Amazon book

the everything store book written by Brad Stone was the Financial times and Goldman Sachs business book of the year it was published. This book delves deep into the Amazon company`s journey right from start up till the year 2014 by when Amazon had become a Technology powerhouse. The Prologue written by Brad Stone with quotes from Google chairman Eric Schmidt, tagging the word ‘To be amazoned’ which means vacuuming up of brick and mortar retail stores are so well written to make the reader intrigued. Initial chapters explains how Bezos quit from a top paying hedge fund company DE Shaw to venture into his dream of creating an Internet based “Everthing store”. His so called “regret-minimization framework” which Bezos used to decide to take the plunge into leave the conforts of a well settled career to start his venture ‘Amazon – the everything store’ which recently became a Trillion Dollar company, second only to Apple which became the first company to cross a Trillion Dollar worth in 2018. To elicit his Regret minimization framework, he goes “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 called Internet…” A great framework though to arrive at crucial decisions at folks in our lives.

In one of the chapters, Bezos was interviewing a candidate named Birtwistle. Bezos asked why the candidate wanted to work at To which Birtwistle replied “If I`m able to join a company like yours at this early stage, I`d feel like I get to participate in something historic”. Bezos almost started yelling “This is exactly how we think at! You watch. There will be proliferation of companies in this space and most will die. There will be only a few enduring brands and we will be one of them”. Although this conversation came up in one of chapters in a lighter vein, it actually became true 20 years later. And that too Amazon is not just one of them, it went on to become “The only lasting survivor”

I didn’t know that Bezos was one of the original investors in Google his company`s future rival and he minted money being an early investor in Google. He was also credited as Times Person of the year in 1999 and celebrating him as “the king of cyber commerce”. The chapter goes to explain excruciating negotiations Bezos had with Toys “R” Us during their partnership discussions. In fact Toys “R” Us deal became a template for Amazon to make its store as a platform for other brands to use and sell although negotiations always failed due to exclusivity rights demand.

Part 2 of the book articulates how much literary influences like Star trek had on Bezos. The second part delves into Bezos childhood, schooling and interests in rockets. The chapter ‘Chaos Theory’ explains how they remodeled entire Fulfilment infrastructure and enabled faster delivery. They pondered on why not to create a speedy shipping club for consumers whose needs were time sensitivity which led to the birth of Amazon Prime memberships. Bezos knew from 1-Click ordering that when friction was removed from online shopping, customers spent more. The chapter talks about fabled flywheel – The virtuous cycle which was the famous concept from Bezos. To explain, when customers spent more, Amazon`s volumes increased, so it could lower shipping costs and negotiate new deals with vendors. That saved the company money which would help pay for Prime and lead back to lower prices.

The most awaited chapter for me was to know how they started the AWS business and transformed into a technology powerhouse and as I had guessed it was an extremely serendipitous path. This is discussed in chapter ‘A technology company, not a retailer’. Google made its IPO in 2004 and 1 year later Google`s market capitalization was 4 times more than Amazon`s market capitalization and this was driven by 80% of analysts giving a sell call on Amazon. It all started with in 2005 when Amazon devised a way to search for phrases inside books on the site. Bezos pioneered a movement with a service called Mechanical Turk and laid the groundwork for Amazon Webservices – a seminal initiative that ushered in the age of cloud computing. They hired Stanford machine learning professor in 2002 and hired Udi Manber who authored “Introduction to Algorithms: A creative approach” as chief algorithms officer. The titles are all so funny and obscure. Bezos was a lot influenced by the book “Creation” wrote by Steve Grand which gave the idea of creating simple atomics computational blocks called primitives. Bezos directed his team to create primitives in storage, bandwidth, messaging, payments and processing and team started creating services for these. This led to Elastic Compute Cloud or EC2 the service that is at heart of AWS and that became engine of the Web 2.0 boom. Then the engineers developed what would become the Simple Storage Service or S3 project which Bezos wanted to scale to infinity with no planned time. And Bezos chose Andy Jassy to head the geeky technology startup. This combination of Storage and Computing led to the AWS revolution in Cloud computing enabling a student in a dorm room with access to same infrastructure as the largest companies in the world. Microsoft started Azure in 2010 and Google started its cloud business in 2012.

There is a reference to Bezos claiming Amazon to be a missionary company not a mercenary one which got formulated based on the business philosophy book The monk and the riddle. Missionaries have righteous goals and are trying to make the world a better place while Mercenaries are out for money and power and will run over anyone who gets in the way. These are expedient convictions that helped company steer through the periods of its greatest public scrutiny. Chapter highlights the farsightedness of Bezos who brought in new fulfillment centers closer to larger cities allowing for the possibility of next day or same day delivery including the wide rollout of groceries business, Amazon fresh. Amazon expanded its test of Amazon lockers in supermarkets, chains that consumers could have their Amazon packages shipped to if they liked. The chapter also talks about how Amazon creates the hostile environment for target acquisition companies by raging a price war to such limits. This was substantiated by articulation of takeovers of,

What is appealing about the book is that it explains how back then when the dark clouds of the dot-com bust still hung over the ecommerce industry, retailers felt the pain and left the arena but Amazon ended up being the lone and massive survivor. Bezos listed 17 attributes including polite, reliable, risk taking and thinking big and arrived at why certain companies like Apple, Google, Nike, Disney are the loved companies and he attributes the reason as these companies were innovators and pioneers and the same time created strong perception within customers as innovator and pioneers. This was a good learning.

To conclude, Amazon is unquestionably a technology company, what Bezos had always imagined it to be. A great book with lots of learnings