Tip:
Highlight text to annotate it
X
PRESENTER: Good afternoon, everyone.
Thank you for coming to Authors@Google Presents Brad
Stone, the author of "Amazon and the Everything Store:
Jeff Bezos and the Age of Amazon."
It's great to see all you here this Friday afternoon.
I want to start by introducing Brad.
Brad has been covering technology
in Silicon Valley for over 14 years,
for publications such as "Newsweek," "New York
Times," and "Bloomberg Businessweek."
Since you hit it off the ground, Brad,
I was just wondering how did you come up with this idea?
How did the project get started?
What was really the spark of creativity
that led you to write this book?
BRAD STONE: Sure.
Well, I'll start with a little bit of my history
covering technology.
So I moved out here to the Bay Area in the late '90s, 1998,
to cover-- I would say I was working for "Newsweek,"
but I'll say I was working for the magazine formerly known
as "Newsweek," since it really doesn't exist
in that incarnation anymore.
And I moved out here to cover what was really, to New York
media, like a foreign country.
I was the correspondent to Silicon Valley.
And I was covering their very early days of Google,
and Apple's resurgence, and Yahoo,
and all the start-up energy during the dot-com boom.
And occasionally I would go up to Seattle
to-- actually the big story then was Microsoft.
But I remember my first trip to Amazon.
It was-- I think it was actually in 2001.
I had covered the company before then, but I visited in 2001.
And they were in this old hospital up on a hilltop south
of downtown Seattle.
And the Nisqually earthquake had just happened.
And you couldn't actually walk into the front door.
You had to go snake around through a small door
in the back.
And there was a big sign warning of falling bricks.
And there were people with hard hats all around.
And it was a perfect metaphor for the company at the time.
Because they had ascended to great heights in the '90s.
And Jeff Bezos was "Time" Man of the Year.
And the stock price was through the roof.
And they were expanding in all directions.
And then it all pretty much came crumbling down
in the span of two years.
It was a single-digit stock.
Bezos was kind of a pinata.
And I was there to talk to him.
And at the time he was very voluble.
He actually spent the first two years
trying to create the Amazon brand,
and then spent about two years trying to rescue it,
talking to everybody about why it was a real company.
And that was sort of my first experience in a room with Jeff.
And over the next 12 years, I followed the company closely
for "Newsweek," then "The New York Times,"
and now "Bloomberg Business Week."
And the inspiration for the book--
to get back around to your question--
was actually in some ways inspired by you guys here.
Because I have a close friend and colleague, Steven Levy,
who I worked with at "Newsweek," who
wrote a great book about Google called "In the Plex."
And I read that book.
And Steven's kind of a mentor to me.
And around the same time that that book came out,
there was "Steve Jobs," by Walter Isaacson, and of course
there had been some Facebook books.
And I thought, here are all the companies changing our world.
And these are all great books with insider access.
And the great Amazon book has never been written.
And that is no coincidence.
I mean, I would argue that Google endeavours to be better
understood by the outside world.
And that's why you guys have given several journalists
access-- at least some measure of access-- to the company
to tell its story.
Whereas-- I don't want to say Amazon
wants to be misunderstood-- but I
think they're comfortable with the lack of attention.
And we could talk about why that is.
So I knew enough at the time, when I decided to do this,
that I wasn't going to ask for permission.
I was going to beg for forgiveness afterwards.
And because In the Plex, and because Steve Jobs had gotten
so much attention, and also because the world in New York
publishers-- everyone was going to bed
and waking up thinking about Amazon.
It's top of mind right now, because Amazon's
their biggest distributor and also their biggest challenger,
because Amazon's self-publishing now-- publishing authors.
I got some interest in the book.
And then I went to talk to Jeff, and tell them I was doing it.
And as a result, I got a pretty good measure of cooperation.
He allowed me to talk to family members, and friends,
and Amazon senior executives, while remaining pretty arm's
length, himself.
Because, extraordinarily, he said
it was too early to tell the Amazon story, which,
when you think about how much they've accomplished over two
decades, is I think insightful as to his ambitions.
But I drew on my many conversations
with him over the years.
And the result is the book.
PRESENTER: I wanted to start with this idea
that I've been thinking a lot about recently,
after having read the book.
And it's the title, "It's the Everything Store."
And I think here at Google, we're a search company
first-- not only a search company,
but that's our bread and butter.
And do you believe that there would ever
be a point where, if there truly were
a single store, virtual or otherwise, that sold everything
on Earth, would it become too much for consumers?
Would there kind of be a trend in the opposite direction?
Would it just--
BRAD STONE: Well, right.
I think, in some ways, we're seeing that.
Amazon is hugely dominant in e-commerce.
And yet there's no lack of e-commerce innovation.
There's lots of startups that have finally figured out
that there's plenty of invention that you can do,
if you're outside of Amazon's backyard.
But it's interesting.
Why has it become the everything store?
Why is it not just a retailer, but why do they
sell digital products, and hardware,
and now enterprise services with the Cloud business?
And that's Jeff.
He's just so relentless in driving into new markets
and finding new opportunities for Amazon,
in part, because they had to.
They were early.
He left Wall Street to start Amazon in 1994 with this idea
that you could start an "everything" store with books,
because they were very portable and shippable.
And there were two major distributors,
so you could find them easily.
And it worked, but it wasn't a great business.
And when he started expanding it wasn't a great business.
And even though they raised a lot of money,
they were really never all that profitable in the early years.
So he's always been on a sort of march.
I mean, you guys, search, right away--
well, OK, not right away, but by conjoining the advertising
business was a great high-margin, profitable
business.
And Amazon sort all along has been on a mission
to kind of invent their way out of their original business
model.
PRESENTER: Going along with that, with what you were saying
with some of the challenges, and just the running the business--
you talk a lot throughout the book about chaos
and Amazon's relationship to chaos.
And just how, especially early in the day,
they were just really growing so fast that it
was difficult for them to keep everything in order.
And, I believe it was in either '99 or 2000, Jeff turned things
around, and said, we're going to stop growing big fast.
And we're going to get things in order.
And he said the company would be profitable by 2001.
What's been your perspective, having watched the company
from the beginning, and seeing all of these different goals,
and this relationship that Amazon has with profitability,
that the stock market loves monitoring?
BRAD STONE: Right, right.
And in fact, yesterday they announced their earnings.
And they lost money, and the stock is-- I think it's up 10%
today.
So it's sort of the perennial Amazon paradox.
But there are different contradictions throughout time.
So at the beginning, a lot of companies
were allowed free capital and plenty of runway
to go build their businesses in this great land grab.
And then, the point you're referencing,
he had to change gears, to his-- probably-- horror in 2001,
when the stock market crashed.
And they demanded profitability.
And they laid people off.
And they stopped adding new product assortment
for a few years.
And they had to close the whole fulfillment center,
and it was a disaster.
And I tell that story, and it's remarkable.
Because the Amazon today-- we all
forget that they went through a period of having to shrink
and actually lay people off.
What's happening now, in terms of its lack of profitability,
is much different.
So in about 2008, 2009, the Amazon model
starts to really work.
In fact, this whole time eBay has been valued more highly
than Amazon. eBay was supposedly the perfect store, and none
of the gritty details of distribution.
But Amazon's model, particularly Prime,
the loyalty that inspired with customers,
and all the work they had done to figure out their fulfillment
centers-- the mechanics of just getting all these products
from point A, in the warehouses, to point B, to people's doors.
And they figured out they've mastered chaos.
And they actually show pretty good profits
for a couple of years.
And that's when all the institutional shareholders come
in and the stock price goes way up at the same time,
as a matter of fact, that eBay is kind of engulfed
by its chaos.
It has never figured out the complexity of shipping.
And the experience on eBay, at the same time,
is getting worse, while Amazon's is getting better.
And, in fact, not to really get off the topic, but eBay
was, at that time, looking for growth elsewhere.
It went and bought Skype and Paypal, which worked out,
and lots of Craigslist-type classified ads.
And so they switch places.
And Amazon starts to become uttered
in the same breath as Google, and even now Apple.
So to get back to the profitability question,
I mean, they just had inspired a lot
of faith in their long-term shareholders
and then the analysts that covered them on Wall Street.
And, for a few years, they just called their shots
very predictably.
And then, about a year ago, they started to telegraph
that they were going into another investment phase,
and building fulfillment centers all over the country.
They're building one right down the 580,
and getting into new kinds of hardware, like the Kindle Fire
tablets, and expanding internationally,
and expanding Amazon Web Services.
And so they're losing money.
But they've projected that they would lose money.
And so nobody's surprised by it.
And they're so happy to see that Amazon's grown
so quickly-- much faster than the rest of e-commerce--
and extremely faster than retail, which
means they're taking customers away from their competitors,
and locking people up.
And those customers are doing a lot
of their shopping on Amazon.
And that's why we see the optimism, particularly
on days like today.
PRESENTER: You start the prologue
of the book talking about how Amazon loves
to delight its customers when something arrives early.
And that actually happened to me last night, which was--
BRAD STONE: OK, now you have to tell us what you got.
PRESENTER: It was just a hard drive.
I just needed-- I think my computer hard drive was
failing, so I just needed to back it up,
and I was getting worried.
And it was supposed to arrive today.
It arrived last night.
Now all my data's safe and sound.
I'm pretty happy.
Shifting gears a little bit, because the book is-- just
like in real life, it's just as much Amazon
as it is Jeff Bezos.
And the book is in the same way.
And you open the book talking about this childhood,
his education, and so on.
I was just left wondering, during his years
at D. E. Shaw, when he first had the idea
to start Amazon, when he saw this tsunami that
was the internet coming-- you wisely, I think, in the book,
never said whether you thought he saw something
that nobody else did, or if he was just
at the right place at the right time.
How much was this circumstance?
And how much was it him?
And these are intertwined, but I just
wanted to ask you your thoughts--
BRAD STONE: Absolutely--
PRESENTER: --and your opinions on that.
BRAD STONE: Good question.
I think it was both.
The reason that chapter one-- So the prologue of the book
starts with an account of his-- he's
in sixth grade at a school.
And there was actually a woman that
wrote a book about that school.
And he's referred to with a pseudonym named Tim.
And so it's just this incredible account
of this visionary figure as a 12th-grader.
But chapter one is D. E. Shaw.
And the reason I started there is
because it is an extraordinary hedge fund.
It is one of the first quantitative hedge funds,
so using computers and algorithms
to trade stocks and bonds.
But David Shaw, who's a former computer science
professor at Columbia, sees the internet
coming far sooner than anyone.
And he also has a very different vision of D. E. Shaw, not as
a hedge fund, but as a technology company,
whose first business is financial instruments.
And it's because he has that vision that he's
hiring not just Wall Street guys like Bezos,
who had been at Bankers Trust and a few other Wall Street
institutions, but lots of generalists.
In fact, Jeff's wife worked at D. E. Shaw,
and she was an English major.
And he really had this vision that they would expand.
And so, in 1993, they've got these very early reports
about how the internet is expanding,
and how web protocol is jumping up,
vis-a-vis other internet tools of the time.
And he starts meeting with Bezos.
Shaw and Bezos were meeting weekly
to talk-- to brainstorm-- the next business for D. E. Shaw.
And they're brainstorming a lot of internet ideas.
And one of the ideas discussed at the time
is Juno, which is one of the first free email services,
and a predecessor to Gmail.
And Farsight Financial Services comes out of D. E. Shaw.
That's kind of an E*TRADE of the mid-'90s.
It was acquired, I think, by Merrill Lynch.
And then they are roughly speaking about this idea
called "the everything store," which
is actually why I titled the book that.
And it's this just vague notion that maybe the internet
can be an intermediary to sell any kind of product.
And I don't think they went any further than that.
But Jeff then went off on his own, and decided, you know,
you probably can't do anything right away.
But you should focus on one thing, and be great at that.
And, as we discussed before, he selected books.
So I think it was, in large part,
the culture there and the environment.
And he's gone and tried to recreate something similar
at Amazon.
But it was also, obviously-- without him, there's
no company.
Because it's then his relentless and focus,
and complete unwillingness to blink
in moments of the company's history,
when all his senior execs-- almost all of them-- leave.
And the world thinks that he's an idiot.
And the company's stock is in the tank.
All these idea stories end up being complicated.
But the success of the company, in large part,
can be easily credited to his drive and intellect.
PRESENTER: To me personally, one of the most interesting
little details about the book-- I'm
not sure how many of-- everyone here is aware of,
but Jeff personally invested in Google back in 1998
around Series A, right?
Right before or--
BRAD STONE: That's right.
PRESENTER: --right after it.
And is this, do you think-- So continuing with that question,
did he just have the foresight that few other people did?
And he saw this great opportunity,
and he invested into it?
Or was it just more it was coming anyways,
and he just happened to be there?
BRAD STONE: I think it was fortuitous.
He had acquired a company called Junglee.
It was like the first comparative shopping engine.
And the COO of Junglee was Ram Shriram,
one of your board members.
And he, on a trip to the Bay Area,
introduced Jeff to Larry and Sergey.
I think it was at Ram's house.
It was on a weekend.
And he was-- actually Round A had closed.
But Jeff was so impressed by Larry and Sergey's-- what he
described as their stubbornness about not putting ads
on the main page, that he was immediately intrigued.
And also, it's what he's always done,
which is bet on the internet.
I mean, that's simplifying things,
but he's the guy that bet the biggest on the internet.
He pushed the most chips on the table.
He raised the most money of any internet company--
I mean, over $2 billion in debt.
It almost sank the company.
I mean, he was just-- and he talks
about long-term orientation, and optimism.
But you can kind of reduce it to balls, right?
He just bet.
And with the Google prototype, he probably
saw this is a better way to search.
And the way Ram describes it, is the Round was closed.
And Jeff said, I want in.
I didn't get too deep into the mechanics of that,
but Ram's working for Jeff at the time, and now
subsequently, and reflecting on it,
is amazed at how Jeff kind of knew just how far to push it.
And in fact, the Round was reopened.
And Jeff was able to invest.
And he won't say, and likely nobody
knows, if he owns any Google stock.
I would imagine that he probably sold it after the IPO.
But it's one of those quirks of history.
And I think it's interesting that you bring it up,
because I think it's insightful about his character.
PRESENTER: It's fairly well known
that Amazon doesn't necessarily provide
too many perks to their employees.
Employees have to pay for parking.
They have to pay for a lot of things,
compared to Google, which is on the other end of spectrum
to that, where, because of our philosophy around all of that,
employees have a lot that is provided for them.
And obviously each one of these strategies
works well for the company.
But from your perspective, having covered these companies
for so many years, how do you see these?
How do you understand these two wildly different--
BRAD STONE: Yeah, that lavish cafeteria
that you guys have over there?
That does not exist at Amazon's offices in Seattle.
They have a cafeteria, but you have to pay for everything.
So very early on, Jeff read Sam Walton's autobiography.
And he, right away, understood what
it takes to be a discount retailer.
Discount retailers-- which is essentially what Amazon is.
I mean, it has these other businesses,
but they want to sell you a product at the lowest price.
And discount retailers are built on low cost structures.
You save pennies in your operations
so you can charge less than your competitor.
And that's why scale matters.
And that's why other retailers are
tend to have those same values of frugality.
Jeff just extracted that DNA outside of Walmart
and implanted it in Amazon.
And so it is very frugal.
They've taken it almost to comical extremes.
The prototypical example are the door desks,
where they just spend the minimum amount of money
to build a desk kit.
And employees often assemble their desks on their first day.
And salaries aren't above industry average.
When they take a job candidate out to lunch,
they can't expense that.
When I would dine with Amazon executives,
they would all-- in researching the book-- they would all,
very theatrically, make a point of tearing up
the receipt afterwards, and saying,
the company isn't paying for this.
I am.
And they're actually, in some ways,
modeling Jeff's own behavior.
Because he does that.
And it's tempting to kind of think
of it as some kind of character flaw of the company,
or a disadvantage, but it's a value that they're proud of.
It's posted on the website in their corporate values.
And it's because it translates, in their business,
directly into the lower prices and their customer focus.
So without it, they wouldn't be able to compete
as they do with the Walmarts and the Targets of the world.
PRESENTER: In your odyssey in writing the book,
you went to search for Jeff's biological father.
And do you just want to share whatever
you're comfortable with about this?
BRAD STONE: Oh, yeah, absolutely.
I, in telling the Amazon story, of course,
I need to tell the story of Jeff Bezos.
And in reflecting on what was known of his story,
it jumped out at me that, like so many other iconic business
leaders, political leaders, cultural leaders,
there are some sort of interesting dynamics
to his early childhood, like Steve Jobs, or Barack Obama,
or Bill Clinton.
It's sort of inexplicable, but he never
knew his biological father.
His parents had him when they were teenagers.
And they were married, but his biological father
left his wife when he was three.
And he's admitted this.
It was never a secret.
And the name was known.
And I thought that this is sort of a missing
piece about the Amazon story.
Who was this guy?
And did he-- in some way, did the circumstances
of his childhood lead him to be such
a unique and relentless figure?
He's an unusual person.
So where does that come from?
So long story short, I decided to try to find this guy.
And the first thing I did was, I was searching newspaper
archives in the 1960s in Albuquerque,
New Mexico, which is where he was born.
And I found, to my utter astonishment,
that this guy was part of a unicycle troupe
that traveled the country.
And they were in circuses, which,
if you remember the years when Jeff was inseparable
with his Segway, was a really bizarre coincidence.
Like, was there some sort of genetic predisposition
to wheeled vehicles?
I didn't know.
So I found him running a bike store outside of Phoenix.
And I went to visit him.
And it turned out, to my surprise,
that he hadn't known what happened to his son.
He lost track of the family.
Jeff's mom remarried.
And they changed their name to Bezos.
And he had lost track, and had spent his whole life
wondering what happened to the kid
that he had when he was 18 years old.
And it was a remarkable story.
It was extremely unexpected.
And it is what it is.
I never really was able to draw any conclusions
about whether that really had an impact on the leader
that he became.
But I think if you're someone like Jeff Bezos,
you've changed the world in numerous ways.
You've changed the way the world shops, and the way the world
reads, and increasingly the way startups are run.
It's like people want to know where you came from.
And in a way, I felt like this was a necessary story to tell.
AUDIENCE: So I'm curious to know.
You've covered Jeff all throughout his life,
or about every period of his life.
We hear stories about Bill Gates,
and how he was the first one in high school
to have a computer club.
And that's how he triggered his passion
for technology, and Steve Jobs, and his search for perfection.
What is it that drives Jeff to be the character that he
is today-- very frugal, very driven, very focused.
Mentioned in a similar vein as the biological father.
But what--
BRAD STONE: What ultimately drives him?
AUDIENCE: And maybe what historical event or what
[INAUDIBLE]
BRAD STONE: Well, I think there are a number of things.
I'll pick out a couple.
One is he was a huge fan of "Star Trek," paid
a lot of attention to the Apollo moon missions growing up,
and developed an extreme passion for space.
And in fact, when he was valedictorian
of his high school in Miami, his speech
was about creating human colonies in space.
And some of his friends from high school
said that he always wanted to be wealthy.
He was always very driven.
And the end goal was always is to be
able to finance some kind of space exploration, which sounds
wacky, but he's actually doing it.
He's got another company called Blue Origin, based
in the Seattle area, and they're building rockets.
Another technological kind of inspiration
is-- so in the prologue, when I'm
describing this old account of his life in middle school,
he's a sixth grader, they have-- very much like Bill Gates.
They've got a computer, like a teletype computer, donated
by a local company.
And he is leading the group of sixth graders
in playing with this computer, like clearly,
for so many of that generation, a very formative experience.
But in terms of what drives him today--
I think what he would say is building an enduring
company, an enduring customer-focused company.
And maybe what his critics would say
is it's being the last man standing, and the smartest
guy in the room, and out-witting rivals.
And look, he's competitive, also,
so I think it's a combination of those two things.
AUDIENCE: If someone walked up to you,
and wasn't familiar with the company, and they said, hey,
Brad.
Amazon-- what do they do?
What is your response to that?
BRAD STONE: Amazon is in the business of value of selling
everything, from physical goods-- all the way from books,
to furniture, lawn chairs, and huge two-ton safes--
to digital products, from digital music, and eBooks,
to streaming video, to things that we don't even
think of as products to be sold-- enterprise services,
storage and compute cycles.
So it's really, in some ways, like this
the extreme distributor on steroids, or retailer
that's in the business of selling its customers
everything and anything, and doing so
at extremely competitive low prices.
And using the momentum of its business,
and all the cash that it generates,
to just relentlessly expand.
I think that's another key point that I
would try to get into that explanation.
This is a company on the move, that it
is going blob-like in almost every conceivable direction.
It's pretty amazing-- international expansion,
product categories.
They just started selling art.
They're selling apparel.
The devices-- obviously, as you guys know, not just the Kindle
and Kindle Fire tablets, but maybe soon the set-top box,
maybe soon a phone-- all, of course, with the help of Google
and it's open-source Android operating system.
So a restless company, and one that,
even though it might take on new forms,
will still ultimately be in the business of selling things.
AUDIENCE: How do you compare him to other past American business
leaders, like Henry Ford and others?
What are some of the similar-- I'm not sure
if you've looked at similarities.
And obviously the world is different,
so you have to kind of-- but what things are similar today?
And what are very different?
BRAD STONE: I think the points of comparison
that I would be most qualified to make-- because I haven't
done a lot of historical research,
but I've covered technology for 15 years.
He's just cut from the same cloth,
I think, as Steve Jobs, Bill Gates, Andy Grove,
maybe occasionally Larry and Sergey,
in having not just this relentless drive, but extremely
high standards, occasional impatience with the people
around them who are not meeting their high standards,
and creative ways of expressing that impatience.
And a willingness to just think big.
And that's obviously what's happening here at Google.
And although I would say it's interesting,
Amazon's moon shots are sort of all
in the purview of kind of Jeff's own independent activities--
and so, of course, Blue Origin, and the Clock of the Long Now.
And he recently went and bought the Washington Post company--
so very much like that small handful of technology leaders,
in a lot of similarities.
It can be uncomfortable to work with him, to work for him.
But it's probably why Amazon is so successful.
Because he's never allowed anyone to rest on their laurels
or to treat Amazon like a country club.
You don't coast at Amazon.
They're working pretty hard up there.
AUDIENCE: So you've used the word relentless many times.
And I've heard that word used before.
But you also used a phrase that really
caught my attention, which is a refusal
to blink in the face of naysayers, basically.
Have you found any point at which that began to emerge?
Was that when he was a sixth-grader?
Or was it earlier or later?
It's a very admirable trait to me.
BRAD STONE: I think it really took a while to emerge.
I think, in the very early years of Amazon,
he was much more receptive to input from the outside,
a lot less sure on his feet.
In fact, in 1999, he sort of allows
his board to appoint a COO.
It's this one ten-month experiment in Amazon's history
that does not work out.
And I tell that story in the book, too.
And maybe as a result of that experience, and the result
of this moment-- when the world does not believe in Amazon,
and a lot of his senior teams leave--
he refuses to give any ground.
And he says we're still on this mission.
And he still is thinking aggressively about expansion.
In the midst of the decline, the crash
in Amazon stock, the second or third Harry Potter book
comes out.
And he-- which is sort of interesting.
In a weird way, Harry Potter might have saved Amazon.
It was very fortuitous.
Because there was such unusual demand for that book.
But Amazon's finances are a mess.
They're driving towards profitability.
And he basically says we're going
to deliver this book on the Saturday that it comes out.
And we're not going to charge any--
we're going to give everyone free two-day shipping.
And we're not going to charge extra for it.
And his CFO at the time, Warren Jenson, who I spoke to,
doesn't admit to losing hair over that.
But he's bald.
So I'll just say that.
But it's crazy.
It's crazy.
But he is extremely customer-focused-- realizes
that it'll engender a lot a loyalty
and some kind of magical experiences
for the Harry Potter fans.
And that it's-- even more kind of strategic--
that it's incredible branding opportunity.
And the thing I did is, as I was writing about that,
is I used LexisNexis to go find out how many clips Amazon got,
how many media mentions.
And it was like hundreds.
Maybe it was thousands.
I can't remember what the number is.
And in fact, his colleagues at the time--
there is a quote in the book along the lines of,
he has ice water running through his veins.
And maybe I'm sounding overly sycophantic right now.
And there are plenty of reasons to criticize
Amazon, particularly for its behavior toward smaller rivals
and sometimes partners.
But it's an incredible moment in Amazon's history, where
he just stands his ground, and says,
we're going to delight our customers right now.
And we'll make the finances work later.
And he did.
AUDIENCE: So you've said a few times
how he's very relentless, but also very focused,
and doesn't really have fear in his eyes or anything.
But I did want to ask you, if you look ahead
towards the future a little bit, where would Jeff be afraid?
Who would he be afraid of?
Because in the retail space, there's a giant like Walmart.
In the internet space, there's a giant like Google.
In the device space, there's a giant like Apple.
Or is it the thing that is yet to come that he's afraid of?
So what would Jeff be worried about or afraid of?
Even though he has ice in his veins, like you say,
he's still human.
So what do you think it would be?
And why?
Why would he be afraid of that?
BRAD STONE: Well, of course I can't-- and I wouldn't presume
to-- speak for him.
And I know what he would say, if we asked him
that, which is that he would say that Amazon is customer-focused
and not competitor-focused.
So they pay attention to what customers do,
but it's not where they put their attention.
And frankly, I'm not sure I completely buy that.
Because there are plenty of examples in Amazon's
history where they clearly fear an upstart.
And the Zappos story, which I told in the book
is a great example.
And the diapers.com story is another good example,
where these e-commerce companies achieve breakaway velocity.
In the case of Zappos, with a very flexible brand
and a great customer experience.
So in those cases, I think they started to really pay attention
to companies that were kind that out-Amazoning Amazon
in other product categories-- in shoes for Zappos,
in diapers and other household goods where Amazon wasn't
so strong at the time.
So I think the general point is he's probably
most scared of other business operators who
think like he does, who want to inspire loyalty,
and are kind of, in some ways, willing to spend recklessly.
Zappos was a billion-dollar company,
but it wasn't all that profitable.
Because customers were buying 10 pairs of shoes
and sending back nine.
Tony Hsieh was as nuts as Jeff is.
And then, more recently, I think-- clearly they
are very-- I'm not going to say worried.
But Apple and Google loom very large on their radar.
And we're seeing a lot of that manifest itself
in the new Kindle Fire tablets and their strategy
with Android.
I have a quote in the book that Tim O'Reilly relayed
to me, which is Jeff saying to him,
we don't have many big advantages.
So we have to weave together a rope of smaller advantages.
And he was saying that in the context
of the one-click patent, and why Amazon
was asserting this patent-- even though I think
Jeff will probably readily agree that the patent
system is broken.
But I think that's what he's doing today
with all of Amazon's digital services and hardware,
where you see them take IMDB, this asset that they've owned
for so long, and draw some of the metadata about TV shows
and movies into the Kindle Fire tablet.
And you just see him-- and Prime is
kind of the linchpin of this strategy-- of bringing
in elements from all corners of the organization-- advertising
is another one-- to kind of subsidize these devices,
lower their price, make them more appealing competitors
to the Nexus tablets or the iPads.
And I think he clearly realizes that a big large part
of this battle, particularly around media,
is going to be fought and won between Apple, Google,
Amazon, or perhaps other members of the Android ecosystem.
So I would say that's probably the biggest
competitive challenge to Amazon right now.
AUDIENCE: So how do you think this book has been received
at Amazon by the folks you spoke to and by folks maybe you
didn't?
And were there any issues that came up
as you were compiling drafts of this,
if you can speak about them?
BRAD STONE: Sure.
I don't have a lot of insight into how it's been received.
And I didn't expect a lot of feedback, at least right away.
I think it's, as I said at the very beginning,
it's a company that doesn't invite this kind of scrutiny.
And I think they participated, to an extent,
to ensure that their viewpoint was known.
But the first thing you're going to hear from any Amazon
spokesperson is "no comment."
And sometimes it's almost a joke among the press corps.
And because, again, they're primarily in retail.
And it's an area where margins are low.
And insight is your competitive weapon.
And you can be copied quickly by rivals.
So they genetically keep to themselves.
And I've heard some stuff.
I've heard from some Amazon folks, current and former,
that said, you got the story right.
And to be honest, I've heard some folks
who felt like there were corners of the account that
were overly tough.
And, from my perspective, that's kind of what you want to hear.
Of course I'm curious to know what, ultimately, Jeff
thought of it.
And I'm not sure I'll ever find out
AUDIENCE: So you spoke to, I guess, a few people at Amazon,
and you have been researching.
So how much do you think Amazon is Bezos-dependent?
And if, let's say, he were to focus on another venture,
and appoint someone else in his place,
how do you think Amazon would change or not change at all?
How much of his philosophy has he
ingrained in people there now?
BRAD STONE: Very good question.
I think, particularly if you're an Amazon shareholder,
that's probably your biggest worry.
And it's not a short-term worry.
But Jeff's about to turn 50 in January.
But it's a long-term worry.
The company is now so diversified
that I'm not sure there's anyone as versatile
as he is to run it.
But to your second point, there are
executives at Amazon that have been by his side
for many years, that think like he does, that exhibit a lot
of his mannerisms, that are very familiar with the business.
And that's Jeff Wilke, who runs the North American consumer
businesses; and Andy Jassy; who runs Amazon Web
Services; and Diego Piacentini, who came from Apple,
and runs the international businesses at Amazon.
I mean even though there is a lot of turnover
in the lower and middle ranks of Amazon,
the upper ranks have remained relatively stable
since the period I referred to during the dot-com bust,
when there was major churn.
But Jeff's a singular individual.
And in a lot of ways, the company
is tailored to how he thinks.
So you guys probably know that meetings are started at Amazon
by reading six-page documents called narratives.
And that's because that is how he
prefers to digest information.
He's kind of trained everyone around him, the entire company,
to do that as well.
But it really is tailored toward him.
And I describe it, in the last chapter
of the book, the company as a series of chess boards,
all perfectly aligned, so that he
can play as many games as possible at once.
So when you lose your chess master,
your grandmaster has to be replaced.
And as we've seen at Apple, another company that
was kind of tailored towards one individual and how he thinks,
the transition is never easy.
AUDIENCE: The question around the future
you mentioned, after a couple decades,
Jeff said it's too early to tell the story.
Is there any way you can project out in the future
and paint a picture about what that second half of the story
might look like?
Where they're going?
What his biggest Moonshot ambitions are, for example?
BRAD STONE: Well, first all, I'll
say that I don't think it is too early.
I just think that's what he says to kind of keep authors at bay.
It's a convenient sort of trope, and sort
of like a stiff arm to anybody that's
trying to get too close to the company.
But what does the future hold?
I mean, I think the goal is Walmart scale,
in terms of the retail business.
So, actually, I'm not even sure what
Walmart's revenues were last year.
But let's say it's $300 billion, and Amazon's on track
to make $75 billion this year.
So they still have a long way to go.
There's a lot of international markets
where Amazon has very little presence.
And in some regions of the world,
it's because the shipping infrastructure is immature.
And credit card processing is immature.
And the Amazon model doesn't scale there.
And then there are other parts of the world,
I think Mexico and India, and maybe Brazil,
where they've chosen to use the Kindle business as a Trojan
horse, and start their eBook-- and maybe, in some cases,
their digital businesses-- there.
So they're expanding.
So I think, at one point, the answer to your question
is Amazon is a global business with a Walmart-like footprint.
And as to other parts of the business,
like digital, I just think there's
no limit to the ambition.
So it'll be phones.
It'll be tablets.
It'll be set-top boxes.
It might be Amazon Glass, at some point.
They'll probably call it something else.
But when you think about it, for Jeff,
customers walking into a store with their glasses,
and seeing the Amazon price on every product-- that's
pretty scary, now that I think about it.
But he's expansive in his vision,
and loves the technology.
And so I'm sure he sees a lot of opportunity
probably almost everywhere, but particularly in the hardware
business and in Amazon's Lab126 operations here in Silicon
Valley.
PRESENTER: Awesome.
Thank you, guys.