Speaker 1: I'd like to start back in November two thousand nineteen.
Speaker 1: We're at a black tie event hosted by the Smithsonian.
Speaker 1: It's their annual National Portrait Galleries Induction ceremony. This is
Speaker 1: a historic honor. The images of George Washington, Abraham Lincoln,
Speaker 1: and Frederick Douglas hang in these halls. CBS News anchor
Speaker 1: Gayle King is the Evening's m c. They like to
Speaker 1: get people at different stages of their careers, and in particular,
Speaker 1: capture careers that are still going strong, that are still
Speaker 1: doing interesting things and still have a lot to do
Speaker 1: and say. And I think that certainly really describes our
Speaker 1: final honor rate last, but certainly not least. So this
Speaker 1: is an annual ceremony where a handful of incredibly accomplished
Speaker 1: individuals are celebrated. They get their likeness painted, and those
Speaker 1: portraits are then entered into the gallery. Earlier in the evening,
Speaker 1: the inducted Vogue editor and a wintour Lynn Manuel Miranda,
Speaker 1: the creator of Hamilton's and the band Earth Wind and Fire.
Speaker 1: Now Gale is about to introduce the wealthiest person in
Speaker 1: the world. He is the founder of Amazon Blue Origin,
Speaker 1: the owner of The Washington Post, So then Jeff Bezos
Speaker 1: walks out on stage, and his speech isn't about his
Speaker 1: remarkable success, his exorbitant wealth, or even the honor of
Speaker 1: being inducted into the Smithsonian. My life is based on
Speaker 1: a large series of mistakes, and I'm kind of famous
Speaker 1: for it. Actually in the business realm. How many people
Speaker 1: here have a firephone? Remember the firephone? This was Amazon's
Speaker 1: attempt at making a smartphone to compete with the iPhone.
Speaker 1: It's so terribly they canceled the project after just a
Speaker 1: few months. Every interesting thing I have ever done, every
Speaker 1: important thing I've ever done, every beneficial thing I've ever done,
Speaker 1: has been through a cascade of experiments and mistakes and failures.
Speaker 1: And I'm covered in scar tissue as a result of this,
Speaker 1: and started in the early days of Amazon. It's interesting
Speaker 1: to me that on this night celebrating his lifetime success,
Speaker 1: he wanted to focus on scar tissue. In fact, that
Speaker 1: was the theme of his portrait. He asked the photo
Speaker 1: realistic artist Robert mccourney to paint him. I wanted some
Speaker 1: one who would paint me hyper realistically, with every flaw,
Speaker 1: every imperfection, every piece of scar tissue that I have,
Speaker 1: and thank you, Robert, you did that amazingly. You can
Speaker 1: see my contact lenses in that painting, and I'm not kidding.
Speaker 1: The painting of Jeff Bezos is pretty uncanny. He used
Speaker 1: to pick that against the stark white background. He's wearing
Speaker 1: a white shirt, a silver tie, like he's coming out
Speaker 1: of a meeting, and his gaze is severe. It's the
Speaker 1: look that is flustered, intimidated, and motivated Amazon employees for
Speaker 1: twenty five years. What's striking to me is that in
Speaker 1: the painting, the light is coming in from an angle,
Speaker 1: so that half of Bezos is illuminated. The other half
Speaker 1: is shadowy and dark. On this night, Bezos was in
Speaker 1: a room full of rich elites. This was a crowd
Speaker 1: that embraced him. But note how literally actually said. This
Speaker 1: is also typical Bezos in public. He stays on script,
Speaker 1: He tells you only what he wants you to hear,
Speaker 1: and he just teases at the scar tissue. Back then,
Speaker 1: Amazon still conjured the promise of next day shipping, the
Speaker 1: marvel of Alexa Voice recognition, a massive library of streaming
Speaker 1: TV and movies, and not controversy or intrigue. You're listening
Speaker 1: to Foundering, I'm your host brad Stone. I've written two
Speaker 1: books chronicling Amazon's His Tree, The Everything Store and Amazon Unbound.
Speaker 1: I've been reporting on Amazon for over twenty years now.
Speaker 1: I've devoted much of my career to this, not only
Speaker 1: to understanding the man Jeff Bezos, but also to chronicling
Speaker 1: how he's totally altered our modern economic reality. So something
Speaker 1: that people often ask me is what's Jeff Bezos really like?
Speaker 1: I want to speak to that for a second. He's
Speaker 1: a big geek. He loves science fiction and space, but
Speaker 1: he can also be kind of scary. He can be
Speaker 1: kind of brutal when people don't meet his expectations, when
Speaker 1: they're not thinking on his level, they can be subjected
Speaker 1: to his outbursts. Also, people ask me, is Bezo smart,
Speaker 1: And the answer is yes, absolutely. He's extremely well read.
Speaker 1: He's a master compartmentalizer, someone who can work on many complicated,
Speaker 1: totally different things one after the other. But what's most
Speaker 1: impressive is probably his ability to dive into the deep
Speaker 1: technical details of things that he knows very little about,
Speaker 1: to basically go to school on a topic like artificial
Speaker 1: intelligence or rocket propulsion. He's extraordinarily disciplined, and he can
Speaker 1: go toe to toe with the engineers who have basically
Speaker 1: spent their entire careers in those industries because of his
Speaker 1: intensity and intelligence. You'll notice that in a lot of
Speaker 1: our interviews, many former Amazon employees and executives seemed to
Speaker 1: adore Basos. He's almost got a kind of cultish following.
Speaker 1: This is a guy who started accompanying as garage and
Speaker 1: evolved it all the way to becoming a trillion dollar
Speaker 1: company that dominates much of the world. He never took
Speaker 1: much of a salary, but these days he's worth around
Speaker 1: two hundred billion just on his Amazon ownership stake alone.
Speaker 1: People who worked for him just marvel at the decisions
Speaker 1: he made and the instinct that he had about the
Speaker 1: future of technology. But lately, something strange has happened. Public
Speaker 1: opinion about Bezos has declined dramatically. People ridicule his dreams
Speaker 1: of space travel and criticize his philanthropic giving. They loved
Speaker 1: a dunk on his lavish lifestyle, which has recently been
Speaker 1: on awkward display on social media. I think that the
Speaker 1: number of people who see Jeff Bezos as a hero
Speaker 1: is diminishing. He's viewed kind of skeptically as someone with
Speaker 1: enormous amounts of power and resources. Who's a difficult person
Speaker 1: to work for, Who's not treating his workforce all that well?
Speaker 1: And who hasn't done as many good things with his
Speaker 1: money and power as he could have. These questions have
Speaker 1: become even sharper during the pandemic. During the first year
Speaker 1: of lockdown, Amazon sales sword and bezos Is personal wealth
Speaker 1: jumped from one fifteen billion to one nine billion. His
Speaker 1: press verity felt perverse given how many people were struggling.
Speaker 1: He was living large just when many people were barely
Speaker 1: scraping by. This raised more questions should billionaires exist at all?
Speaker 1: Is the world better off with or without Amazon in it?
Speaker 1: Amazon was never one of those tech companies with idealistic
Speaker 1: promises to save the world, But suddenly the company found
Speaker 1: itself getting blamed for the world's problems. Why isn't Amazon
Speaker 1: doing more to combat climate change, fix inequality, protect smaller companies?
Speaker 1: People started to contrast bezos fortune with the plight of
Speaker 1: his workers. Amazon is seen as an essential service through
Speaker 1: this pandemic, but you have been very slow to install
Speaker 1: your workers protections, and it's hurt your reputation. You've been
Speaker 1: seen as a company that puts profits ahead of people.
Speaker 1: Amazon was ranked one of the twin worst companies to
Speaker 1: work for by the National Center for Occupational Safety and Health,
Speaker 1: but many Amazon staffers say the demand for greater speed
Speaker 1: is the leading factor harming warehouse workers. Allen says she
Speaker 1: processed an average of six hundred items an hour on
Speaker 1: the job here at a broken workstation that injured her back.
Speaker 1: Protesters march down street intent to vent their anger at Amazon.
Speaker 1: Outside on the street. These days, a vocal minority of
Speaker 1: people go out of their way to buy nothing from
Speaker 1: Amazon dot Com, which brings me to another question I get,
Speaker 1: Can you really avoid Amazon in this day and age?
Speaker 1: I would say the answers probably no. If you're a
Speaker 1: conscientious objector and you're not shopping on the site, well,
Speaker 1: are you shopping from Whole Foods? They are owned by Amazon.
Speaker 1: Even if you're watching Netflix videos or sending images on Snapchat,
Speaker 1: you may not know that both companies are in service
Speaker 1: pace from Amazon through its cloud division. Or you might
Speaker 1: be reading The Washington Post, which Jeff Bezos personally owns.
Speaker 1: You might be buying from alternative websites, and those products
Speaker 1: might be stored in Amazon warehouses and delivered with Amazon Vans.
Speaker 1: Amazon has simply become so big that its tentacles reach
Speaker 1: into almost every aspect of business these days. To really
Speaker 1: understand this company that's become as essential as it is villainized,
Speaker 1: it's important to go back to the beginning. Love him
Speaker 1: or hate him, or depend on him for all your
Speaker 1: daily shopping needs. The rise of Jeff Bezos and Amazon
Speaker 1: is one of the most celebrated and contentious business stories
Speaker 1: of our times. But Bezos didn't just change the business world.
Speaker 1: He also changed himself, pulling off a personal transformation, and
Speaker 1: you can see it. He's no longer the balding paste
Speaker 1: the tech nerd from Seattle. Now he's buff. He post
Speaker 1: regularly to Instagram showing off his new girlfriend and a
Speaker 1: new lifestyle that includes private yachts, remote islands, and celebrity parties.
Speaker 1: He acts like the celebrity he is, some of whose
Speaker 1: personal life and fashion choices are avidly covered by the tabloids.
Speaker 1: It's a remarkable act of personal and business reinvention. Will
Speaker 1: begin to tell that story when we come back. We're
Speaker 1: going to go all the way back to the paleolithic
Speaker 1: days of the internet. Back then, Amazon was just an
Speaker 1: online bookseller, people were being introduced for the first time
Speaker 1: to this new thing called the world Wide Web. Here
Speaker 1: are you? I'm Jeff Beazos and what are your What
Speaker 1: is your claim to face? And the founder of Amazon
Speaker 1: dot com? Where did a good an idea for Amazon
Speaker 1: dot com? Well? Three years ago, I was in New
Speaker 1: York City where he for a quantitative hedge fund when
Speaker 1: it came across the startling statistic that web usage was
Speaker 1: growing at a year. So I decided I would try
Speaker 1: and find a business plan that made sense in the
Speaker 1: context of that growth, and I picked books as the
Speaker 1: first best product to sell online. That's Jeff Bezos speaking
Speaker 1: in an interview filmed at the Special Libraries conference in
Speaker 1: In some ways, Bezos had been preparing to start this
Speaker 1: company since childhood. As a kid, he was considered precocious,
Speaker 1: highly intelligent. His mother, Jackie, had him whence she was
Speaker 1: still in high school. He didn't know his biological dad
Speaker 1: for most of his life. When he was four, his
Speaker 1: mom remarried a Cuban immigrant, Mike Bezos, and they spent
Speaker 1: the next several years moving around. He was the valedictorian
Speaker 1: of his high school in Miami, and he gave a
Speaker 1: speech about entrepreneurship and space. Friends would later say, he
Speaker 1: started Amazon on and he went after all this money
Speaker 1: because he dreamed of going into space himself. One day
Speaker 1: before he started Amazon, Bezos had been a vice president
Speaker 1: at a Wall Street firm, D. E. Shawn Co. He
Speaker 1: was researching new business opportunities for the company, and he
Speaker 1: got an idea for a startup, which meant he had
Speaker 1: a choice to make. Here he is on sixteen minutes.
Speaker 1: The way I made the decision to leave Wall Street
Speaker 1: and do this was it will sound geeky to you,
Speaker 1: but um, it was a regret minimization framework. So this
Speaker 1: is how I actually made it. So if I understand it,
Speaker 1: if I can translate that into English, I can deal with.
Speaker 1: Does that mean I want to live my life so
Speaker 1: that in a few decades from now, I'm not going
Speaker 1: to regret it. That's exactly right. I want to have
Speaker 1: lived my life in such a way that when I'm
Speaker 1: eighty years old, I've minimized the number of regrets that
Speaker 1: I have. For you, it was not carpet d M.
Speaker 1: It was not wine women in song. No, no, no no.
Speaker 1: I don't go in for carpet d M. I go
Speaker 1: in for regret minimization framework. So he end his wife Mackenzie,
Speaker 1: left their Manhattan apartment, flew to Fort Worth, Texas, took
Speaker 1: his parents Chevy Blazer out of storage, and started driving
Speaker 1: north to Seattle. He chose Seattle because Microsoft was already there.
Speaker 1: It was a budding tech cup but still small compared
Speaker 1: to California or New York, and Washington State had something
Speaker 1: else appealing to Bezos, lower taxes. He had the seed
Speaker 1: of a business notion that on the web there were
Speaker 1: no limits to what you could sell as long as
Speaker 1: you could figure out a way to find it and
Speaker 1: ship it through the mail. You could literally create and
Speaker 1: everything store. So when you have that many items, could
Speaker 1: literally build a store online that couldn't exist any other way.
Speaker 1: And that's important right now because the web is still
Speaker 1: an infant technology basically. Right now then Bezos was bubbling
Speaker 1: with optimism about the Internet and the massive business opportunities
Speaker 1: in retrospect. He was absolutely correct. What's really incredible about
Speaker 1: this is that this is day one, this is the
Speaker 1: very beginning, this is the kiddieh hawks stage of electronic commerce.
Speaker 1: We're moving forward in so many different areas and lots
Speaker 1: of different companies are as well. I think a millennia
Speaker 1: from now, people are gonna look back and say, wow,
Speaker 1: the late twentieth century was really a great time to
Speaker 1: be alive. Beazos sets up the original Amazon office in
Speaker 1: the garage of a suburban Seattle home. The first challenge
Speaker 1: was figuring out what to name the company. Bezos registers
Speaker 1: at as Cadabra inc as an Abra Cadabra, but that
Speaker 1: sounds too much like cadaver. Then he registers relentless dot
Speaker 1: com because he wants his young startup to operate relentlessly.
Speaker 1: And here's a neat trick. Even now, if you type
Speaker 1: relentless dot com in your browser, it'll redirect you to
Speaker 1: Amazon anyway. In a wise move, he chooses the name Amazon,
Speaker 1: the Earth's largest river can stand for its largest selection
Speaker 1: of books. Amazon dot Com went live in July. He
Speaker 1: encodes a few values into Amazon's DNA, chief, among them
Speaker 1: satisfied the customer at all costs. The next few years,
Speaker 1: Bezos moves his company to a succession of offices around
Speaker 1: downtown Seattle. Some of those spaces were famously sketchy. Yeah,
Speaker 1: that Columbia building was amazingly right across the street from
Speaker 1: the Needle Exchange in downtown Seattle, so you had heroin
Speaker 1: addicts that were hanging out right outside the building. That's
Speaker 1: Dan Rose, who joined Amazon out of business school in
Speaker 1: the nineties. Later he became a top deputy to Mark
Speaker 1: Zuckerberg at Facebook. I called up Dan and a few
Speaker 1: other early Amazon employees I had originally interviewed from my books.
Speaker 1: They were proud of their time at Amazon and happy
Speaker 1: to talk about it. Um. I remember those interviews there.
Speaker 1: You know, there were no uh, there were no offices available,
Speaker 1: so we literally, uh for a couple of the interviews.
Speaker 1: We went into the stairwell and I did interviews in
Speaker 1: the stairwell. It was, you know, there was definitely a
Speaker 1: feeling of chaos. Bezos prowled these halls, and he loved
Speaker 1: the chaos. He gave the company a mission, get big fast.
Speaker 1: Amazon raised money from venture capitalists, they went public, then
Speaker 1: raised more money from Wall Street. Bezos became a billionaire
Speaker 1: when the company was only five years old. You generally
Speaker 1: hear him before you see him. It's the ear piercing
Speaker 1: laugh of billionaire Jeff Bezos. I was a good student.
Speaker 1: I always worked really hard. I was nerdy. You were nerdy.
Speaker 1: I was nerdy. That hasn't changed by At the time,
Speaker 1: Jeff Bezos was famous for his laugh. I interviewed him
Speaker 1: for the first time around this period, and his laugh
Speaker 1: was definitely something you couldn't avoid. It was kind of jarring.
Speaker 1: Bezos is goofy optimism wasn't an act. In the late nineties,
Speaker 1: he took Amazon's riches and went on a spending spree.
Speaker 1: He acquired random startups like IMDb and online stores in France.
Speaker 1: In the UK, they branched into new product categories like
Speaker 1: c d s, DVDs and toys. He even splurged on
Speaker 1: a set of totally nerdy advertisements that appeared all over
Speaker 1: network TV TV. Y What I Got dot com? Yes,
Speaker 1: he paid for a group of guys to wear matching
Speaker 1: sweaters and sing these little jingles in an attempt to
Speaker 1: lodge Amazon dot Com into the public's imaginations. Here's the thing, though,
Speaker 1: in those early years, Amazon was kind of a hot
Speaker 1: mess who was losing money, lots of it. That was fine,
Speaker 1: most startups do this, but it was goring so quickly
Speaker 1: that its internal systems were a disaster. Some of the
Speaker 1: earliest employees were starting to worry. I would say that
Speaker 1: the train was heading down the track and there was
Speaker 1: no track. That's Kellen Brannon, she was an early vice
Speaker 1: president of finance. There was actually no financial planning or
Speaker 1: analysis at all. And Jeff would say, you know, if
Speaker 1: you're thinking about something longer than twenty minutes, you've missed
Speaker 1: the opportunity, meaning literally, don't stop and deliberate for more
Speaker 1: than twenty minutes. Keep moving. At the time, Amazon had
Speaker 1: only two warehouses in Seattle and Delaware. During the holiday season,
Speaker 1: the warehouse workers couldn't handle the surgeon orders. So early
Speaker 1: on Amazon's executives, including Jeff Bezos, helped out. In the warehouse.
Speaker 1: There were packing boxes, driving forkliffs, and gift trapping. I
Speaker 1: learned so much right one. I learned it was fun
Speaker 1: that I could race Jeff in the stacks because we
Speaker 1: would time ourselves when we had these library cards, and
Speaker 1: we would be because the warehouse managers is back then,
Speaker 1: you know, it might put like an obscene book next
Speaker 1: to a children's book and you're picking them, but they're
Speaker 1: going to different people, which you're stacking him on these
Speaker 1: library cards, and so we would check in, get our
Speaker 1: library card, race up and down the stacks, picking the
Speaker 1: books that were on the sheet, and then we take
Speaker 1: it out right, and I could pick two point four
Speaker 1: books per minute, and Jeff was slower, and that was
Speaker 1: and he you could hear him because he would be
Speaker 1: chasing us, right, we're all competing together, and his big
Speaker 1: laugh would be there booming. Brandon left Amazon in two thousand,
Speaker 1: but she still looks back fondly at that time. Racing
Speaker 1: Jeff Bezos in the warehouses, she actually got a valuable
Speaker 1: glimpse of how Bezos operates. He dove into the details
Speaker 1: of every aspect of his company and just wanted to
Speaker 1: win at all costs, even against his own colleagues. He's
Speaker 1: incredibly competitive. He wanted to prove his performance, which made
Speaker 1: me more competitive. And but there was a lot of laughter,
Speaker 1: right he he loved it, and I have to say,
Speaker 1: I have to say I loved it. All This cast
Speaker 1: was okay to a point. Many of the dot coms
Speaker 1: of the late nineties were pursuing similar strategies, trying to
Speaker 1: get big fast. Here's Warren Jensen, the company's chief financial
Speaker 1: officer at the time. It was a land grab. I
Speaker 1: think one of the things that I remember during that period,
Speaker 1: Jeff would frequently say is it makes the statement that
Speaker 1: brands are like quick drawing cement uh. And the Amazon
Speaker 1: mission was very clear to come, find, discover, and buy
Speaker 1: anything online. Wall Street seemed happy to fund that mission
Speaker 1: to bet on its possibility, even though it was unprofitable.
Speaker 1: Amazon lost six hundred million dollars, and investors didn't seem
Speaker 1: to bat an eye. At first. The company was incredibly strong.
Speaker 1: The capital markets in early nine were wide open to
Speaker 1: big Internet ideas like Amazon dot Com. But gradually investors
Speaker 1: started to ask questions, when are you going to get
Speaker 1: real and start to operate like a professional company. There
Speaker 1: were real storm clouds forming. The company was burning a
Speaker 1: lot of cash, and I would argue that by the
Speaker 1: fall of the Internet bubble was getting pretty thin. In fact,
Speaker 1: it was starting to burst. Investors were in awe of
Speaker 1: the growth, but we're also voicing strong objections to the
Speaker 1: mounting losses. And in March two thousand, the Internet bubble burst.
Speaker 1: This was the dot Com crash, and it was epic.
Speaker 1: A whole generation of Internet companies like pets dot Com,
Speaker 1: we're careening into bankruptcy. It's described as nothing showed with
Speaker 1: breathtaking a points drop never before seen on the US markets.
Speaker 1: This closing bill might as well have been an alarm,
Speaker 1: So savage was the silly that another one? Yeah, too
Speaker 1: many in a row, and spare thought for Bill Gates.
Speaker 1: The Wall Street collapse cost the world's richest man and
Speaker 1: me at one point eight billion dollars this week alone.
Speaker 1: Investors were starting to worry was Amazon going to be
Speaker 1: next in the trash heap? And Amazon feared what if
Speaker 1: suppliers got nervous next? This could create a domino effect.
Speaker 1: Bezos and his colleagues had to move quickly to stave
Speaker 1: off disaster. So Amazon sends Warren to visit one of
Speaker 1: their largest suppliers, the book distributor Ingram's, to convince them
Speaker 1: that the company was on solid footing. And we went
Speaker 1: in and made a presentation to the Ingram board of directors,
Speaker 1: and I think it was Laura Ingram Um stopped the
Speaker 1: meeting for a second and she said, Warren, you have
Speaker 1: to remember that if you go bankrupt and we go bankrupt.
Speaker 1: Warren was Amazon CFO at the time. If Amazon went under,
Speaker 1: it could drag Ingram's down with him. This was a
Speaker 1: remarkable statement and apportent of things to come. Amazon had
Speaker 1: only been around for eight years, and it was already
Speaker 1: dangerously intertwined with the success of some of the largest
Speaker 1: company in the world. After bezos is lieutenants went around
Speaker 1: reassuring suppliers, he made a second change, completely altering the
Speaker 1: company's operating posture. For five years, Amazon's mantra had been
Speaker 1: get big fast, and Bezos realized those days had to end. Jeff,
Speaker 1: You've got to be concerned about operating margins overall for
Speaker 1: the company. They're really extremely low, your factor amongst the
Speaker 1: worst out there, So the company is basically a break
Speaker 1: even at this point. You know, we expect to generate
Speaker 1: substantial and meaningful free cash flow, so we're very excited
Speaker 1: about where the company is from a business. This next
Speaker 1: era at Amazon was going to be about tightening the belt,
Speaker 1: and that was looking to be a lot less fun.
Speaker 1: The change and fortune was stunning. Another question that's been
Speaker 1: raised on Walter is you've had a lot of top
Speaker 1: executive departures within the last year. I think five. No,
Speaker 1: you know, I'm very happy with the executive team we
Speaker 1: have and the and we are, and we're really functioning
Speaker 1: well as a team. We've got good succession plans in place,
Speaker 1: great people. Um, we're having fun. A lot of people left. Uh,
Speaker 1: you know, a lot of people left the company during
Speaker 1: that period, and um, and you can't blame him, you know,
Speaker 1: because again, it wasn't it wasn't clear we were going
Speaker 1: to survive. Dan Rose was fresh out of business school
Speaker 1: at the time. He watched as his dreams of instant
Speaker 1: wealth were dashed suddenly the NASDAC creators and Amazon stock craters.
Speaker 1: And by the time I had vested my first year
Speaker 1: of my stock options at the company that one year, Cliff,
Speaker 1: my stock was underwater. It was back down below sixty dollars.
Speaker 1: When I joined, it was like at forty dollars, and
Speaker 1: over the next few years it went down to something
Speaker 1: like eight or seven or something like that. As for Bezos,
Speaker 1: his fortunes were also reversing, particularly in the court of
Speaker 1: public opinion. Jeff goes from being the poster child of
Speaker 1: the Internet to being the poster child of the Internet
Speaker 1: bubble um. And so this precipitous fall from grace. The
Speaker 1: people stuck around said that Bezos was handling it gracefully,
Speaker 1: but Warren Jensen, who worked closely with him, says that
Speaker 1: the scrutiny and pressure really got to him, especially when
Speaker 1: the SEC began investigating his personal stock sales for signs
Speaker 1: of impropriety. There were a lot of arrows pointed directly
Speaker 1: at Amazon and at Jeff. That was, you know, a
Speaker 1: painful period for Jeff. I mean, nobody wants to be
Speaker 1: questioned that way by the SEC. And you know read
Speaker 1: about it, you know, above the fold in the New
Speaker 1: York Times. The other thing we've noticed is that there's
Speaker 1: been more selling of your stock by yourself. You've done
Speaker 1: about eighty million dollars worth of shares that you've sold
Speaker 1: this year, a lot higher than what you have been
Speaker 1: doing historically. My sales are that you're talking about are
Speaker 1: made subject to Attende five one plan which gets set
Speaker 1: well in advance. Uh. And I do it for liquidity
Speaker 1: and diversification. I don't take a big salary at Amazon
Speaker 1: dot Com, I don't take options, and my source of
Speaker 1: income is is that stock. The SEC. He later dropped
Speaker 1: the case without bringing any churches. It's hard to imagine
Speaker 1: it now because Bezo seems so invincible, but back then
Speaker 1: he was subject to such doubt, even ridicule. His name
Speaker 1: was almost synonymous with the bust and hubris of the
Speaker 1: tech elite inside the company. Employees said that Bezos kept
Speaker 1: repeating one thing, almost as a mantra, the only way
Speaker 1: out of this is to invent our way out. He
Speaker 1: is at his heart he's an inventor. So here you
Speaker 1: have a CEO of a by that time, a successful
Speaker 1: company that had invented something new. He was saying to
Speaker 1: the world, I didn't just fall into this business. This
Speaker 1: is who I am. I'm going to constantly be inventing
Speaker 1: and trying new things, and I'm gonna build a culture
Speaker 1: of invention where everybody who works here is going to
Speaker 1: embrace this and is going to um constantly be pushing
Speaker 1: themselves to invent new things. How Amazon invented its way
Speaker 1: out of this first cycle of cynicism. It started to
Speaker 1: become the giant that many people know and fear today.
Speaker 1: That's next. I want to take a moment and interrogate
Speaker 1: this idea that Jeff Bezos is an inventor. As Dan Rose,
Speaker 1: the early Amazon employee said earlier, invention is something Bezos
Speaker 1: cares deeply about. He wants to be seen as an inventor.
Speaker 1: It's a little contentious. He didn't exactly invent e commerce,
Speaker 1: but he defined it in its current form, and Bezos
Speaker 1: did mastermind the Kindle and Alexa. These are objects that
Speaker 1: have changed the everyday lives of so many people. But
Speaker 1: because of his wealth and Amazon status is one of
Speaker 1: the largest businesses in the world, bezos Is ingenuity as
Speaker 1: an inventor often gets lost. Critics see him as a
Speaker 1: monopolist and Amazon as a monster that has unfairly tilted
Speaker 1: the economic playing field. That gulf between the inventor and
Speaker 1: the monopolist, between how Bezos hopes to be seen and
Speaker 1: the way he often is perceived, that's never been larger.
Speaker 1: He didn't always have this problem. Back in two thousand four,
Speaker 1: Amazon was just in survival mode. Here's Dan Rose. It
Speaker 1: wasn't like the company had turned the corner and everything
Speaker 1: was going great and we were out of the woods.
Speaker 1: It was like we had barely skated by. Many people
Speaker 1: thought we were six months away from bankruptcy at a
Speaker 1: moment there. If our suppliers hadn't extended credit to us,
Speaker 1: we probably would have gone out of business. So Amazon
Speaker 1: has survived, but would it ever thrive again? Many analysts
Speaker 1: are doubtful, But in the next few years, Jeff Bezos
Speaker 1: would pioneer a series of new inventions that would not
Speaker 1: only change the course of the company's fate, they changed
Speaker 1: the entire tech industry. One of those inventions is extremely
Speaker 1: fast free shipping. Another is the Kindle. A third, which
Speaker 1: we'll get to in the next episode, is Amazon Web
Speaker 1: services or cloud computing. Here were three incredible inventions that
Speaker 1: were not obvious. None of them were obvious, and he
Speaker 1: shipped them to the world and and set this stage
Speaker 1: for for what would become one of the greatest runs
Speaker 1: in the history of business over the next fifteen years.
Speaker 1: Perhaps the most consequential invention of this era is Amazon Prime.
Speaker 1: It's late two thousand four and Bezos's early vision for
Speaker 1: Prime was as a sort of loyalty program. At the time,
Speaker 1: people weren't buying stuff like dish, detergents, and food online,
Speaker 1: and Bazos had this idea that if they could eliminate
Speaker 1: the shipping costs, then online shopping would be no more
Speaker 1: expensive than going to the store. Back then, Amazon has
Speaker 1: fast tracked shipment and it was the pride of the company,
Speaker 1: but they were charging customers a lot extra to rush
Speaker 1: their orders in one or two days, so not that
Speaker 1: many people were using it. Here's former vice president Greg Greeley,
Speaker 1: you know, and Jeff himself had been saying, what can
Speaker 1: we do to get more people using our best product.
Speaker 1: Um the OPS team had worked so hard to create
Speaker 1: this really amazing supply chain that could provide predictable you know,
Speaker 1: albeit expensive, but could provide a very predictable next day
Speaker 1: and two day experience. So Pasos imagines Prime is a
Speaker 1: special club. Pay seventy dollars up front and get two
Speaker 1: days shipping for a year. He likes to call it
Speaker 1: and all you can eat experience. And from the start
Speaker 1: he has one name in mind. In two thousand and four,
Speaker 1: and when we were trying to kind of lock it
Speaker 1: on the program, Jeff said, I think it should be
Speaker 1: called Prime. And because we've been pushing on this all
Speaker 1: you can eat experience, my initial thought was, well, when
Speaker 1: we confuse that with Prime rib that's where my head went.
Speaker 1: I said, there must be a better branding there by
Speaker 1: anything you want like patio furniture and get two day shipping.
Speaker 1: You can imagine financial analysts were skeptical. I am sure
Speaker 1: we could both do a Google search and find lots
Speaker 1: of analysts that said this is absolutely crazy. For a
Speaker 1: number of years, they were questioning how we were affording it,
Speaker 1: because of course you just get the math at our
Speaker 1: ship revenues that we were collecting and the cost of
Speaker 1: our shipping. But Bazos insists on going ahead with Prime.
Speaker 1: He believes that it will make customers more loyal, more
Speaker 1: willing to shop beyond books, music, and DVDs, which were
Speaker 1: Amazon's core products at the time, and it was gambling
Speaker 1: that the expense of unlimited two days shipping would go
Speaker 1: down as Amazon builds more warehouses closer to customers. Both
Speaker 1: Amazon dot Com and many of its customers are getting
Speaker 1: what they want with Amazon's Prime service. For Amazon, it's
Speaker 1: more customers and for customers nearly free shipping. The service
Speaker 1: at seventy nine dollars a year, includes free to day
Speaker 1: delivery on any item Amazon stocks That includes, according to
Speaker 1: The Wall Street Journal, a five hundred pounds safe that's
Speaker 1: pounds David. Prime's impact wouldn't be visible to the outside
Speaker 1: world for a couple of years, but over time it's
Speaker 1: seriously changed people's shopping habits. How many things did you
Speaker 1: used to buy in stores that you now buy online?
Speaker 1: And Prime has created a new expectation that shipping and
Speaker 1: online orders should be free. This created an impossible bar
Speaker 1: for Amazon's competitors, because now rival retailers like Barnes and
Speaker 1: Noble and Best Buy also have to offer some version
Speaker 1: of free shipping and primes. That's another thing in motion.
Speaker 1: Almost invisibly, tens of thousands of workers join Amazon as
Speaker 1: warehouse workers and drivers. Soon this balloons to hundreds of
Speaker 1: thousands of workers. They do the brutal work of fulfilling
Speaker 1: the promise of two day delivery over time. As Prime
Speaker 1: accelerates to next day delivery, same day delivery, the labor
Speaker 1: issues will intensify. At the same time, as Bezos orders
Speaker 1: the creation of Prime, he branches out in an even
Speaker 1: more surprising direction. He wants Amazon to be more than
Speaker 1: an online retailer. He has an idea for a consumer
Speaker 1: electronics device. In the early two thousands, Apple introduces the
Speaker 1: iPod in the iTunes music store. It drastically changes the
Speaker 1: music business. Bazos watches the CD sales on Amazon fall.
Speaker 1: Jeff had this realization that this could also happen to books,
Speaker 1: and if it did happen to books, it would be
Speaker 1: much more existential for us than the CD business, because,
Speaker 1: for two reasons, books was by far largest business, but
Speaker 1: also more importantly, it was half of the company's profits.
Speaker 1: Dan says that from Bezos's point of view, it was
Speaker 1: only a matter of time before someone invented an iPod
Speaker 1: for books, and it could kill his business. Jeff also
Speaker 1: realized that if Amazon didn't do it, somebody else would.
Speaker 1: That it was inevitable that digital books would exist in
Speaker 1: the world in the same way that it was inevitable
Speaker 1: that the iPod would exist. He got that in a
Speaker 1: deep instinctual level. Bezos sets up a secret team to
Speaker 1: produce the Kindle, and he closely manages the project. Some
Speaker 1: would say he micromanages it. He insists on a cellular
Speaker 1: modem that allows the Kindle owner to download an e
Speaker 1: book anywhere, even in the back of a taxi. It
Speaker 1: will take three years and generate all kinds of tension.
Speaker 1: One challenge is to get book publishers to digitize more
Speaker 1: of their catalogs. At the time, only about twenty books
Speaker 1: exists in the book form, but Bezos wants to see
Speaker 1: five times that many titles available for the Kindle's launch.
Speaker 1: Dan Rose is in charge of the effort. I cannot
Speaker 1: overstate the lack of enthusiasm that my overtures were met
Speaker 1: with from the book publishers. They immediately explained to us
Speaker 1: why it was not a good use of their time
Speaker 1: or resources or money to produce more digital books, and
Speaker 1: that they just, frankly, we're not going to do it.
Speaker 1: So Amazon pushes back against the book publishers. It basically
Speaker 1: threatens to pull the publisher's physical books from Amazon dot
Speaker 1: Com unless they agree to digitize more of their catalogs.
Speaker 1: Then Amazon surprises publishers with an announcement that all new
Speaker 1: e books will be sold at a flat rate of
Speaker 1: ten dollars. I don't know if you've bought a new
Speaker 1: hardcover lately, but they usually cost closer to thirty dollars.
Speaker 1: Publishers are not amused. They believe they've been deceived by
Speaker 1: Amazon into undermining the most profitable part of their business.
Speaker 1: The drive towards the books was the first notable instance
Speaker 1: of Amazon really strong arming its suppliers. This more or
Speaker 1: less becomes Amazon's signature move in the next decade, as
Speaker 1: the company seals its dominance as an online retailer. It
Speaker 1: also starts to see Amazon's reputation as a ruthless monopolist.
Speaker 1: But the Amazon It's all worth it. When it introduces
Speaker 1: the Kindle in November two thousand seven, it changes the
Speaker 1: way the world views the company. Yesterday, Amazon CEO Jeff
Speaker 1: Bezos and failed the much waited Amazon Kindle, a sort
Speaker 1: of portable digital library, which is at book Expo, the
Speaker 1: book industry's annual convention held this year in l A.
Speaker 1: There was a palpable buzz of curiosity about the Kindle
Speaker 1: on the convention floor. People who had never seen a
Speaker 1: kindle were eager to get a look at it. Can
Speaker 1: I feel it? Can I see? Amazon is no longer
Speaker 1: a dot com sensation. Bezos is no longer a goofy
Speaker 1: over exuberant CEO with the crazy laugh who barely survives
Speaker 1: the dot com bust. The Kindle puts Amazon in the
Speaker 1: same league as Apple. There are two pioneers creating a
Speaker 1: bold future for digital media. And when the Kindle lands
Speaker 1: on the cover of Newsweek magazine, Bezos is seen for now,
Speaker 1: at least the way he always wants to be seen,
Speaker 1: as an inventor. Here's Bezos on stage of the Kindle
Speaker 1: paperweite announcement. We love to invent, we loved to pioneer.
Speaker 1: We even like going down alleys that turned out to
Speaker 1: be blind alleys, and it was a big deal and
Speaker 1: I do think it changed the perception of Amazon, and
Speaker 1: people recognize now that this was more than just an
Speaker 1: Internet retailer. You're a company that can innovate and build
Speaker 1: new things that may be orthogonal to the core thing
Speaker 1: that you do. These two seminal inventions, Amazon Prime and
Speaker 1: the Kindle not only changed the way the world views Amazon,
Speaker 1: they give Bezos a license to keep trying new things.
Speaker 1: This means that Amazon can push into new product categories,
Speaker 1: new countries, chake up new industries, and the repercussions of
Speaker 1: Amazon's relentless march forward become bigger than just the tech industry.
Speaker 1: It has consequences for society at large. Alexa, introduce yourself.
Speaker 1: I'm Alexa, and I respond when you say my name.
Speaker 1: There are lots of things we can do together. Alexa,
Speaker 1: are you alive? I'm not really alive, but I can
Speaker 1: be lively sometimes. That's next time on Foundering the Amazon Story.
Speaker 1: Foundering is hosted by me brad Stone Sean When as
Speaker 1: our executive producer. Raymondo is our audio engineer, Molly Nugent
Speaker 1: as our associate producer, Mark Million and Vander May, Robin
Speaker 1: Agello and Molly Shoots our story editors. Francesca Leivia is
Speaker 1: the head of Bloomberg Podcasts. Be sure to subscribe and
Speaker 1: if you like our show, leave a review. Most importantly,
Speaker 1: tell your friends see you next time.