The Everything Store, Brad Stone
- Substrat: value trumps everything
- character
- continuously looked for flaws in Amazon's systems & culture; saw customer calls as defects (goal: provide self-help tools)
- "I have never seen anyone so calm in the eye of a storm. Ice water runs through his veins."
- stopped 1:1 conversations with subordinates to save time
- continuously battled Institutional No within Amazon
- uses symbolic gestures to make point
- how he confronts people: "Why are you wasting my life?", "Why are you ruining this company?", "I'm already bored", "This is developing too slow. Do you care about this?"
- sticks to well-established, abstract talking points; goofy fun; intensely focused & competitive; not concerned about others' opinions; secretive; disliked celebrating early; gogogo even against internal resistance; ruthless; flexible; combative; impulsive; tough negotiator (argued every point, even low stakes); long-term focused; calculating; abhors consensus; willingness to fail; prefers simple over complex
- spent 7 years at D. E. Shaw, was workaholic (kept sleeping bag in office)
- Amazon "is genuinely customer-centric, long-term oriented and likes to invent"
- high margins justify rival investment in R&D while low margins attract customers & are defensible
- how to be liked at any size: customer-obsessed insufficient, also needs to be inventive explorer/pioneer
- compensation package: industry-average base; signing bonus over 2 ys; restricted stock grant over 4 ys, which is backloaded (5% after y1, 15% y2, then 20% every 6 ms); managers in 50+ departments must dismiss least effective performers every year
- biannual operating reviews (OP1 & OP2): teams present 6 page memos for year-ahead planning
- scrapes competitor prices and matches them continuously
- in dotcom era, Amazon had iconic ads; later, stopped all advertising to focus on price/experience
- during dotcom boom Amazon spent $2.2 bn on acquisitions, which mostly failed; resulted in building culture
- Prime criticised internally, obvious success only after years (!); company experienced massive exodus of talent in 2002/03, Bezos never wavered
- in 2000s Bezos internalised open-source ethos & wanted to open up APIs to developers; developers became 3rd constituency after customers & 3rd party sellers (critical step towards AWS); wanted to breake infrastructure down to simple, flexible atomic components (EC2 & S3 were 2 primitives as compute & storage); considered web infrastructure as utility like electricity
- Kindle (V1 released in 11/2007 after 3 year development) because Amazon late in digital (iPod took large part of analog music business); quickly owned 90% of ebook market (lost ground with iPad, etc.); ebook price at $9.99 (against publishers), often at loss for Amazon
- "We are the 'Unstore'": traditional retail rules didn't apply; limitless shelf space & personalisation
- competitors already existed that sold books (e.g. Books.com); Cadabra Inc. incorporated in July 1994; Amazon.com registered in November 1994; site go-live on July 16 1995 (1st week: 12 k $ orders but only 846 $ shipped; 2nd week: 14 k $ orders & 7 k $ shipped; i.e. behind from the get-go; week after launch, Yahoo founders asked whether Amazon wanted to be featured);
- Bezos was first backer with 10 k $ investment + 84 k $ loan, his parents invested 100 k $ + 145 k $; he always thought about raising money;
- KPCB invested $8m at $60m valuation, Bezos' condition: Doerr joins board; transformative for Bezos: explosion of ambitions & expansion plans
- first phase was "pre-startup": page was still being developed, moderate urgency
- beginning of 1996 had MoM revenue growth 30-40%
- at small scale: company-wide slogans to give direction ("Get Big Fast", "Get Our House in Order")
- IPO wasn't necessary financially but Bezos wanted publicity (global branding event); at the time, he took every opportunity to appear in public; at roadshow withheld KPIs to hide data from competitors
- lucrative negative operating cycle: customers paid immediately, settlement with publishers only every few months
- Amazon succeeded because large competitors (Walmart, Barnes & Noble, ...) didn't put full effort behind digital efforts (best employees worked in core profit areas; conflicting priorities); Walmart eventually started online price war, but 10 years too late
- first letter to public shareholders in 1998 (4 years after founding!)
- 5 core values: customer obsession, frugality, bias for action, ownership, high bar for talent; later added innovation
- for the release of Harry Potter 4, Amazon offered 40% discount & express delivery (they lost money on each sale !; executives didn't agree with the promotion)
- frugality: made employees pay for parking/snacks; hell-bent on not collecting sales tax
- Zappos: Hsieh felt strongly that everyone (including senior mgmt.) should take below-market compensation because of great internal culture
- D. E. Shaw
- at D. E. Shaw, employees were mandated to use the same description of the mission: "trade stocks, bonds, furtures, options and various other financial instruments"
- D. E. Shaw didn't see itself as hedge fund but versatile technology laboratory (Amazon didn't see itself as online retailer but technology company)
- Alan Kay: "point of view is worth 80 IQ points"
- recruiting:
- for years, he interviewed all potential hires himself
- whoever asked for harmonious work-life balance was rejected
- ask random abstract questions ("How many fax machines are in the US?", "How many gas stations are in the US?")
- one of 4 opinions: strong no hire, inclined not to hire, inclined to hire, strong hire
- looked for versatile "athletes" who could move fast and get big things done; should raise bar for next hire
- job description from 21.08.1994: "Well-capitalized start-up seeks extremely talented
C/C++/Unix developers to help pioneer commerce on the Internet. You must have experience
designing and building large and complex (yet maintainable) systems, and you should be
able to do so in about one-third the time that most competent people think possible.
You should have a BS, MS, or PhD in Computer Science or the equivalent. Top-noth
communication skills are essential. Familiarity with web servers and HTML would be
helpful but is not necessary.
Expect talented, motivated, intense, and interesting co-workers. Must be willing to relocate to the Seattle area (we will help cover moving costs).
Your compensation will include meaningful equity ownership." - Microsoft: designated senior interviewer to interview candidate last & make final judgment to ensure high quality; Amazon did it via Bar Raiser
- missionary vs. mercenary companies; to Bezos Amazon was missionary company
