The Everything Store: Jeff Bezos and the Age of Amazon (7 page)

Davis had a KILL YOUR TV bumper sticker on his Honda Civic, and so to commemorate Davis’s departure, Bezos laid down a blue tarp in the parking lot and put an old computer terminal and keyboard on it. He handed Davis a sledgehammer and then filmed him smashing the machine. Afterward, Davis kept the Escape key.

* * *

By the first weeks of 1996, revenues were growing 30 to 40 percent a month, a frenzied rate that undermined attempts at planning and required such a dizzying pace that employees later found gaps in their memory when they tried to recall this formative time. No one had any idea how to deal with that kind of growth, so they all made it up as they went along.

That spring, at the American Association of Publishers annual convention, the chairman of Random House, Alberto Vitale, told a
Wall Street Journal
reporter about the new online bookselling sensation from the Pacific Northwest. A few weeks later, Amazon was featured in a front-page
WSJ
article, “How Wall Street Whiz Found a Niche Selling Books on the Internet,” and Bezos had his first stippled-and-hatched portrait in the country’s largest financial newspaper. The number of orders each day immediately doubled. The world now knew about Amazon.com, and, likely, so did Barnes & Noble and Borders, the nation’s largest book chains.

With the influx of the $1 million in fresh capital, the company upgraded its servers and software, and, more important, it hired. Bezos added waves of new employees to customer service, to the warehouse, and to Kaphan’s technical team. He started building an editorial group—writers and editors who would craft a literary voice for the site and give customers a reason to keep coming back. The group’s mission was to make Amazon the most authoritative online source of information about books and replicate the trustworthy atmosphere of a quirky independent bookstore with refined literary tastes. “We were asking people to put a credit card into the computer, which at the time was a radical concept,” says Susan Benson, whose job title evolved to managing editor. Editorial “was important both in creating a good shopping experience but also in getting people comfortable about the idea that there were people on the other side of the screen that they could trust.”

That summer, the company launched what could be considered its first big innovation: allowing other websites to collect a fee when they sent customers directly to Amazon to buy a book. Amazon gave these approved sites an 8 percent commission for the referral. The Associates program wasn’t exactly the first of its kind, but it was the most prominent and it helped spawn a multibillion-dollar-a-year industry called affiliate marketing. It also allowed Amazon, very early on, to extend its reach across the Web to other sites, entrenching it in advance of the looming competition.

By that spring, the company was burning cash hiring and buying equipment and server space, so Bezos decided to raise venture capital. He started negotiating with the Boston-based General Atlantic, whose partners discussed valuing the company at $10 million, eminently reasonable for a startup on track for $15.7 million in sales and $5.8 million in losses that year. Then John Doerr, a prominent partner at the storied Silicon Valley venture-capital firm Kleiner Perkins Caufield and Byers, heard about the company and flew up to Seattle for a visit.

“I walked into the door and this guy with a boisterous laugh who was just exuding energy comes bounding down the steps,” says
Doerr, who had backed such winners as Netscape and Intuit. “In that moment, I wanted to be in business with Jeff.” Bezos introduced him to MacKenzie and Kaphan and took him on a tour of the warehouse, where all the outbound orders were neatly stacked on door-desks. When Doerr asked about the volume of daily transactions, Bezos leaned over a computer and typed a
grep
command next to a UNIX prompt, instantly pulling up the data—and demonstrating his technical fluency. Doerr swooned.

Kleiner and General Atlantic dueled for the next few weeks over the investment, driving Amazon’s valuation up to an altitude that Bezos had not imagined possible. He chose Kleiner on the strength of its reputation in the technology community. It invested $8 million, acquiring a 13 percent stake in the company, and valuing it at $60 million. Kleiner wanted to put a junior member of the firm on Amazon’s board of directors but, as a condition of the deal, Bezos insisted that Doerr himself take the position. Doerr’s direct involvement was a public vote of confidence for any technology startup.

In the circuitry of Bezos’s brain, something then flipped. Budding optimism about the Internet in Silicon Valley was creating a unique environment for raising money at a historically low price in ownership. Doerr’s optimism about the Web mixed with Bezos’s own bullish fervor and sparked an explosion of ambitions and expansion plans. Bezos was going to do more than establish an online bookstore; now he was set on building one of the first lasting Internet companies. “Jeff was always an expansive thinker, but access to capital was an enabler,” Doerr says. James Marcus, an editorial employee, saw it too, writing in his 2004 memoir
Amazonia
that “the cash from Kleiner Perkins hit the place like a dose of entrepreneurial steroids, making Jeff more determined than ever.”
¹²

Employees soon learned of a new motto: Get Big Fast. The bigger the company got, Bezos explained, the lower the prices it could exact from Ingram and Baker and Taylor, the book wholesalers, and the more distribution capacity it could afford. And the quicker the company grew, the more territory it could capture in what was becoming the race to establish new brands on the digital frontier.
Bezos preached urgency: the company that got the lead now would likely keep it, and it could then use that lead to build a superior service for customers.

Of course, that meant everyone at Amazon would have to work even harder. The assumption was that no one would take even a weekend day off. “Nobody said you couldn’t, but nobody thought you would,” says Susan Benson. Eric Benson adds, “There were deadlines and death marches.”

In the warehouse, an expanding and eclectic group raced to keep up with the surge of customer orders. An Amazon representative even told a temp agency, “Send us your freaks.” The bejeweled, tattooed, hair-dyed crew that responded to the call worked day and night in the warehouse next to the Pecos Pit and took turns selecting the music that played on a boom box. Their ranks included a three-hundred-pound baritone who would skip through the room belting out Russian arias.

Christopher Smith, a twenty-three-year-old warehouse temp with tattoos of Chinese characters on his forearms, began working at Amazon, and he would stay with the company in various roles for fourteen years. He started his typical day at four thirty in the morning, biked to work and let in the deliveryman from Ingram at six thirty, and usually stayed past midnight, packing furiously and answering customer e-mails before drinking a few beers in the warehouse and biking back home. “The dominant image in my mind is just… running. And scads of cardboard and packing material flying,” he says.

Smith worked so tirelessly over one span of eight months that he forgot about his light blue Peugeot station wagon that he’d parked near his apartment in Seattle’s Capitol Hill neighborhood. The fate of the car would later be revealed in the piles of mail that stacked up inside his front door. When he finally opened the mail in that pile, Smith found, in succession, several parking tickets, a notice that the car had been towed, a few warnings from the towing company, and finally a letter informing him that the vehicle had been sold at auction for seven hundred dollars. He still owed eighteen hundred
dollars on his car loan, and the incident dinged his credit rating. He doesn’t recall caring much at the time.

“Life just stopped,” Smith says. “You were stuck in amber. But inside that amber was frenetic activity that no one else could see.”

Eric and Susan Benson didn’t come to Amazon alone every day—they brought their dog Rufus, a Welsh corgi. Because the two would be working such long hours, Bezos had promised they could always bring Rufus to the office. That was no problem in the SoDo buildings, but then Amazon moved yet again, late in the summer of 1996, to a building downtown, and the company had to write Rufus into the lease with the new landlord. The dog, an amiable presence who liked to park himself in meetings and occasionally suffered gastric distress from being overfed by employees, became the startup’s mascot. There was a superstitious belief that his paw tap on the keyboard was required to launch a new feature, and even today, though Rufus is long gone, there’s a building named for him on Amazon’s Seattle campus. (Bezos, it seems, has a nostalgic streak; one building is called Fiona, the code name of the original Kindle, and another is Obidos, which is what Shel Kaphan dubbed the company’s original computer infrastructure, after a town in Brazil where the tributaries of the Amazon River converge.)

Amazon was now nearing a hundred and fifty full-time employees, less than a third of whom were in the warehouse. A few months later, the warehouse also moved, to a larger, ninety-three-thousand-square-foot facility on Dawson Street in South Seattle (another current Amazon building: Dawson). The new downtown digs weren’t exactly high-class. Amazon took over the Columbia Building on Second Avenue in a seedy downtown neighborhood full of strip joints that was two blocks from touristy Pike Place Market. On the day the company moved in, a homeless man who’d been sleeping near the front door showed employees how to use their new key cards to gain access to the lobby.

The building itself was across the street from a needle-exchange program and methadone clinic and a wig store that attracted the
transvestite trade. Kay Dangaard, a New Zealander who had moved through careers as a reporter and an advertising executive, joined the company as its first publicist, and from her office in the new building, she could stare out the window across the alley and into the apartment of a prostitute who practiced her trade early every evening under a flickering, low-wattage lamp.

Parking was scarce and expensive. Nicholas Lovejoy suggested to Bezos that the company subsidize bus passes for employees, but Bezos scoffed at the idea. “He didn’t want employees to leave work to catch the bus,” Lovejoy says. “He wanted them to have their cars there so there was never any pressure to go home.”

That fall, the company focused on customizing the site for each visitor, just as Bezos had promised his original investors it would. Its first attempt relied on software developed by a firm called Firefly Network, an offshoot of the MIT Media Lab. The feature, which Amazon called Bookmatch, required customers to rate a few dozen books and then generated recommendations based on their tastes. The system was slow and crashed frequently, and Amazon found that customers were reluctant to go through the extra effort of evaluating books.

So Bezos suggested that the personalization team develop a much simpler system, one that made recommendations based on books that customers had already bought. Eric Benson took about two weeks to construct a preliminary version that grouped together customers who had similar purchasing histories and then found books that appealed to the people in each group. That feature, called Similarities, immediately yielded a noticeable uptick in sales and allowed Amazon to point customers toward books that they might not otherwise have found. Greg Linden, an engineer who worked on the project, recalls Bezos coming into his office, getting down on his hands and knees, and joking, “I’m not worthy.”

Similarities eventually displaced Bookmatch and became the seed that would grow into Amazon’s formidable personalization effort. Bezos believed that this would be one of the insurmountable
advantages of e-commerce over its brick-and-mortar counterparts. “Great merchants have never had the opportunity to understand their customers in a truly individualized way,” he said. “E-commerce is going to make that possible.”
¹³

As the company and its technologies evolved, one person was having a ridiculously good time: Shel Kaphan. He was forty-three years old and had led the remarkable effort to hack Bezos’s vision into existence, completely buying into the gospel of a bookstore with limitless shelf space that spread knowledge to all corners of the earth. He was the mother hen of the technology systems: during the move to the Pecos Pit building, he put the company’s two servers, dubbed Bert and Ernie, into the back of his Acura Integra and drove them over there himself.

Kaphan had taped a fortune-cookie message to the PC monitor on his desk. It read
Let no one cause you to alter your code.

Kaphan and Bezos occasionally took walks around the city to discuss the business and Kaphan’s concerns about technical issues and future plans. On one walk, Kaphan asked Bezos why, now that they had accomplished some of their earliest goals, he was so bent on rapid expansion. “When you are small, someone else that is bigger can always come along and take away what you have,” Bezos told him. “We have to level the playing field in terms of purchasing power with the established booksellers.”

One thing was bothering Kaphan around that time. He had enough experience with technology startups to know that the arrival of venture capitalists usually coincided with an influx of new, high-powered executives. He walked into Bezos’s office that year and wondered aloud, “We’re growing pretty quickly now. Are you going to replace me?”

Bezos didn’t waver. “Shel, the job is yours as long as you want it.”

In early 1997, Mark Breier, a former executive at Cinnabon and one of those new executives Kaphan had anticipated, invited his department to his Bellevue home for a day of meetings. That afternoon, Amazon’s marketing vice president introduced employees to a game
called broomball. Breier’s father had been an engineer at IBM in Bethesda and had seen the game played on ice during trips to IBM’s offices in Canada. In Breier’s land-based version, players swatted a kickball on the lawn with brooms and other random implements from his garage.