© The Financial Times Ltd 2013 FT and 'Financial Times' are trademarks of The Financial Times Ltd.
October 25, 2013 6:53 pm
The Everything Store: Jeff Bezos and the Age of Amazon, by Brad Stone, Bantam Press RRP£18.99/Little, Brown RRP$28, 384 pages
Seventeen years ago, as Jeff Bezos’s Amazon.com raised $8m in venture capital at a valuation of $60m – it now has a market capitalisation of $150bn – a 23-year-old temporary worker in its Seattle warehouse mislaid his car.
Christopher Smith was working so furiously around the clock as Amazon grew that post piled up unopened in his apartment and he forgot he had left his Peugeot in a no-parking zone. When he finally opened his mail, he found several parking tickets, a notice that it had been towed away, and a letter telling him that the car had been sold at auction for $700, and he owed $1,800 in unpaid fines.
Amazon was then a tiny company, started in Seattle by an intensely driven, scarily bright 31-year-old who had been working at a Wall Street hedge fund called DE Shaw & Co when he spotted the potential of the internet. He had the idea for an online retailer that could become the digital equivalent of Montgomery Ward, the mail-order and department-store business. He called it “the everything store”.
It says something that one of Bezos’s first ideas for its name was Relentless.com (which still takes you to Amazon if you type it into a web browser). His unbounded drive and ambition has pushed his company through doldrums, diversions, failed ideas and a near-death financial crisis to become something remarkably like the outfit he first envisaged at DE Shaw.
The outlines of the Bezos story – the drive west from Texas to Seattle with his wife MacKenzie in his father’s Chevrolet, the decision to start out with an online bookstore, his weird, booming laugh – are familiar. Anyone who wishes to dig deeper must penetrate the force field of secrecy that Bezos, a teenage Star Trek fan, erects to frustrate his competitors and shape his image.
Brad Stone, a technology journalist who first covered Amazon in 2000, has done a remarkable job in The Everything Store, in a way that Bezos would appreciate – by working very hard. He has talked to many of those who knew and worked with Bezos from the early days, and even tracked down his biological father, who was divorced by his mother when he was a baby (Bezos is his stepfather’s name).
“I thought he was a little bit crazy,” confesses one early employee. He is referring to a time when Amazon was offering 1.5m titles for sale on its website and had 40 books in its warehouse, but it is a fair assessment. Bezos mixes acute intelligence (and affability when relaxed) with touches of the psychopath. Not for nothing do Amazon executives call his screaming fits “nutters”.
Stone recounts one incident when Bezos publicly humiliated a senior executive by calling Amazon’s number to check the man’s assertion that its phones were being picked up promptly. “Bezos took his watch off and made a deliberate show of tracking the time. A brutal minute passed, then two ... Bezos’s face grew red; the vein in his forehead, a hurricane warning system, popped out”.
All of this, however, was to a purpose. Bezos was building a company that broke the rules of retailing – for example, by allowing hostile reviews of products that it sold. He was thinking and pushing his way into a world that he had envisaged in theory but had to forge in reality.
“Jeff does a couple of things better than anyone I’ve ever worked for,” one executive told Stone. “He embraces the truth. A lot of people talk about the truth, but they don’t engage their decision-making around [it] ... The second thing is that he is not tethered by conventional thinking ... he is bound only by the laws of physics. He can’t change those. Everything else, he views as open to discussion.”
“Physically, I’m a chicken. Mentally, I’m bold,” is Bezos’s self-assessment. His formidable appetite for risk-taking has been necessary since Amazon’s success was far from assured. Stone recounts how Bezos, discussing the book, asked him: “How do you plan to handle the narrative fallacy?” He meant the author Nassim Nicholas Taleb’s term for the urge to weave a simple story from complex events.
Amazon was so overstretched by explosive growth at first that it could easily have collapsed; many of Bezos’s initiatives, such as his effort to build an Amazon search engine, have failed and been shut down; the company could have run out of cash in the dotcom bust of the early 2000s. Yet he made enough good decisions and executed them well enough to shrug the rest off.
As with other entrepreneurs, it is a bit of a mystery where this talent and focus sprang from. Discussing Bezos’s separation from his father, Stone notes that both Steve Jobs of Apple and Larry Ellison of Oracle, two other technology founders, were adopted and “the experience is thought by some to have given each a powerful motivation to succeed”. He moves swiftly on, perhaps fearing a narrative fallacy.
Bezos’s boldness did not simply create a new type of retailer. He has also been fearlessly long-term in his outlook, keeping Amazon’s margins low and its profits small at best while expanding its revenue base, from books into other physical goods and, with the Kindle, into digital information. It took a long time for investors to grasp the scale of his ambition.
Bezos has shaped Amazon so forcefully, with such attention to detail, that it is uncertain how well the company can outlast him. The culture is eccentric, with meetings starting in silence as everyone reads a memo on the topic. With their tight discipline and reluctance to stray from the script, its executives behave like members of a cult.
Yet Bezos created a company with sufficient momentum to knock over and digest everything in its path – book stores, speciality retailers, publishers. It is as hard to block as its founder.
John Gapper is the FT’s chief business commentator
Copyright The Financial Times Limited 2013. You may share using our article tools.
Please don't cut articles from FT.com and redistribute by email or post to the web.