The breakfast with Jeff Bezos started awkwardly and ended with an indignity that Matt Rutledge didn’t even catch at first. The waitress at Lola, a trendy Seattle restaurant owned by celebrity chef Tom Douglas, didn’t recognize Bezos. But she sensed she should have. When she stumbled over his name, he explained that his father was Cuban, which, in terms of making a positive ID, probably wasn’t as helpful as saying, “I’m the guy who founded Amazon.”
Also seated at the table that Monday morning in 2010 were Bezos’ shadow, an up-and-coming Amazon executive who follows Bezos everywhere, watching how the CEO makes decisions; and the corporate development guy who’d put together Amazon’s recent $110 million purchase of Rutledge’s company. Bezos is better at business than he is at small talk. Rutledge would claim he himself has been lucky in the first field and is incompetent in the second. The breakfast unfolded with all the ease and grace of a tango danced by two beginners on painter’s stilts. The development guy did his best to keep things moving while the shadow looked on, learning God knows what.
Rutledge, a charmingly awkward man in his early 40s, had met Bezos more than once prior to the acquisition, each time figuring his job had been to answer questions and be liked. Now that the deal had closed, he saw his role differently. He wanted to have a good meeting, sure, but he didn’t feel the need to impress the billionaire. Bezos asked how Rutledge’s day was going, which struck him as surreal. He’d flown to Seattle on a Sunday just to have breakfast with Bezos on Monday. After breakfast, he would return to Dallas. All that time and travel, and Bezos didn’t have an agenda? Rutledge, having agreed to remain an Amazon employee for three years, had hoped that the meeting would usher him into an inner circle. Bezos would give him the secret scroll of incantations and explain how the two men together would rule the world. Instead, Bezos was idly asking how Rutledge’s day was going? Rutledge wanted to answer, “I don’t know, Jeff. You tell me how my day is going so far.”
At length, after a bit of business talk that maybe resembled a cousin of an actual breakfast meeting, Rutledge blurted out a question that had been troubling him: “Why did you buy Woot?”
For the uninitiated, the term “woot” is an expression of joy that sprang from online role-playing games, a portmanteau of “wow” and “loot.” Rutledge had bought the web address Woot.com in 2003 for $6,000, and the next year launched a site that sold stuff in a way no one had ever tried. Woot offered only one item per day, usually a gadget but maybe a wheel of cheese, and priced it so low that it oftentimes sold out in a matter of hours. When the items didn’t sell out, Woot put them in a Bag of Crap, a bundle that users bought blindly. Customer service pretty much began and ended with the suggestion that the customer put any unwanted or defective item on eBay.
Woot violated nearly every precept of retail. And it was wildly successful. Each weekday just after midnight Central Standard, a new item went up. It was an event. The site attracted a community of geeks who once flooded its discussion forum with 452 comments about a power adapter. At its height, Woot attracted 1 million daily visitors, to whom Rutledge was something of a rock star. By 2008, annual sales had eclipsed $164 million, and Inc. magazine named Woot the fastest-growing private retailer in the country (and the fastest-growing private company in North Texas). At that point, Amazon had already invested in the company. Then it bought the whole thing.
So there sat Bezos at the breakfast table, faced with a question for which he was apparently unprepared. Many painful seconds passed without an answer. Rutledge let the pause lengthen as long as he could bear it and was just about to tell his host to forget it, when Bezos finally spoke.
He looked down at his plate. Bezos had ordered a dish called Tom’s Big Breakfast, a preparation of Mediterranean octopus that includes potatoes, bacon, green garlic yogurt, and a poached egg. “You’re the octopus that I’m having for breakfast,” Rutledge remembers Bezos saying. “When I look at the menu, you’re the thing I don’t understand, the thing I’ve never had. I must have the breakfast octopus.”
Not until Rutledge had returned to Dallas and related the story to his anxious employees—now Amazon’s employees—did he realize just how absurd that explanation sounded. Before it can be eaten, generally, the breakfast octopus must be killed.
None of it—Woot, the sale to Amazon that afforded him a 7-acre spread in Plano with its own lake, the launch this month of his next mad experiment in online retail—would have happened without the Apple II that his dad bought in 1979. Rutledge taught himself a little BASIC and wrote a quiz program for the periodic table. When his parents divorced, young Matt moved with Dad from San Antonio to Farmers Branch, then Carrollton. Eventually little brother Dave moved with Mom to St. Louis.
Rutledge did not distinguish himself in high school, which ended before he realized it would. Mom offered to pay for community college, so off he went to St. Louis and promptly began failing every class except tennis. This was 1989, when the computer industry was speeding up, and bulletin-board groups began holding meetups. Rutledge attended one such meeting and found it far more rewarding than school.
“I wasn’t particularly social,” he says. “So any ability to be social and meet people, to be a geek and find friends, was overwhelmingly fun for me.”
“To a certain degree, I believe that making money in retail is evil.”
“To a certain degree, I believe that making money in retail is evil.”- Matt Rutledge
Eventually he bought his own car, a Mazda RX-7, which he opted to neither register nor insure. Multiply those infractions by a series of moving violations, throw in court costs for ignoring all of the above, and, in short order, the city wanted about $8,000 from Rutledge. Rather than pay up, he beat it back to Dallas and moved in with an old high school buddy who was still living at his mom’s house.
A series of jobs followed. He worked at the record store Sound Warehouse. He worked at a computer retailer called Resource Concepts. Then, in 1994, Rutledge started Synapse Micro, a wholesale hardware distributor that he would build into a $50 million business, before the internet and CompUSA and Fry’s destroyed the ecosystem of mom-and-pop computer shops. But before that happened, at both Resource and then with his own Synapse, Rutledge found himself in a setting that taught him a crucial lesson about selling crap.
The First Saturday swap meet started in 1972 as a market for ham radio enthusiasts. By the time Rutledge returned to Dallas in the early ’90s, First Saturday had grown to include computer hardware and all sorts of related gadgetry. Vendors set up Friday evening in a downtown Dallas parking lot. People arrived at midnight to shop in darkness, haggling over motherboards and hard drives as the sun rose on the first Saturday of every month. Enter Matt Rutledge—doing it his own way.
“On Friday night, I’d go to the bar,” he says, “probably the Salute Club on Midway. When the bar closed, I’d get a buddy, pay him a couple hundred bucks to come back to the warehouse with me and load up the Ryder truck. All the other guys had already set up their tables, wearing miner hats. This was grassroots stuff. But I was a closeout distributor with a bunch of returns already written off. So at 2 or 3 in the morning, everybody else is already set up, and we’re these assholes with bloodshot eyes trying to figure out how to park a truck in our spot at the last minute.”
Rutledge has a mischievous laugh that he lets loose in bursts. “You went to the bar, you were up late, and you made the best of it. I didn’t plan it that way. It just happened. And people knew who we were. I was almost like a drug dealer to them. They’d follow us, gather around the back of the truck when we threw the door up. ‘I’ve got these motherboards!’ You’re delirious. ‘No warranty! Who wants it for $10?’ You’re a jerk, but you’re having fun, taking cash, stuffing it in this pocket, making change from that pocket. People would come just to watch, not even buy anything. That was kind of cool.”