Jeff Bezos was drawn to focus a large portion of his new $2 billion philanthropic foundation on preschool education because of the “powerful compounding effect” that comes from getting kids started with with the right education, the Amazon founder and CEO told an audience in Washington, D.C., on Thursday night.
“There’s no doubt, we know for a fact, that if a kid falls behind, it’s really, really hard to catch up, and if you can give somebody a leg up when they are 2, 3, or 4 years old, by the time they get to kindergarten or first grade, they’re much less likely to fall behind,” Bezos said at The Economic Club of Washington, D.C. “The money spent there is going to pay gigantic dividends for decades.”
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The new Day One Fund, announced by Bezos via Twitter on Thursday morning, is starting with an initial $2 billion endowment, but he confirmed on stage that he expects to ultimately provide additional funding to the organization. The initiative will also fund existing programs to help homeless families, but Bezos made it clear that he will be more directly involved in the preschool initiative.
“I’m very excited about that because I’m going to operate that,” he said. “That’s going to be an operating nonprofit. I’m going to hire an executive team. There’s going to be leadership team. We’re going to operate these schools and we’re going to put them in low-income neighborhoods.”
Bezos was less forthcoming about where Amazon will put its second headquarters, despite efforts by interviewer David Rubenstein to pin him down on the location of the $5 billion project known as HQ2. “We will announce a decision before the end of this year. We’ve made tremendous progress. The team is working their butts off on it and we will get there,” he said.
As the crowd jokingly jeered, Bezos responded with a grin, “No, no. Hey, be nice. Come on.”
He also talked about the turnaround of the Washington Post, which he purchased for $250 million in 2013. Without calling out President Trump by name, Bezos addressed his frequent criticism of the press.
“If you’re the President of the United States or a governor of a state or whatever, you don’t take that job thinking you’re not going to get scrutinized,” he said. “You’re going to get scrutinized and it’s healthy. What the president should say is, this is right, this is good. I’m glad I’m being scrutinized. And that would be so secure and confident. But it’s really dangerous to demonize the media.”
Bezos continued, “It’s dangerous to call the media low-lifes. It’s dangerous to say that they’re the enemy of the people. We live in a society where it’s not just the laws of the land that protect us. We do have freedom of press. It’s in the Constitution. But it’s also the social norms that protect us. It works because we believe those words on that piece of paper, and every time you attack that, you’re it eroding a little bit around the edges.”
The conversation started with a discussion of Amazon’s market value, and Bezos’ status as the world’s wealthiest person, a title he claimed from his neighbor, Microsoft co-founder Bill Gates. Watch the full video below, via the archived CNBC live stream, and continue reading for extended excerpts.
Rubenstein: As a result of [Amazon stock] going up 70 percent this year, you have become the wealthiest man in the world. Is that a title that you really wanted or not? Is it a burden?
Bezos: I can assure you I have never sought that title. It was fine being the second-wealthiest person in the world. That actually worked fine. It’s something people naturally are curious about, you know, it’s kind of an interesting curiosity, but I would much rather if they said like, inventor Jeff Bezos or entrepreneur Jeff Bezos or father Jeff Bezos. Those kinds of things are much more meaningful to me. It’s an output measure. If you look at the financial success of Amazon and the stock, I own 16 percent of Amazon. Amazon is worth roughly a trillion dollars. That means that what we have built over 20 years, we have built $840 billion of wealth for other people. From a financial point of view, that’s what we’ve done. We’ve built $840 billion of wealth for other people and that’s great. That’s how it should be. I believe so powerfully in the ability of entrepreneurial capitalism and free markets to solve so many of the world’s problems. Not all of them, but so many of them.
Rubenstein: So you live in Washington state, in Seattle or outside of Seattle. Now, the man who was the richest man for about 20 years is named Bill Gates. What is the likelihood that the two richest men in the world live not only in the same country, not only the same state, not only in the same city, but in the same neighborhood? I mean, is there something in that neighborhood that we should know about, and are there any more houses for sale?
Bezos: I saw Bill not too long ago. We were joking about the world’s richest man thing. I said, you’re welcome. And he immediately turned to me and said, thank you. But no, Medina is a great little suburb of Seattle and, you know, I don’t think there’s anything special in the water there. You know, I did locate Amazon in Seattle because of Microsoft. I thought that that big pool of technical talent would provide a good place to recruit talented people from. And that did turn out to be true. So it’s not a complete coincidence. There is some correlation there.
Rubenstein: But when you are the richest man in the world, you go into a store, when you went to buy something, do you have to put a credit card down? You just say I’m Jeff Bezos and they send you the stuff? You carry cash around?
Bezos: I do carry cash and I have credit cards. Yeah. I have to show my driver’s license.
Rubenstein: But have you ever had a credit card denied? Has that ever happened?
Bezos: I have. I’ve had my credit card denied.
Rubenstein: So what do you say, do you say don’t you know who I am?
Bezos: I give ’em another credit card. I say here, try this one.
Rubenstein: So earlier today you made an announcement that is the most significant philanthropic gift you’ve made. About a year ago, you said you wanted to look for some good philanthropic ideas and you got, I think, 47,000 of them. … How did you decide where to put this $2 billion, and would you describe exactly what you’re going to do?
Bezos: Well, that process was very helpful. I solicited ideas, kind of crowd sourced and I got literally, as you said, something like 47,000, maybe even a little more. Some of them came to my inbox, most of them came on social media and I read through thousands and thousands of them. My office kind of correlated them all and put them into buckets. And there were some themes that emerged. But the other thing that’s fascinating about this kind of exercise, you see just how long-tailed it is. People are interested in trying to help the world in so many different ways and it’s all the things you would expect, you know, it’s uh, but, but, but also some more unusual things, but it’s, you know, some people are very interested in arts and opera and they think that’s underfunded, and so a lot of people are interested in medicine, in particular diseases, and think that those deserve more R&D dollars. All these things are correct. A lot of people are very interested in homelessness, including me. A lot of people are very interested in education of all kinds. Both a kind of college, scholarship-type education, but also apprenticeship programs. So, you name it and people are interested in education.
I’m very interested in early education. The apple doesn’t fall far from the tree. My mother has become, in running the Bezos Family Foundation … she has become an expert in early education. I’m a student of Montessori schools. I started at Montessori when I was 2 years old. And the teacher complained to my mother, the Montessori school teacher complained to my mother that I was too task-focused and that she couldn’t get me to switch tasks so she would have to just pick up my chair and move me. And, by the way, I think that’s, if you ask the people who work with me, that’s still probably true today.
Rubenstein: Did that teacher ever call you since and say that she was responsible for your success?
Bezos: No, I’m in touch with several of my high school and elementary school teachers though, but I don’t know any of my Montessori school teachers.
Rubenstein: So the gift that you’re giving — essentially, you’re going to have preschool for children who need preschool.
Bezos: Yeah, full-tuition preschool, Montessori-inspired. I’m very excited about that because I’m going to operate that. That’s going to be an operating nonprofit. I’m going to hire an executive team. There’s going to be leadership team. We’re going to operate these schools and we’re going to put them in low-income neighborhoods. There’s no doubt, we know for a fact that if a kid falls behind, it’s really, really hard to catch up and if you can give somebody a leg up when they are 2, 3, or 4 years old, by the time they get to kindergarten or first grade, they’re much less likely to fall behind. It can still happen, but you’ve really improved their odds and probably most of the people in this room have been very mindful about making sure that their kids got very good preschool educations, and got that kind of headstart. That headstart compounds fantastically and if you can get that starting at age 2, 3, 4, there’s a powerful compounding effect there. So it’s highly levered. That’s all that really means. The money spent there is going to pay gigantic dividends for decades.
Rubenstein: And the other part of your gift will be to give awards out to …
Bezos: Yes, and that’s going to a be more traditional grant-making philanthropy. So there, I’m going to identify, with the help of a team — we’re going to hire a full time team — identify and fund, vet and fund, family homeless shelters.
Rubenstein: You said you would give an initial $2 billion. You expect to add to that?
Bezos: Yeah. It’s Day One. Everything I’ve ever done has started small. Amazon started with a couple of people. Blue Origin started with five people. And the budget at Blue Origin was very, very small. Now the budget of Blue Origin approaches a billion dollars a year, and next year it’ll be more than a billion dollars. And Amazon literally was 10 people. Today, it’s half a million people, but it’s hard to remember for you guys, but for me it’s like yesterday, I was driving the packages to the post office myself and hoping one day we could afford a forklift. And so for me, I’ve seen small things get big and it’s part of this Day One mentality. I like treating things as if if they’re small. Amazon, even though it is a large company, I want it to have the heart and spirit of a small one. The Day One Foundation is going to be like that. We’ll wander a little bit, too. We have some very specific ideas of what we want to do. But I believe in the power of wandering. All of my best decisions in business and in life have been made with heart, intuition, guts, not analysis. When you can make a decision with analysis, you should do so, but it turns out in life that your most important decisions are always made with instinct, intuition, taste, heart. That’s what we’ll do with this Day One Foundation, too. It’s part of that Day One mentality. As we go about building out this network of nonprofit schools, we will learn new things and we’ll figure out how to make it better. …
And the customer is going to be the child, this is so important because that is the secret sauce of Amazon. There several principles at Amazon, but the number one thing that has made us successful — by far — is obsessive compulsive focus on the customer, as opposed to obsession over the competitor. And I talked so often to other CEOs, some other CEOs, and also founders and entrepreneurs, and I can tell that even though they’re talking about customers, they’re really focusing on competitors and it is a huge advantage to any company if you can stay focused on your customer instead of your competitor.
So then you have to identify, who is your customer. So at the Washington Post for example, is the customer the people who buy advertisements from us? No, the customer is the reader, full stop. Then, by the way, where do advertisers want to be? Advertisers want to be where there are readers. So it’s really not that complicated, you know, it comes around really well. And in the school, who are the customers? Is it the parents? Is that the teachers? No. It is the child, and that’s what we’re going to do. We’re going to be obsessive, compulsively focused on the child. We’re going to be scientific when we can be, and we’re going to use heart and intuition when we need to.
Rubenstein: When you use your intuition to make decisions, where is the intuition leading you now on your second headquarters?
Bezos: All right. Can we just take a moment to acknowledge that that may be the best segue in the history of interviewing. Seriously, David. That is amazing.
Rubenstein: And the answer is …
Bezos: We will announce a decision before the end of this year. We’ve made tremendous progress. The team is working their butts off on it and we will get there. [Jeers from the crowd.] No, no. Hey, be nice. Come on.
Rubenstein: But you know, you already have something in one Washington. And what about another Washington area?
Bezos: That’s right. In Seattle, we call this the other Washington.
Rubenstein: So speaking of Washington, you bought a few years ago, as you mentioned, the Washington Post. Why did you buy the Washington Post? You had no background in that area. What convinced you to do that?
Bezos: OK. First of all, I was not looking for a newspaper. I had no intention of buying a newspaper. I’d never thought about the idea. Had never occurred to me. It was never something. It wasn’t like a childhood dream. Knew nothing. And my friend Don Graham — who at that time I had known 15 years, I know him 20 years now — he approached me through an intermediary and wanted to know if I would be interested in buying the Washington Post and I sent back word that I would not, because I didn’t really know anything about newspapers and Don over a series of conversations convinced me that that was unimportant, because inside the Washington Post, we have so much talent that understands newspapers. That wasn’t what the problem was. What they needed was somebody who had an understanding of the internet. That’s kind of how it got started.
And then I did some soul searching and again, my decision-making process on something like this would definitely be intuition, and not analysis. The financial situation of the Washington Post at that time, this is 2013, was very upside down. It is a fixed cost business, and they had lost a lot of revenue over the previous five or six years, not through any fault of the people working there or of the leadership team. The paper had been managed very, very well. The problem was a secular one. The internet was just eroding. All of the traditional advantages that local newspapers had, all of them, it was just taking away. Every gift that a local newspaper had was kind of systematically removed by the internet.
And so that’s why you see this. It’s a profound problem across local newspapers all around the country and in fact the world. So I had to do some soul searching and I said, is this something I want to get involved in? If I’m going to do it, I’m going to put some heart into it and some work into it. I decided I would only do that if I really believed it was an important institution. I said to myself, if this were a financially upside down salty snack food company, the answer would be no. But as soon as I started thinking about that way, I was like, this is an important institution. It is the newspaper in the capital city of the most important country in the world. The Washington Post has an incredibly important role to play in this democracy. There’s just no doubt in mind about that.
So as soon as I had passed through that gate, I only had one more gate that I had to go through before telling Don yes. And that was, I wanted to be really open with myself and look in a mirror and sort of think about the company and be sure that I was optimistic that it could work because if it were hopeless that would also be not something I would get involved in. And I looked at that, and I was super-optimistic and it needed to be transitioned to a national and a global publication.
There’s one gift that the internet brings newspapers — it destroys almost everything — but it brings one gift. And that is free global distribution. In the old days of paper newspapers, you would have to build printing plants everywhere and your logistics operations to have a truly global newspaper or even really a national newspaper, super expensive, heavy CapEx investments. That’s why so few papers actually became national or global. Really no global ones to speak of, depending on what you count. But today with the internet, you get that gift of free distribution. So we had to take advantage of that gift. And that was the basic strategy. We had to switch from a business model where we made a lot of money per reader with a relatively small number of readers to a tiny bit of money per reader on a very large number of readers. And that’s the transition that we did with our site.
I’m pleased to report to you that the Post is profitable today. The newsroom is growing. It’s been growing every year since I’ve been there. Marty Baron, who leads the newsroom, is killing it. I think he’s the best editor in the newspaper business. We have Fred Ryan, who is the publisher. Fred Hiatt, the editorial page. They’re killing it. Shailesh [Prakash], our head of technology, is a superstar. It’s working and I’m so proud of that team, and I know for a fact when I’m 80 or let’s say I was project myself forward to age 80, but as I get older I’m starting to do 90, so I know that when I’m 90 it’s going to be one of the things I’m most proud of, is that I took on the Washington Post and helped them through a very rough transition.
Rubenstein: So when you agreed to buy it, I think the asking price was $250 million. You didn’t negotiate?
Bezos: No. I asked [Don] how much he wanted. He said 250. I said, fine. I didn’t negotiate with him and I did no due diligence, and I wouldn’t need to with Don.
Rubenstein: I have something I’d like to sell.
Bezos: Don told me every wart and pimple, and he told me all the things that were great, and every single thing he told me on both sides of that ledger turned out to be true.
Rubenstein: So now that you own the Washington Post, sometimes there are some people who criticize some things that the Washington Post says, and you’ve been remarkably quiet.
Bezos: I have no idea what you’re talking about.
Rubenstein: Well, you’ve been remarkably quiet in not defending yourself.
Bezos: Well, I do defend the Post. I don’t feel the need to defend Amazon, but I will say this. It is a mistake for any elected official in my opinion — I don’t think this is a very out-there opinion — to attack media and journalists. I believe that it is an essential component of our democracy. There has never been — I was going to say never been an elected official who liked their headlines. I think there’s probably no public figure who has ever liked their headlines. It’s OK. It’s part of the process. If you’re the President of United States or a governor of a state or whatever, you don’t take that job thinking you’re not going to get scrutinized. You’re going to get scrutinized and it’s healthy. What the president should say is, this is right, this is good. I’m glad I’m being scrutinized. And that would be so secure and confident. But it’s really dangerous to demonize the media. It’s dangerous to call the media low-lifes. It’s dangerous to say that they’re the enemy of the people. We live in a society where it’s not just the laws of the land that protect us. We do have freedom of press. It’s in the Constitution. But it’s also the social norms that protect us. It works because we believe those words on that piece of paper and every time you attack that, you’re it eroding a little bit around the edges.
Now, look, I don’t want to be dramatic here. We are so robust in this country. The media is going to be fine. We’re going to push through this and by the way, Marty Baron would tell you — this is a super important point — he will always say, when he meets with the newsroom. I’ve heard him say many times. I say it myself, when I meet with journalists at the Washington Post. Marty says, the administration may be at war with us. We are not at war with the administration. Just do the work. Just do the work. That’s smart. That’s Marty’s phrase.
Rubenstein: So I didn’t mention the president, but you mentioned the president. So since you mentioned the president, have you met the president?
Bezos: He was a lawyer, wasn’t he?
Rubenstein: So you’ve met the president on a couple occasions and talked to him very much. Does he call you in for lunch or dinner … not that much?
Bezos: Well, I’ll keep my conversations with the president to myself, but yes, I’ve had a couple of frank conversations with him.
Rubenstein: And this doesn’t make you think you want the job yourself though, right? It’s not a job you would ever aspire to?
Bezos: Are you asking me if I would run for president?
Bezos: I’ll be your VP. You run, you run.
Rubenstein: Well, no, I think you’d be better candidate.
Watch the full video above, and read more coverage of Bezos’ Day One Fund.