The Everything Store: Jeff Bezos and the Age of Amazon

by Brad Stone

“He was excruciatingly focused,” says Weinstein, who lived around the corner and became one of Bezos’s best friends (the two are still close). “Not like mad-scientist focused, but he was capable of really focusing, in a crazy way, on certain things. He was extremely disciplined, which is how he is able to do all these things.”

Bezos took a series of odd jobs throughout high school. One summer he famously worked as a fryer at a local McDonald’s, learning, among other skills, how to crack an egg with one hand.

Bezos’s high-school friends say he was ridiculously competitive. He collected awards for best science student at his school for three years and best math student for two, and he won a statewide science fair for an entry concerning the effects of a zero-gravity environment on the housefly. At some point, he announced to his classmates his intention to become the valedictorian of his 680-student class, and he crammed his schedule with honors courses to bolster his rank. “The race [for the rest of the students] then became to be number two,” says Josh Weinstein. “Jeff decided he wanted it and he worked harder than anybody else.”

Bezos scored straight As at Miami Palmetto, got early admission to Princeton University, and not only became valedictorian of his high school but won the Silver Knight, a prestigious statewide award sponsored by the Miami Herald. According to Weinstein, who was there, when Jeff went to the bank to deposit his award check, the teller looked at it and said, “Oh, what do you do for the Miami Herald?” and Bezos cockily replied, “I win Silver Knights.” Bezos wrote out his valedictory speech longhand. His mother typed it up, pausing just long enough to realize that for a high-school senior, Jeff had some wildly outlandish ambitions. She still has a copy, which includes the classic Star Trek opening, “Space, the final frontier,” and discusses his dream of saving humanity by creating permanent human colonies in orbiting space stations while turning the planet into an enormous nature preserve.

“He absolutely thinks he’s going to space,” Hanauer says. “It’s always been one of his goals. It’s why he started working out every morning. He’s been ridiculously disciplined about it.”

Brad, I’m travelling and responding by Blackberry—maybe you’ll get this. It’s way premature for Blue to say anything or comment on anything because we haven’t done anything worthy of comment. If you’re interested in this topic over the coming years, we’ll keep it in mind for when we have anything worth saying. Some of what you have below is right and some is wrong. I will comment on one thing because you touched a nerve, and I think it’s hurtful to the people of NASA. There should be a counterpoint. NASA is a national treasure, and it’s total bull that anyone should be frustrated by NASA. The only reason I’m interested in space is because they inspired me when I was five years old. How many government agencies can you think of that inspire five year olds? The work NASA does is technically super-demanding and inherently risky, and they continue to do an outstanding job. The ONLY reason any of these small space companies have a chance of doing ANYTHING is because they get to stand on the shoulders of NASA’s accomplishments and ingenuity. If you want a specific example: consider that all these companies use extremely sophisticated computer codes for analyzing things like structures, heat flows and aerodynamics, which codes were developed (over many years and meticulously tested against physical reality) by NASA! Jeff

By 2005 he owned 290,000 acres—an area about a third of the size of Rhode Island. He announced his intentions to build a spaceport by walking into the office of a local newspaper, the Van Horn Advocate, and giving an impromptu interview to its bewildered editor.

He gave Blue Origin a coat of arms and a Latin motto, Gradatim Ferociter, which translates to “Step by Step, Ferociously.”

An interviewer once asked Bezos why he was motivated to accomplish so much, considering that he had already amassed an exceedingly large fortune. “I have realized about myself that I’m very motivated by people counting on me,” he answered. “I like to be counted on.”

The junior executives recommended a variety of different techniques to foster cross-group dialogue and afterward seemed proud of their own ingenuity. Then Jeff Bezos, his face red and the blood vessel in his forehead pulsing, spoke up. “I understand what you’re saying, but you are completely wrong,” he said. “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.”

At that meeting and in public speeches afterward, Bezos vowed to run Amazon with an emphasis on decentralization and independent decision-making. “A hierarchy isn’t responsive enough to change,” he said. “I’m still trying to get people to do occasionally what I ask. And if I was successful, maybe we wouldn’t have the right kind of company.”2 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 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.

Bezos had all the new televisions in Amazon’s conference rooms immediately removed. But according to Matt Williams, a longtime Amazon manager, Bezos deliberately kept the metal mounts hanging in the conference rooms for many years, even some that were so low on the wall that employees were likely to stand up and hit them. Like a warlord leaving the decapitated heads of his enemies on stakes outside his village walls, he was using the mounts as a symbol, and as an admonition to employees about how not to behave. The television episode was the foundation of another official award at Amazon, this one presented to an employee who identified an activity that was bureaucratic and wasteful. The suddenly superfluous televisions were given as the prize. When the supply ran out, that commendation morphed into the Door-Desk award, given to an employee who came up with “a well-built idea that helps us to deliver lower prices to customers”—the prize was a door-desk ornament. Bezos was once again looking for ways to reinforce his values within the company.

As part of his ongoing quest for a better allocation of his own time, he decreed that he would no longer have one-on-one meetings with his subordinates. These meetings tended to be filled with trivial updates and political distractions, rather than problem solving and brainstorming. Even today, Bezos rarely meets alone with an individual colleague.

“PowerPoint is a very imprecise communication mechanism,” says Jeff Holden, Bezos’s former D. E. Shaw colleague, who by that point had joined the S Team. “It is fantastically easy to hide between bullet points. You are never forced to express your thoughts completely.” Bezos announced that employees could no longer use such corporate crutches and would have to write their presentations in prose, in what he called narratives. The S Team debated with him over the wisdom of scrapping PowerPoint but Bezos insisted. He wanted people thinking deeply and taking the time to express their thoughts cogently. “I don’t want this place to become a country club,” he was fond of saying as he pushed employees harder. “What we do is hard. This is not where people go to retire.” There was a period of grumbling adjustment. Meetings no longer started with someone standing up and commanding the floor as they had previously at Amazon and everywhere else throughout the corporate land. Instead, the narratives were passed out and everyone sat quietly reading the document for fifteen minutes—or longer. At the beginning, there was no page limit, an omission that Diego Piacentini recalled as “painful” and that led to several weeks of employees churning out papers as long as sixty pages. Quickly there was a supplemental decree: a six-page limit on narratives, with additional room for footnotes.

Bezos refined the formula even further. Every time a new feature or product was proposed, he decreed that the narrative should take the shape of a mock press release. The goal was to get employees to distill a pitch into its purest essence, to start from something the customer might see—the public announcement—and work backward. Bezos didn’t believe anyone could make a good decision about a feature or a product without knowing precisely how it would be communicated to the world—and what the hallowed customer would make of it.

Among his greatest hits, collected and relayed by Amazon veterans: “If that’s our plan, I don’t like our plan.” “I’m sorry, did I take my stupid pills today?” “Do I need to go down and get the certificate that says I’m CEO of the company to get you to stop challenging me on this?” “Are you trying to take credit for something you had nothing to do with?” “Are you lazy or just incompetent?” “I trust you to run world-class operations and this is another example of how you are letting me down.” “If I hear that idea again, I’m gonna have to kill myself.” “Does it surprise you that you don’t know the answer to that question?” “Why are you ruining my life?” [After someone presented a proposal.] “We need to apply some human intelligence to this problem.” [After reviewing the annual plan from the supply-chain team.] “I guess supply chain isn’t doing anything interesting next year.” [After reading a narrative.] “This document was clearly written by the B team. Can someone get me the A team document? I don’t want to waste my time with the B team document.”

The group spent nine months on the task, then presented their work to Bezos and the S Team. “We had beautiful documents and everyone was really prepared,” Jones says. Bezos read the paper, said, “You’re all wrong,” stood up, and started writing on the whiteboard. “He had no background in control theory, no background in operating systems,” Jones says. “He only had minimum experience in the distribution centers and never spent weeks and months out on the line.” But Bezos laid out his argument on the whiteboard and “every stinking thing he put down was correct and true,” Jones says. “It would be easier to stomach if we could prove he was wrong but we couldn’t. That was a typical interaction with Jeff. He had this unbelievable ability to be incredibly intelligent about things he had nothing to do with, and he was totally ruthless about communicating it.”

“He called me a ‘complete fucking idiot’ and said he had no idea why he hired idiots like me at the company, and said, ‘I need you to clean up your organization,’ ” Jones recalls, years later. “It was brutal. I almost quit. I was a resource of his that failed. An hour later he would have been the same guy as always and it would have been different. He can compartmentalize like no one I’ve ever seen.”

The pressure during the holidays could get so intense that Wilke instituted a new ritual as a form of therapeutic release: primal screams. When a logistics executive or his team accomplished something significant, Wilke would allow the person or even the entire group to lean back, close their eyes, and yell into the phone at the tops of their lungs. “It was clearly a great release but the first time it almost blew my phone speaker,” Wilke says.

It was considered a Jeff project, which meant that the product manager met with Bezos every few weeks and received a constant stream of e-mail from the CEO, usually containing extraordinarily detailed recommendations and frequently arriving late at night.

Part of AWS’s immediate attraction to startups was its business model. Bezos viewed Web services as similar to an electric utility that allowed customers to pay for only what they used and to increase or decrease their consumption at any time. “The best analogy that I know is the electric grid,” Bezos said. “You go back in time a hundred years, if you wanted to have electricity, you had to build your own little electric power plant, and a lot of factories did this. As soon as the electric power grid came online, they dumped their electric power generator, and they started buying power off the grid. It just makes more sense. And that’s what is starting to happen with infrastructure computing.”14 Bezos wanted AWS to be a utility with discount rates, even if that meant losing money in the short term.

Bezos predicted they would be good over the long term but said that he didn’t want to repeat “Steve Jobs’s mistake” of pricing the iPhone in a way that was so fantastically profitable that the smartphone market became a magnet for competition. The comment reflected his distinctive business philosophy. Bezos believed that high margins justified rivals’ investments in research and development and attracted more competition, while low margins attracted customers and were more defensible.

“I thought it would be difficult and disruptive and I was skeptical that it was the right use of our resources,” he says. “It turned out that most of the things I predicted would happen actually happened, and we still powered through it because Jeff is not deterred by short-term setbacks.”

“If you are running both businesses you will never go after the digital opportunity with tenacity,” he said.

Christensen wrote that great companies fail not because they want to avoid disruptive change but because they are reluctant to embrace promising new markets that might undermine their traditional businesses and that do not appear to satisfy their short-term growth requirements.

Bezos worked his subordinates to exhaustion, supplied little in the way of corporate creature comforts, and allowed many key personnel to leave without showing any remorse. But he was also capable of deeply gracious and unexpected expressions of appreciation.

“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.”

But Bezos was dissatisfied with that simplistic conclusion and applied his usual analytical sensibility to parse out why some companies were loved and others feared. Rudeness is not cool. Defeating tiny guys is not cool. Close-following is not cool. Young is cool. Risk taking is cool. Winning is cool. Polite is cool. Defeating bigger, unsympathetic guys is cool. Inventing is cool. Explorers are cool. Conquerors are not cool. Obsessing over competitors is not cool. Empowering others is cool. Capturing all the value only for the company is not cool. Leadership is cool. Conviction is cool. Straightforwardness is cool. Pandering to the crowd is not cool. Hypocrisy is not cool. Authenticity is cool. Thinking big is cool. The unexpected is cool. Missionaries are cool. Mercenaries are not cool.

Within Amazon, an official system ranks the severity of its internal emergencies. A Sev-5 is a relatively inconsequential technical problem that can be solved by engineers in the course of the workday. A Sev-1 is an urgent problem that sets off a cavalcade of pagers (Amazon still gives them to many engineers). It requires an immediate response, and the entire situation will later be reviewed by a member of Bezos’s management council, the S Team. Then there’s an entirely separate kind of crisis, what some employees have informally dubbed the Sev-B. That’s when an e-mail containing the notorious question mark arrives directly from Bezos. When Amazon employees receive one of these missives, they drop everything they are doing and fling themselves at whatever issue the CEO is highlighting.

Amazon’s culture is notoriously confrontational, and it begins with Bezos, who believes that truth springs forth when ideas and perspectives are banged against each other, sometimes violently.

Despite the scars and occasional bouts of post-traumatic stress disorder, former Amazon employees often consider their time at the company the most productive of their careers. Their colleagues were smart, the work was challenging, and frequent lateral movement between departments offered constant opportunities for learning. “Everybody knows how hard it is and chooses to be there,” says Faisal Masud, who spent five years in the retail business. “You are learning constantly and the pace of innovation is thrilling. I filed patents; I innovated. There is a fierce competitiveness in everything you do.”

Have Backbone; Disagree and Commit Leaders are obligated to respectfully challenge decisions when they disagree, even when doing so is uncomfortable or exhausting. Leaders have conviction and are tenacious. They do not compromise for the sake of social cohesion. Once a decision is determined, they commit wholly.

New hires are given an industry-average base salary, a signing bonus spread over two years, and a grant of restricted stock units over four years. But unlike other technology companies, such as Google and Microsoft, which spread out their stock grants evenly, Amazon backloads the grant toward the end of the four-year period. Employees typically get 5 percent of their shares at the end of their first year, 15 percent their second year, and then 20 percent every six months over the final two years. Ensuing grants vest over two years and are also backloaded, to ensure that employees keep working hard and are never inclined to coast. Managers in departments of fifty people or more are required to “top-grade” their subordinates along a curve and must dismiss the least effective performers. As a result of this ongoing examination, many Amazon employees live in perpetual fear. A common experience among Amazon workers is a feeling of genuine surprise when one receives a good performance review. Managers are so parsimonious with compliments that underlings tend to spend their days anticipating their termination.

Still, evidence of the company’s constitutional frugality is everywhere. Conference-room tables are a collection of blond-wood door-desks shoved together side by side. The vending machines take credit cards, and food in the company cafeterias is not subsidized. When a new hire joins the company, he gets a backpack with a power adapter, a laptop dock, and some orientation materials. When someone resigns, he is asked to hand in all that equipment—including the backpack.

Frugality 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.

Bezos’s top executives are always modeling Bezos-like behavior. In the fall of 2012, I had dinner with Diego Piacentini at La Spiga, his favorite Italian restaurant in Seattle’s Capitol Hill neighborhood. He graciously insisted on picking up the tab, and after paying, he almost theatrically tore up the receipt. “The company is not paying for this,” he said.

The meetings can be intense and intimidating. “This is what, for employees, is so absolutely scary and impressive about the executive team. They force you to look at the numbers and answer every single question about why specific things happened,” says Dave Cotter, who spent four years at Amazon as a general manager in various divisions. “Because Amazon has so much volume, it’s a way to make very quick decisions and not get into subjective debates. The data doesn’t lie.”

Amazon, it seemed, was a company in constant flux. Yet some things remained the same. On a cold, wet Tuesday morning in early November 2012 at around nine o’clock, a Honda minivan pulled up to Day One North, on the corner of Terry Avenue and Republican Street in Seattle’s South Lake Union neighborhood. Jeff Bezos, sitting in the passenger seat, leaned over to kiss his wife, MacKenzie, good-bye, got out of the car, and walked self-assuredly into the building to start another day. In many ways, Bezos’s life has become as complicated as Lee Scott’s was back in 2000 when Bezos visited the former Walmart CEO and marveled at the security around him. Bezos may not get ferried to work in a black sedan, but Amazon still spends $1.6 million per year on personal security for him and his family, according to the company’s financial reports. His small domestic scene with MacKenzie speaks to at least one normal routine he has managed to preserve amid the unimaginable complexity that comes with Amazon’s towering success. The family can hire drivers; they can buy limousines and private airplanes. Yet they still own a modest Honda, albeit a larger model than the Accord of a decade ago, and MacKenzie often delivers their four children to school and then drives her husband to work. There is nothing modest about their wealth, of course. Bezos’s fortune is now estimated at $25 billion, making him the twelfth-richest person in the United States.

Bezos coordinates closely with the creators of the Clock of the Long Now and oversees its quarterly review sessions, which the clock engineers call Ticks. “He’s hell on the details and in the thick of the design and very strict on where costs are going,” says Stewart Brand, the cochairman of the Long Now Foundation.

In the main conference room of the foundation’s office, a few blocks from Amazon’s headquarters, is a rag doll that they often prop up in an empty chair during meetings. The doll is meant to represent the student they are trying to help—just as Bezos once had a habit of keeping a chair empty in meetings to represent the customer.

“We don’t have a single big advantage,” he once told an old adversary, publisher Tim O’Reilly, back when they were arguing over Amazon protecting its patented 1-Click ordering method from rivals like Barnes & Noble. “So we have to weave a rope of many small advantages.”

When I rediscovered Covey’s e-mail after her death, I was struck by its thoughtfulness and eloquence. Here it is, lightly edited for clarity. Hello Brad, I have been wondering how your writing is coming along. Also, I thought of your project (and Jeff) while beginning the Jobs biography recently. I found myself thinking about what it takes to accomplish things as big as they both did, when a lot of what you are doing is unconventional. It may very well be that the absolute intensity of drive and focus is essential and incompatible with all of the nice management thought about consensus and gentle demeanor. I think about how effective and quick Jeff was and how important it was that he didn’t slow down too much or modify his ideas to make others feel comfortable. I think about the early days and the level of clarity, vision, potential, and values that Jeff brought. And then I look at Amazon today, and reflect on some conversations I have had with him in the intervening years. It is easy to draw a straight line from the vision he had back then to the Amazon of today. There were a few little wobbles and detours in places, but really I don’t know any other company that has created such a juggernaut that is so consistent with the original ideas of the founder. It is almost like he fired an arrow and then followed that arc. Can we really think of any other company approaching Amazon’s size or age that continues to move forward with the boldness, risk-taking, innovation, and the ...

Think Big Thinking small is a self-fulfilling prophecy. Leaders create and communicate a bold direction that inspires results. They think differently and look around corners for ways to serve customers.