For the exclusive use of P. Isautier
Harvard Business School
Rev. August 3, 1999
Joy Covey, chief financial officer of online bookseller Amazon.com, settled into her airline seat and opened the day’s Financial Times as her plane pulled back from its gate at London’s Heathrow airport. It was April 30, 1997, and Covey and Jeff Bezos, Amazon.com’s founder and CEO, had just completed the European leg of Amazon.com’s “road show.” Over the past three days, they had presented the company’s investment story to dozens of European institutional investors interested in Amazon.com’s pending initial public offering. They were returning to San Francisco to attend Hambrecht & Quist’s Technology Investor Conference the next day, where they would meet scores of technology investors and analysts. Following the conference, they would launch the domestic leg of Amazon.com’s road show, during which they would make 48 presentations in 20 U.S. cities in 16 days.
Covey was tired from their European tour but encouraged by the reception she and Bezos had received. Though she had not seen the “book”— the list of investors who tentatively had subscribed to purchase shares in the offering — she believed that the Amazon.com story had been well received. Frank Quattrone, Amazon.com’s investment banker at lead underwriter Deutsche Morgan Grenfell, had told her that he had never seen a road show presentation as heavily attended. Covey and Bezos had fielded many difficult questions about the company’s aggressive spending plans and sustained losses, but investors had seemed to understand the company’s long-term investment strategy. They also had been willing to accept Covey’s reluctance to disclose key operating metrics that she and Bezos felt were strategically sensitive. As Covey flipped through the Financial Times, she noticed a headline that was becoming all too familiar: “Investors Skeptical on Internet Flotations.” Despite a surge in the technology sector and a recent spike in IPO’s of venture-backed technology start-ups, several prominent Internet commerce companies had recently encountered difficulties. Most notably, Auto-By-Tel, a leading online car retailer, had pulled its much-anticipated IPO the previous week. Covey was cautiously observing this market, uncertain of the impact that these events would have on Amazon.com’s offering.
As the plane took off, she was hopeful that attendees at H&Q’s conference would respond as favorably to Amazon.com’s story as she felt their European counterparts had. She knew a successful IPO would be critical to the company’s long-term success — both in raising capital to fund future operating requirements and in extending its brand — and knew that the next several weeks would determine the offering’s success. She expected that she would continue to face difficult questions about the company’s still unproven business model, its bold spending plans, recent competitive entries, and the weak technology market. She also thought ahead to the upcoming pricing meeting Senior Researcher Laurence E. Katz prepared this case at the HBS California Research Center under the supervision of Professor William A. Sahlman as the basis for class discussion rather than to illustrate either effective or ineffective handling of an administrative situation.
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