The Everything Store: Jeff Bezos and the Age of Amazon (50 page)

An Amazon fulfillment center in Milton Keynes, forty-five miles northwest of London.
(David Levene/Eyevine/Redux)

In 2013, Amazon proposed radical designs for a new headquarters in downtown Seattle.
(NBBJ)

Acknowledgments

For years I talked about writing a book about Amazon. And that’s probably what I’d still be doing—talking—if it weren’t for the help and support of my wonderful friends, family, and colleagues.

Two years ago, my agent Pilar Queen gently instructed me to stop procrastinating and deliver a book proposal. She then became a tenacious champion for this project. At Little, Brown, executive editor John Parsley gave this book the kind of careful editorial attention that is supposedly going out of style at traditional publishers, at least according to certain critics of the book business. Additional thanks go to Reagan Arthur, Michael Pietsch, Geoff Shandler, Nicole Dewey, Fiona Brown, Pamela Marshall, Tracy Roe, and Malin von Euler-Hogan at Little, Brown for steering this book through the birthing process with professionalism and enthusiasm.

I owe an enormous debt to Craig Berman and Drew Herdener in Amazon’s public-relations department. While they were always stubborn advocates for the company, they also saw the need for, and perhaps the inevitability of, a definitive book-length look at Amazon’s remarkable rise. I’m grateful to Jeff Wilke, Diego Piacentini, Andy Jassy, Russ Grandinetti, Jeff Blackburn, and Steve Kessel at Amazon, who all took the time to talk to me, and of course to Jeff
Bezos, for approving innumerable interviews with his friends, family, and employees.

Over the course of 2012 and 2013, I spent considerable time in Seattle, and a few families there made me feel especially welcome. Nick and Emily Wingfield put me up in their cozy spare bedroom, and I got to play Trivial Pursuit
Star Wars
over breakfast with their wonderful kids, Beatrice and Miller. Scott Pinizzotto and Ali Frank were great hosts on several occasions.

In Silicon Valley, Jill Hazelbaker, Shernaz Daver, Dani Dudeck, Andrew Kovacs, Christina Lee, Tiffany Spencer, Chris Prouty, and Margit Wennmachers provided helpful connections. Susan Prosser at DomainTools helped me to scour the domain-name archives for the early alternatives to Amazon.com. My old Columbia classmate Charles Ardai gave me a head start on untangling the long-ago D. E. Shaw days. Like so many other journalists trying to decipher the modern enigma that is Amazon, I relied heavily on the wisdom of Scott Devitt of Morgan Stanley, Scot Wingo of ChannelAdvisor, and Fiona Dias of ShopRunner.

At
Bloomberg Businessweek,
I’ve found a comfortable home that not only offers a great platform for serious business journalism but also accommodates ambitious projects like this one. Josh Tyrangiel, Brad Wieners, Romesh Ratnesar, Ellen Pollock, and Norman Pearlstine gave me incredible support and leeway to write this book. My editor Jim Aley provided a careful first read. Diana Suryakusuma helped me assemble the photographs under a tight deadline. My friend and colleague Ashlee Vance proved an invaluable sounding board when I needed to discuss the thornier challenges of telling this story.

I also want to thank fellow journalists Steven Levy, Ethan Watters, Adam Rogers, George Anders, Dan McGinn, Nick Bilton, Claire Cain Miller, Damon Darlin, John Markoff, Jim Brunner, Alan Deutschman, Tom Giles, Doug MacMillan, Adam Satariano, Motoko Rich, and Peter Burrows. Nick Sanchez provided stellar research and reporting assistance for this book, and Morgan Mason from the journalism program at the University of Nevada at Reno
assisted with interviews of Amazon associates at the fulfillment center in Fernley, Nevada.

My family was remarkably helpful and patient throughout this process, particularly in taking up the slack when I disappeared into reporting and writing. My parents Robert Stone and Carol Glick have always been wonderfully supportive and nurturing. Josh Krafchin, Miriam Stone, Dave Stone, Monica Stone, Jon Stone, and Steve Stone were great sounding boards. My brothers, Brian Stone and Eric Stone, and Becca Zoller Stone, Luanne Stone, and Jennifer Granick were awesome, as always.

While they were only vaguely aware of a distraction they called “Daddy’s book,” my twin daughters, Calista and Isabella Stone, provided the motivation behind this work. My hope and belief is that it will remain relevant history when they are old enough to find it interesting.

And I couldn’t have made it across the finish line without the loving support of Tiffany Fox.

Appendix

Jeff’s Reading List

Books have nurtured Amazon since its creation and shaped its culture and strategy. Here are a dozen books widely read by executives and employees that are integral to understanding the company.

The Remains of the Day,
by Kazuo Ishiguro (1989).

Jeff Bezos’s favorite novel, about a butler who wistfully recalls his career in service during wartime Great Britain. Bezos has said he learns more from novels than nonfiction.

Sam Walton: Made in America,
by Sam Walton with John Huey (1992).

In his autobiography, Walmart’s founder expounds on the principles of discount retailing and discusses his core values of frugality and a bias for action—a willingness to try a lot of things and make many mistakes. Bezos included both in Amazon’s corporate values.

Memos from the Chairman,
by Alan Greenberg (1996).

A collection of memos to employees by the chairman of the now-defunct investment bank Bear Stearns. In his memos, Greenberg is constantly restating the bank’s core values, especially modesty and frugality. His repetition of wisdom from a fictional philosopher presages Amazon’s annual recycling of its original 1997 letter to shareholders.

The Mythical Man-Month,
by Frederick P. Brooks Jr. (1975).

An influential computer scientist makes the counterintuitive argument that small groups of engineers are more effective than larger ones at handling complex software projects. The book lays out the theory behind Amazon’s two-pizza teams.

Built to Last: Successful Habits of Visionary Companies,
by Jim Collins and Jerry I. Porras (1994).

The famous management book about why certain companies succeed over time. A core ideology guides these firms, and only those employees who embrace the central mission flourish; others are “expunged like a virus” from the companies.

Good to Great: Why Some Companies Make the Leap… and Others Don’t,
by Jim Collins (2001).

Collins briefed Amazon executives on his seminal management book before its publication. Companies must confront the brutal facts of their business, find out what they are uniquely good at, and master their flywheel, in which each part of the business reinforces and accelerates the other parts.

Creation: Life and How to Make It,
by Steve Grand (2001).

A video-game designer argues that intelligent systems can be created from the bottom up if one devises a set of primitive building blocks. The book was influential in the creation of Amazon Web Services, or AWS, the service that popularized the notion of the cloud.

The Innovator’s Dilemma: The Revolutionary Book That Will Change the Way You Do Business,
by Clayton M. Christensen (1997).

An enormously influential business book whose principles Amazon acted on and that facilitated the creation of the Kindle and AWS. Some companies are reluctant to embrace disruptive technology because it might alienate customers and undermine their core businesses, but Christensen argues that ignoring potential disruption is even costlier.

The Goal: A Process of Ongoing Improvement,
by Eliyahu M. Goldratt and Jeff Cox (1984).

An exposition of the science of manufacturing written in the
guise of the novel, the book encourages companies to identify the biggest constraints in their operations and then structure their organizations to get the most out of those constraints.
The Goal
was a bible for Jeff Wilke and the team that fixed Amazon’s fulfillment network.

Lean Thinking: Banish Waste and Create Wealth in Your Corporation,
by James P. Womack and Daniel T. Jones (1996).

The production philosophy pioneered by Toyota calls for a focus on those activities that create value for the customer and the systematic eradication of everything else.

Data-Driven Marketing: The 15 Metrics Everyone in Marketing Should Know,
by Mark Jeffery (2010).

A guide to using data to measure everything from customer satisfaction to the effectiveness of marketing. Amazon employees must support all assertions with data, and if the data has a weakness, they must point it out or their colleagues will do it for them.

The Black Swan: The Impact of the Highly Improbable,
by Nassim Nicholas Taleb (2007).

The scholar argues that people are wired to see patterns in chaos while remaining blind to unpredictable events, with massive consequences. Experimentation and empiricism trumps the easy and obvious narrative.

Notes

Prologue

1
Jeff Bezos, keynote address at Tepper School of Business graduation, Carnegie Mellon University, May 18, 2008.

Part I

Chapter 1: The House of Quants

1
Jeff Bezos, speech at Lake Forest College, February 26, 1998.

2
Mark Leibovich,
The New Imperialists
(New York: Prentice Hall, 2002), 84.

3
Rebecca Johnson, “MacKenzie Bezos: Writer, Mother of Four, and High-Profile Wife,”
Vogue,
February 20, 2013.

4
Eerily, here is how Bezos described the third-market opportunity to
Investment Dealers’ Digest
on November 15, 1993: “We wanted something to differentiate our product. We think there is a desire for one stop shopping.”

5
Michael Peltz, “The Power of Six,”
Institutional Investor
(March 2009). “David Shaw envisioned D. E. Shaw ‘as essentially a research lab that happened to invest, and not as a financial firm that happened to have a few people playing with equations.’ ”

6
Leibovich,
The New Imperialists,
85.

7
Peter de Jonge, “Riding the Perilous Waters of Amazon.com,”
New York Times Magazine,
March 14, 1999.

8
John Quarterman,
Matrix News.

9
Jeff Bezos interview, Academy of Achievement, May 4, 2001.

10
Jeff Bezos, speech at Lake Forest College, February 26, 1998.

11
Jeff Bezos, speech to Commonwealth Club of California, July 27, 1998.

12
Jeff Bezos, speech to the American Association of Publishers, March 18, 1999.

Chapter 2: The Book of Bezos

1
Robert Spector,
Amazon.com: Get Big Fast
(New York: HarperCollins, 2000). Spector’s book offers a comprehensive account of Amazon’s early years.

2
Jeff Bezos, speech to the American Association of Publishers, March 18, 1999.

3
David Sheff, “The
Playboy
Interview: Jeff Bezos,”
Playboy,
February 1, 2000.

4
Ibid.

5
Adi Ignatius, “Jeff Bezos on Leading for the Long-Term at Amazon,”
HBR IdeaCast
(blog),
Harvard Business Review,
January 3, 2013, http://blogs.hbr.org/ideacast/2013/01/jeff-bezos-on-leading-for-the.html.

6
Jeff Bezos, speech to the American Association of Publishers, March 18, 1999.

7
Jeff Bezos, speech at Lake Forest College, February 26, 1998.

8
Ibid.

9
Amazon.com Inc. S-1, filed March 24, 1997.

10
Mukul Pandya and Robbie Shell, eds., “Lasting Leadership: Lessons from the 25 Most Influential Business People of Our Times,” Knowledge@Wharton, October 20, 2004, http://knowledge.wharton.upenn.edu/article.cfm?articleid=1054.

11
Ibid.

12
James Marcus,
Amazonia
(New York: New Press, 2004).

13
Jeff Bezos, speech to Commonwealth Club of California, July 27, 1998.

14
Cynthia Mayer, “Investing It; Does Amazon = 2 Barnes & Nobles?,”
New York Times,
July 19, 1998.

15
Jeff Bezos, interview by Charlie Rose,
Charlie Rose,
PBS, July 28, 2010.

16
Justin Hibbard, “Wal-Mart v. Amazon.com: The Inside Story,”
InformationWeek,
February 22, 1999.

17
Jeff Bezos interview, Academy of Achievement, May 4, 2001.

Chapter 3: Fever Dreams