Amazon: The Everything Store Summary

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In 1994 and 1995, Amazon lost $52,000 and $300,000, respectively. Despite the losses, Amazon CEO Jeff Bezos projected $74 million in sales by 2000, and $114 million if everything went well. The actual sales in 2000? $1.64 billion.

Beginning in the 1990s, Web-mania fueled the meteoric rise of “Amazon.com” to a higher valuation than Sears. Barnes & Noble and Borders Bookstore first popularized the superstore model over independent mom-and-pop bookstores, but Amazon looked to the future for its business model. Amazon quickly became known for its core values of customer obsession, frugality, bias for action, ownership, high bar for talent, and innovation. Founder and CEO Jeff Bezos prided himself on pioneering innovation via novel features like Amazon Sales Rank, 1-Click ordering, and the Alexandria Project. Bezos once told an employee, “Your job is to kill your own business […] You are basically already late,” accentuating the perpetual quest for innovation that was ingrained in the company’s culture (234). While competitors like Barnes & Noble waited for small markets to grow enough to warrant investment, Amazon effectively positioned itself to capture market share and reap the rewards once markets caught up to Bezos’ innovative vision. Despite a tumultuous path, Amazon has succeeded in developing into a fundamentally sound, pioneering conglomerate that now dominates retail worldwide.

Jeff Bezos

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On the left, Jeff Bezos in 1999. On the right, Jeff Bezos in 2017.

Amazon’s secret to success has been its ambitious, demanding leader. Jeff Bezos is notorious for prioritizing his customers at the expense of his employees. Since the startup phase, the customer has remained the company’s highest priority. Bezos understood and prioritized the perspective of the customer and intentionally designed products and services to appeal to customers with convenience and performance.

Customer Focus

Amazon’s visionary Founder and CEO Jeff Bezos understood that e-commerce would enable brick-and-mortars to personalize the consumer experience using data analytics only available online. Bezos pioneered the personalization of commerce, setting the stage for future collaborative filtering across industries, from Netflix to Amazon itself. By implementing Amazon’s P13N personalization, Amazon generated appealing recommendations for customers based on the items they browsed and purchased (133). Bezos also insisted on a customer-friendly 30-day return policy and implemented Amazon Marketplace to increase customer selection, despite the uproar from suppliers. Amazon’s mission has always been to drive inefficiencies out of the supply chain and offer the lowest prices for its valued customers. As such, frugality has been utilized since Amazon’s inception to sustain innovation and customer happiness via low prices and resourcefulness.

Working Conditions

In stark contrast, Bezos demands superior performance from his employees, constantly pushing them to the limit. Bezos once told employees “The reason we are here is to get stuff done, that is the top priority […] That is the DNA of Amazon. If you can’t excel and put everything into it, this might not be the place for you” (90). He even prefers to frame negative press over company successes, exploiting fear to drive results. Bezos is notorious for his amusingly degrading criticism, as he callously tells subordinates, “I’m sorry, did I take my stupid pills today?” or “Why are you ruining my life?” (177). Amazon often saw high employee turnover because of the demanding CEO, with countless senior executives leaving soon after joining.

However, Bezos never despaired over the employee exoduses. He was known for effectively motivating employees without developing personal attachments. Bezos worked employees to exhaustion, but occasionally showed unexpected expressions of appreciation to his closest colleagues, including lavish farewell parties (267). With this in mind, Amazon employees are well aware of the intense environment. As one ex-Amazon employee said, “Everybody knows how hard it is and chooses to be there […] You are learning constantly and the pace of innovation is thrilling” (328).

Competitive Advantage

Bezos also keenly sought to gain a competitive advantage. He wanted to have more user generated content than any competitor, thus establishing a sustainable competitive advantage and switching costs over brick-and-mortar competitors. In Good to Great, Jim Collins describes Amazon’s sustainable flywheel model: low prices increased sales and attracted more third-party sellers, which offset fixed costs and increased efficiency, further lowering prices (126).

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Jeff Bezos was named TIME Person of the Year in 1999.

Long-Term Profitability

While building the company, Bezos was stubbornly unwilling to mortgage the future of the company to generate profitability now. Even with the stellar sales in 2000, Amazon still lost $1.4 billion, investing massive amounts in new markets for future profitability. Amazon did not report a profitable quarter until 2002 – a symbolic penny per share profit at that. Bezos established the “holy scripture” of Amazon as making decision based on long-term prospects of future cash flow and growing market share rather than short-term profitability (69).

 

 

Realizing the Vision

Bezos’ confidence in his vision and devotion to realizing his vision differentiated him from the competition. Looking to our trip and beyond, emulating his vision and tirelessly pursuing the vision can be integral to a startup’s success.

From the beginning, Bezos held an inconceivable vision of an “Everything Store”, and successfully stood by his vision and made it into a reality. Bezos envisioned a personalized customer experience utilizing high-speed internet, essentially unheard of at the time, and an “Everything Store” that would compete with Sears, even when Amazon only sold books. To make it happen, he let his uninhibited ambitions inspire subordinates and propel the company forwards. Bezos encouraged employees to be aware of the bigger picture and understand that they were working to improve the greater company, saying “There will be only a few enduring brands, and we will be one of them” (66). Even in troubled times, Bezos would reaffirm his commitment to building a lasting company, learning from his mistakes and developing a brand associated with the “abstract concept of starting with the customer and working backward” (105). As Sam Walton wrote, Bezos understood that anyone could develop a competing company, but the differentiator would be his attitude and ability to learn and adapt.

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Over 20+ years, Bezos confidently defended his vision and worked tirelessly to realize it.

Never one to doubt himself during tough times, Bezos constantly defended his vision and ensured that it would come to fruition. When Howard Schultz criticized Amazon’s lack of physical presence, Bezos disagreed and said “We are going to take this thing to the moon” (54). Later on, he began to actively pursue his dream of the “Everything Store”, named Project Fargo, and saw the potential when no one else did. Amazon has recently come to embody Bezos and David Shaw’s original vision of the “Everything Store” by selling millions of products, expanding across industries, filling gaps in Amazon’s product lineup, and disregarding the seemingly impossible boundaries to his mission.

 

Recommendation

After reading The Everything Store, I can confidently say I would recommend it to anyone interested in the fields of business or technology. Author Brad Stone offers little-known insights into the brain of Amazon’s mastermind and documents the company’s meteoric rise from startup to world domination. With a market cap of $600 billion, Amazon’s growth has impossibly continued through revolutionary breakthroughs and forward-thinking dominance across diverse product areas. For a company in constant flux, Bezos has maintained continuous innovation in every industry imaginable. Stone’s book highlights the importance of maintaining a vision and constantly working to make the vision a reality, as Bezos did. Interestingly, with Bezos’ Blue Origin, space exploration may be the next frontier and the next step in his vision. As Jeff’s high-school girlfriend said, “The reason he’s earning so much money […] is to get to outer space” (153). We’ll have to wait and see if Blue Origin turns into the next major success in Bezos’ illustrious career!

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9 thoughts on “Amazon: The Everything Store Summary

  1. Hey Rohan!

    It truly impresses me how far into the future Bezos was willing to invest his company. Even among the likes of Steve Jobs and Peter Thiel, it seems unlikely that anyone else would have been as open to taking on so much debt. Yet, it clearly has paid off more than 20 years after its inception, and your summary really makes that clear. While I’m sad that we won’t be visiting their office on our trip, I look forward to seeing how you translate Amazon’s successes into those that we do!

    Liked by 1 person

  2. Great summary. Whenever a new business concept emerges, there’s now the looming question about what would happen if Amazon got into the space. It’d be interesting to hear your thoughts on the other companies we learn about knowing what you know about Amazon.

    Liked by 1 person

  3. Your opening sentence really struck me– Amazon surely exceeded expectations! Bezos must have faced a lot of criticism and skepticism when he first introduced his idea for Amazon. It’s incredible to see how Bezos’ flywheel napkin sketch has revolutionized retail and the way we shop. Amazon has certainly evolved into an “everything” store. It’s no surprise that Bezos’ commitment to excellence in service and production earned him a seat at the Golden Globes!

    Liked by 1 person

  4. Great summary. I read this one while I was on Tech Trek last year, and I was happy to recommend it. Although I’m sorry that we aren’t going to Seattle/ Amazon, I do think there are a number of lesson that will apply to the types of companies we will visit and study. It’s really been impressive how much Amazon has risen to dominance over the past year. They are definitely the “big dog” of the tech world these days.

    Liked by 1 person

  5. Jeff Bezos is the man! Such an interesting company that is always on the cutting edge, trying to innovate. I think the possible move to buy Target is just another way that Amazon is going to take over the world. I think that Bezos would be a tough boss to have, but I think he would get the most out of me as an employee. Would love to swap books with you!

    Liked by 1 person

  6. Hi Rohan!
    I agree that Bezos is a fascinating person and CEO. The way he holds himself and views his corporation is extremely unique. I remember reading an article about him last year in Portico. It mentioned that Bezos, in response to angry customer emails, used to forward them to an employee simply with a question mark. The employees then frantically scrambled to try to fix the issue, in order appease their demanding boss. Although this approach seems ruthless to some, the ways in which Bezos has grown his company almost exponentially through this method is captivating.

    Liked by 1 person

  7. Hey Rohan, this was a very well thought-out summary! Bezos is one of the most interesting people of our time. It seems with every business decision, he’s one step closer to world domination. He’s such an incredible businessman and leader. Amazon is always at the forefront of innovation so it’s nice learning about him and his practices.

    Liked by 1 person

  8. Hey Rohan,

    I also read the Everything Store and I’m glad we focused on different points in both our summaries. There was so much interesting material in this book, and it was impossible to cover all of it. One of my favorite takeaways from Brad Stone’s work is that Amazon always had a “willingness to be misunderstood”. Another thing that often gets overlooked is how ruthless Amazon treated the companies threatening their success in a certain product category. Poor Quidsi and Zappos, both companies determined to build a firm independently. They had no choice in the end but to sell themselves to Bezos.

    I really like how you focused on the importance of having a vision, and relentlessly making sure that it happens. So much of us have amazing ideas that never come to fruition, because we don’t want to do the work to make it happen. Bezos was determined to create an everything store, and he did just that!

    Awesome job. Looking forward to seeing you today!

    Like

  9. Very helpful visuals! Thanks for sharing! I quite enjoyed the book and I too wrote a short blog highlighting three major takeaways from the book. I would love your insight on my three takeaways (Strategy, culture, and communication). I look forward to hearing from you! Keep up the great work!

    Like

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