The genius, obsession and cruelty of Amazon’s Jeff Bezos

From his garage to a worldwide empire

 
10. Amazon.com
(AP)

When Bloomberg Businessweek reporter Brad Stone first approached Jeff Bezos about writing a book about Amazon, the notoriously tight-lipped founder sat the journalist down in his company’s Seattle headquarters to ask him some questions. What were Stone’s ambitions? Wasn’t it too early to tell Amazon’s story? After almost an hour of chat, Bezos leaned in. “How do you plan to handle the narrative fallacy?” he asked.

The narrative fallacy, a term used by Nassim Nicholas Taleb in his book The Black Swan, explains how humans turn complex truths into oversimplified stories. Inconvenient facts are abandoned to better fit a predetermined mould. A messy jumble of data becomes a tidy arc. Would a book about the rise of one of the most dominant companies of our time, Bezos wondered, sacrifice the complex truth for an easy narrative?

In The Everything Store, Stone wisely chooses not to abandon the concept of story altogether. The best thing you can do, he writes, is acknowledge the pitfalls of the narrative fallacy “and then plunge ahead anyway.” In Stone’s story of Amazon’s rise, it is certainly easy to identify at least two archetypal narratives, one complimentary and another decidedly not.

The first story is perhaps the quintessential business narrative of our time. Call it the Rise of the Startup. It’s a variation on the tales you’ve heard about Steve Jobs, Bill Gates, Google and Facebook: conquering eggheads use guile, bravery and cunning to “disrupt” traditional businesses and triumph over slow-moving 20th-century dinosaurs.

It’s easy to plop Amazon into this mould. In true startup-origin-story fashion, the company began in its founder’s garage, where Bezos built the company’s first two desks out of blond-wood doors from Home Depot back in 1994. While Amazon began by shipping books, Bezos’s goal was always much larger: to build an “everything store,” a retail outlet that could harness the power of the quickly growing Internet to deliver every imaginable product to consumers across the world.

Stone spends much of his comprehensive book explaining how Bezos’s ramshackle operation worked toward this absurdly grandiose ambition, eventually becoming a company that employs almost 100,000 people and cleared $61 billion in sales in 2012. In Stone’s telling, Bezos’s fixation on growth, regardless of profits, led to chaos and disorder. At one point, the entire distribution system was held up by a missing pallet of Pokemon Jigglypuff. But that chaotic growth was vitally important as the online retailer attempted to use its online head start to sneak up on established giants like Borders and Walmart.

The book is stuffed with anecdotes that highlight Bezos’s supreme confidence, genuine long-term thinking and utter indifference to losing money. In 2006, Amazon introduced its web storage service, allowing other companies (including Netflix) to rent space on Amazon’s servers. As in their retail business, Bezos wanted to guarantee he was offering the steepest discounts available. After looking at the numbers, an executive proposed pricing at 15¢ an hour. Bezos unilaterally decided to make it 10¢. “You realize you could lose money on that for a long time,” the executive told him. “Great” was Bezos’s only response.

According to Stone, Bezos created Amazon in his own image. The journalist does an admirable job tracing Bezos’s own obsessions and proclivities and how they found their way into Amazon’s DNA. “The entire company is scaffolding built around his brain—an amplification machine meant to disseminate his ingenuity and drive across the greatest possible radius,” Stone writes.

Stone also thoroughly portrays just how difficult Bezos can be, identifying a kernel of intense competitiveness and occasional cruelty that has also found its way into the company’s culture. Bezos’s withering comments and angry rants, known internally as “nutters,” terrify his employees. Amazon workers have fled the company in droves over the years, and Bezos ruthlessly cuts out others without a second thought. “One of his gifts, his colleagues said, was being able to drive and motivate his employees without getting overly attached to them personally,” writes Stone.

Indeed, as the book continues, a less complimentary narrative emerges—a story about an increasingly powerful company that elbows its way through the world with a single-minded focus on growth and rock-bottom prices. In 2010, while pursuing an online diaper retailer called Quidsi, Amazon gave them a low-ball offer. Before the company could respond, Amazon slashed its prices on diapers. At one point, Quidsi executives calculated that Amazon was set to lose US$100 million over three months on diapers. Quidsi eventually acquiesced and was absorbed into the company. As one observer told Stone, “They have an absolute willingness to torch the landscape around them to emerge the winner.”

In 2004, while negotiating with publishers, Amazon determinedly threw its weight around, removing publishers from its recommendation algorithms if they refused to accept specific terms. Amazon went after the smallest publishers hardest, companies that couldn’t survive without Amazon revenues. The strategy became known as the Gazelle Project after Bezos suggested in a meeting that “Amazon should approach these small publishers the way a cheetah would pursue a sickly gazelle.”

As Amazon grows closer to becoming the “everything store” Bezos always dreamed of, the weakened gazelles Amazon hunts become bigger and bigger. In Stone’s estimation, Amazon isn’t going to stop growing any time soon. “It will continue to expand until either Jeff Bezos exits the scene or no one is left to stand in his way,” he writes.

Perhaps conscious of his subject’s aversion to the “narrative fallacy,” Stone doesn’t push his own interpretation of that conclusion. He leaves it to the reader to decide if the rise of Amazon under the watch of its brilliant, ruthlessly ambitious leader is an inspiring narrative, a cautionary tale, or some mixture of the two.

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