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Kindle Notes & Highlights
by
Brad Stone
Read between
July 14 - August 7, 2021
“It has always seemed strange to me…. The things we admire in men—kindness and generosity, openness, honesty, understanding, and feeling—are the concomitants of failure in our system. And those traits we detest—sharpness, greed, acquisitiveness, meanness, egotism, and self-interest—are the traits of success. And while men admire the quality of the first, they love the produce of the second.” —John Steinbeck,
“Every interesting thing I’ve ever done, every important thing I’ve ever done, every beneficial thing I’ve ever done, has been through a cascade of experiments and mistakes and failures,”
Amazon was no longer just an inspiring business story but a referendum on society, and on the responsibilities that large companies have toward their employees, their communities, and the sanctity of our fragile planet.
After failing to match eBay’s success with online auctions, Bezos opened the site to third-party sellers and allowed them to list their wares alongside Amazon’s own products and let customers decide who to buy from. Then he had an epiphany, recognizing the flywheel, or virtuous cycle, that was powering his business. By adding outside vendors and additional selection to Amazon.com, the company drew in new shoppers and earned commissions on those sales, which it could use to lower prices or subsidize faster delivery. That in turn drew in more shoppers and attracted more sellers—and the process
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Employees were instructed to model his fourteen leadership principles, such as customer obsession, high bar for talent, and frugality, and they were trained to consider them daily when making decisions about things like new hires, promotions, and even trivial changes to products.
PowerPoint presentations, with their litany of bullet points and incomplete thoughts, were banned inside the company despite being popular in the rest of corporate America. Instead, all meetings started with almost meditative readings of data-rich, six-page documents, called “narratives.” The act of business building at Amazon was an editorial process, with papers subject to numerous revisions, debate over the meaning of individual words, and meticulous consideration by company leaders, most of all from Bezos himself.
This unusual and decentralized corporate culture hammered into employees that there was no trade-off between speed and accuracy. They were supposed to move fast and never break things.
Only his private jet seemed to kindle his overt enthusiasm, because avoiding public air travel saved him a resource that money couldn’t buy: time.
Amazon’s principle #10, “frugality”: Accomplish more with less. Constraints breed resourcefulness, self-sufficiency, and invention. There are no extra points for growing headcount, budget size, or fixed expense.
If Bezos took one leadership principle most to heart—which would also come to define the next half decade at Amazon—it was principle #8, “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.
Characteristically secretive, Amazon has never revealed the name of the voice artist behind Alexa. I learned her identity after canvasing the professional voice-over community: Boulder-based singer and voice actress Nina Rolle. Her professional website contained links to old radio ads for products such as Mott’s Apple Juice and the Volkswagen Passat—and the warm timbre of Alexa’s voice was unmistakable.
“When I asked Steve ‘Why me?’ a key part of his answer was that while we had a lot in common, he thought we would approach problems from different angles and look at things in different ways,” Puerini said.
Amazon executives like to say and repeat compulsively that they start with the needs of the customer and “work backwards.”
“Every time I was in a room with him, he never asked us, ‘How much is this going to cost me?’ or ‘Can we make money in X amount of time?’ He would look at us and say, ‘I know this is really hard and there is a lot of fatigue that comes with inventing something new. You’re heading in the right direction.’ ”
“If I have to choose between agreement and conflict, I’ll take conflict every time,” Bezos often said. “It always yields a better result.”
We all know that if you swing for the fences, you’re going to strike out a lot, but you’re also going to hit some home runs. The difference between baseball and business, however, is that baseball has a truncated outcome distribution. When you swing, no matter how well you connect with the ball, the most runs you can get is four. In business, every once in a while, when you step up to the plate, you can score 1,000 runs. This long-tailed distribution of returns is why it’s important to be bold.
“Don’t come to me with a plan that assumes I will only make a certain level of investment,” Bezos continued, according to the recollection of two executives who were there. “Tell me how to win. Then tell me how much it costs.” Another Indian executive at the meeting, Amit Deshpande, says the message was: “Go big and take risks. Make it happen. We have your backs.”
To recover that lost traffic, the paper concluded, they’d have to dangle discounts, offer free shipping, and wage a brand advertising campaign to get customers to begin their shopping searches on Amazon instead of Google. Later, Jeff Wilke explained his support for such a move by saying, “We have a reliance to varying degrees on Google in all of our established countries. I always want to ask the question, ‘Is the advertising that we do worth it?’ ”
In the meeting, Bezos was circumspect, Garcia recalled. He seemed to side with Garcia against the plan. But then Wilke convinced him that it was a “two-way door”—Bezos’s phrase for a decision that can always be reversed later, as opposed to “one-way doors,” in which the choice is permanent. He agreed to try it out. Garcia had to “disagree and commit,” Amazon’s lingo for committing to a course of action you oppose.
“I wanted to see if we could get traction in a country launch without using Google,” Wilke later said, “and it turned out, the answer was no…. We weren’t reaching enough customers.”
“The future is going to be the U.S., China, and India,” he declared, according to a colleague who reports hearing him say it multiple times. “For Amazon to be a truly world-class global company, we have to be relevant in two out of the three markets.”
The first companies to embrace AWS became its beta testers and evangelists. Silicon Valley startups like Uber, Airbnb, Dropbox, and the photo-sharing site SmugMug ran their operations on AWS and could quickly order up more servers as their businesses grew at unprecedented rates. It was one of the greatest enablers of the post-recession technology boom—arguably more important than even the iPhone, though outsiders understood very little about it.
Each week the wheel was spun (until 2014 when there were too many services and software mimicked the function of the wheel), with the goal being, Jassy said, to make sure managers were “on top of the key metrics of their service all week long, because they know there’s a chance they may have to speak to it in detail.” Getting selected could be a career-defining moment at AWS. Managers could boost their prospects with a comprehensive and confident presentation. But if they employed ambiguous language, erred with their data, or conveyed even the whiff of bullshit, then Charlie Bell swooped in,
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As Google and Microsoft awoke to the potential of cloud computing and began investing heavily in their competing initiatives, he urged Jassy to think about ways to protect Amazon’s advantages. “You’ve built this lovely castle, and now all the barbarians are going to come riding on horses to attack the castle,” Bezos said, according to a former AWS exec who reports hearing the comment. “You need a moat; what is the moat around the castle?”
“Working at Amazon is like being in an Olympic training camp,” Niekerk told me a few years later. “There are very high standards and a push to get everything done, all the time.”
Bezos suspected that managers couldn’t be counted on to voluntarily embrace the hassle of additional hiring and feared that a tolerance for mediocre performers would spread through the company and erode the “Day 1 mentality.” Stack ranking would force managers to upgrade the talent on their teams. “People thought it was a mean-spirited process and to a certain extent it was,” Niekerk said. “But in the big picture, it kept Amazon fresh and innovative.”
Bezos eschewed any financial hooks, like steadily increasing stock grants, that might keep people at the company even if they were no longer engaged in their work.
Be engaged in your work and have big impact
Bezos understood that in some quarters, all this might make Amazon an unpopular place to work. But he also felt that the perks factored into those high-profile media surveys of workplace desirability—like lavish compensation, unlimited vacation time, and free meals and massages—had little to do with the passion and purpose employees brought to their jobs. “He once told me, ‘If we ever appear in the “100 best places to work in America,” you’ve screwed this place up,’ ” Niekerk said.
In this revamped performance review system, peers and managers were asked to write sixty words describing an employee’s “superpower,” and another sixty to describe a “growth idea” for the year ahead. “It was all about looking forward and being motivational,” Galetti said.
“The most important thing Jeff has brought is a culture of experimentation,” Prakash said. “None of us feel that if we spend money and screw up some big project that we’re going to have to face an auditing committee. We are not afraid to fail.”
To Carr and other execs, the idea was perplexing. Prime, originally $79 a year, guaranteed Amazon customers that their purchases would show up in two days without an extra shipping charge. Bezos now wanted to define Prime as something different and less transactional: an all-access entry pass to a library of digital content. “I didn’t get it at first,” Bill Carr said. “But what I had learned at that point of my career is that when Jeff comes up with a novel idea, you listen carefully, ask a lot of questions to get clarification of how to think about it, and then come back to him later with
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Bezos boiled it down: “Look, I know what it takes to make a great show. This should not be that hard. All of these iconic shows have basic things in common.” And off the top of his head, displaying his characteristic ability to shift disciplines multiple times a day, then reduce complex issues down to their most essential essence, he started to reel off the ingredients of epic storytelling: A heroic protagonist who experiences growth and change A compelling antagonist Wish fulfillment (e.g., the protagonist has hidden abilities, such as superpowers or magic) Moral choices Diverse worldbuilding
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“Averages are bad measures. I want to see actuals, highs, lows and why—not an average. An average is just lazy.”
Jeff always said that when you focus on the business inputs, then the outputs such as revenue and income will take care of themselves.”
“Teaching 250 seventh graders who have never played an instrument before prepares you for a lot of challenges in life,” he later told me.
Bezos also solemnly declared that one of the biggest threats to the company was a disgruntled and entrenched hourly workforce—like the unionized workers that impaired U.S. automakers with strikes and onerous contract negotiations. (Amazon later denied that Bezos said this.) He encouraged Niekerk and Onetto to focus on ensuring that FC workers who weren’t advancing within Amazon stayed for a maximum of three years. Amazon then made several changes in its warehouses to ward off this danger. Where previously workers had been eligible for small raises in their hourly wage every six months for five
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He possessed a crucial skill at Amazon that was about to prove exceedingly useful: he could take Bezos’s ambitious visions, convert them into something approximating reality, and then grow them into systems that didn’t blow apart at Amazon’s tremendous size.
“I’m okay with you making sophisticated mistakes, but this is just us being stupid,” Bezos said in one review of Amazon Logistics, according to an operations exec.
“I’m a simplifier,” Clark said, when I asked about the set of skills that had enabled him to progress from the Campbellsville FC, all the way to the upper echelons of the S-team. “I can take complicated stuff and figure out how to boil it down into what you need to do to actually make it big.”
Meetings with Bezos could still go sideways, resetting projects and depleting employee morale. Even the most inconsequential of utterances from the sagacious chief executive could instigate a flurry of wheel-spinning and white paper–writing inside the company. Many executives were relieved to be meeting with Bezos less often and wondered openly if his interest in Amazon was waning.
Bezos had tugged on a string, and the entire quilt started to unravel. Now he kept pulling. In the multi-hour discussion that followed, he argued that the growth of advertising was concealing stagnation in online retail.
Bezos ran through headcount requests line by line and demanded justifications for them. He skeptically questioned anything that resembled gratuitous expansion.
He talked about two hypothetical e-commerce websites: one with ads that subsidized low prices and another that was ad-free but had higher prices. Customers, he said, would always flock to the website with better deals.
While Google knew what people searched for and Facebook knew what they liked, Amazon had one of the most substantive data points of all: what they actually bought.
Amazon never quite fit into the clubby confines of New York City advertising. Though the age of Mad Men had long passed, the industry still revolved around personal relationships and expensed lunches. Ad execs were accustomed to taking their clients to premier sporting events and traveling to glamorous industry conferences, like the annual Cannes Lions festival on the French Riviera. Amazon, frugal to the bone, refused to do any of that. Even employees taking international flights were relegated to coach class unless they personally secured an upgrade. “You would get flagged if you paid over a
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Amazon moved hesitantly to grow its New York–based ad sales team. It didn’t throw people at problems, it threw brainpower, went the common internal refrain.
In one debate, Doug Herrington, chief of the domestic retail division, used the parable of the scorpion and the frog to frame the issue. In the story, the scorpion asks the frog if it can climb onto its back for passage across a river, then can’t help but sting the frog along the way, dooming both. His counterparts in advertising were the scorpion—they weren’t evil, per se, but it was simply in their nature to pervert the more egalitarian playing field of the authentic search results.
At the same time as he issued the directive, he also ordered S-team members to watch a nineteen-minute video on YouTube, produced by Bain & Company, called “Founder’s Mentality.” It was all about eliminating bureaucracy, maintaining the voice of customers in everyday decision-making, and preserving the mindset and motivation of an insurgent startup.
“Raise your hand if you think you’ve had a harder week than I’ve had,” he said, momentarily cutting through the tension by leading the group in a hearty laugh. Then his colleagues settled back into an expectant silence. Bezos was a master compartmentalizer; his ability to keep the intricate threads of his personal and professional lives separate was unrivaled. But now those threads had gotten tangled up. He needed to address the elephant in the room. “Just to set the record straight,” he started slowly, according to two people who heard the comments, “I did have a relationship with this woman.
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In April, they had dinner at the Hearth & Hound, a hip West Hollywood restaurant,
