Why is Jeff Bezos, and not his initial investor the richest person in the world? How does it work for Jeff Bezos?

Question

I have always had a curiosity since a very long time about ordinary people who become very rich (millionaires, billionaires..). But I have a feeling that this is going to be a silly question, so please pardon me if it is too silly, I am here just to learn about a simple thing.

How do people who become billionaires get such a stake (share) in their company that make them very rich? Consider Jeff Bezos. He was just like anyone else (financially). He was nowhere near the category of even millionaires I guess. But he had a powerful idea about an everything online store that went on to become the most popular thing. But he certainly did not have so much money to open up facilities etc. to fund his brilliant idea. He had to utilise money from investors. And the investors, hence, got the majority share in the company (like 95% or so) and the remaining an be considered to be possessed by Jeff Bezos (who had little money to contribute in it). This way, if Amazon gets successful, the person who would profit the most will be that investor(s) who invested in Jeff Bezos' idea. How did Jeff Bezos become the richest person then? Why not that/those investor(s) who initially funded his project?

So the question is: Is having a brilliant idea enough to claim the majority share of a company even though the creator has nothing in their own pockets? If an investor funds a project fully, does that mean he will own the majority of the share (say 95% of the profits)?

How does all this work? How do people who have nothing in their pocket go on to become the richest people just by a single idea? As far as I know, only money can generate more money. If you have money, you can invest, own the majority shares, and become even more super-rich if the project (like Amazon) thrives. But if you just have an idea, not money, how could you go on to become the richest person? How does all this work?

Thank you and kind regards.

Answer 1

Consider Jeff Bezos. He was just like anyone else (financially).

Ah, SERIOUSLY? As per wikipedia: His last job pre Amazon "He worked there from 1988 to 1990.[32] He then joined D. E. Shaw & Co, a newly-founded hedge fund with a strong emphasis on mathematical modelling in 1990 and worked there until 1994. Bezos became D. E. Shaw's fourth senior vice-president at the age of 30.[". I assume anyone else also becomes the youngest VP in a hedge fund? And the earlier parts of his career let me assume he was well into being a millionaire at this stage.

The main point then is you have one VERY naive assumption - that there is A (as in singular) initial investor. It is not. As per the same wikipedia page:

He accepted an estimated $300,000 from his parents and invested in Amazon.[35] He warned many early investors that there was a 70% chance that Amazon would fail or go bankrupt.

So, there where a number of investors. It is likely many cashed out earlier or are rich - just they own a smaller part of the pie. There is not "ONE" investor.

How do people who have nothing in their pocket go on to become the richest people just by a single idea?

By owning a significant part of the initial small company which they turn into this market giant over many years of hard work.

But if you just have an idea, not money, how could you go on to become the richest person?

By now selling the majority of your shares.

Answer 2

And the investors, hence, got the majority share in the company (like 95% or so) and the remaining an be considered to be possessed by Jeff Bezos (who had little money to contribute in it)

Why would an person that started a company sell 95% of the company to the early investors. That means that those investors control the company. That means that the founders ideas, vision, and effort is no longer wanted.

Steve Jobs and Steve Wozniak were poor, and they need financing to build the Apple II, but they didn't give control to the outside investors. Of course later on Jobs lost control of the company.

Those people on Shark Tank don't give up too much of their company or they won't control the direction of the company.

So the question is: Is having a brilliant idea enough to claim the majority share of a company even though the creator has nothing in their own pockets? If an investor funds a project fully, does that mean he will own the majority of the share (say 95% of the profits)?

Yes having the brilliant idea, or a brilliant product, or a patent can be enough to claim 95% of the company. In many cases the outside investor is just a source of money. Sometimes they do bring advice and expertise. Many of these investors are happy with a small part of the company. Even if they start with 20%-30%, they sell when the company goes public.