The Story of Amazon: The Everything Store

“It’s easier to invent the future than predict it.”- Alan Kay

Everything store

When you think of Amazon, what do most customers think about? Limitless selection? Prime? 1-click purchases? My new BFF, Alexa? Almost instant gratification of any desire you may feel? This was all a part of Jeff Bezos’s dream to create a company that could give you anything you want, as quickly as possible. Brad Stone’s investigative journalism takes the reader on a journey from the early days of Jeff Bezos, his first professional job at a unique firm named D.E. Shaw & Company (often abbreviated as DESCO), and his drive to fulfill his goal in creating a true everything store for his future customers.

The Early Days

Shel Kaphan

Do you recognize this photo? Have you heard the name Shel Kaphan? Kudos if you have, but before I read this book, I had never heard this name. Well, I can tell you this: he does not get nearly enough credit. He is considered a co-founder of Amazon along with Bezos, and was Amazon’s first technical engineer. After Bezos decided to leave DESCO with his crazy idea, he started to pitch his mission to other tech-savvy coders and engineers, and Kaphan was inspired by the man who believed in the full capabilities and the future of the Internet, and who was determined to build a company around its powers.

The two set off on their adventure, and Bezos converted his garage in his new apartment in Seattle to an office. And here’s a direct quote from Brad Stone: “Bezos built the first two desks out of sixty-dollar blond-wood doors from Home Depot, an endeavor that later carried almost biblical significance at Amazon, like Noah building the ark.” A lot of these early events and stories that the original employees at Amazon experienced continued to carry significance throughout the firm’s growth, and are still important today. For example, early workers Eric and Susan Benson used to bring their dog Rufus, a Welsh corgi, to work. The dog became almost a mascot-like figure at Amazon, like our heart of Spirit at BC, Baldwin the Eagle! Bezos later named a building in Amazon’s Seattle Campus Rufus in memory of Benson’s beloved pet.

Amazon dogs

As the startup slowly developed, Bezos had the direction and goals, and Kaphan was the coder to make it happen. They struggled with choosing a name, and almost settled on the name “Cadabra”. But Jeff wasn’t satisfied with that, and he looked through the A section of the dictionary for a new one. He had an epiphany when he came across the word Amazon: the Earth’s largest river could provide the Earth’s largest selection!

Amazon didn’t start immediately as an everything store. Bezos knew that was just plain impractical. So he started in a category near and dear to his heart: BOOKS. Bezos learned a lot of lessons from the books that he has read, and he took those lessons that inspired him and applied them to forming his company’s corporate culture later on. Bezos was particularly inspired by Sam Walton’s autobiographical masterpiece, Made in America.  Walton founded one of Amazon’s key competitors, Walmart, and Bezos shared many of the same qualities with Walton, including continually searching for new ideas and new ways to improve and innovate.

Made in America

Jeff Bezos’s parents, Jackie and Mike, made a quick $100,000 investment in their son’s company. They believed in their son’s determination and relentless work ethic, and they took a BOLD bet. And BOLD defines Amazon’s first decade, and frankly its entire history. The company would expand past books into toys, jewelry, and more, and the company acquired a myriad of different competitors. One of their most prominent early mottos was “Get Big Fast”. Jeff had fever dreams, and a lot of people, including some of his own employees, thought that he was crazy. He took bets that lead to net losses on just about every quarterly report. But Bezos was NEVER, NEVER worried about the short-term. He always obsessed about the customers and their satisfaction, and he was concerned only with the long-term.

Bezos knew that e-commerce would change the world. He understood earlier than most that there was huge strategic advantages of e-commerce compared to traditional brick-and-mortar retail. He once said: “Great merchants have never had the opportunity to understand their customers in a truly individualized way. E-commerce is going to make that possible”. He enforced in his company that big, cold, hard data is an extremely valuable asset, and could be used to personalize the individual shopping experience, something that brick-and-mortar stores have failed to do successfully.

More data.png

Inevitable Struggles

Throughout its history, Amazon proved to be a firm that was constantly growing at quite a frenetic pace. Always. However, this growth did not come without struggles, and times where people doubted Amazon, and even predicted the firm’s failure. During the dot-com boom, Amazon made many acquisitions that came to be useless. Management boards entered the firm’s hectic growth with no structure and no direction. It was chaos.

And not all of Bezos’s risky capital investment decisions paid off, and cost the firm millions of dollars. “Institutional no” refers to the opposition within the company to Bezos’s ideas and fever dreams, including top executives.

Another enemy appeared on Amazon’s battle to success on Wall Street in 2000: Ravi Suria. Suria, born in India, came to the United States to obtain his MBA from the University of Toledo. He then was hired by Lehman Brothers as a convertible-bond analyst, and often wrote opinion pieces on specific companies. In 2000, one of his first of many articles on Amazon attacked the company. He analyzed their recent quarterly report and their latest offering in the debt market. He called their credit “extremely weak and deteriorating,” and warned all investors to avoid Amazon debt at all costs. He concluded that their heavy losses in the previous holiday season of sales showed that Amazon was in trouble. He even called their distribution methods extremely inefficient. His boldest prediction from this report? “We believe that the company will run out of cash within the next four quarters, unless it manages to pull another financing rabbit out of its rather magical hat.” 

Ravi Suria

His report spread like wildfire on Wall Street. Investors dropped the company’s stock, and they would continue to sell more shares as he wrote more negative pieces about the company in the next eight months. Much of Suria’s analysis was incorrect, and he became a hated figure within Amazon’s offices. Bezos was determined to prove him wrong, and he did just that. The launch of the Kindle shaped the book business and nearly destroyed the publishing business. The company continued to expand into new product offerings in their ever-continuing mission to bring customers incredible selection at everyday low prices. Pricing bots would match the lowest prices of their competitors, and ruthless threats led many companies threatening Amazon’s success in a certain product category to cave and sell their business to the technology conglomerate, including Zappos and Quidsi. Amazon Web Services (AWS), which allows other companies store data through Amazon’s cloud, among other services, quickly became one of Amazon’s most profitable and attractive businesses. Improved distribution mechanisms and efficient fulfillment centers led to the launch of Amazon Prime, which attracted many subscribers. All these bold and calculated bets, among others, brought Amazon to where the firm is today: a fierce competitor that all companies in today’s business world fear and view with caution.

Amazonnnn

The Humble Background of Jeff Bezos

One of the most interesting takeaways from this incredible read was learning about Jeff Bezos’s background, and how it shaped the inspirational leader that he has become today. Today’s CEO of Amazon was actually born Jeffrey Preston Jorgensen. He was born to two parents, Jaclyn (Jackie) Gise and Theodore (Ted) Jorgensen, both in their teens when they had Jeff. Ted was a circus performer and one of Albuquerque’s best unicyclists, but he also had a major drinking problem. They decided to marry, but their marriage was anything but healthy. Jackie’s parents helped take care of the baby when he was in school, and Ted gave Jackie very little help. So, Jackie decided to divorce him and move in with her parents. She eventually remarried a man named Miguel (later changed to Mike) Bezos, who was a Cuban refugee. His parents sent him to Florida to escape when Castro took over, and he spoke not a word of English when arriving. He moved into foster care along with other escapees, and was taught English and the American way of life by a priest, Father James Byrnes. Jackie made sure to change Jeff’s last name to Bezos, and told Ted to stay out of their lives.

Young Jeff

Baby Jeff!

As a side note, a few days ago, Jeff and his wife Jackie recently donated $33 million dollars to DACA students needing scholarship for education in the United States. He cares deeply about immigration, since Miguel had been so successful when given the chance to escape his chaotic country. He is also deeply involved in philanthropy! He believes in the powers of giving, and owns his own charity along with his wife: the Bezos Family Foundation.

fam

Jeff was eventually told that his father was not his biological father, and was so moved. Two other technology icons, Steve Jobs and Larry Ellison, were both adopted. Coincidence? The world may never know.

Jeff was particularly close with his grandfather, Pop Gise. From 4 to 16, he spent summers with his grandparents, and Pop would enlist Jeff’s help in working on the ranch. Pop served in World War II, and tried to teach Jeff the values (many learned during his service) that he held near and dear to his heart. Gise in many ways is considered one of Bezos’s most important mentors in life. According to Stone, “He instilled in Bezos the values of self-reliance and resourcefulness, as well as a visceral distaste for inefficiency”. Those summers on the ranch played a huge role in the man Jeff shaped to be.

Jeff Bezos

As a leader, Bezos tried to instill the values of his business philosophy deep into the corporate culture, hoping that they would have a lasting impact. He is known for having many outbursts of anger within his company, as well as having a piercingly loud laugh. However, he is known to be a loving and caring spouse to MacKenzie Bezos, and a deeply emotional person. Although praise is not often given out by Bezos, and he let many executives leave the company without even an ounce of regret, for others he threw parties and shed many tears, like Rick Dalzell. NO ONE can deny his wisdom. I cannot tell you how many times I cried reading some of his quotes in this book, feeling completely inspired. He never gave up on his dream to build an everything store with so many doubters and haters on his path. But he persevered; he was recently named the richest man in the world. BUT, his wife still drives him to work to this day in a HONDA…he clearly exhibits frugality and being humble in every aspect of his life.

Amazon Studios Golden Globes Celebration

Corporate Culture: Strong or Weak?

Amazon’s corporate culture is absolutely fascinating. Some people seem to thrive in the company’s frenetic growth, while others succumb to the pressure. A lot of employees describe Amazon’s corporate structure as a large corporation that is constantly trying to operate like a startup. Some employees chose to be there due to the hard work, the constant opportunity, the constant change, and the challenges and pressures they face to improve every single day. Some can’t handle it.

Jeff Bezos’s firm repeats many unique customs as well, many of which started in his garage. At every meeting, he leaves a chair open for the symbolic representation of a customer. There are no PowerPoints in meetings, but rather a narrative to read at the beginning, followed by brainstorming, perspective sharing, and often fierce debates. New ideas must be presented in the form of a press release. There are constant performance reviews using cold, hard data. And so much more.

One thing cannot be denied: Amazon’s core values, known as the company’s 14 leadership principles, have shaped the firm from the beginning. I find them quite inspirational, and many employees believe in these traits with utter passion and heart. Check out the picture below to read all 14. The most emphasized will always be customer obsession. These characteristics shape the firm’s recruiting efforts, and hiring managers look for these specific traits when interviewing potential candidates. I hope to exhibit these qualities one day as an Amazon employee!

14 principles

Recommendation: A Definite Must Read!

Brad Stone does an incredible job showing the rise of Amazon. He wrote the book with incredible detail, and his voice gives the novel a refreshing feeling when reading it. Amazon has to be doing something right, and it’s important to learn about ways that arguably one of the most successful companies in history uses technology in an innovative manner to create sustainable competitive advantage. On top of all that, Bezos is a fascinating person to learn about as well, and I’m completely moved and inspired by his story! He didn’t attempt to predict the future; he created it. I also got a few reading recommendations from books that inspired Bezos throughout his adventure, and Stone even provides Bezos’s reading list at the end! Words I can use to describe the masterpiece: thrilling, attention-grabbing, and fun to follow. Do yourselves a favor, and read this book!!

Recommend

4 thoughts on “The Story of Amazon: The Everything Store

  1. I loved the Bezos quote you used in this write-up: “great merchants have never had the opportunity to know their customers in an individualized way.” This is the heart of the Amazon that I see today. My front page is completely different than my roommates and ours both are different than my mom’s. Everyone has their own interests and only a true internet powerhouse could combine so much of our online identity to present us with the products we actually want directly to our faces. One really interesting note is what that individualization means for advertising– Amazon ads are hundreds of times more powerful in purchase conversion than Facebook or Google’s (#2 and #3) because they know what customers actually want to buy, rather than their social likes (FB) or their interests (Google).

    Liked by 1 person

  2. For @geraldckane‘s Social Media and Digital Business class last semester (aka, ISYS6621), I presented on Amazon (specifically, Amazon Prime — I’m sharing with the class tomorrow to demo presentation style). I’m surprised at how much I didn’t know about Amazon and Bezos’s background from reading your summary. Great job!

    Liked by 1 person

  3. Dan, great post! The book sounds really interesting and seems to do a good job describing the history of Amazon, as well as the key people and the company’s culture. It’s interesting that Bezos still runs the company like a startup. I can see why that is a hit or miss for some of the workers. I also like the tidbit about the other founders who were adopted! See you tomorrow!

    Liked by 1 person

  4. Great summary of the book. I read this one while I was on Tech Trek last year, so I think i’ll always associate it with the trip, even though we don’t visit Amazon. I thought it was an interesting take on how he had a grander vision all along, but actually executing that vision took twists and turns along the way. It’s always tempting to look at success stories in Tech as inevitable in hindsight and forget all the right (and wrong) decisions they made along the way.

    Liked by 1 person

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