Read The Everything Store: Jeff Bezos and the Age of Amazon Online
Authors: Brad Stone
Americans in general get nervous about the gathering of so much corporate power, particularly when it is amassed by large companies based in distant cities whose success could change the character of their own communities. Walmart faced this skepticism; so did Sears, Woolworth’s, and the other retail giants of each age, all the way back to the A&P grocery chain, which battled a ruinous antitrust lawsuit during the 1940s. Americans flock to large retailers for their convenience and low prices. But at a certain point, these companies get so big that a contradiction in the public’s collective psyche reveals itself. We want things cheap, but we don’t really want anyone undercutting the mom-and-pop store down the street or the locally owned bookstore, whose business has been under assault for decades, first by the rise of chain bookstores like Barnes & Noble and now by Amazon.
Bezos is an excruciatingly prudent communicator for his own company. He is sphinxlike with details of his plans, keeping thoughts and intentions private, and he’s an enigma in the Seattle business community and in the broader technology industry. He rarely speaks at conferences and gives media interviews infrequently. Even those who admire him and closely follow the Amazon story are apt to mispronounce his surname (it’s “
Bay
-zose,” not “
Bee
-zose”).
John Doerr, the venture capitalist who backed Amazon early and was on its board of directors for a decade, has dubbed Amazon’s miserly public-relations style “the Bezos Theory of Communicating.” He says Bezos takes a red pen to press releases, product
descriptions, speeches, and shareholder letters, crossing out anything that does not speak simply and positively to customers.
We
think
we know the Amazon story, but really all we’re familiar with is its own mythology, the lines in press releases, speeches, and interviews that Bezos hasn’t covered with red ink.
Amazon occupies a dozen modest buildings south of Seattle’s Lake Union, a small, freshwater glacial lake linked by canals to Puget Sound on the west and Lake Washington on the east. The area was home to a large sawmill in the nineteenth century and before that to Native American encampments. That pastoral landscape is now long gone, and biomedical startups, a cancer-research center, and University of Washington School of Medicine buildings dot the dense urban neighborhood.
From the outside, Amazon’s modern, low-slung offices are unmarked and unremarkable. But step inside Day One North, seat of the Amazon high command on Terry Avenue and Republican Street, and you’re greeted with Amazon’s smiling logo on a wall behind a long rectangular visitors’ desk. On one side of the desk sits a bowl of dog biscuits for employees who bring their dogs to the office (a rare perk in a company that makes employees pay for parking and snacks). Near the elevators, there’s a black plaque with white lettering that informs visitors they have entered the realm of the philosopher-CEO. It reads:
There is so much stuff that has yet to be invented.
There’s so much new that’s going to happen.
People don’t have any idea yet how impactful the Internet is going to be and that this is still Day 1 in such a big way.
Jeff Bezos
Amazon’s internal customs are deeply idiosyncratic. PowerPoint decks or slide presentations are never used in meetings. Instead, employees are required to write six-page narratives laying out their points in prose, because Bezos believes doing so fosters critical
thinking. For each new product, they craft their documents in the style of a press release. The goal is to frame a proposed initiative in the way a customer might hear about it for the first time. Each meeting begins with everyone silently reading the document, and discussion commences afterward—just like the productive-thinking exercise in the principal’s office at River Oaks Elementary. For my initial meeting with Bezos to discuss this project, I decided to observe Amazon’s customs and prepare my own Amazon-style narrative, a fictional press release on behalf of the book.
Bezos met me in an eighth-floor conference room and we sat down at a large table made of half a dozen door-desks, the same kind of blond wood that Bezos used twenty years ago when he was building Amazon from scratch in his garage. The door-desks are often held up as a symbol of the company’s enduring frugality. When I first interviewed Bezos, back in 2000, a few years of unrelenting international travel had taken their toll and he looked pasty and out of shape. Now he was lean and fit; he’d transformed his physique in the same way that he’d transformed Amazon. He’d even cropped his awkwardly balding pate right down to the dome, which gave him a sleek look suggestive of one of his science-fiction heroes, Captain Picard of
Star Trek: The Next Generation.
We sat down, and I slipped the press release across the table to him. When he realized what I was up to, he laughed so hard that spit came flying out of his mouth.
Much has been made over the years of Bezos’s famous laugh. It’s a startling, pulse-pounding bray that he leans into while craning his neck back, closing his eyes, and letting loose with a guttural roar that sounds like a cross between a mating elephant seal and a power tool. Often it comes when nothing is obviously funny to anyone else. In a way, Bezos’s laugh is a mystery that has never been solved; one doesn’t expect someone so intense and focused to have a raucous laugh like that, and no one in his family seems to share it.
Employees know the laugh primarily as a heart-stabbing sound that slices through conversation and rocks its targets back on their heels. More than a few of his colleagues suggest that on some level,
this is intentional—that Bezos wields his laugh like a weapon. “You can’t misunderstand it,” says Rick Dalzell, Amazon’s former chief information officer. “It’s disarming and punishing. He’s punishing you.”
Bezos read my press release silently for a minute or two and we discussed the ambitions of this book—to tell the Amazon story in depth for the first time, from its inception on Wall Street in the early 1990s up to the present day. Our conversation lasted an hour. We spoke about other seminal business books that might serve as models and about the biography
Steve Jobs
by Walter Isaacson, published soon after the Apple CEO’s untimely death.
We also acknowledged the awkwardness inherent in writing and selling a book about Amazon at this particular moment in time. (All of the online and offline booksellers of
The Everything Store
undoubtedly have strong opinions about its subject matter. In fact, the French media giant Hachette Livre, which owns Little, Brown and Company, the house that is publishing the book, recently settled long-standing antitrust litigation with the U.S. Department of Justice and regulatory authorities in the European Union stemming from the corporation’s dispute with Amazon over the pricing of electronic books. Like so many other companies in so many other retail and media industries, Hachette has had to view Amazon as both an empowering retail partner and a dangerous competitor. Of course, Bezos has a thought on this as well. “Amazon isn’t happening to the book business,” he likes to say to authors and journalists. “The future is happening to the book business.”)
I’ve spoken to Bezos probably a dozen times over the past decade, and our talks are always spirited, fun, and frequently interrupted by his machine-gun bursts of laughter. He is engaged and full of twitchy, passionate energy (if you catch him in the hallway, he will not hesitate to inform you that he never takes the office elevator, always the stairs). He devotes his full attention to the conversation, and, unlike many other CEOs, he never gives you the sense that he is hurried or distracted—but he is highly circumspect about deviating from well-established, very abstract talking points. Some of
these maxims are so well worn that one might even call them Jeffisms. A few have stuck around for a decade or more.
“If you want to get to the truth about what makes us different, it’s this,” Bezos says, veering into a familiar Jeffism: “We are genuinely customer-centric, we are genuinely long-term oriented and we genuinely like to invent. Most companies are not those things. They are focused on the competitor, rather than the customer. They want to work on things that will pay dividends in two or three years, and if they don’t work in two or three years they will move on to something else. And they prefer to be close-followers rather than inventors, because it’s safer. So if you want to capture the truth about Amazon, that is why we are different. Very few companies have all of those three elements.”
Toward the end of the hour we spent discussing this book, Bezos leaned forward on his elbows and asked, “How do you plan to handle the narrative fallacy?”
Ah yes, of course, the narrative fallacy. For a moment, I experienced the same sweaty surge of panic every Amazon employee over the past two decades has felt when confronted with an unanticipated question from the hyperintelligent boss. The narrative fallacy, Bezos explained, was a term coined by Nassim Nicholas Taleb in his 2007 book
The Black Swan
to describe how humans are biologically inclined to turn complex realities into soothing but oversimplified stories. Taleb argued that the limitations of the human brain resulted in our species’ tendency to squeeze unrelated facts and events into cause-and-effect equations and then convert them into easily understandable narratives. These stories, Taleb wrote, shield humanity from the true randomness of the world, the chaos of human experience, and, to some extent, the unnerving element of luck that plays into all successes and failures.
Bezos was suggesting that Amazon’s rise might be that sort of impossibly complex story. There was no easy explanation for how certain products were invented, such as Amazon Web Services, its pioneering cloud business that so many other Internet companies
now use to run their operations. “When a company comes up with an idea, it’s a messy process. There’s no aha moment,” Bezos said. Reducing Amazon’s history to a simple narrative, he worried, could give the
impression
of clarity rather than the real thing.
In Taleb’s book—which, incidentally, all Amazon senior executives had to read—the author stated that the way to avoid the narrative fallacy was to favor experimentation and clinical knowledge over storytelling and memory. Perhaps a more practical solution, at least for the aspiring author, is to acknowledge its potential influence and then plunge ahead anyway.
And so I begin with a disclaimer. The idea for Amazon was conceived in 1994 on the fortieth floor of a midtown New York City skyscraper. Nearly twenty years later, the resulting company employed more than ninety thousand people and had become one of the best-known corporations on the planet, frequently delighting its customers with its wide selection, low prices, and excellent customer service while also remaking industries and unnerving the stewards of some of the most storied brands in the world. This is one attempt at describing how it all happened. It is based on more than three hundred interviews with current and former Amazon executives and employees, including my conversations over the years with Bezos himself, who in the end was supportive of this project even though he judged that it was “too early” for a reflective look at Amazon. Nevertheless, he approved many interviews with his top executives, his family, and his friends, and for that I am grateful. I also drew from fifteen years of reporting on the company for
Newsweek,
the
New York Times,
and
Bloomberg Businessweek.
The goal of this book is to tell the story behind one of the greatest entrepreneurial successes since Sam Walton flew his two-seat turboprop across the American South to scope out prospective Walmart store sites. It’s the tale of how one gifted child grew into an extraordinarily driven and versatile CEO and how he, his family, and his colleagues bet heavily on a revolutionary network called the Internet, and on the grandiose vision of a single store that sells everything.
Before it was the self-proclaimed largest bookstore on Earth or the Web’s dominant superstore, Amazon.com was an idea floating through the New York City offices of one of the most unusual firms on Wall Street: D. E. Shaw & Co.
A quantitative hedge fund, DESCO, as its employees affectionately called it, was started in 1988 by David E. Shaw, a former Columbia University computer science professor. Along with the founders of other groundbreaking quant houses of that era, like Renaissance Technologies and Tudor Investment Corporation, Shaw pioneered the use of computers and sophisticated mathematical formulas to exploit anomalous patterns in global financial markets. When the price of a stock in Europe was fractionally higher than the price of the same stock in the United States, for example, the computer jockeys turned Wall Street warriors at DESCO would write software to quickly execute trades and exploit the disparity.
The broader financial community knew very little about D. E. Shaw, and its polymath founder wanted to keep it that way. The firm preferred operating far below the radar, deploying private capital from wealthy investors such as billionaire financier Donald Sussman and the Tisch family, and keeping its proprietary trading algorithms out of competitors’ hands. Shaw felt strongly that if
DESCO was going to be a firm that pioneered new approaches to investing, the only way to maintain its lead was to keep its insights secret and avoid teaching competitors how to think about these new computer-guided frontiers.
David Shaw came of age in the dawning era of powerful new supercomputers. He earned a PhD in computer science from Stanford in 1980 and then moved to New York to teach in Columbia’s computer science department. Throughout the early eighties, high-tech companies tried to lure him to the private sector. Inventor Danny Hillis, founder of the supercomputer manufacturer Thinking Machines Corporation and later one of Jeff Bezos’s closest friends, almost convinced Shaw to come work for him designing parallel computers. Shaw tentatively accepted the job and then changed his mind, telling Hillis he wanted to do something more lucrative and could always return to the supercomputer field after he got wealthy. Hillis argued that even if Shaw did get rich—which seemed unlikely—he’d never return to computer science. (Shaw did, after he became a billionaire and passed on the day-to-day management of D. E. Shaw to others.) “I was spectacularly wrong on both counts,” Hillis says.