These are notes I wrote up after reading The Everything Store by Brad Stone. I enjoyed reading the book and learned a lot of new things about Amazon’s journey and felt like I got insight into Bezos’ mind.

Warning: notes below this point are haphazardly written and organized…

It’s amazing that the Amazon IPO comes in a fifth of the way thru the book. And if the book was written at a later date, the IPO would be in the opening pages. Jeff has done so much after Amazon went public. He embodies the long term thinking that he espouses.

I liked how this book didn’t fixate on his childhood or growing up years, but it was interesting that there was very little mention of his growing up other than his family situation. I don’t know why that section of his life was glossed over.

Also interesting that he had an adopted father. Could be motivation for needing to show that he is worthy / approval. This was speculated about in the book and a connection was drawn to Jobs and other founders who were adopted.  

Leadoff quote by Bezos

When you are eighty and in reflection... you will remember your life as a series of choices. We are our choices.

Bezos seems incredibly hard to work for but he makes working for him worth it because of his intelligence and hard work and the opportunity to be part of something large. It surprised me that he and Amazon were not always as intense — the early days of Amazon were very chill. One day after employees came into the office, Bezos decided to take the whole company hiking since they were all new to Seattle.

I struggle to tease out the causation vs correlation between success and being difficult. Was he so successful because or in spite of being difficult? Maybe being difficult is also correlated with thinking outside the box and a lack of social cohesion, and those are really what make people have the opportunity to be wildly successful. But can you be kind and lack social cohesion / herd mentality?

Another way to see this lack of social cohesion is in how Bezos thought analytically and rationally about everything, even social situations. 

Much was made of Bezos’ laugh. 

Bezos spends much more time looking forwards than going reflecting. Similar to some successful friends of mine. What weaknesses does that expose? What do you gain from reflection?

Narrative fallacy is the tendency of humans to smooth complex realities into simple stories and gloss over the complexes, chaos and randomness. When interviewed for the book, Bezos challenged Brad Stone to deal with narrative fallacy.

Bezos identified the internet as something undergoing explosive growth and figured out how to apply his skills to the internet. Selling books was the best entry point. 

I was surprised by how many acquisitions Amazon made in the early days. They bought companies to expand into new businesses. After the dot-com crash, they revised their buying strategy and only bought companies to accelerate flywheels, not to fill in gaps. 

So many Amazon stories involve them not doing the full accounting / predictions of a new product that was designed to help customers. Examples: $9.99 top sellers on Kindle, $79 pricing for Amazon Prime, etc, etc.  Bezos is ruthlessly analytical in certain situations, but he is also OK not thinking thru a plan if it makes intuitive sense and aligns with Amazon’s goals. 

Amazon also is a ruthless, emotionless, memoryless negotiator. Example 1: Amazon wanted lower UPS rates but USPS and FedEx offered inferior service. So Amazon set up their FedEx capabilities right before the UPS negotiation. Then when UPS wouldn’t give lower rates, Amazon said they were going to start using FedEx and did. They could not have kept it up for long but they kept it up long enough for UPS to capitulate. 

Example 2: Book publishers. When book publishers wouldn’t give them lower rates, Amazon would take their books out of the Amazon prediction algorithms and publishers would see their revenue tank. 

Example 3: Diapers.com. Amazon wanted to buy diapers.com but they did not want to sell. So Amazon started selling diapers at a lost. They even launched a new product, Amazon Mom, while the diapers.com founders (Marc Lore of Jet is one of them) were at Amazon for an acquisition meeting. The founders were not able to respond to Amazon’s press release because they were stuck all day in meetings and their company could not get ahold of them. 

Amazon doesn’t care about fucking over the other party. In an interview for an executive position, a candidate said that a good negotiation has both parties come out happy. That candidate did not get the job.

Amazon’s negotiation gives them a meaningful advantage. They use a tactic that reminds me of Nixon’s madmen theory, they are willing to hurt themselves in order to win the negotiation. And Amazon’s constant turnover ensures that the negotiations are memoryless and that there is not a personal connection between the two parties. 

Amazon also took this ruthless mentality within the company. 

EBay had a larger market cap than Amazon for a few years. EBay led the third-party marketplace while Amazon led direct eCommerce sales. But while eBay was loathe to create a direct eCommerce system that competed with the small sellers on their platform, Amazon and Bezos encouraged multiple efforts to develop a third-party marketplace to the dismay of the Amazon teams working on direct eCommerce. 

Amazon is willing to create a division of their company whose success directly competes with another division. Bezos read The Innovator’s Dilemma and Good to Great and internalized that companies die when they become static. So he ditched sentimentality and embraced chaos. (After Bezos received a letter from his biological father who he never met, he wrote back 5 months later with a letter saying, in effect, “no worries, dude.” And that was that.)

Bezos gave out the “Just Do It” award to employees who did something notable on their own initiative, “even if the action turned out to be an egregious mistake”. That last part is key. Bezos is so focused on the future, that mistakes are OK as long as they lead to positive future results. 

Bezos did not believe in “work-life balance”, he believes in “work-life harmony”. 

While Amazon was still not profitable and people began to get worried, Bezos told them “if you are planning for more than twenty minutes ahead .. you are wasting your time”. Everything was changing so quickly everyone needed to focus on what was in front of them. 

Definition — common-sizing the income statement: showing the income statement with components of sales shown as a percent rather than a dollar value. 

Jigglypuff story — great story about how one of Amazon’s fulfillment centers had an issue with a missing pallet of Jigglypuffs. On page 96 of the hardcover edition. 

Amazon discounted the Harry Potter books when they came out and sold them at a loss. While other retailers might see a best seller or big PR event as an opportunity to make money, Amazon saw them as opportunities to invest in the future. 

You climb to the top of the first tiny hill and from there you see the next hill.

Bezos on the beginning of Search Inside the Book

I love this quote. As you dive into a problem and start to understand it’s complexities each step of progress you make just reveals new problems. 

For as horrible Jeff seems to work with, I can’t help but feeling he’s on my team, on all of our teams. His ruthless negotiations and temper tantrums come, at least in part, from a desire to serve the customer, and that’s all of us. He comes off as a good guy because he spends money to develop consumer trust, not to maximize his short-term profits. Amazon’s forays are driven and judged by consumer demand and satisfaction. 

This contrasts with Facecbook who seems to invest more in just getting more use of Facebook. They have taken engagement and usage to be a positive end goal in itself, so they have figured out how to make everyone use more Facebook. Facebook is not looking, for the most part, for new consumer desires. 

Bezos in an interview talked about sins of omission vs commission. His regret minimization framework leads him to bias towards action because he wants to avoid sins of omission. This ties well with one of my favorite poems ”Portrait Of The Artist As A Prematurely Old Man” by Ogden Nash.

And that is, don't bother your head about the sins of commission because
    however sinful, they must at least be fun or else you wouldn't be
    committing them.
It is the sin of omission, the second kind of sin,
That lays eggs under your skin.