The Everything Store: Jeff Bezos and the Age of Amazon

by Brad Stone

Instead, employees are required to write six-page narratives laying out their points in prose, because Bezos believes doing so fosters critical thinking. For each new product, they craft their documents in the style of a press release. The goal is to frame a proposed initiative in the way a customer might hear about it for the first time. Each meeting begins with everyone silently reading the document, and discussion commences afterward—just like the productive-thinking exercise in the principal’s office at River Oaks Elementary.

Really interesting meeting structure. Sounds like it fosters good ideas and saves time.

“We are genuinely customer-centric, we are genuinely long-term oriented and we genuinely like to invent. Most companies are not those things. They are focused on the competitor, rather than the customer. They want to work on things that will pay dividends in two or three years, and if they don’t work in two or three years they will move on to something else. And they prefer to be close-followers rather than inventors, because it’s safer. So if you want to capture the truth about Amazon, that is why we are different. Very few companies have all of those three elements.”

the author stated that the way to avoid the narrative fallacy was to favor experimentation and clinical knowledge over storytelling and memory.

In early 1994, several prescient business plans emerged from the discussions between Bezos and Shaw and others at D. E. Shaw. One was the concept of a free, advertising-supported e-mail service for consumers—the idea behind Gmail and Yahoo Mail. DESCO would develop that idea into a company called Juno, which went public in 1999 and soon after merged with NetZero, a rival. Another idea was to create a new kind of financial service that allowed Internet users to trade stocks and bonds online. In 1995 Shaw turned that into a subsidiary called FarSight Financial Services, a precursor to companies like E-Trade. He later sold it to Merrill Lynch.

Hopsfully teamstand gets this action

Bezos concluded that a true everything store would be impractical—at least at the beginning. He made a list of twenty possible product categories, including computer software, office supplies, apparel, and music. The category that eventually jumped out at him as the best option was books. They were pure commodities; a copy of a book in one store was identical to the same book carried in another, so buyers always knew what they were getting. There were two primary distributors of books at that time, Ingram and Baker and Taylor, so a new retailer wouldn’t have to approach each of the thousands of book publishers individually. And, most important, there were three million books in print worldwide, far more than a Barnes & Noble or a Borders superstore could ever stock.

“It’s easier to invent the future than to predict it.” —Alan Kay

“When I read that letter, I thought, we don’t make money when we sell things. We make money when we help customers make purchase decisions.”

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.

The stronger our market leadership, the more powerful our economic model. Market leadership can translate directly to higher revenue, higher profitability, greater capital velocity, and correspondingly stronger returns on invested capital.

They agreed on five core values and wrote them down on a whiteboard in a conference room: customer obsession, frugality, bias for action, ownership, and high bar for talent. Later Amazon would add a sixth value, innovation.

Just Do It award—an acknowledgment of an employee who did something notable on his own initiative, typically outside his primary job responsibilities.

But Galli was also making some important contributions. He turned category leaders like Harrison Miller and Chris Payne into general managers who had control over their own profit-and-loss statements and their costs and profit margins. He had experienced the push-and-pull of Black and Decker’s relationship with big-box stores like Home Depot, so he introduced traditional retailing concepts, like the idea of earning cooperative marketing dollars, or co-op, from suppliers in exchange for highlighting their products to customers.

I should understand what this means

Odyssey: Pepsi to Apple,

During this period, he met with two retailing legends who would focus his attention on the power of everyday low prices. He would start to think differently about conventional advertising and look for a way to mitigate the costs and inconveniences of shipping products through the mail. He would also show what was becoming a characteristic volatility, lashing out at executives who failed to meet his improbably high standards. The Amazon we know today, with all of its attributes and idiosyncrasies, is in many ways a product of the obstacles Bezos and Amazon navigated during the dot-com crash, a response to the widespread lack of faith in the company and its leadership.

Which is why Amazon’s damage-control response was unusually emphatic. In early summer, Jenson and Grandinetti crisscrossed the United States and Europe, meeting with big suppliers and giving presentations on the financial health of the company. “Even the facts were guilty until proven innocent for a short period of time,” Grandinetti says.

Baller move balls in your court

It is the ambition of every technology company to be worth more than the sum of its parts. It inevitably seeks to offer a set of tools that other companies can use to reach their customers. It wants to become, in the parlance of the industry, a platform.

This really is a key element to big success

All of these deals improved Amazon’s balance sheet in the short term, but in the long run, they were awkward for all parties.

Insane every one of these companies are out of business

“In the short term, the stock market is a voting machine. In the long run, it’s a weighing machine”

Bezos was obsessed with the customer experience, and anyone who didn’t have the same single-minded focus or who he felt wasn’t demonstrating a capacity for thinking big bore the brunt of his considerable temper.

“If somebody else can sell it cheaper than us, we should let them and figure out how they are able to do it.”

This is where the anti trust controversy comes in. The only reason its not anti trust is because the customer benefits

Bezos didn’t care about any of that, as long as it offered more choices to customers and, in the process, gave Amazon a greater selection of products.

before.

Wow a biblical meeting

Scott also talked about how Walmart viewed advertising and pricing as two ends on the same spectrum. “We spend only forty basis points on marketing. Go look at our shareholder statement,” he said. “Most of that goes to newspapers to inform people about what is in our stores. The rest of our marketing dollars we pour into reducing prices. Our marketing strategy is our pricing strategy, which is everyday low pricing.”

quirk of history,

Suria believes Bezos is “deranged” and proudly notes that he hasn’t bought anything from Amazon since he tangled with the company.

Hahaha bezos is ruthless he ended that guys career

(He would win a Just Do It award and get to keep an old ratty sneaker for that bit of bravado.)

“My approach has always been that value trumps everything,”

“There are two kinds of retailers: there are those folks who work to figure how to charge more, and there are companies that work to figure how to charge less, and we are going to be the second, full-stop,”

stop.

.... Jeez jeff

He had the marketing department organize tests, running commercials in only the Minneapolis and Portland media markets and measuring whether they generated an uptick in local purchases.

Smart segmented user test

They would make the free-shipping offer permanent, but only for customers who were willing to wait a few extra days for their order. Just like the airlines, Amazon would, in effect, divide its customers into two groups: those whose needs were time sensitive, and everyone else.

Amazon introduced the service, called Free Super Saver Shipping, in January 2002 for orders above $99. In the span of a few months, that number dropped to $49, and then to $25. Super Saver Shipping would set the stage for a variety of new initiatives in the years ahead, including the subscription club Amazon Prime.

“This whole journey started with a car ride and what a ride it’s been,” Bezos said.

Sometimes its all it takes. Put yourself in front of people.

He instilled in Bezos the values of self-reliance and resourcefulness, as well as a visceral distaste for inefficiency.

“Jeff, one day you’ll understand that it’s harder to be kind than clever.”

“I got the sense that Jackie and Mike were the kinds of parents who always encouraged Jeff and nurtured his creativity,”

The History of Space Vehicles, by Tim Furniss, and Rare Earth: Why Complex Life Is Uncommon in the Universe,

Books to get

Amazon’s internal logistics software didn’t properly account for new categories, so the computers would ask workers whether a new toy entering the warehouse was a hardcover or a paperback book.

Building scalable IT from the start is so important

He earned an MBA and an MS from the Massachusetts Institute of Technology’s engineering/MBA dual-degree program. Called Leaders for Manufacturing (now it’s Leaders for Global Operations), the program is a novel alliance of MIT’s business school, its engineering school, and partner companies, like Boeing, created to address emerging global competition.

Before Wilke joined Amazon, the general managers of the fulfillment centers often improvised their strategies, talking on the telephone each morning and gauging which facility was fully operational or had excess capacity, then passing off orders to one another based on those snap judgments. Wilke’s algorithms seamlessly matched demand to the correct FC, leveling out backlogs and obviating the need for the morning phone call.

Along the way, he was exhibiting a style—leadership by example, augmented with a healthy dose of impatience—that

“Communication is a sign of dysfunction. It means people aren’t working together in a close, organic way. We should be trying to figure out a way for teams to communicate less with each other, not more.”

Bezos’s counterintuitive point was that coordination among employees wasted time, and that the people closest to problems were usually in the best position to solve them.

The Mythical Man-Month,

IBM veteran and computer science professor Frederick Brooks argued that adding manpower to complex software projects actually delayed progress. One reason was that the time and money spent on communication increased in proportion to the number of people on a project.

All new hires had to directly improve the outcome of the company. He wanted doers—engineers, developers, perhaps merchandise buyers, but not managers. “We didn’t want to be a monolithic army of program managers, à la Microsoft. We wanted independent teams to be entrepreneurial,” says Neil Roseman. Or, as Roseman also put it: “Autonomous working units are good. Things to manage working units are bad.”

(In this respect, Microsoft’s Bill Gates, who also took such annual think weeks, served as a positive example.)

The entire company, he said, would restructure itself around what he called “two-pizza teams.” Employees would be organized into autonomous groups of fewer than ten people—small enough that, when working late, the team members could be fed with two pizza pies. These teams would be independently set loose on Amazon’s biggest problems. They would likely compete with one another for resources and sometimes duplicate their efforts, replicating the Darwinian realities of surviving in nature. Freed from the constraints of intracompany communication, Bezos hoped, these loosely coupled teams could move faster and get features to customers quicker.

Key part of this is having versile and scalable infrastructure

Each group was required to propose its own “fitness function”—a

What is my fitness function ?

Bezos wanted to personally approve each equation and track the results over time. It would be his way of guiding a team’s evolution.

Build a single key metric