Speaker 1: Welcome, Welcome, Welcome back to the Bob West That's podcast.
Speaker 1: I guess today Brad Still he works for Bomberg from
Speaker 1: He is the Amazon it with a definitive book on Amazon,
Speaker 1: The Everything Store, and he's got a brand new bestseller
Speaker 1: Amazon Unbound. Brad, glad to have you here, Bob, great
Speaker 1: to see you, Thanks for having me. Okay, you're talking
Speaker 1: the book. How you got access? How did you get
Speaker 1: all this access? Because when you write negative things about
Speaker 1: the Amazon, well, look, I mean I I don't view
Speaker 1: myself as a as a critic of the company. I'm
Speaker 1: almost a historian. I'm trying to tell the story and
Speaker 1: that's both the accomplishments and the real reasons to scrutinize
Speaker 1: the company. But um, just to back up, you know,
Speaker 1: I wrote a previous book about the company, The Everything Store,
Speaker 1: in two thousand thirteen. It was the origin story. Jeff
Speaker 1: Bezos didn't particularly like it. You might recall some some
Speaker 1: negative reviews from his family members and close colleagues. But yes, right, um,
Speaker 1: but but you know, over the years, it's it has
Speaker 1: become I think the definitive history of the company. And
Speaker 1: when I reconsidered, you know, whether there was more story
Speaker 1: to tell. In two thousand and seventeen, I approached the company.
Speaker 1: I said that I felt like, you know, the the
Speaker 1: last decade had been, if anything, more interesting than the
Speaker 1: than the original, uh you know, fifteen years, and that
Speaker 1: I wanted to write another installment. And I also think
Speaker 1: Bob that Amazon change it was. It had been a
Speaker 1: very secretive, cloistered company up there in Seattle, and to
Speaker 1: some in some in many respects it's still very secretive.
Speaker 1: But I think there was an understanding that if they
Speaker 1: didn't tell their story, if they didn't allow journals to
Speaker 1: tell their story, then that wasn't going to go very
Speaker 1: well for them. And so you know, they did allow
Speaker 1: me to talk to fifteen or so senior executives. Bezos
Speaker 1: so didn't talk to me. There there are some still
Speaker 1: some is there perhaps from the first book, but you know,
Speaker 1: I got I got a lot of access, and then
Speaker 1: the foundation of the new book. It's really just the
Speaker 1: volumes of interviews with employees who have come and gone
Speaker 1: or still they're talking um, you know, on background, sharing
Speaker 1: what they what they saw, what they think of the
Speaker 1: company there, and their experiences, the things that they're proud
Speaker 1: of and the things that they, you know, wish the
Speaker 1: company did it differently, and that's really the foundation of
Speaker 1: both books. Now that the book is out, what has
Speaker 1: the reaction been from inside Seattle, Amazon, HQ, etcetera. Well,
Speaker 1: there are no one star reviews, so I suppose that's nice.
Speaker 1: Um there There really has been no official reaction. I
Speaker 1: will say informally, I've heard from employees and executives of
Speaker 1: Amazon who who feel like that, you know that the
Speaker 1: story that I got the story right, that it accurately
Speaker 1: captures the the innovation that went into products like Alexa,
Speaker 1: the determination of Bezos, but also the way in which
Speaker 1: the company has built systems such as the global marketplace
Speaker 1: and the transportation network, maybe without a lot of regard
Speaker 1: for what some of the consequences might be. And then
Speaker 1: if when we can talk about that, but then if
Speaker 1: they've had to go back and kind of repair some
Speaker 1: of those and the way in which the company has
Speaker 1: kind of graduated into a whole new realm of scrutiny
Speaker 1: and skepticism, and Bezos in particular, I think has come
Speaker 1: under a lot of that criticism. So you know, I
Speaker 1: probably not hearing the bad stuff, but for what I
Speaker 1: have heard from from employees and executives has been favorable.
Speaker 1: Well usually always here from an employee that got something wrong,
Speaker 1: whether you did or not, you know that I have gotten.
Speaker 1: I've gotten a couple of those I should. So what
Speaker 1: we know is that Bezos will be stepping down and
Speaker 1: the new person coming in, JOSSI made his bones in
Speaker 1: a ws To what degree, aid, do you think this
Speaker 1: will change the company and be to what degree do
Speaker 1: you project that Bezos will still be involved? So the
Speaker 1: change every date they've announced is July five, and that
Speaker 1: is when Jeff Bezos will no longer be CEO and
Speaker 1: Andy Jesse will be But in in many respects, Bezos
Speaker 1: has been pulling away from Amazon for many years. And
Speaker 1: that's part of the story that I'm telling in this book.
Speaker 1: He buys the Washington Post, he's fighting with the Trump administration,
Speaker 1: he has his tangle with the National Enquirer, and of
Speaker 1: course the formation of philanthropies, and he's allowing Andy Jasse
Speaker 1: and the executives on the retail side to run these
Speaker 1: massive Amazon businesses with a lot of autonomy and and
Speaker 1: so that's been a gradual process, and I think it
Speaker 1: will continue to be a gradual process. Bezos his executive chairman.
Speaker 1: He says he's going to continue to work on new
Speaker 1: projects at Amazon. He said in his last investor letter
Speaker 1: that he's going to be rethinking Amazon's relationship with its
Speaker 1: blue collar employees and trying to make that a kinder relationship.
Speaker 1: And so I suspect that not a lot actually changes. Uh.
Speaker 1: Andy Jasse will certainly be the figurehead he'll be, I think,
Speaker 1: maybe to the consternation of regulators and lawmakers, when they
Speaker 1: ask for Jeff Bezos, they will get Andy Jasse, and
Speaker 1: much the same way Google now gets presents Sundar Pachai
Speaker 1: and not the founders Larry Pager, Sergey Brand. But I
Speaker 1: think Bezos will continue to be involved, and I think
Speaker 1: but I think the process will continue gradually, and in
Speaker 1: a couple of years we might see him drop the
Speaker 1: executive part of that title executive chairman, and then really
Speaker 1: move on to other things. But I don't. I don't
Speaker 1: think much actually changes at Amazon other than the very
Speaker 1: public and visible figure of Andy Jasse taking over CEO.
Speaker 1: To what do you degreed? You believe these changes were
Speaker 1: engendered by his relationship with his new girlfriend, Lawrence Sanchez.
Speaker 1: In terms of the his his on a lot of levels,
Speaker 1: but here talking about stepping down. I don't think so. Again,
Speaker 1: part of the story in this book is is Bezos
Speaker 1: stepping away from the big business. This is an Amazon,
Speaker 1: and that process was under way before the relationship started.
Speaker 1: So I don't know if it was a precipitating factor
Speaker 1: in the timing. I will say in the book I
Speaker 1: revealed that Bezos is building this massive super yacht to
Speaker 1: sail the high seas on my suspicion because he was
Speaker 1: never a yacht guy. That that is the the you know,
Speaker 1: part of the influence of his partner, Um, and so
Speaker 1: his evolution into a famous figure someone who's turning up
Speaker 1: at courtside at Wimbledon or partying on the yacht of
Speaker 1: of Barry Diller, David Geffen, that that is in part
Speaker 1: the influence of of Laurence Sanchez. He is he has
Speaker 1: been taking helicopter flying lessons. There's a lot of things
Speaker 1: I think that Um, maybe she has influenced him, But
Speaker 1: in terms of the CEO role, I think this was
Speaker 1: probably all always in the in the long term plans,
Speaker 1: and Andy Jasse has been in some ways as close
Speaker 1: to a disciple as you can get. He was basis
Speaker 1: is t a or shadow basically as chief of staff
Speaker 1: now twenty years ago, and he has been in the
Speaker 1: aw s business. But he's also been a member of
Speaker 1: the S team Andy Jasse, which means he's weighing in
Speaker 1: on every big decision that has been made at the company,
Speaker 1: from acquisitions, the acquisition of Whole Foods to the decision
Speaker 1: on where to put HQ two. So it's not like
Speaker 1: Jesse has really been a stranger to this bigger part
Speaker 1: of Amazon, the retail side. He's he has been quite
Speaker 1: involved in it. Okay, let's just staying with this, Lauren
Speaker 1: Sanchez changes you know that blew up at Piccaba tabloid issue.
Speaker 1: You certainly cover that in the book. But the divorce
Speaker 1: he that Jeff had with Mackenzie was relatively smooth and
Speaker 1: she's even gotten remarried ding Bezos has not, whereas Gates,
Speaker 1: the whole situation blew up and is continuing in the news.
Speaker 1: Do you feel that from the company's perspective, bezos perspective,
Speaker 1: the business and world perspective, and those could be multiple
Speaker 1: viewpoints that this is now in the rear view mirror
Speaker 1: or people still judging him for this, and there might
Speaker 1: be another few shoes to drop. I think folks have
Speaker 1: pretty much moved on. And it might have been it's
Speaker 1: It might be a symbol of his absolute sort of
Speaker 1: mastery of the levers of public relations in that he
Speaker 1: he so swiftly put it behind him and vanquished his rivals.
Speaker 1: If you remember about the editor of the National Inquirer
Speaker 1: who published that story, um was fired afterwards. You know,
Speaker 1: Bezos wrapped himself up in the mantle of the Washington Post,
Speaker 1: used the Saudi enmity toward the Washington Post and towards
Speaker 1: his ownership of it as as kind of a weapon,
Speaker 1: and imputed political motives to the Inquirer. And as I
Speaker 1: show in the book, there really weren't any. The Inquirer
Speaker 1: was was writing about writing a story that Lawrence Sanchez's
Speaker 1: brother had had given him and trying to embarrass the
Speaker 1: wealthiest person in the world. But Bezos really turned the
Speaker 1: tables on them. He posted that famous Medium article. Uh,
Speaker 1: he accused them of extortion, and the Southern District of
Speaker 1: New York investigated it. The FBI investigated it and and
Speaker 1: moved on. Didn't didn't really find anything. So but are
Speaker 1: there other shoes to drop? I mean, I wanna approach
Speaker 1: this topic with a little bit of humility. It is
Speaker 1: such a crazy topic. The cast of characters you can't
Speaker 1: even fathom is so bizarre. It's a hall of mirrors.
Speaker 1: I concluded, based on the information that's in the court filings,
Speaker 1: based on people that I talked to, the testimony of
Speaker 1: the reporters and editors at the Inquirer, that it really
Speaker 1: was Michael Sanchez delivering them the text, messages and some
Speaker 1: images in the fall of two thousand and eighteen, and
Speaker 1: that's how they got the story. But if you're asking,
Speaker 1: could could we find out something unfathomable about the Saudi
Speaker 1: government's hack of his cell phone, tipping off the paper,
Speaker 1: or some Trump World connection that we we can't possibly guess,
Speaker 1: I would say it's improbable, but I want to leave
Speaker 1: open the possible ality for it, and I hope, hopefully
Speaker 1: do a little bit in the book, because this story
Speaker 1: has taken so many twists and turns that you don't know.
Speaker 1: But I would say if something else emerged, it would
Speaker 1: probably contradict the information and the timeline that we already
Speaker 1: have established in the court files, where the editors and
Speaker 1: reporters of the National Enquirers say, in September two, eighteen,
Speaker 1: Michael Sanchez approached them with this tip and they knew
Speaker 1: nothing about it beforehand, and in fact afterwards have to
Speaker 1: had to kind of read into the tea leaves because
Speaker 1: he wasn't being explicit. So this idea that perhaps they
Speaker 1: were tipped off severally about the Saudi government would be surprising,
Speaker 1: It would It would contradict a lot of the established evidence.
Speaker 1: Let's go back to Bezos and him splitting from the company.
Speaker 1: In the book, he's really the driving force for innovation.
Speaker 1: He is the one who's pushing the envelope with the
Speaker 1: moon shots. He's actually in space. But I'm using that
Speaker 1: in a business sense. Do you believe he will continue
Speaker 1: to play that role? And to what degree is the
Speaker 1: culture of the company, So if he's not doing it,
Speaker 1: someone else might. It's a great question. And in the
Speaker 1: book I am telling the origin stories of products like
Speaker 1: Alexa and and the Ghost Store, of those cashier less supermarkets,
Speaker 1: and they all start they typically start with a Bezos idea.
Speaker 1: And in fact, if the Alexa project starts with an
Speaker 1: email from Bezos to his deputies, we should build a
Speaker 1: twenty dollar computer whose brains are in the cloud that's
Speaker 1: completely controllable by your voice. And I have the first
Speaker 1: Bezos whiteboard drawing of the product that becomes the the
Speaker 1: Echo or an Alexa. And so when you peel back
Speaker 1: the layers to a lot of these projects inside Amazon,
Speaker 1: not only do you often find a Bezos idea, but
Speaker 1: you find that it was his sponsorship, his maniacal attention,
Speaker 1: his willingness to invest uneconomically in the seeds of an
Speaker 1: idea and then to and then to follow through spending money,
Speaker 1: losing money, risking failure. That is kind of key to
Speaker 1: the inventiveness. And am on and I think you put
Speaker 1: your finger on on something interesting and real. They would say,
Speaker 1: They would preach that Amazon has a culture of invention,
Speaker 1: that it's decentralized, that employees can move quickly on their own.
Speaker 1: It's the land of a thousand CEOs. It's all by design.
Speaker 1: But I just really wonder if in terms of at
Speaker 1: least minting new product categories, once Bezos really does step away,
Speaker 1: and again that might not be for a couple of
Speaker 1: years he's executive chairman, he'll be involved, but once he
Speaker 1: really does step away, well, Amazon have the same ability
Speaker 1: to strike fear and employees to go pursue big things
Speaker 1: and then obviously competitors when they enter new markets. Well, historically,
Speaker 1: you know, individuals make a difference. They can't be quantified.
Speaker 1: You can get a manager who's an NBA, but someone
Speaker 1: who's an entrepreneur that tends to be a unique character,
Speaker 1: but staying with the company for a second. For years,
Speaker 1: their financials were not good. We're going back almost twenties.
Speaker 1: Does he the worst numbers? To what degree is the
Speaker 1: company playing to the street at all? Back when when
Speaker 1: Bezos wrote that first letter to shareholders, he he kind
Speaker 1: of called his shot. He said, We're not going to
Speaker 1: really pay attention to short term metrics. We're not going
Speaker 1: to focus on profitability. We're gonna run the company for
Speaker 1: market share and cash flow. And that promise and the
Speaker 1: patient investors that enlisted got them through many, many tough years.
Speaker 1: And in fact, as I write in the book, even
Speaker 1: in two thousand fifteen, Amazon was either losing money or
Speaker 1: not very profitable, and Steve Ballmer went on the Charlie
Speaker 1: Rose Show and said, it's not a real company, Charlie,
Speaker 1: You've got to make money. That's my Steve Balmber impression.
Speaker 1: Bob Um maybe needs some work, and it was because
Speaker 1: not that Amazon was unprofitable, it was almost hiding its profits.
Speaker 1: Bezos was taking the winnings from the retail business, the
Speaker 1: winnings from AWS and funneling them in Alexa and China
Speaker 1: and India and Prime Video, and that all paid remarkable dividends.
Speaker 1: And I think recently it's an extraordinarily profitable company. The
Speaker 1: stock prices zoomed up. It's worth one point six trillion dollars.
Speaker 1: And no, I don't I don't, but I don't think
Speaker 1: the operating posture of the company has changed. I don't
Speaker 1: think they particularly pay attention to two quarterly numbers. I mean,
Speaker 1: they've got a pretty professional CFO and finance staff that
Speaker 1: seems to be good at making projections and then exceeding them. Um.
Speaker 1: But look, Amazon doesn't provide a dividend, it doesn't buy
Speaker 1: back its own stock. Right, It's not doing the things
Speaker 1: that would please more short term investors. It's it really is.
Speaker 1: It continues to take its its profits and build more
Speaker 1: fulfillment centers and buy more Prime Video. It's buying the
Speaker 1: mg MGM and the catalog there, build more data centers,
Speaker 1: and basically Amazon's winnings go to fund more Amazon, so
Speaker 1: it's unlike a lot of other companies. It's still incredibly
Speaker 1: optimistic about the future, and clearly it has not achieved
Speaker 1: whatever maturity or end goal that it has for being ubiquitous.
Speaker 1: And one thing you go deeply into in the book
Speaker 1: is the organizational structure. You know, Bezos basically has the
Speaker 1: guy who shadows him. Sounds like a low position, but
Speaker 1: it's really a privileged position. Their committees you move up.
Speaker 1: For those who were uninitiated, can you please describe the structure? Okay, Well,
Speaker 1: so the technical title is the technical assistant, and Bezos
Speaker 1: had one. He actually hasn't for a couple of years,
Speaker 1: which might have been a sign that he was ready
Speaker 1: for the CEO transition. But the others, the other members
Speaker 1: of the leadership team, the s team, they all have
Speaker 1: their t A S and the s TEA. So everybody there,
Speaker 1: I didn't know everybody there has a t A too.
Speaker 1: How far down the totem pole does that go or
Speaker 1: is that it? I? I believe it's just the the
Speaker 1: the the s VP is the senior vice presidents, and
Speaker 1: maybe not even all of them. But it's my understanding
Speaker 1: that the the the upper echelon of the company. They
Speaker 1: all have tas. So for example, Beth Galletti, the senior
Speaker 1: vice president of HR, she has a technical assistant, Andy
Speaker 1: Jasey as the head of a w S, head of
Speaker 1: t A, and of course we'll have one of CEO.
Speaker 1: So that's interesting. It's a way in which I think
Speaker 1: Amazon training. It's almost a leadership and informer leadership training
Speaker 1: program where chosen executives just get bathed in the you know,
Speaker 1: the mechanics of the senior leaders and the leadership committee
Speaker 1: at Amazon. So it's a it's an interesting training program.
Speaker 1: But you know, think of Amazon, I guess as a
Speaker 1: little bit of a conglomerate. So many disparate businesses right,
Speaker 1: so much surface area to this company's it almost makes
Speaker 1: it hard to categorize. But a senior vice president, you know,
Speaker 1: tends to kind of oversee one or several of these
Speaker 1: business units and and they run pretty autonomously. Again the
Speaker 1: Land of a thousand CEOs, they call them single threaded leaders,
Speaker 1: a leader of the team. It's like a little CEO
Speaker 1: of his own group. And they've got a lot of autonomy.
Speaker 1: But they report, they push up reports, it up through
Speaker 1: the organization and those have metrics and operating plans, um
Speaker 1: competitive analysis, and all those reports filter up to the
Speaker 1: S team. Oh and by the way, Bob, you're probably
Speaker 1: familiar that all meetings, all deliberations at Amazon start with
Speaker 1: the six page documents. Right. It's a very right. It's
Speaker 1: a writing culture and editorial culture, and so the documents
Speaker 1: flow up and then the senior leadership team obviously they
Speaker 1: make the big strategic decisions, but they also push goals
Speaker 1: they're called S team goals down through the organization. So
Speaker 1: a small team in Amazon Fresh, the grocery delivery service,
Speaker 1: and this is an example from my book, might get
Speaker 1: a goal to go and produce a eclectic product there
Speaker 1: there I have an example in the book called the
Speaker 1: single cow burger. And in fact, a team gets this
Speaker 1: directive to go produce a single cow burger, or a
Speaker 1: burger made from the meat of just one cow instead
Speaker 1: of a hundred uh, and to do it, you know,
Speaker 1: by by the next quarterly review. And that's how it works.
Speaker 1: And there are hundreds of S team goals and they
Speaker 1: pushed down and then the teams proliferate and and they
Speaker 1: report their progress upwards. Now we've seen a lot of history, unfortunately,
Speaker 1: the last couple of decades with these multi furious companies
Speaker 1: having these goals, and then the people at the bottom
Speaker 1: or in the middle are so busy getting the goals
Speaker 1: that they throw their morals right out the window. Wells
Speaker 1: Fargo being the best case, because rather than you know,
Speaker 1: say wait a second, this is wrong, it's unachievable, they say,
Speaker 1: if I want to move up the company, I want
Speaker 1: to get my bonus. So how does that you know?
Speaker 1: Is that a factor you think at Amazon? Absolutely? And
Speaker 1: in fact that the history of the company is replete
Speaker 1: with low level executives in fear for their jobs, desperately
Speaker 1: trying to meet their goals, moving fast and getting getting
Speaker 1: to some trouble um. There's a great example in the
Speaker 1: book with the marketplace segment in the in the well,
Speaker 1: actually it's it's in the consumable segments, so the fresh
Speaker 1: groceries and other other products that you might find at
Speaker 1: a drug store or supermarket. And and they're running the
Speaker 1: private label division, so it's it's their job to go
Speaker 1: create Amazon Basics batteries or Amazon Essential diapers or Solomo
Speaker 1: potato chips, and essentially they start peaking at the data
Speaker 1: from the third party sellers to see independent sellers on Amazon,
Speaker 1: what's doing well for them? Maybe Amazon should copy it.
Speaker 1: And of course that is now put Amazon at the
Speaker 1: center of all sorts of questioning in front of the
Speaker 1: US Congress and the and the EU and and it's
Speaker 1: arguably violated some antitrust laws. Well we'll see it. Amazon
Speaker 1: has said, well, there's a policy against that. The people
Speaker 1: shouldn't have been managers, shouldn't have been doing it. But
Speaker 1: I think to your point, it's a decentralized culture with
Speaker 1: big goals and a culture of fear. And you know
Speaker 1: when when when you create that environment, bad things can happen.
Speaker 1: For those who have worked for Amazon, I'm not talking
Speaker 1: about those in the warehouse, but those working in white
Speaker 1: collar positions, they portray a terrible culture where they're working
Speaker 1: around the clock. There's fear, there's expendable it's the opposite
Speaker 1: of some of these other companies that you know, put
Speaker 1: them in a blanket and make them feel warm. Is
Speaker 1: that your experience? One point two million people work for Amazon.
Speaker 1: There there. I think it's just honest to say that
Speaker 1: there is a wide variety of of experience, and there
Speaker 1: are people that will sing the harmony of Amazon, and
Speaker 1: you know, drink the kool aid and loved it there
Speaker 1: or there for years, and and then their fair number
Speaker 1: of dissidents, and you hear different things, you know, the
Speaker 1: executive environment in the white collar offices, and then the warehouses.
Speaker 1: You want to talk about the warehouses predominantly not yet,
Speaker 1: let's just stay with white collar. We'll go back to
Speaker 1: the house. Well, look, I mean there are there. There
Speaker 1: are many people that have left there with a lot
Speaker 1: of pride. And then there are people and I profile
Speaker 1: a couple of them in the book who felt like
Speaker 1: it was a cruel culture, that they gave more than
Speaker 1: they got, that they didn't particularly end up admiring bezos
Speaker 1: or the or the leadership team there. I I profiled
Speaker 1: the woman in this book who who ran the first
Speaker 1: Prime Day in two thousand fifteen, and she came to
Speaker 1: sort of think that, like here she was sort of
Speaker 1: engaged in selling people, you know, insta pots and other
Speaker 1: appliances that perhaps they didn't need, in a kind of
Speaker 1: frenzy of discounting. And the other thing that she really
Speaker 1: took away from the experience was she had gone to
Speaker 1: herculean lynx to get this thing out the door in
Speaker 1: two thousand fifteen, the first Prime Day, and you know, afterwards,
Speaker 1: they presented one of these six page documents that kind
Speaker 1: of highlighted everything they did wrong. And so it wasn't
Speaker 1: a culture of celebrating success. It was this this just
Speaker 1: really driven culture of how do we get better, how
Speaker 1: do we fix the errors that we may And she
Speaker 1: found that thankless, and she she found the culture somewhat difficult.
Speaker 1: And the big epiphany for her was when she went home,
Speaker 1: I think it was a couple of years after the
Speaker 1: first Prime Day. She had taken on a number of
Speaker 1: different roles, and she said that she found herself using
Speaker 1: Amazon's leadership principles on her mother. They're like the crew
Speaker 1: of the sort of you know, arduous ways that they
Speaker 1: talked to each other and get to decisions. And that's
Speaker 1: when she realized that the culture had changed her a
Speaker 1: little bit in the way she didn't like. So, you know,
Speaker 1: all that said, Amazon remains high on the list of
Speaker 1: of admired employees or places that you know, when LinkedIn
Speaker 1: does a survey of places people want to work or
Speaker 1: enjoy working, Amazon, perhaps the Jeff Bezos consternation now appears
Speaker 1: high on those lists. He never wanted to create a
Speaker 1: country club. He told human resource employees that it should
Speaker 1: be challenging, it should be difficult. He wants people to
Speaker 1: do their best work and then move on. I think
Speaker 1: that's accounts for some of the challenges, the cruelty and
Speaker 1: Amazon culture. It's also been effective and it attracts a
Speaker 1: certain kind of person. So I think it's a little
Speaker 1: bit of a it's it's hard to characterize easily or simplistically.
Speaker 1: I think it's it's it's complex and it's tough, and
Speaker 1: that's by design, and that attracts some people, and then
Speaker 1: after a couple of years or even after the first visit,
Speaker 1: it repels them. Okay, how many people are on the
Speaker 1: S team? You're you're challenging you now because they keep
Speaker 1: adding to it. But I want to say it's about
Speaker 1: twenty four people right now, and it's as big as
Speaker 1: as it's ever been. And that's in part because Amazon
Speaker 1: has continued to expand and they've got members there who
Speaker 1: represent Amazon fashion and technical engineers on on the on
Speaker 1: aws who are members of of the S team. Um,
Speaker 1: there's a Mike Hopkins at Prime Videos on the S
Speaker 1: team now. But in part it's also because This was
Speaker 1: a lily white and male crew for a very long time,
Speaker 1: and quite rightfully, I think the employees at Amazon and
Speaker 1: some of the shareholders and some of the outside observers,
Speaker 1: you know, made the point that Amazon needs to modernize,
Speaker 1: and as with many things, Bezos kind of got the message,
Speaker 1: but got it a little late, and he started to,
Speaker 1: you know, really add to the diversity of that leadership team. Now,
Speaker 1: let's talk about the documents. Six pages. That's not sure. Okay,
Speaker 1: someone wrote a lot of papers in college and as
Speaker 1: a writer. Now, to what degree are these Let's say
Speaker 1: I had to do one. To what degree do I
Speaker 1: have to write something on an a level both in
Speaker 1: content and style? And you know what's the require? How
Speaker 1: much time to people put into this? And if you
Speaker 1: have a public company, it's not a direct analogy. You know,
Speaker 1: they're they're managing the street. It's a huge job. In
Speaker 1: addition to doing the regular job, is producing these six
Speaker 1: page reports. Similar you've put your finger on why I
Speaker 1: think the culture can be so enervating too too many people.
Speaker 1: The documents take a lot of time. That's often work
Speaker 1: that moves into the night or the weekends. They're also
Speaker 1: really collaborative it's a collaborative process. It's not like an
Speaker 1: employee writes one and then they go and are reviewed
Speaker 1: in a leadership meeting. These are deliberated over there, edited,
Speaker 1: they're revised ad nauseam. I described that the process of
Speaker 1: revisions during Alexa, with even Bezos weighing in and a
Speaker 1: kind of perpetual tug of war in these documents about
Speaker 1: what Alexa would do. So in a way, it's not
Speaker 1: just an end product that's presented at a meeting, but
Speaker 1: it's very much part of the deliberative process. Right figuring
Speaker 1: out what a new product or service is going to
Speaker 1: do is in part they hash it out over the
Speaker 1: writing of these documents, and these are edited and revised
Speaker 1: and aggregated throughout the organization as they pass up, particularly
Speaker 1: during the the operating reviews, the bi annual review sessions
Speaker 1: OP one and OP two during the year, and probably
Speaker 1: by the time something is presented to the senior leadership team,
Speaker 1: it's destroyed at least you know, one team's private life
Speaker 1: for the period of many weeks and been revised a
Speaker 1: million times. So it's it's core to how Amazon works.
Speaker 1: It's peculiar. I know a lot of executives who have
Speaker 1: left and tried to bring it to other companies with
Speaker 1: mixed success. And I don't know. I think it's the
Speaker 1: way that Bezos has kind of trained himself and his
Speaker 1: leadership team to process information, but I'm not so sure.
Speaker 1: It's kind of how naturally the rest of us might
Speaker 1: might do it. Now. You also portray in the book
Speaker 1: that Bezos has a jobs and personality to a degree
Speaker 1: that he will make a snap judgment, say negative things,
Speaker 1: not worry about the reaction. On a personal level, that
Speaker 1: he's evolved a little bit. What's going on there? So
Speaker 1: in the Everything Store, I think, I think, I really write,
Speaker 1: I think I'm capturing Bezos one point oh a little bit.
Speaker 1: And and that is in large part the person you
Speaker 1: describe just withering feedback to employees. Did I take my
Speaker 1: stupid pills today? A or um? Is this the A team?
Speaker 1: Where did the A team go? Just? You know, he
Speaker 1: had a he had a way, particularly when he got impatient,
Speaker 1: And I flashed back to that in Amazon and Bound.
Speaker 1: I have an episode that I believe happens around two
Speaker 1: thou seven where he's reviewing a document that has a
Speaker 1: mathematical error in it and he he he identifies the
Speaker 1: air and he says, if I can't trust this number,
Speaker 1: I don't know why I can trust anything in this document.
Speaker 1: And he rips it in half and throws it down
Speaker 1: the conference from table and walks out. So there's Bezos
Speaker 1: one oh. My sense is that either he got leadership
Speaker 1: assistance or else just realized that he really couldn't do
Speaker 1: that anymore, that with his stature inside the company, with
Speaker 1: his public profile, perhaps with modernizing norms around around management,
Speaker 1: that that wasn't really going to be tolerated. And I
Speaker 1: think Bezos two point oh was equal measures inspiring and intimidating.
Speaker 1: Certainly the end result of motivating employees was the same.
Speaker 1: He still have a couple episodes in the book will
Speaker 1: walk out of a meeting when he's not satisfied. But
Speaker 1: Beazos two point oh I think was a little more
Speaker 1: circumspect with some of his negative negativity. Now that's not
Speaker 1: to say at Blue Origin and Space Company, which is
Speaker 1: has lagged SpaceX Elon Musk's company quite a bit, he
Speaker 1: doesn't show flashes of that. But my sense from talking
Speaker 1: to innumerable people was that he he doesn't really unleash it,
Speaker 1: and the way perhaps you know you're associating with Steve Jobs. Okay,
Speaker 1: you described the first thing they do in these s
Speaker 1: meetings is they read the document. Reading when other people
Speaker 1: there makes one very self conscious. Do they literally read
Speaker 1: it from beginning to end or is it just there
Speaker 1: in the reference and how much time does it take
Speaker 1: or was allotted for everybody to read it? They sit
Speaker 1: there in meditational silence, reading it until everybody has done,
Speaker 1: then they go, or if it's a steam meeting, they'll
Speaker 1: go around the room and Bezos and I presume Andy
Speaker 1: Jessey soon speaks last, and the discussion ensues. But they
Speaker 1: read it. They read the thing, which is right, incredible
Speaker 1: six pages long. It seems like it could take a while,
Speaker 1: but oftentimes that's what they do. And by the way,
Speaker 1: Bezos brought that to the Washington Post, and when the
Speaker 1: senior leadership team there convence with Bezos, they'll present him
Speaker 1: with a document. Now, my impression was with the Post
Speaker 1: meetings that he was reading those beforehand, which maybe made
Speaker 1: their time a little bit more efficient, but that is
Speaker 1: not always the case, and an Amazon certainly they sit
Speaker 1: there in silence reading. Okay, let's go to the warehouses.
Speaker 1: Let's first, talk about practical You know, I'm at a distance,
Speaker 1: you're right there in the belly of the beast. It
Speaker 1: seems to me that certain warehouses were created and certain
Speaker 1: machinery was installed, which were then abandoned repurposed. Do I
Speaker 1: have that right in terms of do you mean the
Speaker 1: and the actual physical machinery the culture they know them physical? Well, no,
Speaker 1: I think that, um, I mean the the Amazon warehouses
Speaker 1: have evolved quite a bit. They've become somewhat automated over
Speaker 1: the years. Amazon bought of robotics system called Kiva back
Speaker 1: in two thousand and twelve. Those have been rolled out.
Speaker 1: But when I in the in the time spend where
Speaker 1: I start this book two twelve, Amazon still only has
Speaker 1: a couple of dozen fulfillment centers around the country. Now
Speaker 1: it has north of eight hundred fulfillment centers, sortation centers,
Speaker 1: transportation hubs. This company and the operations network has sprawled
Speaker 1: out in every direction. So you know, part of the
Speaker 1: reason that Amazon's tax burden is so low, by the way,
Speaker 1: is because they're buying all this new equipment and then
Speaker 1: it's depreciating and Amazon's writing that off on their taxes.
Speaker 1: So it is um you know, it's it's a unique
Speaker 1: fulfillment network. They keep adding to it and changing it,
Speaker 1: tweaking it. Bringing in the robotics is one of the
Speaker 1: latest changes. Spawning a transportation network so that it's not
Speaker 1: ups or the post office delivering packages, but it's Amazon
Speaker 1: vans and Amazon trucks on the highway. That's another change.
Speaker 1: So it's it's it's pretty fresh, and I think it's
Speaker 1: also pretty unique. And I think one of the major
Speaker 1: vectors of growth for Amazon is going to be, you know,
Speaker 1: not only delivering more of their packages, but one day
Speaker 1: maybe offering that as a service to other companies. Let
Speaker 1: Amazon be your FedEx and deliver a package. Okay, Now
Speaker 1: we had a move that one best picture. How many
Speaker 1: people saw it as another debatable issue, but I saw
Speaker 1: it. It It was an excellent picture depicting the life of
Speaker 1: an warehouse person an Amazon. So that what you say
Speaker 1: in the book is a lot of that has been automated,
Speaker 1: so the people are not running around, but they're getting
Speaker 1: repetitive use injuries. You also said there was a policy
Speaker 1: where kind of like g the least performing people are
Speaker 1: are cut off. Then there's issues of compensation. What is
Speaker 1: the status of work in the warehouses today, well, the
Speaker 1: the status of work is um and it's still a
Speaker 1: a a position that is is sought after in many
Speaker 1: parts of the world. Amazon is one of the fastest
Speaker 1: growing employers. It's now the second largest employer in in
Speaker 1: the U S after Walmart. It's the wage Amazon has
Speaker 1: has raised it in part because of criticism. It's it's
Speaker 1: fifteen dollars an hour in most places, seventeen dollars an
Speaker 1: hour in some, and so comparatively against other kinds of
Speaker 1: warehouse work. You know, Amazon is seen as an employer
Speaker 1: of choice, and I think we saw that a little
Speaker 1: bit in Best Summer, Alabama, where employees voted against a union.
Speaker 1: Now we'll see if the National Labor Relations Board overturns
Speaker 1: that because some Amazon's conduct, but the workers voted pretty
Speaker 1: definitively not to join in the union. We could get
Speaker 1: back to what that means. But you know, all all
Speaker 1: that said, I think that the depiction in Nomad Land
Speaker 1: I thought was accurate. It was it was kind of
Speaker 1: criticized for being too nice to Amazon, but there was
Speaker 1: something about it that resonated with me that you know,
Speaker 1: this was seasonal work, there was no job security, it
Speaker 1: was very transactional. You know, the character was coming in
Speaker 1: there over the holidays. There was a sense of camaraderie
Speaker 1: but also a real sense of melancholy and isolation in
Speaker 1: that work. Um and and look, I mean they didn't
Speaker 1: have a villainous you know, manager firing the Francis mcdormant character,
Speaker 1: but there was something about it I thought that was
Speaker 1: quite sad when particularly when you combined it with the
Speaker 1: rest of your life. So I think that to me
Speaker 1: sort of captures it. You know, these vast facilities that
Speaker 1: have employees, but you know, the work is drowned out
Speaker 1: by a chorus of conveyor belts and automation. Uh. The
Speaker 1: workers are really managed in large part by algorithm them
Speaker 1: that's monitoring everything they do, that's putting them on performance
Speaker 1: improvement plans that if if their work suffers, you know,
Speaker 1: managers that will pipe up if they're taking overly long
Speaker 1: bathroom breaks and and so look, I mean I think
Speaker 1: it's it's it's difficult work, I don't you know. I
Speaker 1: think it's it's highly valued by people who's whose economic
Speaker 1: opportunities are otherwise limited, and it's probably you know, remarkable.
Speaker 1: You know, it's probably good for them that there there
Speaker 1: is opportunity in parts of the country where the manufacturing
Speaker 1: base really has declined. But I do think the Besos
Speaker 1: recently has understood that the you know, the company is
Speaker 1: getting bad image because of some of the testimonies about
Speaker 1: this work and the quality of the work. And that's
Speaker 1: why he has talked about addressing personally the ergonomic issues
Speaker 1: are on standing in one place and servicing the robots
Speaker 1: and and the other other things that people talk about.
Speaker 1: Hopefully we will see Amazon being more mindful about things
Speaker 1: like breaks and mandatory over time. Um. Yeah, and and
Speaker 1: so like I think, I think the company realizes that
Speaker 1: there's a lot of room for improvement and that it's
Speaker 1: public image and large part might depend on whether they
Speaker 1: can really get on top of that issue. So you
Speaker 1: mentioned Bessemer Alabama, and you talked about the unionization effort
Speaker 1: and how it failed. But being such a large company,
Speaker 1: a lot of the questions permeating America. You wonder to
Speaker 1: what degree they'll be focused on Amazon. There will be
Speaker 1: changed their last mild delivery trucks, that's all contractors. This
Speaker 1: has been a big issue in terms of uber and lift.
Speaker 1: So to what degree do you think there's going to
Speaker 1: be changed which will represent change in America or will
Speaker 1: continue to hit in this direction. I think that the
Speaker 1: Biden administration is recognizing the tech companies have gotten away
Speaker 1: with something here being able to to use to use
Speaker 1: one of the technical terms invoked now Fisher their their
Speaker 1: workplaces to employ, you know, to have an employment contract
Speaker 1: with their white collar are workers with some of their
Speaker 1: their fulfillment center workers, but then to basically um outsource
Speaker 1: some of the some of the you know, the harder things,
Speaker 1: the things that the company doesn't want liability over, you know,
Speaker 1: Uber with drivers certainly, you know, Apple does it with janitors,
Speaker 1: cafeteria workers. And Amazon has done it, has created a
Speaker 1: fishered workplace with its drivers. Those are those are contractors
Speaker 1: that are employed by delivery service providers. When they get
Speaker 1: into accidents, Amazon kind of throws its hands up. At
Speaker 1: the same time, they are driving in vans that have
Speaker 1: the Amazon Prime Swish arrow on them, they have Amazon uniforms,
Speaker 1: and in in some cases they're cameras in their automobiles
Speaker 1: run and put there by Amazon, run by Amazon algorithms
Speaker 1: that are monitoring their performance and their safety records. So
Speaker 1: Amazon wants all the elements of control over this workforce
Speaker 1: and really none of the liabilities and the responsibilities or
Speaker 1: for maintaining them. There's a professor at Brandeis University named
Speaker 1: David Wild who wrote a book called The Fisher at
Speaker 1: Workplace and who has really done a lot of of
Speaker 1: work in this area. And I believe he either was
Speaker 1: nominated or currently is a member of the Biden administration,
Speaker 1: or at least was being considered for a role. And
Speaker 1: I think the clear message here is that the Biden
Speaker 1: administration wants to take a look at this and reevaluate
Speaker 1: whether these companies should have more responsibility. And certainly some
Speaker 1: of the legal rulings are on Uber that we've seen
Speaker 1: in the US and in the United Kingdom suggests that
Speaker 1: judges are beginning to view that relationship a little more skeptically. Now,
Speaker 1: one of the discussions in your book is about the
Speaker 1: last mile problem and faster delivery. People pay approximately twenty
Speaker 1: dollars for Prime to get two day delivery. Now it's
Speaker 1: all about one day delivery and then something you can
Speaker 1: get now it's all this convenient. Do you believe this
Speaker 1: actually drive sales? And what is Amazon believe to what
Speaker 1: did user of focus on this issue, I think historically
Speaker 1: fast delivery has always has always shown up in the
Speaker 1: numbers and been meaningful for Amazon's customers, but I will
Speaker 1: I will argue that maybe it's less so now. So
Speaker 1: in the early days when Amazon devised Prime in two
Speaker 1: thousand five, guaranteeing two day shipping, allow people to pay
Speaker 1: once for it and then and then feel like they
Speaker 1: would get things promptly, really made a big difference, and
Speaker 1: Prime locked people in, made them big Amazon spenders, and
Speaker 1: really contributed to some of the amazing growth we've seen
Speaker 1: since then. But as I mentioned, Amazon has gone from
Speaker 1: a dozen or so fulfillment centers two hundreds and hundreds,
Speaker 1: and there's one not far from where I'm sitting, and
Speaker 1: there's probably not one not far bob from where you're sitting.
Speaker 1: And what that means is that to day or one
Speaker 1: day delivery promise it's it really doesn't mean that much anymore.
Speaker 1: You might be getting your packages from Amazon pretty quickly,
Speaker 1: regardless of whether you're a Prime member. So I suspect
Speaker 1: that's one of the reasons why they're pivoting so hard
Speaker 1: now to content and not just buying MGM, but spending
Speaker 1: eleven billion dollars in two thousand twenty to either license
Speaker 1: or create video. Basically, Prime was a shipping club, and
Speaker 1: now it's becoming a kind of all access content club.
Speaker 1: And so yes, shipping, to answer your question, was important.
Speaker 1: But I think it's it's almost something that people are
Speaker 1: now going Amazon customers are going to take for granted
Speaker 1: because those fulfillment centers and distribution hubs are now all
Speaker 1: over the country. Let's talk about the store itself first.
Speaker 1: Let's talk about the actual image, what you actually see.
Speaker 1: There's a plethora of advertising, which I find very confusing.
Speaker 1: Can you give us the history of rise of advertising
Speaker 1: on the site? It's really interesting, and I devote a
Speaker 1: chapter to it in the book, and I call the
Speaker 1: chapter the gold Mine in the backyard because it was
Speaker 1: there all along, and and for many years Bezos didn't
Speaker 1: want us, didn't seem to want to rate it. So
Speaker 1: probably about fifteen years ago they started very carefully putting
Speaker 1: banner ads on the site. And Bezos comes to the
Speaker 1: s team with a list of all the product categories
Speaker 1: that he doesn't want to touch, and that's things like
Speaker 1: alcohol and financial instruments and pharmaceuticals. He just says, no way,
Speaker 1: not interested, And it basically reveals a kind of underlying
Speaker 1: skepticism in in you know, basic advertising and in the
Speaker 1: ways in which companies get advertising. So of course, and
Speaker 1: that's with salespeople and and staffs, and Amazon higher salespeople,
Speaker 1: but they always constrained its growth and they're just not
Speaker 1: interested in that kind of revenue or really in cluttering
Speaker 1: up the site with ads. And for many years Amazon
Speaker 1: is analysts are speculating why doesn't Amazon get into advertising
Speaker 1: more significantly. And the turning point is when they discover
Speaker 1: what Google had pioneered a decade before, putting ads in
Speaker 1: search results, and Amazon starts at the bottom of the
Speaker 1: search results page, moves them to the side, and eventually
Speaker 1: Bezos decides that he will let sellers and brands compete
Speaker 1: to get the top ad on the on the search
Speaker 1: results page. And that is the gold mine in the backyard.
Speaker 1: It unlocks a tremendous opportunity. I would argue that it
Speaker 1: actually depreciates I think, as you're referring to the customer
Speaker 1: experience a little bit the search for page. Yeah, but
Speaker 1: and and actually they see that in the test results,
Speaker 1: they see that it's going to lower the customers um
Speaker 1: success rate and getting what they want. But Bezos explicitly
Speaker 1: makes a decision that the bounty of this revenue is
Speaker 1: going to be worth any decrease in the customer experience
Speaker 1: because that is a whole fuel that he can use
Speaker 1: to go invest in Hollywood, create new devices, pioneer new
Speaker 1: product categories, or disrupt new industries. And they make the decision.
Speaker 1: And right now, Amazon search results are less a taxonomy
Speaker 1: and useful result and more a very merchandise page of
Speaker 1: of pay to play advertisements and Amazon's own private label products.
Speaker 1: And that's a decision they made. I would argue it
Speaker 1: wasn't very customer centric, but I think last quarter Baby
Speaker 1: was like six billion dollars was in the other category
Speaker 1: on their on their income statement where they hied advertising
Speaker 1: revenues and and it is one of the fastest growing
Speaker 1: parts of the company right now. Now, let's talk about
Speaker 1: third party sellers. You know how they came up with that? Now,
Speaker 1: all the rules and constraints in the compete competition from China.
Speaker 1: They they celebrate the beginning of their marketplace business as
Speaker 1: starting in two thousand, but it really was as dusty
Speaker 1: repository of used items for almost a decade after that,
Speaker 1: and it was when Bezos is sort of casting about
Speaker 1: for another leader, feeling like they hadn't achieved very much
Speaker 1: with the marketplace, and he was asking executives, how would
Speaker 1: you bring a million sellers onto this platform? And that's
Speaker 1: actually really interesting and revealing question because there's no way
Speaker 1: you can do that hand to hand. It gets back
Speaker 1: to the salesperson point. You can only build a self
Speaker 1: service system that where sellers can go and sign up
Speaker 1: and list their wares on on an Amazon product page
Speaker 1: and start selling to Amazon's customer base tomorrow. So that
Speaker 1: was like the intuition build a self service platform where
Speaker 1: any seller can basically go and sign up. And then
Speaker 1: a couple of things happened well that that took off.
Speaker 1: It was very effective. It meant that a whole generation
Speaker 1: of successful sellers in the West. But then another thing happened,
Speaker 1: which is Ali Baba started to expand outside China and
Speaker 1: a little startup called wish dot Com started to engage
Speaker 1: in a kind of geographical arbitrage where they were allowing
Speaker 1: Chinese sellers very close to the factories or in some
Speaker 1: cases the factories themselves to sell abroad. And Bezos, who
Speaker 1: never wants to be outflanked, essentially, looked at his senior
Speaker 1: executives and said, you guys are on this right. And
Speaker 1: Amazon went to China almost literally, They started sending teams
Speaker 1: of executives there, and they extended those self service platforms
Speaker 1: into China translating from Mandarin, and allowed sellers in China
Speaker 1: to list their wearers on Amazon. Globally. They consolidated their
Speaker 1: merchandise in in in in giant freight yacht ships. They
Speaker 1: moved across the country. They stored it in their fulfillment centers.
Speaker 1: Amazon did, and they offered these products to sail to
Speaker 1: their customers. And it was an explosion of selection. It
Speaker 1: was a proliferation of bizarre brands that no one's ever
Speaker 1: heard of. It was a lot of low priced stuff generally,
Speaker 1: it really I think fueled like the Amazon machine and
Speaker 1: contributed to a lot greater selection and higher sales. But
Speaker 1: it also introduced all kinds of chaos to Amazon. And
Speaker 1: it's it's apparent every time you search for something, um
Speaker 1: you know, not just the no name brands or the
Speaker 1: shenanigans with reviews, but a lot of fraud, a lot
Speaker 1: of counterfeit, a lot of fake reviews. Some real disasters
Speaker 1: U like the exploding hoverboards that were that went in
Speaker 1: the news a couple of years ago, where people were
Speaker 1: buying these hoverboards with lithium ion batteries at Amazon and
Speaker 1: they were they were catching fire when plugged in and
Speaker 1: burning down people's homes. And that is still those cases
Speaker 1: are still winding their way through the court system. So
Speaker 1: in a very Amazon or a very big tech company
Speaker 1: like way, they started creating new systems to address some
Speaker 1: of the unintended consequences. And these are like anti counterfeiting
Speaker 1: tools and tools to preserve the sanctity of the review system.
Speaker 1: But they unlocked a lot of that cast that they
Speaker 1: now have to address by creating a self service global
Speaker 1: marketplace that became international, and really it was almost like
Speaker 1: pure unadulterated globalization in terms of its complete tilting of
Speaker 1: the of the e commerce playing field. Okay, but ultimately
Speaker 1: these products come from China and Western sellers people in
Speaker 1: the United States started bitching they can't compete on price,
Speaker 1: and then there becomes a whole issue that Amazon is
Speaker 1: caught in the middle of that you're addressed in the book.
Speaker 1: I went back. I was trying to figure out how
Speaker 1: to take the temperature of this massive seller community, and
Speaker 1: there's no way you can pull them all, and opinions vary,
Speaker 1: and there's a lot of happy sellers. Then there's a
Speaker 1: lot of economic opportunity on Amazon right now. In fact,
Speaker 1: one recent trend are these these companies that are buying
Speaker 1: up a lot of sellers and rolling them up to
Speaker 1: create bigger entities. But I did think it'd be interesting
Speaker 1: if I went back to every seller who was mentioned
Speaker 1: in Jeff Bezos shareholder letter over the years, who were
Speaker 1: sort of celebrated as as success stories, And so I
Speaker 1: did that, I think going back to around two ten,
Speaker 1: and they had all become embittered, they had all they
Speaker 1: had all lost their enthusiasm. One guy compared to being
Speaker 1: invited over for Thanksgiving dinner only to realize that you're
Speaker 1: the turkey. I thought that was a great quote. And
Speaker 1: what it suggested to me, again because there are happy
Speaker 1: Amazon sellers, is that this is a playing fielder frontier
Speaker 1: that is changing so rapidly that yesterday's winners are not
Speaker 1: are are sometimes today's losers. That you have to constantly
Speaker 1: reinvent yourself in much the same way that Amazon does.
Speaker 1: If you want to be successful on Amazon, and you know,
Speaker 1: you have sellers that were devoted to single product categories
Speaker 1: like paddle boards, and they did a great, great business
Speaker 1: on Amazon for for a couple of years, and then
Speaker 1: when the marketplace globalized. You know, they're getting their supply
Speaker 1: from a Chinese manufacturer, So it kind of makes sense
Speaker 1: that that manufacturer, someone very close to it would say,
Speaker 1: why are we going through a middleman in the United States.
Speaker 1: Here's the opportunity to go direct, and they do that
Speaker 1: and the middleman is disrupted. And so that is a
Speaker 1: common experience on Amazon. They really do celebrate the Super
Speaker 1: Bowl ads are all about the lights turning on in
Speaker 1: the Middle America. Would working shop, you know, where an
Speaker 1: entrepreneurs pursuing his or her dreams on Amazon where the
Speaker 1: reality of it, I think it's a little different. I
Speaker 1: think that it's really now tilted in favor of the entrepreneurs,
Speaker 1: the businesses that are in in low wage, low tax countries,
Speaker 1: very close to manufacturers who have some of the advantages.
Speaker 1: I think that Amazon is availing to to these countries
Speaker 1: like like China where they they really are and they
Speaker 1: feel like they're in competition with the Ali Baba's and
Speaker 1: wishes of the world, and they're trying to capture that
Speaker 1: global supply. Now, Amazon keeps changing the rules, tightening the screw.
Speaker 1: As we sit here, DC is cracking down saying that
Speaker 1: if you sell on Amazon, you can't sell cheaper elsewhere.
Speaker 1: You know, what do we know the government, especially when
Speaker 1: it comes to tech, it's always a few steps behind,
Speaker 1: you know. Is the Amazon just going to continue to
Speaker 1: get away with this behavior or is something going to change? Well,
Speaker 1: let me break this specific case down a little bit.
Speaker 1: So this is the Attorney General of Washington, d C.
Speaker 1: And he's basically putting his finger on um, what's what
Speaker 1: they call him. The business like most favored nation clauses
Speaker 1: in the agreements between Amazon and sellers, And what Amazon
Speaker 1: tell sellers is you can't go to Walmart or your
Speaker 1: own website or Target and list for lower a lower
Speaker 1: price than you're listing for on Amazon. And by the way,
Speaker 1: I'm pretty sure Walmart and other retailers do that as well.
Speaker 1: And and Amazon has kind of backed away from that
Speaker 1: in the past over the past few years, but they
Speaker 1: still implemented in some non subtle ways. They go and
Speaker 1: find a product elsewhere for cheaper. They're gonna pull you
Speaker 1: from the search results. You're it's gonna be harder to buy.
Speaker 1: And so they really are implement They're implementing the same
Speaker 1: techniques now. And one thing that we should just say
Speaker 1: so people understand it is that all these retail sites
Speaker 1: are scraping each other. They have automated software. Amazon is
Speaker 1: looking at Walmart all the time, and vice versa, ad nauseam.
Speaker 1: All these companies have kind of binoculars trained algorithmic binoculars
Speaker 1: trained on each other to see where prices are lower.
Speaker 1: And what the A G Is saying is that, you know,
Speaker 1: that is in effect of forcing a higher price Amazon
Speaker 1: to Amazon's forcing a higher price elsewhere and not allowing
Speaker 1: its sellers to to discount elsewhere. Look, historically that was legal,
Speaker 1: and I think the question is as Amazon gets bigger
Speaker 1: and accumulates power, as it commands an ever larger share
Speaker 1: of um of of e commerce, does it start to
Speaker 1: kind of look bad? And as I said, Amazon backed
Speaker 1: away from a form of it, but still does it
Speaker 1: in some quieter ways. I think ultimately, my guest Bob
Speaker 1: is that they probably stopped doing that, you know, just
Speaker 1: because of the optics. I don't think this antitrust case
Speaker 1: is existential in any way. It's about one particular form
Speaker 1: of conduct, something that everybody kind of historically has done,
Speaker 1: by which Amazon doing tends to tends to look bad.
Speaker 1: And I think ultimately that they settle this case. Yes,
Speaker 1: now we expand this and go back to your first
Speaker 1: book with the example of diapers dot com. If for
Speaker 1: whatever reason, Amazon wants to be in your business, it
Speaker 1: appears they'll just put you out of business, or they
Speaker 1: said to Zappos. Now, these are historical issues at this point,
Speaker 1: you know, either sell or compete, and forgetting that they
Speaker 1: ultimately got out of the diaper's business after selling after
Speaker 1: buying the diaper business. A lot of third party sellers say, well,
Speaker 1: if I have a big business selling battery, selling anything,
Speaker 1: they're gonna look at my data. They're just gonna make
Speaker 1: it so they win. And do you believe this is conscious?
Speaker 1: This bleeds into the other issue. You know, at the
Speaker 1: street level, they say that Amazon makes more money selling
Speaker 1: third party products and it does sell its own products.
Speaker 1: So what is the viewpoint of the Amazon and all
Speaker 1: this stuff. Well, let me let me take a couple
Speaker 1: of pieces there. I mean that the quizzy story of
Speaker 1: now ten years ago, which I tell me everything stories
Speaker 1: is interesting. Amazon was in hot competition with the company
Speaker 1: that owned Diapers dot Com. Discounted the product until everyone
Speaker 1: was kind of losing money, forced Quizzy into a sale,
Speaker 1: bought the asset. I think they feared, like Zappos, this
Speaker 1: could be one of those companies that could be acquired
Speaker 1: by Walmart or funded by venture capital and Silicon Valley
Speaker 1: and become really a full featured competitor. And instead they
Speaker 1: bought it, and then they allowed it to run independently
Speaker 1: and then eventually closed it down. They did not get
Speaker 1: out of the diapers business though, diapers. They still sell
Speaker 1: tons of diapers on Amazon dot Com. I thought that
Speaker 1: they closed that down just you know, they closed down
Speaker 1: diapers dot com right, they bought diapers dot Com. They
Speaker 1: allowed it to run independently, and eventually they did shut
Speaker 1: down that website. But on Amazon dot Com, not only
Speaker 1: can you find all manners of Pampers and Huggies and
Speaker 1: and Amazon Amazon's own private label products. There they do
Speaker 1: a brisk business and diapers. They just don't have a
Speaker 1: separate website anymore. For example, Zappos is still zappos dot Com.
Speaker 1: You can still go and buy sneakers there. You can
Speaker 1: also buy sneakers on Amazon, so they sometimes buy these
Speaker 1: other companies two uh to, I think the close off
Speaker 1: future opportunity for them, right and and look, I think
Speaker 1: that the government has looked at that. The House Antitrust
Speaker 1: Subcommittee devoted paragraph to that. And so of course my
Speaker 1: book was was my first book was cited there. The
Speaker 1: way in which they Amazon conducted itself back then to
Speaker 1: pursue rivals, I think was was extraordinary. They cannot get
Speaker 1: away with that anymore. It's a it's a much larger
Speaker 1: and more scrutinized company. And in fact, I actually don't
Speaker 1: think acquisitions like like uh Quidzy or Zappos, if they
Speaker 1: were doing those types of acquisitions today, they would necessarily
Speaker 1: get them through the FTC. MGM is a different matter
Speaker 1: which we could talk about UM. But then you talked
Speaker 1: about then you then you talked about UM. The marketplace
Speaker 1: of vendors on Amazon dot com and whether Amazon peaks
Speaker 1: at their data to put out their own private label products,
Speaker 1: and my book shows that they have. You know that
Speaker 1: that that managers did that. There was a policy against it,
Speaker 1: as we talked about, they did it anyway because they
Speaker 1: were trying to meet their goals, and Amazon has to
Speaker 1: answer some really hard questions about that. Again, they are
Speaker 1: now under the microscope. I wouldn't be surprised if there
Speaker 1: are some very strict policies if the cookie jar is
Speaker 1: kind of nailed chat right now in terms of access
Speaker 1: to that third party data. You know, it doesn't excuse
Speaker 1: the conduct that happened in the past. Amazon likes to
Speaker 1: say that, well, if you go into a Costco, it's
Speaker 1: all Kirkland, if you go into a Walmart, Walmart, their
Speaker 1: private label brands are predominant and actually private able, and
Speaker 1: Amazon's a small percentage of their overall sales, it's actually
Speaker 1: quite prominent in search results. So it's another thing that
Speaker 1: Amazon's going to have to answer for the fact that
Speaker 1: they are quite explicitly in competition with their own not
Speaker 1: just their own brands, but their own sellers. They're a platform,
Speaker 1: They're a retail store, and then increasingly they're they're a
Speaker 1: white label manufacture because a lot of those products and
Speaker 1: I think a large amount of their sales growth is
Speaker 1: coming from private label. Let's talk about a WS Amazon
Speaker 1: Web Services. Uh, it starts, it's the only game in town.
Speaker 1: They price it relatively reasonable. There's first mover advantage to
Speaker 1: degree people are paying attention. All of a sudden under
Speaker 1: the Trump administration, the Defense Department gives a huge contract
Speaker 1: to Microsoft, then it's reevaluated, then Microsoft gets again the
Speaker 1: most recent stories. They might lead it up. But what
Speaker 1: is the future of the web services industry and Amazon's
Speaker 1: police in it. It's incredibly competitive now. Um, Amazon is
Speaker 1: in the lead, but Microsoft is nipping at its heels.
Speaker 1: Google's a little bit farther behind, and then you have
Speaker 1: IBM and Oracle and innumerable other players. These are the
Speaker 1: largest technology companies in the world, and of course Microsoft
Speaker 1: by market cap is larger than Amazon. So I think
Speaker 1: there's obviously tremendous growth in cloud computing the way that
Speaker 1: you know governments have embraced it. And then the the
Speaker 1: scramble for for contracts like the Jedi contract, which Amazon
Speaker 1: loss to Microsoft during the Trump years, but which might
Speaker 1: be getting reawarded soon depending on on on the legal
Speaker 1: outcome of Amazon's protest. This is the direction of enterprise
Speaker 1: software and enter enterprise computing, and Amazon has been a pioneer,
Speaker 1: but it's no longer the only one. So if if
Speaker 1: you're asking about you know, a a legislator or regulator's
Speaker 1: ability to make a case that Amazon has a dominant
Speaker 1: position in cloud computing. I think that right now that
Speaker 1: there's a pretty weak case there. What what's more interesting
Speaker 1: or maybe some of the very opaque ties between AWS
Speaker 1: and Amazon retail and that's really not all that well understood,
Speaker 1: and it's something that the House Antitrust Subcommittee last year
Speaker 1: express frustration within their ultimate report, like how do why
Speaker 1: are these units together? How do they nurture each other?
Speaker 1: Actually a lot of people internally don't even quite know,
Speaker 1: but I suspect that they really help each other. That
Speaker 1: retail plays a wholesale price for for AWS, and AWS
Speaker 1: has this available beta tester for new services that allows
Speaker 1: it to scale very quickly, and that this is you know,
Speaker 1: have been a very productive union for both sides of
Speaker 1: the company, and that Bezos and any Jesse would would
Speaker 1: not willingly separate them. Let's go into entertainment. Yes, this
Speaker 1: became a benefit with Prime. So this is a different
Speaker 1: model from the competitors, certainly Netflix, which is, you know,
Speaker 1: owns its own vertical so what do we know? The
Speaker 1: policy is different. They'll allow almost anything on their site,
Speaker 1: their interface is non attractive. They don't have huge success,
Speaker 1: although it's hard to tell. Also, adding in the music thing,
Speaker 1: once you start bundling, they are beating the ten dollar
Speaker 1: price that other companies have. They don't real they don't
Speaker 1: really break out a lot of information. But is it
Speaker 1: just a matter of time till they get entertainment right
Speaker 1: or really they don't have the right people in place,
Speaker 1: You know, I would I would say that I'm not
Speaker 1: so sure. I agree with the premise. You know, Amazon actually,
Speaker 1: in a very typical way, has a lot of ways
Speaker 1: to win. And we look at Prime Video and I
Speaker 1: totally agree that the menu that shows up on the
Speaker 1: screen is sometimes bizarre and what am I looking at?
Speaker 1: And why can't I find anything? And the original original
Speaker 1: content that they've produced from their Hollywood division has more
Speaker 1: mrs than hits. There there have been some great things
Speaker 1: like Fleabag and the marvelous Mrs. Maisel and Transparent. That's
Speaker 1: kind of niche programming, but then Jack Ryan maybe has
Speaker 1: done a little better, and The Boys I found entertaining,
Speaker 1: and then they some great movies. Um, I love the
Speaker 1: sound of Metal. I don't know if you saw that one, Bob, Yeah,
Speaker 1: so good. Bore at two was horrendous and somehow people
Speaker 1: have watched and I couldn't watch it. I know I'm
Speaker 1: not a huge fan of his, but I where he
Speaker 1: was going on an intellectual level. I just brilliant. Okay,
Speaker 1: So but here's here's the point that's trying to make.
Speaker 1: Amazon doesn't That's part of their strategy. They also have
Speaker 1: the set top box, the Fire TV stick, probably one
Speaker 1: of the most successful streaming products alongside Roku. And then
Speaker 1: you look at Disney Plus and you look at Netflix,
Speaker 1: and I actually think elements of Apple TV Plus, if
Speaker 1: not the whole thing. Those running a ws amaz on
Speaker 1: a loan in this scramble to create an entertainment future,
Speaker 1: is operating at every level of the stack and succeeding
Speaker 1: at a at a lot of those places. So it
Speaker 1: has a lot of advantages here. It's got a lot
Speaker 1: of resources in cash that it's devoting. It's spent eleven
Speaker 1: billion dollars on Prime Video in two thousand twenty. Now
Speaker 1: they're paying for for MGM, so they're going to deepen
Speaker 1: their catalog and they're getting access, you know, depending on
Speaker 1: how you view the MGM library to a lot of
Speaker 1: I P and potential for franchises and spinoffs. So I
Speaker 1: don't think that Amazon's foray into Hollywood has been really
Speaker 1: we could say it's been unsuccessful. In fact, in a
Speaker 1: lot of ways they're pioneers. Maybe in the Flasher Flasher
Speaker 1: aspects of it, they've had a checkered history, But I
Speaker 1: do think it's a matter of time. The resources that
Speaker 1: this company is able to bring to bear, the deep pockets,
Speaker 1: the fact that they really kind of don't explicitly charge
Speaker 1: for Prime video, that it's wrapped up into this nebulous
Speaker 1: idea of prime which includes UH ship and includes access
Speaker 1: to music and kindle. People don't really think about what
Speaker 1: they're paying for this as in the same way that
Speaker 1: they might for Netflix every month. So I think Amazon
Speaker 1: actually has a lot of tools at its disposal to
Speaker 1: ultimately really succeed. Now, if you look at the purchase
Speaker 1: of MGM, you know this is a whole separate issue
Speaker 1: the percent perception of the Amazon's marketplace share relative to
Speaker 1: the reality. But under conventional as employed in the last
Speaker 1: couple of decades uh antitrust laws, it's hard to see
Speaker 1: a problem with the purchase of MGM, But it does
Speaker 1: appear that they overpaid for it. But it's just that
Speaker 1: these companies, just like Microsoft buying Skype in Nokia, they
Speaker 1: have so much damn money that it just doesn't make
Speaker 1: a difference. Well, I mean, Senate, we're hearing Senator Klobascher
Speaker 1: and other politicians grumble about this, But ultimately the FTC
Speaker 1: or the d o J is going to ask is
Speaker 1: this limiting? Is this still limiting competition? And when you
Speaker 1: look at at the streaming landscape that we just talked about,
Speaker 1: there are lots of alternatives in terms of studios and content.
Speaker 1: MGM is not a big player, So I think it's
Speaker 1: really hard to make the argument that this deal is
Speaker 1: anti competitive. I think Amazon will get it approved despite
Speaker 1: probably a hostile political environment. Um. And then the second
Speaker 1: party of your question, which is now promptly escaped me, well,
Speaker 1: the perception of Amazon in terms of market Here people
Speaker 1: always saying Amazon is the enemy, but then they trot
Speaker 1: out statistics, what percentage of retail they have and all
Speaker 1: these other things to try to prove that, no, that's
Speaker 1: not true. Right, Critics are trying to make the case
Speaker 1: that Amazon is a monopolist, and the challenge there is
Speaker 1: that it operates in such large markets, and so we
Speaker 1: talked about cloud computing and and the very big competitors
Speaker 1: it has with with Google and Microsoft. And then in
Speaker 1: in retail, when you look at you know, Walmart and
Speaker 1: Target and Costco and the large supermarket chains, it's gonna
Speaker 1: be tricky for regulators or lawmakers to write law or
Speaker 1: to to make judgments that applied just to Amazon that
Speaker 1: don't apply across the board, and that don't end up
Speaker 1: maybe even augmenting Amazon's power. I'll give you an example.
Speaker 1: If you were to say tomorrow that retailers weren't allowed
Speaker 1: to sell private label products or compete with their own vendors,
Speaker 1: that would cripple a company like Costco, probably probably a
Speaker 1: Walmart as well, certainly the drug store chains. And Amazon
Speaker 1: might actually get more profitable because suddenly, uh, those vendors
Speaker 1: or marketplace sellers that found their listings eclipsed by Amazon
Speaker 1: products would be back there paying fees and advertising to
Speaker 1: get in front of customers. So, I you know, Bezos
Speaker 1: says he welcomes scrutiny. I think, and obviously they're deploying
Speaker 1: quite a large lobbying force. I think there are lots
Speaker 1: of outcomes that end up solidifying Amazon's power, you know,
Speaker 1: rather than reducing it. And then to the original point,
Speaker 1: it's not a monopoly and that monopolis in the traditional sense.
Speaker 1: So I think it's gonna be challenging for regulators to
Speaker 1: make that case. Let's talk about hardware. They have the
Speaker 1: firephone disaster, you mentioned the firestick successful, you have the
Speaker 1: fire tablet, you have the Kindle, you have the Alexa
Speaker 1: hardware products. What do we know about Amazon traditionally? One point, oh,
Speaker 1: is kind of crappy, and then they get it better.
Speaker 1: They never get it to the level of Apple, but
Speaker 1: they certainly get it to a serviceable level. Now Amazon's
Speaker 1: Kindle is crippled by the Apple antitrust case. So when
Speaker 1: something like that happens in Amazon, is there a conscious
Speaker 1: because you know, Basil's philosophy was, we're gonna lower prices,
Speaker 1: sell more books. We're gonna blow this world up to
Speaker 1: the advantage of publishers. Okay, so when they put a
Speaker 1: roadblock in, I mean, is the Kindle busines, Well, that's
Speaker 1: a business and it'll run, but you know, we're not
Speaker 1: focused thing on that anymore. I feel like the Kindle
Speaker 1: is like the children from a child from a former marriage,
Speaker 1: right that it was, it was the center of it
Speaker 1: was the apple of his eye ten years ago. And
Speaker 1: now they have moved on and the new kids are
Speaker 1: Alexa and uh, you know maybe the the the Echo
Speaker 1: buds and this whole other ecosystem of products. So they
Speaker 1: it's it's interesting unlike Apple, which has this limited span
Speaker 1: of products that they cherish and nourish and keep updating. Yeah,
Speaker 1: they Amazon moves on right They produced a lot of stuff.
Speaker 1: It's not to say they're not updating the Kindle right
Speaker 1: all the time or the Kindle Fire tablet, but you
Speaker 1: get the sense that it's a little bit of of
Speaker 1: an afterthought right now. The company tries a lot of things,
Speaker 1: a lot of strange things. Did you remember hearing about
Speaker 1: the Halo wrist band which was reading people's moods or
Speaker 1: the Alexas spectacles that I guess is maybe gathering some
Speaker 1: diagnostic data because it came from their healthcare group. And
Speaker 1: then you've got the Echo buds. It's the second generation
Speaker 1: is out now, and it was just an example that's
Speaker 1: on my mind. This thing is brutally reviewed on Amazon itself.
Speaker 1: It's like two and a half stars, and yet they
Speaker 1: keep and of course people don't even know about it.
Speaker 1: It's and also ran to to obviously Apple's product, and
Speaker 1: yet they keep iterating it's like they're bull headed in
Speaker 1: the forward momentum. And Prime Day is coming up next month,
Speaker 1: and I guarantee you Amazon will discount the heck out
Speaker 1: of this thing. And they, you know, they've got so
Speaker 1: many advantages, including including controlling the retail outlet, that they
Speaker 1: kind of muscle their way to success. And we'll see
Speaker 1: if Amazon cares about the the Echo buds and another
Speaker 1: ten years, or even Alexa for that matter. But you're
Speaker 1: you're right in which it's it's not a very refined strategy, right.
Speaker 1: They try a lot of things. Do you remember the
Speaker 1: Alexa microwave? Oh god, yeah, yeah, yeah, I mean we
Speaker 1: haven't heard much about that, or there was an Alexa
Speaker 1: wall clock. Yeah, they try a lot of things. They
Speaker 1: orphaned some of them and they move on. Okay, talking
Speaker 1: about physical retail, we know from Warby Parker. You know
Speaker 1: a lot of people you can sell them the glasses
Speaker 1: by shipping to them, but a lot of people just
Speaker 1: want to try them on, so they open shops. How
Speaker 1: big a deal? I mean, first, here's the Amazon stores.
Speaker 1: You know, he started sort of his bookstores where they
Speaker 1: have hus be very little inventory, then they buy whole foods.
Speaker 1: Are they ever going to get this right? And you
Speaker 1: talk in your book about the no cashier shopping and
Speaker 1: all the development that took. Is there a big play
Speaker 1: here or are they going to play around and move
Speaker 1: here too. There's a massive play and they are moving here. Essentially,
Speaker 1: ninetent of all retail is still conducted in physical stores.
Speaker 1: Bezos has known that forever. He always said he wanted
Speaker 1: Amazon to do it. Open a store, but do something differently.
Speaker 1: And ten years ago they came upon this idea of
Speaker 1: putting cameras in the ceiling and censors in the shelves
Speaker 1: and automatically charging people instead of having them wait in
Speaker 1: front of a cashier. And they have spent hundreds of
Speaker 1: millions of dollars on that. It could be the most
Speaker 1: expensive initiative and Amazon history. And they trialed them in
Speaker 1: the seven eleven stores, where by the way, the sandwiches
Speaker 1: are got awful and and it was seemingly unsuccessful. But
Speaker 1: what it was was basically a technology trial, and they've
Speaker 1: been they've been iterating on it, and now we're seeing
Speaker 1: them stamp out full size Amazon Fresh supermarkets with either
Speaker 1: the ghost store technology, the cameras and the sensors, or
Speaker 1: these dash carts where it's a shopping cart that you
Speaker 1: roll around and as you put a product in, it
Speaker 1: scans it and automatically churches you. So they think they
Speaker 1: have a novel way to enter physical retail, and I
Speaker 1: suspect we're at the very earliest stages of seeing a
Speaker 1: massive expansion where every shopping center, every every mall, every
Speaker 1: retail set of retail outlets in our communities are going
Speaker 1: to have at least one Amazon store of some kind,
Speaker 1: and then Amazon can use those as kind of fulfillment nodes,
Speaker 1: maybe to have people order and collect packages or maybe
Speaker 1: even like a delivery station in the in the back,
Speaker 1: as well as capturing that of retail that happens in
Speaker 1: physical environment. So no, I don't think they're giving up.
Speaker 1: They haven't made a lot of progress recently, but the
Speaker 1: fact that we're seeing more and more of those ms
Speaker 1: on Fresh supermarkets tells me that we're still really at
Speaker 1: the beginning of this. Okay, you have the long history
Speaker 1: delineated in your book. I have to ask you, does
Speaker 1: this ghost store scanning work or they just have built
Speaker 1: in shrinkage because we all know at first serious the example,
Speaker 1: oh great concept doesn't work, but as time Alexa has
Speaker 1: gotten better by the same token. Can't have a conversation
Speaker 1: with it exactly. Yeah, No, you're right, alexis still a moron.
Speaker 1: And the it does seem like the tech companies always
Speaker 1: sort of overestimate the progress of of their AI systems,
Speaker 1: and and no doubt that the Ghost Store is an
Speaker 1: example of that, where they're they're mischarging or not understanding
Speaker 1: certain transactions. But instead of shrinkage, I think they've got
Speaker 1: create cadres of of workers, maybe contract workers, probably overseas,
Speaker 1: who when there's a moment of ambiguity will be reviewing
Speaker 1: the footage and making a manual determination. So I don't
Speaker 1: know the extent to which they still rely on that
Speaker 1: that would be a worthy focus of follow up. But
Speaker 1: um I do think that I I don't know there
Speaker 1: are employees who are concerned early on that the ghost
Speaker 1: Star wouldn't scale because they had these crews that had
Speaker 1: to monitor footage. Let's pull back the lens of the landscape.
Speaker 1: What do we know The guy from Quidzy ultimately went
Speaker 1: to Walmart during uh COVID Amazon posted amazing numbers. The
Speaker 1: most recent Walmart. Walmart numbers are not that good. Let's
Speaker 1: just talk about the business it's in, which is online retailing.
Speaker 1: Will anybody ever compete, certainly in in in the US
Speaker 1: and in parts of Europe, It's hard to imagine who
Speaker 1: that would be. I mean, I I do think there's
Speaker 1: room for competitors. I think Walmart's e commerce business has
Speaker 1: has been growing, as many have during the pandemic. But
Speaker 1: Amazon has such a tremendous headstart. eBay was so mismanaged
Speaker 1: for so many years that no, I I think it's hard.
Speaker 1: It's hard for anyone to get to that same scale.
Speaker 1: Now companies like Shopify are showing, you know, of carved
Speaker 1: out tremendous pieces of it, and Shopify might be one
Speaker 1: of the best success stories of the past five years
Speaker 1: in the technology world. But then you leave, you leave
Speaker 1: the US in Europe, and you do find countries where
Speaker 1: Amazon struggled, you know, India, it's it's run headlong into
Speaker 1: a local competitor, flip Card that was acquired by Walmart,
Speaker 1: and then Reliance Industries, which seems to have the backing
Speaker 1: of the of the Modi administration. And you go to
Speaker 1: different markets, and there's always this kind of nationalist champion.
Speaker 1: So I think, you know, and its oldest Marcus, Amazon
Speaker 1: has a little bit of a hammer lock, and you know,
Speaker 1: but but the world is large, and it still has
Speaker 1: There's a lot of countries where Amazon is not even
Speaker 1: in and there are a lot of countries where it's
Speaker 1: player number two or three. And to what degree is
Speaker 1: a first move or advantage in scale, and to what
Speaker 1: degree is it's special sauce referencing what we did before
Speaker 1: with Bezos and whether that's you know, dribbled down into
Speaker 1: the culture. Well, I mean, Amazon was very early in
Speaker 1: China and it lost, It lost big and lost billions
Speaker 1: of dollars. So I don't necessarily think it's the food.
Speaker 1: First mover advantage has been important all around. But I
Speaker 1: think you're asking, okay about the keys to Amazon success
Speaker 1: in general. Yeah, okay, so Amazon wasn't the first online store,
Speaker 1: but it was very early on. It was in large
Speaker 1: part pays us taking advantage of the capital environment in
Speaker 1: the in the late nineties and dreaming big and feeling
Speaker 1: like books books were just the beginning and embracing you know,
Speaker 1: kind of destiny. Destiny is the everything store and it
Speaker 1: was Yeah, it was Bezos betting big and basically sinking
Speaker 1: as profits into new product categories, and being willing to rethink,
Speaker 1: completely rethink the operations arm and creating a warehouse network
Speaker 1: that was tailored not for regular retail but for e commerce,
Speaker 1: and hiring the right people and being so public and
Speaker 1: bizarrely charismatic. These were all elements in the success story,
Speaker 1: as well as good timing and then probably just some
Speaker 1: luck in terms of them raising money during at the
Speaker 1: very beginning of the dot com bus that allowed them
Speaker 1: to navigate the shakeout when a lot of companies went out.
Speaker 1: But you know, you look at the constant reinvention of
Speaker 1: the company by Bezos, Aws the Kindle, Alexa, now Prime Video,
Speaker 1: and I think it's hard to avoid concluding that there's
Speaker 1: something about Bezos and his willingness to look around the
Speaker 1: next hill change the company, bet his winnings again on
Speaker 1: a new product category, reinvests his ambition, his competitiveness, his
Speaker 1: savv nous about technology that's been key to its success.
Speaker 1: Now in the music business, a truly legendary managers someone
Speaker 1: who does it twice. So what do we know, Bezos,
Speaker 1: who's built this the guy who ran the Apple Store
Speaker 1: for Steve Jobs, reaching success went to J. C. Penny
Speaker 1: couldn't do anything. If we plucked Basils out of the
Speaker 1: Amazon and put him in another company that was struggling,
Speaker 1: would he be able to reinvent it? Is he a
Speaker 1: wonder kind? I think he has been in terms of
Speaker 1: amplifying and building on Amazon's advantages. And the closest that
Speaker 1: I can come to that hypothetical is Bezos at at
Speaker 1: Blue Origin, the space company. Different company, different environment, different industry,
Speaker 1: different set of competitors, and I would argue he hasn't
Speaker 1: been very successful there. Now. In part that might be
Speaker 1: because it hasn't really received a lot of his focus.
Speaker 1: He's been funding it, but he's been managing it from afar,
Speaker 1: and in part I think sowing some dysfunction because of
Speaker 1: that choosing to who who to lead the company and
Speaker 1: then kind of changing leaders halfway through, viewing Elon Musk
Speaker 1: competitively and then amplifying his ambitions. So maybe it's a
Speaker 1: poor example, but I think it's a way of saying
Speaker 1: that the magic isn't as in broadly applicable that in
Speaker 1: Space and with Blue Origin, he hasn't succeeded in the
Speaker 1: same way and at least the way you might think now.
Speaker 1: At the Washington Post, he took over a paper and
Speaker 1: decline and he really revived its fortune. So yeah, I
Speaker 1: think there's probably something that's broadly applicable about the Bezos
Speaker 1: management style. But the guy has spread very thin now,
Speaker 1: and I don't think he's given the care and attention
Speaker 1: to blue origin that it's required. Okay, you've been following
Speaker 1: the landscape for decades here, so what do we know?
Speaker 1: Twenty years ago is all about hardware? Today it's about software.
Speaker 1: Up until about ten years ago, every month, if not
Speaker 1: more frequently, there was a new product, whether it be
Speaker 1: hardware software. That is not the case. We've had consolidation
Speaker 1: such we have the Amazon, Google, Facebook, and Apple. Maybe
Speaker 1: you can throw Microsoft in there. Being this here, where's
Speaker 1: this all going? I think we're living in an age
Speaker 1: of oligopoly. I think at it's hard to evaluate these
Speaker 1: companies alone. They you know, they they compete with each
Speaker 1: other really not even on the margins, but in significant
Speaker 1: business categories and um they you know, because of their
Speaker 1: their fierce competition with each other, you know, they they're
Speaker 1: they're moving quickly, They're they're in competition for the best engineers.
Speaker 1: They're throwing elbows. I worry that it's blotting out a
Speaker 1: lot of the opportunity and entrepreneurial opportunity. Um that's that's
Speaker 1: been so historic to America's success in the vibrancy of
Speaker 1: Silicon Valley. So you know, it's we're entering a really
Speaker 1: interesting period where we have a presidential administration now that's
Speaker 1: committed to reviewing the conduct of these companies. I think
Speaker 1: we're gonna see a lot more high profile antitrust lawsuits
Speaker 1: against the big tech companies. It'll be interesting to see
Speaker 1: the government to grapple with their complexity. And it's all,
Speaker 1: of course so fast moving, and these legal processes stretch
Speaker 1: out over many years. Is and these companies change every
Speaker 1: every year. So I don't know, I mean, I think
Speaker 1: I think it'll it'll be it'll be interesting to watch.
Speaker 1: But I see, you know, these big tech companies in
Speaker 1: you know, continuing to grow and in some ways probably
Speaker 1: sapping some of the vibrancy from the economy and some
Speaker 1: of the opportunity for other companies. Now we talk is
Speaker 1: the Internet mature. What I mean by that is if
Speaker 1: you can look at certain things I'm a big skier, music, etcetera.
Speaker 1: There's an element, there's a craziness when it develops and
Speaker 1: then you have a business, but it's relatively regimented and managed.
Speaker 1: You talk to other people and they'll say the power
Speaker 1: of the smartphone is so strong computer in your hand
Speaker 1: that the runway is incredibly long. So what's your viewpoint
Speaker 1: and what might we see on the horizon technically or
Speaker 1: with the Internet. I think it's probably the wrong move
Speaker 1: to pad against the Internet, right it's I mean, just
Speaker 1: in my professional career, I've seen the thing explain what
Speaker 1: over over twenty five years and showed no signs of
Speaker 1: slowing down. It does always seem like new kind of
Speaker 1: transitions or new technologies are around the corner. The smartphone
Speaker 1: gave us, you know, almost ten years of of runway.
Speaker 1: My last book was about Uber and Airbnb and how
Speaker 1: they basically built their businesses on on the smartphone. Um.
Speaker 1: The fact is people are spending more time on their devices,
Speaker 1: on their computers, interacting with the world. You know. Cloud
Speaker 1: computing feels like a change, a revolution in its infancy. Still,
Speaker 1: so I don't I don't see any reasons to think
Speaker 1: that anything any anything any of our the slow creep
Speaker 1: into UH technological society is slowing down. Okay, then drilling
Speaker 1: down a little bit more to your work directly. You
Speaker 1: work for Bloomberg, and what do we know? A lot
Speaker 1: of media companies have been hurt by the lack of
Speaker 1: advertising of during COVID. Bloomberg makes most of its money
Speaker 1: from its UH quote machines and information machines that brokers use.
Speaker 1: Bloomberg was a three sixty degree news company, then they
Speaker 1: refocus it to business. Bloomberg will last. But being in
Speaker 1: this publishing news industry, and I'll make it pretty broad.
Speaker 1: Our physical magazines going to survive? Is there a hope
Speaker 1: for local newspapers? I'm not asking for you to be optimistic,
Speaker 1: but where is it going? There? Are we going towards
Speaker 1: a winner take all landscape in news too. I'm extremely
Speaker 1: concerned about the health and the future of local newspapers.
Speaker 1: I'm from Cleveland, Ohio, and I grew up reading the
Speaker 1: Cleveland Plane Dealer and it's where I really got my
Speaker 1: interest in news. That and reading Newsweek magazine actually, which
Speaker 1: ended up being my first employer. And you know, recently
Speaker 1: the sale of the of the Tribune Company assets to
Speaker 1: private equity, and just the deteriorating health of local newspapers
Speaker 1: and media outlets and how that's ended up polluting the
Speaker 1: democratic process. It's really worrisome and I don't see, really
Speaker 1: it's hard to be optimistic about that, you want. I mean,
Speaker 1: what Basos has done with the Washington Post has been remarkable,
Speaker 1: and it would be great to see him or a
Speaker 1: billionaire like him, pursue a kind of Carnegie like philanthropy.
Speaker 1: You know what Carnegie did with the libraries? Was it?
Speaker 1: It was Carnegie? I guess it was Okay, great, I'm
Speaker 1: not embarrassing myself with my history there uh to to
Speaker 1: do something like that for local newspapers. And unfortunately that
Speaker 1: that billionaire philanthropist is not has not made him or
Speaker 1: herself known yet. And meanwhile newspapers are languishing, the business
Speaker 1: model is deteriorated, and the democratic process I think has
Speaker 1: been polluted because of that. As for magazines, you know,
Speaker 1: we're we're still I think, and now the second or
Speaker 1: third decade of a slow transition, and properly, these properties
Speaker 1: have to become digital and they have to build events,
Speaker 1: businesses and create new relationships with there. There they're subscribers
Speaker 1: and I think we've seen there have been remarkable examples
Speaker 1: of magazines. I'm gonna just gonna pick one The Atlantic
Speaker 1: that I think it's really successfully made the transition. Business
Speaker 1: Week I think is another good example. It's now inside
Speaker 1: the Bloomberg empire. It nourishes what we do at Bloomberg
Speaker 1: in so many different ways. But it's still a time
Speaker 1: of transition. And the old the the the physical ads
Speaker 1: and the actual subscriptions. Of course, you know, the analog
Speaker 1: print subscriptions, as you would expect, have continued to deteriorate.
Speaker 1: That's not changing soon. So the magazines that are going
Speaker 1: to survive are going to have to really complete their
Speaker 1: their transition. I've written two books on Amazon. What is
Speaker 1: your personal focus? What is the subject that you're putting
Speaker 1: paying attention to going forward? I mean, right now, Bob,
Speaker 1: I'm still locked in the Amazon jail. The book came out, Um,
Speaker 1: you know I'm talking about it. I I don't actually
Speaker 1: see the light at the end of the tunnel in
Speaker 1: terms of I mean, the challenge of the Amazon is
Speaker 1: they make news every single day or every single week,
Speaker 1: and you know it's it's MGM or it's a shareholder meeting.
Speaker 1: Or it's something with the workplace or Bezos news, and
Speaker 1: so there there is a near future for me of
Speaker 1: continuing to to blab about Amazon and my books. But
Speaker 1: longer term, I run a tech team at Bloomberg. It's
Speaker 1: I'm extraordinarily proud of it. It's you know, we cover
Speaker 1: all the big tech companies and investors and trends, and
Speaker 1: so that gives me a great purview to kind of
Speaker 1: see all these changes in our society and our business
Speaker 1: landscape and try to find the stories I'm interested in.
Speaker 1: I have no idea what that is next. I have
Speaker 1: to kind of lick my wounds from from this ordeal
Speaker 1: and then hopefully I'll find something that interests me. Thanks
Speaker 1: so much, Brad. This has really been great. Thanks for
Speaker 1: taking the time to tell the story, Bob, It's been
Speaker 1: a pleasure. I also want to say for people, these
Speaker 1: are easily read books. They're written as stories. These are
Speaker 1: not hardcore business books where your eyes rolled back into
Speaker 1: your head. And if you want to know what Amazon
Speaker 1: is doing, Brad literally is the guy in these books?
Speaker 1: Are the definitive statements. I just want to emphasize that's
Speaker 1: not a hype. I've certainly read both of them. That's
Speaker 1: why I wanted Brad on the podcast. Until next time.
Speaker 1: This is Bob Blessed sex