The Everything Store: Jeff Bezos and the Age of Amazon

by Brad Stone

He says he came up with what he called a “regret-minimization framework” to decide the next step to take at this juncture of his career. “When you are in the thick of things, you can get confused by small stuff,” Bezos said a few years later. “I knew when I was eighty that I would never, for example, think about why I walked away from my 1994 Wall Street bonus right in the middle of the year at the worst possible time. That kind of thing just isn’t something you worry about when you’re eighty years old. At the same time, I knew that I might sincerely regret not having participated in this thing called the Internet that I thought was going to be a revolutionizing event. When I thought about it that way… it was incredibly easy to make the decision.”11

During this time, Bezos relentlessly advocated for taking risks outside of Amazon’s core business. Between 2003 and 2005, Amazon started its own search engine and devised a way to allow customers to search for phrases inside books on the site. Bezos also helped to pioneer the modern crowd-sourcing movement with a service called Mechanical Turk and laid the groundwork for Amazon Web Services—a seminal initiative that ushered in the age of cloud computing.

Bezos added Frederick’s team to the Associates group under Colin Bryar and tasked them with creating a new set of APIs to let developers plug into the Amazon website. Soon other websites would be able to publish selections from the Amazon catalog, including prices and detailed product descriptions, and use its payment system and shopping cart. Bezos himself bought into the Web’s new orthodoxy of openness, preaching inside Amazon over the next few months that they should make these new tools available to developers and “let them surprise us.” The company held its first developer conference that spring and invited all the outsiders who were trying to hack Amazon’s systems. Now developers became another constituency at Amazon, joining customers and third-party sellers. And the new group, run by Colin Bryar and Rob Frederick, was given a formal name: Amazon Web Services. It was the trailhead of an extremely serendipitous path.

The book, though dense and challenging, was widely discussed in the book clubs of Amazon executives at the time and it helped to crystallize the debate over the problems with the company’s own infrastructure. If Amazon wanted to stimulate creativity among its developers, it shouldn’t try to guess what kind of services they might want; such guesses would be based on patterns of the past. Instead, it should be creating primitives—the building blocks of computing—and then getting out of the way. In other words, it needed to break its infrastructure down into the smallest, simplest atomic components and allow developers to freely access them with as much flexibility as possible. As Bezos proclaimed at the time, according to numerous employees: “Developers are alchemists and our job is to do everything we can to get them to do their alchemy.”

Over the next few years, Dalzell watched Amazon from afar and marveled at how Bezos turned himself into one of the world’s most admired corporate chiefs. “Jeff does a couple of things better than anyone I’ve ever worked for,” Dalzell says. “He embraces the truth. A lot of people talk about the truth, but they don’t engage their decision-making around the best truth at the time. “The second thing is that he is not tethered by conventional thinking. What is amazing to me is that he is bound only by the laws of physics. He can’t change those. Everything else he views as open to discussion.”

Still, as Wilke says, some of the companies that disavow selling on Amazon ultimately return, irresistibly drawn to its 200 million active customers and brisk sales. Amazon’s own employees have compared third-party selling on the site to heroin addiction—sellers get a sudden euphoric rush and a lingering high as sales explode, then progress to addiction and self-destruction when Amazon starts gutting the sellers’ margins and undercutting them on price. Sellers “know they should not be taking the heroin, but they cannot stop taking the heroin,” says Kerry Morris, the former Amazon buyer. “They push and bitch and complain and threaten until they finally see they have to cut themselves off.”

Arnold was frustrated. He was monitoring Amazon’s third-party Marketplace and tracking several unfamiliar low-priced sellers, including one called Great Deals Now Online. This mysterious entity always seemed to have Wüsthof knives for sale, yet Arnold had no idea who they were, and Amazon provided no way to contact them. “He might know someone who has gotten a hold of surplus product, or he might have someone working at Bed, Bath and Beyond stealing from the distribution center,” says Arnold. “Customers would never give their credit card to this guy, but because he’s on the Amazon platform, they figure he’s clean, he must be good.” Arnold felt that Amazon’s own Marketplace was enabling the destructive discounting that its retail business was using as an excuse to undercut MAP.

In December of 2011, as if seeking a fitting conclusion to a year filled with controversy over sales tax, acquisitions, MAPs, and the economics of electronic books, Amazon ran a ham-fisted promotion of its price-comparison application for smartphones. The app allowed users to take pictures or scan the bar codes of products in local stores and compare those prices with Amazon’s. On December 10, Amazon offered a discount of up to fifteen dollars to anyone who used the application to buy online instead of in a store. Although certain categories, like books, were exempt, the move stirred up an avalanche of criticism.

We try not to spend money on things that don’t matter to customers. Frugality breeds resourcefulness, self-sufficiency and invention. There are no extra points for headcount, budget size or fixed expense. All of this comes from Bezos himself. Amazon’s values are his business principles, molded through two decades of surviving in the thin atmosphere of low profit margins and fierce skepticism from the outside world. In a way, the entire company is scaffolding built around his brain—an amplification machine meant to disseminate his ingenuity and drive across the greatest possible radius. “It’s scaffolding to magnify the thinking embodied by Jeff, to the greatest extent possible,” says Jeff Wilke when I bounce that theory off him. “Jeff was learning as he went along. He learned things from each of us who had expertise and incorporated the best pieces into his mental model. Now everyone is expected to think as much as they can like Jeff.”