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The Everything Store:

Jeff Bezos and the Age of Amazon

Brad Stone

(London Times)

Years ago I interviewed Jeff Bezos, the founder of Amazon. I was not put off by the minions sitting either side of him pointing recorders at me. I was, however, put off by his laugh. A series of thunderous, punctuated exhalations unpredictably emitted at unfunny moments, it would, in most people, be taken as clear evidence of mental disturbance. In Bezos, it is a trademark.

To my relief - I did, for a while, think I was the mad one - the laugh surfaces repeatedly in this thorough profile of Bezos the man and Amazon his company that, for good or ill, has come to dominate the retail world. It shocks and baffles people and, on one occasion, it destroys a deal because the counterparty cannot abide the Bezos roar. In childhood, the laugh ruined visits to the cinema for his younger brother and sister. It would be some Disney movie, his mother recalls, and his laughter was drowning out everything.

The book does not explain the laugh beyond saying that it seems to have been inherited. It is simply an emblem of the man's oddity and, perhaps, of a certain disassociation from ordinary lives and manners. Like other internet emperors - Steve Jobs of Apple, Larry Ellison of Oracle, both adopted - Bezos grew up with a mystery. His biological father had left when he was two and, at 10, he discovered he was unrelated to his mother's second husband, the man he had called Dad.

Whether such a beginning determines a life is unknowable, but it is certainly true that Bezos shares with Jobs and Ellison a freakish confidence in his own convictions and insights. He is, says Stone, quite indifferent to the opinions of others and he reacts harshly to efforts that don't meet his rigorous standards. The phrase 'work-life balance' angers him because working for Amazon must be an all-consuming vocation. It certainly doesn't seem to be fun. Bezos refuses to follow the Silicon Valley cult of free catering and parking for employees (he charges for both), though for a time he did let them have free Advil, a painkiller. He ruthlessly chucks out loyal - and entirely successful - executives to replace them with the latest hotshots. Even executives from the famously ruthless retailer Walmart, a company Bezos seems to admire, can't really cope. A certain Tom Sharpe arrived from that company to announce to Amazonians, "the grown-ups are here now". He lasted a year. Born in 1964, Bezos emerged from a family that, though broken, seems to have happily nurtured their odd son. At three he wanted to sleep in a proper bed, so he took his cot apart with a screwdriver. At his Montessori school he became so engrossed in what he was doing, teachers had to lift both him and his chair to take him to the next activity. He spent summers on his grandparents' ranch where he repaired windmills and castrated bulls. He was, in short, a determined and technically competent boy.

The idea for Amazon came to him when he was working at the hedge fund DE Shaw as a computer scientist in the early 1990s. He became convinced that the internet was the future of retailing and, in 1994, he set up his company in Seattle. He began with books — they suited the technology and delivery systems better than any other product - but his intention was always to be able to sell everything up to, but perhaps not including, aircraft carriers.

For the first decade his focus was exclusively - and almost fatally - on volume at the expense of profits. He saw the internet as a landgrab; you had to seize territory now to have any hope of making money later. It worked for a time; traditional bookshop chains patronised and then threatened him, only to find themselves washed away by the Amazonian flood.

This rapid rise to ascendancy in the internet book trade encouraged Bezos's ruthlessness. One plan to wring the best possible terms out of small publishers was called the Gazelle Project because he wanted Amazon to approach these little companies as a cheetah would approach a sick gazelle. Horrified by such frankness, the company lawyers made him change the name to Small Publisher Negotiation Program; the project itself was unchanged.

In 1999, the company lost $1bn and it was becoming clear to all - but not yet Bezos - that the landgrab phase had to end and be replaced by a profit consolidation phase. Amazon had first to weather the dotcom crash, which, miraculously, it did - primarily because lenders and investors remained dazzled by the energy of Bezos and the sheer scale of Amazon and its future ambitions. But it was a damn close-run thing and, before the usual business books appear with their glib post-success formulations, we should be clear: Bezos very nearly didn't make it and, had his own worst landgrabbing instincts prevailed, Amazon would be all but forgotten.

Now it is everywhere, selling almost everything - a quick check shows only model aircraft carriers. Amazon has done grievous harm to traditional publishers and to books in general, slashing profitability to the point where the cultivation of talent and the exercise of taste are no longer priorities. Other sectors are now also being transformed. It probably had to happen and, with luck, something new, something of quality, will emerge from the ruins. In any case, I confess I am grateful to Bezos for my ability to get hold of books and almost everything else without leaving my sofa.

That leaves one loose thread. Bezos never contacted Ted Jorgensen, his biological father. Ted was a circus performer and 'one of Albuquerque's best unicyclists'. But Brad Stone diligently sought him out only to find that Ted - now the owner of a bike shop near Phoenix - had no idea he had fathered one of the most successful men on the planet, a man worth just short of $30bn.

At first Ted did not tell his new family, but, when he did, one son became intrigued. He watched videos of Bezos and noticed what everybody first notices. Nothing could more conclusively establish paternity.

"He has," he announced, "Ted's laugh!"

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The story of Bezos' personal life is well-told in The Everything Store, forming a sort of entrepreneurial stations of the cross. There's a childhood gifted with educational opportunities but marred by the absence of his biological father ("belonging to a unicycle troupe didn't pay much," Stone writes). There's the relentless drive and determination from an early age. There's the youthful job at D. E. Shaw & Company, the hedge fund whose mercurial founder redefined the industry and showed the power of thinking outside the box. We've got the daring decision to start a new company - literally in a garage at first. Then comes the key early six-figure investment in the company by Bezos' mom and stepdad - a forceful reminder of the deeply uneven playing field in American life.

If you're interested in the company, Stone's history is consistently engaging and full of amusing anecdotes. Bezos' high-school valedictorian speech outlined 'his dream of saving humanity by creating permanent colonies in orbiting space stations while turning the planet into an enormous nature preserve.' During the company's early years, executives from Seattle had to help staff up distribution centers during the holiday rush. The strong labor market made it hard to obtain quality temp help; one early hire dispatched to Delaware watched one worker get fired for intoxication and then wet himself while he tried to protest. At a high-level executive meeting shortly before the launch of Amazon Web Services, Bezos unilaterally lowered the price. When warned that would cause the company to lose money on AWS for a long time, the CEO simply replied, "Great!" - he thought high profits would only attract competition.

The best part of the book is set during the early-to-mid aughts, when the post-dot-com blues raised serious questions as to whether the company could continue to exist at all. Of today’s tech giants, the vast majority either went public well before (Apple, Microsoft) or well after (Google, Facebook) the great technology mania of the 1990s. Most companies from that era failed, of course. And most of the survivors such as AOL, Yahoo, and eBay, are more or less struggling. Amazon stands alone as a dial-up-era company thriving in the present day. But this was a close thing. The 1999 iteration of Amazon had all the problems of a classic money-bleeding bubble company. It was only a well-timed European bond issue that let Amazon avoid a disastrous financial crunch.

Amazon subsisted for several years thanks to cash injections from deals it made to run the website back-ends of several big box retailers, including Toys-R-Us, Target, Borders, and Circuit City. These tales, coming from a time when Amazon was neither a fascinating startup nor a dominant player, are not well-known, and they nicely illustrate the combination of hard work, intelligence, and old-fashioned dumb luck it takes to succeed in business.

As the book goes on and Amazon survives, then thrives, then dominates, the shrewd business dealings of its CEO can begin to look more menacing. Scrappy negotiating from a startup feels more like bullying from an incumbent. Stone's recounting of the hardball tactics Bezos used to acquire Zappos and are slightly horrifying. Faced with promising newcomers to e-commerce spaces that he wanted to add to his empire, Bezos in both cases opened with lowball acquisition offers. When rebuffed, instead of negotiating he launched ferocious price wars, selling shoes and diapers at far below wholesale cost. Once it was clear Bezos would rather lose millions destroying rivals than spend them on higher acquisition prices, both firms were induced to sell and join the Amazon family. And hey, at least those Web startups got buyout offers and ultimately made money from Bezos' empire-building. Bookstore chains just got stomped on.

But throughout it all, Amazon stays remarkably true to its core vision of long-term growth via customer satisfaction. The company and its CEO are not without their dark sides, but it's never consumers who have cause to complain. When Bezos throws sharp elbows his tactic is almost always to lower prices. The official company line that everything they do is in pursuit of better serving their customers sounds self-serving, but as best anyone can tell it's true. Even in its best years, Amazon's profit margins are thin, and in recent quarters they've been losing money. I once described the company as "a charitable organization being run by elements of the investment community for the benefit of consumers," which prompted a reply from Bezos who explained that long-term shareholder value is created by building long-term relationships with customers.

This is where the absence of a comparative perspective in Stone's book hurts it. Bezos' core ideas - long-term focus, consumers first - are correct but hardly earth-shattering. But while most companies just pay lip service to this stuff, Amazon stands out by actually doing it. The deep structure of American financial capitalism almost compels focus on the next quarterly earnings report. That, rather than stupidity, is what leaves Radio Shack addicted to brand-killing warranty pitches and kept Barnes & Noble perennially a day late and a dollar short on the Web. CEOs are loath to deliberately take a short-term profit hit, no matter the long-term upside. Companies change and adapt not when they should, but when they have no choice - and by then it's usually too late.

What makes Bezos probably the greatest businessman in America today (I should note that Slate has an affiliate relationship with Amazon, though unlike our former corporate partners at the Washington Post we're not owned by Jeff Bezos) is his ability to actually stick with these ideas. It's not so much that he sees things other executives miss, but that he manages to actually do them. Nobody has been better at keeping Wall Street's confidence even during a quarter or two of bad earnings, or at keeping his team's confidence even during a year or two of bad stock performance. Stone's narrow focus occasionally exaggerates the originality of Bezos' vision (Amazon wasn't the first online bookstore, or the first company to focus on everyday low prices, or the first vendor of cloud computing services) while understating his unusual mastery of the larger corporate game.

At the same time, those interested in a broader discussion of Amazon's implications for the future of small business, commercial real estate, wages and working conditions, book publishing, or the American economy as a whole will be disappointed. Such matters all rate mention, but little in the way of sustained engagement or discussion. But if Stone and Bezos are right that Amazon will only grow and grow in the years to come - and I think they are - there will be time for other books. For now, Stone's tale of the birth, near-death, and impressive revival of an iconic American company is well worth your time.

(Sunday London Times)

Before it was the self-proclaimed largest bookstore on earth or the web's dominant superstore, was an idea floating through the New York offices of one of the most unusual firms on Wall Street: DE Shaw & Co.

A quantitative hedge fund, Desco, as its employees affectionately called it, was started in 1988 by David E Shaw, a former Columbia University computer science professor. Shaw pioneered the use of computers and sophisticated mathematical formulas to exploit anomalous patterns in global financial markets.

In Shaw's estimation, the company wasn't really a hedge fund but a versatile technology laboratory full of talented engineers. So in 1994, when the opportunity of the internet began to reveal itself to the few people watching closely, Shaw felt his company was uniquely positioned to exploit it. And the person he anointed to spearhead the effort was Jeff Bezos.

Bezos had encountered the internet in an astrophysics class at Princeton in 1985 but hadn't thought about its commercial potential until Desco. Shaw and Bezos would meet for a few hours each week to brainstorm for this coming technological wave, and then Bezos would take those ideas and investigate their feasibility.

In early 1994, several prescient business plans emerged from the discussions between Bezos and Shaw and others at DE Shaw. One was the concept of a free, advertising-supported email service for consumers - the idea behind Gmail and Yahoo Mail. Desco would develop that idea into a company called Juno, which went public in 1999 and soon after merged with NetZero, a rival.

Another idea was to create a new kind of financial service that allowed internet users to trade shares and bonds online. In 1995, Shaw turned that into a subsidiary called FarSight Financial Services, a precursor to companies such as E-Trade. Shaw and Bezos discussed another idea as well. They called it 'the everything store'.

The idea of the everything store was simple: an internet company that served as the intermediary between customers and manufacturers and sold nearly every type of product, around the world. Bezos concluded that a true everything store would be impractical - at least at the beginning. He made a list of 20 possible product categories, including computer software, office supplies, clothes and music. The category that jumped out at him as the best option was books. They were pure commodities; a copy of a book in one store was identical to the book in another.

Bezos knew it would never really be his company if he pursued the venture inside DE Shaw. Indeed, the firm initially owned all of Juno and FarSight, and Shaw acted as chairman of both. If Bezos wanted to be a true owner and entrepreneur, with significant equity in his creation, he had to leave his lucrative and comfortable home on Wall Street.

AS A new millennium dawned, Amazon stood on the precipice. It was on track to lose more than $1bn (€730m) in 2000, just as the sunny optimism over the dotcom economy morphed into dark pessimism. Amazon’s shares, which since its float had moved primarily in one direction — up — topped out at $107, and would head steadily down over the next 21 months.

The excesses of the dotcom boom had begun to wear on investors. Companies without actual business models were raising hundreds of millions of dollars, rushing to go public and seeing their stock prices roar into the stratosphere despite an unsound financial footing. The Nasdaq peaked on March 10, 2000, then wobbled and began to spiral downward.

While other dotcoms merged or perished, Amazon survived through a combination of conviction, improvisation and luck. Early in 2000, Warren Jenson, the fiscally conservative new chief financial officer, decided the company needed a stronger cash position.

Ruth Porat, co-head of Morgan Stanley's global technology group, advised him to tap into the European market, and so in February, Amazon sold $672m in convertible bonds to overseas investors.

The deal was completed just a month before the crash of the stock market, after which it became exceedingly difficult for any company to raise money. Without that cushion, Amazon would almost certainly have faced the prospect of insolvency over the next year.

In June 2000, with Amazon's share price headed downward along with the rest of the Nasdaq, Bezos first heard the name Ravi Suria. A native of Madras, India, and the son of a schoolteacher, Suria came to America to attend the University of Toledo and earned an MBA from the school of business at Tulane University.

At the start of 2000, he was a new and unknown 28-year-old convertible bond analyst at the investment bank Lehman Brothers, working in a small office on the 14th floor of the World Financial Center.

By the end of that year, he was one of the most frequently mentioned analysts on Wall Street and the unlikely nemesis of Bezos and Amazon.

For the first five years of his career, at Paine Webber and then at Lehman, Suria wrote about esoteric subjects such as the overcapitalisation of telecommunications companies and biotechnology firms.

After raising its third high-profile round of debt and losing Joe Galli, its chief operating officer, Amazon demanded Suria's attention.

Working from Amazon's latest quarterly earnings release, Suria analysed the heavy losses of the previous holiday season and concluded the company was in trouble, and in a widely disseminated research report, he predicted doom.

"From a bond perspective, we find the credit extremely weak and deteriorating," he wrote in what would be the first of several scathing reports on Amazon over the next eight months. Suria said that investors should avoid Amazon debt at all costs and that the company had shown an "exceedingly high degree of ineptitude" in areas such as distribution. "We believe that the company will run out of cash within the next four quarters, unless it manages to pull another financing rabbit out of its rather magical hat."

The prediction generated sensational headlines (New York Post: 'Analyst finally tells the truth about dotcoms'). Already freaked by the market's initial decline, investors dropped Amazon and its stock fell another 20%.

Inside Amazon, Suria's report hit a nerve. Bill Curry, then Amazon's chief publicist, called the report 'hogwash'. Bezos expanded on that when he spoke to The Washington Post, saying that it was 'pure unadulterated hogwash'.

Bezos began a charm offensive. Suddenly, he was everywhere - in interviews with journalists, talking to investors - asserting that Suria was incorrect and that Amazon’s fundamentals were fine.

In fact, times were not normal. The challenge from Suria and the dotcom collapse had changed the financial climate, and Bezos knew it. Jenson and Bezos sat down to scrutinise Amazon's balance sheet. They came to the conclusion that even if the company showed reasonable growth, its fixed costs - the distribution centres and payrolls - were simply too big. They would have to cut even more.

For the next eight months, Suria continued to pummel Amazon with negative reports. According to colleagues from the time, Bezos frequently invoked Suria's analyses in meetings. An executive in finance used Suria's name to coin a term for a significant mathematical error of a million dollars or more. Bezos loved it and started using it himself. The word was 'milliravi'.

The slide in Amazon’s share price started to accelerate. In the span of three weeks in June, it dropped from $57 to $33, shedding almost half its value. Employees started to get nervous. Bezos scrawled: "I am not my stock price" on the whiteboard in his office and instructed everyone to ignore the mounting pessimism. "You don’t feel 30% smarter when the stock goes up by 30%, so when the stock goes down you shouldn't feel 30% dumber," he said at an all-hands meeting.

As if to prove his singular obsession with customer experience, Bezos placed an expensive bet, hitching Amazon to the rising fantasy series Harry Potter. In July, author JK Rowling published the fourth book in the series, Harry Potter and the Goblet of Fire. Amazon offered a 40% discount on the book and express delivery so customers would get it on Saturday, July 8 - the day it was released - for the cost of regular delivery. Amazon lost a few dollars on each of about 255,000 orders, just the kind of money-losing gambit that frustrated Wall Street.

The Harry Potter promotion unsettled even executives working on it. "I was thinking, holy shit, this is a lot of money," said Lyn Blake, the Amazon executive in charge of books at the time. She was later inclined to admit that Bezos was right.

In February 2001, Suria reared his head again. He published another report that questioned Amazon's reserve of capital. With Amazon facing $130m in annual interest payments on its debt and given the prospect of its continued losses, Suria predicted that the company would face a cash shortage by the end of the year.

This time, Amazon made it personal. Spokesman Bill Curry retorted in an interview that Suria's report was 'silly'. Warren Jenson paid a personal visit to Lehman vice-chairman Howard Clark, and John Doerr, an Amazon investor, called Dick Fuld, chief executive of the investment bank, and implored him to have the firm review Suria's research.

Suria now helps to run a hedge fund and has a bitter view of his history with the online retailer. "Amazon was like a high-school bully picking on an elementary school kid. I was 29 years old. It was a character-defining moment [for them], and as far as I'm concerned, they failed it miserably. It ruined my life for two years.”

Suria believes Bezos is "deranged" and proudly notes that he hasn't bought anything from Amazon since he tangled with the company. But there's no doubt investors were keyed into Suria's analysis.

The February research report, his last at Lehman Brothers before departing for the hedge fund Duquesne Capital Management, sent Amazon's share price plunging towards the ignominious land of single digits.

In January 2002, Amazon reported its first profitable quarter, posting net income of $5m, a meagre but symbolic penny per share. Marketing costs were down, international revenues from the UK and Germany were up, and sales from third-party sellers on the vaunted Amazon platform made up 15% of the company's orders. The share price immediately jumped 25% in after-hours trading, clawing its way out of the single digits.

In the first quarter of the following year, Amazon cleared $1bn in sales for the first time during a non-holiday period, setting the stage for its first profitable year.

In a sign of optimism, Amazon said it would redeem the bonds from its first debt round back in 1998, paying bond holders the full outstanding value of the bonds five years before their maturity date.

As they prepared to make this announcement, someone on the finance team wondered what their old foe Ravi Suria was thinking. That revived the notion of the milliravi, a significant mathematical error. Mark Peek, the chief accounting officer at the time, joked that they should find a way to use the word in their press release.

Everyone loved that idea, including Bezos, and they started exchanging suggestions over email. Finally, investor relations chief Tim Stone asked Bezos if he was serious about doing this, and Bezos said that yes, he definitely was.

Thus, on April 24, 2003, in the press release announcing quarterly earnings, shareholders, analysts and journalists were treated to this inexplicable headline, which doubled as a quotation attributed to Bezos: MEANINGFUL INNOVATION LEADS, LAUNCHES, INSPIRES RELENTLESS AMAZON VISITOR IMPROVEMENTS. Taking the first letter of each word and putting them together produced MILLIRAVI.

A few of the analysts and reporters following the company scratched their heads over the unartful prose. No one outside Amazon knew what to make of it. But for Bezos, and the employees who stuck with their implacably demanding leader through that first critical battle, the message was clear. They had won.

(London Review of Books)

Jeff Bezos thinks of himself as a great man, and why shouldn't he? 'Our vision is to have every book ever printed, in any language, available in under 60 seconds.' He wrote that ten years ago; now it's almost true. When he graduated from high school, first in his class, he gave a speech to his classmates on how the fragility of the Earth required them to explore outer space and work towards rehousing humanity in orbiting space stations. He has used some of his fortune to turn 290,000 acres in West Texas into a giant laboratory for new spacecraft, which he claims will be so efficient and inexpensive to service that everyone will eventually be able to leave the planet. In his annual letter to the shareholders of Amazon, he acknowledges that some of his decisions may seem inexplicable, but 'it's all about the long-term.' To that end, he has donated $42 million to the construction of the Clock of the Long Now, which is supposed to tick for 10,000 years. His temporarily is not our temporarily.

Bezos was born in 1964 in New Mexico. His mother was 16; his father, not much older, was a unicyclist in a circus. Bezos never knew him, and he was adopted by his mother's second husband, a Cuban petroleum engineer who fled Castro as a teenager and told Brad Stone that he takes credit for passing on a 'libertarian aversion to government intrusion into the private lives and enterprises of citizens'. To taxes, for example. Jeff did well at school, particularly in maths and science; he went to Princeton; and by the age of 28 he was one of the vice presidents of a New York investment firm. In 1994, when the World Wide Web was a year old, he made a list of things that he might be able to sell in great quantities over the internet. In a supposed triumph for mail order and catalogue companies, the US Supreme Court had decided that businesses weren't required to collect sales tax on behalf of any state in which they lacked a 'physical presence'. Anything sold online was going to be cheaper than almost anything sold in a shop. Someone was going to make a fortune. Bezos created a 'regret minimisation framework':

I knew when I was eighty that I would never, for example, think about why I walked away from my 1994 Wall Street bonus. At the same time, I knew that I might sincerely regret not having participated in this thing called the internet that I thought was going to be a revolutionising event. When I thought about it that way... it was incredibly easy to make the decision.

Bezos's list included clothes, computer software and office supplies. What he liked about books was that they were 'pure commodities': copies of the latest Stephen King sold online would be no better or worse than those sold in shops. But no actual shop was big enough to offer all the three million-plus books in print. Two distributors, Ingram and Baker & Taylor, handled distribution for most American publishers: Bezos wouldn't have to make separate deals with each publishing house. Books also came assigned with International Standard Book Numbers and were catalogued on CD-ROM: that would save time, and Bezos was in a hurry.

The company's motto was 'Get Big Fast'. The Amazon isn't just the largest river in the world: it's larger than the next seven largest rivers combined. Bezos preferred the name, but friends persuaded him that it sounded sinister. (Type Relentless into an address bar and you still get directed to Amazon.) He also considered (but he knew that soon enough he wouldn't only be selling books) and (sounded too much like 'cadaver'). Naturally he couldn't set up the business in New York - too many potential customers lived there, and he didn't want to charge them all sales tax - but somewhere isolated would make it difficult to hire engineers. The compromise was Seattle: at least Microsoft was nearby. Washington is also one of the few American states that doesn't charge any personal income tax. (In 2010, Bezos donated $100,000 to a campaign that successfully defeated Initiative 1098, supported by Bill Gates, which would have started taxing those who earn more than $200,000 a year.) Bezos took a four-day bookselling course through the American Booksellers Association. He used his savings and took out loans to hire a small staff, and his parents put up money from their retirement fund. They didn't know anything about the internet, but they trusted him.

At first only web geeks shopped from Amazon, and for a year its bestselling book was How to Set Up and Maintain a World Wide Web Site: The Guide for Information Providers. To make the site livelier Bezos hired an editorial team to review books, but sacked them when he realised that customers preferred doing it themselves. (My first book review was a freebie for Amazon: five stars for Jane Eyre.) Distributors made Amazon order ten books at a time, but Bezos got round the system:

You didn't have to receive ten books, you only had to order ten books. So we found an obscure book about lichens that they had in their system but was out of stock. We began ordering the one book we wanted and nine copies of the lichen book. They would ship out the book we needed and a note that said: 'Sorry, but we're out of the lichen book.'

Amazon advertised itself as the world's largest bookstore, but didn't actually hold any stock: a customer would order a book from Amazon, Amazon would order it from a distributor and pass it on. It was the kind of transaction that ordinary bookshops do all the time: the difference was that Amazon - run from Bezos's garage, later from crummy offices in the cheapest part of town - could afford to take 30 or 40 per cent off bestsellers, 10 per cent off everything else. Any business meetings were held in a cafe inside a branch of Barnes and Noble.

According to Stone's The Everything Store, which charts Amazon's growth from bookseller to all-around mercantile hegemon, one of Bezos's favourite books is Sam Walton's autobiography, Made in America, about the creation of Wal-Mart. Bezos made his top employees read it, then realised that it was simplest just to replace or augment them with executives from Wal-Mart - so many of them that Wal-Mart sued, alleging that Amazon was stealing trade secrets. Walton's creed, as Bezos understood it, was to have lower prices than your competitors, even if doing so cut into your profits or meant you had to treat your employees like garbage. With lower prices you'll get more customers; with more customers you can push suppliers to lower their prices, which will let you lower your prices even further, thereby attracting more customers; repeat until your competitors are dust. Mega-bookstores - Borders and Barnes and Noble - were slow to take to the web, but Bezos prepared for them by patenting '1-Click' checkout, which just meant that customers' shipping and billing details were saved and stored: no need to type them out next time. The patent was written so broadly that when Barnes and Noble did start selling books online, Amazon was able to prevent their 'Express Lane' checkout, even though it required two clicks. Every American webstore was forced to be clunkier than Amazon unless, like Apple, it paid Amazon huge licensing fees. This lasted until 2006, when a New Zealand actor with a side interest in intellectual property law finally produced evidence that another e-commerce company had actually patented one-click shopping first, under a different name. But by then most of Amazon's would-be competitors were defunct.

In 1995, the pioneer web-browser Netscape went public at $28 a share and tripled in a day, even though it had never made money. Raising capital would no longer present Bezos with any difficulties. Amazon started making its own deals with publishers, cutting out distributors and building warehouses: as at Wal-Mart, they were first called 'distribution centres' and were miserable. Few of them had air-conditioning: on hot days it was cheaper just to station private ambulances outside to cope with the employees who inevitably collapsed. Workers carried little devices that kept track of their speed on the floor, and Amazon regularly got rid of the slowest. (The best article about what it's like to work in one of these places is Mac McClelland's 'I Was a Warehouse Wage Slave: My Brief, Backbreaking, Rage-Inducing, Low-Paying, Dildo-Packing Time Inside the Online-Shipping Machine', which was published in Mother Jones last year.) No other company was as good at sending things out, fast and cheaply. Stone explains:

A customer might place an order for a half dozen products, and the company's software would quickly examine factors like the address of the customer, the location of the merchandise in the Fulfilment Centres, and the cutoff times for shipping at the various facilities around the country. Then it would take all those variables and calculate both the fastest and the least expensive way to ship the items.

The company still didn't make a profit after it went public in 1997. One business writer, Matthew Yglesias, likes to say that Amazon is practically a charity run by investors for the benefit of the world's consumers. Bezos assured his shareholders that Amazon was betting big on the future: any idiot could make Amazon profitable overnight just by not investing in infrastructure. Cheap books had coaxed people to try shopping online; now Amazon would begin to sell them everything else. It added a music store, then movies, bought companies in China and offices in Luxembourg to shelter its taxes. In a failed attempt to create a rival to eBay, Amazon Auctions, it spent $175 million to acquire the company According to Stone, its most avid user may have been Bezos himself, who spent $40,000 on an 'Ice Age cave bear, complete with an accompanying penis bone'. A price comparison site,, cost Amazon $187 million, and was then abandoned; PlanetAll, an early social media site, cost $93 million; a premature entrance into the toy market cost $39 million in unsellable merchandise. For several years the company bought or invested in almost every major site that was trying to sell things over the internet and lost money on all of them. But with each failed acquisition, the company was acquiring scores of programmers at a time when there weren't enough good ones in the US for all the tech companies that needed them. (Amazon has since joined Apple and Microsoft to lobby for immigration reform. Top priority: more work visas for Indian engineers.) It learned how to reshape the site for each user, constantly, instantly. Programmes to recommend products to customers based on their previous purchases were so effective that Amazon could leverage them. If a small publisher wouldn't give Amazon deeper discounts than it offered other booksellers, Amazon would promote a competitor's titles instead. It was all part of the Gazelle Project, after Bezos said Amazon should go after publishers the way 'a cheetah would pursue a sickly gazelle'. Publishers would sometimes hold out against lowering prices for a few weeks, but Amazon stocked books that no one else would; and they paid their bills, when suddenly there weren't very many other booksellers around to pay them.

Bezos told the Washington Post (before he bought it) that 'to be nine times bigger than your nearest competitor, you actually only have to be 10 per cent better.' And his site was better, though by how much who could say? In 1999, when Toys 'R' Us launched its website in time for Christmas, Amazon bought out its entire stock of the most popular toys (taking advantage of a free shipping promotion), and resold them on its own site. Toys 'R' Us was fined by the Federal Trade Commission for over-promising. A department within Amazon called Competitive Intelligence noticed that a New Jersey company called Quidsi was having success with a site called it sold nappies at a loss to entice customers to buy its other baby products. Amazon tried to acquire the company, but Quidsi wasn't interested. So Amazon started selling its nappies for even less than Quidsi, though it meant losing $1 million a day. When Quidsi still wouldn't sell, Amazon threatened to start giving away nappies. Quidsi sold to Amazon; nappy prices went back up. To make Amazon's catalogue deeper than, it bought up stock from used book dealers, then started letting the dealers sell their stock on Amazon's site for a fee. Publishers didn't like their new books competing with cheaper versions of the same titles, but Amazon made money either way. In addition to selling products from their own warehouses, they would become the biggest middleman of the internet: more than two million registered 'marketplace sellers' pay Amazon fees and commissions to have their products listed on the site, or pay Amazon to warehouse and ship their products for them. There are blogs that keep track of the more unlikely items: tanks, wolf urine, simulation models for infant circumcision, uranium ore, live ladybirds, Zimbabwean trillion dollar banknotes. Type in 'dog Halloween costume', and you'll see thousands. The more different things the site sold, the more people used the site, the more businesses would pay to have their products listed on the site. Customers were a commodity like anything else.

But it was losing out on music. Apple had taken control of the digital music market while Amazon kept pushing CDs. They wouldn't allow the same thing to happen to books. Hence: the Kindle. 'Your job is to kill your own business,' Bezos told the engineer in charge. 'I want you to proceed as if your goal is to put everyone selling physical books out of a job.' He was convinced that Apple had made the iPhone too profitable: the smartphone market became glutted with cheaper competitors. Instead Amazon would lose money when people bought the Kindle, but make money when they used it – by buying e-books from Amazon. 'Publishers that didn't digitise enough of their catalogues, or didn't do it fast enough, were told they faced losing prominence in Amazon's search results or in its recommendations to customers.' Amazon's plan to charge only $9.99 for e-books frightened publishers, who knew it would cut into their hardback sales. When five major US publishers attempted to create an electronic bookstore with Apple, Amazon complained to the US Department of Justice, arguing that the publishers were conspiring to raise prices for electronic books in violation of antitrust law. The publishers paid at least $164 million to make the charges go away; they also gave up their bookstore.

Stone has covered Amazon almost since its creation, first for Newsweek, now for Bloomberg Businessweek. He admires it because it's good at giving us what we want, which is why he thinks we should fear it; and he thinks it will 'expand until either Jeff Bezos exits the scene or no one is left to stand in his way'. In the few months since Stone's book went to press, Amazon has bought eight million square feet of warehouse space and taken on 70,000 temporary American workers for the Christmas rush; launched Amazon India and a Kindle store in Mexico; unveiled a new tablet; started the largest website for the sale of fine art; begun selling groceries throughout Los Angeles (other markets to be announced); and made an unprecedented deal with the US Postal Service to have customer deliveries on Sundays. London is to get Sunday deliveries too, via Amazon's own trucks. The company is also preparing to launch its own smartphone (possibly with 'eye-tracking' software: no clicks necessary, just blink) and is manufacturing a box that will let users access Amazon content through their televisions. All this in addition to building up its own publishing house, television and film studio, and continuing its dominance over the sale of server space for tech companies.

The Everything Store is listed for sale on Amazon. MacKenzie Bezos, Jeff Bezos's wife, has reviewed it on the site: one star out of five because she doesn't think it's accurate. Shel Kaphan, Amazon's first employee, also reviewed it - four stars - and says that it is, 'by and large'. You can buy it new in hardback at 46 per cent off list price; or cheaper used; or even cheaper on Kindle. You can also listen to it through Amazon's company - for free if you've never tried before. Shipping is free if you're willing to buy something else too, and they're betting you will.

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