Summary - The Everything Store: Jeff Bezos and the Age of Amazon -  Brad Stone

Summary - The Everything Store: Jeff Bezos and the Age of Amazon - Brad Stone

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  • In the 1970s, an advertising executive named Julie Ray wrote a book profiling an innovative school program for gifted children in Houston, Texas. One of the students she featured was a precocious sixth-grader named Jeff Bezos. Teachers praised his intellect and creativity. Bezos showed Ray some of his projects, including an infinity cube he had built.

  • More than 30 years later, Brad Stone, the author, visited Bezos at Amazon**’s headquarters in Seattle. Stone wanted to write a book chronicling Amazon’**s emergence as a technology powerhouse. Amazon started as an online bookseller but now sells almost everything and has annual revenue of over **$**60 billion.

  • Amazon is both loved and feared. It offers convenience and a huge selection, delivering many items quickly. But it has hurt traditional retailers. The term “to be Amazoned” means to lose business to Amazon.

  • Amazon has reinvented itself several times. It started selling books, then added music, movies and more. It became a platform for other sellers. Then it added cloud computing and devices like the Kindle.

  • Jeff Bezos, Amazon**’s founder and CEO, drove the company’**s vision. Despite losses and skepticism, Bezos persevered. Investors have patience with Bezos’ long-term strategy. Bezos aims to build Amazon for the future.

  • Amazon remains a puzzling company. Its bottom line is weak but its stock price is high. Investors believe in Bezos’ vision.

  • Jeff Bezos is the founder and CEO of Amazon. He is an extremely driven and demanding leader with ambitious visions for the company.

  • Bezos is very strategic and competitive. He takes a long-term view of business opportunities and is ruthless against competitors. However, he believes there is room for many winners in the markets Amazon competes in.

  • Bezos is a very private person and rarely gives interviews. He is cautious about sharing details on Amazon**'s plans and strategies. Even people close to him don**'t fully understand him.

  • Bezos has an eccentric management style. He hates PowerPoint presentations and prefers six-page narratives. Meetings at Amazon begin with everyone reading proposals in silence.

  • Bezos has an unusual, boisterous laugh that he often uses to unnerve people. His laugh is somewhat of a mystery and seems mismatched with his serious personality.

  • There is some awkwardness around a book on Amazon**'**s history being published by a company that has had antitrust litigation with Amazon. However, Bezos believes "the future is happening to the book business."

  • Bezos is fully engaged in conversations but sticks to abstract talking points. Some of his favorite phrases are "we are genuinely customer-centric" and "we start with the customer and work backwards."

  • Bezos has transformed himself physically in the same way he transformed Amazon. He used to seem out of shape but now appears very fit. His shaved head gives him a sleek, determined look.

  • Bezos admires iconic CEOs like Steve Jobs and believes Amazon**'**s story could be told in a similar manner. However, he is aware of the challenges in writing about Amazon objectively.

In summary, Jeff Bezos is an enigmatic yet visionary leader who built Amazon into a formidable powerhouse. He is demanding, competitive, and private but also genuinely passionate about serving customers. His unusual style and abstract philosophies have shaped Amazon**'**s culture and business model.

David Shaw founded **D.**E. Shaw & Co. in 1988. It was a quantitative hedge fund that used sophisticated computer programs and mathematical models to exploit small price discrepancies in global financial markets.

Shaw recruited scientists, mathematicians, and technologists to build computer systems for automated trading. The company was very secretive about its trading algorithms and strategies.

Jeff Bezos joined **D.**E. Shaw in 1990 as a vice president, when he was 29 years old. He had worked on Wall Street for several years and was regarded as intelligent, determined, and able to solve complex problems.

Bezos started his career working for companies developing private computer networks for stock trading. He was known for his work ethic, ability to get things done, and not caring much what other people thought.

By 1991, **D.**E. Shaw had grown rapidly and moved into new offices near Times Square in New York City. Jeff Bezos attended a fund-raiser there for Bill Clinton and got his photo taken with the future president.

The key elements are: D.E. Shaw’s secrecy and use of science/math**/technology; Jeff Bezos’**s intelligence, determination, and pragmatism; and the emergence of automated trading using sophisticated computer systems in the late 1980s. The experience at **D.**E. Shaw gave Bezos exposure to figuring out how to apply technology to new problems.

Does this summary accurately reflect the key details and themes around Jeff Bezos, **D.**E. Shaw, and the context of automated trading in the late 1980s and early 1990s? Let me know if you would like me to clarify or expand the summary in any way.

  • Jeff Bezos worked as a vice president at D. E. Shaw & Co, a hedge fund company, in the early 1990s.

  • Bezos admired several entrepreneurs and studied them closely, including Frank Meeks who owned Domino**'**s Pizza franchises and Alan Kay, a pioneering computer scientist. Bezos approached everything in a very analytical and methodical manner.

  • D. E. Shaw & Co. had a casual work culture where employees wore casual clothes. Bezos exhibited many of the qualities that would later define him as CEO of Amazon, including his excitement, memorable laugh, and habit of recording ideas in a notebook. He spent a lot of time at work and even kept a sleeping bag in his office.

  • D. E. Shaw & Co. recruited very selectively from top colleges and put candidates through a grueling interview process. Bezos would later adopt similar hiring practices at Amazon.

  • Bezos met his wife, MacKenzie Tuttle, at D. E. Shaw & Co., where she worked as an administrative assistant. They had an expedited courtship, getting engaged after three months of dating and married three months after that.

  • Although D. E. Shaw & Co. was seen from the outside as a secretive hedge fund, internally it viewed itself more as a technology laboratory. When the Internet began to emerge in the early 1990s, David Shaw believed the company was well-positioned to take advantage of it. He tasked Bezos with spearheading new Internet-based business ideas.

  • Some early ideas that emerged from Bezos and Shaw**'**s discussions included a free, ad-supported email service (which became Juno and NetZero) and online stock trading (which became FarSight Financial Services, later sold to Merrill Lynch). They also discussed the idea of "the everything store" - an online store that would sell a wide range of goods.

  • Bezos would leave D. E. Shaw & Co. in 1994 to found Amazon, the everything store, though the early ideas likely germinated from discussions with David Shaw and colleagues at the hedge fund.

Jeff Bezos was intrigued by the rapid growth of the Internet and e-commerce in the early 1990s. He came across some statistics showing that web activity and traffic were doubling every few months. This exponential growth convinced him that the Internet could be a hugely transformative technology.

Bezos decided he wanted to start an online retail company to take advantage of the Internet, but realized that atrue everything store” was unrealistic at the start. He made a list of 20 product categories to consider, and ultimately settled on books as the best option. Books were commoditized, with identical versions available from multiple suppliers. There were also millions of book titles in print, far more than any physical bookstore could stock. So an online bookstore could provide an extensive selection that matched the diversity of books available.

Bezos decided to leave his high-paying job at **D.**E. Shaw to start the company. His boss David Shaw suggested taking a walk to discuss the idea. Shaw understood Bezos’ entrepreneurial ambitions but warned him that leaving was risky and that D.E. Shaw might end up competing with his new venture. Bezos thought about it and decided he didn’t want to regret not pursuing this opportunity. Using what he called aregret-minimization framework,” the choice became clear.

Bezos’ parents were initially shocked that he would leave his Wall Street job to sell books online. But Bezos was determined to move quickly. He began planning to start the company. He met with programmers Shel Kaphan and Jeff Holden, who were interested in joining the new venture. Kaphan met with Bezos and was excited by the possibilities of the Internet. Holden wanted to join as well, but Bezos warned him it was risky and to build up his net worth first.

Bezos and his wife MacKenzie then packed up their belongings and started driving cross**-coun**try to find a location for the headquarters of their new company, Cadabra. Bezos typed in revenue projections into a spreadsheet along the way, though these early numbers proved to be quite inaccurate.

  • Initially, the company was named Cadabra but they changed it to Amazon later that summer after a lawyer pointed out that Cadabra sounded like “cadaver” over the phone.

  • Bezos chose Seattle to start the company because Washington state did not have a state income tax and the area had a good technology talent pool. Local businessman Nick Hanauer urged Bezos to consider Seattle and later introduced him to potential investors.

  • Shel Kaphan, a computer engineer from California, joined as a founding employee. He helped build the company**’**s first website and had initial doubts about its success but was inspired by its potential to fulfill the vision of the Whole Earth Catalog.

  • At first, the company operated out of Bezos’ garage. Bezos and Kaphan built desks out of wooden doors. Bezos took a course on bookselling and Kaphan started building the website.

  • Bezos’ parents invested $100,000 in the company in 1995. Bezos told them there was a 70% chance they could lose their money but he still wanted to come home for Thanksgiving.

  • MacKenzie Bezos, Jeff**’s wife, handled the company’**s finances and payroll in the early days. The employees would go to the nearby Barnes & Noble for coffee and meetings.

  • They hired Paul Davis, a British programmer, who joined them in the garage. The servers they used repeatedly blew fuses in the house, forcing them to run extension cords to different circuits.

  • Initially, they were not in a hurry and even took a day off to go hiking at Mount Rainier. But soon, the pace intensified as the website launched.

  • Jeff Bezos, Shel Kaphan, and Paul Davis founded Amazon in 1994. They worked out of Bezos’ garage in Bellevue, Washington.

  • They wanted to create an online bookstore better than existing ones like They spent a few months developing a primitive beta website.

  • Bezos renamed the company Amazon in late 1994 after looking through the dictionary. He liked that the Amazon is the largest river, and he envisioned Amazon as the largest bookstore.

  • In 1995, Bezos and Kaphan sent the beta website to a few dozen friends and family to test. It offered about one million book titles and discounts up to 40**%** off list prices.

  • At first, Amazon didn’t hold any inventory. They ordered books from distributors only after customers placed orders. Deliveries took up to a month. To meet distributors**’** 10-book minimum order requirement, they ordered obscure books they knew were out of stock.

  • Kaphan added customer reviews to the site in June 1995. Bezos wanted Amazon to have more reviews than any other site. Employees and friends wrote many early reviews.

  • The site officially launched in July 1995. They immediately got orders for a wide range of books, showing the potential of the “long tail.” The employees had to help pack and ship orders to keep up.

  • The packing work was difficult and time-consuming. Nicholas Lovejoy, a former colleague, joined part-time and suggested Amazon hold inventory so they could pack more efficiently. Bezos agreed.

  • Amazon relocated to a 2600-square-foot office and warehouse space later in 1995. Bezos left his job at **D.**E. Shaw to run Amazon full-time.

So in summary, Amazon started small but grew quickly after launching their website. They learned from both the challenges of packing and shipping orders and the diversity of orders that holding inventory and expanding their operations would be keys to success. Within a year, the company had outgrown Bezos’ garage and he had left his hedge fund job to focus on Amazon full-time.

  • Jeff Bezos and his employees were overwhelmed with orders in the first weeks after launching They were working long hours and struggling to keep up with demand.

  • Bezos wanted to hire the smartest people he could find, just like he had learned from David Shaw at **D.**E. Shaw. He tapped Nick Lovejoy, a friend from D.E. Shaw, to help recruit. Lovejoy brought in four friends, including Laurel Canan, to help build packing tables and work in the warehouse. Canan gave up coffee for the job, saying "You can't do a job like that on caffeine. You have to do it on carbs.”

  • A week after launching, Yahoo featured Amazon on its homepage, exposing Amazon to many new potential customers. Amazon**'**s business grew quickly but chaotically. They were constantly behind on orders and maxing out their line of credit.

  • In 1995, Netscape**'s IPO brought mainstream attention to the Internet and e-commerce. Around the same time, Bezos was raising money from investors to fund Amazon'**s growth. He pitched a **$6 million valuation to investors despite Amazon'**s losses and unclear path to profitability. Many investors passed, but some, like Eric Dillon and Bob Gelfond, bet on Bezos and the potential of e-commerce.

  • Bezos originally didn't want to hire Nick Lovejoy full-time, envisioning a culture where employees worked long hours to build the company. Lovejoy pleaded his case, and Bezos eventually agreed to hire him full-time after Lovejoy**'s friends and co-work**ers advocated for him.

  • In summary, Amazon**'s early days were defined by rapid growth, constant challenges, and Bezos'**s vision for building a successful company with highly dedicated employees. Through persistence, Bezos was able to raise enough money from investors to keep the company going despite little evidence it would eventually turn a profit.

Jeff Bezos was meticulous about hiring only the best and brightest for Amazon. He personally interviewed all potential hires and focused on their problem-solving abilities. He wanted each new hire to raise the bar for future hires.

Bezos**’s high standards and improbable questions caused friction. The company badly needed more employees but Bezos rejected many candidates. His standards and low pay made it hard to attract good candidates. Some early employees thought Bezoss ambitions were unrealistic given Amazon’**s small size and lack of revenue.

By early 1996, Amazon**’**s rapid growth required frequent moves to larger office spaces. One early employee, Paul Davis, left due to the demanding pace and low pay. Bezos had Davis smash an old computer terminal with a sledgehammer to commemorate his departure.

In 1996, a Wall Street Journal article introduced Amazon to the world. Traffic and orders doubled. Amazon used new funding to hire more staff and build editorial and technical teams. The editorial team gave the site a literary voice and built trust. The Associates program let other sites earn commissions for referrals to Amazon.

Bezos sought venture funding and got competing offers. Kleiner Perkins invested **$**8 million, valuing Amazon at **$60 million. Bezos chose Kleiner for its reputation and got John Doerr, a Kleiner partner, on Amazons board. Doerr’**s enthusiasm and the startup funding environment led Bezos to think much bigger.

In summary, 1996 was a year of rapid growth and evolution for Amazon. New funding and exposure let Bezos scale the company and build key teams. Bezos**’s demanding standards and vision drove a relentless pace of work. Doerr’**s support and the startup bubble encouraged Bezos to have even greater ambitions for Amazon.

  • Jeff Bezos**’**s ambition and vision expanded dramatically after raising a large amount of capital from Kleiner Perkins. Bezos aimed to build a lasting Internet company, not just an online bookstore.

  • Bezos preached the motto “Get Big Fast,” believing that rapid growth was essential to dominate the market and gain a competitive advantage. This required employees to work extremely hard.

  • The company and workforce grew quickly. The warehouse team was an eclectic group that worked long hours to fulfill customer orders. One employee, Christopher Smith, worked so hard that he forgot about his car for eight months.

  • The company moved into a larger warehouse and new office space, though the office space was in a run-down area of downtown Seattle filled with strip clubs and other seedy establishments.

  • The company focused on customizing the site for each visitor. Their first attempt, Bookmatch, failed, but a second attempt, Similarities, succeeded and significantly increased sales. Bezos saw personalized recommendations as an advantage of e-commerce over physical stores.

  • Shel Kaphan, Amazon**’**s first employee, thoroughly enjoyed helping build the company in its early years. Though he worried Bezos might replace him as the company grew, Bezos assured him his job was secure.

  • In 1997, new executives like Mark Breier joined the company. At a meeting at Breier**’s house, employees played “broomball,” demonstrating the company’**s competitive intensity in a silly activity.

Jeff Bezos hired Joe Breier from Electromagnetic Data Systems as VP of marketing. Breier introduced broomball as a team-building exercise at Amazon, and Jeff Bezos occasionally participated. However, Breier only lasted about a year as Bezos wanted to constantly reinvent marketing.

Bezos began recruiting experienced executives to help take Amazon public, including people from Microsoft and Barnes & Noble. Two key hires were CFO Joy Covey and retail head David Risher. They helped Bezos plan an IPO to raise Amazon**'**s profile and compete with Barnes & Noble.

Barnes & Noble**'**s CEO Len Riggio saw Amazon as a threat and offered to acquire or partner with them. But Bezos and investor Tom Alberg declined, believing Amazon could triumph as a disruptor. So Barnes & Noble started their own website to compete.

Amazon chose Deutsche Bank and Frank Quattrone to lead their IPO. Bezos and Covey pitched investors on Amazon**'**s business model, including its negative operating cycle and high return on investment due to low costs and infrastructure.

The summary covers some key events in Amazon**'**s early history, including executive changes, competition with Barnes & Noble, and preparing for an IPO. A few lighthearted details, like Bezos playing broomball and tearing his shirt, provide color to the overall narrative.

Jeff Bezos took Amazon public through an IPO in May 1997. The process was difficult because Bezos had to remain silent for weeks due to SEC regulations. The IPO raised **$**54 million for Amazon.

Barnes & Noble sued Amazon for false advertising just before the IPO and launched their own website to compete with Amazon. However, Barnes & Noble struggled to effectively compete online. Amazon eventually surpassed them by expanding into other product categories.

Rick Dalzell, a former Walmart executive, joined Amazon as Chief Information Officer in August 1997 after repeated recruiting efforts by Jeff Bezos and Joy Covey. Dalzell brought valuable management and engineering experience that helped Amazon scale. His arrival increased tensions with Shel Kaphan, Amazon**’**s first employee and CTO.

Kaphan felt marginalized by Dalzell**'s appointment and Bezos’**s decision to make Dalzell a key member of the J Team. Kaphan believed technical decisions were being made without his input. His time at Amazon was coming to an end.

Amazon**'s IPO and the addition of Dalzell propelled the company to 900%** revenue growth in 1997. Bezos and early investors became very wealthy, though Bezos urged employees not to focus too much on the stock price.

To celebrate the IPO, Frank Quattrone and Deutsche Bank took key Amazon executives including Bezos, his family, and Joy Covey on an all-expenses paid trip to Mexico. The celebration showed Bezos**’**s close relationship with Quattrone and Deutsche Bank.

That covers the key highlights from the summary on Amazon**’**s IPO, competition with Barnes & Noble, Rick Dalzell joining the company, and resulting tensions with Shel Kaphan.

  • In early 1997, Jeff Bezos spoke at Harvard Business School. Most students thought Amazon was unlikely to survive competition from established retailers moving online. Bezos acknowledged the risks but thought the students were underestimating the challenges traditional companies face in adapting to the Internet.

  • On the drive to the airport, Bezos interviewed Brian Birtwistle, a student from the class, for a job at Amazon. Bezos enthusiastically shared his vision that while many Internet companies would fail, Amazon would become an enduring brand. He also asked Birtwistle brainteaser questions, like why manhole covers are round.

  • In 1998, a survey showed most consumers were unlikely to start shopping at Amazon. Bezos tasked recent Harvard MBAs, including Birtwistle and others, with researching new product categories for Amazon to expand into. They looked at areas with many product options that were underserved by physical stores and could be shipped easily.

  • The MBAs found music and DVDs as the top expansion targets. Although expanding beyond books made some early employees uncomfortable, Bezos believed diversifying Amazon**’**s offerings and increasing sales were necessary to generate enough returns to stay ahead of competitors. Some executives said Bezos had always planned to expand beyond books but was waiting for the right time.

  • The mission now became more comprehensive, shifting from creating a literary hub on the Web to something broader, like Richard Branson**’s Virgin brand. The motto on a sign at Amazons office changed from “Earths Biggest Bookstore” to “Earth’**s Biggest Selection.”

The key points are:

  1. Bezos was determined to make Amazon an enduring Internet brand despite risks and skeptics.

  2. Bezos tasked recent MBAs with finding new product areas for Amazon to expand into in order to increase sales and diversify.

  3. Music and DVDs were chosen as the first areas for expansion, marking a shift to a more comprehensive mission beyond just books.

  4. Some saw the expansion into new areas as inevitable to generate enough returns to invest in growth, while others were initially uncomfortable moving beyond books.

  • In the late 1990s, Amazon aggressively expanded by raising billions of dollars in junk-bond and convertible debt offerings. Investors were eager to buy into the hype around Internet companies.

  • Amazon spent much of the money on acquisitions, opening new distribution centers, and investing in other startups. Many of the acquisitions and investments failed or did not significantly help Amazon**’**s core business. However, Bezos remained bold and undeterred by setbacks.

  • Bezos believed Amazon was undervalued and that the world did not understand its potential. He focused on long-term growth and gaining market leadership over short-term profits. He reiterated this philosophy in letters to shareholders.

  • Amazon started by paying large sums to become the exclusive bookseller on major Internet portals like AOL and Yahoo. Bezos refused to give the portals equity stakes but got them to provide links to Amazon.

  • Bezos enforced strict cost-cutting measures but also invested heavily in risky ventures. He went on an “epic shopping spree,” acquiring many companies in a short time. Most executives from the acquired companies left quickly.

  • Amazon invested hundreds of millions in dot-com startups, most of which failed. Bezos and other executives thought Amazon had the “bandwidth” to help the startups but were mistaken. Employees saw the expansion as either leading to huge success or failure.

  • Bezos began hiring more executives from Walmart as Amazon grew. These executives had experience in large-scale operations that Bezos wanted to build.

In summary, in the late 1990s, Amazon aggressively expanded into new areas through acquisitions and investments but failed in many ventures. However, Bezos**’s bold vision and tolerance for risk allowed the company to grow rapidly and gain market leadership during this period. His appetite for scale and long-term thinking attracted executives from major companies like Walmart. Despite many setbacks, Bezos pushed ahead believing in Amazon’**s potential.

Jeff Bezos wanted to rapidly expand Amazon**'s distribution and delivery capabilities to keep up with the company'**s fast growth.

He recruited Jimmy Wright, a Walmart distribution expert, and gave him free rein to build new distribution centers. Wright built or retrofitted warehouses across the **U.S. that were highly automated to handle Amazon'**s increasing volume.

Many Walmart employees followed Wright to Amazon, causing tension with the existing Amazon staff. Walmart even sued Amazon over this staff poaching. However, Bezos aimed to emulate Walmart**'**s logistical excellence.

Bezos was obsessed with constant improvement and coming up with new ideas to improve Amazon. One idea was to rank all products on the site by sales, not just the top 100. This "sales rank" feature became popular with authors and publishers.

Another Bezos idea was "1-Click ordering," which stored customer information to enable one-click purchases. Critics argued this patented idea was too basic to patent but it helped Amazon gain a competitive advantage.

In summary, Bezos**'s relentless drive for innovation, recruitment of logistical experts, and quest for frictionless customer experience fueled Amazon'**s success. His vision was key to overcoming the many challenges of building an online retailer in the late 1990s.

  • Jeff Bezos saw eBay as a threat to Amazon**'**s dominance as the online shopping destination of choice. Although Amazon was focused on providing a large selection of goods for sale at a fixed price, eBay pioneered person-to-person virtual commerce through auctions.

  • Bezos invited eBay**'s founders to Seattle in 1998 to discuss a potential partnership or investment. The meetings did not lead to a deal, but Bezos became more concerned about eBay'**s rapidly growing sales and profits.

  • In secret, Bezos initiated an "auctions project" to replicate eBay**'s model, hoping to beat them. But Amazon Auctions launched in 1999 and failed to gain traction, demonstrating the power of network effects. eBay already had a critical mass of buyers and sellers, whereas Amazon'**s auctions looked like an afterthought.

  • Bezos acquired various curiosities to sell on the fledgling Amazon Auctions site, including an Ice Age cave bear skeleton that he displayed in Amazon**'**s headquarters. But the auctions effort went nowhere.

  • Meanwhile, Amazon**'**s stock price was skyrocketing due to hype around internet companies. An analyst predicted Amazon would hit **$400 per share, fueling the frenzy. Bezos claimed to ignore the hype but used it to accelerate Amazon'**s growth.

  • Bezos explored radical ideas to expand selection and make Amazon "the place for someone to find and discover anything they want to buy." Project Fargo aimed to stock one of every product ever made. Project Alexandria sought two copies of every book. Teams pushed back, finding these ideas inefficient, and developed more practical alternatives.

  • In summary, Bezos was determined to preempt eBay and establish Amazon as the dominant online retailer. But some of his most ambitious expansion plans were unrealistic "fever dreams" that revealed his penchant for radical thinking. Still, the dot-com bubble allowed Bezos to accelerate progress toward positioning Amazon as the "everything store."

  • Project Fargo was an initiative pushed by Jeff Bezos that lacked support from Amazon employees. It eventually faded away as other priorities took over.

  • Bezos became obsessed with offering same-day delivery and fast shipping. This led Amazon to invest in, a startup that offered same-day delivery in New York City. The idea ultimately failed. Bezos even suggested hiring college students to store and deliver popular products, but employees thought it was unrealistic.

  • In 1998, Amazon acquired Junglee, a price comparison site, for **$170 million in stock. Bezos wanted to incorporate Junglees product listings into Amazons site so customers could search for any product. However, most Amazon executives disliked sending customers away from Amazon’**s site to buy products elsewhere. The Junglee acquisition was a failure, with most employees leaving soon after. However, the deal allowed Bezos to invest in Google, which went on to become very valuable.

  • After the failure of Junglee and same-day delivery dreams, Amazon took a more methodical approach to expanding into new product categories. It moved into toys and electronics in 1999.

  • The move into toys was challenging because toys have short lifecycles and are hard to predict. Amazon had to work hard to convince toy makers to sell through them. Bezos wanted to invest **$**120 million in toys to have a huge selection, but other executives warned against it. In the end, Bezos prevailed but Amazon was left with **$**50 million in unsold toy inventory after the holidays.

  • The move into electronics faced even bigger challenges due to low margins and established competitors. Amazon**’**s electronics business struggled for years before becoming successful.

In summary, Amazon**’**s early attempts at radical initiatives were unsuccessful, teaching the company the value of a careful, step-by-step approach to expanding into new areas. With time and persistence, Amazon was eventually able to build strong businesses in categories like toys and electronics. But the road was long, with many failures and lessons along the way.

To launch the electronics product category, David Risher hired Chris Payne, a Dartmouth alum, who had previously worked on Amazon**’**s DVD store. Like Miller, Payne had to plead with suppliers to get products—in this case, major Asian consumer electronics companies like Sony, Toshiba, and Samsung.

He struggled to get them to sell through Amazon. The big Japanese companies saw Internet sellers as sketchy discounters. They were also being told not to sell through Amazon by big-box stores like Best Buy. Amazon had to turn to unauthorized gray-market distributors to get some products. Buying this way got them some products but selection was still lacking. Bezos was unhappy with it and compared it to Soviet-era stores. They only reached two-thirds of Bezos**’**s **$**100M sales goal for electronics in 1999.

To promote the new toy and electronics stores, Amazon held a press event in New York. Bezos threw a tantrum when he thought the product piles were too small, so employees went out around Manhattan to buy more products to make the piles bigger. They had to use their own money and max out their credit cards to satisfy Bezos.

Bezos spent time thinking about Amazon**’s culture. With things like the door-desks and little employee parking subsidy, he emphasized frugality. He made a show of using the free drink cards at the office coffee stand. Although he used a private jet, he said “The company isn**’t paying for this, I am.”

When Amazon bought companies in Germany and the UK, Bezos articulated five core values: customer obsession, frugality, bias for action, ownership, high bar for talent. (Later adding innovation.) To reinforce the hiring bar, he created the “bar raiser” program where designated employees vetoed candidates who didn’t meet standards. To show bias for action, he awarded Nike sneakers to employees who showed initiative, even if the result was a mistake.

Although employees liked the values, many struggled with the demanding pace. Bezos called weekend meetings, Saturday executive book clubs, and repeated “work smart, hard and long.” The culture was unfriendly to families and some executives left to have children. Bezos said “we are here to get stuff done.” Question and answer sessions showed the workload frustrated employees. When asked about work-life balance, Bezos said excellence and dedication were required.

The accounting group struggled to make sense of massive losses from expansion. Bezos insisted on controlling the customer experience and didn’t care about profits. For two years, Wall Street didn’t care either and praised Amazon**’s growth. In 1999, Barron’**s published “Amazon.bomb,” suggesting Walmart and B&N would beat them. The next quarterly report showed the usual losses but analysts were less congratulatory.

The CFO and CAO showed Bezos some analyses suggesting even higher future losses. He dismissed them, saying profits didn’t matter and the stock price would take care of itself. The execs were stunned and felt he didn’t understand the peril. Bezos just wanted to keep delighting customers and growing.

Amazon was losing a lot of money in its early years due to aggressive spending and expansion. An analysis of Amazon**’**s income statement showed that at the current rate, Amazon would not become profitable for decades. Jeff Bezos agreed to slow down spending and move toward profitability.

The Amazon board felt Bezos needed help managing the company and suggested hiring a chief operating officer. Bezos agreed and they hired Joe Galli, an executive from Black & Decker, as COO. Galli reported to Bezos, while other executives reported to Galli. Bezos could then focus on other areas.

Galli aimed to bring more discipline and control to Amazon. He cut costs and pushed for more structure. However, he was not technical and did not fully understand Amazon**'**s culture. He and Bezos clashed over authority and the direction of the company.

Galli did make some important contributions. He turned category leaders into general managers in control of their own P&L. He introduced retail concepts like earning co-op dollars from suppliers. He helped hire a new CFO and head of operations.

The 1999 holiday season was chaotic, with Amazon struggling to keep popular toys in stock. Employees had to work long hours to help meet demand. Some had difficult experiences working in the distribution centers over the holidays. However, other employees found it rewarding to help "save Santa" and uphold Amazon**'**s brand promise.

In summary, Amazon**'s early struggles with costs and management culminated in hiring a COO who aimed to impose more control but clashed with Bezos. Although the 1999 holidays were chaotic, Amazon's employees came together to fulfill customer orders, showing their dedication to the company'**s values.

In 2000, Amazon faced major challenges. The company**'s rapid expansion and acquisitions had led to accounting disarray, misplaced inventory, and unfulfilled customer orders over the holidays. The board considered replacing Jeff Bezos as CEO but ultimately kept him in the role. Joe Galli, Amazon'**s president and chief operating officer, left the company.

Amazon**'**s stock price, which had mostly gone up since the IPO, started declining steadily. There were several reasons:

  1. The dot-com bubble burst in 2000 and 2001. Investors lost enthusiasm for tech companies.

  2. Amazon was losing over **$**1 billion per year and its future was uncertain.

  3. Bezos**'**s long-term vision for Amazon seemed implausible to outsiders. He believed Amazon would become an "everything store" that sold and shipped all types of goods. Critics thought this idea was unrealistic.

  4. Skeptics doubted whether Amazon could ever become profitable. Bezos was focused on growth over profits, but investors wanted to see a viable business model.

  5. The 9/11 terrorist attacks further damaged the economy and stock market. Amazon**'s share price declined over 74%** in 2001.

Amazon faced a crisis of faith in its business model, leadership, and long-term prospects. Bezos had to convince investors, employees, and the public that Amazon would survive and ultimately thrive. His vision was being severely tested.

In early 2000, the dot-com boom began to decline as investors became more skeptical of internet companies without viable business models. A critical article in Barron**’**s reinforced fears that many dot-coms were spending money too quickly and aday of reckoning” was coming. The NASDAQ peaked in March 2000 and then declined sharply.

Although other dot-coms failed, Amazon survived due to a combination of conviction, improvisation, and luck. In February 2000, Amazon raised **$**672 million from European investors just before the stock market crash, giving them a crucial cash cushion. Amazon also shifted strategies, adopting the mantra “Get Our House in Order” and focusing on efficiency and cost-cutting.

The dot-com crash was difficult for Amazon. Early employees were still wealthy but newer ones had worthless stock options. Top executives questioned many of Bezos**’**s past decisions. However, Bezos remained calm and helped redefine Amazon for the changing times.

In June 2000, analyst Ravi Suria predicted that Amazon would run out of cash within a year based on their losses. His report caused Amazon**’s stock to drop 20%** and generated major headlines. Although Suria**’**s analysis was narrow and mistaken, his predictions could have become self-fulfilling if they spooked suppliers, customers, and investors.

Amazon vigorously rebutted Suria**’**s claims to reassure suppliers, customers, and investors. Executives visited major suppliers in the **U.S. and Europe to prove Amazons financial stability. Although Suria’**s predictions were wrong, the perception of instability was the real danger to Amazon. Bezos helped steer Amazon through this turbulent period and proved skeptics wrong.

The key events are the dot-com crash of 2000, Suria**’s dire predictions about Amazons future, and Amazons efforts to survive and rebut these claims. Although the company was in a precarious position, Bezoss leadership and quick action helped ensure Amazon’**s endurance.

  • In 2000, Amazon was struggling financially and facing criticism from analysts like Ravi Suria who questioned its business model.

  • CEO Jeff Bezos and CFO Warren Jenson scrutinized Amazon**'**s costs and set a goal to become profitable by Q4 2001. They cut costs and tried to be realistic about revenue projections. However, Amazon continued to face criticism in the media.

  • Bezos became obsessed with proving Suria wrong. Executives even coined the term "milliravi" to refer to a million-dollar error, named after Suria.

  • Amazon aimed to become a "platform" that other companies could build upon to reach customers. Their first attempts, like Amazon Auctions and zShops, failed.

  • After the 1999 holiday season, Toys "R" Us approached Amazon to partner on toy sales. Toys "R" Us had product expertise but struggled with logistics; Amazon had logistics expertise but struggled with product selection.

  • Negotiations were difficult, as Bezos insisted on a huge toy selection and Toys "R" Us wanted to be the exclusive toy seller. They compromised, with Toys "R" Us selling the most popular toys and Amazon selling some others.

  • The deal provided cash to Amazon and helped address balance sheet issues. It also established the model for Amazon to become a platform, with Toys "R" Us inventory kept in Amazon**'**s distribution centers.

  • With the model in place, executives tried to pitch similar deals to other retailers like Best Buy, Bed Bath & Beyond, and Barnes & Noble, but most declined or deals fell through. A potential deal with Sony Electronics also fell through.

  • In summary, Amazon**'**s move into becoming a platform was born out of necessity and struggle but eventually succeeded with the Toys "R" Us partnership. The company continued trying to build on that model, with mixed success.

Here**’**s a summary:

In early 2001, Amazon started signing deals with major retailers like Borders, AOL, and Circuit City to handle their e-commerce operations and inventory in exchange for investments and fees. These deals helped Amazon**’**s finances in the short term but were awkward for the long run.

The stock price slide and criticism from analysts made employees nervous, but Bezos told them to ignore the stock price and focus on customers. To prove his point, Amazon offered steep discounts and quick delivery for the new Harry Potter book, losing money on each order but gaining customer loyalty.

Bezos demanded constant improvements in customer service but didn’t understand the trade-offs. The head of customer service, Bill Price, struggled to meet Bezos**’**s demands with limited resources. During the 2000 holidays, Bezos embarrassed Price in front of executives by calling customer service and timing how long he was on hold. Price was fired 10 months later.

eBay**’s CEO Meg Whitman visited Amazon and offered to buy its failing Amazon Auctions business. But Bezos refused to give up on Amazons goal of becoming a platform for small sellers, even though Auctions and zShops weren**’t working.

Bezos believed Auctions and zShops failed because they were isolated from the main site. Amazon started experimenting with using algorithms to link auctions and product pages to drive more traffic. Bezos envisioned a single product page integrating listings from Amazon and third-party sellers.

Bezos refused to relinquish his vision of Amazon as a platform for small businesses despite the failures and criticism. His insistence on persevering with long-term plans over short-term pressures was a hallmark of his leadership.

  • In 2000, Amazon launched a new initiative called Marketplace that allowed third-party sellers to sell used books on Amazon**'**s website. This upset many inside Amazon who worried it would cannibalize their sales but Bezos believed it would offer more choice to customers.

  • In December 2000, Bezos, Mark Britto, and Doug Boake visited Walmart CEO Lee Scott at his home. They discussed the possibility of Amazon operating Walmart**'**s website but ultimately nothing came of the conversation. However, Bezos learned some valuable lessons about retail from Scott.

  • In February 2001, analyst Ravi Suria again questioned whether Amazon had enough capital. Amazon aggressively pushed back this time, calling Suria**'s report "silly." Executives met with Suria'**s firm, Lehman Brothers, to complain. Suria ended up leaving Lehman Brothers a few months later.

  • Overall, this section shows Bezos**'s willingness to upset the status quo by launching Marketplace and his desire to learn from more traditional retailers like Walmart. It also illustrates Amazon'**s combative stance toward critics and skeptics.

Here**’**s a summary:

An analyst named Henry Blodget wrote a negative research report about Amazon and led Dick Fuld, CEO of Lehman Brothers, to ask Amazon to review the report before publishing. Amazon pressured the analyst, Ravi Suria, to change his negative outlook. Years later, Suria said Amazon**’**s behavior during that time ruined two years of his life.

Investors paid attention to Suria**’s reports, and his last report for Lehman sent Amazon’**s stock tumbling. Around the same time, Jeff Bezos filed to sell some stock, leading the SEC to investigate him for insider trading. The investigation found nothing, but the publicity was embarrassing for Bezos and Amazon.

Amazon had to lay off a large number of employees and close some new initiatives, like a multilingual call center, due to costs and the low stock price. During this time, Amazon executives were worried that slowing growth in book sales signaled an overall decrease in online shopping. To improve profits, Amazon raised some prices.

However, after meeting with Jim Sinegal, the Costco founder, Bezos reversed the price increases. Sinegal, like Bezos, believed in keeping prices low to benefit customers in the long run. Bezos was inspired by Costco**’**s business model and decided Amazon should stick to its strategy of offering the lowest prices.

So in summary, Amazon went through a difficult time with a plunging stock price, overexpansion, and slowing growth. However, after evaluating the strategy of competitor Costco, Bezos reaffirmed Amazon**’s commitment to offering the lowest prices for customers. Though painful, this difficult period helped shape Amazon’**s relentless focus on affordability and the customer.

  • Jeff Bezos met with Jim Sinegal, the CEO of Costco, in 2001 to discuss a potential wholesale partnership. While that didn't pan out, Bezos learned some key lessons from Sinegal about the importance of low prices and customer loyalty.

  • After the meeting, Bezos decided Amazon needed to adopt an "everyday low price" strategy to match or beat competitors**'** prices. Amazon cut prices by 20**-30%** that July.

  • Bezos and his team conceived of the "flywheel" strategy, a virtuous cycle of low prices leading to more customers and greater efficiency, enabling even lower prices. But Bezos didn't want this strategy publicly discussed yet.

  • On September 11, 2001, Bezos and some colleagues were in Minnesota to announce a partnership with Target. They ended up stranded for days and drove back to Seattle, stunned by the 9/11 terrorist attacks.

  • Although Amazon ran memorable TV ads in the early 2000s, Bezos wanted to eliminate advertising spending as losses mounted. Tests in certain markets showed ads didn't significantly boost sales, so Bezos concluded TV advertising wasn't effective for Amazon.

The key takeaway is that Jeff Bezos was determined to build Amazon for the long run, not pursue short-term fixes. After learning from Costco**'**s model, he committed Amazon to a strategy of constant low prices and efficiency, even if it meant less advertising and quarterly losses. Bezos was playing the long game.

  • After the cancellation of TV ads and purging the marketing department, Amazon shifted its marketing budget to improving customer experience and offering free shipping.

  • Free Super Saver Shipping was introduced in 2002 for orders above **$**25. It boosted sales but some executives like the CFO Warren Jenson opposed it due to costs.

  • Many executives left Amazon during this time due to low pay, difficult work conditions, and lack of belief in the company**’**s future. Bezos was not sentimental about the departures but met with executives personally. Some still felt loyalty to Bezos and Amazon despite the challenges.

  • The CFO Warren Jenson left due to disagreements with Bezos over strategies like raising prices and opposing free shipping. His legacy at Amazon was debated. Bezos replaced him with Tom Szkutak from GE.

  • There were conflicts between the editorial team that provided recommendations and human touches and the personalization team that used data to provide recommendations. The personalization team started taking over the editorial team**’**s responsibilities, leading to tensions.

  • Overall, this was a tumultuous time for Amazon with high attrition rates, financial struggles, and internal conflicts. But Bezos**’**s vision and belief in improving customer experience helped steer the company through this period.

Jeff Bezos**’**s biological father was Ted Jorgensen, a circus performer from Albuquerque, New Mexico, known for riding unicycles and performing other stunts. Bezos last saw Jorgensen when he was three years old. Bezos was primarily raised by his mother, Jackie, and his adoptive father, Miguel “Mike” Bezos.

When Bezos was a child, his teachers and parents quickly recognized that he was exceptionally intelligent and ambitious. Bezos has credited his mother and adoptive father for his success. However, some believe that being adopted at a young age gave Bezos a strong drive to prove himself and succeed.

As a child, Bezos developed an early interest in science and space exploration. His fascination with space travel has endured into adulthood and may someday lead him into space.

Bezos**’**s competitive nature and need to surpass rivals also traces back to his childhood. When recounting stories of overcoming skeptics or competitors, Bezos often refers to experiences from his early years. His victory over critics like Ravi Suria during the dot-com bust gave Bezos satisfaction and a sense of overcoming adversity from his past.

In summary, Bezos**’**s unusual start in life as the biological son of a circus performer, subsequent adoption, and natural gifts and ambitions all combined to launch him toward his path as an entrepreneur and his quest for achievement and discovery.

From an early age, the pieces were in place for Jeff Bezos to become who he is today. His life story is one of determination, intelligence, vision, and perseverance against doubters and obstacles.

  • Ted Jorgensen and Jacklyn Gise were high school sweethearts who got married when Jacklyn got pregnant at age 16. They had a son named Jeffrey Preston Jorgensen in 1964.

  • The marriage was troubled and they divorced in 1965. Jacklyn got custody of Jeffrey and moved in with her parents.

  • Jacklyn started dating Miguel Bezos, a Cuban immigrant, in 1968. They got married and Miguel adopted Jeffrey, who became Jeffrey Preston Bezos.

  • Miguel and Jacklyn went on to have two more children, Christina and Mark. Miguel worked as a petroleum engineer for Exxon, so the family moved around a lot.

  • Miguel Bezos passed on a strong work ethic and libertarian values to his children. He hated totalitarianism of any kind.

  • Jacklyn noticed early signs of Jeff**’s giftedness and strong will. For example, as a toddler he dismantled his crib with a screwdriver because he didn**’t want to sleep in it anymore.

Key details:

  • Jeff Bezos**’**s biological father was Ted Jorgensen. His adoptive father was Miguel Bezos.

  • Jeff was born Jeffrey Preston Jorgensen, then became Jeffrey Preston Bezos after Miguel adopted him.

  • Miguel and Jacklyn Bezos had two other children, Christina and Mark, after adopting Jeff.

  • Miguel was a Cuban immigrant who worked as an engineer for Exxon, so Jeff moved around a lot as a child.

  • Miguel passed on strong libertarian and anti**-totali**tarian values to his children. Jacklyn noticed early that Jeff was very intelligent, determined and willful.

  • Jeff Bezos was a precocious child who showed early signs of curiosity and determination. As an infant, he disassembled his crib. As a toddler, he was more interested in how rides worked than the experience of the ride. His teachers noted how focused he could become.

  • Bezos**’s grandparents, especially his grandfather Pop Gise, were influential mentors. Bezos spent summers working on their Texas ranch, learning skills like repairing windmills and castrating bulls. Pop Gise also inspired Bezoss interest in science and space. He taught Bezos compassion, once telling him “it’**s harder to be kind than clever” after Bezos bluntly told his grandmother about her smoking habits.

  • Bezos**’**s mother Jackie was pivotal in nurturing his talents and interests. She got him into a gifted program at his middle school and patiently took him to RadioShack to buy supplies for his inventions and gadgets. She recognized how focused and determined he was, though his loud laugh sometimes embarrassed his siblings.

  • As a teenager in Miami, Bezos was disciplined and focused, impressing friends with his work ethic. He was involved in science and chess clubs. His home was a gathering place for friends, where they built a homecoming float in his garage. But he was somewhat detached from the tumultuous events happening in Miami at the time.

  • Bezos dreamed of becoming an inventor like Thomas Edison. He was always creating and tinkering, building robots, hovercrafts, and alarms to booby-trap his house.

The summary paints a picture of a bright, curious, and industrious boy who was surrounded by supportive influences and who showed early signs of the focus and determination that would define him as an adult. His childhood experiences likely helped shape his entrepreneurial spirit and interest in innovation.

  • Jackie Bezos, Jeff Bezos**'**s mother, was strict but supportive. She once made Jeff call his friends to apologize after he got a ticket for speeding.

  • Jeff Bezos was extremely competitive in high school. He announced his intention to become valedictorian and won several academic awards. He worked various odd jobs, including at McDonald**'**s and helping a neighbor breed hamsters.

  • Bezos**'**s high school girlfriend said he was creative and romantic. For her 18th birthday, he created an elaborate scavenger hunt around Miami.

  • Bezos gave an ambitious valedictory speech about establishing space colonies and space travel. His family and friends said he always aimed to become wealthy to achieve his goals.

  • In 2000, as Amazon**'**s stock dropped, Bezos secretly founded a space exploration company called Blue Origin. He told some Amazon colleagues and friends about his lifelong goal of space travel.

  • Bezos hinted at his space ambitions in some interviews, mentioning space travel books he was reading and that it would be good if the sci-fi novel Dune was "nonfiction."

  • In 2002, Bezos put space travel books on his public Amazon Wish List. In 2003, he and his lawyer were in a helicopter accident in Texas while Bezos was looking to buy land. Bezos later said his main thought was how dumb it would be to die that way.

Jeff Bezos founded Blue Origin, a space exploration company, in 2000. He wanted to provide his children the experience of space travel that he had growing up. He was also looking for a suitable location to build a spaceport for launching rockets.

At the time, Blue Origin was a secretive company. The author discovered its existence by searching public records and found references to “Blue Operations LLC” at Amazon**’s headquarters address. The author staked out Blue Origin’**s warehouse and found evidence of its space-travel ambitions by rummaging through its trash.

The author broke the news about Blue Origin**’s existence and ambitions in a 2003 Newsweek article. Blue Origin’**s goal was space tourism and achieving lower costs for space access. Bezos acknowledged the article was “premature” but said some details were right and some wrong. He expressed admiration for NASA and said space companies rely on its work.

Progress was slow. A test vehicle crashed in 2011. But Blue Origin received NASA grants and moved to a larger headquarters. Bezos filled it with space memorabilia and a model of a Victorian-era spaceship. Friends said Bezos viewed space travel as a long-term dream of humanity**'**s that he wanted to advance.

Bezos embraced the responsibilities of Blue Origin while leading Amazon. He gave Blue Origin a motto, “Step by Step, Ferociously,” that fit Amazon**'**s philosophy of steady progress toward ambitious goals. Bezos said he was motivated by people counting on him and liked being depended upon.

But as Amazon grew larger and more complex in the early 2000s, Bezos struggled to tame the internal chaos. More employees and new initiatives added complications, coordination troubles, and operational problems. Bezos needed help stabilizing the company.

During Amazon**’s early years of rapid growth, new products were introduced hastily without much planning, leading to chaos in the fulfillment centers. The logistics software couldn**’t properly handle the variety of new products.

To deal with this chaos, Jeff Bezos created an unusual organizational structure and relied on Jeff Wilke, a young executive, to fix the problems. Wilke and Bezos fed off each other, driven to achieve ambitious goals.

Wilke**’**s job was to overhaul the logistics network designed by Jimmy Wright, which was inefficient and expensive. Wilke had an exceptional mind and background in engineering and supply-chain management. He joined Amazon from AlliedSignal, where he learned Six Sigma, a philosophy focused on efficiency and reducing defects.

Wilke transformed Amazon**’s fulfillment centers, which he renamed from warehouses and distribution centers. He recognized that Amazon’**s operations were more like manufacturing and assembly than retail because of the huge variety of custom orders. He applied Six Sigma and lean manufacturing, giving more control to associates.

Wilke instituted data-driven management, with dozens of metrics to track productivity and costs. He eliminated frivolous terms for mistakes in favor of more serious ones. He brought discipline by requiring time clocks and schedules. He promised cost savings through increasing efficiency and reducing defects.

Wilke raised the visibility and importance of fulfillment center managers. He showed solidarity by wearing flannel shirts during the holidays. He made managers feel like part of a lifelong club. Like Bezos, Wilke could be volatile but inspired loyalty through his high standards and vision.

Under Wilke**’s leadership, Amazon built its first fully automated fulfillment center, setting the stage for massive expansion and efficiency gains. Wilke's transformation of the logistics network was crucial to Amazon’**s success.

  • In the fall of 2000, Amazon**'**s software systems were still unable to precisely track inventory and shipments. During the busy holiday season, Jeff Wilke, head of operations, held daily calls with managers demanding updates.

  • One troubled fulfillment center was McDonough, GA. Its manager, Bob Duron, angered Wilke by not having information ready on one call. Wilke erupted in anger and ended the call.

  • Wilke shut down McDonough and fired 450 employees. Though it reduced capacity, it forced Amazon to improve other fulfillment centers. Wilke showed a leadership style like Bezos**'**s.

  • Bezos believed communication showed dysfunction and that teams should communicate less. He wanted decentralized decision making and teams to solve their own problems.

  • After the dot-com crash, Bezos cut costs and middle management. He wanted "doers" who directly improved the company. Independent, "autonomous" teams were better than managing the teams.

  • In 2002, Bezos proposed reorganizing into small "two-pizza teams" of under 10 people. These teams would work on problems independently and even compete, like natural selection. They**'**d move faster without much communication.

  • Each team proposed a "fitness function" to measure its impact. But the concept didn't work that well. Teams worried too much over the formulas. The concept fit engineering but not other departments. And proposing your own evaluation metric was uncomfortable.

So in summary, Amazon aimed for decentralized decision making with autonomous teams, but Bezos**'s two-pizza-team concept and fitness functions didn**'t work out as envisioned. Still, the general philosophy of independent teams and little hierarchy or communication between groups shaped how Amazon developed.

Here is a summary of the act:

  • A year into Jeff Wilke**’s tenure as an Amazon executive, he asked Stephen Graves, a professor at MIT, to help improve Amazons fulfillment centers. At the time, Amazon’**s fulfillment centers were inefficient, making it difficult to predict delivery times for customers.

  • Wilke and his colleagues questioned whether Amazon should even operate its own fulfillment centers or outsource to third-party distributors. They ultimately decided to invest in and improve their fulfillment centers.

  • The main issue with the fulfillment centers was that they operated in “batches,” with individual pickers retrieving items in waves. This led to downtime as the centers waited for slower pickers to finish. This episodic system limited efficiency and capacity.

  • Wilke and his team, including Jeff Bezos, decided to rewrite the software for the fulfillment centers to move to a continuous flow model instead of batches. They moved away from the equipment and software from third-party vendors and developed their own solutions.

  • The new system allowed orders to move continuously through the fulfillment center, coordinated by algorithms. This increased productivity, accuracy, and reliability. It also allowed Amazon to make specific delivery promises to customers and optimize delivery routes.

  • Tight control of fulfillment and distribution gave Amazon a competitive advantage. Although difficult, consolidating inventory in their own fulfillment centers allowed Amazon to cover the costs. Wilke said the “principles and math” supported this model.

  • Jeff Bezos was meticulous in searching for “defects” in Amazon**’**s systems and culture. For example, when he found new TVs installed in conference rooms without his authorization, he had them removed, leaving the wall mounts as a symbolic warning to employees.

In summary, Amazon invested in improving and optimizing their own fulfillment centers by moving from a batch-based system to a continuous flow model. This allowed them to gain a competitive advantage through tight control of distribution and lower costs. Jeff Bezos closely managed this transition by eliminating inefficiencies and waste.

Jeff Bezos identified an internal Amazon activity that he saw as bureaucratic and wasteful. The activity involved employees using Microsoft PowerPoint and Excel in meetings to present their ideas. Bezos believed this approach hid lazy thinking and ineffective communication.

To address this, Bezos decreed that employees could no longer use PowerPoint and Excel in meetings and would instead have to write their presentations in prose, in what he called narratives. The goal was to get employees to think deeply and communicate their thoughts clearly. Bezos also mandated that every new product proposal be written in the form of a mock press release to distill the idea to its essence and work backward from there.

The narrative approach was not enthusiastically embraced by all employees, especially engineers. Some saw it as rewarding good writers over effective thinkers or doers. However, Bezos felt it led to sharper thinking and better decision making.

Bezos was known for aggressive and harsh criticism of employees who did not meet his high standards or who he felt were underperforming. His “nutters” and outbursts were melodramatic temper tantrums where he would loudly and brutally rebuke employees for laziness, incompetence, lack of intelligence, or other perceived deficits. While seen by some as lacking empathy, Bezos**’**s priority was improving the company and customer service. His criticisms were also frequently deemed accurate and on target, even if the style and approach were harsh.

An example was Bezos**’s reaction to a team that spent nine months developing an algorithm to optimize fulfillment center operations. When they presented their work, Bezos immediately told them they were “all wrong” and corrected their approach on the whiteboard despite having no direct expertise. While the interaction was brutal, the team acknowledged Bezos’**s solution was right.

Another instance was when Bezos called a VP acomplete fucking idiot” and threatened to fire him when a system transition caused some revenue issues. However, the VP was backed by a senior colleague and able to continue in his role.

The key events are:

  1. Bezos banned PowerPoint and Excel, requiring narratives instead to spur clearer thinking.

  2. Bezos demanded mock press releases for new product ideas to work from the customer-facing announcement backward.

  3. Bezos was known for frequent harsh and melodramatic criticism and outbursts, especially when he felt employees or their work were underperforming his standards.

  4. Examples include Bezos upbraiding a team whose work he corrected and a VP he called an idiot during a revenue issue, though the VP kept his role with colleague support.

  5. Bezos**’**s priority was customer experience and company success, not employee satisfaction or morale. His criticism reflected his high standards and desire to improve Amazon, though his style was often viewed as lacking empathy.

Jeff Wilke and Jeff Bezos would visit one fulfillment center per day on a whistle-stop tour during the holidays. They were intense and demanding, focusing on improving processes and eliminating errors. The visits inspired and terrified employees.

On one visit, Jeff Wilke noticed a disorganized pile of inventory in a corner of a new fulfillment center. He asked the general manager why it was there, determined the process wasn't precise enough yet, and said it needed to be fixed.

The whistle-stop visits happened during the ramp up to the holidays, from October through December 23. After the season ended, employees felt a huge sense of accomplishment and relief.

In 2002, Jeff Wilke led negotiations with UPS to get bulk discounts for Amazon. When UPS wouldn't budge, Wilke cut them off for 3 days. They caved and gave Amazon the discounted rates. This showed Amazon the power of its scale.

In 2003, Jeff Bezos described Amazon as the "unstore." As an unstore, Amazon didn't have to follow traditional retail rules. It had limitless shelf space, personalized the experience for each customer, allowed all reviews, and mixed used and new items. It aimed for low prices and great service.

When Amazon started selling jewelry in 2004, Bezos said Amazon didn't have to follow traditional retail markups. He envisioned customers buying a **$**1,200 bracelet and finding out it was worth **$**2,000. Though Amazon hired retail executives, Bezos said they were now unbound from old retail rules.

Amazon sold 2/3 of jewelry through the Marketplace at first, to learn the business. Bezos obsessed over the design of the jewelry boxes. Amazon did promotions with Paris Hilton, custom ring design tools, and a "Diamond Search" feature. The goal was to make Amazon iconic for jewelry, like Tiffany**'**s.

  • Jeff Bezos instructed Amazon**'s communication staff to time public announcements to coincide with rival Blue Nile's quarterly reports in order to gain a competitive advantage. However, Amazon'**s jewelry business did not grow as much as Bezos envisioned.

  • Amazon**'**s logistics network underwent a complete software rewrite which lowered costs and reduced shipment times. This gave Amazon a competitive edge over rivals like eBay.

  • In 2004, an Amazon engineer proposed a premium shipping club for customers willing to pay higher fees for faster shipping. Bezos loved the idea and made it a top priority.

  • The team proposed calling the service "Super Saver Platinum" but Bezos wanted a name that didn't imply saving money. They settled on "Prime."

  • Selecting the annual fee was challenging. They considered **$**49 and **$**99 before choosing $79, which Bezos thought was high enough to matter but low enough for people to try. The goal was to change shoppers' mindsets, not make money.

  • Launching Prime was an act of faith since Amazon had little data on how it might impact orders or shopping habits. Financial analyses said it was "completely crazy" but Bezos relied on instinct and experience.

  • Prime eventually justified itself. It turned customers into devoted shoppers who loved two-day shipping. Though initially unprofitable, Prime helped increase sales volumes which then lowered costs.

  • Prime was unpopular internally at first. Executives worried about its estimated losses. But Bezos closely tracked sign-ups and believed in its potential. He suspected early on that Prime would be a winner.

In July 2005, Amazon celebrated its 10th anniversary with a gala in Seattle. The event featured speeches, music performances, and was streamed live online for customers. Despite Amazon**'**s progress, Google was dominating media attention at the time as the new star of Silicon Valley.

Though overshadowed, Amazon continued to expand. In 2006, Jeff Wilke took over as head of North American retail and hired Marc Onetto, an executive from GE, to run operations. Onetto improved Amazon**'s logistics software and process. However, Amazon'**s large, temporary workforce and high turnover made organization difficult. Unions tried unsuccessfully to organize workers, facing fear of retaliation and high turnover.

Amazon also struggled with harsh working conditions, especially extreme heat in warehouses. A 2011 news report revealed 15 workers had suffered heat-related issues during a hot summer. Amazon installed AC and improved conditions in response to criticism.

Other unpredictable challenges emerged, like fires, accidents, and theft. One notable case was an employee who created a secret den inside a warehouse and furnished it with stolen goods. He left when discovered without protest.

Despite the challenges, Amazon continued improving its operations through technology and efficiency. The company saw itself as a technology company enabling ecommerce, not just a traditional retailer. Together, Bezos and Wilke battled through the ups and downs of building a massive distribution infrastructure.

  • In the early 2000s, Amazon was struggling. Its stock price was falling and analysts were skeptical about its business model. Many believed Amazon was just an unprofitable retailer, not a tech company as Bezos claimed.

  • The rise of Google posed a major challenge. Google competed with Amazon for customers, engineers, and advertising dollars. Bezos warned employees not to help make Google smarter.

  • To reinvent Amazon, Bezos advocated for taking risks in new areas outside of core retail. He started various new initiatives like a search engine, book search, Mechanical Turk, and AWS. He fought internal resistance to these moves, which he called “the institutional no.”

  • Bezos hired technologists for obscure roles to help transform Amazon into a tech company. Two key hires were Larry Tesler, an Apple vet, and Udi Manber, a computer science professor and expert in algorithms. Manber and Bezos bonded over their technical knowledge.

  • One of Manber**’s first major projects was Search Inside the Book, which allowed customers to search the full text of books. Bezos wanted to include 100,000 books. Publishers were wary of piracy but many participated. The project required intensive computing that almost maxed out Amazon’**s resources.

  • Search Inside the Book was unveiled in 2003 and hailed in Wired as fulfilling Bezos**’**s vision for a vast digital library. It showed how Amazon was becoming a tech innovator.

  • As Amazon grew rapidly, it realized its search capabilities were lacking and inadequate. It initially licensed search technology from other companies but eventually built its own internal search engine called Botega.

  • However, as Amazon**'s catalog and offerings grew more complex, and as Google'**s search prowess increased, Amazon recognized Google could actually search its own website better. This led Amazon to make its first foray into general web search to challenge Google.

  • To aid in this effort and to tap into technical talent, Amazon opened its first satellite office in Palo Alto, California in 2003 called A9. A9 worked to improve Amazon**'**s product search but also developed a general web search engine, though it ultimately proved unsuccessful against Google. However, A9 did yield some valuable patents and advertising technology.

  • This period was difficult within Amazon, as its technology infrastructure was fraying under the weight of its growth and success. Morale was low, and many engineers left for Google. Amazon undertook a massive, multi**-ye**ar effort to rebuild its technical architecture into a service-oriented framework.

  • A lawsuit with Toys "R" Us in 2005 provided a glimpse into the internal workings of Amazon. The judge found that little happened at Amazon without Bezos**'**s approval and that Amazon employees were contemptuous of Toys "R" Us but fearful of upsetting Bezos. The ruling allowed Toys "R" Us to end its partnership with Amazon.

  • In summary, this was a pivotal time for Amazon technologically and culturally. It grappled with scaling difficulties and confronted its limitations in search and infrastructure. Satellite offices and new talent were brought in to aid its ambitions, but morale languished. A legal battle with a key partner exposed internal strains. Overall, Amazon was trying to prove itself as more than just an online retailer.

Amazon sued its partner Toys “RUs for **$51 million over a dispute involving the toy retailer promoting its own products on the Amazon website. The dispute highlighted Amazons antagonistic relationships with some of its partners. At around the same time, Amazons partnership with Expedia also ended in litigation. The hardlines retail division, including categories like electronics and jewelry, was struggling and dragged down Amazon’**s finances.To address this, Jeff Bezos hired Kal Raman, who had worked with Rick Dalzell at Walmart, to lead the hardlines retail division.

Raman implemented automated systems and pricing software to help buyers make data-driven decisions. However, he was an extremely demanding manager known for his temper, and his heavy accent and malapropisms led to many memorable quotes. Raman only lasted two years at Amazon, though he made a big impact.

There were many tensions within the senior leadership team at this time. Raman and Diego Piacentini, who had previously led retail, did not get along. Raman and Jeff Wilke also clashed. Kathy Savitt, VP of communications, did not get along with Piacentini. Jason Kilar was planning to leave to run Hulu but had not yet been replaced. Overall, the senior team was highly combustible.

A major dispute was between Jeff Holden, Bezos**’s longtime colleague, and Udi Manber, who ran the A9 search division. Holden felt A9 was not focused enough on improving search on, so he started a secret project to rebuild Amazons search engine. Bezos allowed Holden to test it, but ultimately decided search should remain with A9. Upset, Holden left to found a mobile search startup. Shortly thereafter, Manber also decided to leave, in part because Bezos had allowed Holden’**s rival search effort. However, Bezos convinced Manber to stay on as an Amazon Fellow. Then Manber received an offer from Google to head search engineering, and decided to take that role instead.

In summary, disputes with partners, competition and infighting within the senior leadership team, and the loss of key leaders like Raman, Holden, and Manber made this a tumultuous time for Amazon. Bezos**’**s management approach and unwillingness to address interpersonal conflicts likely contributed to the situation.

  • In early 2002, Tim O'Reilly visited Jeff Bezos and suggested that Amazon open up its data and systems to outside developers. Bezos was initially skeptical but eventually agreed.

  • Amazon created a group called Amazon Web Services (AWS) to build application programming interfaces (APIs) that would allow third-party websites and developers to access Amazon**'**s catalog data, shopping cart, and payment systems. The goal was to "let them surprise us."

  • AWS evolved from a group working on commerce APIs into a business selling computing infrastructure like storage, databases, and raw computing power. AWS now powers major technology companies like Netflix, Instagram, and Pinterest. Though secretive about its finances, AWS is estimated to generate over **$**2 billion in revenue.

  • The rise of AWS was unplanned. It began around 2003 as Amazon transitioned to a new technical infrastructure called Gurupa. Amazon**'**s internal tech team strictly controlled resources and slowed down new projects. Bezos and others got frustrated with the bottleneck.

  • To address this, Amazon broke its tech team into smaller groups dedicated to individual services. One group got the freedom to experiment with using Amazon**'**s servers to host third-party websites and software. This experiment eventually became AWS.

  • In summary, the emergence of AWS was the result of an unplanned evolution driven by a desire to remove obstacles to innovation within Amazon. Giving one group the freedom to experiment with Amazon**'**s servers led to the creation of an entirely new business.

  • Jeff Bezos was frustrated with the lack of experimentation and creativity at Amazon. He wanted to empower developers to build new products and features.

  • Bezos was inspired by a book called Creation, which argued that intelligence and creativity emerge from combining simple building blocks. Bezos directed teams to identify computing "primitives" to build.

  • Two key primitives were storage (which became S3) and computing (which became EC2). Teams worked in isolation to build these foundational services.

  • EC2 was built by a team in South Africa, led by Chris Pinkham. They were largely left alone by Bezos. S3 was built by a team in Seattle, led by Alan Atlas. Bezos was very involved and demanding, frequently berating the team for not thinking big enough.

  • With S3 and EC2 making progress, Bezos and Bill Dalzell needed someone to lead the Web services effort overall. They picked Andy Jassy, who had previously been Bezos**'** "shadow" - following him around and learning from him.

  • Jassy wrote a 6-page vision statement for what would become AWS. The goal was to give startups and small companies the same infrastructure as large companies.

  • Jassy, Bezos, and Dalzell pitched the AWS plan to the Amazon board of directors, who initially rejected the idea. But Bezos persisted and the board eventually approved it.

  • AWS launched in 2006, starting with S3 and EC2. The services were very basic but resonated with developers, launching a revolution in cloud computing.

The key points are:

  1. Bezos**'**s push for experimentation and "primitives" led to S3 and EC2.

  2. S3 and EC2 were built by isolated teams with little oversight, as Bezos wanted.

  3. Andy Jassy emerged to lead the Web services effort and navigate company politics.

  4. Despite initial skepticism, Bezos persuaded the board to approve AWS.

  5. AWS started very simply but ignited cloud computing and changed the tech landscape.

Around 2000, Jeff Bezos wanted Amazon to invest in Cambrian Ventures, an incubator started by former Amazon employees. However, Amazon**'s board rejected the idea. Bezos then invested in Cambrian Ventures personally. Cambrian Ventures came up with an idea called Project Agreya to coordinate low-wage workers around the world to solve problems that computers couldn**'t. However, the idea was ahead of its time and failed to get funding.

When Cambrian Ventures shut down, Bezos negotiated to get ownership of the Agreya patent. Bezos then developed a version of Agreya in-house at Amazon called Mechanical Turk. Mechanical Turk launched in 2005 and allowed companies to hire inexpensive remote workers to perform simple tasks like transcription, image tagging, and data verification. Mechanical Turk helped demonstrate Amazon**'**s ability to innovate but faced criticism over its low pay. It has not become as successful as Bezos hoped.

Around the same time, Amazon launched its first major web service, the Simple Storage Service (S3), in 2006. A month later, Amazon launched the Elastic Compute Cloud (EC2), which allowed developers to run their own programs on Amazon**'s servers. These web services took off quickly because of their utility-like business model, in which customers only paid for what they used and could scale up or down. Although the services could lose money for a long time, Bezos believed Amazon was well-positioned to compete in low-margin businesses. Bezos wanted to avoid making "Steve Jobs'**s mistake" of pricing a product so profitably that it attracted too much competition.

So in summary, Bezos unsuccessfully pushed for Amazon to invest in Cambrian Ventures but later gained control of their idea for Mechanical Turk. Mechanical Turk and Amazon**'s initial web services, S3 and EC2, demonstrated Bezos's appetite for experimentation and long-term thinking, even if the services were unprofitable for a time. Bezos thought Amazon'**s cost structure gave it an advantage in low-margin businesses that other tech giants might avoid.

  • In 1997, entrepreneurs Martin Eberhard and Marc Tarpenning came up with the idea of developing an e-reader and founded NuvoMedia.

  • They created the Rocket eBook, one of the first e-readers, which could display digital books and had a long battery life.

  • They approached Jeff Bezos and Amazon to invest in their company. Bezos was intrigued by the product but wanted exclusivity provisions and veto power over future investors.

  • Eberhard did not agree to Bezos’s demands, so Amazon did not invest. Instead, Barnes & Noble and Bertelsmann invested $2 million each in NuvoMedia.

  • NuvoMedia sold 20,000 Rocket eBooks in the first year and had plans to double that. They got contracts with major publishers and good reviews. However, they still needed more funding.

  • Eberhard was worried the dot-com bubble was unsustainable and fund-raising environment was deteriorating. Despite interest in the product, NuvoMedia was running out of money.

  • Eventually, the company could not raise more funding and had to wind down operations. The product was ahead of its time, but NuvoMedia also made some strategic errors.

In summary, while NuvoMedia had developed an innovative product that showed promise, a mix of being ahead of its time technologically as well as some strategic missteps led the company to ultimately be unable to sustain itself. The founders**’** inability to come to an agreement with Amazon and Jeff Bezos proved fateful. Had an investment and partnership happened, the e-reader market might have developed much earlier. Still, NuvoMedia**’**s Rocket eBook demonstrated the potential of e-readers and helped pave the way for future successful products.

  • In 2000, Jeff Bezos sold his company NuvoMedia, makers of the Rocket eBook reader, to Gemstar. However, Gemstar ended up shutting down NuvoMedia and the Rocket eBook. This dealt a major blow to the ebook industry and interest in digital reading.

  • In 2004, concerned about Apple**'**s growing digital media business, Amazon started a secret lab called Lab126 to develop an ebook reader. After many mistakes, they released the first Kindle in 2007. Bezos called one of the founders of NuvoMedia to ask if they had finally "gotten it right."

  • In 2003, Amazon approached Apple about partnering on a digital music store. However, Steve Jobs insisted that Apple would build its own music store, iTunes. iTunes and the iPod ended up dominating digital music. Bezos initially dismissed iTunes but later tried to catch up with the MP3 Store. However, Apple always stayed ahead.

  • Bezos was slow to invest in digital music and media in part because he wasn't personally passionate about music. In contrast, Steve Jobs loved music and made it central to Apple**'**s strategy. Bezos was deeply passionate about books, however.

  • The success of the iPod and iTunes caused panic at Amazon about the future of digital media. Investors and executives worried that without an ebook reader, Amazon could lose its core book business. This spurred the development of the Kindle.

  • In summary, Apple**'s early success with the iPod and iTunes alarmed Amazon and highlighted the threat of digital transition. This motivated Amazon to develop the Kindle ebook reader and catch up in digital media. But Amazon always trailed Apple, in part because of Steve Jobs's personal passion for music versus Jeff Bezos'**s passion for books.

  • Jeff Bezos was determined that for Amazon to succeed in the digital age, it must dominate the e-book business like Apple did with music. He said "It is far better to cannibalize yourself than have someone else do it."

  • Bezos contemplated an e-reader as early as 2003 and said "It**'**s for one-handed reading." His executives objected to making hardware but Bezos insisted it was necessary to control the customer experience.

  • Steve Kessel was put in charge of digital efforts in 2004. Bezos told him "Your job is to kill your own business. I want you to proceed as if your goal is to put everyone selling physical books out of a job." He said Kessel was "basically already late" in developing an e-reader.

  • Kessel learned that developing hardware required many types of engineers. Following the book "The Innovator**'**s Dilemma," he set up Lab126, an independent subsidiary in Silicon Valley to build the e-reader.

  • Gregg Zehr, an ex**-Pa**lm exec, was hired to run Lab126. They investigated other ideas first but were eventually told to focus on an e-reader. "The aspiration was to be Apple."

  • Lab126 researched existing e-readers and concluded the market was open. Bezos wanted a simple device with built-in cellular access so customers never had to configure WiFi or pay for connectivity. Execs thought this was "insane" but went along with it.

  • Key decisions were made to use a low-powered black-and-white display and have seamless cellular connectivity. This became the basis for the first Kindle.

  • E Ink, the technology Amazon used for Kindle, was discovered by Martin Eberhard years before but was too primitive and expensive at the time. It uses microcapsules that contain charged white and black particles in a clear fluid. When an electric field is applied, the particles move and show either white or black spots.

  • Unlike LCD, E Ink worked well in sunlight, used little battery, and was easy on the eyes. Amazon was lucky the technology matured when it did.

  • The Kindle project was code-named “Fiona” after a character in Neal Stephenson**’**s The Diamond Age. Pentagram, a design firm, worked on the Kindle design for two years. They studied the physics of reading and wanted a simple, streamlined design. Bezos insisted on adding a keyboard and wireless connectivity, envisioning searching for and downloading books on the go.

  • There were many delays in developing Kindle due to issues with E Ink displays, a buyout of the company providing Kindle**’**s microprocessors, and a lawsuit between two companies providing wireless components. Rumors of the secret project spread inside Amazon despite efforts to keep it quiet.

  • To succeed, Kindle needed many ebooks. Amazon had to pressure publishers, who had only digitized about 20,000 books, to provide 100,000 titles including 90**%** of bestsellers for Kindle**’s launch. While Amazon and publishers had a symbiotic relationship originally, it grew more complicated. Publishers didn**’t like customer reviews or used book sales but saw Amazon as countering bookstore chains. Bezos made few friends in publishing, though he knew the CEO of Time Warner Book Group.

  • In 1997, Jeff Bezos and hbaum attended a party hosted by Rupert Murdoch where they mingled with publishing executives. At the time, Amazon had a good relationship with publishers.

  • In the early 2000s, as Amazon pursued profitability, its relationship with publishers became more adversarial. Amazon wanted better financial terms and bigger profit margins from publishers. Lyn Blake, who oversaw publisher relations, had to balance Amazon**’s demands with publishers’** concerns.

  • Bezos pushed Blake and her team to get steeper discounts and more favorable terms from publishers, especially small and vulnerable ones. They targeted these publishers in a program called the “Gazelle Project.” Publishers were alarmed by Amazon**’**s increasing demands and market power.

  • In 2005, Blake left Amazon, predicting the relationship with publishers would deteriorate. Her successor, Randy Miller, took an aggressive approach to negotiating with publishers. He threatened and punished publishers that did not give Amazon better terms. He called this approach “Pay to Play,” though Amazon**’**s lawyers renamed it “Vendor Realignment.”

  • Miller targeted major European publishers like Random House, Hachette, and Bloomsbury. He raised prices, removed their books from recommendations, and promoted competitors**’** books instead. He also exploited authors**’** anxieties about sales rank to pressure publishers. Publishers felt they were losing control of their business to Amazon.

  • In summary, Amazon**’s relationship with book publishers grew increasingly adversarial in the early to mid-2000s. As Amazon pursued higher profit margins, it demanded more concessions from publishers and used coercive tactics to gain leverage over them. Publishers felt threatened by Amazon’**s growing power and influence. The once-amicable relationship deteriorated in this period.

  • Amazon learned tactics of demanding price concessions and other benefits from suppliers from companies like Walmart. As Amazon grew more powerful, it started using these tactics with publishers and other suppliers.

  • Dan Rose and Jeff Steele were tasked with convincing publishers to provide ebooks for the Kindle, but had trouble without being able to disclose the Kindle**'**s existence. Once publishers saw the Kindle, some became more interested.

  • Amazon proposed "Topaz," a program to convert scanned book files into Kindle ebooks, as a way for publishers to easily provide ebooks. Some smaller publishers used this, while bigger ones didn't want to become dependent on Amazon.

  • The Kindle launched in 2007 after many delays to improve the device and build up an ebook catalog. Laura Porco, a tough negotiator, took over the Kindle ebook negotiations.

  • Former Amazon employees like Erick Goss and Jeff Steele became uncomfortable with Amazon**'**s aggressive tactics towards suppliers. Goss left due to the culture, while Steele clashed with management over renegotiating a deal with Oxford University Press and was fired.

  • After Steele**'s departure, negotiations with publishers became tense, with Amazon threatening publishers that didn**'t provide enough ebooks or move fast enough. The summary portrays Amazon as using threats and intimidation to get what it wanted from publishers.

The key themes are Amazon**'s increasing use of hardball negotiating tactics and threats with suppliers as its power grew, the difficulty of convincing publishers to bet on ebooks and the Kindle, and the discomfort some felt with Amazon's culture at the time. The anecdotes about Laura Porco and Jeff Steele illustrate Amazon'**s aggressive approach.

  • Publishers were initially reluctant to embrace e-books and the Kindle because they didn't see e-books as a major threat like music piracy. But Jeff Bezos and his team at Amazon essentially forced publishers into the digital age by alternately wooing and threatening them.

  • Bezos was obsessed with reaching a goal of 90,000 e-book titles to match a large physical bookstore. His team sent aggressive messages to publishers in the middle of the night demanding to know why certain titles weren't yet available as e-books.

  • Bezos decided to price most e-books at $9.99, even though that meant Amazon would lose money. He believed that low price would drive adoption of e-books and that publishers would eventually lower their wholesale prices. But Amazon didn't tell publishers about the **$**9.99 price ahead of time, to avoid objections.

  • When the first Kindle launched in 2007, publishers showed up to support it, unaware of Amazon**'s pricing plans. The Kindle was a compromise between Bezos's visions and engineers'** concerns, packed with extra features. But its core features—like an e-ink screen and 3G wireless—made it a success.

  • Competitors like Barnes & Noble were caught off guard by the Kindle**'s success. B&N'**s CEO initially doubted there would be much e-book demand for years. But after the Kindle launched, B&N had to scramble to create the Nook e-reader and e-bookstore to catch up.

  • The first Kindle sold out quickly but took months to restock because a key component had been discontinued. Bezos**'**s appearance on Oprah in the fall of 2008 blew out the supply again. The device was a surprise hit that showed publishers e-books were the future.

In 2007, Amazon**'s business started accelerating rapidly. Sales growth increased to 32%** annually, much faster than the rest of e-commerce. This showed Amazon was gaining customers from competitors.

Amazon**'**s Prime membership program fueled this growth. Prime members spent twice as much on average. They bought more products across more categories. This convinced more third-party sellers to have Amazon fulfill their orders, since it meant Prime shipping.

Amazon**'**s tiny profit margins started to expand, showing "operating leverage" - it was getting more out of its assets. Although margins would later shrink again as Amazon invested in new areas.

Amazon**'s stock jumped 240%** in 2007 as investors realized Prime**'**s impact. But it later fell sharply in the financial crisis.

Meanwhile, eBay struggled. Interest in auctions faded. Customers wanted fast, certain purchases, not waiting to see if an auction bid won. eBay**'**s problems went beyond that, including a loss of community feel, reliance on professional merchants, and competition from Craigslist.

Analysts were slow to see Amazon**'s momentum and potential. One analyst was "laughed out of portfolio managers'** offices" for upgrading Amazon early. Most saw only Amazon**'**s tiny margins.

The pain of Amazon**'**s difficult years was paying off. Prime showed the value of long-term thinking. Amazon was poised to gain more advantages in coming years through smart bets on technology.

That covers the key highlights around Amazon**'s accelerating momentum and growth starting in 2007, fueled by Prime, as well as the contrast with eBay's struggles and the skepticism most analysts still held about Amazon. The summary touches on the key factors driving both Amazon's surge and eBay'**s issues, as well as the themes of long-term thinking, operating leverage, and technology-driven advantages that would benefit Amazon in the future.

Amazon and eBay took opposite approaches in the late 2000s. Amazon disrupted itself by allowing third-party sellers, while eBay failed to fully commit to fixed-price sales and split its focus across multiple initiatives.

Amazon invested in technology like the Kindle and improving its warehouses. eBay acquired other companies but neglected its core business. Customers became more satisfied with Amazon and unhappy with eBay.

In 2008, eBay**’s stock dropped by half and Amazons valuation surpassed eBays for the first time in 10 years. Amazon’**s sales were more than double major competitors like Barnes & Noble and eBay.

To reach **$**200 billion in sales, Bezos wanted Amazon to sell more clothes, food, and consumables. He hired executives from Webvan and acquired Shopbop. Bezos seemed to be improving his management style but could still be harsh.

Rick Dalzell, a longtime senior engineer and Bezos**’s right-hand man, retired in 2007. Bezos and colleagues surprised Dalzell with a trip to Hawaii to thank him for his service. Dalzell admired Bezos’**s embrace of truth and unconventional thinking.

Between 2000 and 2008, Amazon made few acquisitions, having learned from failed 1990s purchases. Bezos preferred to build rather than buy. An exception was Zappos, an online shoe retailer with a unique culture. Bezos saw it as an opportunity to accelerate momentum.

Nick Swinmurn started Zappos to sell shoes online without trying them on. It grew rapidly, guided by Tony Hsieh**’**s customer service philosophy. In 2009, Amazon bought Zappos for **$1.2 billion, the largest acquisition in its history. The deal gave Amazon an infusion of Zappos’**s culture and expertise in shoes and apparel.

That covers the key highlights from the summary on the overripening of auctions, Amazon**’s acquisition of Zappos, and related events in Amazon’**s history. Let me know if you would like me to explain anything in the summary in more detail.

Tony Hsieh founded Zappos in 1999 to sell shoes online. After struggling initially, Zappos found success in Las Vegas by providing great customer service and overnight shipping. Its sales grew rapidly, reaching **$**1 billion in 2008. However, Zappos’ growth stalled that year due to the financial crisis and competition from Amazon.

Amazon launched in 2006 to compete with Zappos in shoes and handbags. Endless offered generous promotions to gain customers, even though it lost money. Endless made little progress against Zappos, but its promotions cut into Zappos’ profits. Zappos struggled with debt and inventory issues in 2008, and its growth slowed.

Zappos’ investors considered selling to Amazon, which had made acquisition offers. Investor Michael Moritz had hoped Zappos would become an independent, head-to-toe clothing company. But Zappos couldn’t compete effectively with Amazon**’**s superior technology and resources. Zappos struggled to hire engineers in Las Vegas and pay competitive salaries.

In summary, Zappos was initially very successful but ran into challenges competing with the larger Amazon. Though Zappos provided great service, Amazon had key advantages in technology, resources, and scale that allowed it to threaten Zappos’ growth and independence.

  • Zappos agreed to sell to Amazon for **$**900 million in 2009. The recession negatively impacted Zappos and its employees, so the acquisition provided them financial relief. The deal showed how Amazon could acquire competitors during economic downturns.

  • The recession devastated many major retailers like Circuit City and Borders. Circuit City went out of business in 2009 after failing to adapt to changes in the electronics industry and e-commerce. Borders filed for bankruptcy in 2011 due to competition from online book sales, the Kindle, and the recession.

  • Target survived the recession but had to lay off employees and close a distribution center. Target had outsourced its website to Amazon from 2001 to 2011 but then built its own e-commerce platform. The transition was difficult, with Target**'**s website crashing frequently.

  • Walmart viewed e-commerce with more urgency after the recession. In 2009, Walmart**'s CEO said aimed to become the biggest retail website. Walmart lowered e-book prices to compete with Amazon, showing how Amazon'**s success threatened Walmart.

  • The recession obscured Amazon**'s growing competition with major retailers as they focused on cutting costs. But after the downturn, retailers recognized the threat from Amazon'**s increasing capabilities and product offerings.

  • In 2009, Amazon introduced the Kindle 2, which revolutionized the e-book market and publishing industry. With 90**%** of the e-book market, Amazon wielded immense power over publishers.

  • Publishers were troubled by Amazon**'**s **$**9.99 price for new releases and bestsellers, which cut into their profits and put pressure on other retailers. Two publishers experimented with "windowing" e-books but faced backlash.

  • Publishers worried Amazon would cut them out of the publishing process altogether. Amazon launched Encore to allow authors to self-publish e-books, and CreateSpace could print physical books on demand. This allowed Amazon to control the entire publishing value chain.

  • In 2009, the CEOs of the six major U.S. publishers allegedly colluded to combat Amazon's power. They considered launching their own e-book company but then Apple's Eddy Cue proposed an "agency model" where publishers set e-book prices and Apple took a 30% commission. This solved the "**$**9.99 problem" and helped Apple enter the e-book market.

  • According to the DOJ, publishers forced Amazon to adopt the agency model. Publishers said they independently decided the agency model**'**s benefits outweighed costs, though it meant less profit per e-book. Random House CEO Markus Dohle worried about the economics and stuck with the wholesale model.

  • The agency model allowed Apple to enter the e-book market and publishers to gain more control over pricing, but the DOJ accused publishers of collusion and filed an antitrust suit. Publishers denied colluding but settled, paying **$**166 million.

  • After the recession, Amazon grew rapidly and became as prominent as Google and Apple. But with the increased visibility came more public criticism. Critics accused Amazon of tax avoidance, questionable acquisitions, competing with suppliers, and ignoring manufacturers**'** pricing.

  • Amazon responded to the criticisms with a "willingness to be misunderstood." Jeff Bezos claimed Amazon was a "missionary" company trying to make the world better, not a "mercenary" company only seeking money and power.

  • The recession harmed governments and led to a fight over collecting sales tax from Amazon. Amazon avoided collecting most sales tax, giving it a competitive advantage. New York**'**s governor proposed a law to make Amazon collect sales tax, threatening millions in revenue for Amazon.

  • Amazon argued it didn't have a taxable presence in states to require sales tax collection. But its growing network of distribution centers weakened that argument. Amazon wanted a national law addressing sales tax to avoid a patchwork of state laws.

  • The battle involved many parties with competing interests. No one was entirely straightforward, but Amazon**'**s position conveniently suited its interests. Amazon resisted collecting sales tax as long as possible to maintain its competitive advantage.

  • Amazon acquired Zappos and Quidsi despite the FTC reviewing the deals, causing controversy. The acquisitions helped Amazon expand into shoes and diapers but led to concerns over Amazon**'s increasing dominance. Amazon'**s publishing arm also upset book publishers by competing with them.

  • Manufacturers like Levi**'**s and Mattel complained Amazon ignored their pricing policies. Amazon often sharply discounted products below MSRPs set by manufacturers. Critics argued it was predatory, but Amazon claimed it benefited consumers and manufacturers still profited.

  • In summary, Amazon faced many new criticisms and legal issues as its power grew after the recession. Though controversial, Amazon**'**s positions tended to suit its competitive interests. It resisted change as long as possible until forced to adapt.

  • Amazon had long avoided collecting sales tax for most of its products, which gave it a competitive advantage. But in 2008, New York passed a law requiring Amazon to collect sales tax in the state. This law spread to other states and threatened Amazon**'**s tax exemption.

  • Amazon**'s CEO Jeff Bezos considered the sales tax exemption to be extremely strategically important. He argued that Amazon did not benefit from any local services in the states, so it should not have to collect sales tax. Losing the exemption could significantly hurt Amazon'**s sales.

  • To avoid establishing a physical presence in states and triggering sales tax collection, Amazon employed various tactics. It classified facilities like fulfillment centers as subsidiaries that earned no revenue. It severed ties with affiliate websites in states. It issued restrictive policies forbidding employees from promoting Amazon or signing contracts outside of Seattle. It required approval for employee travel and monitored trips to certain "high-risk" states.

  • An Amazon engineer, Vadim Tsypin, sued Amazon for wrongful termination after he refused to alter time sheets to hide that he worked from home in Canada. The case revealed Amazon**'**s extensive internal rules and maps for avoiding sales tax liability.

  • A coalition of Amazon**'s competitors, including Walmart and Target, formed a group called the Alliance for Main Street Fairness to lobby against Amazon'**s tax advantage. The CEOs of these companies closely monitored the fight.

  • Amazon aggressively fought against efforts to end its sales tax exemption, using both incentives and threats to persuade politicians.

That covers the key highlights from the passage on Amazon**'**s battle to maintain its sales tax exemption and the strategies it employed to do so. Let me know if you would like me to explain anything in the summary in more detail.

Amazon fought attempts by states to collect sales tax from online retailers for many years. It threatened to close facilities and cancel expansion plans in states that passed sales tax laws.

Jeff Bezos advocated for a federal law to simplify sales tax collection instead of state-by-state laws. But Congress did not pass a law.

Amazon eventually started negotiating agreements with states to delay sales tax collection in exchange for building new warehouses. It dropped a campaign in California to overturn a sales tax law after facing public backlash.

Amazon**'**s head tax lawyer, Robert Comfort, retired in 2012. Under his leadership, Amazon had minimized its tax burden using methods like funneling European sales through Luxembourg.

Amazon has a group called Competitive Intelligence that buys from competitors to evaluate their services. In the late 2000s, it focused on, an online diaper retailer.'s founders wanted to remain independent, but Amazon dropped diaper prices by up to 30% to pressure them. then raised **$**100 million from Walmart and other investors.

Amazon matched Walmart**'s investment in and suggested the companies merge.'**s founders sold to Amazon for over **$**500 million in 2010. Amazon then lowered diaper prices back to normal levels.

The fight showed how Amazon will drop prices and make big investments to neutralize competition. Its size and scale make it hard for startups to resist its demands.

The key points are that Amazon fought hard to avoid collecting sales tax for as long as possible. But as states passed laws, public opinion turned against it, and it started negotiating deals. Amazon also works aggressively to counter competitive threats, as shown by its diaper price war and acquisition of Its huge size and resources make it difficult for startups to remain independent.

  • Quidsi, the parent company of, was acquired by Amazon in 2010 for **$**540 million.

  • Amazon aggressively priced diapers low to force Quidsi to sell. Amazon lost over **$**100 million in 3 months just on diapers to win the acquisition.

  • Quidsi wanted **$900 million, like what Zappos got from Amazon. But Amazon'**s predatory pricing forced Quidsi to accept a lower offer.

  • Walmart was also interested in Quidsi but missed the chance to buy them.

  • The FTC investigated the acquisition for anti**-trust issues but allowed it because Amazon didn**'t have a monopoly in diapers.

  • Quidsi was allowed to operate independently within Amazon, like Zappos.

  • Wüsthof, a German knife maker, started selling on Amazon in the early 2000s. Amazon repeatedly violated Wüsthof**'**s minimum pricing rules, damaging their brand.

  • Wüsthof wanted to leave Amazon, but Amazon threatened Wüsthof with punitive actions if they did. Wüsthof felt they had no choice but to keep selling on Amazon.

  • Many brands and manufacturers feel like they have no choice but to sell on Amazon, even if it damages their business. They feel trapped by Amazon**'**s power over e-commerce.

  • Wüsthof is a German knife maker that sells high-end chef**’**s knives. In the early 2000s, it stopped selling on Amazon due to Amazon violating its minimum advertised price policy (MAP) and undercutting its prices.

  • Wüsthof wanted to protect small independent retailers that made up 25**%** of its sales. These retailers helped build Wüsthof**’s brand but couldn**’t match Amazon**’**s discounts.

  • After 3 years, in 2009, Wüsthof started selling on Amazon again after Amazon promised to follow its MAP. But Amazon soon violated the policy again by discounting Wüsthof**’s products. This undercut Wüsthof’**s other retailers and threatened its profit margins.

  • In 2011, Wüsthof ended its relationship with Amazon again. Wüsthof**’**s CEO met with Amazon but tensions remained. Amazon argued it had to match the lowest prices from unauthorized third-party sellers on its own marketplace. But Wüsthof felt Amazon was enabling these sellers to improperly discount its products.

  • Some companies have an addictive-yet-destructive relationship with selling on Amazon**’s marketplace. They get a sales rush but then Amazon guts their profit margins and undercuts them on price. Many ultimately leave but some return, drawn to Amazon’**s huge customer base and strong sales.

  • Amazon**’**s goal is to provide the lowest prices. It sees MAPs and other techniques as inefficient ways for companies to protect profit margins. Amazon uses algorithms and other means to quickly match any lower prices from competitors. Some big brands like Dyson and Apple restrict or avoid selling certain products on Amazon.

  • Amazon**’**s booming marketplace, where third-party sellers offer products, creates tension. Amazon closely watches what sells well and often starts selling those items itself, undercutting the third-party sellers. But the marketplace also generates profits for Amazon, which takes a commission on each sale.

  • Wüsthof, a 200-year old German knife maker, decided to withdraw from selling on Amazon in 2010 due to Amazon**'**s price matching policies and pressure to lower prices.

  • Amazon threatened Wüsthof, saying they would promote competitors on Amazon and acquire Wüsthof knives through unofficial channels.

  • Wüsthof stood firm in their decision to withdraw. They wanted to protect their brand and business.

  • However, Amazon still sells Wüsthof knives through third-party sellers and Amazon**'s Warehouse Deals unit, which sells used/refurb**ished products, often at steep discounts.

  • Around the same time, Jeff Bezos saw Netflix as a potential threat to Amazon. Amazon explored acquiring Netflix but Netflix**'s CEO wasn**'t interested. Amazon then started DVD-rental businesses in Europe but ended up selling them to Lovefilm, a competitor, in exchange for stock and ownership in Lovefilm.

  • A few years later, as streaming video grew, Lovefilm looked to transition to streaming and needed funding. Google offered to buy Lovefilm but the deal fell through. Lovefilm then pursued an IPO.

  • Amazon wanted to buy Lovefilm to get into the streaming video market in Europe. Amazon argued Lovefilm needed a lot of money to compete and that an IPO wasn't the best path. Amazon also found a way to block Lovefilm**'**s IPO by refusing to amend its bylaws to allow it.

  • Faced with this, Lovefilm had little choice but to sell to Amazon, which Amazon wanted all along to gain a foothold in European streaming video.

In summary, Amazon employed ruthless tactics to gain control of Lovefilm and further its own strategic goals after losing out on an earlier chance to get into streaming video by acquiring Netflix.

Amazon acquired Lovefilm, a European DVD rental and streaming company, for **$**300 million in 2011. The acquisition gave Amazon a foothold in the European streaming video market.

Around the same time, Amazon launched a free video streaming service for members of its Prime subscription service in the **U.**S. The service directly competed with Netflix and helped prevent Netflix from dominating the streaming video market.

In 2011, the largest book publisher, Random House, adopted an agency pricing model for ebooks that allowed publishers to set ebook prices. This reduced Amazon**’**s control over ebook prices and its ebook market share declined.

In response, Amazon launched its own New York-based book publishing imprint to publish bestselling books. It hired Larry Kirshbaum, a well-known industry insider, to run the imprint.

The book publishing industry reacted very negatively to Amazon**’s move into publishing. They saw it as a threat and rejected Amazon’**s publishing efforts. Many bookstores refused to stock books published by Amazon.

Amazon executives claimed they just wanted to innovate and help the industry, but CEO Jeff Bezos had openly discussed eliminating “gatekeepers” like traditional publishers. This stoked fears that Amazon aimed to disrupt the role of traditional publishers.

The relationship between Amazon and traditional book publishers was very tense and contentious. Publishers saw Amazon as a threat to their existence, while Amazon saw publishers as slowing innovation.

  • Amazon, nearly 20 years after its founding, had become a vast conglomerate that sold nearly everything and hosted a huge marketplace of third-party sellers and cloud computing infrastructure.

  • Jeff Bezos**'**s biological father, Ted Jorgensen, owned a small bike shop in Glendale, Arizona, that provided a stark contrast to Amazon. The Roadrunner Bike Center sold a small selection of high-end bikes and was known for its friendly, dedicated owner and service.

  • Jorgensen had not had contact with Jeff Bezos for many years. Bezos was adopted by Miguel Bezos, who raised him, when Jeff was four years old.

  • The author tracked down Jorgensen at his bike shop in 2012 but gave a "very low probability" to the possibility that Jorgensen would welcome the unannounced appearance. The author wanted to see Jorgensen**'**s reaction to the sudden visit.

  • Ted Jorgensen is Jeff Bezos**'** biological father. Bezos**'** parents divorced when Bezos was a baby, and Jorgensen agreed to stay out of Bezos**'** life.

  • Jorgensen went on to remarry twice, start a bike shop, and have health issues. He always regretted giving up Bezos and wanted to reconnect.

  • In 2013, Jorgensen**'**s stepson Darin Fala helped Jorgensen write a letter to Bezos hoping to reestablish contact. Bezos did not respond.

  • Bezos is known for forwarding customer emails to executives with just a "?" to signify they need to urgently address the issue. This is known as an "escalation" and requires dropping everything to solve the problem.

  • One such escalation was over a marketing email about lubricants that embarrassed customers. Bezos was furious and demanded a meeting. He told the marketing VP to "shut down the channel" and that "We can build a one-hundred-billion-dollar company without sending out a single fucking e-mail."

  • There was an argument in the meeting typical of Amazon**'**s confrontational culture. But Bezos won, and Amazon stopped the automatic emails.

  • The story shows Bezos**'** obsession with customer service and his temper, as well as his complicated relationship with his biological father. Bezos seems uninterested in reconnecting, preferring to focus on moving forward.

  • Jeff Bezos strongly values customer trust and experience. He was willing to terminate a profitable e-mail marketing campaign for sensitive products to avoid jeopardizing customer trust.

  • Amazon relies heavily on data and metrics to make decisions but customer anecdotes also carry a lot of weight. Bezos will often escalate issues based on a single customer complaint to fix potential larger problems. This can disrupt teams and processes.

  • The culture at Amazon is intense and adversarial. Employees are expected to have “backbone” and disagree with and challenge each other. Bezos prefers friction and argument over consensus and “social cohesion.”

  • The culture is like a mix of a startup and a big company. It moves fast but also has a lot of bureaucracy. Many employees thrive in this environment but others leave quickly due to the long hours and combative culture.

  • Amazon**’**s compensation and hiring practices are designed to keep costs low and retain employees. Salaries are average but stock grants vest over time to encourage retention. Managers must fire the lowest performers. Perks are minimal.

  • Frugality is deeply embedded in Amazon**’s culture. They cut costs wherever possible and pass on savings to customers through lower prices. Expenses that don**’t benefit customers are seen as unnecessary.

  • Amazon**’s culture and processes reflect Bezos and how he thinks. Executives model Bezos-like behavior. Company rhythms revolve around Bezos and how he prefers to get information and use time. The company aims to scale Bezos’**s thinking and ingenuity.

  • An anecdote highlights how Bezos**’**s executives model his behavior. Diego Piacentini insisted on paying for a meal and then tore up the receipt to show the company was not paying.

  • Jeff Bezos and other senior executives at Amazon spend the end of each year reviewing plans for each department. Departments prepare six-page documents outlining their plans and strategies for the coming year. Recently, Amazon refined this process to make the plans easier to understand by including "tenets" at the top of each page - principles to guide decision making.

  • Bezos pays close attention to Amazon**'**s newer businesses like Amazon Web Services, streaming video, Kindle and Kindle Fire. These divisions experience a lot of pressure and work-life balance is minimal.

  • Each week, departments meet to review data and metrics. The meetings are intense but help Amazon make fast, data-driven decisions without debate. The weekly business review culminates these meetings, attended by 60 managers who review metrics and forecasts.

  • Although Bezos doesn't attend the weekly meetings, he is known for suddenly focusing intensely on an issue, like Amazon**'s email marketing. After a "lubricant crisis," Bezos monitored Amazon's email filtering and suggested sending a weekly email "magazine" to reestablish a personal voice with customers. His team spent months developing concepts but Bezos criticized them harshly, saying "it'**s already bored" him and the writing was "bad." He demanded faster progress.

  • In 2012**-2013, Amazon expanded rapidly. Its stock rose 60%** and it issued 237 press releases, opened fulfillment centers, acquired a robotics company, launched new websites and devices, grew its advertising business, and acquired TV**/mov**ie content for Prime Video to compete with Apple and Google.

  • In 2012, Bezos unveiled new Kindle Fire tablets and the Kindle Paperwhite. He said the Paperwhite achieved Amazon**'s original vision though he was sure they'**d continue improving. Around the same time, a settlement allowed Amazon to again discount ebooks.

  • In 2012, Amazon held its first AWS conference with 6,000 developers. Bezos discussed long-term thinking, willingness to fail, and the Clock of the Long Now he**'**s building. Like Jobs, Bezos has gradually convinced people to think his way - that any process can improve and long-term thinking matters. Bezos often repeats stories and phrases about thinking long-term, willingness to be misunderstood, and revelations like adding packing tables.

Jeff Bezos approaches Amazon with a long-term vision and philosophy. He is focused on steady progress toward accomplishing huge goals over time. His simple and consistent articulation of Amazon**'**s goals makes it easy for others to help the company.

By 2012, Amazon had moved into its new headquarters in Seattle. Around this time, the company began using simply "Amazon" instead of "" in signs and marketing to reflect how it had expanded beyond e-commerce. Though constantly changing, some things stayed the same, like Bezos**'** modest morning routine with his wife driving him to work.

Bezos**'** wealth and life have become very complicated. His lakefront mansion and multiple homes provide security and privacy. He focuses his time on his family, Amazon, Blue Origin, and other ventures like the Washington Post. He is very involved in philanthropy through the Bezos Family Foundation.

Occasionally, Bezos**'** complicated past catches up with him, as when he emailed his biological father in 2013. Bezos expressed no ill will and wished him the best.

Looking ahead, the answers to questions about Amazon**'**s future are usually "yes." Amazon will likely offer faster delivery, own more infrastructure, expand Fresh and devices, enter new countries, use 3D printing, and face more antitrust scrutiny.

Bezos has a long-term vision of selling everything, everywhere as conveniently as possible. Amazon**'**s growth into new areas like perishables, devices, and manufacturing is aimed at achieving unprecedented scale and eliminating inefficiencies. Overall, the summary depicts Bezos as a long-term, customer-focused thinker who has built Amazon into a massive, ever-expanding company.

Amazon dominates the book and electronics retail markets, while rivals have struggled or gone out of business. Amazon skillfully navigates regulations and avoids antitrust issues that harmed Microsoft in the 1990s.

Amazon**’**s founder and CEO Jeff Bezos is relentlessly focused on growth and invention. His vision is for Amazon to become an “everything company” that sells and provides all types of goods and services.

Bezos values both major innovations as well as small, incremental improvements. He believes many small advantages can weave together into a strong competitive position.

Since its founding, Amazon has been ambitious and willing to make bold bets to achieve Bezos**’**s vision. At the same time, it has avoided moves that could threaten its growth or lead to legal troubles.

Amazon is likely to continue expanding into new areas and working to gain advantages over competitors. As long as Bezos remains in charge, Amazon will pursue his vision for the company aggressively but carefully.

In summary, Amazon has dominated its initial markets, avoided missteps of other tech giants, and is poised to continue growing under Bezos**’s leadership. Its relentless pursuit of Bezos’**s vision and incremental innovations have fueled its success.

Any mistakes. Bezos included both in Amazon**’**s corporate values:

  1. Memos from the Chairman by Alan Greenberg: The chairman of Bear Stearns constantly restated the company**’**s core values of modesty and frugality in his memos to employees. This is similar to how Amazon recycles its 1997 shareholder letter.

  2. The Mythical Man-Month by Frederick P. Brooks Jr.: Small teams of engineers are more effective than large ones in handling complex projects. This theory is behind Amazon**’**s two-pizza teams.

  3. Built to Last by Jim Collins and Jerry I. Porras: Visionary companies have a strong central ideology and expunge those who don’t embrace it.

  4. Good to Great by Jim Collins: Companies must face facts, find what they uniquely do well, and have a "flywheel effect." Collins briefed Amazon executives on this before publishing.

  5. Creation by Steve Grand: Intelligent systems can emerge from primitive building blocks. This influenced Amazon Web Services.

  6. The Innovator**’**s Dilemma by Clayton Christensen: Some companies avoid disruptive technology to protect their business but end up more disrupted. Amazon acted on this in creating Kindle and AWS.

  7. The Goal by Eliyahu Goldratt: Identify constraints and organize to optimize them. This helped fix Amazon**'**s fulfillment network.

  8. Lean Thinking by James Womack and Daniel Jones: Focus on value-adding activities and eliminate waste.

  9. Data-Driven Marketing by Mark Jeffery: Measure everything and provide data to support assertions. Amazon employees must do this.

  10. The Black Swan by Nassim Taleb: People see patterns in randomness but miss unpredictable events. Experimentation

So in summary, Bezos and Amazon incorporated many of these principles around lean operations, use of metrics, focus on core values, forming small teams, and avoiding disruption by acting on new technologies. The key values and philosophies from these books were built into Amazon**'**s corporate values and culture.

In July 2012, Brad Stone submitted a Freedom of Information Act request to the **U.**S. Department of Labor for any complaints or violations against Amazon since 1995. He received a few dozen complaints from OSHA offices, though most were minor issues that Amazon promptly addressed. The most serious was a **$**3,000 fine in Washington for lacking an emergency evacuation plan for ammonia fumes. However, FOIA requests are difficult to fulfill completely for large companies like Amazon.

In 2012, Amazon began offering up to **$**2,000 a year in tuition reimbursement for fulfillment center employees who had worked there for at least 3 years to continue their education.

Chapter 7 discusses how Amazon considers itself a technology company, not just a retailer. It has applied technology and innovation to transform retail.

In 2007, an executive claimed Steve Jobs said that Apple was going to kill the Kindle. The CEOs of other publishers said that was "incredibly stupid."

In 2009, Walmart began competing aggressively with Amazon on book pricing, which led Amazon to pressure publishers to lower e-book prices. The American Booksellers Association complained to the Justice Department.

Jeff Bezos believes that companies need to make "high-velocity decisions" to adapt quickly in a fast-changing world. But Amazon has been criticized at times for making "expedient" decisions without fully considering consequences. For example, its lending library initiative upset publishers and authors.

Jeff Bezos instilled 14 leadership principles in Amazon**'**s culture that emphasize customer obsession, innovation, and long-term thinking. He lives by those principles himself in his personal life and at Amazon.

The chapter provides some details on Jeff Bezos**'** family, home, interests, and reading habits.

Here is a summary of the key rights that are commonly granted to authors:

Copyright - The author retains the copyright in the work, which includes the exclusive right to reproduce, distribute and modify the work. The author can authorize others (like publishers) to exercise these rights.

Final approval - The author often retains the right to approve final edits, changes, or modifications to the work before publication.

Advance against royalties - The author typically receives an upfront payment (the advance) before the work is published. The advance is deducted from future royalties.

Royalties - The author earns a percentage (the royalty rate) of the revenue from sales of the work. Hardcover royalties are typically higher than paperback. Ebook royalties vary but are often 25**-50%** of net revenue.

Subsidiary rights - The author may retain or share revenue from licensing audiobook, film, TV, theatrical, and other adaptations of the work.

Reversion of rights - If the work goes out of print or sales drop below a certain level, the rights in the work may revert back to the author after a set period of time. This allows the author to publish the work with another publisher.

Creative control - The author is often granted certain rights to be consulted on key creative decisions related to the work, such as covers, titles, adaptations, and more. The level of control depends on the author**'**s bargaining power.

Non**-comp**ete clause - The author may agree not to publish a work that competes directly with the contracted work for a certain period of time. This prevents the author from immediately publishing a sequel or very similar work with another publisher.

Option clause - The publisher may obtain the option to acquire the author**'s next work(s) under specified terms. But the author is under no obligation to actually provide the work if they don**'t wish to.


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