[2 December 2013]
I don’t know about you, but I both love and hate Amazon. I love the availability of, well, everything. I buy ebooks. I stream videos. I download music. Yet I know it is the 800-pound gorilla that tries to destroy smaller stores and has already crushed many wonderful bookstores. Its practices can result in hurting authors. I fear for journalism as founder Jeff Bezos takes over his newest toy, the Washington Post.
This well-crafted book is the first in-depth look at the enterprise and Bezos, who has been called the “natural heir” to Steve Jobs in a New York Times article. He holds the top spot on Vanity Fair’s 2013 “New Establishment List: The Disrupters,” vaulting ahead of Google founders Larry Page and Sergey Brin.
So is this book the natural heir to Walter Isaacson’s biography of Jobs? In a word, no. There’s still a halo hovering over the Apple founder, even up in digital heaven. As transformative as Amazon is, there is none around Bezos.
Certainly, Brad Stone carefully studied Isaacson’s book while writing this one. He searches for Bezos’s birth father, unicyclist Ted Jorgensen, and finds him, although it’s not clear why he has to spend so much time on it. He burnishes the Bezos legend while inspecting nasty blotches on that bald pate.
At best, Bezos is compelling and powerful. But Bezos is not beloved by outsiders; his products not worshiped nor his status iconic as Jobs’s was. A giant online retailer is still in retail, despite forays into manufacturing hardware like the Kindle.
That said, Stone offers us an interesting business story. Bezos is a big-vision guy who had the idea for an “everything” virtual department store even before the rest of us were introduced to what looked simply like a digital bookstore. From the beginning, in 1994, while working for a hedge fund in New York, Bezos kept the “everything” idea quiet. Meanwhile, he was researching how to capture online customers for a foot-in-the-door e-commerce site.
The answer: books. Or, more dramatically, a superstore for books at the lowest price with a huge inventory that brick-and-mortar bookstores, not even giants like Barnes and Noble could match.
“Whoa!” moments abound in this tale. In its earliest days a bell rang at Seattle headquarters every time there was a sale. Bezos considered Jamie Dimon the Wall Street bigfoot, as a possible COO but rejected him in favor of Joe Galli Jr. of Black and Decker. (It’s not clear what soured them on Dimon, who was interviewed for the job after being fired from Citibank but before failing upward to preside over the financial debacle at JPMorgan Chase.) Galli, in turn, slashed one of the few perks for Amazon worker bees: free Advil.
Very early meetings and coffee breaks were held in a Seattle Barnes and Noble. Bezos instituted a “two pizza” rule to limit the time and size of problem solving meetings. Bezos tantrums were so frequent that staffers gave them a name: “nutters”. Both Barnes & Nobel and eBay tried to buy or negotiate partnerships with Amazon.
Although books were Amazon’s gateway drug, it learned about new lines of retail goods that could be profitably sold online by letting other companies hawk their wares as “Marketplace” sellers. Amazon then did its best to ruin them by selling the same goods cheaper and delivering them faster.
If you are one of those idealists who orders from Amazon but won’t go near Walmart because of its business practices, think about this: The model for Amazon always has been a Walmart for the 21st century. “Bezos had imbibed” Sam Walton’s autobiography “thoroughly and wove the Walmart founder’s credo about frugality and a ‘bias for action’ into the cultural fabric of Amazon.”
The company could be “a somewhat cruel master.” Stone details uncomfortable truths about working conditions both at the executive and the fulfillment levels. Employees were charged for parking and for coffee. In some warehouses, there was not enough air conditioning. Rather than install it, Amazon added exactly five minutes to work breaks. Workers were offered Gatorade when temperatures rose above 100 degrees. During a 2011 heat wave, the company also paid for private paramedics to be stationed outside a Pennsylvania facility “ready to deal with employees” as they collapsed. Fear of retribution stopped unionizing attempts.
There’s no question that Bezos and his teams made many correct decisions in its 20-year journey to dominance. They created Amazon Web Services, which became source of storage, databases and computing power for many start-up and turned it from merely a giant e-retailer into a true technology power.
And then there is the Kindle. I remember when I first saw someone a few years ago reading on It and asked myself: “Would I, a compulsive reader, pay $400 for such a device?” The answer was no. Now I can’t imagine not having one. The major drawback is that you can’t get an author to autograph an ebook.
Amazon was not first with an e-reader but its Kindle is still the best, and thus the leader, in such devices. One reason: Bezos decreed he wanted a gadget “so easy to use that a grandmother could operate it.” Fiona, the original name, came from a sci-fi novel by Neal Stephenson. When the first Kindle was introduced in 2006, publishers made the mistake of regarding it as a Betamax-type failure. In 2007, an early model sold for $399. By 2012 the price had dropped to barely $100.
What works for us as customers (Amazon now as 200 million of us worldwide, or a sum nearly two-thirds the size of the US population) does not make it a beloved brand. Do you prefer to patronize squeaky clean corporate giants? Bezos constantly skirted illegalities when negotiating with publishers, suppliers and partners. Don’t like coldblooded business practices? Amazon punished Macmillan in one battle by removing the “buy’ button from all its books; sales plummeted.
Like the idea of Zappos selling shoes using the same low-price platform? Amazon competed, undercutting prices until it could buy Zappos in its entirety. Don’t like a company that swallows others? Amazon introduced Amazon Mom at the very moment leaders of Diaper.com were making their pitch to Amazon executives in Seattle.
Amazon’s bottom line still does not reflect huge profits, but who cares when the stock price is in the stratosphere, especially after outlasting the Great Recession? Stone does make it sound like a hateful place to work: the Bezos mantra is about “working smart, hard and long.” Said one employee “Jeff didn’t believe in work-life balance.”
Stone’s verdict on its business philosophy? “Relentlessly innovative and disruptive a well as calculating and ruthless.” Does Bezos care? Probably not, since this “arrogant giant” is a “manifestation of Bezos’s own competitive personality and boundless intellect.”
A final scary story: In the beginning, Amazon hired an editorial staff so humans could write recommendations to customers. When an algorithm called Amabot showed in 2002 that it could do the job better, the editorial staff was laid off. So you work for the Washington Post? There’s still time to look elsewhere or ask for a transfer. Just avoid any workplace where, on a hot day, paramedics proffer Gatorade.