1 00:00:00,040 --> 00:00:02,920 Speaker 1: I'd like to start back in November two thousand nineteen. 2 00:00:03,720 --> 00:00:06,960 Speaker 1: We're at a black tie event hosted by the Smithsonian. 3 00:00:07,800 --> 00:00:12,799 Speaker 1: It's their annual National Portrait Galleries Induction ceremony. This is 4 00:00:12,840 --> 00:00:17,840 Speaker 1: a historic honor. The images of George Washington, Abraham Lincoln, 5 00:00:18,040 --> 00:00:22,240 Speaker 1: and Frederick Douglas hang in these halls. CBS News anchor 6 00:00:22,280 --> 00:00:25,639 Speaker 1: Gayle King is the Evening's m c. They like to 7 00:00:25,640 --> 00:00:29,040 Speaker 1: get people at different stages of their careers, and in particular, 8 00:00:29,560 --> 00:00:33,040 Speaker 1: capture careers that are still going strong, that are still 9 00:00:33,080 --> 00:00:36,040 Speaker 1: doing interesting things and still have a lot to do 10 00:00:36,159 --> 00:00:39,440 Speaker 1: and say. And I think that certainly really describes our 11 00:00:39,479 --> 00:00:42,919 Speaker 1: final honor rate last, but certainly not least. So this 12 00:00:43,000 --> 00:00:46,400 Speaker 1: is an annual ceremony where a handful of incredibly accomplished 13 00:00:46,440 --> 00:00:50,520 Speaker 1: individuals are celebrated. They get their likeness painted, and those 14 00:00:50,560 --> 00:00:54,200 Speaker 1: portraits are then entered into the gallery. Earlier in the evening, 15 00:00:54,360 --> 00:00:58,240 Speaker 1: the inducted Vogue editor and a wintour Lynn Manuel Miranda, 16 00:00:58,320 --> 00:01:01,920 Speaker 1: the creator of Hamilton's and the band Earth Wind and Fire. 17 00:01:02,880 --> 00:01:06,120 Speaker 1: Now Gale is about to introduce the wealthiest person in 18 00:01:06,160 --> 00:01:10,120 Speaker 1: the world. He is the founder of Amazon Blue Origin, 19 00:01:10,440 --> 00:01:13,720 Speaker 1: the owner of The Washington Post, So then Jeff Bezos 20 00:01:13,760 --> 00:01:16,960 Speaker 1: walks out on stage, and his speech isn't about his 21 00:01:17,040 --> 00:01:21,760 Speaker 1: remarkable success, his exorbitant wealth, or even the honor of 22 00:01:21,800 --> 00:01:26,000 Speaker 1: being inducted into the Smithsonian. My life is based on 23 00:01:26,080 --> 00:01:30,000 Speaker 1: a large series of mistakes, and I'm kind of famous 24 00:01:30,040 --> 00:01:33,680 Speaker 1: for it. Actually in the business realm. How many people 25 00:01:33,720 --> 00:01:37,960 Speaker 1: here have a firephone? Remember the firephone? This was Amazon's 26 00:01:37,959 --> 00:01:40,759 Speaker 1: attempt at making a smartphone to compete with the iPhone. 27 00:01:41,200 --> 00:01:44,600 Speaker 1: It's so terribly they canceled the project after just a 28 00:01:44,640 --> 00:01:48,560 Speaker 1: few months. Every interesting thing I have ever done, every 29 00:01:48,600 --> 00:01:52,160 Speaker 1: important thing I've ever done, every beneficial thing I've ever done, 30 00:01:52,320 --> 00:01:58,640 Speaker 1: has been through a cascade of experiments and mistakes and failures. 31 00:01:59,080 --> 00:02:02,760 Speaker 1: And I'm covered in scar tissue as a result of this, 32 00:02:03,080 --> 00:02:05,760 Speaker 1: and started in the early days of Amazon. It's interesting 33 00:02:05,760 --> 00:02:09,040 Speaker 1: to me that on this night celebrating his lifetime success, 34 00:02:09,600 --> 00:02:12,880 Speaker 1: he wanted to focus on scar tissue. In fact, that 35 00:02:13,000 --> 00:02:15,560 Speaker 1: was the theme of his portrait. He asked the photo 36 00:02:15,639 --> 00:02:19,680 Speaker 1: realistic artist Robert mccourney to paint him. I wanted some 37 00:02:20,320 --> 00:02:27,160 Speaker 1: one who would paint me hyper realistically, with every flaw, 38 00:02:28,480 --> 00:02:35,400 Speaker 1: every imperfection, every piece of scar tissue that I have, 39 00:02:36,400 --> 00:02:41,480 Speaker 1: and thank you, Robert, you did that amazingly. You can 40 00:02:41,600 --> 00:02:46,880 Speaker 1: see my contact lenses in that painting, and I'm not kidding. 41 00:02:47,560 --> 00:02:51,000 Speaker 1: The painting of Jeff Bezos is pretty uncanny. He used 42 00:02:51,000 --> 00:02:54,120 Speaker 1: to pick that against the stark white background. He's wearing 43 00:02:54,120 --> 00:02:57,480 Speaker 1: a white shirt, a silver tie, like he's coming out 44 00:02:57,480 --> 00:03:01,680 Speaker 1: of a meeting, and his gaze is severe. It's the 45 00:03:01,919 --> 00:03:06,680 Speaker 1: look that is flustered, intimidated, and motivated Amazon employees for 46 00:03:06,720 --> 00:03:09,840 Speaker 1: twenty five years. What's striking to me is that in 47 00:03:09,880 --> 00:03:12,079 Speaker 1: the painting, the light is coming in from an angle, 48 00:03:12,600 --> 00:03:16,000 Speaker 1: so that half of Bezos is illuminated. The other half 49 00:03:16,200 --> 00:03:20,040 Speaker 1: is shadowy and dark. On this night, Bezos was in 50 00:03:20,120 --> 00:03:23,000 Speaker 1: a room full of rich elites. This was a crowd 51 00:03:23,080 --> 00:03:27,919 Speaker 1: that embraced him. But note how literally actually said. This 52 00:03:28,040 --> 00:03:32,200 Speaker 1: is also typical Bezos in public. He stays on script, 53 00:03:32,720 --> 00:03:34,760 Speaker 1: He tells you only what he wants you to hear, 54 00:03:35,440 --> 00:03:39,400 Speaker 1: and he just teases at the scar tissue. Back then, 55 00:03:39,560 --> 00:03:43,400 Speaker 1: Amazon still conjured the promise of next day shipping, the 56 00:03:43,440 --> 00:03:47,920 Speaker 1: marvel of Alexa Voice recognition, a massive library of streaming 57 00:03:47,960 --> 00:03:54,040 Speaker 1: TV and movies, and not controversy or intrigue. You're listening 58 00:03:54,040 --> 00:03:58,280 Speaker 1: to Foundering, I'm your host brad Stone. I've written two 59 00:03:58,320 --> 00:04:03,400 Speaker 1: books chronicling Amazon's His Tree, The Everything Store and Amazon Unbound. 60 00:04:04,280 --> 00:04:07,000 Speaker 1: I've been reporting on Amazon for over twenty years now. 61 00:04:07,480 --> 00:04:10,280 Speaker 1: I've devoted much of my career to this, not only 62 00:04:10,280 --> 00:04:14,600 Speaker 1: to understanding the man Jeff Bezos, but also to chronicling 63 00:04:14,640 --> 00:04:22,240 Speaker 1: how he's totally altered our modern economic reality. So something 64 00:04:22,279 --> 00:04:25,760 Speaker 1: that people often ask me is what's Jeff Bezos really like? 65 00:04:26,560 --> 00:04:29,120 Speaker 1: I want to speak to that for a second. He's 66 00:04:29,160 --> 00:04:33,599 Speaker 1: a big geek. He loves science fiction and space, but 67 00:04:33,640 --> 00:04:36,320 Speaker 1: he can also be kind of scary. He can be 68 00:04:36,400 --> 00:04:40,080 Speaker 1: kind of brutal when people don't meet his expectations, when 69 00:04:40,080 --> 00:04:42,960 Speaker 1: they're not thinking on his level, they can be subjected 70 00:04:42,960 --> 00:04:47,520 Speaker 1: to his outbursts. Also, people ask me, is Bezo smart, 71 00:04:48,000 --> 00:04:52,320 Speaker 1: And the answer is yes, absolutely. He's extremely well read. 72 00:04:52,960 --> 00:04:57,560 Speaker 1: He's a master compartmentalizer, someone who can work on many complicated, 73 00:04:57,880 --> 00:05:02,080 Speaker 1: totally different things one after the other. But what's most 74 00:05:02,080 --> 00:05:04,919 Speaker 1: impressive is probably his ability to dive into the deep 75 00:05:05,000 --> 00:05:08,240 Speaker 1: technical details of things that he knows very little about, 76 00:05:09,080 --> 00:05:11,719 Speaker 1: to basically go to school on a topic like artificial 77 00:05:11,760 --> 00:05:17,000 Speaker 1: intelligence or rocket propulsion. He's extraordinarily disciplined, and he can 78 00:05:17,000 --> 00:05:19,880 Speaker 1: go toe to toe with the engineers who have basically 79 00:05:19,920 --> 00:05:24,200 Speaker 1: spent their entire careers in those industries because of his 80 00:05:24,279 --> 00:05:28,039 Speaker 1: intensity and intelligence. You'll notice that in a lot of 81 00:05:28,080 --> 00:05:32,880 Speaker 1: our interviews, many former Amazon employees and executives seemed to 82 00:05:32,920 --> 00:05:36,920 Speaker 1: adore Basos. He's almost got a kind of cultish following. 83 00:05:37,880 --> 00:05:40,800 Speaker 1: This is a guy who started accompanying as garage and 84 00:05:40,839 --> 00:05:43,400 Speaker 1: evolved it all the way to becoming a trillion dollar 85 00:05:43,480 --> 00:05:47,360 Speaker 1: company that dominates much of the world. He never took 86 00:05:47,440 --> 00:05:50,640 Speaker 1: much of a salary, but these days he's worth around 87 00:05:50,720 --> 00:05:54,560 Speaker 1: two hundred billion just on his Amazon ownership stake alone. 88 00:05:55,400 --> 00:05:58,440 Speaker 1: People who worked for him just marvel at the decisions 89 00:05:58,480 --> 00:06:01,039 Speaker 1: he made and the instinct that he had about the 90 00:06:01,080 --> 00:06:06,880 Speaker 1: future of technology. But lately, something strange has happened. Public 91 00:06:06,920 --> 00:06:11,799 Speaker 1: opinion about Bezos has declined dramatically. People ridicule his dreams 92 00:06:11,800 --> 00:06:16,440 Speaker 1: of space travel and criticize his philanthropic giving. They loved 93 00:06:16,440 --> 00:06:19,840 Speaker 1: a dunk on his lavish lifestyle, which has recently been 94 00:06:19,839 --> 00:06:23,520 Speaker 1: on awkward display on social media. I think that the 95 00:06:23,600 --> 00:06:26,120 Speaker 1: number of people who see Jeff Bezos as a hero 96 00:06:26,760 --> 00:06:30,919 Speaker 1: is diminishing. He's viewed kind of skeptically as someone with 97 00:06:31,040 --> 00:06:35,400 Speaker 1: enormous amounts of power and resources. Who's a difficult person 98 00:06:35,440 --> 00:06:38,880 Speaker 1: to work for, Who's not treating his workforce all that well? 99 00:06:39,360 --> 00:06:41,600 Speaker 1: And who hasn't done as many good things with his 100 00:06:41,760 --> 00:06:46,240 Speaker 1: money and power as he could have. These questions have 101 00:06:46,320 --> 00:06:49,960 Speaker 1: become even sharper during the pandemic. During the first year 102 00:06:50,000 --> 00:06:54,920 Speaker 1: of lockdown, Amazon sales sword and bezos Is personal wealth 103 00:06:55,000 --> 00:06:59,440 Speaker 1: jumped from one fifteen billion to one nine billion. His 104 00:06:59,560 --> 00:07:03,440 Speaker 1: press verity felt perverse given how many people were struggling. 105 00:07:04,120 --> 00:07:07,280 Speaker 1: He was living large just when many people were barely 106 00:07:07,360 --> 00:07:12,960 Speaker 1: scraping by. This raised more questions should billionaires exist at all? 107 00:07:13,560 --> 00:07:16,640 Speaker 1: Is the world better off with or without Amazon in it? 108 00:07:18,160 --> 00:07:21,520 Speaker 1: Amazon was never one of those tech companies with idealistic 109 00:07:21,600 --> 00:07:26,000 Speaker 1: promises to save the world, But suddenly the company found 110 00:07:26,000 --> 00:07:30,440 Speaker 1: itself getting blamed for the world's problems. Why isn't Amazon 111 00:07:30,520 --> 00:07:35,840 Speaker 1: doing more to combat climate change, fix inequality, protect smaller companies? 112 00:07:36,800 --> 00:07:40,160 Speaker 1: People started to contrast bezos fortune with the plight of 113 00:07:40,200 --> 00:07:45,320 Speaker 1: his workers. Amazon is seen as an essential service through 114 00:07:45,360 --> 00:07:48,960 Speaker 1: this pandemic, but you have been very slow to install 115 00:07:49,320 --> 00:07:54,320 Speaker 1: your workers protections, and it's hurt your reputation. You've been 116 00:07:54,360 --> 00:07:57,760 Speaker 1: seen as a company that puts profits ahead of people. 117 00:07:58,120 --> 00:08:01,160 Speaker 1: Amazon was ranked one of the twin worst companies to 118 00:08:01,240 --> 00:08:05,040 Speaker 1: work for by the National Center for Occupational Safety and Health, 119 00:08:05,080 --> 00:08:08,560 Speaker 1: but many Amazon staffers say the demand for greater speed 120 00:08:09,040 --> 00:08:13,000 Speaker 1: is the leading factor harming warehouse workers. Allen says she 121 00:08:13,120 --> 00:08:15,960 Speaker 1: processed an average of six hundred items an hour on 122 00:08:16,000 --> 00:08:19,679 Speaker 1: the job here at a broken workstation that injured her back. 123 00:08:19,840 --> 00:08:24,240 Speaker 1: Protesters march down street intent to vent their anger at Amazon. 124 00:08:24,400 --> 00:08:31,160 Speaker 1: Outside on the street. These days, a vocal minority of 125 00:08:31,200 --> 00:08:33,319 Speaker 1: people go out of their way to buy nothing from 126 00:08:33,360 --> 00:08:37,160 Speaker 1: Amazon dot Com, which brings me to another question I get, 127 00:08:37,840 --> 00:08:40,520 Speaker 1: Can you really avoid Amazon in this day and age? 128 00:08:41,400 --> 00:08:44,760 Speaker 1: I would say the answers probably no. If you're a 129 00:08:44,840 --> 00:08:48,679 Speaker 1: conscientious objector and you're not shopping on the site, well, 130 00:08:48,720 --> 00:08:52,079 Speaker 1: are you shopping from Whole Foods? They are owned by Amazon. 131 00:08:53,040 --> 00:08:57,040 Speaker 1: Even if you're watching Netflix videos or sending images on Snapchat, 132 00:08:57,400 --> 00:08:59,880 Speaker 1: you may not know that both companies are in service 133 00:09:00,000 --> 00:09:03,720 Speaker 1: pace from Amazon through its cloud division. Or you might 134 00:09:03,760 --> 00:09:07,720 Speaker 1: be reading The Washington Post, which Jeff Bezos personally owns. 135 00:09:08,440 --> 00:09:11,880 Speaker 1: You might be buying from alternative websites, and those products 136 00:09:11,960 --> 00:09:16,079 Speaker 1: might be stored in Amazon warehouses and delivered with Amazon Vans. 137 00:09:17,120 --> 00:09:20,360 Speaker 1: Amazon has simply become so big that its tentacles reach 138 00:09:20,440 --> 00:09:25,120 Speaker 1: into almost every aspect of business these days. To really 139 00:09:25,240 --> 00:09:29,120 Speaker 1: understand this company that's become as essential as it is villainized, 140 00:09:29,600 --> 00:09:33,120 Speaker 1: it's important to go back to the beginning. Love him 141 00:09:33,200 --> 00:09:35,520 Speaker 1: or hate him, or depend on him for all your 142 00:09:35,559 --> 00:09:39,120 Speaker 1: daily shopping needs. The rise of Jeff Bezos and Amazon 143 00:09:39,600 --> 00:09:42,920 Speaker 1: is one of the most celebrated and contentious business stories 144 00:09:42,960 --> 00:09:46,960 Speaker 1: of our times. But Bezos didn't just change the business world. 145 00:09:47,320 --> 00:09:52,440 Speaker 1: He also changed himself, pulling off a personal transformation, and 146 00:09:52,520 --> 00:09:55,520 Speaker 1: you can see it. He's no longer the balding paste 147 00:09:55,520 --> 00:09:59,880 Speaker 1: the tech nerd from Seattle. Now he's buff. He post 148 00:10:00,040 --> 00:10:03,800 Speaker 1: regularly to Instagram showing off his new girlfriend and a 149 00:10:03,840 --> 00:10:09,480 Speaker 1: new lifestyle that includes private yachts, remote islands, and celebrity parties. 150 00:10:10,240 --> 00:10:13,400 Speaker 1: He acts like the celebrity he is, some of whose 151 00:10:13,440 --> 00:10:18,040 Speaker 1: personal life and fashion choices are avidly covered by the tabloids. 152 00:10:18,880 --> 00:10:23,160 Speaker 1: It's a remarkable act of personal and business reinvention. Will 153 00:10:23,200 --> 00:10:38,520 Speaker 1: begin to tell that story when we come back. We're 154 00:10:38,559 --> 00:10:41,040 Speaker 1: going to go all the way back to the paleolithic 155 00:10:41,120 --> 00:10:44,439 Speaker 1: days of the internet. Back then, Amazon was just an 156 00:10:44,440 --> 00:10:48,440 Speaker 1: online bookseller, people were being introduced for the first time 157 00:10:48,600 --> 00:10:53,040 Speaker 1: to this new thing called the world Wide Web. Here 158 00:10:53,040 --> 00:10:55,880 Speaker 1: are you? I'm Jeff Beazos and what are your What 159 00:10:56,000 --> 00:10:58,560 Speaker 1: is your claim to face? And the founder of Amazon 160 00:10:58,600 --> 00:11:01,319 Speaker 1: dot com? Where did a good an idea for Amazon 161 00:11:01,440 --> 00:11:04,360 Speaker 1: dot com? Well? Three years ago, I was in New 162 00:11:04,440 --> 00:11:07,200 Speaker 1: York City where he for a quantitative hedge fund when 163 00:11:07,240 --> 00:11:10,080 Speaker 1: it came across the startling statistic that web usage was 164 00:11:10,080 --> 00:11:13,920 Speaker 1: growing at a year. So I decided I would try 165 00:11:13,960 --> 00:11:16,360 Speaker 1: and find a business plan that made sense in the 166 00:11:16,440 --> 00:11:19,079 Speaker 1: context of that growth, and I picked books as the 167 00:11:19,120 --> 00:11:22,720 Speaker 1: first best product to sell online. That's Jeff Bezos speaking 168 00:11:22,760 --> 00:11:27,520 Speaker 1: in an interview filmed at the Special Libraries conference in 169 00:11:27,520 --> 00:11:30,360 Speaker 1: In some ways, Bezos had been preparing to start this 170 00:11:30,440 --> 00:11:34,760 Speaker 1: company since childhood. As a kid, he was considered precocious, 171 00:11:35,040 --> 00:11:38,800 Speaker 1: highly intelligent. His mother, Jackie, had him whence she was 172 00:11:38,840 --> 00:11:41,640 Speaker 1: still in high school. He didn't know his biological dad 173 00:11:41,679 --> 00:11:44,560 Speaker 1: for most of his life. When he was four, his 174 00:11:44,679 --> 00:11:48,400 Speaker 1: mom remarried a Cuban immigrant, Mike Bezos, and they spent 175 00:11:48,440 --> 00:11:52,080 Speaker 1: the next several years moving around. He was the valedictorian 176 00:11:52,160 --> 00:11:54,720 Speaker 1: of his high school in Miami, and he gave a 177 00:11:54,760 --> 00:11:59,000 Speaker 1: speech about entrepreneurship and space. Friends would later say, he 178 00:11:59,080 --> 00:12:01,840 Speaker 1: started Amazon on and he went after all this money 179 00:12:02,040 --> 00:12:05,080 Speaker 1: because he dreamed of going into space himself. One day 180 00:12:05,480 --> 00:12:08,760 Speaker 1: before he started Amazon, Bezos had been a vice president 181 00:12:08,800 --> 00:12:12,000 Speaker 1: at a Wall Street firm, D. E. Shawn Co. He 182 00:12:12,080 --> 00:12:15,199 Speaker 1: was researching new business opportunities for the company, and he 183 00:12:15,280 --> 00:12:17,920 Speaker 1: got an idea for a startup, which meant he had 184 00:12:17,960 --> 00:12:20,600 Speaker 1: a choice to make. Here he is on sixteen minutes. 185 00:12:21,240 --> 00:12:23,559 Speaker 1: The way I made the decision to leave Wall Street 186 00:12:23,600 --> 00:12:25,800 Speaker 1: and do this was it will sound geeky to you, 187 00:12:25,920 --> 00:12:29,200 Speaker 1: but um, it was a regret minimization framework. So this 188 00:12:29,280 --> 00:12:31,360 Speaker 1: is how I actually made it. So if I understand it, 189 00:12:31,360 --> 00:12:34,160 Speaker 1: if I can translate that into English, I can deal with. 190 00:12:34,480 --> 00:12:38,160 Speaker 1: Does that mean I want to live my life so 191 00:12:38,280 --> 00:12:40,720 Speaker 1: that in a few decades from now, I'm not going 192 00:12:40,760 --> 00:12:43,280 Speaker 1: to regret it. That's exactly right. I want to have 193 00:12:43,360 --> 00:12:45,040 Speaker 1: lived my life in such a way that when I'm 194 00:12:45,040 --> 00:12:47,720 Speaker 1: eighty years old, I've minimized the number of regrets that 195 00:12:47,760 --> 00:12:50,240 Speaker 1: I have. For you, it was not carpet d M. 196 00:12:50,280 --> 00:12:53,160 Speaker 1: It was not wine women in song. No, no, no no. 197 00:12:53,840 --> 00:12:55,679 Speaker 1: I don't go in for carpet d M. I go 198 00:12:55,720 --> 00:13:00,960 Speaker 1: in for regret minimization framework. So he end his wife Mackenzie, 199 00:13:01,200 --> 00:13:05,040 Speaker 1: left their Manhattan apartment, flew to Fort Worth, Texas, took 200 00:13:05,040 --> 00:13:08,160 Speaker 1: his parents Chevy Blazer out of storage, and started driving 201 00:13:08,200 --> 00:13:12,960 Speaker 1: north to Seattle. He chose Seattle because Microsoft was already there. 202 00:13:13,480 --> 00:13:16,160 Speaker 1: It was a budding tech cup but still small compared 203 00:13:16,200 --> 00:13:19,880 Speaker 1: to California or New York, and Washington State had something 204 00:13:19,920 --> 00:13:24,120 Speaker 1: else appealing to Bezos, lower taxes. He had the seed 205 00:13:24,280 --> 00:13:27,040 Speaker 1: of a business notion that on the web there were 206 00:13:27,080 --> 00:13:29,480 Speaker 1: no limits to what you could sell as long as 207 00:13:29,520 --> 00:13:31,400 Speaker 1: you could figure out a way to find it and 208 00:13:31,440 --> 00:13:34,640 Speaker 1: ship it through the mail. You could literally create and 209 00:13:34,800 --> 00:13:38,800 Speaker 1: everything store. So when you have that many items, could 210 00:13:38,840 --> 00:13:43,160 Speaker 1: literally build a store online that couldn't exist any other way. 211 00:13:43,280 --> 00:13:45,320 Speaker 1: And that's important right now because the web is still 212 00:13:45,320 --> 00:13:49,560 Speaker 1: an infant technology basically. Right now then Bezos was bubbling 213 00:13:49,559 --> 00:13:53,319 Speaker 1: with optimism about the Internet and the massive business opportunities 214 00:13:53,600 --> 00:13:57,520 Speaker 1: in retrospect. He was absolutely correct. What's really incredible about 215 00:13:57,559 --> 00:13:59,640 Speaker 1: this is that this is day one, this is the 216 00:13:59,760 --> 00:14:03,240 Speaker 1: very beginning, this is the kiddieh hawks stage of electronic commerce. 217 00:14:03,520 --> 00:14:06,280 Speaker 1: We're moving forward in so many different areas and lots 218 00:14:06,320 --> 00:14:08,840 Speaker 1: of different companies are as well. I think a millennia 219 00:14:08,920 --> 00:14:11,040 Speaker 1: from now, people are gonna look back and say, wow, 220 00:14:11,120 --> 00:14:13,240 Speaker 1: the late twentieth century was really a great time to 221 00:14:13,360 --> 00:14:16,880 Speaker 1: be alive. Beazos sets up the original Amazon office in 222 00:14:16,920 --> 00:14:20,600 Speaker 1: the garage of a suburban Seattle home. The first challenge 223 00:14:20,680 --> 00:14:24,160 Speaker 1: was figuring out what to name the company. Bezos registers 224 00:14:24,200 --> 00:14:27,920 Speaker 1: at as Cadabra inc as an Abra Cadabra, but that 225 00:14:28,040 --> 00:14:32,560 Speaker 1: sounds too much like cadaver. Then he registers relentless dot 226 00:14:32,600 --> 00:14:36,440 Speaker 1: com because he wants his young startup to operate relentlessly. 227 00:14:37,360 --> 00:14:39,920 Speaker 1: And here's a neat trick. Even now, if you type 228 00:14:39,920 --> 00:14:42,920 Speaker 1: relentless dot com in your browser, it'll redirect you to 229 00:14:42,960 --> 00:14:48,200 Speaker 1: Amazon anyway. In a wise move, he chooses the name Amazon, 230 00:14:48,680 --> 00:14:51,920 Speaker 1: the Earth's largest river can stand for its largest selection 231 00:14:51,960 --> 00:14:57,400 Speaker 1: of books. Amazon dot Com went live in July. He 232 00:14:57,520 --> 00:15:01,960 Speaker 1: encodes a few values into Amazon's DNA, chief, among them 233 00:15:02,200 --> 00:15:11,400 Speaker 1: satisfied the customer at all costs. The next few years, 234 00:15:11,640 --> 00:15:14,720 Speaker 1: Bezos moves his company to a succession of offices around 235 00:15:14,760 --> 00:15:19,480 Speaker 1: downtown Seattle. Some of those spaces were famously sketchy. Yeah, 236 00:15:19,480 --> 00:15:22,720 Speaker 1: that Columbia building was amazingly right across the street from 237 00:15:22,720 --> 00:15:25,760 Speaker 1: the Needle Exchange in downtown Seattle, so you had heroin 238 00:15:25,760 --> 00:15:29,360 Speaker 1: addicts that were hanging out right outside the building. That's 239 00:15:29,440 --> 00:15:32,120 Speaker 1: Dan Rose, who joined Amazon out of business school in 240 00:15:32,120 --> 00:15:35,400 Speaker 1: the nineties. Later he became a top deputy to Mark 241 00:15:35,440 --> 00:15:39,440 Speaker 1: Zuckerberg at Facebook. I called up Dan and a few 242 00:15:39,440 --> 00:15:43,040 Speaker 1: other early Amazon employees I had originally interviewed from my books. 243 00:15:43,520 --> 00:15:45,880 Speaker 1: They were proud of their time at Amazon and happy 244 00:15:45,920 --> 00:15:49,280 Speaker 1: to talk about it. Um. I remember those interviews there. 245 00:15:49,320 --> 00:15:53,080 Speaker 1: You know, there were no uh, there were no offices available, 246 00:15:53,120 --> 00:15:55,840 Speaker 1: so we literally, uh for a couple of the interviews. 247 00:15:55,880 --> 00:15:58,240 Speaker 1: We went into the stairwell and I did interviews in 248 00:15:58,280 --> 00:16:01,200 Speaker 1: the stairwell. It was, you know, there was definitely a 249 00:16:01,240 --> 00:16:05,200 Speaker 1: feeling of chaos. Bezos prowled these halls, and he loved 250 00:16:05,240 --> 00:16:08,840 Speaker 1: the chaos. He gave the company a mission, get big fast. 251 00:16:09,360 --> 00:16:14,480 Speaker 1: Amazon raised money from venture capitalists, they went public, then 252 00:16:14,560 --> 00:16:18,080 Speaker 1: raised more money from Wall Street. Bezos became a billionaire 253 00:16:18,280 --> 00:16:21,600 Speaker 1: when the company was only five years old. You generally 254 00:16:21,680 --> 00:16:27,240 Speaker 1: hear him before you see him. It's the ear piercing 255 00:16:27,360 --> 00:16:31,560 Speaker 1: laugh of billionaire Jeff Bezos. I was a good student. 256 00:16:31,800 --> 00:16:35,600 Speaker 1: I always worked really hard. I was nerdy. You were nerdy. 257 00:16:35,760 --> 00:16:41,040 Speaker 1: I was nerdy. That hasn't changed by At the time, 258 00:16:41,160 --> 00:16:44,440 Speaker 1: Jeff Bezos was famous for his laugh. I interviewed him 259 00:16:44,480 --> 00:16:47,280 Speaker 1: for the first time around this period, and his laugh 260 00:16:47,440 --> 00:16:50,720 Speaker 1: was definitely something you couldn't avoid. It was kind of jarring. 261 00:16:55,440 --> 00:16:59,240 Speaker 1: Bezos is goofy optimism wasn't an act. In the late nineties, 262 00:16:59,440 --> 00:17:02,520 Speaker 1: he took Amazon's riches and went on a spending spree. 263 00:17:03,040 --> 00:17:07,880 Speaker 1: He acquired random startups like IMDb and online stores in France. 264 00:17:07,880 --> 00:17:11,840 Speaker 1: In the UK, they branched into new product categories like 265 00:17:11,960 --> 00:17:16,439 Speaker 1: c d s, DVDs and toys. He even splurged on 266 00:17:16,440 --> 00:17:19,720 Speaker 1: a set of totally nerdy advertisements that appeared all over 267 00:17:19,760 --> 00:17:33,840 Speaker 1: network TV TV. Y What I Got dot com? Yes, 268 00:17:34,080 --> 00:17:36,320 Speaker 1: he paid for a group of guys to wear matching 269 00:17:36,400 --> 00:17:39,760 Speaker 1: sweaters and sing these little jingles in an attempt to 270 00:17:39,840 --> 00:17:50,840 Speaker 1: lodge Amazon dot Com into the public's imaginations. Here's the thing, though, 271 00:17:51,160 --> 00:17:54,040 Speaker 1: in those early years, Amazon was kind of a hot 272 00:17:54,080 --> 00:17:57,960 Speaker 1: mess who was losing money, lots of it. That was fine, 273 00:17:58,000 --> 00:18:00,960 Speaker 1: most startups do this, but it was goring so quickly 274 00:18:01,240 --> 00:18:04,320 Speaker 1: that its internal systems were a disaster. Some of the 275 00:18:04,359 --> 00:18:07,360 Speaker 1: earliest employees were starting to worry. I would say that 276 00:18:07,400 --> 00:18:09,480 Speaker 1: the train was heading down the track and there was 277 00:18:09,520 --> 00:18:12,680 Speaker 1: no track. That's Kellen Brannon, she was an early vice 278 00:18:12,680 --> 00:18:16,600 Speaker 1: president of finance. There was actually no financial planning or 279 00:18:16,600 --> 00:18:20,479 Speaker 1: analysis at all. And Jeff would say, you know, if 280 00:18:20,520 --> 00:18:22,960 Speaker 1: you're thinking about something longer than twenty minutes, you've missed 281 00:18:22,960 --> 00:18:27,200 Speaker 1: the opportunity, meaning literally, don't stop and deliberate for more 282 00:18:27,200 --> 00:18:31,280 Speaker 1: than twenty minutes. Keep moving. At the time, Amazon had 283 00:18:31,320 --> 00:18:35,520 Speaker 1: only two warehouses in Seattle and Delaware. During the holiday season, 284 00:18:35,720 --> 00:18:39,919 Speaker 1: the warehouse workers couldn't handle the surgeon orders. So early 285 00:18:40,000 --> 00:18:44,760 Speaker 1: on Amazon's executives, including Jeff Bezos, helped out. In the warehouse. 286 00:18:45,000 --> 00:18:49,000 Speaker 1: There were packing boxes, driving forkliffs, and gift trapping. I 287 00:18:49,119 --> 00:18:51,800 Speaker 1: learned so much right one. I learned it was fun 288 00:18:51,960 --> 00:18:54,960 Speaker 1: that I could race Jeff in the stacks because we 289 00:18:55,000 --> 00:18:57,600 Speaker 1: would time ourselves when we had these library cards, and 290 00:18:57,640 --> 00:18:59,760 Speaker 1: we would be because the warehouse managers is back then, 291 00:19:00,359 --> 00:19:02,520 Speaker 1: you know, it might put like an obscene book next 292 00:19:02,520 --> 00:19:05,200 Speaker 1: to a children's book and you're picking them, but they're 293 00:19:05,200 --> 00:19:07,200 Speaker 1: going to different people, which you're stacking him on these 294 00:19:07,240 --> 00:19:09,639 Speaker 1: library cards, and so we would check in, get our 295 00:19:09,680 --> 00:19:12,240 Speaker 1: library card, race up and down the stacks, picking the 296 00:19:12,240 --> 00:19:14,640 Speaker 1: books that were on the sheet, and then we take 297 00:19:14,720 --> 00:19:17,920 Speaker 1: it out right, and I could pick two point four 298 00:19:18,000 --> 00:19:21,720 Speaker 1: books per minute, and Jeff was slower, and that was 299 00:19:22,000 --> 00:19:24,000 Speaker 1: and he you could hear him because he would be 300 00:19:24,080 --> 00:19:27,240 Speaker 1: chasing us, right, we're all competing together, and his big 301 00:19:27,320 --> 00:19:30,520 Speaker 1: laugh would be there booming. Brandon left Amazon in two thousand, 302 00:19:30,840 --> 00:19:33,800 Speaker 1: but she still looks back fondly at that time. Racing 303 00:19:33,840 --> 00:19:37,320 Speaker 1: Jeff Bezos in the warehouses, she actually got a valuable 304 00:19:37,359 --> 00:19:40,840 Speaker 1: glimpse of how Bezos operates. He dove into the details 305 00:19:40,920 --> 00:19:43,960 Speaker 1: of every aspect of his company and just wanted to 306 00:19:43,960 --> 00:19:47,359 Speaker 1: win at all costs, even against his own colleagues. He's 307 00:19:47,760 --> 00:19:50,640 Speaker 1: incredibly competitive. He wanted to prove his performance, which made 308 00:19:50,640 --> 00:19:53,760 Speaker 1: me more competitive. And but there was a lot of laughter, 309 00:19:54,040 --> 00:19:57,280 Speaker 1: right he he loved it, and I have to say, 310 00:19:57,520 --> 00:19:59,680 Speaker 1: I have to say I loved it. All This cast 311 00:19:59,800 --> 00:20:02,720 Speaker 1: was okay to a point. Many of the dot coms 312 00:20:02,720 --> 00:20:05,919 Speaker 1: of the late nineties were pursuing similar strategies, trying to 313 00:20:06,000 --> 00:20:10,240 Speaker 1: get big fast. Here's Warren Jensen, the company's chief financial 314 00:20:10,240 --> 00:20:13,879 Speaker 1: officer at the time. It was a land grab. I 315 00:20:13,920 --> 00:20:16,040 Speaker 1: think one of the things that I remember during that period, 316 00:20:16,119 --> 00:20:20,159 Speaker 1: Jeff would frequently say is it makes the statement that 317 00:20:20,240 --> 00:20:24,280 Speaker 1: brands are like quick drawing cement uh. And the Amazon 318 00:20:24,359 --> 00:20:27,240 Speaker 1: mission was very clear to come, find, discover, and buy 319 00:20:27,359 --> 00:20:30,880 Speaker 1: anything online. Wall Street seemed happy to fund that mission 320 00:20:31,040 --> 00:20:34,440 Speaker 1: to bet on its possibility, even though it was unprofitable. 321 00:20:34,920 --> 00:20:39,720 Speaker 1: Amazon lost six hundred million dollars, and investors didn't seem 322 00:20:39,760 --> 00:20:43,560 Speaker 1: to bat an eye. At first. The company was incredibly strong. 323 00:20:44,520 --> 00:20:48,960 Speaker 1: The capital markets in early nine were wide open to 324 00:20:49,080 --> 00:20:54,000 Speaker 1: big Internet ideas like Amazon dot Com. But gradually investors 325 00:20:54,040 --> 00:20:56,440 Speaker 1: started to ask questions, when are you going to get 326 00:20:56,480 --> 00:21:00,360 Speaker 1: real and start to operate like a professional company. There 327 00:21:00,359 --> 00:21:05,119 Speaker 1: were real storm clouds forming. The company was burning a 328 00:21:05,200 --> 00:21:08,439 Speaker 1: lot of cash, and I would argue that by the 329 00:21:08,480 --> 00:21:13,399 Speaker 1: fall of the Internet bubble was getting pretty thin. In fact, 330 00:21:13,560 --> 00:21:17,879 Speaker 1: it was starting to burst. Investors were in awe of 331 00:21:17,960 --> 00:21:22,359 Speaker 1: the growth, but we're also voicing strong objections to the 332 00:21:22,400 --> 00:21:26,919 Speaker 1: mounting losses. And in March two thousand, the Internet bubble burst. 333 00:21:27,800 --> 00:21:30,480 Speaker 1: This was the dot Com crash, and it was epic. 334 00:21:30,960 --> 00:21:34,439 Speaker 1: A whole generation of Internet companies like pets dot Com, 335 00:21:34,720 --> 00:21:38,800 Speaker 1: we're careening into bankruptcy. It's described as nothing showed with 336 00:21:38,920 --> 00:21:42,560 Speaker 1: breathtaking a points drop never before seen on the US markets. 337 00:21:46,000 --> 00:21:48,600 Speaker 1: This closing bill might as well have been an alarm, 338 00:21:48,840 --> 00:21:54,400 Speaker 1: So savage was the silly that another one? Yeah, too 339 00:21:54,400 --> 00:21:56,760 Speaker 1: many in a row, and spare thought for Bill Gates. 340 00:21:56,800 --> 00:21:59,800 Speaker 1: The Wall Street collapse cost the world's richest man and 341 00:22:00,040 --> 00:22:03,240 Speaker 1: me at one point eight billion dollars this week alone. 342 00:22:03,920 --> 00:22:07,119 Speaker 1: Investors were starting to worry was Amazon going to be 343 00:22:07,240 --> 00:22:10,959 Speaker 1: next in the trash heap? And Amazon feared what if 344 00:22:11,000 --> 00:22:15,040 Speaker 1: suppliers got nervous next? This could create a domino effect. 345 00:22:15,480 --> 00:22:17,920 Speaker 1: Bezos and his colleagues had to move quickly to stave 346 00:22:17,960 --> 00:22:21,679 Speaker 1: off disaster. So Amazon sends Warren to visit one of 347 00:22:21,720 --> 00:22:25,880 Speaker 1: their largest suppliers, the book distributor Ingram's, to convince them 348 00:22:25,960 --> 00:22:30,200 Speaker 1: that the company was on solid footing. And we went 349 00:22:30,240 --> 00:22:33,240 Speaker 1: in and made a presentation to the Ingram board of directors, 350 00:22:33,880 --> 00:22:36,879 Speaker 1: and I think it was Laura Ingram Um stopped the 351 00:22:36,920 --> 00:22:39,199 Speaker 1: meeting for a second and she said, Warren, you have 352 00:22:39,240 --> 00:22:41,600 Speaker 1: to remember that if you go bankrupt and we go bankrupt. 353 00:22:42,200 --> 00:22:45,920 Speaker 1: Warren was Amazon CFO at the time. If Amazon went under, 354 00:22:46,119 --> 00:22:49,040 Speaker 1: it could drag Ingram's down with him. This was a 355 00:22:49,080 --> 00:22:53,000 Speaker 1: remarkable statement and apportent of things to come. Amazon had 356 00:22:53,000 --> 00:22:55,680 Speaker 1: only been around for eight years, and it was already 357 00:22:55,760 --> 00:22:59,560 Speaker 1: dangerously intertwined with the success of some of the largest 358 00:22:59,560 --> 00:23:03,760 Speaker 1: company in the world. After bezos is lieutenants went around 359 00:23:03,760 --> 00:23:07,800 Speaker 1: reassuring suppliers, he made a second change, completely altering the 360 00:23:07,840 --> 00:23:12,920 Speaker 1: company's operating posture. For five years, Amazon's mantra had been 361 00:23:13,040 --> 00:23:18,440 Speaker 1: get big fast, and Bezos realized those days had to end. Jeff, 362 00:23:18,480 --> 00:23:21,600 Speaker 1: You've got to be concerned about operating margins overall for 363 00:23:21,640 --> 00:23:24,320 Speaker 1: the company. They're really extremely low, your factor amongst the 364 00:23:24,359 --> 00:23:27,080 Speaker 1: worst out there, So the company is basically a break 365 00:23:27,119 --> 00:23:30,560 Speaker 1: even at this point. You know, we expect to generate 366 00:23:30,680 --> 00:23:34,159 Speaker 1: substantial and meaningful free cash flow, so we're very excited 367 00:23:34,160 --> 00:23:36,119 Speaker 1: about where the company is from a business. This next 368 00:23:36,160 --> 00:23:39,159 Speaker 1: era at Amazon was going to be about tightening the belt, 369 00:23:39,480 --> 00:23:41,360 Speaker 1: and that was looking to be a lot less fun. 370 00:23:42,200 --> 00:23:45,560 Speaker 1: The change and fortune was stunning. Another question that's been 371 00:23:45,600 --> 00:23:47,400 Speaker 1: raised on Walter is you've had a lot of top 372 00:23:47,440 --> 00:23:51,720 Speaker 1: executive departures within the last year. I think five. No, 373 00:23:51,880 --> 00:23:54,600 Speaker 1: you know, I'm very happy with the executive team we 374 00:23:54,680 --> 00:23:59,440 Speaker 1: have and the and we are, and we're really functioning 375 00:23:59,480 --> 00:24:01,960 Speaker 1: well as a team. We've got good succession plans in place, 376 00:24:02,080 --> 00:24:07,800 Speaker 1: great people. Um, we're having fun. A lot of people left. Uh, 377 00:24:07,840 --> 00:24:09,720 Speaker 1: you know, a lot of people left the company during 378 00:24:09,720 --> 00:24:12,639 Speaker 1: that period, and um, and you can't blame him, you know, 379 00:24:12,680 --> 00:24:15,040 Speaker 1: because again, it wasn't it wasn't clear we were going 380 00:24:15,080 --> 00:24:18,240 Speaker 1: to survive. Dan Rose was fresh out of business school 381 00:24:18,240 --> 00:24:21,040 Speaker 1: at the time. He watched as his dreams of instant 382 00:24:21,080 --> 00:24:26,520 Speaker 1: wealth were dashed suddenly the NASDAC creators and Amazon stock craters. 383 00:24:27,119 --> 00:24:30,120 Speaker 1: And by the time I had vested my first year 384 00:24:30,200 --> 00:24:33,040 Speaker 1: of my stock options at the company that one year, Cliff, 385 00:24:33,640 --> 00:24:36,800 Speaker 1: my stock was underwater. It was back down below sixty dollars. 386 00:24:36,800 --> 00:24:39,080 Speaker 1: When I joined, it was like at forty dollars, and 387 00:24:39,119 --> 00:24:41,760 Speaker 1: over the next few years it went down to something 388 00:24:41,840 --> 00:24:45,800 Speaker 1: like eight or seven or something like that. As for Bezos, 389 00:24:45,840 --> 00:24:49,439 Speaker 1: his fortunes were also reversing, particularly in the court of 390 00:24:49,440 --> 00:24:52,240 Speaker 1: public opinion. Jeff goes from being the poster child of 391 00:24:52,280 --> 00:24:54,560 Speaker 1: the Internet to being the poster child of the Internet 392 00:24:54,560 --> 00:24:59,560 Speaker 1: bubble um. And so this precipitous fall from grace. The 393 00:24:59,600 --> 00:25:03,480 Speaker 1: people stuck around said that Bezos was handling it gracefully, 394 00:25:03,520 --> 00:25:06,560 Speaker 1: but Warren Jensen, who worked closely with him, says that 395 00:25:06,600 --> 00:25:10,280 Speaker 1: the scrutiny and pressure really got to him, especially when 396 00:25:10,320 --> 00:25:14,320 Speaker 1: the SEC began investigating his personal stock sales for signs 397 00:25:14,320 --> 00:25:18,680 Speaker 1: of impropriety. There were a lot of arrows pointed directly 398 00:25:18,720 --> 00:25:21,040 Speaker 1: at Amazon and at Jeff. That was, you know, a 399 00:25:21,040 --> 00:25:23,720 Speaker 1: painful period for Jeff. I mean, nobody wants to be 400 00:25:23,840 --> 00:25:27,160 Speaker 1: questioned that way by the SEC. And you know read 401 00:25:27,160 --> 00:25:29,560 Speaker 1: about it, you know, above the fold in the New 402 00:25:29,600 --> 00:25:32,680 Speaker 1: York Times. The other thing we've noticed is that there's 403 00:25:32,720 --> 00:25:35,920 Speaker 1: been more selling of your stock by yourself. You've done 404 00:25:35,920 --> 00:25:38,600 Speaker 1: about eighty million dollars worth of shares that you've sold 405 00:25:38,600 --> 00:25:40,840 Speaker 1: this year, a lot higher than what you have been 406 00:25:40,880 --> 00:25:45,119 Speaker 1: doing historically. My sales are that you're talking about are 407 00:25:45,160 --> 00:25:48,480 Speaker 1: made subject to Attende five one plan which gets set 408 00:25:48,520 --> 00:25:51,560 Speaker 1: well in advance. Uh. And I do it for liquidity 409 00:25:51,560 --> 00:25:54,840 Speaker 1: and diversification. I don't take a big salary at Amazon 410 00:25:54,920 --> 00:25:56,879 Speaker 1: dot Com, I don't take options, and my source of 411 00:25:56,920 --> 00:26:00,840 Speaker 1: income is is that stock. The SEC. He later dropped 412 00:26:00,840 --> 00:26:04,080 Speaker 1: the case without bringing any churches. It's hard to imagine 413 00:26:04,080 --> 00:26:07,640 Speaker 1: it now because Bezo seems so invincible, but back then 414 00:26:07,880 --> 00:26:11,440 Speaker 1: he was subject to such doubt, even ridicule. His name 415 00:26:11,480 --> 00:26:13,960 Speaker 1: was almost synonymous with the bust and hubris of the 416 00:26:14,000 --> 00:26:18,280 Speaker 1: tech elite inside the company. Employees said that Bezos kept 417 00:26:18,280 --> 00:26:22,080 Speaker 1: repeating one thing, almost as a mantra, the only way 418 00:26:22,080 --> 00:26:24,399 Speaker 1: out of this is to invent our way out. He 419 00:26:24,560 --> 00:26:27,520 Speaker 1: is at his heart he's an inventor. So here you 420 00:26:27,600 --> 00:26:31,280 Speaker 1: have a CEO of a by that time, a successful 421 00:26:31,920 --> 00:26:34,720 Speaker 1: company that had invented something new. He was saying to 422 00:26:34,760 --> 00:26:37,480 Speaker 1: the world, I didn't just fall into this business. This 423 00:26:37,560 --> 00:26:39,880 Speaker 1: is who I am. I'm going to constantly be inventing 424 00:26:39,920 --> 00:26:41,840 Speaker 1: and trying new things, and I'm gonna build a culture 425 00:26:41,880 --> 00:26:44,639 Speaker 1: of invention where everybody who works here is going to 426 00:26:44,720 --> 00:26:48,719 Speaker 1: embrace this and is going to um constantly be pushing 427 00:26:48,760 --> 00:26:52,840 Speaker 1: themselves to invent new things. How Amazon invented its way 428 00:26:52,840 --> 00:26:55,720 Speaker 1: out of this first cycle of cynicism. It started to 429 00:26:55,760 --> 00:26:59,000 Speaker 1: become the giant that many people know and fear today. 430 00:26:59,080 --> 00:27:20,480 Speaker 1: That's next. I want to take a moment and interrogate 431 00:27:20,520 --> 00:27:24,399 Speaker 1: this idea that Jeff Bezos is an inventor. As Dan Rose, 432 00:27:24,480 --> 00:27:28,720 Speaker 1: the early Amazon employee said earlier, invention is something Bezos 433 00:27:28,760 --> 00:27:31,960 Speaker 1: cares deeply about. He wants to be seen as an inventor. 434 00:27:32,640 --> 00:27:35,720 Speaker 1: It's a little contentious. He didn't exactly invent e commerce, 435 00:27:36,040 --> 00:27:39,119 Speaker 1: but he defined it in its current form, and Bezos 436 00:27:39,160 --> 00:27:42,639 Speaker 1: did mastermind the Kindle and Alexa. These are objects that 437 00:27:42,680 --> 00:27:45,960 Speaker 1: have changed the everyday lives of so many people. But 438 00:27:46,040 --> 00:27:48,639 Speaker 1: because of his wealth and Amazon status is one of 439 00:27:48,680 --> 00:27:52,199 Speaker 1: the largest businesses in the world, bezos Is ingenuity as 440 00:27:52,240 --> 00:27:56,000 Speaker 1: an inventor often gets lost. Critics see him as a 441 00:27:56,000 --> 00:27:59,760 Speaker 1: monopolist and Amazon as a monster that has unfairly tilted 442 00:27:59,800 --> 00:28:03,639 Speaker 1: the economic playing field. That gulf between the inventor and 443 00:28:03,680 --> 00:28:07,240 Speaker 1: the monopolist, between how Bezos hopes to be seen and 444 00:28:07,280 --> 00:28:10,320 Speaker 1: the way he often is perceived, that's never been larger. 445 00:28:10,960 --> 00:28:14,200 Speaker 1: He didn't always have this problem. Back in two thousand four, 446 00:28:14,359 --> 00:28:17,960 Speaker 1: Amazon was just in survival mode. Here's Dan Rose. It 447 00:28:18,080 --> 00:28:20,679 Speaker 1: wasn't like the company had turned the corner and everything 448 00:28:20,760 --> 00:28:22,359 Speaker 1: was going great and we were out of the woods. 449 00:28:22,359 --> 00:28:26,120 Speaker 1: It was like we had barely skated by. Many people 450 00:28:26,160 --> 00:28:28,639 Speaker 1: thought we were six months away from bankruptcy at a 451 00:28:28,880 --> 00:28:31,919 Speaker 1: moment there. If our suppliers hadn't extended credit to us, 452 00:28:32,000 --> 00:28:34,320 Speaker 1: we probably would have gone out of business. So Amazon 453 00:28:34,359 --> 00:28:38,200 Speaker 1: has survived, but would it ever thrive again? Many analysts 454 00:28:38,240 --> 00:28:41,520 Speaker 1: are doubtful, But in the next few years, Jeff Bezos 455 00:28:41,560 --> 00:28:44,400 Speaker 1: would pioneer a series of new inventions that would not 456 00:28:44,440 --> 00:28:47,400 Speaker 1: only change the course of the company's fate, they changed 457 00:28:47,440 --> 00:28:51,440 Speaker 1: the entire tech industry. One of those inventions is extremely 458 00:28:51,520 --> 00:28:55,400 Speaker 1: fast free shipping. Another is the Kindle. A third, which 459 00:28:55,400 --> 00:28:58,240 Speaker 1: we'll get to in the next episode, is Amazon Web 460 00:28:58,280 --> 00:29:02,720 Speaker 1: services or cloud computing. Here were three incredible inventions that 461 00:29:02,840 --> 00:29:05,440 Speaker 1: were not obvious. None of them were obvious, and he 462 00:29:05,960 --> 00:29:08,520 Speaker 1: shipped them to the world and and set this stage 463 00:29:08,520 --> 00:29:10,840 Speaker 1: for for what would become one of the greatest runs 464 00:29:10,840 --> 00:29:13,520 Speaker 1: in the history of business over the next fifteen years. 465 00:29:13,880 --> 00:29:17,959 Speaker 1: Perhaps the most consequential invention of this era is Amazon Prime. 466 00:29:18,680 --> 00:29:22,080 Speaker 1: It's late two thousand four and Bezos's early vision for 467 00:29:22,120 --> 00:29:25,400 Speaker 1: Prime was as a sort of loyalty program. At the time, 468 00:29:25,760 --> 00:29:29,200 Speaker 1: people weren't buying stuff like dish, detergents, and food online, 469 00:29:29,840 --> 00:29:32,560 Speaker 1: and Bazos had this idea that if they could eliminate 470 00:29:32,600 --> 00:29:35,760 Speaker 1: the shipping costs, then online shopping would be no more 471 00:29:35,760 --> 00:29:39,600 Speaker 1: expensive than going to the store. Back then, Amazon has 472 00:29:39,720 --> 00:29:42,800 Speaker 1: fast tracked shipment and it was the pride of the company, 473 00:29:42,840 --> 00:29:45,640 Speaker 1: but they were charging customers a lot extra to rush 474 00:29:45,680 --> 00:29:47,960 Speaker 1: their orders in one or two days, so not that 475 00:29:48,040 --> 00:29:51,920 Speaker 1: many people were using it. Here's former vice president Greg Greeley, 476 00:29:52,480 --> 00:29:55,240 Speaker 1: you know, and Jeff himself had been saying, what can 477 00:29:55,280 --> 00:29:57,440 Speaker 1: we do to get more people using our best product. 478 00:29:57,720 --> 00:30:00,640 Speaker 1: Um the OPS team had worked so hard to create 479 00:30:00,680 --> 00:30:05,000 Speaker 1: this really amazing supply chain that could provide predictable you know, 480 00:30:05,040 --> 00:30:07,880 Speaker 1: albeit expensive, but could provide a very predictable next day 481 00:30:07,920 --> 00:30:10,520 Speaker 1: and two day experience. So Pasos imagines Prime is a 482 00:30:10,560 --> 00:30:13,960 Speaker 1: special club. Pay seventy dollars up front and get two 483 00:30:14,040 --> 00:30:16,680 Speaker 1: days shipping for a year. He likes to call it 484 00:30:16,720 --> 00:30:19,680 Speaker 1: and all you can eat experience. And from the start 485 00:30:19,960 --> 00:30:23,120 Speaker 1: he has one name in mind. In two thousand and four, 486 00:30:23,200 --> 00:30:25,160 Speaker 1: and when we were trying to kind of lock it 487 00:30:25,200 --> 00:30:27,200 Speaker 1: on the program, Jeff said, I think it should be 488 00:30:27,200 --> 00:30:30,480 Speaker 1: called Prime. And because we've been pushing on this all 489 00:30:30,560 --> 00:30:34,920 Speaker 1: you can eat experience, my initial thought was, well, when 490 00:30:35,040 --> 00:30:37,520 Speaker 1: we confuse that with Prime rib that's where my head went. 491 00:30:37,560 --> 00:30:40,640 Speaker 1: I said, there must be a better branding there by 492 00:30:40,720 --> 00:30:44,320 Speaker 1: anything you want like patio furniture and get two day shipping. 493 00:30:44,880 --> 00:30:48,520 Speaker 1: You can imagine financial analysts were skeptical. I am sure 494 00:30:48,560 --> 00:30:50,440 Speaker 1: we could both do a Google search and find lots 495 00:30:50,440 --> 00:30:54,600 Speaker 1: of analysts that said this is absolutely crazy. For a 496 00:30:54,760 --> 00:30:58,440 Speaker 1: number of years, they were questioning how we were affording it, 497 00:30:58,480 --> 00:31:00,800 Speaker 1: because of course you just get the math at our 498 00:31:01,040 --> 00:31:03,840 Speaker 1: ship revenues that we were collecting and the cost of 499 00:31:03,840 --> 00:31:07,400 Speaker 1: our shipping. But Bazos insists on going ahead with Prime. 500 00:31:07,880 --> 00:31:10,880 Speaker 1: He believes that it will make customers more loyal, more 501 00:31:10,920 --> 00:31:14,560 Speaker 1: willing to shop beyond books, music, and DVDs, which were 502 00:31:14,560 --> 00:31:17,640 Speaker 1: Amazon's core products at the time, and it was gambling 503 00:31:17,640 --> 00:31:20,200 Speaker 1: that the expense of unlimited two days shipping would go 504 00:31:20,280 --> 00:31:24,360 Speaker 1: down as Amazon builds more warehouses closer to customers. Both 505 00:31:24,400 --> 00:31:27,040 Speaker 1: Amazon dot Com and many of its customers are getting 506 00:31:27,080 --> 00:31:30,720 Speaker 1: what they want with Amazon's Prime service. For Amazon, it's 507 00:31:30,720 --> 00:31:34,480 Speaker 1: more customers and for customers nearly free shipping. The service 508 00:31:34,520 --> 00:31:38,360 Speaker 1: at seventy nine dollars a year, includes free to day 509 00:31:38,400 --> 00:31:43,000 Speaker 1: delivery on any item Amazon stocks That includes, according to 510 00:31:43,000 --> 00:31:46,920 Speaker 1: The Wall Street Journal, a five hundred pounds safe that's 511 00:31:47,800 --> 00:31:50,760 Speaker 1: pounds David. Prime's impact wouldn't be visible to the outside 512 00:31:50,760 --> 00:31:53,640 Speaker 1: world for a couple of years, but over time it's 513 00:31:53,680 --> 00:31:57,280 Speaker 1: seriously changed people's shopping habits. How many things did you 514 00:31:57,360 --> 00:31:59,440 Speaker 1: used to buy in stores that you now buy online? 515 00:32:00,000 --> 00:32:03,040 Speaker 1: And Prime has created a new expectation that shipping and 516 00:32:03,120 --> 00:32:07,640 Speaker 1: online orders should be free. This created an impossible bar 517 00:32:07,840 --> 00:32:12,200 Speaker 1: for Amazon's competitors, because now rival retailers like Barnes and 518 00:32:12,200 --> 00:32:15,040 Speaker 1: Noble and Best Buy also have to offer some version 519 00:32:15,080 --> 00:32:18,520 Speaker 1: of free shipping and primes. That's another thing in motion. 520 00:32:18,960 --> 00:32:22,840 Speaker 1: Almost invisibly, tens of thousands of workers join Amazon as 521 00:32:22,880 --> 00:32:27,120 Speaker 1: warehouse workers and drivers. Soon this balloons to hundreds of 522 00:32:27,120 --> 00:32:30,760 Speaker 1: thousands of workers. They do the brutal work of fulfilling 523 00:32:30,760 --> 00:32:34,560 Speaker 1: the promise of two day delivery over time. As Prime 524 00:32:34,560 --> 00:32:38,480 Speaker 1: accelerates to next day delivery, same day delivery, the labor 525 00:32:38,520 --> 00:32:42,600 Speaker 1: issues will intensify. At the same time, as Bezos orders 526 00:32:42,640 --> 00:32:45,400 Speaker 1: the creation of Prime, he branches out in an even 527 00:32:45,440 --> 00:32:48,920 Speaker 1: more surprising direction. He wants Amazon to be more than 528 00:32:48,920 --> 00:32:52,440 Speaker 1: an online retailer. He has an idea for a consumer 529 00:32:52,480 --> 00:32:57,240 Speaker 1: electronics device. In the early two thousands, Apple introduces the 530 00:32:57,320 --> 00:33:01,120 Speaker 1: iPod in the iTunes music store. It drastically changes the 531 00:33:01,200 --> 00:33:05,440 Speaker 1: music business. Bazos watches the CD sales on Amazon fall. 532 00:33:05,960 --> 00:33:10,560 Speaker 1: Jeff had this realization that this could also happen to books, 533 00:33:10,600 --> 00:33:12,560 Speaker 1: and if it did happen to books, it would be 534 00:33:13,440 --> 00:33:17,280 Speaker 1: much more existential for us than the CD business, because, 535 00:33:17,440 --> 00:33:19,840 Speaker 1: for two reasons, books was by far largest business, but 536 00:33:19,840 --> 00:33:23,280 Speaker 1: also more importantly, it was half of the company's profits. 537 00:33:23,600 --> 00:33:26,480 Speaker 1: Dan says that from Bezos's point of view, it was 538 00:33:26,560 --> 00:33:29,760 Speaker 1: only a matter of time before someone invented an iPod 539 00:33:29,800 --> 00:33:33,480 Speaker 1: for books, and it could kill his business. Jeff also 540 00:33:33,600 --> 00:33:37,960 Speaker 1: realized that if Amazon didn't do it, somebody else would. 541 00:33:38,600 --> 00:33:43,000 Speaker 1: That it was inevitable that digital books would exist in 542 00:33:43,040 --> 00:33:45,120 Speaker 1: the world in the same way that it was inevitable 543 00:33:45,120 --> 00:33:47,680 Speaker 1: that the iPod would exist. He got that in a 544 00:33:47,760 --> 00:33:51,320 Speaker 1: deep instinctual level. Bezos sets up a secret team to 545 00:33:51,360 --> 00:33:55,200 Speaker 1: produce the Kindle, and he closely manages the project. Some 546 00:33:55,240 --> 00:33:59,320 Speaker 1: would say he micromanages it. He insists on a cellular 547 00:33:59,440 --> 00:34:02,440 Speaker 1: modem that allows the Kindle owner to download an e 548 00:34:02,560 --> 00:34:06,440 Speaker 1: book anywhere, even in the back of a taxi. It 549 00:34:06,480 --> 00:34:09,440 Speaker 1: will take three years and generate all kinds of tension. 550 00:34:10,400 --> 00:34:13,799 Speaker 1: One challenge is to get book publishers to digitize more 551 00:34:13,840 --> 00:34:18,520 Speaker 1: of their catalogs. At the time, only about twenty books 552 00:34:18,520 --> 00:34:22,000 Speaker 1: exists in the book form, but Bezos wants to see 553 00:34:22,040 --> 00:34:25,320 Speaker 1: five times that many titles available for the Kindle's launch. 554 00:34:25,800 --> 00:34:29,520 Speaker 1: Dan Rose is in charge of the effort. I cannot 555 00:34:29,680 --> 00:34:34,799 Speaker 1: overstate the lack of enthusiasm that my overtures were met 556 00:34:34,840 --> 00:34:40,200 Speaker 1: with from the book publishers. They immediately explained to us 557 00:34:40,400 --> 00:34:42,879 Speaker 1: why it was not a good use of their time 558 00:34:43,000 --> 00:34:46,319 Speaker 1: or resources or money to produce more digital books, and 559 00:34:46,400 --> 00:34:48,239 Speaker 1: that they just, frankly, we're not going to do it. 560 00:34:48,760 --> 00:34:52,680 Speaker 1: So Amazon pushes back against the book publishers. It basically 561 00:34:52,719 --> 00:34:55,919 Speaker 1: threatens to pull the publisher's physical books from Amazon dot 562 00:34:55,920 --> 00:34:59,319 Speaker 1: Com unless they agree to digitize more of their catalogs. 563 00:35:00,040 --> 00:35:03,839 Speaker 1: Then Amazon surprises publishers with an announcement that all new 564 00:35:03,880 --> 00:35:05,680 Speaker 1: e books will be sold at a flat rate of 565 00:35:05,760 --> 00:35:08,239 Speaker 1: ten dollars. I don't know if you've bought a new 566 00:35:08,280 --> 00:35:11,720 Speaker 1: hardcover lately, but they usually cost closer to thirty dollars. 567 00:35:12,400 --> 00:35:17,080 Speaker 1: Publishers are not amused. They believe they've been deceived by 568 00:35:17,120 --> 00:35:21,200 Speaker 1: Amazon into undermining the most profitable part of their business. 569 00:35:22,400 --> 00:35:25,560 Speaker 1: The drive towards the books was the first notable instance 570 00:35:25,600 --> 00:35:29,360 Speaker 1: of Amazon really strong arming its suppliers. This more or 571 00:35:29,440 --> 00:35:33,279 Speaker 1: less becomes Amazon's signature move in the next decade, as 572 00:35:33,360 --> 00:35:37,560 Speaker 1: the company seals its dominance as an online retailer. It 573 00:35:37,719 --> 00:35:42,080 Speaker 1: also starts to see Amazon's reputation as a ruthless monopolist. 574 00:35:43,440 --> 00:35:46,759 Speaker 1: But the Amazon It's all worth it. When it introduces 575 00:35:46,800 --> 00:35:49,880 Speaker 1: the Kindle in November two thousand seven, it changes the 576 00:35:49,880 --> 00:35:53,239 Speaker 1: way the world views the company. Yesterday, Amazon CEO Jeff 577 00:35:53,280 --> 00:35:57,439 Speaker 1: Bezos and failed the much waited Amazon Kindle, a sort 578 00:35:57,480 --> 00:36:00,520 Speaker 1: of portable digital library, which is at book Expo, the 579 00:36:00,560 --> 00:36:03,560 Speaker 1: book industry's annual convention held this year in l A. 580 00:36:03,760 --> 00:36:06,800 Speaker 1: There was a palpable buzz of curiosity about the Kindle 581 00:36:07,320 --> 00:36:09,560 Speaker 1: on the convention floor. People who had never seen a 582 00:36:09,640 --> 00:36:12,239 Speaker 1: kindle were eager to get a look at it. Can 583 00:36:12,280 --> 00:36:17,360 Speaker 1: I feel it? Can I see? Amazon is no longer 584 00:36:17,440 --> 00:36:21,160 Speaker 1: a dot com sensation. Bezos is no longer a goofy 585 00:36:21,200 --> 00:36:25,440 Speaker 1: over exuberant CEO with the crazy laugh who barely survives 586 00:36:25,480 --> 00:36:29,319 Speaker 1: the dot com bust. The Kindle puts Amazon in the 587 00:36:29,360 --> 00:36:33,080 Speaker 1: same league as Apple. There are two pioneers creating a 588 00:36:33,080 --> 00:36:36,959 Speaker 1: bold future for digital media. And when the Kindle lands 589 00:36:36,960 --> 00:36:40,480 Speaker 1: on the cover of Newsweek magazine, Bezos is seen for now, 590 00:36:40,520 --> 00:36:43,400 Speaker 1: at least the way he always wants to be seen, 591 00:36:43,880 --> 00:36:47,000 Speaker 1: as an inventor. Here's Bezos on stage of the Kindle 592 00:36:47,040 --> 00:36:53,880 Speaker 1: paperweite announcement. We love to invent, we loved to pioneer. 593 00:36:55,080 --> 00:36:57,360 Speaker 1: We even like going down alleys that turned out to 594 00:36:57,400 --> 00:37:01,560 Speaker 1: be blind alleys, and it was a big deal and 595 00:37:01,600 --> 00:37:04,680 Speaker 1: I do think it changed the perception of Amazon, and 596 00:37:04,800 --> 00:37:07,239 Speaker 1: people recognize now that this was more than just an 597 00:37:07,239 --> 00:37:10,880 Speaker 1: Internet retailer. You're a company that can innovate and build 598 00:37:10,880 --> 00:37:13,200 Speaker 1: new things that may be orthogonal to the core thing 599 00:37:13,200 --> 00:37:17,480 Speaker 1: that you do. These two seminal inventions, Amazon Prime and 600 00:37:17,560 --> 00:37:21,080 Speaker 1: the Kindle not only changed the way the world views Amazon, 601 00:37:21,680 --> 00:37:24,440 Speaker 1: they give Bezos a license to keep trying new things. 602 00:37:25,480 --> 00:37:28,759 Speaker 1: This means that Amazon can push into new product categories, 603 00:37:29,239 --> 00:37:33,840 Speaker 1: new countries, chake up new industries, and the repercussions of 604 00:37:33,880 --> 00:37:38,280 Speaker 1: Amazon's relentless march forward become bigger than just the tech industry. 605 00:37:38,760 --> 00:37:50,600 Speaker 1: It has consequences for society at large. Alexa, introduce yourself. 606 00:37:51,239 --> 00:37:53,960 Speaker 1: I'm Alexa, and I respond when you say my name. 607 00:37:54,560 --> 00:37:57,920 Speaker 1: There are lots of things we can do together. Alexa, 608 00:37:58,560 --> 00:38:02,120 Speaker 1: are you alive? I'm not really alive, but I can 609 00:38:02,160 --> 00:38:07,240 Speaker 1: be lively sometimes. That's next time on Foundering the Amazon Story. 610 00:38:08,160 --> 00:38:11,759 Speaker 1: Foundering is hosted by me brad Stone Sean When as 611 00:38:11,800 --> 00:38:16,680 Speaker 1: our executive producer. Raymondo is our audio engineer, Molly Nugent 612 00:38:16,719 --> 00:38:20,799 Speaker 1: as our associate producer, Mark Million and Vander May, Robin 613 00:38:20,880 --> 00:38:25,440 Speaker 1: Agello and Molly Shoots our story editors. Francesca Leivia is 614 00:38:25,440 --> 00:38:28,680 Speaker 1: the head of Bloomberg Podcasts. Be sure to subscribe and 615 00:38:28,680 --> 00:38:31,600 Speaker 1: if you like our show, leave a review. Most importantly, 616 00:38:31,800 --> 00:38:33,879 Speaker 1: tell your friends see you next time.