being a fraction of its revenue. It is the most profitable cloud business in history.

Jeff Bezos stepped down as CEO on July 5, 2021 — exactly 27 years after founding the company — handing over to Andy Jassy, who had built AWS from scratch. Bezos announced plans to fly to space on Blue Origin the same day. His net worth at the time was approximately $200 billion.

Amazon invested up to $4 billion in Anthropic in 2023, securing preferred cloud provider status and deploying Claude across AWS Bedrock. By April 2026, over 100,000 businesses were running Claude on Amazon Bedrock. AWS was growing at 17% annually in 2025, crossing $100 billion in annualised revenue. The company that had started by selling books online had become the infrastructure provider for the AI revolution — and was charging every major AI company for the compute to run it.