The Everything Store: Jeff Bezos and the Age of Amazon

by Brad Stone

Amid this renaissance of sales growth and continued category expansion, Amazon made very few acquisitions. The lessons learned from its early acquisition spree in the late 1990s were still felt inside the company. Amazon had impulsively spent hundreds of millions to buy unproven startups that it could not digest and whose executives almost all left. In the resulting retrenchment, Amazon became uniquely parsimonious in how it approached mergers and acquisitions. Between 2000 and 2008, it acquired just a few companies, among which were the Chinese e-commerce site Joyo (bought in 2004 for $75 million), the print-on-demand upstart BookSurge (bought in 2005 for an undisclosed amount), and audio-book company Audible (bought in 2008 for $300 million). These deals were paltry by the standards of the broader technology industry. During this span of time, for example, Google bought YouTube for $1.65 billion and DoubleClick for $3.1 billion. Jeff Blackburn, Amazon’s chief of business development, said that Amazon’s bruises from the 1990s helped to create a “building culture” there. Every major company faces decisions over whether it should build or buy new capabilities. “Jeff almost always prefers to build it,” Blackburn says. Bezos had absorbed the lessons of the business bible Good to Great, whose author, Jim Collins, counseled companies to acquire other firms only when they had fully mastered their virtuous circles, and then “as an accelerator of flywheel momentum, not a creator o...

Great way to think about acquisitions: they should accelerate the flywheel