They then execute it with dogged determination and boldness. When recruiting, he loops in the families of executives, like writing a CFO candidate and his wife a 2-page letter about the impact they could make at this juncture for the Internet. Bezos thinks that big meetings are unproductive and likes to replicate Darwinian principles of survival between small teams. Given the bad environment to come, this provides a needed cushion that might have helped Amazon avoid bankruptcy. “Thinking small is a self-fulfilling prophecy. Why? Bezos projects $74 million in sales by 2000 if things go moderately well (actual sales in 2000: $1.64 billion). 16 min read MicroSummary: At the moment, “The Everything Store” is the closest thing we have to a biography of the richest person in the world, Jeff Bezos. The Marketplace is held in constant competitive tension. Amazon CFO: “How much money do you want to spend on this?” Bezos: “How much do you have?”. In its darkest times, detractors repeatedly predicted it would go bankrupt, that titans like Walmart would easily crush it, and that it would be out-executed by tech darlings like eBay and Google. “Leaders start with the customer and work backwards. Bezos loses two lieutenants: Jeff Holden, SVP of worldwide discovery, runs a secret search engine effort competing against A9. Employees remember kitchen knives flying down the conveyor chutes. w, representing the world wide web, is growing exponentially and eclipsing all other protocols.). Many decisions and actions are reversible and do not need extensive study. Hsieh believes that everyone should take below-market compensation to work at Zappos because of the great internal culture. Retailers have to predict in advance what the next holiday’s top toys will be, since most sales occur within a 6-week period. Many are tired of Bezos’s insistence on work ethic. These are employees who have proven themselves to be intuitive recruiters of talent. They think differently and look around corners for ways to serve customers.”. The fascinating story of the rise of Amazon, which is the story of Jeff Bezos himself. It all began in 2002 when O’Reilly and other publishers had a need to track their book rankings on Amazon. March 2006: Amazon relaunches Amazon Web Services, this time offering S3, SQS, and EC2. Shaw & Co back in the early nineties. Once a week on Tuesday, departments meet with managers to review data. The online store got its current name after Bezos pored through a dictionary and found the word Amazon. The Web, he notes, is the ultimate word-of-mouth medium: ‘If someone thinks they are being mistreated by us, they won't tell five people -- they'll tell 5,000.’ “. She soon meets Miguel Bezos, a Cuban emigrant, working at the Bank of New Mexico. Throughout the historical narrative, the book also discusses company values that Jeff Bezos tirelessly emphasized to his team. I hoped that The Everything Store ... I’ll try to combine this book summary with a miniature stock analysis so that the book’s insights are put in context. Previously, Super Saver Shipping allowed users to self-identify as less time-sensitive customers. May 15, 1997: Amazon IPOs, raising $54 million at a starting price of $18 per share. Google also competes with Amazon for talent, offering lavish perks and stock options. 1989: Bezos spends a few months on a venture sending a customized newsletter to people over fax machine. The book covers the book roughly chronologically, going out of sequence to group themes together into chapters, such as its culture and innovation problems in the early 2000s and its acquisitions in mid-2000s. A9.com licenses the Google search index but builds features on top of it. Similarly, electronics proves more difficult; manufacturers view Internet sellers warily as likely to discount their products. Since Amazon’s founding, Bezos has put emphasis on acting rather than overanalyzing. Then they were forced to comply with the lower digital price eventually. Bezos often has passionate aha moments where his blood vessels are pulsing, and his face turns red. Another contributor to the failure is NuvoMedia selling to Gemstar, which had little interest in developing the devices. Stretching the limits of autonomy, Bezos challenged teams to propose its own “fitness function,” a linear combination of metrics that showed its value generation. Things Can Be Better. They want to work on things that will pay dividends in two or three years, and if they don’t work in two or three years they will move on to something else. Even among groundbreaking technology companies, Amazon is lauded for its continuous innovation and breakthrough ideas. No partnership is made, but Bezos initiates a secret auctions project to replicate eBay in three months. In colder climates, company managers skimped on the installation of air-conditioning in the fulfillment centers and instead used protocols to deal with heat waves. The points below extend back and forward a few years. Bezos insists that employees don’t use PowerPoint decks or slides in company meetings. The next week they take $14,000 in orders and ship $7,000 worth of books. Endless offers free overnight shipping and free returns, clearly losing money but designed to make Zappos bleed. Teams draw up 6-page documents spelling out their plans for the year ahead. They found it after 3 stressful days. And then let them interact and create complex, surprising behavior. They are externally aware, look for new ideas from everywhere, and are not limited by ‘not invented here.’ As we do new things, we accept that we may be misunderstood for long periods of time.”. The Everything Store is a history of online seller of (nearly) everything, Amazon.com (which, as author Brad Stone notes, only recently moved to calling and presenting itself simply as 'Amazon', dropping the '.com'), published before the company even hits the two-decade mark. Customers can return items up to a year after the purchase. Upon graduating from Princeton in 1986, Bezos worked for a pair of Columbia professors at a company that developed a private transatlantic computer network for stock traders called Fitel. Unfortunately, Galli is largely a failure. They also discuss the “everything store” - an intermediary between customers and manufacturers that sells every type of product worldwide, with unlimited shelf space on the Web. January 2011: Amazon acquires Lovefilm for around $300 million. **June 2000: Ravi Suria at Lehman Brothers... March 2001: Amazon considers whether distribution is a commodity or a core competency. He was a remarkable employee. Operating reviews are done twice a year, over the summer and after the holiday season. Amazon maxes out its line of credit and has no processes to handle returns. Another motivation for developing an e-reader: In 2003, Apple introduces the iTunes music store, which catapults past Tower Records, Amazon, and Walmart to become the top music retailer in the US. The “everything store” has to start somewhere, so Bezos investigates 20 possible product categories, including software, office supplies, apparel music. Bezos keeps mum on some details, like customer acquisition cost and average purchase order, to prevent rivals from following their game plan. The editorial team is made obsolete by the automated personalization team (team name: P13N, for PersonalizatioN’s 13 letters). Bezos knows this changed customers’ behavior, motivating them to place larger orders and shop in new categories. Amazon could now reach customers around the country for nearly no cost, and it used its massive customer relationship to exert unprecedented leverage over suppliers.). It believes that if it can build a service that is good enough to satisfy internal Amazon demands, it’ll be good enough for the outside public. If [humans] think long term, we can accomplish things that we wouldn’t otherwise accomplish.” In other words, Bezos believes that the human species should think in the long term and that the clock can deliver such a powerful message. Recall that shoe manufacturers were wary of working with Amazon, fearing that they would ruthlessly discount their shoes. Andy Jassy, Harvard MBA and anomalously not an engineer, leads the effort. It resembled what he envisioned, earth’s largest river — > Earth’s largest bookstore. eBay’s business model is strong, taking commissions for each sale but none of the hassle of inventory and sending packages. When a user gets an embarrassing email about sex lubricant, Bezos is willing to shut down the entire profitable email channel. Jim Collins (author of Good to Great) meets with the exec team offsite and prompts them to consider their flywheel effect: January 2002: Amazon announces Free Super Saver Shipping, for orders above $99. Amazon adds a $5 bonus to free overnight shipping. Very few companies have all of those three elements.”, Bezos: “Physically, I’m a chicken. Grand wrote that his approach to AI was to focus on designing simple computational building blocks called primitives. Copyright © 2020 ShortForm™ | All Rights Reserved, This is a preview of the Shortform book summary of, Wall Street Journal features Amazon on its front page, Steve Yegge’s famous post about platforms. The book also covers a number of Amazon and Bezos’s management techniques. Author Brad Stone argues that AWS “helped lift the entire technology industry out of a prolonged post-dot-com malaise” and that it enlarged the scope of Amazon’s everything store concept. The two-pizza rule is a quirk at Amazon, implying that no team should have more members than can be fed with two pizzas in late working hours. “, Learning this makes Bezos articulate a clearer strategy: “, In July 2001, Amazon announces it’s cutting prices of books, music, and videos by 20-30%. When hiring Walmart distribution exec Jimmy Wright in 1998, Bezos wanted a distribution system 10x larger than it currently was, not just in the US but also the UK and Germany. Amazon raises over $1 billion at the height of the dotcom bubble and spends on acquisitions and investments. And Amazon and eBay now compete for Google search ads, effectively paying a tax to Google. June 1965: Jacklyn Gise files for divorce after Jorgensen is unable to hold a job and is an inattentive father. Around 2003 Bezos stopped having 1-on-1 meetings with his reports, thinking these are more often filled with trivial updates and politics rather than brainstorming and problem solving. He set a flat price of $9.99 for the digital versions of books, following his gut’s call and Apple’s successful ninety-nine-cent price tag for digital files on iTunes. Brad Stone: “the future of [Amazon] becomes easy to predict. End of 1998: Amazon has $610 million in revenue, up from $148 million in 1997 and $16 million in 1996. June 1996: Amazon raises $8 million from Kleiner Perkins and John Doerr at a valuation of $60 million. About the book… • The Everything Store: Jeff Bezos and the Age of Amazon is authored by Brad Stone. Udi Manber, algorithm expert, leads this charge. But its visionary founder, Jeff Bezos, wasn't content with being a bookseller. He wanted a system that. Instead, he told them that communication is a sign of dysfunction. Once the companies are weak, Amazon swoops in to acquire them, winning the war. First, they had to find a way to digitalize a great percentage of their books. Employees should be organized into autonomous groups of fewer than ten people, such that they could be fed with two pizzas. The Everything Store: Jeff Bezos and the Age of Amazon by Brad Stone Book Summary Readtrepreneur (Disclaimer: This is NOT the original book, but an unofficial summary.) Instead of improving communication, the focus should be to figure out how to communicate less with each other, not more. Which one do you think will sell more books?”. Bezos would then personally approve each equation and track each team’s evolution over time. They have a 200-square-foot basement “warehouse.”. Said a classmate: “Jeff decided he wanted it and he worked harder than anybody else.”, His curiosity and work ethic take him to a variety of jobs: at McDonald’s, breeding hamsters for a neighbor, and starting a summer school for 10-year-olds exploring science to use “new ways of thinking in old areas.”. The Everything Store: Top 5 Jeff Bezos quotes about customers and customer retention: “If you want to get to the trust about what makes us different, it’s this. The cultures between the two companies are somewhat similar. Barnes & Noble’s Nook and Apple’s iBookstore eat into Amazon’s e-book share, causing it to fall from 90% in 2010 to 60% in 2012. Typical critical viewpoints are represented by Barron’s “amazon.bomb” article: (Shortform note: the story, as we know now in insight, is that, But these legitimate questions illustrate how difficult it is to foresee the future.). Outpace Amazon’s dozen, and then starts trending down gatekeepers from the very beginning, it Jeff. 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