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Q: Investment Cost of Different Businesses ( Answered,   0 Comments )
Subject: Investment Cost of Different Businesses
Category: Business and Money > eCommerce
Asked by: petertlee-ga
List Price: $100.00
Posted: 11 Jun 2004 09:58 PDT
Expires: 11 Jul 2004 09:58 PDT
Question ID: 359733
I'm trying to find out what the initial, up-front, investment cost was
to build the following companies (just to get the company launched and
open for business - i.e., maybe it took Amazon $20M to just get the
infrastructure built to open for business even though they have spend
$1B to expand - I only need the $20M number - just the amount to get
the business initially launched)

1. Amazon
2. Ebay
3. Netflix
4. TiVo

I don't necessarily need an exact financial number off an analyst
report but even a quote from a news site or estimate of how much
investment is needed to build this from some reputable source(it would
be nice to also get some idea of the on-going costs to run/operate
this but I definitely need to know what the initial cost is to just

Request for Question Clarification by pafalafa-ga on 11 Jun 2004 10:07 PDT
Hello peterlee,

I'd be interested in working on this question for you, but I have a
question or two of my own first.

You've asked for information pertaining to five specific companies. 
Supposing I can only find some, but not all of them.  How should we
handle that?

Would you consider 3 out of 5, or 4 out 5 an acceptable answer?  

Are there other companies that might serve as substitutes for the ones not found?

Any additional perspective you can provide would be helpful in
crafting the best possible answer.



Clarification of Question by petertlee-ga on 11 Jun 2004 11:09 PDT
In terms of getting a few of the companies but not all - is there a
way that we can do somethink like $20 per company?

Also, regarding comparable companies, this would be ok, but I would
have to "approve" the companies. I just want to make sure the
comparables are truly comparable - i.e., I want the investment cost of
a top-tier successful company as opposed to a second-rate money
losing/failing company. As long as it meets this criteria, I would be

For example for Amazon - I would be ok if there were another large
successful online store - but it would have to be a store that sells
media (movies, music, etc.)

For ebay - probably only Yahoo Auctions.

For Netflix - I think Blockbuster is trying to do the same thing so
this would be ok, but only for Blockbuster's investment in a
mail-order DVD rental business -not their traditional in-store rental

For TiVo - Not sure if there is a good comparable

For - any other TOP TIER sports site (NFL, NBA, etc.)

If there is an number I could reach you at, we could discuss. Or you
could call me. Let me know.

Request for Question Clarification by pafalafa-ga on 11 Jun 2004 11:44 PDT
Thanks for the's a big help.

No way we can talk on the phone -- it's against Google Answer rules --
so I hope you don't mind a continuing dialogue right here.

Here's a few tidbits of info I found on in a 1997 newspaper article:


In true entrepreneurial style, Bezos and a handful of others went to
work in his Bellevue garage...Then Bezos went looking for money...He
rounded up a couple million dollars from individual investors...Last
spring, Bezos negotiated with Kleiner Perkins partner John Doerr for
[an] $ 8 million investment..."


So, a couple million from individual investors plus $8 million from a
VC firm -- looks like Bezos and crew started up with around $10-11
million in financing.

Is that a satisfactory answer for, or are you looking for
more precise numbers (which -- for a firm that was not public at that
time, might be hard to come by).

Let me know if this is the type of information you're looking for.



Clarification of Question by petertlee-ga on 11 Jun 2004 11:58 PDT
I would actually prefer if you could find quotes (see my previous post
and answer on a similar request for iTunes - The answer
gives information on overall cost to build the platform.

Regarding your method using VC money, it is ok, but I would need to be
sure on how much money it took to get to the point of launching and
making sales to the public (i.e., were they actually able to launch
based on only $5M of this funding or did they need another round of
financing after this round to actually get it off the ground and
selling product).

Clarification of Question by petertlee-ga on 11 Jun 2004 14:21 PDT
Not sure how far you've gotten, but can you give me an update?
Depending on how much you have, I will accept it as finished even if
everything is not completely done. I have a deadline I'm trying to
meet and if I can get it sooner, I'd rather have part of it now than
none of it. :)

Request for Question Clarification by pafalafa-ga on 11 Jun 2004 14:31 PDT
Haven't gotten much further than my earlier comment.  

I did read your previous question though, and it seems to me there's a
big difference in getting cost figures for a start-up like
vs figures for spending from an established business starting up a new
activity, such as Apple's iTunes.

I will continue to research this.  However, I'm also unlocking the
question so that other researchers can have a go at it, as well. 
Perhaps someone out there can make faster progress than I can.

All the best...


Request for Question Clarification by tox-ga on 11 Jun 2004 14:49 PDT
Hi there,

Per your request on the other page that I've answered, I'll start
researching right away and keep you updated on my progress.

Thank you,
Subject: Re: Investment Cost of Different Businesses
Answered By: tox-ga on 11 Jun 2004 16:06 PDT
Hi there,

Since you are tight on time, I paused my other research and started
looking for these companies and have good news; I've found information
regarding seven companies: all the company listed in the question, as
well as information on (Blockbuster's startup) and  Each of them are referenced from reputable
sources, and I have quoted them as you requested.

The following are words directly from Inc. CEO Jeffrey P.
Bezos in an interview
" was started with a few hundred thousand dollars, most of
which came from my parents--always a good source of angel investment
capital." content/01_18/b3730092.htm

From the complaint by his wife regarding difficulty of finding other
collectors to trade Pez dispensers with, the founder and current
chairman Pierre Omidyar wrote some software code at home and
introduced ""
"Shortly thereafter, an outside consulting firm concocted a simpler,
more-elegant brand name: eBay. Benchmark Capital (
kicked in $6.5 million to fund eBay's build-out (an investment now
said to be worth some $4 billion)"

The following is from the report - Meet the star of Netflix, founder
and CEO Reed Hasting...

"Hastings' earlier success gave him credit and credibility with Bay
Area venture capitalists and he rapidly put together a VC triad of
Silicon Valley heavyweights.  Gaining the concurrence of Jay Hoag of
Technology Crossover Ventures, Mike Schuh of Foundation Capital and
Tim Haley of IVP, Hasting had a VP war chest of $100 million to make
Netflix a reality." currentissue/04Spr-CaCEO-p30-34.pdf
Barnes & Noble and Bertelsmann have pumped a $200 million investment
into (by Blockbuster)
"Blockbuster has invested about $10 million, a fraction of its $5
billion-a-year business, in several small companies for R&D purposes,
Antioco said."
Among the ventures:
-, an online DVD-rental business that competes with
Netflix Inc.'s, pioneer of the DVD mail-rental model.
Thus, the start-up cost can be estimated to be a portion of the $10
million; a more accurate estimation on the portion could be made by
deducting costs of the other small companies Blockbuster created.

"The well-connected Ramsay mentioned his concept to the folks over at
the venture-capital firm Institutional Venture Partners (IVP)... IVP
initially put up $1.5 million, and Ramsay and Barton were off and
running.  Just as Wood's Replay was launching, Ramsay and Barton set
up shop seven miles down the road in Sunnyvale. There TiVo was born --
and with it a heated rivalry"
"MLBAM, which has a $120 million commitment over four years from the
league, is believed to have used up about $90 million so far. The
company, which runs like a start-up out of offices in Manhattan, was
expecting to be cash flow positive by the time the World Series ends
in October but a strike could strikeout those plans. "


I will post my search strategies soon, but I am posting the results of
the research now so that you can use it to meet your deadline.

Best regards,

Request for Answer Clarification by petertlee-ga on 12 Jun 2004 11:01 PDT
Thanks for the information. Regarding some of the answers, I put a
clarification earlier in the thread about using VC funding as a proxy
for investment cost. I think to some extent this is ok, but I would
need to know exactly how much TOTAL VC money was taken before the
company was really able to take off. Just getting a single round of VC
funding may not have been enough to really launch the business - they
may have needed more.

I guess if the only sources are VC financing, the proxy that would be
ok with me to use is the TOTAL VC financing they received until they
IPO'ed would be fine.
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