WEBVTT - Amazon Part 1: The Inventor vs. The Monopolist 0:00:00.040 --> 0:00:02.920 I'd like to start back in November two thousand nineteen. 0:00:03.720 --> 0:00:06.960 We're at a black tie event hosted by the Smithsonian. 0:00:07.800 --> 0:00:12.799 It's their annual National Portrait Galleries Induction ceremony. This is 0:00:12.840 --> 0:00:17.840 a historic honor. The images of George Washington, Abraham Lincoln, 0:00:18.040 --> 0:00:22.240 and Frederick Douglas hang in these halls. CBS News anchor 0:00:22.280 --> 0:00:25.639 Gayle King is the Evening's m c. They like to 0:00:25.640 --> 0:00:29.040 get people at different stages of their careers, and in particular, 0:00:29.560 --> 0:00:33.040 capture careers that are still going strong, that are still 0:00:33.080 --> 0:00:36.040 doing interesting things and still have a lot to do 0:00:36.159 --> 0:00:39.440 and say. And I think that certainly really describes our 0:00:39.479 --> 0:00:42.919 final honor rate last, but certainly not least. So this 0:00:43.000 --> 0:00:46.400 is an annual ceremony where a handful of incredibly accomplished 0:00:46.440 --> 0:00:50.520 individuals are celebrated. They get their likeness painted, and those 0:00:50.560 --> 0:00:54.200 portraits are then entered into the gallery. Earlier in the evening, 0:00:54.360 --> 0:00:58.240 the inducted Vogue editor and a wintour Lynn Manuel Miranda, 0:00:58.320 --> 0:01:01.920 the creator of Hamilton's and the band Earth Wind and Fire. 0:01:02.880 --> 0:01:06.120 Now Gale is about to introduce the wealthiest person in 0:01:06.160 --> 0:01:10.120 the world. He is the founder of Amazon Blue Origin, 0:01:10.440 --> 0:01:13.720 the owner of The Washington Post, So then Jeff Bezos 0:01:13.760 --> 0:01:16.960 walks out on stage, and his speech isn't about his 0:01:17.040 --> 0:01:21.760 remarkable success, his exorbitant wealth, or even the honor of 0:01:21.800 --> 0:01:26.000 being inducted into the Smithsonian. My life is based on 0:01:26.080 --> 0:01:30.000 a large series of mistakes, and I'm kind of famous 0:01:30.040 --> 0:01:33.680 for it. Actually in the business realm. How many people 0:01:33.720 --> 0:01:37.960 here have a firephone? Remember the firephone? This was Amazon's 0:01:37.959 --> 0:01:40.759 attempt at making a smartphone to compete with the iPhone. 0:01:41.200 --> 0:01:44.600 It's so terribly they canceled the project after just a 0:01:44.640 --> 0:01:48.560 few months. Every interesting thing I have ever done, every 0:01:48.600 --> 0:01:52.160 important thing I've ever done, every beneficial thing I've ever done, 0:01:52.320 --> 0:01:58.640 has been through a cascade of experiments and mistakes and failures. 0:01:59.080 --> 0:02:02.760 And I'm covered in scar tissue as a result of this, 0:02:03.080 --> 0:02:05.760 and started in the early days of Amazon. It's interesting 0:02:05.760 --> 0:02:09.040 to me that on this night celebrating his lifetime success, 0:02:09.600 --> 0:02:12.880 he wanted to focus on scar tissue. In fact, that 0:02:13.000 --> 0:02:15.560 was the theme of his portrait. He asked the photo 0:02:15.639 --> 0:02:19.680 realistic artist Robert mccourney to paint him. I wanted some 0:02:20.320 --> 0:02:27.160 one who would paint me hyper realistically, with every flaw, 0:02:28.480 --> 0:02:35.400 every imperfection, every piece of scar tissue that I have, 0:02:36.400 --> 0:02:41.480 and thank you, Robert, you did that amazingly. You can 0:02:41.600 --> 0:02:46.880 see my contact lenses in that painting, and I'm not kidding. 0:02:47.560 --> 0:02:51.000 The painting of Jeff Bezos is pretty uncanny. He used 0:02:51.000 --> 0:02:54.120 to pick that against the stark white background. He's wearing 0:02:54.120 --> 0:02:57.480 a white shirt, a silver tie, like he's coming out 0:02:57.480 --> 0:03:01.680 of a meeting, and his gaze is severe. It's the 0:03:01.919 --> 0:03:06.680 look that is flustered, intimidated, and motivated Amazon employees for 0:03:06.720 --> 0:03:09.840 twenty five years. What's striking to me is that in 0:03:09.880 --> 0:03:12.079 the painting, the light is coming in from an angle, 0:03:12.600 --> 0:03:16.000 so that half of Bezos is illuminated. The other half 0:03:16.200 --> 0:03:20.040 is shadowy and dark. On this night, Bezos was in 0:03:20.120 --> 0:03:23.000 a room full of rich elites. This was a crowd 0:03:23.080 --> 0:03:27.919 that embraced him. But note how literally actually said. This 0:03:28.040 --> 0:03:32.200 is also typical Bezos in public. He stays on script, 0:03:32.720 --> 0:03:34.760 He tells you only what he wants you to hear, 0:03:35.440 --> 0:03:39.400 and he just teases at the scar tissue. Back then, 0:03:39.560 --> 0:03:43.400 Amazon still conjured the promise of next day shipping, the 0:03:43.440 --> 0:03:47.920 marvel of Alexa Voice recognition, a massive library of streaming 0:03:47.960 --> 0:03:54.040 TV and movies, and not controversy or intrigue. You're listening 0:03:54.040 --> 0:03:58.280 to Foundering, I'm your host brad Stone. I've written two 0:03:58.320 --> 0:04:03.400 books chronicling Amazon's His Tree, The Everything Store and Amazon Unbound. 0:04:04.280 --> 0:04:07.000 I've been reporting on Amazon for over twenty years now. 0:04:07.480 --> 0:04:10.280 I've devoted much of my career to this, not only 0:04:10.280 --> 0:04:14.600 to understanding the man Jeff Bezos, but also to chronicling 0:04:14.640 --> 0:04:22.240 how he's totally altered our modern economic reality. So something 0:04:22.279 --> 0:04:25.760 that people often ask me is what's Jeff Bezos really like? 0:04:26.560 --> 0:04:29.120 I want to speak to that for a second. He's 0:04:29.160 --> 0:04:33.599 a big geek. He loves science fiction and space, but 0:04:33.640 --> 0:04:36.320 he can also be kind of scary. He can be 0:04:36.400 --> 0:04:40.080 kind of brutal when people don't meet his expectations, when 0:04:40.080 --> 0:04:42.960 they're not thinking on his level, they can be subjected 0:04:42.960 --> 0:04:47.520 to his outbursts. Also, people ask me, is Bezo smart, 0:04:48.000 --> 0:04:52.320 And the answer is yes, absolutely. He's extremely well read. 0:04:52.960 --> 0:04:57.560 He's a master compartmentalizer, someone who can work on many complicated, 0:04:57.880 --> 0:05:02.080 totally different things one after the other. But what's most 0:05:02.080 --> 0:05:04.919 impressive is probably his ability to dive into the deep 0:05:05.000 --> 0:05:08.240 technical details of things that he knows very little about, 0:05:09.080 --> 0:05:11.719 to basically go to school on a topic like artificial 0:05:11.760 --> 0:05:17.000 intelligence or rocket propulsion. He's extraordinarily disciplined, and he can 0:05:17.000 --> 0:05:19.880 go toe to toe with the engineers who have basically 0:05:19.920 --> 0:05:24.200 spent their entire careers in those industries because of his 0:05:24.279 --> 0:05:28.039 intensity and intelligence. You'll notice that in a lot of 0:05:28.080 --> 0:05:32.880 our interviews, many former Amazon employees and executives seemed to 0:05:32.920 --> 0:05:36.920 adore Basos. He's almost got a kind of cultish following. 0:05:37.880 --> 0:05:40.800 This is a guy who started accompanying as garage and 0:05:40.839 --> 0:05:43.400 evolved it all the way to becoming a trillion dollar 0:05:43.480 --> 0:05:47.360 company that dominates much of the world. He never took 0:05:47.440 --> 0:05:50.640 much of a salary, but these days he's worth around 0:05:50.720 --> 0:05:54.560 two hundred billion just on his Amazon ownership stake alone. 0:05:55.400 --> 0:05:58.440 People who worked for him just marvel at the decisions 0:05:58.480 --> 0:06:01.039 he made and the instinct that he had about the 0:06:01.080 --> 0:06:06.880 future of technology. But lately, something strange has happened. Public 0:06:06.920 --> 0:06:11.799 opinion about Bezos has declined dramatically. People ridicule his dreams 0:06:11.800 --> 0:06:16.440 of space travel and criticize his philanthropic giving. They loved 0:06:16.440 --> 0:06:19.840 a dunk on his lavish lifestyle, which has recently been 0:06:19.839 --> 0:06:23.520 on awkward display on social media. I think that the 0:06:23.600 --> 0:06:26.120 number of people who see Jeff Bezos as a hero 0:06:26.760 --> 0:06:30.919 is diminishing. He's viewed kind of skeptically as someone with 0:06:31.040 --> 0:06:35.400 enormous amounts of power and resources. Who's a difficult person 0:06:35.440 --> 0:06:38.880 to work for, Who's not treating his workforce all that well? 0:06:39.360 --> 0:06:41.600 And who hasn't done as many good things with his 0:06:41.760 --> 0:06:46.240 money and power as he could have. These questions have 0:06:46.320 --> 0:06:49.960 become even sharper during the pandemic. During the first year 0:06:50.000 --> 0:06:54.920 of lockdown, Amazon sales sword and bezos Is personal wealth 0:06:55.000 --> 0:06:59.440 jumped from one fifteen billion to one nine billion. His 0:06:59.560 --> 0:07:03.440 press verity felt perverse given how many people were struggling. 0:07:04.120 --> 0:07:07.280 He was living large just when many people were barely 0:07:07.360 --> 0:07:12.960 scraping by. This raised more questions should billionaires exist at all? 0:07:13.560 --> 0:07:16.640 Is the world better off with or without Amazon in it? 0:07:18.160 --> 0:07:21.520 Amazon was never one of those tech companies with idealistic 0:07:21.600 --> 0:07:26.000 promises to save the world, But suddenly the company found 0:07:26.000 --> 0:07:30.440 itself getting blamed for the world's problems. Why isn't Amazon 0:07:30.520 --> 0:07:35.840 doing more to combat climate change, fix inequality, protect smaller companies? 0:07:36.800 --> 0:07:40.160 People started to contrast bezos fortune with the plight of 0:07:40.200 --> 0:07:45.320 his workers. Amazon is seen as an essential service through 0:07:45.360 --> 0:07:48.960 this pandemic, but you have been very slow to install 0:07:49.320 --> 0:07:54.320 your workers protections, and it's hurt your reputation. You've been 0:07:54.360 --> 0:07:57.760 seen as a company that puts profits ahead of people. 0:07:58.120 --> 0:08:01.160 Amazon was ranked one of the twin worst companies to 0:08:01.240 --> 0:08:05.040 work for by the National Center for Occupational Safety and Health, 0:08:05.080 --> 0:08:08.560 but many Amazon staffers say the demand for greater speed 0:08:09.040 --> 0:08:13.000 is the leading factor harming warehouse workers. Allen says she 0:08:13.120 --> 0:08:15.960 processed an average of six hundred items an hour on 0:08:16.000 --> 0:08:19.679 the job here at a broken workstation that injured her back. 0:08:19.840 --> 0:08:24.240 Protesters march down street intent to vent their anger at Amazon. 0:08:24.400 --> 0:08:31.160 Outside on the street. These days, a vocal minority of 0:08:31.200 --> 0:08:33.319 people go out of their way to buy nothing from 0:08:33.360 --> 0:08:37.160 Amazon dot Com, which brings me to another question I get, 0:08:37.840 --> 0:08:40.520 Can you really avoid Amazon in this day and age? 0:08:41.400 --> 0:08:44.760 I would say the answers probably no. If you're a 0:08:44.840 --> 0:08:48.679 conscientious objector and you're not shopping on the site, well, 0:08:48.720 --> 0:08:52.079 are you shopping from Whole Foods? They are owned by Amazon. 0:08:53.040 --> 0:08:57.040 Even if you're watching Netflix videos or sending images on Snapchat, 0:08:57.400 --> 0:08:59.880 you may not know that both companies are in service 0:09:00.000 --> 0:09:03.720 pace from Amazon through its cloud division. Or you might 0:09:03.760 --> 0:09:07.720 be reading The Washington Post, which Jeff Bezos personally owns. 0:09:08.440 --> 0:09:11.880 You might be buying from alternative websites, and those products 0:09:11.960 --> 0:09:16.079 might be stored in Amazon warehouses and delivered with Amazon Vans. 0:09:17.120 --> 0:09:20.360 Amazon has simply become so big that its tentacles reach 0:09:20.440 --> 0:09:25.120 into almost every aspect of business these days. To really 0:09:25.240 --> 0:09:29.120 understand this company that's become as essential as it is villainized, 0:09:29.600 --> 0:09:33.120 it's important to go back to the beginning. Love him 0:09:33.200 --> 0:09:35.520 or hate him, or depend on him for all your 0:09:35.559 --> 0:09:39.120 daily shopping needs. The rise of Jeff Bezos and Amazon 0:09:39.600 --> 0:09:42.920 is one of the most celebrated and contentious business stories 0:09:42.960 --> 0:09:46.960 of our times. But Bezos didn't just change the business world. 0:09:47.320 --> 0:09:52.440 He also changed himself, pulling off a personal transformation, and 0:09:52.520 --> 0:09:55.520 you can see it. He's no longer the balding paste 0:09:55.520 --> 0:09:59.880 the tech nerd from Seattle. Now he's buff. He post 0:10:00.040 --> 0:10:03.800 regularly to Instagram showing off his new girlfriend and a 0:10:03.840 --> 0:10:09.480 new lifestyle that includes private yachts, remote islands, and celebrity parties. 0:10:10.240 --> 0:10:13.400 He acts like the celebrity he is, some of whose 0:10:13.440 --> 0:10:18.040 personal life and fashion choices are avidly covered by the tabloids. 0:10:18.880 --> 0:10:23.160 It's a remarkable act of personal and business reinvention. Will 0:10:23.200 --> 0:10:38.520 begin to tell that story when we come back. We're 0:10:38.559 --> 0:10:41.040 going to go all the way back to the paleolithic 0:10:41.120 --> 0:10:44.439 days of the internet. Back then, Amazon was just an 0:10:44.440 --> 0:10:48.440 online bookseller, people were being introduced for the first time 0:10:48.600 --> 0:10:53.040 to this new thing called the world Wide Web. Here 0:10:53.040 --> 0:10:55.880 are you? I'm Jeff Beazos and what are your What 0:10:56.000 --> 0:10:58.560 is your claim to face? And the founder of Amazon 0:10:58.600 --> 0:11:01.319 dot com? Where did a good an idea for Amazon 0:11:01.440 --> 0:11:04.360 dot com? Well? Three years ago, I was in New 0:11:04.440 --> 0:11:07.200 York City where he for a quantitative hedge fund when 0:11:07.240 --> 0:11:10.080 it came across the startling statistic that web usage was 0:11:10.080 --> 0:11:13.920 growing at a year. So I decided I would try 0:11:13.960 --> 0:11:16.360 and find a business plan that made sense in the 0:11:16.440 --> 0:11:19.079 context of that growth, and I picked books as the 0:11:19.120 --> 0:11:22.720 first best product to sell online. That's Jeff Bezos speaking 0:11:22.760 --> 0:11:27.520 in an interview filmed at the Special Libraries conference in 0:11:27.520 --> 0:11:30.360 In some ways, Bezos had been preparing to start this 0:11:30.440 --> 0:11:34.760 company since childhood. As a kid, he was considered precocious, 0:11:35.040 --> 0:11:38.800 highly intelligent. His mother, Jackie, had him whence she was 0:11:38.840 --> 0:11:41.640 still in high school. He didn't know his biological dad 0:11:41.679 --> 0:11:44.560 for most of his life. When he was four, his 0:11:44.679 --> 0:11:48.400 mom remarried a Cuban immigrant, Mike Bezos, and they spent 0:11:48.440 --> 0:11:52.080 the next several years moving around. He was the valedictorian 0:11:52.160 --> 0:11:54.720 of his high school in Miami, and he gave a 0:11:54.760 --> 0:11:59.000 speech about entrepreneurship and space. Friends would later say, he 0:11:59.080 --> 0:12:01.840 started Amazon on and he went after all this money 0:12:02.040 --> 0:12:05.080 because he dreamed of going into space himself. One day 0:12:05.480 --> 0:12:08.760 before he started Amazon, Bezos had been a vice president 0:12:08.800 --> 0:12:12.000 at a Wall Street firm, D. E. Shawn Co. He 0:12:12.080 --> 0:12:15.199 was researching new business opportunities for the company, and he 0:12:15.280 --> 0:12:17.920 got an idea for a startup, which meant he had 0:12:17.960 --> 0:12:20.600 a choice to make. Here he is on sixteen minutes. 0:12:21.240 --> 0:12:23.559 The way I made the decision to leave Wall Street 0:12:23.600 --> 0:12:25.800 and do this was it will sound geeky to you, 0:12:25.920 --> 0:12:29.200 but um, it was a regret minimization framework. So this 0:12:29.280 --> 0:12:31.360 is how I actually made it. So if I understand it, 0:12:31.360 --> 0:12:34.160 if I can translate that into English, I can deal with. 0:12:34.480 --> 0:12:38.160 Does that mean I want to live my life so 0:12:38.280 --> 0:12:40.720 that in a few decades from now, I'm not going 0:12:40.760 --> 0:12:43.280 to regret it. That's exactly right. I want to have 0:12:43.360 --> 0:12:45.040 lived my life in such a way that when I'm 0:12:45.040 --> 0:12:47.720 eighty years old, I've minimized the number of regrets that 0:12:47.760 --> 0:12:50.240 I have. For you, it was not carpet d M. 0:12:50.280 --> 0:12:53.160 It was not wine women in song. No, no, no no. 0:12:53.840 --> 0:12:55.679 I don't go in for carpet d M. I go 0:12:55.720 --> 0:13:00.960 in for regret minimization framework. So he end his wife Mackenzie, 0:13:01.200 --> 0:13:05.040 left their Manhattan apartment, flew to Fort Worth, Texas, took 0:13:05.040 --> 0:13:08.160 his parents Chevy Blazer out of storage, and started driving 0:13:08.200 --> 0:13:12.960 north to Seattle. He chose Seattle because Microsoft was already there. 0:13:13.480 --> 0:13:16.160 It was a budding tech cup but still small compared 0:13:16.200 --> 0:13:19.880 to California or New York, and Washington State had something 0:13:19.920 --> 0:13:24.120 else appealing to Bezos, lower taxes. He had the seed 0:13:24.280 --> 0:13:27.040 of a business notion that on the web there were 0:13:27.080 --> 0:13:29.480 no limits to what you could sell as long as 0:13:29.520 --> 0:13:31.400 you could figure out a way to find it and 0:13:31.440 --> 0:13:34.640 ship it through the mail. You could literally create and 0:13:34.800 --> 0:13:38.800 everything store. So when you have that many items, could 0:13:38.840 --> 0:13:43.160 literally build a store online that couldn't exist any other way. 0:13:43.280 --> 0:13:45.320 And that's important right now because the web is still 0:13:45.320 --> 0:13:49.560 an infant technology basically. Right now then Bezos was bubbling 0:13:49.559 --> 0:13:53.319 with optimism about the Internet and the massive business opportunities 0:13:53.600 --> 0:13:57.520 in retrospect. He was absolutely correct. What's really incredible about 0:13:57.559 --> 0:13:59.640 this is that this is day one, this is the 0:13:59.760 --> 0:14:03.240 very beginning, this is the kiddieh hawks stage of electronic commerce. 0:14:03.520 --> 0:14:06.280 We're moving forward in so many different areas and lots 0:14:06.320 --> 0:14:08.840 of different companies are as well. I think a millennia 0:14:08.920 --> 0:14:11.040 from now, people are gonna look back and say, wow, 0:14:11.120 --> 0:14:13.240 the late twentieth century was really a great time to 0:14:13.360 --> 0:14:16.880 be alive. Beazos sets up the original Amazon office in 0:14:16.920 --> 0:14:20.600 the garage of a suburban Seattle home. The first challenge 0:14:20.680 --> 0:14:24.160 was figuring out what to name the company. Bezos registers 0:14:24.200 --> 0:14:27.920 at as Cadabra inc as an Abra Cadabra, but that 0:14:28.040 --> 0:14:32.560 sounds too much like cadaver. Then he registers relentless dot 0:14:32.600 --> 0:14:36.440 com because he wants his young startup to operate relentlessly. 0:14:37.360 --> 0:14:39.920 And here's a neat trick. Even now, if you type 0:14:39.920 --> 0:14:42.920 relentless dot com in your browser, it'll redirect you to 0:14:42.960 --> 0:14:48.200 Amazon anyway. In a wise move, he chooses the name Amazon, 0:14:48.680 --> 0:14:51.920 the Earth's largest river can stand for its largest selection 0:14:51.960 --> 0:14:57.400 of books. Amazon dot Com went live in July. He 0:14:57.520 --> 0:15:01.960 encodes a few values into Amazon's DNA, chief, among them 0:15:02.200 --> 0:15:11.400 satisfied the customer at all costs. The next few years, 0:15:11.640 --> 0:15:14.720 Bezos moves his company to a succession of offices around 0:15:14.760 --> 0:15:19.480 downtown Seattle. Some of those spaces were famously sketchy. Yeah, 0:15:19.480 --> 0:15:22.720 that Columbia building was amazingly right across the street from 0:15:22.720 --> 0:15:25.760 the Needle Exchange in downtown Seattle, so you had heroin 0:15:25.760 --> 0:15:29.360 addicts that were hanging out right outside the building. That's 0:15:29.440 --> 0:15:32.120 Dan Rose, who joined Amazon out of business school in 0:15:32.120 --> 0:15:35.400 the nineties. Later he became a top deputy to Mark 0:15:35.440 --> 0:15:39.440 Zuckerberg at Facebook. I called up Dan and a few 0:15:39.440 --> 0:15:43.040 other early Amazon employees I had originally interviewed from my books. 0:15:43.520 --> 0:15:45.880 They were proud of their time at Amazon and happy 0:15:45.920 --> 0:15:49.280 to talk about it. Um. I remember those interviews there. 0:15:49.320 --> 0:15:53.080 You know, there were no uh, there were no offices available, 0:15:53.120 --> 0:15:55.840 so we literally, uh for a couple of the interviews. 0:15:55.880 --> 0:15:58.240 We went into the stairwell and I did interviews in 0:15:58.280 --> 0:16:01.200 the stairwell. It was, you know, there was definitely a 0:16:01.240 --> 0:16:05.200 feeling of chaos. Bezos prowled these halls, and he loved 0:16:05.240 --> 0:16:08.840 the chaos. He gave the company a mission, get big fast. 0:16:09.360 --> 0:16:14.480 Amazon raised money from venture capitalists, they went public, then 0:16:14.560 --> 0:16:18.080 raised more money from Wall Street. Bezos became a billionaire 0:16:18.280 --> 0:16:21.600 when the company was only five years old. You generally 0:16:21.680 --> 0:16:27.240 hear him before you see him. It's the ear piercing 0:16:27.360 --> 0:16:31.560 laugh of billionaire Jeff Bezos. I was a good student. 0:16:31.800 --> 0:16:35.600 I always worked really hard. I was nerdy. You were nerdy. 0:16:35.760 --> 0:16:41.040 I was nerdy. That hasn't changed by At the time, 0:16:41.160 --> 0:16:44.440 Jeff Bezos was famous for his laugh. I interviewed him 0:16:44.480 --> 0:16:47.280 for the first time around this period, and his laugh 0:16:47.440 --> 0:16:50.720 was definitely something you couldn't avoid. It was kind of jarring. 0:16:55.440 --> 0:16:59.240 Bezos is goofy optimism wasn't an act. In the late nineties, 0:16:59.440 --> 0:17:02.520 he took Amazon's riches and went on a spending spree. 0:17:03.040 --> 0:17:07.880 He acquired random startups like IMDb and online stores in France. 0:17:07.880 --> 0:17:11.840 In the UK, they branched into new product categories like 0:17:11.960 --> 0:17:16.439 c d s, DVDs and toys. He even splurged on 0:17:16.440 --> 0:17:19.720 a set of totally nerdy advertisements that appeared all over 0:17:19.760 --> 0:17:33.840 network TV TV. Y What I Got dot com? Yes, 0:17:34.080 --> 0:17:36.320 he paid for a group of guys to wear matching 0:17:36.400 --> 0:17:39.760 sweaters and sing these little jingles in an attempt to 0:17:39.840 --> 0:17:50.840 lodge Amazon dot Com into the public's imaginations. Here's the thing, though, 0:17:51.160 --> 0:17:54.040 in those early years, Amazon was kind of a hot 0:17:54.080 --> 0:17:57.960 mess who was losing money, lots of it. That was fine, 0:17:58.000 --> 0:18:00.960 most startups do this, but it was goring so quickly 0:18:01.240 --> 0:18:04.320 that its internal systems were a disaster. Some of the 0:18:04.359 --> 0:18:07.360 earliest employees were starting to worry. I would say that 0:18:07.400 --> 0:18:09.480 the train was heading down the track and there was 0:18:09.520 --> 0:18:12.680 no track. That's Kellen Brannon, she was an early vice 0:18:12.680 --> 0:18:16.600 president of finance. There was actually no financial planning or 0:18:16.600 --> 0:18:20.479 analysis at all. And Jeff would say, you know, if 0:18:20.520 --> 0:18:22.960 you're thinking about something longer than twenty minutes, you've missed 0:18:22.960 --> 0:18:27.200 the opportunity, meaning literally, don't stop and deliberate for more 0:18:27.200 --> 0:18:31.280 than twenty minutes. Keep moving. At the time, Amazon had 0:18:31.320 --> 0:18:35.520 only two warehouses in Seattle and Delaware. During the holiday season, 0:18:35.720 --> 0:18:39.919 the warehouse workers couldn't handle the surgeon orders. So early 0:18:40.000 --> 0:18:44.760 on Amazon's executives, including Jeff Bezos, helped out. In the warehouse. 0:18:45.000 --> 0:18:49.000 There were packing boxes, driving forkliffs, and gift trapping. I 0:18:49.119 --> 0:18:51.800 learned so much right one. I learned it was fun 0:18:51.960 --> 0:18:54.960 that I could race Jeff in the stacks because we 0:18:55.000 --> 0:18:57.600 would time ourselves when we had these library cards, and 0:18:57.640 --> 0:18:59.760 we would be because the warehouse managers is back then, 0:19:00.359 --> 0:19:02.520 you know, it might put like an obscene book next 0:19:02.520 --> 0:19:05.200 to a children's book and you're picking them, but they're 0:19:05.200 --> 0:19:07.200 going to different people, which you're stacking him on these 0:19:07.240 --> 0:19:09.639 library cards, and so we would check in, get our 0:19:09.680 --> 0:19:12.240 library card, race up and down the stacks, picking the 0:19:12.240 --> 0:19:14.640 books that were on the sheet, and then we take 0:19:14.720 --> 0:19:17.920 it out right, and I could pick two point four 0:19:18.000 --> 0:19:21.720 books per minute, and Jeff was slower, and that was 0:19:22.000 --> 0:19:24.000 and he you could hear him because he would be 0:19:24.080 --> 0:19:27.240 chasing us, right, we're all competing together, and his big 0:19:27.320 --> 0:19:30.520 laugh would be there booming. Brandon left Amazon in two thousand, 0:19:30.840 --> 0:19:33.800 but she still looks back fondly at that time. Racing 0:19:33.840 --> 0:19:37.320 Jeff Bezos in the warehouses, she actually got a valuable 0:19:37.359 --> 0:19:40.840 glimpse of how Bezos operates. He dove into the details 0:19:40.920 --> 0:19:43.960 of every aspect of his company and just wanted to 0:19:43.960 --> 0:19:47.359 win at all costs, even against his own colleagues. He's 0:19:47.760 --> 0:19:50.640 incredibly competitive. He wanted to prove his performance, which made 0:19:50.640 --> 0:19:53.760 me more competitive. And but there was a lot of laughter, 0:19:54.040 --> 0:19:57.280 right he he loved it, and I have to say, 0:19:57.520 --> 0:19:59.680 I have to say I loved it. All This cast 0:19:59.800 --> 0:20:02.720 was okay to a point. Many of the dot coms 0:20:02.720 --> 0:20:05.919 of the late nineties were pursuing similar strategies, trying to 0:20:06.000 --> 0:20:10.240 get big fast. Here's Warren Jensen, the company's chief financial 0:20:10.240 --> 0:20:13.879 officer at the time. It was a land grab. I 0:20:13.920 --> 0:20:16.040 think one of the things that I remember during that period, 0:20:16.119 --> 0:20:20.159 Jeff would frequently say is it makes the statement that 0:20:20.240 --> 0:20:24.280 brands are like quick drawing cement uh. And the Amazon 0:20:24.359 --> 0:20:27.240 mission was very clear to come, find, discover, and buy 0:20:27.359 --> 0:20:30.880 anything online. Wall Street seemed happy to fund that mission 0:20:31.040 --> 0:20:34.440 to bet on its possibility, even though it was unprofitable. 0:20:34.920 --> 0:20:39.720 Amazon lost six hundred million dollars, and investors didn't seem 0:20:39.760 --> 0:20:43.560 to bat an eye. At first. The company was incredibly strong. 0:20:44.520 --> 0:20:48.960 The capital markets in early nine were wide open to 0:20:49.080 --> 0:20:54.000 big Internet ideas like Amazon dot Com. But gradually investors 0:20:54.040 --> 0:20:56.440 started to ask questions, when are you going to get 0:20:56.480 --> 0:21:00.360 real and start to operate like a professional company. There 0:21:00.359 --> 0:21:05.119 were real storm clouds forming. The company was burning a 0:21:05.200 --> 0:21:08.439 lot of cash, and I would argue that by the 0:21:08.480 --> 0:21:13.399 fall of the Internet bubble was getting pretty thin. In fact, 0:21:13.560 --> 0:21:17.879 it was starting to burst. Investors were in awe of 0:21:17.960 --> 0:21:22.359 the growth, but we're also voicing strong objections to the 0:21:22.400 --> 0:21:26.919 mounting losses. And in March two thousand, the Internet bubble burst. 0:21:27.800 --> 0:21:30.480 This was the dot Com crash, and it was epic. 0:21:30.960 --> 0:21:34.439 A whole generation of Internet companies like pets dot Com, 0:21:34.720 --> 0:21:38.800 we're careening into bankruptcy. It's described as nothing showed with 0:21:38.920 --> 0:21:42.560 breathtaking a points drop never before seen on the US markets. 0:21:46.000 --> 0:21:48.600 This closing bill might as well have been an alarm, 0:21:48.840 --> 0:21:54.400 So savage was the silly that another one? Yeah, too 0:21:54.400 --> 0:21:56.760 many in a row, and spare thought for Bill Gates. 0:21:56.800 --> 0:21:59.800 The Wall Street collapse cost the world's richest man and 0:22:00.040 --> 0:22:03.240 me at one point eight billion dollars this week alone. 0:22:03.920 --> 0:22:07.119 Investors were starting to worry was Amazon going to be 0:22:07.240 --> 0:22:10.959 next in the trash heap? And Amazon feared what if 0:22:11.000 --> 0:22:15.040 suppliers got nervous next? This could create a domino effect. 0:22:15.480 --> 0:22:17.920 Bezos and his colleagues had to move quickly to stave 0:22:17.960 --> 0:22:21.679 off disaster. So Amazon sends Warren to visit one of 0:22:21.720 --> 0:22:25.880 their largest suppliers, the book distributor Ingram's, to convince them 0:22:25.960 --> 0:22:30.200 that the company was on solid footing. And we went 0:22:30.240 --> 0:22:33.240 in and made a presentation to the Ingram board of directors, 0:22:33.880 --> 0:22:36.879 and I think it was Laura Ingram Um stopped the 0:22:36.920 --> 0:22:39.199 meeting for a second and she said, Warren, you have 0:22:39.240 --> 0:22:41.600 to remember that if you go bankrupt and we go bankrupt. 0:22:42.200 --> 0:22:45.920 Warren was Amazon CFO at the time. If Amazon went under, 0:22:46.119 --> 0:22:49.040 it could drag Ingram's down with him. This was a 0:22:49.080 --> 0:22:53.000 remarkable statement and apportent of things to come. Amazon had 0:22:53.000 --> 0:22:55.680 only been around for eight years, and it was already 0:22:55.760 --> 0:22:59.560 dangerously intertwined with the success of some of the largest 0:22:59.560 --> 0:23:03.760 company in the world. After bezos is lieutenants went around 0:23:03.760 --> 0:23:07.800 reassuring suppliers, he made a second change, completely altering the 0:23:07.840 --> 0:23:12.920 company's operating posture. For five years, Amazon's mantra had been 0:23:13.040 --> 0:23:18.440 get big fast, and Bezos realized those days had to end. Jeff, 0:23:18.480 --> 0:23:21.600 You've got to be concerned about operating margins overall for 0:23:21.640 --> 0:23:24.320 the company. They're really extremely low, your factor amongst the 0:23:24.359 --> 0:23:27.080 worst out there, So the company is basically a break 0:23:27.119 --> 0:23:30.560 even at this point. You know, we expect to generate 0:23:30.680 --> 0:23:34.159 substantial and meaningful free cash flow, so we're very excited 0:23:34.160 --> 0:23:36.119 about where the company is from a business. This next 0:23:36.160 --> 0:23:39.159 era at Amazon was going to be about tightening the belt, 0:23:39.480 --> 0:23:41.360 and that was looking to be a lot less fun. 0:23:42.200 --> 0:23:45.560 The change and fortune was stunning. Another question that's been 0:23:45.600 --> 0:23:47.400 raised on Walter is you've had a lot of top 0:23:47.440 --> 0:23:51.720 executive departures within the last year. I think five. No, 0:23:51.880 --> 0:23:54.600 you know, I'm very happy with the executive team we 0:23:54.680 --> 0:23:59.440 have and the and we are, and we're really functioning 0:23:59.480 --> 0:24:01.960 well as a team. We've got good succession plans in place, 0:24:02.080 --> 0:24:07.800 great people. Um, we're having fun. A lot of people left. Uh, 0:24:07.840 --> 0:24:09.720 you know, a lot of people left the company during 0:24:09.720 --> 0:24:12.639 that period, and um, and you can't blame him, you know, 0:24:12.680 --> 0:24:15.040 because again, it wasn't it wasn't clear we were going 0:24:15.080 --> 0:24:18.240 to survive. Dan Rose was fresh out of business school 0:24:18.240 --> 0:24:21.040 at the time. He watched as his dreams of instant 0:24:21.080 --> 0:24:26.520 wealth were dashed suddenly the NASDAC creators and Amazon stock craters. 0:24:27.119 --> 0:24:30.120 And by the time I had vested my first year 0:24:30.200 --> 0:24:33.040 of my stock options at the company that one year, Cliff, 0:24:33.640 --> 0:24:36.800 my stock was underwater. It was back down below sixty dollars. 0:24:36.800 --> 0:24:39.080 When I joined, it was like at forty dollars, and 0:24:39.119 --> 0:24:41.760 over the next few years it went down to something 0:24:41.840 --> 0:24:45.800 like eight or seven or something like that. As for Bezos, 0:24:45.840 --> 0:24:49.439 his fortunes were also reversing, particularly in the court of 0:24:49.440 --> 0:24:52.240 public opinion. Jeff goes from being the poster child of 0:24:52.280 --> 0:24:54.560 the Internet to being the poster child of the Internet 0:24:54.560 --> 0:24:59.560 bubble um. And so this precipitous fall from grace. The 0:24:59.600 --> 0:25:03.480 people stuck around said that Bezos was handling it gracefully, 0:25:03.520 --> 0:25:06.560 but Warren Jensen, who worked closely with him, says that 0:25:06.600 --> 0:25:10.280 the scrutiny and pressure really got to him, especially when 0:25:10.320 --> 0:25:14.320 the SEC began investigating his personal stock sales for signs 0:25:14.320 --> 0:25:18.680 of impropriety. There were a lot of arrows pointed directly 0:25:18.720 --> 0:25:21.040 at Amazon and at Jeff. That was, you know, a 0:25:21.040 --> 0:25:23.720 painful period for Jeff. I mean, nobody wants to be 0:25:23.840 --> 0:25:27.160 questioned that way by the SEC. And you know read 0:25:27.160 --> 0:25:29.560