WEBVTT - Amazon's 'Everything War' with Dana Mattioli

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<v Speaker 1>Bloomberg Audio Studios, Podcasts, radio News. This is Master's in

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<v Speaker 1>Business with Barry rid Holts on Bloomberg Radio.

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<v Speaker 2>This week on the podcast, I have another extra special guest.

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<v Speaker 2>Dana Mannioli is the Amazon reporter for The Wall Street Journal.

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<v Speaker 2>In addition to covering Amazon, she is an award winning

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<v Speaker 2>reporter who has deep roots in both M and A

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<v Speaker 2>and retail. Her new book is really quite fascinating, The

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<v Speaker 2>Everything Wore, Amazon's ruthless quest to own the world and

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<v Speaker 2>remake corporate power, just came out a few months ago.

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<v Speaker 2>I thought this was a really interesting book. I read

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<v Speaker 2>a lot of stuff for interviews, and this is a

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<v Speaker 2>book that I would have just plowed through regardless. It

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<v Speaker 2>was really fascinating. And you know a lot of the

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<v Speaker 2>things you spect about on Amazon, you think about, you know,

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<v Speaker 2>how they flex their corporate muscles. You have like a

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<v Speaker 2>loose idea, Hey, they really seem to be the eight

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<v Speaker 2>hundred pound gorilla. I had no idea. You know, as

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<v Speaker 2>I'm reading the book, I'm just genuinely shocked, and by

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<v Speaker 2>the way, it's deeply investigating. In research, she did hundreds

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<v Speaker 2>of interviews with former employees and executives and partners and

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<v Speaker 2>like just everybody who was affiliated with this and these

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<v Speaker 2>are not nice people. These are ethically compromised executives who

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<v Speaker 2>are just hell bent on increasing profits by any means necessary.

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<v Speaker 2>And she paints a not very pretty picture of the company,

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<v Speaker 2>It's culture, its tactics.

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<v Speaker 1>Like I thought I.

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<v Speaker 2>Knew Amazon, and it turns out I really didn't know Amazon.

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<v Speaker 2>Fascinating book and I'm really fascinating conversation that I think

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<v Speaker 2>you'll enjoy. With no further to do. My discussion with

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<v Speaker 2>the Wall Street Journals. Dana Maddioli, Welcome to Bloomberg.

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<v Speaker 1>Thanks for having me.

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<v Speaker 2>So we've been trying to get the schedule for quite

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<v Speaker 2>some time. We've been ships in the night, and I'm

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<v Speaker 2>glad we finally did this. Before we get into the book,

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<v Speaker 2>I just have to go over your background, which is

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<v Speaker 2>really fascinating. You started the journal in two thousand and six.

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<v Speaker 2>Tell us a little bit about how you got there.

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<v Speaker 1>Oh, I'd say I snuck through the back door. I

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<v Speaker 1>started a week after graduating from college, Amazing as a

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<v Speaker 1>journal as a major in an English major. I had

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<v Speaker 1>some freelance clips while I was in college. I would

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<v Speaker 1>go and take my articles that I wrote for class

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<v Speaker 1>and sell them to the local newspapers in Washington, DC.

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<v Speaker 1>Sometimes just give them away to get a byline. And

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<v Speaker 1>that's sort of how I got hired at the Journal

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<v Speaker 1>and just really learned as a grunt at that point

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<v Speaker 1>and rose up the ranks.

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<v Speaker 2>It's kind of fascinating that you're the Amazon reporter now

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<v Speaker 2>because you began covering retail companies like j C. Pennies.

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<v Speaker 2>I don't know if it call Kodak retail. They had

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<v Speaker 2>a tail arm. Tell us a little bit about some

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<v Speaker 2>of the companies you covered and some of the front

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<v Speaker 2>page scoops you got.

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<v Speaker 1>Yeah. So for a while I was the retail reporter

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<v Speaker 1>at the Wall Street Journal. I loved that job. I

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<v Speaker 1>basically covered thirty different publicly traded retailers, from Gap to

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<v Speaker 1>Macy's to Nordstrom and got to know a lot of

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<v Speaker 1>those CEOs very well, people like Mickey Drexler over at

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<v Speaker 1>shake Crew right like legends. And that was a really

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<v Speaker 1>good education for me actually in writing this book, because

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<v Speaker 1>I saw firsthand through their lens of how they had

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<v Speaker 1>to react to a young Jeff Bezos and how that

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<v Speaker 1>was decimating their businesses.

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<v Speaker 2>Right. You started six at that point, Amazon is what

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<v Speaker 2>a decade old just about Yeah, and had already begun

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<v Speaker 2>to damage traditional retailers. You go from retail to doing

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<v Speaker 2>large M and A deals. You covered the Pfizer Alergen

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<v Speaker 2>deal and a bunch of other M and A tell

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<v Speaker 2>us how you went from retail to mergers and eye acquisitions.

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<v Speaker 1>Yeah, there was a stop before that. Actually, I covered Quodak,

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<v Speaker 1>like you said, that was my first corporate gig, and

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<v Speaker 1>then retail, and then I was the M and A

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<v Speaker 1>reporter with another reporter named Dana Simluca who's a good

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<v Speaker 1>friend of mine, and our whole job was to break

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<v Speaker 1>what companies were buying other companies, and it was a

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<v Speaker 1>really exciting job. You'd get these giant tips one hundred

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<v Speaker 1>billion dollar deals and you put the headlines down. You'd

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<v Speaker 1>see the stock prices just go through the roof, right.

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<v Speaker 1>It was like this kind of adrenaline rush of a beat.

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<v Speaker 1>So I did that for six years, which is a

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<v Speaker 1>very long time to cover that beat because it's fairly

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<v Speaker 1>all on. You know, you work every Sunday because deals

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<v Speaker 1>get announced on Monday. But also a through line on

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<v Speaker 1>that beat was the beginning of that beat. When I

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<v Speaker 1>started in twenty thirteen, the retail companies, the consumer companies

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<v Speaker 1>were worried about Amazon. By the time I left that

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<v Speaker 1>beat in twenty nineteen, every single corporate boardroom I spoke

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<v Speaker 1>to every CEO, every banker, in industrials, healthcare, every industry

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<v Speaker 1>was worried about Amazon.

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<v Speaker 2>Huh. And just to wrap up the M and A,

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<v Speaker 2>you win another Lobe award in twenty sixteen covering the

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<v Speaker 2>Dow DuPont merger. That was a giant merger. Tell us

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<v Speaker 2>a little bit about that story.

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<v Speaker 1>Yeah, that was you know that this was a time

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<v Speaker 1>when there were a lot of there's a lot of

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<v Speaker 1>industrial m and A, A lot of these corporate giants

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<v Speaker 1>that you know, had been esteemed companies were hitting a

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<v Speaker 1>rough patch and we started to see a lot of

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<v Speaker 1>deals in the chemicals space and the industrial space. I

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<v Speaker 1>broke that with my colleagues Danis and Luca and Dave Banoit,

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<v Speaker 1>and that was one of the biggest years for em

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<v Speaker 1>Anda that I was on the beat.

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<v Speaker 2>So retail m and A, how do you end up

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<v Speaker 2>not just back in their online retail space with Amazon,

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<v Speaker 2>but making that your sole beat? How did you become

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<v Speaker 2>Amazon only as a reporter?

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<v Speaker 1>So after six years on the M and A beat,

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<v Speaker 1>you know, writing probably hundreds of articles. It's very competitive,

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<v Speaker 1>beat Bloomberg pretty fiercely. It was time for me to

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<v Speaker 1>take a step back from that type of reporting. You

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<v Speaker 1>get fairly burn.

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<v Speaker 2>It's a grind, it is.

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<v Speaker 1>It's a grind, you know. I was reporting stories out

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<v Speaker 1>from my friend's weddings, from christenings, from family birthday parties,

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<v Speaker 1>ever off. So I wanted to take a step back

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<v Speaker 1>and do a bigger, like investigatory beat. And the only

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<v Speaker 1>thing that really excited me at the time was Amazon.

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<v Speaker 1>I'd seen them be this major player on the retail beat,

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<v Speaker 1>on the M and A beat, I saw stupid M

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<v Speaker 1>and A happening because of Amazon. I remember I broke

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<v Speaker 1>this deal when CVS was buying Etna. This is a

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<v Speaker 1>bet the farm sort of eminem deal. Sixty nine billion

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<v Speaker 1>dollars were the CVS, this pharmacy was buying an insurance company.

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<v Speaker 1>And I learned that the CEO of CVS was terrified

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<v Speaker 1>of Amazon. Every board meeting he had with his board,

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<v Speaker 1>they had Amazon proofing plans put in place. And I

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<v Speaker 1>started seeing that in other boardrooms too, that these dumb

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<v Speaker 1>deals were happening because people were trying to Amazon proof

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<v Speaker 1>their businesses, and I started to think about how how

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<v Speaker 1>little people knew about how Amazon always seemed to win,

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<v Speaker 1>how they seemed to have their finger on the scale

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<v Speaker 1>in a lot of ways. So I pitched this investigatory

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<v Speaker 1>Amazon beat to my bosses at the Wall Street Journal,

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<v Speaker 1>and they were into it. They said, if you think

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<v Speaker 1>you could get inside this black box, the do it?

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<v Speaker 2>What ye was that?

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<v Speaker 1>That was twenty nineteen, all right.

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<v Speaker 2>So by then I'm trying to remember how big Amazon

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<v Speaker 2>had become. I mean, they obviously blew up after the pandemic,

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<v Speaker 2>but I want to say Scott Galloway's book The Four

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<v Speaker 2>had already come out, Brad Stone's book The Everything Store.

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<v Speaker 2>I don't know if that had come out yet.

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<v Speaker 1>That did that came out? I want to say maybe

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<v Speaker 1>twenty fifteen, And.

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<v Speaker 2>Both of those books sold very well and drew a

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<v Speaker 2>lot of attention Amazon. It doesn't sound like it was

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<v Speaker 2>a tough argument to get the editors of woll Street

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<v Speaker 2>General to say, Hey, these guys are a behemoth. We

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<v Speaker 2>need a dedicated person covering justice one company.

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<v Speaker 1>Yeah, And they were excited that I've raised my hand.

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<v Speaker 1>I had, you know, a history of being very scoopy

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<v Speaker 1>getting inside companies.

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<v Speaker 2>Again war winning, right, and and you.

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<v Speaker 1>Know Amazon's such a big company. You know, they're two

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<v Speaker 1>trillion dollars today, and they're kind of like a giant.

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<v Speaker 1>They're not kind of they're giant conglomerate. They're like fifteen

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<v Speaker 1>different publicly traded companies in one company. Yeah, so I

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<v Speaker 1>had I wanted to do this in a way that

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<v Speaker 1>I my spots. If you just cover Amazon news day

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<v Speaker 1>and day out, you could just write wire stories all day. Right,

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<v Speaker 1>there's a million stories about them. I wanted to be

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<v Speaker 1>deliberate and investigate them.

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<v Speaker 2>So let's talk a little bit about that delibered investigation.

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<v Speaker 2>The book covers Amazon's quest to own the world and

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<v Speaker 2>remake corporate power. What does that mean?

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<v Speaker 1>Well, Amazon, you know they started as this against all odds,

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<v Speaker 1>grudge startup, right, But what we've seen in more recent

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<v Speaker 1>years is that they've become the number one or two

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<v Speaker 1>player by size in about eight different industries. You know,

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<v Speaker 1>from retail, which we are already know forty percent of

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<v Speaker 1>everything bought online in the US is Amazon to cloud computing,

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<v Speaker 1>where they are the biggest cloud computing in the world

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<v Speaker 1>exactly in the US. They deliver more parcels than UPS

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<v Speaker 1>or FedEx. And it goes on and on and on.

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<v Speaker 2>Say that again, they deliver more parcels than UPS or FedEx.

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<v Speaker 1>Yes, they are the number one parcels.

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<v Speaker 2>That's astonishing.

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<v Speaker 1>And guess what it's they're only their own product. They're

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<v Speaker 1>not delivery it really for other people. That's just Amazon goods.

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<v Speaker 2>Wow.

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<v Speaker 1>They've taken over industry after industry, and that's forced bankruptcies,

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<v Speaker 1>it's forced lack of innovation. And beyond that, you know,

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<v Speaker 1>my book gets into how they have this pattern of lying, cheating,

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<v Speaker 1>copying their way to the top, and using their leverage

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<v Speaker 1>in all these different industries to crush competition.

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<v Speaker 2>So we're going to get into the details of that

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<v Speaker 2>for sure. I just want to go through the eight

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<v Speaker 2>areas where they're number one or two. So online retail, cloud, computing,

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<v Speaker 2>package delivery. What are the other four or five where

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<v Speaker 2>they're dominant?

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<v Speaker 1>Yeah, voice assistant devices.

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<v Speaker 2>Yeah, nobody comes close to that.

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<v Speaker 1>Right. In online advertising, the number three actually a whole

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<v Speaker 1>charged which.

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<v Speaker 2>By the way, the online advertising is has become so

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<v Speaker 2>ubiquitous throughout the site. So it's Google, Facebook, Amazon, exactly amazing.

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<v Speaker 2>Give us the other two or three ebook ebooks, and

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<v Speaker 2>that's before we get to other gadgets. Yeah, I mean

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<v Speaker 2>the Kindle. Just Barnes and Nobles still make the Nook

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<v Speaker 2>or is it do?

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<v Speaker 1>And it's it's kind of a paltry experience. And I'll

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<v Speaker 1>tell you ninety percent of my ebooks for this book

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<v Speaker 1>have been sold in Amazon, which just tells you, right,

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<v Speaker 1>how much of a dominant.

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<v Speaker 2>I'll tell you something fascinating that when you Google search

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<v Speaker 2>your book, the first link that comes up is Amazon.

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<v Speaker 2>And that's true on so much stuff. I mean on Google,

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<v Speaker 2>I don't mean on the Amazon site. Yeah, but on

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<v Speaker 2>eight verticals, most of which they are either number one

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<v Speaker 2>or number two.

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<v Speaker 1>And they're keeping you know, they're going to keep growing.

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<v Speaker 1>They they're getting into space with this project Kuiper.

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<v Speaker 2>They are, now that's separate from Bezos's Blue Origins company.

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<v Speaker 2>You're talking about a wholy different pursuit coming from Amazon

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<v Speaker 2>proper within their own company, and what do they want

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<v Speaker 2>to do in space.

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<v Speaker 1>They're going to go head to head with Elon Musks

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<v Speaker 1>Starlink with this these satellites, these orbital satellites, and that

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<v Speaker 1>should launch in the next year. So they're ever growing

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<v Speaker 1>and they have a lot of bandwidth to do that

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<v Speaker 1>in ways that other publicly traded companies really don't.

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<v Speaker 2>Why on earth does Amazon want to be in the

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<v Speaker 2>satellite business out of curiosity? Is this related at all

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<v Speaker 2>to Blue Origins and what Bezos is doing with that?

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<v Speaker 1>Well, it's a question for Bezos, I would say. You know, Starlink,

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<v Speaker 1>which is Elon Musk's venture, is considered one of his

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<v Speaker 1>crown jewels. Okay, so there's like definitely an appeal there.

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<v Speaker 1>The way that Elon has its structured it does fit

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<v Speaker 1>into his space exploration company SpaceX. So some people pose

0:11:41.200 --> 0:11:43.160
<v Speaker 1>it that this should this be part of Blue Origin

0:11:43.240 --> 0:11:45.960
<v Speaker 1>rather than Amazon. Sure, but as of right now it

0:11:46.040 --> 0:11:47.240
<v Speaker 1>is part of Amazon is.

0:11:47.320 --> 0:11:49.760
<v Speaker 2>I guess the thinking must be, Hey, if we have

0:11:49.920 --> 0:11:52.800
<v Speaker 2>more people with access to the Internet, we're shopping more

0:11:52.840 --> 0:11:55.920
<v Speaker 2>people will shop online and we'll capture forty percent of

0:11:55.960 --> 0:11:56.520
<v Speaker 2>it or whatever.

0:11:56.520 --> 0:12:00.400
<v Speaker 1>They're right, they'll boost those two hundred million pribes ribers

0:12:00.400 --> 0:12:01.479
<v Speaker 1>could grow exponentially.

0:12:02.000 --> 0:12:06.320
<v Speaker 2>Right. How do you define Amazon Prime as a vertical?

0:12:06.600 --> 0:12:10.120
<v Speaker 2>Is it just part of their delivery process? It comes

0:12:10.120 --> 0:12:13.160
<v Speaker 2>with a lot of other things. Where do you put

0:12:13.200 --> 0:12:14.400
<v Speaker 2>Amazon Prime into this?

0:12:14.480 --> 0:12:17.240
<v Speaker 1>I mean, it's one of the biggest membership programs there

0:12:17.360 --> 0:12:18.240
<v Speaker 1>is at any company.

0:12:18.320 --> 0:12:20.839
<v Speaker 2>It's amazing, right, pay for the privilege.

0:12:20.480 --> 0:12:21.600
<v Speaker 1>To shop with this company.

0:12:21.760 --> 0:12:26.000
<v Speaker 2>Well, you theoretically pay for two day delivery, although if

0:12:26.040 --> 0:12:28.839
<v Speaker 2>you've been an Amazon user for any length of time,

0:12:29.440 --> 0:12:32.400
<v Speaker 2>that turns out to be bs because they do everything

0:12:32.440 --> 0:12:36.320
<v Speaker 2>they can to dissuade you from next day or two

0:12:36.360 --> 0:12:39.880
<v Speaker 2>day or same day delivery. Hey, ship on Wednesdays with

0:12:39.960 --> 0:12:45.920
<v Speaker 2>even fewer boxes, create less ecological waste. Ship next Thursday.

0:12:46.000 --> 0:12:50.200
<v Speaker 2>Here's a ninety nine percent digital coupon. Ooh, that's great.

0:12:50.440 --> 0:12:53.200
<v Speaker 2>I rent ahead of Beatle. I'll save ninety nine cents.

0:12:53.240 --> 0:12:58.280
<v Speaker 2>But obviously it works because the more they can spread

0:12:58.320 --> 0:13:05.439
<v Speaker 2>out their shipping. My experience has been the shipping timeliness

0:13:05.480 --> 0:13:07.280
<v Speaker 2>has decreased dramatically.

0:13:07.360 --> 0:13:08.840
<v Speaker 1>I hear that from a lot of shopping right.

0:13:09.080 --> 0:13:13.160
<v Speaker 2>I mean, So, I've been an Amazon member since I

0:13:13.200 --> 0:13:17.040
<v Speaker 2>got a gift certificate from my college roommate. I want

0:13:17.040 --> 0:13:19.800
<v Speaker 2>to say it was ninety eight, ninety eight, So this

0:13:19.880 --> 0:13:22.800
<v Speaker 2>is early member and I out of college long before that.

0:13:22.920 --> 0:13:27.280
<v Speaker 2>But but early member, like I used to just search

0:13:27.520 --> 0:13:30.520
<v Speaker 2>and click whatever came up first, and it was always

0:13:30.600 --> 0:13:34.200
<v Speaker 2>the right thing. I ordered lithium batteries with a like

0:13:34.280 --> 0:13:37.439
<v Speaker 2>for a keyfob on your car. It's a very specific

0:13:37.520 --> 0:13:41.000
<v Speaker 2>model number, wouldn't that exact model number come up first?

0:13:41.480 --> 0:13:43.520
<v Speaker 2>So I was, and I went back and I redid

0:13:43.559 --> 0:13:46.200
<v Speaker 2>it and figured out, oh, that's a sponsored link that

0:13:46.240 --> 0:13:49.040
<v Speaker 2>has nothing to do with what I requested other than

0:13:49.080 --> 0:13:53.880
<v Speaker 2>it's roughly a lithium ion battery. So I went to

0:13:53.880 --> 0:13:56.679
<v Speaker 2>return it, and every now and then Amazon will say, yeah,

0:13:56.679 --> 0:13:59.480
<v Speaker 2>I don't bother, just just keep it right and we'll

0:13:59.520 --> 0:14:02.280
<v Speaker 2>credit you because it's more expensive to send it back

0:14:02.360 --> 0:14:06.960
<v Speaker 2>then the product is worth. So the search has been terrible,

0:14:07.080 --> 0:14:11.000
<v Speaker 2>The pages are just festooned with advertising. The whole experience

0:14:11.679 --> 0:14:14.480
<v Speaker 2>is much worse. And then there's the other two issues.

0:14:14.760 --> 0:14:17.920
<v Speaker 2>The prices are no longer the lowest, and the interesting

0:14:17.960 --> 0:14:20.320
<v Speaker 2>thing about the pandemic is when they were frequently out

0:14:20.320 --> 0:14:24.239
<v Speaker 2>of things, it sent you searching. So I think everybody

0:14:24.320 --> 0:14:27.760
<v Speaker 2>has a Target account, a Walmart account, which may not

0:14:27.840 --> 0:14:31.280
<v Speaker 2>have been true in twenty nineteen pre pandemic. So the

0:14:31.360 --> 0:14:37.680
<v Speaker 2>whole experience is much less delightful than it was. I

0:14:37.880 --> 0:14:41.680
<v Speaker 2>kind of think since Bezos left, the people who are

0:14:41.680 --> 0:14:44.920
<v Speaker 2>there are just focused on how do we max out

0:14:44.960 --> 0:14:48.480
<v Speaker 2>profitability and the hell with the user experience, which wasn't

0:14:48.520 --> 0:14:51.800
<v Speaker 2>what it felt like under Bezos or am I wildly

0:14:52.560 --> 0:14:53.320
<v Speaker 2>overstating that.

0:14:53.440 --> 0:14:56.080
<v Speaker 1>Well, there's a large part of my book gets into

0:14:56.120 --> 0:14:59.680
<v Speaker 1>this toxic culture at Amazon. Uh huh, where employees are

0:15:00.040 --> 0:15:03.000
<v Speaker 1>in this hunger games like scenario where they're competing with

0:15:03.040 --> 0:15:05.320
<v Speaker 1>their other employees to keep their jobs.

0:15:06.120 --> 0:15:08.520
<v Speaker 2>Talking about the six percent, Yeah, they get cut at

0:15:08.560 --> 0:15:11.320
<v Speaker 2>the end of the year, ranking that whole like everything

0:15:11.320 --> 0:15:12.600
<v Speaker 2>they said they weren't doing.

0:15:12.440 --> 0:15:15.880
<v Speaker 1>The Actually time, I have all the documents.

0:15:14.960 --> 0:15:18.720
<v Speaker 2>GE used to cut the bottom ten percent six percent?

0:15:19.000 --> 0:15:22.120
<v Speaker 2>And then where did the force ranking come from?

0:15:22.240 --> 0:15:24.600
<v Speaker 1>Jeff like that Intel did this right, That's what he

0:15:24.640 --> 0:15:27.520
<v Speaker 1>said to his leadership team, like, let's do this because

0:15:27.520 --> 0:15:29.600
<v Speaker 1>we have to get rid of the bottom performers. But

0:15:29.680 --> 0:15:33.040
<v Speaker 1>that has unintended consequences. It means that everyone at Amazon,

0:15:33.080 --> 0:15:36.200
<v Speaker 1>on the white collar side, is driven to work in

0:15:36.200 --> 0:15:39.120
<v Speaker 1>a way that just benefits their numbers, benefits their bottom lines,

0:15:39.200 --> 0:15:41.240
<v Speaker 1>even if it's not good for you as the customer,

0:15:41.400 --> 0:15:44.040
<v Speaker 1>even if it means it's unsafe for the customer, as

0:15:44.120 --> 0:15:48.040
<v Speaker 1>long as it's expanding selection and increasing profits. That often

0:15:48.160 --> 0:15:49.240
<v Speaker 1>is the name of the game.

0:15:49.240 --> 0:15:51.080
<v Speaker 2>Unsafe for the customer. How is it on?

0:15:51.360 --> 0:15:53.520
<v Speaker 1>Yes, So I have anecdotes in the book where there

0:15:53.520 --> 0:15:57.960
<v Speaker 1>are well meaning people on the Child's Marketplace team that

0:15:57.680 --> 0:16:00.440
<v Speaker 1>are that where there's they're selling clothes for children, right,

0:16:00.680 --> 0:16:03.880
<v Speaker 1>and there's a mandate from Bezos to expand selection and

0:16:03.880 --> 0:16:06.000
<v Speaker 1>get more sellers into Amazon dot Com because the more

0:16:06.000 --> 0:16:08.040
<v Speaker 1>sellers you have, the more sales you get, the more

0:16:08.040 --> 0:16:13.440
<v Speaker 1>sales sellers come on exactly, And they make changes to

0:16:13.480 --> 0:16:16.280
<v Speaker 1>the sign up process for sellers to on board to

0:16:16.320 --> 0:16:18.200
<v Speaker 1>Amazon dot Com. They want to make it easy as

0:16:18.200 --> 0:16:21.840
<v Speaker 1>possible sign up and you could be selling within a day, okay, right,

0:16:22.160 --> 0:16:23.640
<v Speaker 1>so not really betting these sellers.

0:16:23.800 --> 0:16:27.560
<v Speaker 2>So in other words, Chinese junk with that's not fireproof,

0:16:27.600 --> 0:16:28.800
<v Speaker 2>that's not exactly.

0:16:29.080 --> 0:16:31.440
<v Speaker 1>So then the Chinese junk comes in within a day

0:16:31.560 --> 0:16:33.600
<v Speaker 1>and some of these parents on the team are horrified.

0:16:33.640 --> 0:16:35.800
<v Speaker 1>There are children's pajamas that smell.

0:16:35.600 --> 0:16:38.000
<v Speaker 2>Like gas, aldehyde and gas.

0:16:38.240 --> 0:16:41.440
<v Speaker 1>There are hoodies that have strings around the acuatch are

0:16:41.440 --> 0:16:43.840
<v Speaker 1>a strangulation hazard that are banned from being sold in

0:16:43.880 --> 0:16:46.280
<v Speaker 1>the US because if it's strangled tall there there are

0:16:46.320 --> 0:16:46.720
<v Speaker 1>all these.

0:16:46.840 --> 0:16:49.360
<v Speaker 2>Listen, if kids have to die in order for our

0:16:49.360 --> 0:16:53.080
<v Speaker 2>profit margin to expand, that's just a little collateral damage.

0:16:53.080 --> 0:16:56.080
<v Speaker 2>Who can complain as long as our profits are gone.

0:16:56.400 --> 0:16:59.640
<v Speaker 2>I mean, you know it's a tough world. That tough enough.

0:17:00.000 --> 0:17:02.280
<v Speaker 1>So they flagged this to the Actually they take upon

0:17:02.320 --> 0:17:04.520
<v Speaker 1>themselves to add some of the friction back into the process.

0:17:04.520 --> 0:17:07.040
<v Speaker 1>Design it okay, and their boss yells at them, it's

0:17:07.080 --> 0:17:09.400
<v Speaker 1>just take that off, and they said, well, we're trying

0:17:09.440 --> 0:17:12.040
<v Speaker 1>to protect the consumer. We ostensibly we are a customer

0:17:12.040 --> 0:17:14.840
<v Speaker 1>obsessed organization, which is what they say, right, And he said, well,

0:17:14.880 --> 0:17:17.440
<v Speaker 1>if that's what you know Bezos wants, there's other people

0:17:17.440 --> 0:17:19.320
<v Speaker 1>that will handle that. So they reluctantly do that, and

0:17:19.359 --> 0:17:22.080
<v Speaker 1>all the goods fled back in right. And ironically, their

0:17:22.119 --> 0:17:23.680
<v Speaker 1>boss who told them not to do that, is now

0:17:23.760 --> 0:17:27.080
<v Speaker 1>the VP of Customer Safety and Trust. But my book

0:17:27.119 --> 0:17:31.119
<v Speaker 1>found other examples. Amazon was selling carbon monoxide detectors that

0:17:31.160 --> 0:17:32.520
<v Speaker 1>don't detect carbon monoxide.

0:17:32.600 --> 0:17:34.840
<v Speaker 2>Well, you know, that's extra if you want it to

0:17:34.920 --> 0:17:41.280
<v Speaker 2>actually work. Yeah, that's a different that's that's carbon monoxide prime.

0:17:41.920 --> 0:17:44.879
<v Speaker 2>You know, you can't just order early, you know. In

0:17:44.960 --> 0:17:49.080
<v Speaker 2>the two thousands and twenty tens, it felt like the

0:17:49.160 --> 0:17:54.040
<v Speaker 2>reason people were terrified of Amazon is huge selection, fairly

0:17:54.160 --> 0:17:59.080
<v Speaker 2>high quality product, and the prices were almost always the cheapest.

0:17:59.400 --> 0:18:02.280
<v Speaker 2>I don't find any of those things now. The selection

0:18:02.640 --> 0:18:07.520
<v Speaker 2>is sort of a it's paradoxically, there's so much garbage

0:18:07.560 --> 0:18:10.640
<v Speaker 2>on it, like when this when they first started marketplace,

0:18:11.200 --> 0:18:14.800
<v Speaker 2>my immediate reaction was, Hey, if I wanted products from

0:18:14.840 --> 0:18:17.720
<v Speaker 2>a garage sale, I know where eBay is. I can

0:18:17.800 --> 0:18:20.639
<v Speaker 2>click over there. Why are you making this worse? But

0:18:20.760 --> 0:18:23.000
<v Speaker 2>I guess you know it's worked out.

0:18:22.960 --> 0:18:25.960
<v Speaker 1>From Well, there's a reason for that. You know, Amazon

0:18:25.960 --> 0:18:27.680
<v Speaker 1>has been sued for being an illegal monopoly.

0:18:27.880 --> 0:18:28.240
<v Speaker 2>Uh huh.

0:18:28.240 --> 0:18:30.480
<v Speaker 1>And the idea here is that, you know, when when

0:18:30.480 --> 0:18:33.280
<v Speaker 1>a company is building monopoly, they have to have the

0:18:33.320 --> 0:18:35.560
<v Speaker 1>best experience because they have to steal market share from

0:18:35.600 --> 0:18:38.520
<v Speaker 1>their competitors. So when Amazon was coming up, when you

0:18:38.600 --> 0:18:41.520
<v Speaker 1>like the experience, it was fast shipping, the quality was

0:18:41.600 --> 0:18:43.600
<v Speaker 1>much better, The prices were low because they were using

0:18:43.640 --> 0:18:47.280
<v Speaker 1>predatory pricing to undercut their rivals, to steal market share,

0:18:47.320 --> 0:18:49.719
<v Speaker 1>get people to sign up for prime, and put companies

0:18:49.760 --> 0:18:51.480
<v Speaker 1>out of business. You know, Lens, the last time you

0:18:51.520 --> 0:18:52.879
<v Speaker 1>saw a circuit city.

0:18:52.720 --> 0:18:53.680
<v Speaker 2>Right, circuit city.

0:18:55.560 --> 0:18:58.240
<v Speaker 1>It goes on. And I spoke to all those CEOs

0:18:58.280 --> 0:19:00.560
<v Speaker 1>for this book, and they lived at first hand. Amazon

0:19:00.600 --> 0:19:03.120
<v Speaker 1>is undercutting them on price to steal their customers and

0:19:03.240 --> 0:19:06.240
<v Speaker 1>put them out of business. What happens to monopoly once

0:19:06.280 --> 0:19:10.280
<v Speaker 1>they become a monopoly is that there's less competition. Where

0:19:10.280 --> 0:19:12.480
<v Speaker 1>are you going to go? So they could raise prices,

0:19:12.520 --> 0:19:15.720
<v Speaker 1>they could flood the feed with advertisements that are annoying

0:19:15.800 --> 0:19:17.879
<v Speaker 1>to you. They could do all these things to make

0:19:17.880 --> 0:19:20.400
<v Speaker 1>it a lesser experience. But have you canceled your Prime account? Probably?

0:19:20.440 --> 0:19:22.680
<v Speaker 2>I haven't canceled my Prime account, but I will tell

0:19:22.760 --> 0:19:27.440
<v Speaker 2>you that I have dramatically reduced the products I buy

0:19:27.440 --> 0:19:31.520
<v Speaker 2>on Amazon, and very often in the old days it's like,

0:19:31.560 --> 0:19:35.040
<v Speaker 2>oh it's on Amazon. Remember one click buying. There is

0:19:35.080 --> 0:19:37.600
<v Speaker 2>no more one click buying because when you see something,

0:19:37.960 --> 0:19:40.520
<v Speaker 2>especially if it's something you're not familiar with the price,

0:19:40.960 --> 0:19:44.800
<v Speaker 2>you have to quickly Google Walmart, Target, and Google shopping

0:19:45.240 --> 0:19:47.280
<v Speaker 2>to see because every now and then a third party

0:19:47.359 --> 0:19:51.040
<v Speaker 2>seller will have a product that's double or you know,

0:19:51.080 --> 0:19:53.399
<v Speaker 2>fifty percent more than what it should be. I just

0:19:53.440 --> 0:19:56.480
<v Speaker 2>bought something from Target the other day that was twenty

0:19:56.520 --> 0:19:58.879
<v Speaker 2>two dollars. It was thirty four dollars on Amazon, and

0:19:58.920 --> 0:20:01.480
<v Speaker 2>it wasn't being sold by Amazon, but it was by

0:20:01.560 --> 0:20:02.440
<v Speaker 2>a marketplace.

0:20:02.560 --> 0:20:06.360
<v Speaker 1>That's why also part of this building. The monopoly situation

0:20:06.520 --> 0:20:09.200
<v Speaker 1>is that Amazon's third party sellers. Sixty percent of what's

0:20:09.200 --> 0:20:11.600
<v Speaker 1>sold on Amazon is these third party sellers. They are

0:20:11.640 --> 0:20:14.720
<v Speaker 1>so reliant on Amazon because forty percent of everything's sold

0:20:14.760 --> 0:20:17.160
<v Speaker 1>online is there. They have to be there, and it's

0:20:17.200 --> 0:20:18.920
<v Speaker 1>this weird love hate relationship.

0:20:18.960 --> 0:20:20.679
<v Speaker 2>We're going to go into the details on some of

0:20:20.680 --> 0:20:25.080
<v Speaker 2>the really dubious things that they did just across the board.

0:20:25.119 --> 0:20:28.560
<v Speaker 2>We'll talk about. I mean, the book is kind of horrifying,

0:20:28.680 --> 0:20:30.800
<v Speaker 2>as I don't know if that was your intention, but

0:20:30.840 --> 0:20:33.520
<v Speaker 2>as you're walking working through it, it's like, oh, this

0:20:33.600 --> 0:20:39.119
<v Speaker 2>company has some ethical compromises and some just culture that

0:20:39.160 --> 0:20:43.760
<v Speaker 2>seems to be really toxic, not just for the customers,

0:20:44.080 --> 0:20:46.920
<v Speaker 2>but the employees as well and the partners. It seems

0:20:46.960 --> 0:20:49.800
<v Speaker 2>across the board it's when it all costs, and you

0:20:49.800 --> 0:20:52.919
<v Speaker 2>don't often stop and think what that means, but it

0:20:52.960 --> 0:20:55.040
<v Speaker 2>means a lot of really bad things. According to your.

0:20:54.960 --> 0:20:56.200
<v Speaker 1>Book, it does.

0:20:56.920 --> 0:21:01.000
<v Speaker 2>Let's talk a little bit about how Amazon's culture got

0:21:01.040 --> 0:21:05.840
<v Speaker 2>to where it is today, going back to its origin story.

0:21:06.560 --> 0:21:11.119
<v Speaker 2>Bezos works at Hedge Funds, Qunshop d Shaw, and he

0:21:11.240 --> 0:21:14.880
<v Speaker 2>is given the task, along with three other employees, of

0:21:14.960 --> 0:21:20.040
<v Speaker 2>investigating this new fangled Internet thingy and what the possible

0:21:20.800 --> 0:21:23.479
<v Speaker 2>areas for growth and disruption might come out of it.

0:21:24.480 --> 0:21:28.520
<v Speaker 2>Three or four different analysts were given different sections. Bezos's

0:21:29.600 --> 0:21:32.680
<v Speaker 2>was tasked with looking into the impact of the Internet

0:21:33.280 --> 0:21:36.920
<v Speaker 2>on retail, directly by David Shaw. Tell us a little

0:21:36.960 --> 0:21:41.760
<v Speaker 2>bit about that project. How long on d Shaw's dime

0:21:42.080 --> 0:21:45.800
<v Speaker 2>was Bezos researching the Internet months?

0:21:46.240 --> 0:21:48.840
<v Speaker 1>And he liked what he saw. At the time, the

0:21:48.920 --> 0:21:51.520
<v Speaker 1>idea that this would take off was really far fetched.

0:21:52.800 --> 0:21:56.399
<v Speaker 1>Nine four ninety three and three percent of Americans had

0:21:56.440 --> 0:21:58.359
<v Speaker 1>ever been on the World Wide Web. So think of it,

0:21:58.400 --> 0:22:01.600
<v Speaker 1>and you know, and and David Shaw was the nerdy

0:22:02.119 --> 0:22:04.840
<v Speaker 1>programmer type of person who could see the potential for it.

0:22:04.880 --> 0:22:08.280
<v Speaker 1>So he thinks, let's have my you know, my star

0:22:08.359 --> 0:22:12.199
<v Speaker 1>associates and vps look into the commercial uses for the Internet.

0:22:12.240 --> 0:22:16.760
<v Speaker 1>One looks into banking, and Jeff looks into retail. And

0:22:17.560 --> 0:22:20.119
<v Speaker 1>the idea is, if they think it's worth worthwhile, that

0:22:20.200 --> 0:22:22.320
<v Speaker 1>d Shaw will open up these verticals and they do

0:22:22.400 --> 0:22:25.000
<v Speaker 1>it with the other areas that the people that research

0:22:25.040 --> 0:22:28.960
<v Speaker 1>the other areas for for David start businesses for him

0:22:28.960 --> 0:22:29.679
<v Speaker 1>that make money.

0:22:29.880 --> 0:22:34.640
<v Speaker 2>Why didn't David Shaw invest in Bezos and Amazon when

0:22:34.680 --> 0:22:36.400
<v Speaker 2>when he left for Seattle.

0:22:36.720 --> 0:22:39.560
<v Speaker 1>Well, so, then Bezos likes what he sees all on

0:22:39.720 --> 0:22:42.600
<v Speaker 1>d Shaw's dime. He does his research report, sees that

0:22:42.640 --> 0:22:44.480
<v Speaker 1>there's likes for this, thinks that books could be the

0:22:44.520 --> 0:22:47.439
<v Speaker 1>first area of selling online. And he goes on this

0:22:47.520 --> 0:22:49.920
<v Speaker 1>walk with David the in Central Park and says, Hey,

0:22:50.680 --> 0:22:52.639
<v Speaker 1>I think I'm going to quit and start an online

0:22:52.640 --> 0:22:55.440
<v Speaker 1>book shop. And David said, you know, I think that's

0:22:55.600 --> 0:22:57.239
<v Speaker 1>you already have a really good job. I think that's

0:22:57.280 --> 0:22:59.360
<v Speaker 1>a good idea for someone else. And by the way,

0:22:59.440 --> 0:23:02.000
<v Speaker 1>you know, that was my idea. We might go head

0:23:02.000 --> 0:23:03.560
<v Speaker 1>to head with you and compete with you on this.

0:23:03.680 --> 0:23:06.600
<v Speaker 1>And Bezos basically says I'll take the risk and moves

0:23:06.640 --> 0:23:07.360
<v Speaker 1>out to Seattle.

0:23:07.520 --> 0:23:11.200
<v Speaker 2>Kind of surprised that Shaw went that way instead of saying,

0:23:11.880 --> 0:23:14.480
<v Speaker 2>you know, sort of let us seed you us, let

0:23:14.520 --> 0:23:19.280
<v Speaker 2>us participate in this, like it was a little adversarial

0:23:19.320 --> 0:23:20.920
<v Speaker 2>as opposed to cooperative.

0:23:21.160 --> 0:23:24.440
<v Speaker 1>Yeah, And actually Bezos had a really hard time fundraising

0:23:24.440 --> 0:23:28.000
<v Speaker 1>this idea because it was so wild. You know, it

0:23:28.000 --> 0:23:29.680
<v Speaker 1>took him a really long time to get his first

0:23:29.720 --> 0:23:32.879
<v Speaker 1>million dollars. Most of his investments trickled in in fifty

0:23:32.960 --> 0:23:33.720
<v Speaker 1>thousand dollars.

0:23:33.480 --> 0:23:38.240
<v Speaker 2>Increments literally friends and family. Oh, yeah, big time until eventually, right,

0:23:38.320 --> 0:23:40.720
<v Speaker 2>who was the first VC to put money into.

0:23:40.560 --> 0:23:44.480
<v Speaker 1>Believe it was Kleiner. They're on the board and oh

0:23:44.480 --> 0:23:44.800
<v Speaker 1>that's right.

0:23:44.880 --> 0:23:47.280
<v Speaker 2>John Door was on the board for forever. That's ocky,

0:23:47.520 --> 0:23:50.400
<v Speaker 2>so really kind of interesting that he missed it. But

0:23:50.520 --> 0:23:55.240
<v Speaker 2>the whole thing, just the way I learned about it,

0:23:55.240 --> 0:23:56.560
<v Speaker 2>it's kind of shady.

0:23:56.280 --> 0:24:00.400
<v Speaker 1>Isn't I mean it's copycat mentality that continues to this date. Amazon.

0:24:00.440 --> 0:24:02.280
<v Speaker 1>Oh that's a good idea. Be a shame if someone

0:24:02.280 --> 0:24:02.600
<v Speaker 1>took it.

0:24:04.200 --> 0:24:08.920
<v Speaker 2>So Amazon is not only Custer obsessed, as Bezos once said,

0:24:09.240 --> 0:24:13.399
<v Speaker 2>but it's also competitor obsessed. Where does that come from?

0:24:13.800 --> 0:24:15.480
<v Speaker 2>And how does it manifest itself?

0:24:15.760 --> 0:24:18.480
<v Speaker 1>Oh, they're the most competitor obsessed company I've ever covered,

0:24:18.480 --> 0:24:21.239
<v Speaker 1>and I've covered companies for eighteen years. Part of it

0:24:21.320 --> 0:24:24.280
<v Speaker 1>is the culture, because they have to be performing at

0:24:24.280 --> 0:24:26.800
<v Speaker 1>all times to justify their existence, to not get cut.

0:24:27.200 --> 0:24:29.760
<v Speaker 1>It's this pressure cooker of an environment that people that

0:24:29.800 --> 0:24:32.359
<v Speaker 1>I've spoken to that might have worked at other companies

0:24:32.359 --> 0:24:34.800
<v Speaker 1>wouldn't be tempted to do illegal things on ethical things,

0:24:34.840 --> 0:24:37.440
<v Speaker 1>anti competitive things are sort of forced to their breaking

0:24:37.480 --> 0:24:39.280
<v Speaker 1>point at Amazon, and I could give you an example

0:24:39.280 --> 0:24:42.199
<v Speaker 1>if you like. There's a scene in the book that

0:24:42.240 --> 0:24:45.119
<v Speaker 1>has resonated with a lot of people where Amazon, at

0:24:45.160 --> 0:24:48.480
<v Speaker 1>Jeff's behest wanted to create like a Trader Joe's like

0:24:49.280 --> 0:24:51.680
<v Speaker 1>product line of food. He liked that Trader Joe's was

0:24:51.720 --> 0:24:56.600
<v Speaker 1>quirky and cool. So the team at Amazon writes the

0:24:56.680 --> 0:24:59.560
<v Speaker 1>sixth pager that's how they come up with ideas, and

0:24:59.600 --> 0:25:02.600
<v Speaker 1>it says, we want to copy the top two hundred

0:25:02.600 --> 0:25:05.280
<v Speaker 1>best selling items at Trader Joe's. And they get the

0:25:05.280 --> 0:25:07.320
<v Speaker 1>green light for management to do that. But Trader Joe's

0:25:07.359 --> 0:25:09.760
<v Speaker 1>is a really secretive company. They don't do online shopping.

0:25:10.200 --> 0:25:11.879
<v Speaker 1>It's hard to figure out what the best sellers are.

0:25:12.000 --> 0:25:13.960
<v Speaker 2>Literally walk through the store, and they have to walk.

0:25:13.840 --> 0:25:15.760
<v Speaker 1>Through the store and people love to do it. It's

0:25:15.760 --> 0:25:19.240
<v Speaker 1>like a really delightful experience, right. So the head of

0:25:19.240 --> 0:25:22.879
<v Speaker 1>the team goes about hiring the senior executive from Trader Joe's.

0:25:23.080 --> 0:25:24.840
<v Speaker 1>She doesn't really know what her job's going to be,

0:25:25.880 --> 0:25:29.320
<v Speaker 1>moves out to Seattle, and her first week in Seattle,

0:25:29.440 --> 0:25:34.680
<v Speaker 1>stumbles across this really secretive room conference room. It has

0:25:34.840 --> 0:25:37.800
<v Speaker 1>paper over the doors and the walls, brown paper. Suit

0:25:37.840 --> 0:25:40.120
<v Speaker 1>can't see inside, and she goes inside and it's filled

0:25:40.240 --> 0:25:43.119
<v Speaker 1>with Trader Joe's boxes of foods, and she has this

0:25:43.200 --> 0:25:46.040
<v Speaker 1>light bulb moment like, oh, crap, I've been hired to

0:25:46.080 --> 0:25:50.440
<v Speaker 1>replicate my former employer. From there, her boss starts hounding her, saying,

0:25:50.520 --> 0:25:53.280
<v Speaker 1>give me any documents you retained from your time at

0:25:53.280 --> 0:25:55.040
<v Speaker 1>Trader Joe's, which is.

0:25:55.080 --> 0:25:57.520
<v Speaker 2>Clearly like and the collect correct answer is I have

0:25:57.560 --> 0:26:00.560
<v Speaker 2>no documents that they made me turn everything in as

0:26:00.640 --> 0:26:03.320
<v Speaker 2>per my prior employment agreement.

0:26:03.119 --> 0:26:05.159
<v Speaker 1>Or if I do, I cannot give them over to

0:26:05.200 --> 0:26:08.639
<v Speaker 1>because that's actually illegal. Okay, So she says no. The

0:26:08.680 --> 0:26:12.040
<v Speaker 1>boss keeps hounding her, hounding her, and it becomes this

0:26:12.160 --> 0:26:15.879
<v Speaker 1>really tense experience. Then she emails him the top selling

0:26:15.880 --> 0:26:18.240
<v Speaker 1>items from Trader Joe's from one whole week in the US,

0:26:18.960 --> 0:26:22.480
<v Speaker 1>ranked by products that were sold, and they start to

0:26:22.480 --> 0:26:24.560
<v Speaker 1>disseminate that within the team. They have their blueprint to

0:26:24.600 --> 0:26:26.840
<v Speaker 1>copy the top two hundred items at Trader Joe's. And

0:26:26.880 --> 0:26:28.440
<v Speaker 1>then he doesn't stop there. He says, no, send me

0:26:28.480 --> 0:26:31.600
<v Speaker 1>all the margins, really, and she says, no, I'm not

0:26:31.640 --> 0:26:33.400
<v Speaker 1>doing that, and he screams at her in the middle

0:26:33.440 --> 0:26:36.399
<v Speaker 1>of the Seattle office starts crying and someone reports to

0:26:36.560 --> 0:26:38.640
<v Speaker 1>HR because it was just like such a clear violation,

0:26:38.720 --> 0:26:40.840
<v Speaker 1>and Amazon actually fired those people because it went up

0:26:40.880 --> 0:26:44.240
<v Speaker 1>to HR. But that sort of scenario plays out at

0:26:44.240 --> 0:26:45.879
<v Speaker 1>Amazon every single team.

0:26:46.280 --> 0:26:49.639
<v Speaker 2>I want to stay with the idea of some of

0:26:49.680 --> 0:26:55.040
<v Speaker 2>the earlier advantages that Amazon had and how it resulted

0:26:55.080 --> 0:26:58.439
<v Speaker 2>in their growth. We'll get to diapers dot com, We'll

0:26:58.440 --> 0:27:02.000
<v Speaker 2>get to some of the other headlers. Let's talk about

0:27:02.320 --> 0:27:08.560
<v Speaker 2>the state tax advantage, So talk about arbitrage. Bezos specifically

0:27:08.880 --> 0:27:15.080
<v Speaker 2>picks Washington state because there's so few shoppers in the

0:27:15.160 --> 0:27:19.040
<v Speaker 2>state that by locating there and shipping to the rest

0:27:19.080 --> 0:27:22.240
<v Speaker 2>of the country, he doesn't believe he has to collect

0:27:22.480 --> 0:27:26.760
<v Speaker 2>state sales tax because of an old Supreme Court case.

0:27:27.040 --> 0:27:29.359
<v Speaker 2>Maybe it even involved a catalog. It wasn't Sears.

0:27:29.480 --> 0:27:31.359
<v Speaker 1>Was it was a catalog, It wasn't Seiers.

0:27:31.920 --> 0:27:36.400
<v Speaker 2>That said, hey, you only collect interstate commerce is not taxable.

0:27:36.520 --> 0:27:39.280
<v Speaker 2>Therefore you don't have to collect it its own unless

0:27:39.320 --> 0:27:44.760
<v Speaker 2>you have a nexus to that state. So immediately they're

0:27:44.800 --> 0:27:48.920
<v Speaker 2>at a six seven eight percent advantage over everybody else

0:27:49.000 --> 0:27:52.280
<v Speaker 2>in most states. Tell us how they push the envelope

0:27:52.320 --> 0:27:53.760
<v Speaker 2>with state sales tax.

0:27:54.080 --> 0:27:58.720
<v Speaker 1>This is simultaneously brilliant but horrifying for the rest of retail.

0:27:59.200 --> 0:28:01.680
<v Speaker 1>He comes up with this idea that his warehouses don't

0:28:01.720 --> 0:28:04.000
<v Speaker 1>count as physical locations for Amazon.

0:28:03.960 --> 0:28:07.320
<v Speaker 2>Which is kind of bizarre because of course it is right.

0:28:07.960 --> 0:28:10.600
<v Speaker 2>I mean, if you locate a warehouse in New York,

0:28:10.720 --> 0:28:12.359
<v Speaker 2>you now have in nexus with New York.

0:28:12.520 --> 0:28:15.240
<v Speaker 1>But they tried to carve that out as a separate entity.

0:28:15.400 --> 0:28:19.760
<v Speaker 1>And up until twenty seventeen, Amazon was not collecting sales tax.

0:28:19.520 --> 0:28:21.879
<v Speaker 2>In something, so they had a twenty year head start.

0:28:21.760 --> 0:28:23.960
<v Speaker 1>Exactly, and up to ten percent in some of these states.

0:28:23.960 --> 0:28:26.680
<v Speaker 1>And that just had ripple effects because people once the

0:28:26.720 --> 0:28:29.880
<v Speaker 1>advent of online shopping came about, people became really price conscious,

0:28:30.080 --> 0:28:33.040
<v Speaker 1>you know, people would do comparison shopping. And I spoke

0:28:33.080 --> 0:28:35.960
<v Speaker 1>to you one of the presidents of Sears who had

0:28:36.000 --> 0:28:38.880
<v Speaker 1>to deal with this head on, and he said, you know,

0:28:38.960 --> 0:28:41.840
<v Speaker 1>Amazon and him would be selling the same Sony television.

0:28:41.880 --> 0:28:45.800
<v Speaker 1>Let's say it's five hundred dollars market the price. Amazon

0:28:45.840 --> 0:28:48.120
<v Speaker 1>for many states could sell that for five hundred dollars flat.

0:28:49.080 --> 0:28:51.360
<v Speaker 1>Sears would have to charge eight percent sales tax in

0:28:51.400 --> 0:28:54.240
<v Speaker 1>New York. So what would Sears do? They would cut

0:28:54.280 --> 0:28:58.360
<v Speaker 1>the price of their TV by eight percent in order

0:28:58.440 --> 0:29:01.040
<v Speaker 1>to go head to head with Amazon, and they would

0:29:01.080 --> 0:29:04.480
<v Speaker 1>just completely destroy their margins. And it created this race

0:29:04.520 --> 0:29:07.560
<v Speaker 1>to the bottom on electronics prices because they had to

0:29:07.600 --> 0:29:10.440
<v Speaker 1>try to compete but at a loss. And this happened

0:29:10.520 --> 0:29:13.840
<v Speaker 1>in so many companies where they either couldn't compete and

0:29:13.880 --> 0:29:16.760
<v Speaker 1>they lost the sale to Amazon, or they cut their

0:29:16.760 --> 0:29:19.040
<v Speaker 1>prices and they destroyed their margins. And that's like a

0:29:19.200 --> 0:29:21.400
<v Speaker 1>very easy way to go bankruptcy.

0:29:21.280 --> 0:29:24.880
<v Speaker 2>So with the benefit of hindsight, you look at they

0:29:24.880 --> 0:29:28.240
<v Speaker 2>have this advantage for twenty years, which is a long time.

0:29:28.840 --> 0:29:33.000
<v Speaker 2>I'm kind of shocked that states didn't stand up and say,

0:29:33.440 --> 0:29:36.080
<v Speaker 2>not only are we losing jobs in our states, but

0:29:36.120 --> 0:29:39.680
<v Speaker 2>we're losing tens of millions or hundreds of million in

0:29:39.800 --> 0:29:44.040
<v Speaker 2>tax revenue. Why did the various states tolerate this for

0:29:44.080 --> 0:29:44.960
<v Speaker 2>as long as they did.

0:29:45.440 --> 0:29:47.640
<v Speaker 1>That's a really good question. I spoke to someone in

0:29:47.680 --> 0:29:50.480
<v Speaker 1>Amazon's public policy office that worked on this, and he said, like,

0:29:50.560 --> 0:29:53.320
<v Speaker 1>this was our secret sauce, and Amazon fought tooth and

0:29:53.400 --> 0:29:55.440
<v Speaker 1>nail to preserve it, to not get rid of this

0:29:55.480 --> 0:29:58.000
<v Speaker 1>advantage they had, and so they know they'd go to court,

0:29:58.160 --> 0:30:00.880
<v Speaker 1>they would go for Congress and make their case and

0:30:00.920 --> 0:30:02.240
<v Speaker 1>some states did come knocking.

0:30:02.640 --> 0:30:05.960
<v Speaker 2>Wherever there is a state income tax, there's usually a

0:30:05.960 --> 0:30:10.040
<v Speaker 2>state sales tax potend. Right, So if you open a

0:30:10.080 --> 0:30:13.360
<v Speaker 2>warehouse there and the state is losing a lot of revenue,

0:30:13.520 --> 0:30:16.920
<v Speaker 2>why wouldn't they just sue Amazon and say, hey, we

0:30:16.960 --> 0:30:19.840
<v Speaker 2>figured out you sold this money goods in our state

0:30:20.120 --> 0:30:21.920
<v Speaker 2>and uo of sales tax here because you have an.

0:30:21.840 --> 0:30:23.520
<v Speaker 1>Ex Well, what part of what I found is that

0:30:23.520 --> 0:30:26.480
<v Speaker 1>many of these legislators in the states were very short sighted.

0:30:26.560 --> 0:30:29.320
<v Speaker 1>They wanted to put up press releases that oh, we

0:30:29.440 --> 0:30:32.320
<v Speaker 1>got an Amazon warehouse at all of these temporary jobs.

0:30:32.920 --> 0:30:35.520
<v Speaker 1>And there's this horrible scene in the book where Jerry Storch,

0:30:35.520 --> 0:30:37.120
<v Speaker 1>who's the CEO of Toys r US at the time,

0:30:37.120 --> 0:30:39.000
<v Speaker 1>which is one of New Jersey's.

0:30:38.720 --> 0:30:40.880
<v Speaker 2>Largest employee r speaks to Chris Christie.

0:30:40.920 --> 0:30:42.720
<v Speaker 1>He speaks to Chris Christie. He says, you guys are

0:30:42.800 --> 0:30:45.680
<v Speaker 1>killing me. Why are you not making Amazon collect sales

0:30:45.720 --> 0:30:47.720
<v Speaker 1>tax in New Jersey. You're putting Toys r Us out

0:30:47.720 --> 0:30:49.720
<v Speaker 1>of business. You're gonna put Main Street on business. And

0:30:49.800 --> 0:30:52.320
<v Speaker 1>Chris Christie sort of the aaas him. And then a

0:30:52.400 --> 0:30:56.240
<v Speaker 1>year later they announced this big Amazon warehouse in Robbinsville,

0:30:56.280 --> 0:30:59.480
<v Speaker 1>New Jersey. They give Amazon all these tax credits for it.

0:31:00.200 --> 0:31:01.880
<v Speaker 1>Christy gets to put out the press release that they're

0:31:01.920 --> 0:31:04.800
<v Speaker 1>bringing hundreds of jobs to New Jersey. But Jerry's whole

0:31:04.800 --> 0:31:07.520
<v Speaker 1>point was, Okay, you're getting hundreds of jobs there, You're

0:31:07.520 --> 0:31:09.960
<v Speaker 1>gonna lose thousands of jobs just from my one company, right,

0:31:10.080 --> 0:31:12.360
<v Speaker 1>So that's really short sighted. And that's what happened out

0:31:12.440 --> 0:31:14.400
<v Speaker 1>you know, toys or restaponant of business.

0:31:14.440 --> 0:31:19.640
<v Speaker 2>It's amazing how effective they were manipulating so many self

0:31:19.680 --> 0:31:22.640
<v Speaker 2>interested politicians who were so short sighted. But we saw

0:31:22.680 --> 0:31:25.560
<v Speaker 2>that time and time again. It was fascinating that the

0:31:25.600 --> 0:31:30.040
<v Speaker 2>Amazon two HQ was slated for New York, and a

0:31:30.040 --> 0:31:32.200
<v Speaker 2>lot of people in New York said, this is a

0:31:32.360 --> 0:31:35.400
<v Speaker 2>money losing deal. This isn't a wealthy company. Why do

0:31:35.440 --> 0:31:37.400
<v Speaker 2>we have to give them tax breaks? They have to

0:31:37.400 --> 0:31:39.560
<v Speaker 2>compete with everybody else, and they said, screw you.

0:31:39.680 --> 0:31:42.440
<v Speaker 1>Going to New York was one of the rare cities

0:31:42.960 --> 0:31:44.920
<v Speaker 1>to really call them out on that. Just think about

0:31:44.960 --> 0:31:49.800
<v Speaker 1>the frenzy around hundreds of different cities lobbied and put

0:31:49.800 --> 0:31:52.920
<v Speaker 1>in these very intensive applications for the pleasure of having

0:31:52.920 --> 0:31:56.160
<v Speaker 1>these warehouse jobs and the second headquarters there, and that

0:31:56.280 --> 0:31:59.640
<v Speaker 1>just shows how politicians really just want the jobs.

0:31:59.600 --> 0:32:02.600
<v Speaker 2>Right, That's right, And so it was kind of interesting

0:32:02.720 --> 0:32:05.719
<v Speaker 2>that when you ran the numbers as people in New

0:32:05.800 --> 0:32:09.000
<v Speaker 2>York did, it wasn't a good deal and they ended

0:32:09.040 --> 0:32:12.320
<v Speaker 2>up sort of splitting it. It's kind of part in Virginia.

0:32:12.880 --> 0:32:15.960
<v Speaker 2>And where where did the rest of the Amazon headquarters

0:32:16.040 --> 0:32:16.560
<v Speaker 2>end up going.

0:32:16.600 --> 0:32:19.080
<v Speaker 1>Oh, it's in Virginia. But they haven't broken ground on

0:32:19.120 --> 0:32:20.440
<v Speaker 1>a lot of it really.

0:32:20.560 --> 0:32:23.720
<v Speaker 2>Yeah, so that was years ago. I mean, after all

0:32:23.800 --> 0:32:28.280
<v Speaker 2>those crazy contests and RFPs and submissions, they got like

0:32:28.360 --> 0:32:32.240
<v Speaker 2>two hundred cities applying for this, they still haven't broken gup.

0:32:32.440 --> 0:32:32.920
<v Speaker 2>That's amazing.

0:32:32.960 --> 0:32:34.920
<v Speaker 1>They have one building up for sure, but the whole

0:32:34.920 --> 0:32:36.400
<v Speaker 1>plan has not come to fruition.

0:32:36.600 --> 0:32:41.320
<v Speaker 2>Ironically, if you take the Long Island Expressway out past Jericho,

0:32:41.400 --> 0:32:45.760
<v Speaker 2>sayas It, you'll see this immense warehouse that they built

0:32:45.760 --> 0:32:48.200
<v Speaker 2>that used to just be like an empty parking lot.

0:32:48.560 --> 0:32:51.000
<v Speaker 2>I don't know what was there if for years it

0:32:51.120 --> 0:32:54.720
<v Speaker 2>was rumored that something was coming, and what a perfect

0:32:54.800 --> 0:32:57.640
<v Speaker 2>location right off the highway. Why do you need to

0:32:57.680 --> 0:33:02.120
<v Speaker 2>give you know, that gives them access to forty million

0:33:02.120 --> 0:33:04.520
<v Speaker 2>people or fifty million people on the aisle, and why

0:33:04.560 --> 0:33:07.360
<v Speaker 2>would you have to give them a tax break for that.

0:33:07.360 --> 0:33:10.440
<v Speaker 2>That's where the customers are. Shouldn't their business model be

0:33:10.480 --> 0:33:12.720
<v Speaker 2>able to accommodate building warehouse?

0:33:12.800 --> 0:33:15.200
<v Speaker 1>I mean they have something like six point five billion

0:33:15.280 --> 0:33:19.480
<v Speaker 1>dollars in subsidies on taxes from different jurisdisdictions around the US.

0:33:19.520 --> 0:33:20.440
<v Speaker 1>It's pretty staggering.

0:33:20.560 --> 0:33:23.520
<v Speaker 2>Yeah, that's really amazing. The other thing that was so

0:33:23.680 --> 0:33:31.120
<v Speaker 2>disruptive was how Amazon changed how Wall Street itself viewed retailers,

0:33:31.160 --> 0:33:35.040
<v Speaker 2>both in terms of profit versus growth and startups versus

0:33:35.120 --> 0:33:39.240
<v Speaker 2>established retailers. Talk a little bit about the impact Amazon

0:33:39.320 --> 0:33:42.560
<v Speaker 2>had on how Wall Street thought about other companies.

0:33:42.640 --> 0:33:45.360
<v Speaker 1>Yeah, this is huge. There probably wouldn't be an Amazon

0:33:45.400 --> 0:33:47.760
<v Speaker 1>today if Jeff did not convince Wall Street that we

0:33:47.800 --> 0:33:48.880
<v Speaker 1>don't have to make profits.

0:33:49.040 --> 0:33:52.800
<v Speaker 2>Right His initial shareholder letter was, hey, don't expect profits

0:33:52.840 --> 0:33:54.840
<v Speaker 2>for the next ten or twenty years exactly.

0:33:54.920 --> 0:33:57.719
<v Speaker 1>And that just was not the norm back then. It

0:33:57.760 --> 0:34:00.080
<v Speaker 1>is today, but that was definitely not the norm. This

0:34:00.200 --> 0:34:03.120
<v Speaker 1>just gave him a tremendous roadway to reinvest in his

0:34:03.200 --> 0:34:06.000
<v Speaker 1>business and grow and steal share and cut on prices

0:34:06.040 --> 0:34:07.880
<v Speaker 1>to get customers and.

0:34:07.760 --> 0:34:10.759
<v Speaker 2>Not pay federal taxes because if you're not profitable, no

0:34:10.880 --> 0:34:11.319
<v Speaker 2>tax it's a.

0:34:11.320 --> 0:34:16.360
<v Speaker 1>Great point tax rate, and that really destroyed his competitors

0:34:16.400 --> 0:34:19.080
<v Speaker 1>because they couldn't catch up with him on online shopping.

0:34:19.160 --> 0:34:20.879
<v Speaker 1>I spoke to a lot of these CEOs who went

0:34:20.960 --> 0:34:23.160
<v Speaker 1>head to head with Amazon in the nineteen nineties and

0:34:23.160 --> 0:34:25.040
<v Speaker 1>two thousands. One of them was the CEO of Linens

0:34:25.080 --> 0:34:26.920
<v Speaker 1>and Things, and I said, you know, why were you

0:34:26.960 --> 0:34:30.080
<v Speaker 1>all so late to online shopping? Did you not believe

0:34:30.120 --> 0:34:32.200
<v Speaker 1>in it? And he said, Dana, we believed in it.

0:34:32.239 --> 0:34:35.239
<v Speaker 1>But my boardroom, my board of directors, laughed me out

0:34:35.280 --> 0:34:36.840
<v Speaker 1>of the room when I asked for one hundred million

0:34:36.880 --> 0:34:40.640
<v Speaker 1>dollars to get our e commerce and logistics up and running,

0:34:40.680 --> 0:34:43.040
<v Speaker 1>because that would have tanked our earnings, that would have

0:34:43.120 --> 0:34:44.320
<v Speaker 1>tanked our share price.

0:34:44.520 --> 0:34:48.160
<v Speaker 2>There's a little bit of short termism there because and

0:34:48.200 --> 0:34:51.719
<v Speaker 2>again we have the benefit of hindsight, but he obviously

0:34:51.760 --> 0:34:55.560
<v Speaker 2>saw what was coming. Why can't you stay to the board? Look,

0:34:55.560 --> 0:34:58.040
<v Speaker 2>here's the trade off. Either we spend one hundred million

0:34:58.080 --> 0:35:01.040
<v Speaker 2>dollars now and be able to compete with them, or

0:35:01.080 --> 0:35:05.319
<v Speaker 2>we and and lose some stock price for a couple

0:35:05.360 --> 0:35:09.239
<v Speaker 2>of quarters or years, or we're dead. Those are your choices.

0:35:09.440 --> 0:35:12.000
<v Speaker 2>You want, you want a little bit of a pullback

0:35:12.040 --> 0:35:15.200
<v Speaker 2>now or you just want to go bankrupt.

0:35:15.440 --> 0:35:17.799
<v Speaker 1>Retail's a notoriously hard business. It could be a low

0:35:17.880 --> 0:35:20.919
<v Speaker 1>margin and they have to manage to Wall Street quarter

0:35:20.920 --> 0:35:23.600
<v Speaker 1>after quarter, quarter to quarter, and they couldn't. You know,

0:35:23.840 --> 0:35:26.520
<v Speaker 1>the CEO told me, we couldn't miss one quarter of earnings,

0:35:26.600 --> 0:35:29.040
<v Speaker 1>let alone years of them like Bezos did. I'd be

0:35:29.040 --> 0:35:30.840
<v Speaker 1>out of a job. I would be fired. The company

0:35:30.840 --> 0:35:33.600
<v Speaker 1>could go bankrupt. And that was exactly what was going

0:35:33.600 --> 0:35:35.480
<v Speaker 1>on in every company that was trying to compete with them,

0:35:35.600 --> 0:35:37.120
<v Speaker 1>to the point where so many of them had to

0:35:37.120 --> 0:35:40.400
<v Speaker 1>outsource their logistics to Amazon, which is their main competitor.

0:35:40.680 --> 0:35:44.560
<v Speaker 2>Go through the list Toys, r US, Linens and things Target.

0:35:44.680 --> 0:35:48.040
<v Speaker 2>Why on earth would Target, which is a giant company,

0:35:48.239 --> 0:35:50.800
<v Speaker 2>outsource its e commerce to Amazon.

0:35:50.880 --> 0:35:53.080
<v Speaker 1>Well, Jerry Storch, who was the see of Toys r US,

0:35:53.120 --> 0:35:55.799
<v Speaker 1>first Target on dot com, and he told me a

0:35:55.840 --> 0:35:58.640
<v Speaker 1>story that he got yelled at by senior leaders for

0:35:58.719 --> 0:36:02.240
<v Speaker 1>spending ten thousand dollars on buying the domain name Target

0:36:02.239 --> 0:36:02.920
<v Speaker 1>stores dot com.

0:36:02.920 --> 0:36:05.480
<v Speaker 2>That's an amazing story in the book, which is like

0:36:05.840 --> 0:36:08.759
<v Speaker 2>ten thousand dollars for a domat like that is around.

0:36:08.520 --> 0:36:10.520
<v Speaker 1>It to be so careful with their money because it's

0:36:10.520 --> 0:36:15.080
<v Speaker 1>a hard business, right, and so yeah, Target Borders Toys

0:36:15.160 --> 0:36:18.279
<v Speaker 1>r US and they they had to outsource it, which

0:36:18.280 --> 0:36:21.239
<v Speaker 1>meant Amazon kept their customer data. They paid Amazon a

0:36:21.239 --> 0:36:23.880
<v Speaker 1>fee for shipping it, they paid Amazon a fee for

0:36:24.040 --> 0:36:27.880
<v Speaker 1>listing it. They paid Amazon all these fees, and Amazon

0:36:27.920 --> 0:36:29.120
<v Speaker 1>had all the upside and.

0:36:29.080 --> 0:36:31.040
<v Speaker 2>They figured out, you write in the book, they figured

0:36:31.040 --> 0:36:33.800
<v Speaker 2>out that if they were losing sixty five seventy million

0:36:33.880 --> 0:36:36.919
<v Speaker 2>dollars a year on their site, hey we could charge

0:36:36.960 --> 0:36:39.160
<v Speaker 2>them fifty million and it's a cost saving for them.

0:36:39.239 --> 0:36:44.120
<v Speaker 1>Yeah, they just can The lowshold just astonishing.

0:36:44.560 --> 0:36:48.080
<v Speaker 2>So let's stay with books for a minute. I'm fascinated

0:36:48.120 --> 0:36:52.719
<v Speaker 2>that Barnes and Noble tries to respond very aggressively to Amazon,

0:36:52.920 --> 0:36:56.560
<v Speaker 2>and they figure, we're going to take over wholesaleer Ingram

0:36:56.800 --> 0:36:59.759
<v Speaker 2>in order to get a little more bulk, be able

0:36:59.800 --> 0:37:03.680
<v Speaker 2>to stands Amazon, which at that point had become a

0:37:03.719 --> 0:37:08.759
<v Speaker 2>substantial market share of the book selling world. And Amazon

0:37:08.840 --> 0:37:12.280
<v Speaker 2>gets the takeover stopped on anti trust grounds. How ironic?

0:37:12.640 --> 0:37:13.759
<v Speaker 2>Explain what happened there.

0:37:13.880 --> 0:37:16.400
<v Speaker 1>Yeah, so Barnes and Noble, in order to stay competitive,

0:37:16.440 --> 0:37:19.520
<v Speaker 1>tries to buy Ingram, this book distributor that Amazon also used,

0:37:20.040 --> 0:37:22.279
<v Speaker 1>and Amazon cried foul and said the should be an

0:37:22.280 --> 0:37:27.080
<v Speaker 1>antitrust violation. And basically, Amazon even today sometimes has this

0:37:27.120 --> 0:37:29.760
<v Speaker 1>mentality that they are the David going up against Goliath,

0:37:29.800 --> 0:37:31.480
<v Speaker 1>even though that has not been true for a very

0:37:31.560 --> 0:37:34.319
<v Speaker 1>very long time, including in that anecdote, Amazon by market

0:37:34.400 --> 0:37:36.719
<v Speaker 1>value was way bigger than Barnes and Noble at that time.

0:37:36.760 --> 0:37:38.960
<v Speaker 1>And Len Reggio, the CEO of Barnes and Noble at

0:37:38.960 --> 0:37:42.080
<v Speaker 1>the time, calls them out on it. He says, you're

0:37:42.120 --> 0:37:44.040
<v Speaker 1>crying fall and pretending like this is going to hurt

0:37:44.239 --> 0:37:47.719
<v Speaker 1>this little player, but you are the behemoth here. You

0:37:47.719 --> 0:37:49.359
<v Speaker 1>know that the regulators do turn it down.

0:37:49.719 --> 0:37:54.080
<v Speaker 2>So we were talking earlier about Amazon's lack of profitability

0:37:54.080 --> 0:37:57.640
<v Speaker 2>for the first couple of years. It's kind of interesting

0:37:57.680 --> 0:38:01.719
<v Speaker 2>how Bezos's initial share hold your letter, I want to

0:38:01.760 --> 0:38:05.279
<v Speaker 2>say ninety six something like that, seventy seven, the same

0:38:05.360 --> 0:38:09.719
<v Speaker 2>year as the IPO warrant investors not to expect profits

0:38:09.760 --> 0:38:12.600
<v Speaker 2>for years to come. We're going to spend a billion

0:38:12.680 --> 0:38:17.839
<v Speaker 2>dollars building out our website. Not only did this not

0:38:17.920 --> 0:38:21.960
<v Speaker 2>have a negative impact, Wall Street applauded the profitless growth.

0:38:22.000 --> 0:38:25.320
<v Speaker 2>Tell us a little bit about what an advantage and

0:38:25.719 --> 0:38:29.440
<v Speaker 2>how prescient that shareholder letter from Bezos was.

0:38:29.920 --> 0:38:33.440
<v Speaker 1>I mean, he trained his shareholders essentially to not expect anything,

0:38:33.480 --> 0:38:35.840
<v Speaker 1>and he was very clear communicating that. But it also

0:38:35.920 --> 0:38:39.440
<v Speaker 1>just gave them roadway to take all their money and say,

0:38:39.480 --> 0:38:41.239
<v Speaker 1>you know, books are not the bi all end all.

0:38:41.280 --> 0:38:43.000
<v Speaker 1>We're going to use this as a test case. We're

0:38:43.000 --> 0:38:44.200
<v Speaker 1>going to make some money, and then we're going to

0:38:44.239 --> 0:38:46.520
<v Speaker 1>take all that money and put it into expanding our verticals.

0:38:46.840 --> 0:38:48.680
<v Speaker 1>Let's open this up to toys, Let's open this up

0:38:48.719 --> 0:38:51.320
<v Speaker 1>to electronics. It allowed them to build the Everything store,

0:38:51.760 --> 0:38:53.600
<v Speaker 1>and then it allowed them to put this money toward

0:38:53.840 --> 0:38:57.360
<v Speaker 1>other areas of growth beyond retail and really create this

0:38:57.440 --> 0:38:58.640
<v Speaker 1>Amazon octopus.

0:38:59.680 --> 0:39:03.960
<v Speaker 2>To say the very least, let's talk about Amazon Web Services.

0:39:04.400 --> 0:39:06.680
<v Speaker 2>I love the part of the book where you describe

0:39:06.719 --> 0:39:10.719
<v Speaker 2>how this became a thing every time they would stand

0:39:10.800 --> 0:39:13.640
<v Speaker 2>up a new vertical or open a new division, and

0:39:13.800 --> 0:39:15.680
<v Speaker 2>people forget what it was like in the nineties and

0:39:15.719 --> 0:39:19.640
<v Speaker 2>early two thousands before there was an AWS. You ought

0:39:19.680 --> 0:39:22.200
<v Speaker 2>to go out and buy a couple of hundred servers

0:39:22.280 --> 0:39:25.600
<v Speaker 2>and a lot of software engineers to put this together

0:39:25.640 --> 0:39:27.280
<v Speaker 2>and to manage it. And then you had to build

0:39:27.520 --> 0:39:30.600
<v Speaker 2>like you were reinventing the wheel every time there was

0:39:30.640 --> 0:39:34.799
<v Speaker 2>a new startup. Tell us about how Andy Jassey kind

0:39:34.880 --> 0:39:37.000
<v Speaker 2>of looked at this and said, hey, why don't we

0:39:37.080 --> 0:39:39.680
<v Speaker 2>just do this once and scale it for ourselves and

0:39:40.080 --> 0:39:42.319
<v Speaker 2>maybe someone else will want to buy the access from us.

0:39:42.400 --> 0:39:44.960
<v Speaker 1>Yeah. So Andy Jasse, who's the CEO today, started at

0:39:44.960 --> 0:39:47.080
<v Speaker 1>Amazon a few like a little bit before the IPO,

0:39:47.280 --> 0:39:49.960
<v Speaker 1>so he's been there from the early days. Amazon's retail

0:39:49.960 --> 0:39:52.600
<v Speaker 1>business was expanding so rapidly, and they had so much

0:39:52.680 --> 0:39:55.440
<v Speaker 1>data and they needed so much computing power that they

0:39:55.480 --> 0:39:58.319
<v Speaker 1>were continuously adding that to their own business, and they

0:39:58.360 --> 0:40:00.440
<v Speaker 1>got good at it. Jeff and and and a few

0:40:00.440 --> 0:40:02.640
<v Speaker 1>other people started figuring out like, hey, yeah, we're a

0:40:02.680 --> 0:40:05.000
<v Speaker 1>retail company, but we're also good at this technology stuff.

0:40:05.080 --> 0:40:08.080
<v Speaker 1>If we need this, other companies probably also need this

0:40:08.120 --> 0:40:11.759
<v Speaker 1>as they explore expanding online. So they productized it. They

0:40:11.800 --> 0:40:15.040
<v Speaker 1>created a company called Amazon Web Services. It was very

0:40:15.120 --> 0:40:17.120
<v Speaker 1>iffy as to whether this would take off. They didn't

0:40:17.120 --> 0:40:19.240
<v Speaker 1>dedicate a ton of resources to it at the beginning.

0:40:19.920 --> 0:40:23.280
<v Speaker 1>Andy remembers sheepishly asking for like a few dozen employees

0:40:23.320 --> 0:40:24.640
<v Speaker 1>to work on it with him and thought that was

0:40:24.640 --> 0:40:27.120
<v Speaker 1>like a big deal standalone. If this were to be

0:40:27.160 --> 0:40:28.800
<v Speaker 1>split off from Amazon, would be one of the biggest

0:40:28.800 --> 0:40:30.720
<v Speaker 1>tech companies in the world on its.

0:40:30.640 --> 0:40:34.160
<v Speaker 2>Own right, and one of the biggest sources of profits

0:40:34.160 --> 0:40:35.240
<v Speaker 2>for Amazon.

0:40:34.840 --> 0:40:36.800
<v Speaker 1>As well, an enormous source of profits.

0:40:36.960 --> 0:40:39.880
<v Speaker 2>So they start out with storage, they start out, they

0:40:39.960 --> 0:40:43.680
<v Speaker 2>had computes, They had a number of different services that

0:40:43.960 --> 0:40:47.080
<v Speaker 2>just allow anybody, you don't have to go buy a

0:40:47.080 --> 0:40:51.279
<v Speaker 2>bunch of servers, and that really led to an enormous

0:40:51.760 --> 0:40:55.000
<v Speaker 2>adoption cycle by a lot of tech startups, a lot

0:40:55.000 --> 0:40:57.399
<v Speaker 2>of small companies that hey, you don't need one hundred

0:40:57.440 --> 0:40:59.840
<v Speaker 2>million dollars worth of junkets, two guys on a laptop,

0:41:00.040 --> 0:41:01.360
<v Speaker 2>you can launch a business exactly.

0:41:01.440 --> 0:41:03.000
<v Speaker 1>And also a lot of their competitors, a lot of

0:41:03.000 --> 0:41:08.200
<v Speaker 1>their fiercest competitors, Netflix, Apple use as the CIA uses aws, right,

0:41:08.239 --> 0:41:11.319
<v Speaker 1>So this is a really entrenched business product for them,

0:41:11.680 --> 0:41:13.399
<v Speaker 1>and it's very sticky. Once you're on it, you don't

0:41:13.400 --> 0:41:13.879
<v Speaker 1>really leave.

0:41:14.160 --> 0:41:17.960
<v Speaker 2>So it's kind of interesting what happens in other areas

0:41:18.080 --> 0:41:21.560
<v Speaker 2>of Amazon, where there's supposed to be a Chinese wall

0:41:21.680 --> 0:41:25.920
<v Speaker 2>between you as a customer of their corporate services and

0:41:25.960 --> 0:41:28.279
<v Speaker 2>the rest of their business. But you described time and

0:41:28.320 --> 0:41:31.479
<v Speaker 2>time again in the book how that Chinese wall really

0:41:31.480 --> 0:41:35.480
<v Speaker 2>doesn't exist. Anybody has access to everything throughout the company.

0:41:35.719 --> 0:41:38.279
<v Speaker 2>Let's talk a little bit about marketplace, all right. So

0:41:38.320 --> 0:41:43.200
<v Speaker 2>originally Amazon, Chase, Deebay launched an auction site. It actually failed,

0:41:43.680 --> 0:41:46.600
<v Speaker 2>and the pivot was to marketplace. Hey, let's bring in

0:41:46.680 --> 0:41:50.480
<v Speaker 2>third party sellers of stuff rather than auctions, just selling

0:41:50.520 --> 0:41:53.759
<v Speaker 2>it at standard prices. That's now more than half of

0:41:53.880 --> 0:41:54.800
<v Speaker 2>the business.

0:41:54.960 --> 0:41:56.880
<v Speaker 1>It's more than sixty percent of their real Wow.

0:41:57.160 --> 0:42:02.680
<v Speaker 2>That's amazing. So that becomes wildly successful. But all of

0:42:02.719 --> 0:42:07.279
<v Speaker 2>these small businesses that sell in marketplace, they haven't been

0:42:07.400 --> 0:42:10.640
<v Speaker 2>very happy with how marketplace works. Tell us what's going on.

0:42:10.840 --> 0:42:13.880
<v Speaker 1>Yeah, they have this uncomfortable situation of selling on marketplace,

0:42:13.920 --> 0:42:17.800
<v Speaker 1>relying on it for their income, but then also seeing

0:42:17.880 --> 0:42:20.560
<v Speaker 1>a lot of their products that they've gone to great

0:42:20.640 --> 0:42:24.200
<v Speaker 1>lengths to use RND to create showing up in very

0:42:24.440 --> 0:42:27.120
<v Speaker 1>similar versions on Amazon's private label side of the business

0:42:27.160 --> 0:42:30.359
<v Speaker 1>called Amazon Basics or Amazon Essentials. And for years they've

0:42:30.360 --> 0:42:33.800
<v Speaker 1>alleged that Amazon stole my idea, and Amazon has always

0:42:34.160 --> 0:42:37.640
<v Speaker 1>very vocally refuted that notion. They say, you know this

0:42:37.760 --> 0:42:40.760
<v Speaker 1>is there's firewalls. We would never copy our own sellers,

0:42:41.400 --> 0:42:43.880
<v Speaker 1>and they've they've disputed that, and I was able to

0:42:44.200 --> 0:42:46.960
<v Speaker 1>get documentation and find the receipts that they've been doing

0:42:47.000 --> 0:42:48.160
<v Speaker 1>this for a very long time.

0:42:48.239 --> 0:42:51.000
<v Speaker 2>So let's put a little flesh on that. So Amazon

0:42:51.080 --> 0:42:54.839
<v Speaker 2>is both the platform to these third party sellers as

0:42:54.880 --> 0:42:59.040
<v Speaker 2>well as a original competitor, not merely selling other people's

0:42:59.080 --> 0:43:02.760
<v Speaker 2>products but creating their own. Anything that's a hot seller

0:43:02.880 --> 0:43:06.680
<v Speaker 2>on Amazon, they are aware of through their own data,

0:43:06.800 --> 0:43:08.640
<v Speaker 2>and they look at it. They look at the margin,

0:43:08.680 --> 0:43:10.520
<v Speaker 2>and they figure out how cheaply can we make this

0:43:11.000 --> 0:43:13.359
<v Speaker 2>and how much do we want to go after this.

0:43:13.840 --> 0:43:16.359
<v Speaker 2>They've been pretty aggressive about that, haven't they They have.

0:43:16.480 --> 0:43:19.400
<v Speaker 1>I mean, the documents that I was given shows how

0:43:19.440 --> 0:43:22.400
<v Speaker 1>they reverse engineer these best selling products, and they have

0:43:22.480 --> 0:43:26.240
<v Speaker 1>everything from the number of items sold to the cost

0:43:26.640 --> 0:43:29.480
<v Speaker 1>to sell them, to the number of returns to the margins.

0:43:29.520 --> 0:43:31.960
<v Speaker 1>There's twenty five different fields that the employees on the

0:43:31.960 --> 0:43:34.880
<v Speaker 1>private label side of the company who have been told

0:43:35.040 --> 0:43:37.480
<v Speaker 1>you probably shouldn't be doing this. There's policies in place

0:43:37.480 --> 0:43:40.520
<v Speaker 1>at Amazon that are essentially not enforced, and because they're

0:43:40.560 --> 0:43:42.600
<v Speaker 1>afraid of losing their jobs and not hitting their numbers,

0:43:42.600 --> 0:43:45.600
<v Speaker 1>they've often resorted to looking over the fence and taking

0:43:45.640 --> 0:43:49.160
<v Speaker 1>this type of data to reverse engineer best selling hits

0:43:49.160 --> 0:43:51.360
<v Speaker 1>because it makes them look good and it keeps their jobs.

0:43:51.719 --> 0:43:55.279
<v Speaker 1>And Amazon, even under oath, told Congress that they were

0:43:55.320 --> 0:43:56.000
<v Speaker 1>not doing this.

0:43:56.520 --> 0:43:59.600
<v Speaker 2>Really, yes, under oath, and yet it's pretty obvious they've

0:43:59.600 --> 0:44:01.760
<v Speaker 2>been doing that and doing it for a long time.

0:44:02.080 --> 0:44:06.359
<v Speaker 2>Let's talk a little bit about Alexa and how they

0:44:06.400 --> 0:44:09.160
<v Speaker 2>sent up a venture funds that was very different than

0:44:09.160 --> 0:44:11.640
<v Speaker 2>the typical venture funds. Tell us a little bit about

0:44:11.640 --> 0:44:15.600
<v Speaker 2>what's going on with Voice and Alexa inside of Amazon.

0:44:15.719 --> 0:44:18.280
<v Speaker 1>Yeah, Amazon was one of the pioneers of this voice

0:44:18.320 --> 0:44:21.959
<v Speaker 1>technology and you know these voice assisted robots, and as such,

0:44:21.960 --> 0:44:24.799
<v Speaker 1>they set up this vcarm called the Alexa Fund. And

0:44:24.840 --> 0:44:27.640
<v Speaker 1>what I learned was that a pattern played out. They'd

0:44:27.640 --> 0:44:30.000
<v Speaker 1>have all of these CEOs and founders pitch them on

0:44:30.040 --> 0:44:33.439
<v Speaker 1>getting money and seed investments for their companies, and under

0:44:33.440 --> 0:44:36.680
<v Speaker 1>the auspices of either getting an investment or being bought

0:44:36.680 --> 0:44:39.000
<v Speaker 1>by Amazon's M and A arm, they'd share all of

0:44:39.040 --> 0:44:43.760
<v Speaker 1>their proprietary data things like, you know, their patents, their technologies,

0:44:44.280 --> 0:44:46.000
<v Speaker 1>all the stuff that companies go to great lengths to

0:44:46.040 --> 0:44:48.120
<v Speaker 1>keep secret because they think they're getting an investment. And

0:44:48.200 --> 0:44:51.879
<v Speaker 1>time and time again, Amazon would take that information, bring

0:44:51.920 --> 0:44:54.160
<v Speaker 1>the heads of different Amazon businesses to these meetings to

0:44:54.239 --> 0:44:57.719
<v Speaker 1>learn from it, and then ghost them and introduce the

0:44:57.719 --> 0:44:59.600
<v Speaker 1>same exact product from an Amazon brand.

0:45:00.280 --> 0:45:04.239
<v Speaker 2>Later you talk about the firewalls and the vcs, and

0:45:04.800 --> 0:45:09.680
<v Speaker 2>one entrepreneur is in a meeting with a bunch of people, Hey,

0:45:09.719 --> 0:45:11.799
<v Speaker 2>who are those guys? I know you are? And who

0:45:11.800 --> 0:45:14.800
<v Speaker 2>are who are these guys? And it turns out they're

0:45:14.840 --> 0:45:18.240
<v Speaker 2>the product heads that are going to be making the competing,

0:45:18.320 --> 0:45:22.600
<v Speaker 2>competing product. It's really the the I like the VC

0:45:22.840 --> 0:45:26.600
<v Speaker 2>quote Amazon is a wolf in wolf's clothing, Like there's

0:45:26.640 --> 0:45:31.480
<v Speaker 2>a very really not even a big attempt to hide it.

0:45:32.160 --> 0:45:35.919
<v Speaker 2>A different part of the book describes an entrepreneur where

0:45:35.960 --> 0:45:38.400
<v Speaker 2>there are people in the room with their arms closed,

0:45:38.440 --> 0:45:44.080
<v Speaker 2>looking bored and like not usual venture capital behavior if

0:45:44.080 --> 0:45:47.759
<v Speaker 2>you're really interested in this technology. They eventually figure out

0:45:48.040 --> 0:45:53.600
<v Speaker 2>this is just a Yeah, that was fishing is too kind?

0:45:54.200 --> 0:45:58.960
<v Speaker 2>You call it specifically VC espionage. Talk a little bit

0:45:58.960 --> 0:46:02.960
<v Speaker 2>about how misleading even the NDA's were. The non disclosure.

0:46:03.000 --> 0:46:04.640
<v Speaker 1>Oh my god, this was galling to me as a

0:46:04.680 --> 0:46:06.920
<v Speaker 1>deal geek who covered M and A. I asked some

0:46:07.000 --> 0:46:08.799
<v Speaker 1>of these founders I spoke to for the book to

0:46:08.840 --> 0:46:11.400
<v Speaker 1>send me all the documents that Amazon gave them prior

0:46:11.440 --> 0:46:13.560
<v Speaker 1>to these meetings, and I read them very thoroughly and

0:46:13.600 --> 0:46:16.879
<v Speaker 1>found something called a residual's clause buried in the legal ease,

0:46:17.360 --> 0:46:21.320
<v Speaker 1>and it basically said that anything retained in the memories

0:46:21.640 --> 0:46:25.160
<v Speaker 1>of Amazon executives at these meetings where proprietary stuff is

0:46:25.160 --> 0:46:28.399
<v Speaker 1>being disclosed could be used by Amazon in their own

0:46:28.440 --> 0:46:32.319
<v Speaker 1>business without any legal repercussion. So it's a license to steal.

0:46:32.840 --> 0:46:35.680
<v Speaker 2>So essentially, and I keep coming back to this from

0:46:35.680 --> 0:46:40.200
<v Speaker 2>the original d Shaw issue the culture at Amazon. They

0:46:40.320 --> 0:46:43.680
<v Speaker 2>hired senior lawyers from some of the best firms. It

0:46:43.800 --> 0:46:47.960
<v Speaker 2>seems like ethics is completely irrelevant. It seems like this

0:46:48.000 --> 0:46:52.480
<v Speaker 2>is a group of rogue capitalists who are just rapacious

0:46:52.760 --> 0:46:59.399
<v Speaker 2>in their greed regardless of ethics and business standards. They're

0:46:59.480 --> 0:47:03.600
<v Speaker 2>just opera reading in a gray zone of legality, but

0:47:03.760 --> 0:47:06.359
<v Speaker 2>in a very black and white zone of ethics. These

0:47:06.400 --> 0:47:08.160
<v Speaker 2>are bad people doing bad things.

0:47:08.560 --> 0:47:10.920
<v Speaker 1>The interesting thing is so many of my sources for

0:47:10.960 --> 0:47:14.120
<v Speaker 1>this book are the people doing the bad things, because

0:47:14.160 --> 0:47:16.600
<v Speaker 1>once they take a step back from Amazon and they

0:47:16.640 --> 0:47:19.680
<v Speaker 1>realized how this company pushed them to their breaking point,

0:47:20.120 --> 0:47:21.640
<v Speaker 1>that it made them do things that they would not

0:47:21.719 --> 0:47:24.120
<v Speaker 1>have done at a company that was not so cutthroat.

0:47:24.440 --> 0:47:26.760
<v Speaker 2>They feel bad, Well they should. They have a guilty

0:47:26.800 --> 0:47:29.800
<v Speaker 2>conscious because they did really bad things for the money.

0:47:29.840 --> 0:47:32.040
<v Speaker 2>They could feel bad about it after the fact. But

0:47:32.160 --> 0:47:35.840
<v Speaker 2>let's be blunts. They had big stock options and reasonable

0:47:35.880 --> 0:47:39.040
<v Speaker 2>pay packages. And if you're coming over from a top

0:47:39.080 --> 0:47:42.280
<v Speaker 2>twenty law firm where you're giving up a seven figure job,

0:47:42.719 --> 0:47:44.680
<v Speaker 2>you're doing it because you have the chance to make

0:47:44.719 --> 0:47:48.600
<v Speaker 2>ten figures in your stock options. So I feel bad

0:47:48.800 --> 0:47:53.440
<v Speaker 2>that they feel bad. Not really, they did bad things

0:47:53.520 --> 0:47:55.920
<v Speaker 2>because they were in for the money and they realized

0:47:56.360 --> 0:47:58.480
<v Speaker 2>the trade off wasn't worth it. Sell your soul for

0:47:58.480 --> 0:48:00.920
<v Speaker 2>a few bucks, you still made to deal with the devil.

0:48:01.360 --> 0:48:03.200
<v Speaker 1>I would agree with you. And you know, that's the

0:48:03.239 --> 0:48:04.960
<v Speaker 1>one thing I wanted to depict in this book is

0:48:04.960 --> 0:48:06.600
<v Speaker 1>the human toll of that. I mean, when I was

0:48:06.640 --> 0:48:09.680
<v Speaker 1>reporting out that chapter, you're just describing the founders that

0:48:09.719 --> 0:48:11.880
<v Speaker 1>would cry to me on the phone about what happened

0:48:11.920 --> 0:48:14.880
<v Speaker 1>to their companies, how Amazon just decimated them. It was

0:48:15.040 --> 0:48:17.680
<v Speaker 1>really hard reporting, just as a journalist to like internalize

0:48:17.719 --> 0:48:20.040
<v Speaker 1>a lot of that. This company that didn't need to

0:48:20.080 --> 0:48:22.840
<v Speaker 1>do these things to win chose to rit and it

0:48:22.920 --> 0:48:27.200
<v Speaker 1>cost people their jobs, their livelihoods, their technologies at what costs.

0:48:27.440 --> 0:48:29.520
<v Speaker 2>Let's talk a little bit about diapers dot com and

0:48:29.600 --> 0:48:32.880
<v Speaker 2>what was the parent company, Quizzy Quizzy Quizzy, So this

0:48:32.960 --> 0:48:36.239
<v Speaker 2>is kind of interesting. Amazon can't figure out how to

0:48:36.239 --> 0:48:41.799
<v Speaker 2>ship diapers quickly, right, And moms are a giant demographic

0:48:41.840 --> 0:48:44.120
<v Speaker 2>in retail. I think the book says they make eighty

0:48:44.120 --> 0:48:48.560
<v Speaker 2>four percent of the consumer spending the controls in the household. Like, there,

0:48:48.600 --> 0:48:51.640
<v Speaker 2>you win the moms, you win retail. And these guys

0:48:51.680 --> 0:48:54.880
<v Speaker 2>have figured out how to have diapers arrived next day, like,

0:48:55.320 --> 0:48:59.600
<v Speaker 2>they figured out how to reach moms. And Amazon decides

0:48:59.640 --> 0:49:03.480
<v Speaker 2>to go out after them, and they start predatory pricing,

0:49:03.640 --> 0:49:09.200
<v Speaker 2>selling diapers twenty percent below cost, which one would think

0:49:10.160 --> 0:49:11.560
<v Speaker 2>is illegal, isn't that.

0:49:11.960 --> 0:49:14.480
<v Speaker 1>Yeah, it's the definition of predatory pricing. It's twenty ten.

0:49:14.640 --> 0:49:17.760
<v Speaker 1>Jeff Bezos becomes laser focused on Quidzy, which is started

0:49:17.760 --> 0:49:20.840
<v Speaker 1>by these two entrepreneurs that are like the first people

0:49:20.880 --> 0:49:22.920
<v Speaker 1>in their in their families to even go to college, right,

0:49:22.960 --> 0:49:26.160
<v Speaker 1>these are homegrown talent, Mark Lori and Vinie Berra, Right.

0:49:26.719 --> 0:49:30.040
<v Speaker 1>And he puts together a team to essentially spy on

0:49:30.120 --> 0:49:32.680
<v Speaker 1>them and figure out how they do it, and Amazon

0:49:32.719 --> 0:49:35.520
<v Speaker 1>starts to really cut the prices of their own diapers

0:49:35.560 --> 0:49:38.160
<v Speaker 1>thirty percent. They cut the price of their diapers so

0:49:38.320 --> 0:49:40.920
<v Speaker 1>much that they start losing two hundred million dollars a

0:49:40.960 --> 0:49:44.680
<v Speaker 1>month just on diapers. According to internal documents.

0:49:43.400 --> 0:49:46.920
<v Speaker 2>That's two point two billion a year on diapers.

0:49:46.480 --> 0:49:48.640
<v Speaker 1>Along because they were so threatened by this little startup

0:49:48.640 --> 0:49:53.040
<v Speaker 1>in New Jersey. Okay, and Amazon eventually makes a buyout

0:49:53.040 --> 0:49:54.680
<v Speaker 1>offer to this firm, but they don't want to do

0:49:54.719 --> 0:49:56.520
<v Speaker 1>it because they're doing so well they think they could

0:49:56.520 --> 0:49:58.879
<v Speaker 1>ipo one day, so they turn them down. So then

0:49:58.920 --> 0:50:02.879
<v Speaker 1>Amazon ratchets up the heat, cuts price of diapers more,

0:50:03.160 --> 0:50:06.000
<v Speaker 1>creates this loyalty program to incentivize moms to shop with

0:50:06.040 --> 0:50:09.520
<v Speaker 1>Amazon not Quidzy, and it becomes to the point where

0:50:09.520 --> 0:50:11.920
<v Speaker 1>it's untenable for the quizy people. They start missing their

0:50:11.920 --> 0:50:14.640
<v Speaker 1>internal numbers. They have to start considering a sale. Unfortunately,

0:50:14.640 --> 0:50:17.920
<v Speaker 1>they're really crestfallen about that Amazon's one of the biggest

0:50:17.920 --> 0:50:19.840
<v Speaker 1>players in the space. They even have to consider an

0:50:19.880 --> 0:50:22.560
<v Speaker 1>offer from the person that did this to them. Okay,

0:50:23.080 --> 0:50:26.040
<v Speaker 1>So they're at this private dinner with Amazon executives discussing

0:50:26.080 --> 0:50:29.080
<v Speaker 1>this offer. They don't want to sell to Amazon. And

0:50:29.600 --> 0:50:32.799
<v Speaker 1>Mark Lori's BlackBerry at the time gets an email pop

0:50:32.880 --> 0:50:35.640
<v Speaker 1>up and it's an offer from Walmart, and they're excited

0:50:35.680 --> 0:50:36.399
<v Speaker 1>to for.

0:50:36.400 --> 0:50:38.480
<v Speaker 2>Like one hundred million dollars more than the five and

0:50:38.600 --> 0:50:41.400
<v Speaker 2>change exactly five point fifty Amazon head offers it's a.

0:50:41.440 --> 0:50:44.319
<v Speaker 1>Higher offer and it's not the company that's destroyed them.

0:50:44.320 --> 0:50:46.160
<v Speaker 1>So they go in the hallway, they discuss it, and

0:50:46.160 --> 0:50:48.680
<v Speaker 1>they say, let's take this Walmart offer. They go back

0:50:48.719 --> 0:50:50.799
<v Speaker 1>into the room with the Amazon executives. They say, hey,

0:50:50.880 --> 0:50:52.359
<v Speaker 1>just want to let you know we got this offer.

0:50:52.400 --> 0:50:54.719
<v Speaker 1>It's better for a shareholders. We're going to go in

0:50:54.760 --> 0:50:58.280
<v Speaker 1>this direction. And they're told by a senior Amazon executive, Okay,

0:50:58.920 --> 0:51:00.319
<v Speaker 1>you go ahead and do that, and we'll go to

0:51:00.360 --> 0:51:01.960
<v Speaker 1>cut the price of our diapers to zero.

0:51:02.200 --> 0:51:04.720
<v Speaker 2>That seems legal, right, We're going to give our diapers

0:51:04.760 --> 0:51:06.440
<v Speaker 2>a way to put you out of business and prevent

0:51:06.480 --> 0:51:08.720
<v Speaker 2>you from selling to our competitor Walmart.

0:51:08.760 --> 0:51:11.359
<v Speaker 1>Right. And the people in that room knew that if

0:51:11.400 --> 0:51:15.560
<v Speaker 1>Walmart had decided to acquire Quidzy and Amazon put them

0:51:15.560 --> 0:51:17.839
<v Speaker 1>out of you know, created this pricing war that they

0:51:17.840 --> 0:51:19.520
<v Speaker 1>were selling diapers for either zero or.

0:51:19.480 --> 0:51:23.520
<v Speaker 2>Like a dollar material change exactly. In fact, elements that

0:51:23.640 --> 0:51:25.280
<v Speaker 2>would lead to the deal falling apart.

0:51:25.400 --> 0:51:28.120
<v Speaker 1>Walmart could back away from the deal scot free, so

0:51:28.160 --> 0:51:30.600
<v Speaker 1>they were forced to sell to their main competitor who

0:51:30.600 --> 0:51:32.520
<v Speaker 1>put them in this position. And this created, you know,

0:51:32.600 --> 0:51:35.319
<v Speaker 1>generational wealth for those two men who didn't even go

0:51:35.360 --> 0:51:37.600
<v Speaker 1>to for a drink to celebrate because they were so upset.

0:51:38.160 --> 0:51:40.400
<v Speaker 2>Now, what what did they end up doing in the

0:51:40.400 --> 0:51:42.840
<v Speaker 2>future post that that purchase?

0:51:42.880 --> 0:51:46.600
<v Speaker 1>Oh, they shut it down. They shut down quids They.

0:51:46.480 --> 0:51:49.720
<v Speaker 2>Just took all the clients. They took the few years

0:51:49.960 --> 0:51:52.560
<v Speaker 2>and then eventually was folded in. The two guys who

0:51:52.640 --> 0:51:54.640
<v Speaker 2>created Quidcy. Did they do anything else in the field?

0:51:54.719 --> 0:51:57.160
<v Speaker 1>Now, Mark Lori went on to start a company called

0:51:57.239 --> 0:51:57.800
<v Speaker 1>jet dot.

0:51:57.680 --> 0:52:00.120
<v Speaker 2>Com, he said, Which gets why.

0:51:59.680 --> 0:52:02.759
<v Speaker 1>Walmt by it for a very significant sum, a couple

0:52:02.800 --> 0:52:04.440
<v Speaker 1>of billion. Body now owns if you live in New York,

0:52:04.440 --> 0:52:07.120
<v Speaker 1>there's a place called Wonder, this restaurant company that is

0:52:07.400 --> 0:52:10.040
<v Speaker 1>I actually really like Wonder. So he's doing that now,

0:52:10.080 --> 0:52:12.200
<v Speaker 1>So I mean this, He's gone on to do really

0:52:12.239 --> 0:52:12.640
<v Speaker 1>big things.

0:52:12.680 --> 0:52:16.080
<v Speaker 2>So the fascinating thing is, after being forced to sell

0:52:16.160 --> 0:52:21.000
<v Speaker 2>the diapers dot Com company to Amazon, Jet dot Com

0:52:21.040 --> 0:52:25.680
<v Speaker 2>became essentially the back end of all of Walmart online retailing.

0:52:26.160 --> 0:52:29.680
<v Speaker 2>So I want to say he got a little bit

0:52:29.719 --> 0:52:35.120
<v Speaker 2>of payback. Whether whether or not he, you know, put

0:52:35.120 --> 0:52:37.520
<v Speaker 2>as much pain to Amazon as Amazon put to him

0:52:37.600 --> 0:52:41.040
<v Speaker 2>is arguable. But it was pretty obvious, and you make

0:52:41.080 --> 0:52:44.240
<v Speaker 2>it clear in the book he was imagine getting bought

0:52:44.239 --> 0:52:47.919
<v Speaker 2>for five hundred and fifty million dollars and leaving dejected.

0:52:48.200 --> 0:52:49.880
<v Speaker 2>I know, it's kind of amazing.

0:52:50.040 --> 0:52:51.600
<v Speaker 1>It is, it really is. I mean, I just I

0:52:51.640 --> 0:52:53.640
<v Speaker 1>think it speaks to like the pain and suffering they

0:52:53.680 --> 0:52:55.600
<v Speaker 1>went through with this M and A battle.

0:52:55.960 --> 0:52:57.600
<v Speaker 2>What are the things that kind of shocked me. You

0:52:57.680 --> 0:53:03.359
<v Speaker 2>mentioned what a difficult a place to work Amazon is.

0:53:03.960 --> 0:53:08.480
<v Speaker 2>They even backload their stock options. Your stock options are

0:53:08.560 --> 0:53:10.840
<v Speaker 2>like if you work at Google or somewhere else, you

0:53:10.880 --> 0:53:13.680
<v Speaker 2>get stock options and they'll vest in three years and

0:53:13.760 --> 0:53:15.880
<v Speaker 2>you could start selling. At least that's what it used

0:53:15.920 --> 0:53:17.240
<v Speaker 2>to be. I don't know what it is these days,

0:53:17.520 --> 0:53:21.840
<v Speaker 2>but they backloaded. It's five fifteen. Year three is forty

0:53:21.840 --> 0:53:25.000
<v Speaker 2>percent of your stock options. Year four is forty percent.

0:53:25.360 --> 0:53:27.480
<v Speaker 2>You really have to stick it out, don't you.

0:53:27.880 --> 0:53:31.000
<v Speaker 1>Yeah, And that creates this pernicious cycle. The average white

0:53:31.040 --> 0:53:33.200
<v Speaker 1>collar employee at Amazon lasts a year and a half.

0:53:33.280 --> 0:53:35.560
<v Speaker 1>That's a major so most of them leave their stock

0:53:35.600 --> 0:53:37.480
<v Speaker 1>options on the table. But if you want to get

0:53:37.480 --> 0:53:39.759
<v Speaker 1>your full payout, you have to survive. You have to

0:53:39.800 --> 0:53:42.279
<v Speaker 1>not be part of that bottom six percent. And that

0:53:42.320 --> 0:53:45.080
<v Speaker 1>creates that pressure cooker of an environment that I talk about.

0:53:45.440 --> 0:53:49.840
<v Speaker 2>So let's ask the question about the big question. Is

0:53:50.000 --> 0:53:53.359
<v Speaker 2>Amazon a monopoly? Have they remade corporate power in their

0:53:53.400 --> 0:53:57.960
<v Speaker 2>own image? And what sort of antitrust enforcement might we

0:53:58.040 --> 0:53:59.040
<v Speaker 2>expect in the future.

0:53:59.239 --> 0:54:02.120
<v Speaker 1>Well around the world, including our government, have said it

0:54:02.160 --> 0:54:05.040
<v Speaker 1>is a monopoly. The Federal Trade Commission filed a lawsuit

0:54:05.080 --> 0:54:08.520
<v Speaker 1>last year saying it's an illegal monopoly, and the lawsuit

0:54:08.560 --> 0:54:09.799
<v Speaker 1>says it could be broken up.

0:54:10.440 --> 0:54:13.480
<v Speaker 2>What about Europe, they've been pretty strict about Amazon as well.

0:54:13.760 --> 0:54:15.840
<v Speaker 1>The ear was way ahead of us on policing our

0:54:15.880 --> 0:54:20.680
<v Speaker 1>own giants. Marguerite Bestare was looking into Amazon, Facebook, Google,

0:54:20.840 --> 0:54:23.080
<v Speaker 1>and Apple years ago and people thought she was crazy.

0:54:23.560 --> 0:54:26.240
<v Speaker 2>Right, So we're recording this a week before the election.

0:54:26.360 --> 0:54:27.960
<v Speaker 2>We don't know what the outcome is going to be,

0:54:28.480 --> 0:54:33.319
<v Speaker 2>but it appears that no matter who wins, Amazon's going

0:54:33.400 --> 0:54:38.920
<v Speaker 2>to stay in the FTC's crosshairs. Because Lena Kahan works

0:54:39.000 --> 0:54:44.320
<v Speaker 2>for the Biden Harris administration, the assumption is if Harris wins,

0:54:44.360 --> 0:54:49.239
<v Speaker 2>she continues, and Trump really dislikes Bezos because of his

0:54:49.239 --> 0:54:52.680
<v Speaker 2>ownership with The Washington Post and has said Amazon should

0:54:52.719 --> 0:54:57.439
<v Speaker 2>be broken up. What's it like inside the lobbying arm

0:54:57.520 --> 0:54:59.520
<v Speaker 2>of Amazon heading into this election.

0:55:00.000 --> 0:55:03.360
<v Speaker 1>It's really fascinating. I don't know which administration they would

0:55:03.360 --> 0:55:05.560
<v Speaker 1>want to win. They you know, they had a really

0:55:05.600 --> 0:55:08.480
<v Speaker 1>painful four years under Trump where he was just berating

0:55:08.520 --> 0:55:11.640
<v Speaker 1>them online every day, alleging that Jeff Bezos was using

0:55:11.640 --> 0:55:14.080
<v Speaker 1>the Washington Post as a political tool to.

0:55:14.080 --> 0:55:16.240
<v Speaker 2>Attack him to the Amazon Washington Post.

0:55:16.040 --> 0:55:20.400
<v Speaker 1>Amazon Washington Post, that should be a lobbyist, according to him.

0:55:20.760 --> 0:55:22.520
<v Speaker 1>So that was like super painful. But then the Biden

0:55:22.560 --> 0:55:25.719
<v Speaker 1>administration came in where they had good connections, and that

0:55:25.840 --> 0:55:27.800
<v Speaker 1>was even more painful in some ways. You know, Biden

0:55:27.880 --> 0:55:30.200
<v Speaker 1>chooses Lena Khan to be the head of the FTC.

0:55:30.760 --> 0:55:33.719
<v Speaker 1>She brings forward the lawsuit against Amazon for being a monopoly.

0:55:34.360 --> 0:55:37.320
<v Speaker 1>So either way, it's not like a really great outcome

0:55:37.400 --> 0:55:38.240
<v Speaker 1>for that company.

0:55:38.560 --> 0:55:41.240
<v Speaker 2>You know. The interesting thing about the anti trust enforcement

0:55:41.280 --> 0:55:46.000
<v Speaker 2>against Microsoft in the nineties was just having that enforcement

0:55:46.040 --> 0:55:48.919
<v Speaker 2>hanging over their head was enough to allow all these

0:55:48.960 --> 0:55:53.080
<v Speaker 2>small companies to get out from under you know, every

0:55:53.160 --> 0:55:57.000
<v Speaker 2>startup had to deal with the question every software startup, Hey,

0:55:57.040 --> 0:55:59.840
<v Speaker 2>what's going to prevent Microsoft from just building these features

0:56:00.120 --> 0:56:05.719
<v Speaker 2>to office or into Windows? And it was really challenging.

0:56:05.760 --> 0:56:09.680
<v Speaker 2>The anti trust enforcements seem to have forced them to

0:56:09.880 --> 0:56:12.320
<v Speaker 2>behave better and that, you know, that was the Cambrian

0:56:12.360 --> 0:56:17.000
<v Speaker 2>explosion of dot COM's Might we see something similar with Amazon?

0:56:17.120 --> 0:56:22.040
<v Speaker 2>Might online retail expand from the forty percent market share

0:56:22.080 --> 0:56:25.880
<v Speaker 2>Amazon has elsewhere if this anti trustwork is enforced.

0:56:26.400 --> 0:56:28.959
<v Speaker 1>You know, the big question is will this FTC suit

0:56:29.000 --> 0:56:32.440
<v Speaker 1>have a chilling effect on the way Amazon behaves? I

0:56:32.480 --> 0:56:35.239
<v Speaker 1>would say they have more competition these days, Timu and

0:56:35.280 --> 0:56:39.400
<v Speaker 1>Shean are you know, these low cost Chinese marketplaces. But

0:56:39.560 --> 0:56:42.200
<v Speaker 1>I don't see any changes to the way Amazon is operating.

0:56:42.320 --> 0:56:44.160
<v Speaker 1>You know, Andy Jasse there's a scoop in the book.

0:56:44.320 --> 0:56:47.799
<v Speaker 1>He's telling his deputies, you know, at around the same

0:56:47.800 --> 0:56:49.759
<v Speaker 1>time that they have this historic lawsuit against them for

0:56:49.800 --> 0:56:52.120
<v Speaker 1>being too big, that they should be so much bigger.

0:56:52.160 --> 0:56:55.200
<v Speaker 1>He tells them, we should be a ten trillion dollar company. Okay,

0:56:55.280 --> 0:56:57.799
<v Speaker 1>so how do you get to ten trillion dollars when

0:56:57.840 --> 0:57:00.560
<v Speaker 1>you're two trillion dollars. It's competing the way you're you've

0:57:00.560 --> 0:57:01.600
<v Speaker 1>been competing.

0:57:01.800 --> 0:57:06.160
<v Speaker 2>Putting it, supersizing it. And since we're talking about antitrust enforcement,

0:57:06.600 --> 0:57:10.760
<v Speaker 2>it's kind of fascinating that the entire we've had forty

0:57:10.880 --> 0:57:15.920
<v Speaker 2>years of lacks anti trust enforcement, dating back to the

0:57:15.920 --> 0:57:19.320
<v Speaker 2>Reagan administration and Judge Bork, who was one of the

0:57:19.360 --> 0:57:25.360
<v Speaker 2>big advocates of moving away from historical anti trust enforcement.

0:57:25.560 --> 0:57:29.160
<v Speaker 2>You describe in the book. Lena Khan is a twenty

0:57:29.240 --> 0:57:33.680
<v Speaker 2>seven year old law student at Yale. She writes a

0:57:33.800 --> 0:57:39.600
<v Speaker 2>law review paper on how much Amazon is monopoly? And

0:57:39.720 --> 0:57:42.480
<v Speaker 2>when was the last time a law review paper when

0:57:42.600 --> 0:57:45.920
<v Speaker 2>viral like this? This completely upended what was going on.

0:57:46.000 --> 0:57:47.439
<v Speaker 2>Tell us a little bit about Lena Khan.

0:57:47.640 --> 0:57:50.160
<v Speaker 1>Yeah, she was this law school student at Yale, where

0:57:50.200 --> 0:57:53.120
<v Speaker 1>actually Bork had been a professor, and she writes this

0:57:53.360 --> 0:57:56.360
<v Speaker 1>seminal law review article saying that the antitrust laws the

0:57:56.360 --> 0:57:59.160
<v Speaker 1>way that they're being interpreted, partially because of Bork, are

0:57:59.200 --> 0:58:02.680
<v Speaker 1>failingstomers and consumers in the US, and that Amazon's the

0:58:02.680 --> 0:58:06.640
<v Speaker 1>prime example of this. That Amazon is a monopoly and

0:58:06.680 --> 0:58:08.840
<v Speaker 1>it's allowed to be monopoly because we're not enforcing her

0:58:08.840 --> 0:58:11.320
<v Speaker 1>anti trust laws the way that they were first derived.

0:58:11.600 --> 0:58:13.840
<v Speaker 1>And this might be the only time that a law

0:58:13.880 --> 0:58:16.320
<v Speaker 1>review article goes viral. Millions of people read this thing,

0:58:16.400 --> 0:58:21.000
<v Speaker 1>including legislators, CEOs. It gets picked up by the New

0:58:21.120 --> 0:58:24.000
<v Speaker 1>York Times, right, it becomes this like zeitgeist type of movement.

0:58:24.000 --> 0:58:27.040
<v Speaker 1>It's the first time that people start equating this company

0:58:27.080 --> 0:58:29.880
<v Speaker 1>with the smile on the box, with potentially being a monopoly.

0:58:30.600 --> 0:58:34.720
<v Speaker 1>And she starts to with this other band of trustbusters

0:58:34.800 --> 0:58:38.360
<v Speaker 1>start to reshape this moment in time about whether anti

0:58:38.360 --> 0:58:40.840
<v Speaker 1>trust laws are failing Americans. She makes the.

0:58:40.800 --> 0:58:44.720
<v Speaker 2>Point that the way Amazon has become a monopoly and

0:58:44.840 --> 0:58:48.800
<v Speaker 2>abuses its platform power is very reminiscent of what we

0:58:48.840 --> 0:58:52.200
<v Speaker 2>saw under standard Oil and Rockefeller tell us a little

0:58:52.200 --> 0:58:56.600
<v Speaker 2>bit about some of the abusive uses of their power

0:58:56.840 --> 0:58:58.800
<v Speaker 2>that manifest in their growth.

0:58:59.000 --> 0:59:02.320
<v Speaker 1>Yeah. So, she points to predatory pricing that Amazon was

0:59:02.400 --> 0:59:05.000
<v Speaker 1>undercutting the market in those early days in order to

0:59:05.000 --> 0:59:07.120
<v Speaker 1>steal share from rivals and put them out of business.

0:59:07.400 --> 0:59:09.960
<v Speaker 1>She also says they're like a utility, that this isn't

0:59:09.960 --> 0:59:12.080
<v Speaker 1>a company that you might want to work with. You

0:59:12.160 --> 0:59:13.720
<v Speaker 1>sort of have to work with them if you want

0:59:13.760 --> 0:59:16.600
<v Speaker 1>to reach shoppers, and that has power over the sellers

0:59:16.600 --> 0:59:19.160
<v Speaker 1>on their website, where they could you know, Jack up fees.

0:59:19.640 --> 0:59:22.840
<v Speaker 1>It has power over lots of different competitors that feel

0:59:22.880 --> 0:59:25.440
<v Speaker 1>like they're forced to work with their main rival in

0:59:25.520 --> 0:59:26.960
<v Speaker 1>order to access markets.

0:59:26.680 --> 0:59:28.000
<v Speaker 2>And share a lot of data a lot of their

0:59:29.000 --> 0:59:32.000
<v Speaker 2>rather not as well as by advertising from them.

0:59:32.040 --> 0:59:33.960
<v Speaker 1>Advertising is another area.

0:59:33.520 --> 0:59:36.480
<v Speaker 2>In the book. You talk about how when Amazon enters

0:59:36.520 --> 0:59:41.080
<v Speaker 2>into the marketplace with a competitive product, they shut off

0:59:41.120 --> 0:59:43.440
<v Speaker 2>their competitors' ability to advertise that.

0:59:43.400 --> 0:59:46.400
<v Speaker 1>Product they do, and that's you know, advertisings become so

0:59:46.720 --> 0:59:49.200
<v Speaker 1>core to being successful as a seller on Amazon dot

0:59:49.240 --> 0:59:52.360
<v Speaker 1>Com because there's millions of other sellers that flywheel that

0:59:52.400 --> 0:59:54.840
<v Speaker 1>if you don't buy advertising, you're not showing up in search.

0:59:55.080 --> 0:59:57.840
<v Speaker 1>And what did Amazon do Roku, which makes a competing

0:59:58.040 --> 1:00:00.520
<v Speaker 1>device for them for streaming TV, all of a sudden

1:00:00.560 --> 1:00:02.880
<v Speaker 1>they can't buy ads anymore. You know, this happened across

1:00:02.880 --> 1:00:03.960
<v Speaker 1>the device's space.

1:00:04.320 --> 1:00:06.120
<v Speaker 2>And so the anti trust law is, Hey, if you

1:00:06.120 --> 1:00:07.920
<v Speaker 2>want to be a platform, you could be a platform.

1:00:07.920 --> 1:00:10.000
<v Speaker 2>If you want to be a retailer, you could be

1:00:10.040 --> 1:00:15.120
<v Speaker 2>a retailer, but you can't tie your platform advertising into

1:00:15.280 --> 1:00:18.720
<v Speaker 2>reducing the competitiveness of your products versus other people.

1:00:18.800 --> 1:00:20.640
<v Speaker 1>Well, that's where the Congress was alleging that if you

1:00:20.680 --> 1:00:23.760
<v Speaker 1>can't own the world's biggest online platform and also compete

1:00:23.800 --> 1:00:25.200
<v Speaker 1>on it, that it has to be one or the.

1:00:25.200 --> 1:00:28.120
<v Speaker 2>Other spin out that separate business and.

1:00:28.960 --> 1:00:32.120
<v Speaker 1>Do FTC lawsuits a little bit different. She alleges that actually,

1:00:32.160 --> 1:00:35.240
<v Speaker 1>in this current form, Amazon's become the monopoly. They don't

1:00:35.240 --> 1:00:37.680
<v Speaker 1>have to do predatory pricing anymore. They could actually exert

1:00:37.720 --> 1:00:40.080
<v Speaker 1>their power on their sellers. You know, a decade ago,

1:00:40.240 --> 1:00:43.400
<v Speaker 1>the average seller in Amazon gave nineteen cents on the

1:00:43.440 --> 1:00:46.080
<v Speaker 1>dollar back to Amazon and fees. Today that's forty five

1:00:46.120 --> 1:00:49.040
<v Speaker 1>cents on the dollar. That's unbelievable, and that means those

1:00:49.080 --> 1:00:51.240
<v Speaker 1>sellers have had to raise the price of their goods

1:00:51.320 --> 1:00:52.800
<v Speaker 1>to cover Amazon's margin.

1:00:52.760 --> 1:00:55.120
<v Speaker 2>Or reduce their own margin or their own margin.

1:00:55.280 --> 1:00:58.840
<v Speaker 1>And the FTC lawsuit says, because Amazon's so big and

1:00:58.880 --> 1:01:01.640
<v Speaker 1>they require those sellers to also have the lowest price

1:01:01.680 --> 1:01:03.760
<v Speaker 1>in Amazon, that they have to raise the price on

1:01:03.800 --> 1:01:05.560
<v Speaker 1>Target dot Com and Walmart dot Com and on and

1:01:05.600 --> 1:01:08.040
<v Speaker 1>on and on, and it's created higher prices for all

1:01:08.080 --> 1:01:08.400
<v Speaker 1>of us.

1:01:08.640 --> 1:01:11.280
<v Speaker 2>Huh, So are you an Amazon Prime member? Do you

1:01:11.360 --> 1:01:12.040
<v Speaker 2>use Amazon?

1:01:12.640 --> 1:01:15.800
<v Speaker 1>We have a Prime account because my husband watches football

1:01:15.840 --> 1:01:18.000
<v Speaker 1>and they have Thursday Night Football. We don't really shop

1:01:18.040 --> 1:01:18.760
<v Speaker 1>on it though.

1:01:18.640 --> 1:01:22.160
<v Speaker 2>You don't very rarely. Huh, that's really interesting. All right,

1:01:22.240 --> 1:01:24.920
<v Speaker 2>Let's jump to our favorite questions. We ask all of

1:01:24.920 --> 1:01:28.480
<v Speaker 2>our guests starting with, so what are you streaming these days?

1:01:28.600 --> 1:01:30.880
<v Speaker 2>What are you either listening to on Audible? What are

1:01:30.920 --> 1:01:34.360
<v Speaker 2>you watching on Amazon Prime or Netflix or Apple Plus?

1:01:34.400 --> 1:01:37.040
<v Speaker 2>What was keeping you entertained besides Thursday Night Football?

1:01:37.480 --> 1:01:40.520
<v Speaker 1>I watch Nobody Wants This. That was very good, charming,

1:01:40.880 --> 1:01:43.360
<v Speaker 1>really really good. I listened to my favorite murder. It's

1:01:43.400 --> 1:01:45.840
<v Speaker 1>a true crime podcast. I'm a Murder, you know they

1:01:45.840 --> 1:01:46.120
<v Speaker 1>call it.

1:01:46.560 --> 1:01:50.240
<v Speaker 2>Tell us about your early mentors who helped shape your career.

1:01:50.360 --> 1:01:52.320
<v Speaker 1>Oh gosh, I have so many of them. Joanne Lublin,

1:01:52.480 --> 1:01:56.680
<v Speaker 1>who was this dynamo at the Wall Street Journal, Danis Simaluka,

1:01:56.720 --> 1:01:58.440
<v Speaker 1>my former boss at the Wall Street Journal on M

1:01:58.440 --> 1:02:01.800
<v Speaker 1>and A Jamie Heller who's now the CEO of Business Insider,

1:02:02.320 --> 1:02:05.680
<v Speaker 1>Dennis Berman, who is an amazing m and a reporter

1:02:05.720 --> 1:02:07.600
<v Speaker 1>at the Journal. And Drew Dowell, I would say, who

1:02:08.120 --> 1:02:09.360
<v Speaker 1>he's now overseas for us.

1:02:09.640 --> 1:02:12.160
<v Speaker 2>Let's talk about books. What are your favorites? What are

1:02:12.160 --> 1:02:13.120
<v Speaker 2>you reading right now?

1:02:13.200 --> 1:02:15.680
<v Speaker 1>So some of my favorites are The Moonstone by Wilkie

1:02:15.720 --> 1:02:19.600
<v Speaker 1>Collins it's like one of the first Victorian detective mysteries.

1:02:19.760 --> 1:02:21.919
<v Speaker 1>I love the Bronts and Jane Austin. I know that's

1:02:21.960 --> 1:02:26.400
<v Speaker 1>like pretty trite. I'm reading some just fun Halloween type

1:02:26.400 --> 1:02:29.080
<v Speaker 1>of books right now, this book called Lucy Fowley called

1:02:29.160 --> 1:02:31.840
<v Speaker 1>The Midnight Feast. That's been really fun. And I love

1:02:31.880 --> 1:02:35.760
<v Speaker 1>Sally Rooney. I have her new book ready to read

1:02:35.800 --> 1:02:36.439
<v Speaker 1>after this one.

1:02:36.600 --> 1:02:39.280
<v Speaker 2>All right, our final two questions. What sort of advice

1:02:39.280 --> 1:02:42.600
<v Speaker 2>would you give to a recent college grad interested in

1:02:42.640 --> 1:02:47.200
<v Speaker 2>a career in either journalism, m and a retail what's

1:02:47.200 --> 1:02:49.320
<v Speaker 2>your advice journalism?

1:02:49.360 --> 1:02:52.120
<v Speaker 1>It's I mean, you have to hustle. I would say

1:02:52.640 --> 1:02:55.120
<v Speaker 1>it's to get as many bylines as you can, even

1:02:55.120 --> 1:02:57.800
<v Speaker 1>if it's not at one of the prestige newspapers. At first,

1:02:58.280 --> 1:02:59.800
<v Speaker 1>I fully believe the way I got hired at the

1:03:00.440 --> 1:03:04.640
<v Speaker 1>was freelancing my college papers. My college you know, articles

1:03:04.680 --> 1:03:06.880
<v Speaker 1>to other places to get a byline in places in

1:03:07.080 --> 1:03:09.960
<v Speaker 1>tiny newspapers that probably don't exist anymore. And you just

1:03:10.040 --> 1:03:12.400
<v Speaker 1>have to be reporting around you all the time, making

1:03:12.440 --> 1:03:15.960
<v Speaker 1>sources wherever you are, keeping a great rolodex. So I

1:03:15.960 --> 1:03:17.840
<v Speaker 1>think that's the most important thing you could do.

1:03:18.480 --> 1:03:21.800
<v Speaker 2>And what do you know about the world of journalism today.

1:03:22.360 --> 1:03:24.680
<v Speaker 2>You wish you knew twenty years or so ago when

1:03:24.680 --> 1:03:26.720
<v Speaker 2>you were first starting out.

1:03:27.440 --> 1:03:30.520
<v Speaker 1>Oh my gosh. When I first started out, dot com

1:03:30.640 --> 1:03:33.400
<v Speaker 1>was like not even that much of a thing, right,

1:03:33.560 --> 1:03:36.240
<v Speaker 1>you know. The WSJ dot Com was this like bastard

1:03:36.280 --> 1:03:39.560
<v Speaker 1>step child, right, And that's that's what I was put on. Actually,

1:03:41.960 --> 1:03:44.040
<v Speaker 1>I think I wish I knew that you just have

1:03:44.120 --> 1:03:49.080
<v Speaker 1>to be so resilient in this profession that if you're

1:03:49.080 --> 1:03:50.880
<v Speaker 1>doing your job well, it means a lot of rejection.

1:03:51.080 --> 1:03:52.840
<v Speaker 1>That you're gonna cold call people and they're gonna hang

1:03:52.920 --> 1:03:55.480
<v Speaker 1>up on you, and that's fine, cold call the next one.

1:03:55.480 --> 1:03:57.120
<v Speaker 1>You just get up again and get up again, because

1:03:57.320 --> 1:03:59.040
<v Speaker 1>so much of journalism is a numbers game.

1:04:00.080 --> 1:04:03.480
<v Speaker 2>Really really interesting. Thank you, Dana for being so generous

1:04:03.520 --> 1:04:07.200
<v Speaker 2>with your time. We have been speaking with Dana Mattioli.

1:04:07.400 --> 1:04:10.840
<v Speaker 2>She covers Amazon for The Wall Street Journal and is

1:04:10.880 --> 1:04:14.640
<v Speaker 2>the author of the book The Everything War, Amazon's ruthless

1:04:14.720 --> 1:04:18.440
<v Speaker 2>quest to own the world and remake corporate power. If

1:04:18.480 --> 1:04:21.080
<v Speaker 2>you enjoy this conversation, well be sure and check out

1:04:21.120 --> 1:04:23.720
<v Speaker 2>any of the five hundred or so previous discussions we've

1:04:23.720 --> 1:04:26.959
<v Speaker 2>had over the past ten years. You can find those

1:04:27.000 --> 1:04:32.240
<v Speaker 2>at iTunes, Spotify, YouTube, Bloomberg, wherever you find your favorite podcast,

1:04:32.560 --> 1:04:34.919
<v Speaker 2>and be sure and check out my new short forum

1:04:35.040 --> 1:04:40.200
<v Speaker 2>podcast At the Money, Short conversations with experts about single

1:04:40.280 --> 1:04:44.320
<v Speaker 2>topics that affect your money, earning it, spending it, and

1:04:44.400 --> 1:04:47.960
<v Speaker 2>most importantly investing it At the Money, in the Master's

1:04:48.040 --> 1:04:51.600
<v Speaker 2>and Business feed, or wherever you find your favorite podcast,

1:04:52.200 --> 1:04:53.880
<v Speaker 2>I would be remiss if I do not thank the

1:04:53.880 --> 1:04:57.040
<v Speaker 2>correct team that helps us put these conversations together each week.

1:04:57.360 --> 1:05:00.960
<v Speaker 2>Sarah Livesey is my audio engineer. Jone Russo is my

1:05:01.120 --> 1:05:05.280
<v Speaker 2>head of research. Anna Luke is my producer. Sage Bauman

1:05:05.360 --> 1:05:08.840
<v Speaker 2>is the head of podcasts at Bloomberg. I'm Barry Bertolts.

1:05:09.120 --> 1:05:12.840
<v Speaker 2>You've been listening to Masters in Business on Bloomberg Radio.