Brad Stone’s new book about Amazon.com, “The Everything Store,” will be released on Tuesday — a definitive and unvarnished account of the rise of Amazon and its CEO, Jeff Bezos.
Earlier this week I talked with Stone about the book, starting with the moment that he found Bezos’ biological father in a bike shop in Glendale, Ariz., and informed the man that his son was “one of the most successful men on the planet.”
Continue reading for edited excerpts from our conversation.
Did you have any ethical qualms when you found yourself unexpectedly telling Jeff Bezos’ biological father, Ted Jorgensen, about the identity of his son? This is a process that usually happens in private in families.
Stone: It wasn’t an ethical dilemma but it was a sense of responsibility that I wasn’t quite prepared for. Suddenly I became the best witness to who his son was and who he had become. I was trying to answer all of these questions that this guy had had for 40 years. It was an extremely moving experience, and I quickly found that Ted, who is a really sweet man, had clearly regretted the situation and wondered about it his whole life.
You show in the book how Amazon’s “focus on the customer” pervades the company’s culture. It seems like it’s to the detriment of every other relationship — with shareholders, employees, partners, the press. Can Amazon continue to grow without a more sophisticated understanding and treatment of its different stakeholders?
Stone: You’re right, there’s this hierarchy of constituents. Customers are at the very top, and then shareholders, and below that there’s employees, and below that let’s call it the civic good. In stories that I tell in the book, like the lubricant crisis, Jeff is ready to just stop emailing customers because some of these messages might embarrass some people. And basically give up a billion dollars in sales because of it. How these priorities are baked right into the organization becomes clear.
I think you’re right, as we’ve both personally experienced, Amazon does not put its own best foot forward when it comes to press, when it comes to weighing the overall good to society with issues like the sales tax. And they do it because they want to preserve this extraordinary pricing benefit for their customers.
You know, I’m not willing to say that their way is inferior. We don’t know. There are clearly some drawbacks to it, but they’re not mixed up about what their priorities are. It is clear that customers love Amazon, and it’s that prioritization that’s responsible for a good deal of their success today.
At the end of the book, you say the answer to every logical question about Amazon is “yes.” One of those questions is whether the company will face antitrust scrutiny. If you look at situations like the Quidsi acquisition, and the things that Amazon is doing behind the scenes in a lot of cases, it just screams out for regulatory scrutiny.
Stone: I think Amazon, just like Google, is now at the size where every acquisition will be scrutinized, and it’s going to be increasingly an issue for Amazon. I think the main challenge they face — and it’s in a different form than Microsoft faced in the ’90s — is they’ve become both a retailer and a marketplace. And it just creates these extraordinary conflicts and requires a so-called “Chinese Wall” inside the organization. One customer set, third-party retailers, are competing against Amazon itself, and there are just too many opportunities for product heads, and product category leaders to put their thumb on the scale and tilt the scale in the direction of Amazon’s first-party retail business.
I tell the story of Wusthof Knives in Chapter 10 in the book. The fact that Wustof pulled its knives from Amazon, and Amazon was so mad that they were advertising for Wustof’s competitors when anyone searched for Wustof, was incredible. I think that was a mistake. But as Amazon starts to really dominate — and it already is — categories like books and electronics, I predict that some interesting issues will arise in the years ahead.
That conflict that you talk about in the book, between Amazon’s third-party marketplace and direct retail sales, made me look more skeptically at the wall that they say is between Amazon Web Services and the rest of the company. Especially when you look at Netflix and its role as an AWS customer and Amazon competitor. When you look at what they’re doing on the e-commerce side, can you really believe what they’re saying about treating Netflix fairly?
Stone: I do. There’s no evidence to suggest that they would be disadvantaging a competitors’ service through AWS, whereas things get a little messier in the retail business and the marketplace. They do a good job there, as well, but the issue is how frequently are mistakes made. Particularly at Amazon, where employees walk in and out of there all the time because it’s such a difficult place to work, and also the pace of growth is so incredibly high. So you’ve got all these new employees.
I think in the case of AWS, it really is a different organization that fits outside the retail business, with its own chain of command. As you know it’s in a separate building. I have a hard time believing that there are improper connections there.
Diving into your reporting, you found an obscure book from the 1970s by an author named Julie Ray, about the gifted education program in Texas, with a chapter describing a young boy named “Tim,” which turned out to be a pseudonym for a young Jeff Bezos.
Stone: That’s right, I’ve called Julie Ray the world’s first “Bezos-ologist.” She met Jeff Bezos in the 70s, when he was an elementary school student in Houston. That book had been referenced in a Wired magazine story. I think Jackie Bezos (Jeff’s mom) had a copy of it, and she just showed it to a reporter in the 90s. But it was not online. So all there was was this mention of this book called “Turning on Bright Minds,” that talks about Jeff under a pseudonym.
I got lucky. I called up the Houston Public Library, they had a copy, they faxed me that chapter, and then I did a little bit of a search for Julie Ray, just like I had done a search for Ted Jorgensen, and found her. She had remembered it well, and was following Jeff’s career, and was very excited to talk.
It adds so much to the book to start with that account of him, written at a time long before he was famous. It’s rare to have that kind of detail on someone, written by an author who had no idea at the time what he would become.
Stone: And the fact that the teachers at the school were saying, ‘With a little bit of guidance there’s no telling what this boy can achieve,’ is remarkable. You can’t make it up.
At the end you make a note that the set-top box Amazon is believed to be developing could have been released before the book came out. Did you feel at times like you were in competition with Amazon to get your product out first?
Stone: Not at all, but the issue that any author of any technology book faces is, how the hell do I future proof this thing? The pace of change is so rapid. How do I write an end to this that’s not going to seem outdated by tomorrow? That whole section about the answer to every possible question is yes, is basically me trying to make this thing relevant in 5 or 10 years. I’m hopeful that people will still be looking at it as a resource.
[Related: Review: ‘The Everything Store’ is the definitive story of Amazon]
You covered Amazon for a long time before starting this book. What did you learn about this company through the process of writing this book?
Stone: I have to say, the view that we get of the company in day-to-day coverage is extremely shallow. Amazon likes it that way, and they play very good defense. So almost everything was surprising: The friction that’s created in the culture, and how difficult it is particularly for new employees to stay there and thrive. A couple of my sources went in and came out in the time that I was writing the book.
One of the other really delightful surprises for me, having covered Amazon in the dot-com bust, was how they really went to war against this analyst Ravi Suria, who was predicting the company’s doom, and how they actually encoded a message in one of their earnings press releases, an inside joke, in a way insulting or calling out the fact that this analyst had been wrong.
(The subheadline on the 2003 release was, “Meaningful Innovation Leads, Launches, Inspires Relentless Amazon Visitor Improvements,” an acronym for “milliravi,” a word that an Amazon executive coined to mean “a significant mathematical error of a million dollars or more.”)
I mean, what public company would do that? It’s the Bezos mischievousness coming through in the way the company was operating back then.
The other thing I like from that era, after Amazon survived the dot-com bust, is the story you tell about Kathy Savitt (then Amazon’s marketing vice president) wanting to put stories about Amazon’s recovery on the walls, and Bezos telling her no, he wanted to put the Barron’s piece “Amazon.bomb” on the wall as motivation.
Stone: Right. He doesn’t take anything for granted, he’s driving everyone forward. You thank your lucky stars that you’re not working there, and at the same time you realize that this is why this is a great company. He believes more than anyone, and he doesn’t let anyone stop for a breath or to take a victory lap.
Brad Stone, the author of, “The Everything Store: Jeff Bezos and the Age of Amazon,” will be our guest this weekend on the GeekWire Radio show. He’ll also talk about the book Oct. 22 at Seattle’s Town Hall. Tickets available here.
