Brad Stone

Episode Transcript
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Speaker 1 (00:08):
Welcome, Welcome, Welcome back to the Bob West That's podcast.
I guess today Brad Still he works for Bomberg from
He is the Amazon it with a definitive book on Amazon,
The Everything Store, and he's got a brand new bestseller
Amazon Unbound. Brad, glad to have you here, Bob, great

(00:29):
to see you, Thanks for having me. Okay, you're talking
the book. How you got access? How did you get
all this access? Because when you write negative things about
the Amazon, well, look, I mean I I don't view
myself as a as a critic of the company. I'm
almost a historian. I'm trying to tell the story and
that's both the accomplishments and the real reasons to scrutinize

(00:51):
the company. But um, just to back up, you know,
I wrote a previous book about the company, The Everything Store,
in two thousand thirteen. It was the origin story. Jeff
Bezos didn't particularly like it. You might recall some some
negative reviews from his family members and close colleagues. But yes, right, um,
but but you know, over the years, it's it has

(01:11):
become I think the definitive history of the company. And
when I reconsidered, you know, whether there was more story
to tell. In two thousand and seventeen, I approached the company.
I said that I felt like, you know, the the
last decade had been, if anything, more interesting than the
than the original, uh you know, fifteen years, and that
I wanted to write another installment. And I also think

(01:32):
Bob that Amazon change it was. It had been a
very secretive, cloistered company up there in Seattle, and to
some in some in many respects it's still very secretive.
But I think there was an understanding that if they
didn't tell their story, if they didn't allow journals to
tell their story, then that wasn't going to go very
well for them. And so you know, they did allow

(01:53):
me to talk to fifteen or so senior executives. Bezos
so didn't talk to me. There there are some still
some is there perhaps from the first book, but you know,
I got I got a lot of access, and then
the foundation of the new book. It's really just the
volumes of interviews with employees who have come and gone
or still they're talking um, you know, on background, sharing

(02:14):
what they what they saw, what they think of the
company there, and their experiences, the things that they're proud
of and the things that they, you know, wish the
company did it differently, and that's really the foundation of
both books. Now that the book is out, what has
the reaction been from inside Seattle, Amazon, HQ, etcetera. Well,
there are no one star reviews, so I suppose that's nice.

(02:37):
Um there There really has been no official reaction. I
will say informally, I've heard from employees and executives of
Amazon who who feel like that, you know that the
story that I got the story right, that it accurately
captures the the innovation that went into products like Alexa,
the determination of Bezos, but also the way in which

(02:58):
the company has built systems such as the global marketplace
and the transportation network, maybe without a lot of regard
for what some of the consequences might be. And then
if when we can talk about that, but then if
they've had to go back and kind of repair some
of those and the way in which the company has
kind of graduated into a whole new realm of scrutiny
and skepticism, and Bezos in particular, I think has come

(03:21):
under a lot of that criticism. So you know, I
probably not hearing the bad stuff, but for what I
have heard from from employees and executives has been favorable.
Well usually always here from an employee that got something wrong,
whether you did or not, you know that I have gotten.
I've gotten a couple of those I should. So what
we know is that Bezos will be stepping down and

(03:46):
the new person coming in, JOSSI made his bones in
a ws To what degree, aid, do you think this
will change the company and be to what degree do
you project that Bezos will still be involved? So the
change every date they've announced is July five, and that
is when Jeff Bezos will no longer be CEO and

(04:08):
Andy Jesse will be But in in many respects, Bezos
has been pulling away from Amazon for many years. And
that's part of the story that I'm telling in this book.
He buys the Washington Post, he's fighting with the Trump administration,
he has his tangle with the National Enquirer, and of
course the formation of philanthropies, and he's allowing Andy Jasse

(04:30):
and the executives on the retail side to run these
massive Amazon businesses with a lot of autonomy and and
so that's been a gradual process, and I think it
will continue to be a gradual process. Bezos his executive chairman.
He says he's going to continue to work on new
projects at Amazon. He said in his last investor letter
that he's going to be rethinking Amazon's relationship with its

(04:52):
blue collar employees and trying to make that a kinder relationship.
And so I suspect that not a lot actually changes. Uh.
Andy Jasse will certainly be the figurehead he'll be, I think,
maybe to the consternation of regulators and lawmakers, when they
ask for Jeff Bezos, they will get Andy Jasse, and
much the same way Google now gets presents Sundar Pachai

(05:14):
and not the founders Larry Pager, Sergey Brand. But I
think Bezos will continue to be involved, and I think
but I think the process will continue gradually, and in
a couple of years we might see him drop the
executive part of that title executive chairman, and then really
move on to other things. But I don't. I don't
think much actually changes at Amazon other than the very
public and visible figure of Andy Jasse taking over CEO.

(05:38):
To what do you degreed? You believe these changes were
engendered by his relationship with his new girlfriend, Lawrence Sanchez.
In terms of the his his on a lot of levels,
but here talking about stepping down. I don't think so. Again,
part of the story in this book is is Bezos

(05:58):
stepping away from the big business. This is an Amazon,
and that process was under way before the relationship started.
So I don't know if it was a precipitating factor
in the timing. I will say in the book I
revealed that Bezos is building this massive super yacht to
sail the high seas on my suspicion because he was

(06:19):
never a yacht guy. That that is the the you know,
part of the influence of his partner, Um, and so
his evolution into a famous figure someone who's turning up
at courtside at Wimbledon or partying on the yacht of
of Barry Diller, David Geffen, that that is in part
the influence of of Laurence Sanchez. He is he has

(06:42):
been taking helicopter flying lessons. There's a lot of things
I think that Um, maybe she has influenced him, But
in terms of the CEO role, I think this was
probably all always in the in the long term plans,
and Andy Jasse has been in some ways as close
to a disciple as you can get. He was basis
is t a or shadow basically as chief of staff

(07:03):
now twenty years ago, and he has been in the
aw s business. But he's also been a member of
the S team Andy Jasse, which means he's weighing in
on every big decision that has been made at the company,
from acquisitions, the acquisition of Whole Foods to the decision
on where to put HQ two. So it's not like
Jesse has really been a stranger to this bigger part

(07:23):
of Amazon, the retail side. He's he has been quite
involved in it. Okay, let's just staying with this, Lauren
Sanchez changes you know that blew up at Piccaba tabloid issue.
You certainly cover that in the book. But the divorce
he that Jeff had with Mackenzie was relatively smooth and
she's even gotten remarried ding Bezos has not, whereas Gates,

(07:44):
the whole situation blew up and is continuing in the news.
Do you feel that from the company's perspective, bezos perspective,
the business and world perspective, and those could be multiple
viewpoints that this is now in the rear view mirror
or people still judging him for this, and there might

(08:05):
be another few shoes to drop. I think folks have
pretty much moved on. And it might have been it's
It might be a symbol of his absolute sort of
mastery of the levers of public relations in that he
he so swiftly put it behind him and vanquished his rivals.
If you remember about the editor of the National Inquirer

(08:26):
who published that story, um was fired afterwards. You know,
Bezos wrapped himself up in the mantle of the Washington Post,
used the Saudi enmity toward the Washington Post and towards
his ownership of it as as kind of a weapon,
and imputed political motives to the Inquirer. And as I
show in the book, there really weren't any. The Inquirer

(08:49):
was was writing about writing a story that Lawrence Sanchez's
brother had had given him and trying to embarrass the
wealthiest person in the world. But Bezos really turned the
tables on them. He posted that famous Medium article. Uh,
he accused them of extortion, and the Southern District of
New York investigated it. The FBI investigated it and and

(09:10):
moved on. Didn't didn't really find anything. So but are
there other shoes to drop? I mean, I wanna approach
this topic with a little bit of humility. It is
such a crazy topic. The cast of characters you can't
even fathom is so bizarre. It's a hall of mirrors.
I concluded, based on the information that's in the court filings,
based on people that I talked to, the testimony of

(09:32):
the reporters and editors at the Inquirer, that it really
was Michael Sanchez delivering them the text, messages and some
images in the fall of two thousand and eighteen, and
that's how they got the story. But if you're asking,
could could we find out something unfathomable about the Saudi
government's hack of his cell phone, tipping off the paper,

(09:53):
or some Trump World connection that we we can't possibly guess,
I would say it's improbable, but I want to leave
open the possible ality for it, and I hope, hopefully
do a little bit in the book, because this story
has taken so many twists and turns that you don't know.
But I would say if something else emerged, it would
probably contradict the information and the timeline that we already

(10:13):
have established in the court files, where the editors and
reporters of the National Enquirers say, in September two, eighteen,
Michael Sanchez approached them with this tip and they knew
nothing about it beforehand, and in fact afterwards have to
had to kind of read into the tea leaves because
he wasn't being explicit. So this idea that perhaps they
were tipped off severally about the Saudi government would be surprising,

(10:34):
It would It would contradict a lot of the established evidence.
Let's go back to Bezos and him splitting from the company.
In the book, he's really the driving force for innovation.
He is the one who's pushing the envelope with the
moon shots. He's actually in space. But I'm using that
in a business sense. Do you believe he will continue

(10:57):
to play that role? And to what degree is the
culture of the company, So if he's not doing it,
someone else might. It's a great question. And in the
book I am telling the origin stories of products like
Alexa and and the Ghost Store, of those cashier less supermarkets,
and they all start they typically start with a Bezos idea.

(11:17):
And in fact, if the Alexa project starts with an
email from Bezos to his deputies, we should build a
twenty dollar computer whose brains are in the cloud that's
completely controllable by your voice. And I have the first
Bezos whiteboard drawing of the product that becomes the the
Echo or an Alexa. And so when you peel back
the layers to a lot of these projects inside Amazon,

(11:39):
not only do you often find a Bezos idea, but
you find that it was his sponsorship, his maniacal attention,
his willingness to invest uneconomically in the seeds of an
idea and then to and then to follow through spending money,
losing money, risking failure. That is kind of key to
the inventiveness. And am on and I think you put

(12:01):
your finger on on something interesting and real. They would say,
They would preach that Amazon has a culture of invention,
that it's decentralized, that employees can move quickly on their own.
It's the land of a thousand CEOs. It's all by design.
But I just really wonder if in terms of at
least minting new product categories, once Bezos really does step away,

(12:22):
and again that might not be for a couple of
years he's executive chairman, he'll be involved, but once he
really does step away, well, Amazon have the same ability
to strike fear and employees to go pursue big things
and then obviously competitors when they enter new markets. Well, historically,
you know, individuals make a difference. They can't be quantified.

(12:42):
You can get a manager who's an NBA, but someone
who's an entrepreneur that tends to be a unique character,
but staying with the company for a second. For years,
their financials were not good. We're going back almost twenties.
Does he the worst numbers? To what degree is the
company playing to the street at all? Back when when

(13:10):
Bezos wrote that first letter to shareholders, he he kind
of called his shot. He said, We're not going to
really pay attention to short term metrics. We're not going
to focus on profitability. We're gonna run the company for
market share and cash flow. And that promise and the
patient investors that enlisted got them through many, many tough years.
And in fact, as I write in the book, even

(13:32):
in two thousand fifteen, Amazon was either losing money or
not very profitable, and Steve Ballmer went on the Charlie
Rose Show and said, it's not a real company, Charlie,
You've got to make money. That's my Steve Balmber impression.
Bob Um maybe needs some work, and it was because
not that Amazon was unprofitable, it was almost hiding its profits.

(13:53):
Bezos was taking the winnings from the retail business, the
winnings from AWS and funneling them in Alexa and China
and India and Prime Video, and that all paid remarkable dividends.
And I think recently it's an extraordinarily profitable company. The
stock prices zoomed up. It's worth one point six trillion dollars.

(14:15):
And no, I don't I don't, but I don't think
the operating posture of the company has changed. I don't
think they particularly pay attention to two quarterly numbers. I mean,
they've got a pretty professional CFO and finance staff that
seems to be good at making projections and then exceeding them. Um.
But look, Amazon doesn't provide a dividend, it doesn't buy
back its own stock. Right, It's not doing the things

(14:36):
that would please more short term investors. It's it really is.
It continues to take its its profits and build more
fulfillment centers and buy more Prime Video. It's buying the
mg MGM and the catalog there, build more data centers,
and basically Amazon's winnings go to fund more Amazon, so
it's unlike a lot of other companies. It's still incredibly

(14:57):
optimistic about the future, and clearly it has not achieved
whatever maturity or end goal that it has for being ubiquitous.
And one thing you go deeply into in the book
is the organizational structure. You know, Bezos basically has the
guy who shadows him. Sounds like a low position, but
it's really a privileged position. Their committees you move up.

(15:19):
For those who were uninitiated, can you please describe the structure? Okay, Well,
so the technical title is the technical assistant, and Bezos
had one. He actually hasn't for a couple of years,
which might have been a sign that he was ready
for the CEO transition. But the others, the other members

(15:41):
of the leadership team, the s team, they all have
their t A S and the s TEA. So everybody there,
I didn't know everybody there has a t A too.
How far down the totem pole does that go or
is that it? I? I believe it's just the the
the the s VP is the senior vice presidents, and
maybe not even all of them. But it's my understanding

(16:02):
that the the the upper echelon of the company. They
all have tas. So for example, Beth Galletti, the senior
vice president of HR, she has a technical assistant, Andy
Jasey as the head of a w S, head of
t A, and of course we'll have one of CEO.
So that's interesting. It's a way in which I think
Amazon training. It's almost a leadership and informer leadership training

(16:25):
program where chosen executives just get bathed in the you know,
the mechanics of the senior leaders and the leadership committee
at Amazon. So it's a it's an interesting training program.
But you know, think of Amazon, I guess as a
little bit of a conglomerate. So many disparate businesses right,
so much surface area to this company's it almost makes

(16:46):
it hard to categorize. But a senior vice president, you know,
tends to kind of oversee one or several of these
business units and and they run pretty autonomously. Again the
Land of a thousand CEOs, they call them single threaded leaders,
a leader of the team. It's like a little CEO
of his own group. And they've got a lot of autonomy.

(17:07):
But they report, they push up reports, it up through
the organization and those have metrics and operating plans, um
competitive analysis, and all those reports filter up to the
S team. Oh and by the way, Bob, you're probably
familiar that all meetings, all deliberations at Amazon start with
the six page documents. Right. It's a very right. It's

(17:27):
a writing culture and editorial culture, and so the documents
flow up and then the senior leadership team obviously they
make the big strategic decisions, but they also push goals
they're called S team goals down through the organization. So
a small team in Amazon Fresh, the grocery delivery service,
and this is an example from my book, might get

(17:48):
a goal to go and produce a eclectic product there
there I have an example in the book called the
single cow burger. And in fact, a team gets this
directive to go produce a single cow burger, or a
burger made from the meat of just one cow instead
of a hundred uh, and to do it, you know,
by by the next quarterly review. And that's how it works.

(18:10):
And there are hundreds of S team goals and they
pushed down and then the teams proliferate and and they
report their progress upwards. Now we've seen a lot of history, unfortunately,
the last couple of decades with these multi furious companies
having these goals, and then the people at the bottom
or in the middle are so busy getting the goals

(18:30):
that they throw their morals right out the window. Wells
Fargo being the best case, because rather than you know,
say wait a second, this is wrong, it's unachievable, they say,
if I want to move up the company, I want
to get my bonus. So how does that you know?
Is that a factor you think at Amazon? Absolutely? And
in fact that the history of the company is replete

(18:50):
with low level executives in fear for their jobs, desperately
trying to meet their goals, moving fast and getting getting
to some trouble um. There's a great example in the
book with the marketplace segment in the in the well,
actually it's it's in the consumable segments, so the fresh
groceries and other other products that you might find at

(19:12):
a drug store or supermarket. And and they're running the
private label division, so it's it's their job to go
create Amazon Basics batteries or Amazon Essential diapers or Solomo
potato chips, and essentially they start peaking at the data
from the third party sellers to see independent sellers on Amazon,
what's doing well for them? Maybe Amazon should copy it.

(19:34):
And of course that is now put Amazon at the
center of all sorts of questioning in front of the
US Congress and the and the EU and and it's
arguably violated some antitrust laws. Well we'll see it. Amazon
has said, well, there's a policy against that. The people
shouldn't have been managers, shouldn't have been doing it. But
I think to your point, it's a decentralized culture with

(19:54):
big goals and a culture of fear. And you know
when when when you create that environment, bad things can happen.
For those who have worked for Amazon, I'm not talking
about those in the warehouse, but those working in white
collar positions, they portray a terrible culture where they're working
around the clock. There's fear, there's expendable it's the opposite

(20:18):
of some of these other companies that you know, put
them in a blanket and make them feel warm. Is
that your experience? One point two million people work for Amazon.
There there. I think it's just honest to say that
there is a wide variety of of experience, and there
are people that will sing the harmony of Amazon, and

(20:41):
you know, drink the kool aid and loved it there
or there for years, and and then their fair number
of dissidents, and you hear different things, you know, the
executive environment in the white collar offices, and then the warehouses.
You want to talk about the warehouses predominantly not yet,
let's just stay with white collar. We'll go back to
the house. Well, look, I mean there are there. There

(21:04):
are many people that have left there with a lot
of pride. And then there are people and I profile
a couple of them in the book who felt like
it was a cruel culture, that they gave more than
they got, that they didn't particularly end up admiring bezos
or the or the leadership team there. I I profiled
the woman in this book who who ran the first
Prime Day in two thousand fifteen, and she came to

(21:24):
sort of think that, like here she was sort of
engaged in selling people, you know, insta pots and other
appliances that perhaps they didn't need, in a kind of
frenzy of discounting. And the other thing that she really
took away from the experience was she had gone to
herculean lynx to get this thing out the door in
two thousand fifteen, the first Prime Day, and you know, afterwards,

(21:45):
they presented one of these six page documents that kind
of highlighted everything they did wrong. And so it wasn't
a culture of celebrating success. It was this this just
really driven culture of how do we get better, how
do we fix the errors that we may And she
found that thankless, and she she found the culture somewhat difficult.
And the big epiphany for her was when she went home,

(22:07):
I think it was a couple of years after the
first Prime Day. She had taken on a number of
different roles, and she said that she found herself using
Amazon's leadership principles on her mother. They're like the crew
of the sort of you know, arduous ways that they
talked to each other and get to decisions. And that's
when she realized that the culture had changed her a
little bit in the way she didn't like. So, you know,

(22:30):
all that said, Amazon remains high on the list of
of admired employees or places that you know, when LinkedIn
does a survey of places people want to work or
enjoy working, Amazon, perhaps the Jeff Bezos consternation now appears
high on those lists. He never wanted to create a
country club. He told human resource employees that it should
be challenging, it should be difficult. He wants people to

(22:52):
do their best work and then move on. I think
that's accounts for some of the challenges, the cruelty and
Amazon culture. It's also been effective and it attracts a
certain kind of person. So I think it's a little
bit of a it's it's hard to characterize easily or simplistically.
I think it's it's it's complex and it's tough, and
that's by design, and that attracts some people, and then

(23:16):
after a couple of years or even after the first visit,
it repels them. Okay, how many people are on the
S team? You're you're challenging you now because they keep
adding to it. But I want to say it's about
twenty four people right now, and it's as big as
as it's ever been. And that's in part because Amazon
has continued to expand and they've got members there who

(23:38):
represent Amazon fashion and technical engineers on on the on
aws who are members of of the S team. Um,
there's a Mike Hopkins at Prime Videos on the S
team now. But in part it's also because This was
a lily white and male crew for a very long time,
and quite rightfully, I think the employees at Amazon and

(24:02):
some of the shareholders and some of the outside observers,
you know, made the point that Amazon needs to modernize,
and as with many things, Bezos kind of got the message,
but got it a little late, and he started to,
you know, really add to the diversity of that leadership team. Now,
let's talk about the documents. Six pages. That's not sure. Okay,
someone wrote a lot of papers in college and as

(24:24):
a writer. Now, to what degree are these Let's say
I had to do one. To what degree do I
have to write something on an a level both in
content and style? And you know what's the require? How
much time to people put into this? And if you
have a public company, it's not a direct analogy. You know,
they're they're managing the street. It's a huge job. In

(24:44):
addition to doing the regular job, is producing these six
page reports. Similar you've put your finger on why I
think the culture can be so enervating too too many people.
The documents take a lot of time. That's often work
that moves into the night or the weekends. They're also
really collaborative it's a collaborative process. It's not like an

(25:08):
employee writes one and then they go and are reviewed
in a leadership meeting. These are deliberated over there, edited,
they're revised ad nauseam. I described that the process of
revisions during Alexa, with even Bezos weighing in and a
kind of perpetual tug of war in these documents about
what Alexa would do. So in a way, it's not

(25:30):
just an end product that's presented at a meeting, but
it's very much part of the deliberative process. Right figuring
out what a new product or service is going to
do is in part they hash it out over the
writing of these documents, and these are edited and revised
and aggregated throughout the organization as they pass up, particularly
during the the operating reviews, the bi annual review sessions

(25:53):
OP one and OP two during the year, and probably
by the time something is presented to the senior leadership team,
it's destroyed at least you know, one team's private life
for the period of many weeks and been revised a
million times. So it's it's core to how Amazon works.
It's peculiar. I know a lot of executives who have
left and tried to bring it to other companies with

(26:15):
mixed success. And I don't know. I think it's the
way that Bezos has kind of trained himself and his
leadership team to process information, but I'm not so sure.
It's kind of how naturally the rest of us might
might do it. Now. You also portray in the book
that Bezos has a jobs and personality to a degree
that he will make a snap judgment, say negative things,

(26:38):
not worry about the reaction. On a personal level, that
he's evolved a little bit. What's going on there? So
in the Everything Store, I think, I think, I really write,
I think I'm capturing Bezos one point oh a little bit.
And and that is in large part the person you
describe just withering feedback to employees. Did I take my

(26:58):
stupid pills today? A or um? Is this the A team?
Where did the A team go? Just? You know, he
had a he had a way, particularly when he got impatient,
And I flashed back to that in Amazon and Bound.
I have an episode that I believe happens around two
thou seven where he's reviewing a document that has a

(27:19):
mathematical error in it and he he he identifies the
air and he says, if I can't trust this number,
I don't know why I can trust anything in this document.
And he rips it in half and throws it down
the conference from table and walks out. So there's Bezos
one oh. My sense is that either he got leadership
assistance or else just realized that he really couldn't do

(27:43):
that anymore, that with his stature inside the company, with
his public profile, perhaps with modernizing norms around around management,
that that wasn't really going to be tolerated. And I
think Bezos two point oh was equal measures inspiring and intimidating.
Certainly the end result of motivating employees was the same.
He still have a couple episodes in the book will

(28:05):
walk out of a meeting when he's not satisfied. But
Beazos two point oh I think was a little more
circumspect with some of his negative negativity. Now that's not
to say at Blue Origin and Space Company, which is
has lagged SpaceX Elon Musk's company quite a bit, he
doesn't show flashes of that. But my sense from talking
to innumerable people was that he he doesn't really unleash it,

(28:29):
and the way perhaps you know you're associating with Steve Jobs. Okay,
you described the first thing they do in these s
meetings is they read the document. Reading when other people
there makes one very self conscious. Do they literally read
it from beginning to end or is it just there
in the reference and how much time does it take
or was allotted for everybody to read it? They sit

(28:51):
there in meditational silence, reading it until everybody has done,
then they go, or if it's a steam meeting, they'll
go around the room and Bezos and I presume Andy
Jessey soon speaks last, and the discussion ensues. But they
read it. They read the thing, which is right, incredible
six pages long. It seems like it could take a while,

(29:11):
but oftentimes that's what they do. And by the way,
Bezos brought that to the Washington Post, and when the
senior leadership team there convence with Bezos, they'll present him
with a document. Now, my impression was with the Post
meetings that he was reading those beforehand, which maybe made
their time a little bit more efficient, but that is

(29:32):
not always the case, and an Amazon certainly they sit
there in silence reading. Okay, let's go to the warehouses.
Let's first, talk about practical You know, I'm at a distance,
you're right there in the belly of the beast. It
seems to me that certain warehouses were created and certain
machinery was installed, which were then abandoned repurposed. Do I

(29:55):
have that right in terms of do you mean the
and the actual physical machinery the culture they know them physical? Well, no,
I think that, um, I mean the the Amazon warehouses
have evolved quite a bit. They've become somewhat automated over
the years. Amazon bought of robotics system called Kiva back

(30:18):
in two thousand and twelve. Those have been rolled out.
But when I in the in the time spend where
I start this book two twelve, Amazon still only has
a couple of dozen fulfillment centers around the country. Now
it has north of eight hundred fulfillment centers, sortation centers,
transportation hubs. This company and the operations network has sprawled

(30:40):
out in every direction. So you know, part of the
reason that Amazon's tax burden is so low, by the way,
is because they're buying all this new equipment and then
it's depreciating and Amazon's writing that off on their taxes.
So it is um you know, it's it's a unique
fulfillment network. They keep adding to it and changing it,
tweaking it. Bringing in the robotics is one of the

(31:02):
latest changes. Spawning a transportation network so that it's not
ups or the post office delivering packages, but it's Amazon
vans and Amazon trucks on the highway. That's another change.
So it's it's it's pretty fresh, and I think it's
also pretty unique. And I think one of the major
vectors of growth for Amazon is going to be, you know,
not only delivering more of their packages, but one day

(31:24):
maybe offering that as a service to other companies. Let
Amazon be your FedEx and deliver a package. Okay, Now
we had a move that one best picture. How many
people saw it as another debatable issue, but I saw
it. It It was an excellent picture depicting the life of

(31:45):
an warehouse person an Amazon. So that what you say
in the book is a lot of that has been automated,
so the people are not running around, but they're getting
repetitive use injuries. You also said there was a policy
where kind of like g the least performing people are
are cut off. Then there's issues of compensation. What is

(32:07):
the status of work in the warehouses today, well, the
the status of work is um and it's still a
a a position that is is sought after in many
parts of the world. Amazon is one of the fastest
growing employers. It's now the second largest employer in in
the U S after Walmart. It's the wage Amazon has

(32:29):
has raised it in part because of criticism. It's it's
fifteen dollars an hour in most places, seventeen dollars an
hour in some, and so comparatively against other kinds of
warehouse work. You know, Amazon is seen as an employer
of choice, and I think we saw that a little
bit in Best Summer, Alabama, where employees voted against a union.

(32:50):
Now we'll see if the National Labor Relations Board overturns
that because some Amazon's conduct, but the workers voted pretty
definitively not to join in the union. We could get
back to what that means. But you know, all all
that said, I think that the depiction in Nomad Land
I thought was accurate. It was it was kind of
criticized for being too nice to Amazon, but there was

(33:12):
something about it that resonated with me that you know,
this was seasonal work, there was no job security, it
was very transactional. You know, the character was coming in
there over the holidays. There was a sense of camaraderie
but also a real sense of melancholy and isolation in
that work. Um and and look, I mean they didn't
have a villainous you know, manager firing the Francis mcdormant character,

(33:36):
but there was something about it I thought that was
quite sad when particularly when you combined it with the
rest of your life. So I think that to me
sort of captures it. You know, these vast facilities that
have employees, but you know, the work is drowned out
by a chorus of conveyor belts and automation. Uh. The
workers are really managed in large part by algorithm them

(34:00):
that's monitoring everything they do, that's putting them on performance
improvement plans that if if their work suffers, you know,
managers that will pipe up if they're taking overly long
bathroom breaks and and so look, I mean I think
it's it's it's difficult work, I don't you know. I
think it's it's highly valued by people who's whose economic

(34:21):
opportunities are otherwise limited, and it's probably you know, remarkable.
You know, it's probably good for them that there there
is opportunity in parts of the country where the manufacturing
base really has declined. But I do think the Besos
recently has understood that the you know, the company is
getting bad image because of some of the testimonies about
this work and the quality of the work. And that's

(34:42):
why he has talked about addressing personally the ergonomic issues
are on standing in one place and servicing the robots
and and the other other things that people talk about.
Hopefully we will see Amazon being more mindful about things
like breaks and mandatory over time. Um. Yeah, and and
so like I think, I think the company realizes that

(35:03):
there's a lot of room for improvement and that it's
public image and large part might depend on whether they
can really get on top of that issue. So you
mentioned Bessemer Alabama, and you talked about the unionization effort
and how it failed. But being such a large company,
a lot of the questions permeating America. You wonder to
what degree they'll be focused on Amazon. There will be

(35:24):
changed their last mild delivery trucks, that's all contractors. This
has been a big issue in terms of uber and lift.
So to what degree do you think there's going to
be changed which will represent change in America or will
continue to hit in this direction. I think that the
Biden administration is recognizing the tech companies have gotten away

(35:46):
with something here being able to to use to use
one of the technical terms invoked now Fisher their their
workplaces to employ, you know, to have an employment contract
with their white collar are workers with some of their
their fulfillment center workers, but then to basically um outsource
some of the some of the you know, the harder things,

(36:09):
the things that the company doesn't want liability over, you know,
Uber with drivers certainly, you know, Apple does it with janitors,
cafeteria workers. And Amazon has done it, has created a
fishered workplace with its drivers. Those are those are contractors
that are employed by delivery service providers. When they get
into accidents, Amazon kind of throws its hands up. At

(36:32):
the same time, they are driving in vans that have
the Amazon Prime Swish arrow on them, they have Amazon uniforms,
and in in some cases they're cameras in their automobiles
run and put there by Amazon, run by Amazon algorithms
that are monitoring their performance and their safety records. So

(36:53):
Amazon wants all the elements of control over this workforce
and really none of the liabilities and the responsibilities or
for maintaining them. There's a professor at Brandeis University named
David Wild who wrote a book called The Fisher at
Workplace and who has really done a lot of of
work in this area. And I believe he either was

(37:14):
nominated or currently is a member of the Biden administration,
or at least was being considered for a role. And
I think the clear message here is that the Biden
administration wants to take a look at this and reevaluate
whether these companies should have more responsibility. And certainly some
of the legal rulings are on Uber that we've seen
in the US and in the United Kingdom suggests that

(37:34):
judges are beginning to view that relationship a little more skeptically. Now,
one of the discussions in your book is about the
last mile problem and faster delivery. People pay approximately twenty
dollars for Prime to get two day delivery. Now it's
all about one day delivery and then something you can
get now it's all this convenient. Do you believe this

(37:56):
actually drive sales? And what is Amazon believe to what
did user of focus on this issue, I think historically
fast delivery has always has always shown up in the
numbers and been meaningful for Amazon's customers, but I will
I will argue that maybe it's less so now. So
in the early days when Amazon devised Prime in two

(38:18):
thousand five, guaranteeing two day shipping, allow people to pay
once for it and then and then feel like they
would get things promptly, really made a big difference, and
Prime locked people in, made them big Amazon spenders, and
really contributed to some of the amazing growth we've seen
since then. But as I mentioned, Amazon has gone from
a dozen or so fulfillment centers two hundreds and hundreds,

(38:41):
and there's one not far from where I'm sitting, and
there's probably not one not far bob from where you're sitting.
And what that means is that to day or one
day delivery promise it's it really doesn't mean that much anymore.
You might be getting your packages from Amazon pretty quickly,
regardless of whether you're a Prime member. So I suspect
that's one of the reasons why they're pivoting so hard

(39:03):
now to content and not just buying MGM, but spending
eleven billion dollars in two thousand twenty to either license
or create video. Basically, Prime was a shipping club, and
now it's becoming a kind of all access content club.
And so yes, shipping, to answer your question, was important.
But I think it's it's almost something that people are

(39:25):
now going Amazon customers are going to take for granted
because those fulfillment centers and distribution hubs are now all
over the country. Let's talk about the store itself first.
Let's talk about the actual image, what you actually see.
There's a plethora of advertising, which I find very confusing.
Can you give us the history of rise of advertising

(39:47):
on the site? It's really interesting, and I devote a
chapter to it in the book, and I call the
chapter the gold Mine in the backyard because it was
there all along, and and for many years Bezos didn't
want us, didn't seem to want to rate it. So
probably about fifteen years ago they started very carefully putting
banner ads on the site. And Bezos comes to the

(40:09):
s team with a list of all the product categories
that he doesn't want to touch, and that's things like
alcohol and financial instruments and pharmaceuticals. He just says, no way,
not interested, And it basically reveals a kind of underlying
skepticism in in you know, basic advertising and in the
ways in which companies get advertising. So of course, and

(40:31):
that's with salespeople and and staffs, and Amazon higher salespeople,
but they always constrained its growth and they're just not
interested in that kind of revenue or really in cluttering
up the site with ads. And for many years Amazon
is analysts are speculating why doesn't Amazon get into advertising
more significantly. And the turning point is when they discover

(40:54):
what Google had pioneered a decade before, putting ads in
search results, and Amazon starts at the bottom of the
search results page, moves them to the side, and eventually
Bezos decides that he will let sellers and brands compete
to get the top ad on the on the search
results page. And that is the gold mine in the backyard.

(41:14):
It unlocks a tremendous opportunity. I would argue that it
actually depreciates I think, as you're referring to the customer
experience a little bit the search for page. Yeah, but
and and actually they see that in the test results,
they see that it's going to lower the customers um
success rate and getting what they want. But Bezos explicitly

(41:35):
makes a decision that the bounty of this revenue is
going to be worth any decrease in the customer experience
because that is a whole fuel that he can use
to go invest in Hollywood, create new devices, pioneer new
product categories, or disrupt new industries. And they make the decision.
And right now, Amazon search results are less a taxonomy

(41:58):
and useful result and more a very merchandise page of
of pay to play advertisements and Amazon's own private label products.
And that's a decision they made. I would argue it
wasn't very customer centric, but I think last quarter Baby
was like six billion dollars was in the other category
on their on their income statement where they hied advertising

(42:18):
revenues and and it is one of the fastest growing
parts of the company right now. Now, let's talk about
third party sellers. You know how they came up with that? Now,
all the rules and constraints in the compete competition from China.
They they celebrate the beginning of their marketplace business as
starting in two thousand, but it really was as dusty

(42:41):
repository of used items for almost a decade after that,
and it was when Bezos is sort of casting about
for another leader, feeling like they hadn't achieved very much
with the marketplace, and he was asking executives, how would
you bring a million sellers onto this platform? And that's
actually really interesting and revealing question because there's no way

(43:02):
you can do that hand to hand. It gets back
to the salesperson point. You can only build a self
service system that where sellers can go and sign up
and list their wares on on an Amazon product page
and start selling to Amazon's customer base tomorrow. So that
was like the intuition build a self service platform where
any seller can basically go and sign up. And then

(43:24):
a couple of things happened well that that took off.
It was very effective. It meant that a whole generation
of successful sellers in the West. But then another thing happened,
which is Ali Baba started to expand outside China and
a little startup called wish dot Com started to engage
in a kind of geographical arbitrage where they were allowing
Chinese sellers very close to the factories or in some

(43:46):
cases the factories themselves to sell abroad. And Bezos, who
never wants to be outflanked, essentially, looked at his senior
executives and said, you guys are on this right. And
Amazon went to China almost literally, They started sending teams
of executives there, and they extended those self service platforms
into China translating from Mandarin, and allowed sellers in China

(44:09):
to list their wearers on Amazon. Globally. They consolidated their
merchandise in in in in giant freight yacht ships. They
moved across the country. They stored it in their fulfillment centers.
Amazon did, and they offered these products to sail to
their customers. And it was an explosion of selection. It
was a proliferation of bizarre brands that no one's ever

(44:32):
heard of. It was a lot of low priced stuff generally,
it really I think fueled like the Amazon machine and
contributed to a lot greater selection and higher sales. But
it also introduced all kinds of chaos to Amazon. And
it's it's apparent every time you search for something, um
you know, not just the no name brands or the
shenanigans with reviews, but a lot of fraud, a lot

(44:55):
of counterfeit, a lot of fake reviews. Some real disasters
U like the exploding hoverboards that were that went in
the news a couple of years ago, where people were
buying these hoverboards with lithium ion batteries at Amazon and
they were they were catching fire when plugged in and
burning down people's homes. And that is still those cases
are still winding their way through the court system. So

(45:19):
in a very Amazon or a very big tech company
like way, they started creating new systems to address some
of the unintended consequences. And these are like anti counterfeiting
tools and tools to preserve the sanctity of the review system.
But they unlocked a lot of that cast that they
now have to address by creating a self service global

(45:40):
marketplace that became international, and really it was almost like
pure unadulterated globalization in terms of its complete tilting of
the of the e commerce playing field. Okay, but ultimately
these products come from China and Western sellers people in

(46:01):
the United States started bitching they can't compete on price,
and then there becomes a whole issue that Amazon is
caught in the middle of that you're addressed in the book.
I went back. I was trying to figure out how
to take the temperature of this massive seller community, and
there's no way you can pull them all, and opinions vary,
and there's a lot of happy sellers. Then there's a

(46:21):
lot of economic opportunity on Amazon right now. In fact,
one recent trend are these these companies that are buying
up a lot of sellers and rolling them up to
create bigger entities. But I did think it'd be interesting
if I went back to every seller who was mentioned
in Jeff Bezos shareholder letter over the years, who were
sort of celebrated as as success stories, And so I

(46:44):
did that, I think going back to around two ten,
and they had all become embittered, they had all they
had all lost their enthusiasm. One guy compared to being
invited over for Thanksgiving dinner only to realize that you're
the turkey. I thought that was a great quote. And
what it suggested to me, again because there are happy

(47:04):
Amazon sellers, is that this is a playing fielder frontier
that is changing so rapidly that yesterday's winners are not
are are sometimes today's losers. That you have to constantly
reinvent yourself in much the same way that Amazon does.
If you want to be successful on Amazon, and you know,

(47:26):
you have sellers that were devoted to single product categories
like paddle boards, and they did a great, great business
on Amazon for for a couple of years, and then
when the marketplace globalized. You know, they're getting their supply
from a Chinese manufacturer, So it kind of makes sense
that that manufacturer, someone very close to it would say,
why are we going through a middleman in the United States.

(47:48):
Here's the opportunity to go direct, and they do that
and the middleman is disrupted. And so that is a
common experience on Amazon. They really do celebrate the Super
Bowl ads are all about the lights turning on in
the Middle America. Would working shop, you know, where an
entrepreneurs pursuing his or her dreams on Amazon where the
reality of it, I think it's a little different. I

(48:10):
think that it's really now tilted in favor of the entrepreneurs,
the businesses that are in in low wage, low tax countries,
very close to manufacturers who have some of the advantages.
I think that Amazon is availing to to these countries
like like China where they they really are and they
feel like they're in competition with the Ali Baba's and

(48:31):
wishes of the world, and they're trying to capture that
global supply. Now, Amazon keeps changing the rules, tightening the screw.
As we sit here, DC is cracking down saying that
if you sell on Amazon, you can't sell cheaper elsewhere.
You know, what do we know the government, especially when
it comes to tech, it's always a few steps behind,

(48:52):
you know. Is the Amazon just going to continue to
get away with this behavior or is something going to change? Well,
let me break this specific case down a little bit.
So this is the Attorney General of Washington, d C.
And he's basically putting his finger on um, what's what
they call him. The business like most favored nation clauses

(49:14):
in the agreements between Amazon and sellers, And what Amazon
tell sellers is you can't go to Walmart or your
own website or Target and list for lower a lower
price than you're listing for on Amazon. And by the way,
I'm pretty sure Walmart and other retailers do that as well.
And and Amazon has kind of backed away from that

(49:35):
in the past over the past few years, but they
still implemented in some non subtle ways. They go and
find a product elsewhere for cheaper. They're gonna pull you
from the search results. You're it's gonna be harder to buy.
And so they really are implement They're implementing the same
techniques now. And one thing that we should just say

(49:55):
so people understand it is that all these retail sites
are scraping each other. They have automated software. Amazon is
looking at Walmart all the time, and vice versa, ad nauseam.
All these companies have kind of binoculars trained algorithmic binoculars
trained on each other to see where prices are lower.
And what the A G Is saying is that, you know,

(50:16):
that is in effect of forcing a higher price Amazon
to Amazon's forcing a higher price elsewhere and not allowing
its sellers to to discount elsewhere. Look, historically that was legal,
and I think the question is as Amazon gets bigger
and accumulates power, as it commands an ever larger share

(50:39):
of um of of e commerce, does it start to
kind of look bad? And as I said, Amazon backed
away from a form of it, but still does it
in some quieter ways. I think ultimately, my guest Bob
is that they probably stopped doing that, you know, just
because of the optics. I don't think this antitrust case
is existential in any way. It's about one particular form

(51:01):
of conduct, something that everybody kind of historically has done,
by which Amazon doing tends to tends to look bad.
And I think ultimately that they settle this case. Yes,
now we expand this and go back to your first
book with the example of diapers dot com. If for
whatever reason, Amazon wants to be in your business, it

(51:22):
appears they'll just put you out of business, or they
said to Zappos. Now, these are historical issues at this point,
you know, either sell or compete, and forgetting that they
ultimately got out of the diaper's business after selling after
buying the diaper business. A lot of third party sellers say, well,
if I have a big business selling battery, selling anything,

(51:42):
they're gonna look at my data. They're just gonna make
it so they win. And do you believe this is conscious?
This bleeds into the other issue. You know, at the
street level, they say that Amazon makes more money selling
third party products and it does sell its own products.
So what is the viewpoint of the Amazon and all

(52:04):
this stuff. Well, let me let me take a couple
of pieces there. I mean that the quizzy story of
now ten years ago, which I tell me everything stories
is interesting. Amazon was in hot competition with the company
that owned Diapers dot Com. Discounted the product until everyone
was kind of losing money, forced Quizzy into a sale,

(52:27):
bought the asset. I think they feared, like Zappos, this
could be one of those companies that could be acquired
by Walmart or funded by venture capital and Silicon Valley
and become really a full featured competitor. And instead they
bought it, and then they allowed it to run independently
and then eventually closed it down. They did not get
out of the diapers business though, diapers. They still sell

(52:49):
tons of diapers on Amazon dot Com. I thought that
they closed that down just you know, they closed down
diapers dot com right, they bought diapers dot Com. They
allowed it to run independently, and eventually they did shut
down that website. But on Amazon dot Com, not only
can you find all manners of Pampers and Huggies and

(53:09):
and Amazon Amazon's own private label products. There they do
a brisk business and diapers. They just don't have a
separate website anymore. For example, Zappos is still zappos dot Com.
You can still go and buy sneakers there. You can
also buy sneakers on Amazon, so they sometimes buy these
other companies two uh to, I think the close off

(53:31):
future opportunity for them, right and and look, I think
that the government has looked at that. The House Antitrust
Subcommittee devoted paragraph to that. And so of course my
book was was my first book was cited there. The
way in which they Amazon conducted itself back then to
pursue rivals, I think was was extraordinary. They cannot get

(53:51):
away with that anymore. It's a it's a much larger
and more scrutinized company. And in fact, I actually don't
think acquisitions like like uh Quidzy or Zappos, if they
were doing those types of acquisitions today, they would necessarily
get them through the FTC. MGM is a different matter
which we could talk about UM. But then you talked
about then you then you talked about UM. The marketplace

(54:14):
of vendors on Amazon dot com and whether Amazon peaks
at their data to put out their own private label products,
and my book shows that they have. You know that
that that managers did that. There was a policy against it,
as we talked about, they did it anyway because they
were trying to meet their goals, and Amazon has to
answer some really hard questions about that. Again, they are
now under the microscope. I wouldn't be surprised if there

(54:38):
are some very strict policies if the cookie jar is
kind of nailed chat right now in terms of access
to that third party data. You know, it doesn't excuse
the conduct that happened in the past. Amazon likes to
say that, well, if you go into a Costco, it's
all Kirkland, if you go into a Walmart, Walmart, their
private label brands are predominant and actually private able, and

(55:00):
Amazon's a small percentage of their overall sales, it's actually
quite prominent in search results. So it's another thing that
Amazon's going to have to answer for the fact that
they are quite explicitly in competition with their own not
just their own brands, but their own sellers. They're a platform,
They're a retail store, and then increasingly they're they're a
white label manufacture because a lot of those products and

(55:22):
I think a large amount of their sales growth is
coming from private label. Let's talk about a WS Amazon
Web Services. Uh, it starts, it's the only game in town.
They price it relatively reasonable. There's first mover advantage to

(55:44):
degree people are paying attention. All of a sudden under
the Trump administration, the Defense Department gives a huge contract
to Microsoft, then it's reevaluated, then Microsoft gets again the
most recent stories. They might lead it up. But what
is the future of the web services industry and Amazon's

(56:06):
police in it. It's incredibly competitive now. Um, Amazon is
in the lead, but Microsoft is nipping at its heels.
Google's a little bit farther behind, and then you have
IBM and Oracle and innumerable other players. These are the
largest technology companies in the world, and of course Microsoft
by market cap is larger than Amazon. So I think

(56:27):
there's obviously tremendous growth in cloud computing the way that
you know governments have embraced it. And then the the
scramble for for contracts like the Jedi contract, which Amazon
loss to Microsoft during the Trump years, but which might
be getting reawarded soon depending on on on the legal
outcome of Amazon's protest. This is the direction of enterprise

(56:52):
software and enter enterprise computing, and Amazon has been a pioneer,
but it's no longer the only one. So if if
you're asking about you know, a a legislator or regulator's
ability to make a case that Amazon has a dominant
position in cloud computing. I think that right now that
there's a pretty weak case there. What what's more interesting
or maybe some of the very opaque ties between AWS

(57:15):
and Amazon retail and that's really not all that well understood,
and it's something that the House Antitrust Subcommittee last year
express frustration within their ultimate report, like how do why
are these units together? How do they nurture each other?
Actually a lot of people internally don't even quite know,
but I suspect that they really help each other. That

(57:35):
retail plays a wholesale price for for AWS, and AWS
has this available beta tester for new services that allows
it to scale very quickly, and that this is you know,
have been a very productive union for both sides of
the company, and that Bezos and any Jesse would would
not willingly separate them. Let's go into entertainment. Yes, this

(57:58):
became a benefit with Prime. So this is a different
model from the competitors, certainly Netflix, which is, you know,
owns its own vertical so what do we know? The
policy is different. They'll allow almost anything on their site,
their interface is non attractive. They don't have huge success,
although it's hard to tell. Also, adding in the music thing,

(58:21):
once you start bundling, they are beating the ten dollar
price that other companies have. They don't real they don't
really break out a lot of information. But is it
just a matter of time till they get entertainment right
or really they don't have the right people in place,
You know, I would I would say that I'm not
so sure. I agree with the premise. You know, Amazon actually,

(58:44):
in a very typical way, has a lot of ways
to win. And we look at Prime Video and I
totally agree that the menu that shows up on the
screen is sometimes bizarre and what am I looking at?
And why can't I find anything? And the original original
content that they've produced from their Hollywood division has more
mrs than hits. There there have been some great things

(59:07):
like Fleabag and the marvelous Mrs. Maisel and Transparent. That's
kind of niche programming, but then Jack Ryan maybe has
done a little better, and The Boys I found entertaining,
and then they some great movies. Um, I love the
sound of Metal. I don't know if you saw that one, Bob, Yeah,
so good. Bore at two was horrendous and somehow people

(59:28):
have watched and I couldn't watch it. I know I'm
not a huge fan of his, but I where he
was going on an intellectual level. I just brilliant. Okay,
So but here's here's the point that's trying to make.
Amazon doesn't That's part of their strategy. They also have
the set top box, the Fire TV stick, probably one
of the most successful streaming products alongside Roku. And then

(59:50):
you look at Disney Plus and you look at Netflix,
and I actually think elements of Apple TV Plus, if
not the whole thing. Those running a ws amaz on
a loan in this scramble to create an entertainment future,
is operating at every level of the stack and succeeding
at a at a lot of those places. So it
has a lot of advantages here. It's got a lot

(01:00:12):
of resources in cash that it's devoting. It's spent eleven
billion dollars on Prime Video in two thousand twenty. Now
they're paying for for MGM, so they're going to deepen
their catalog and they're getting access, you know, depending on
how you view the MGM library to a lot of
I P and potential for franchises and spinoffs. So I
don't think that Amazon's foray into Hollywood has been really

(01:00:36):
we could say it's been unsuccessful. In fact, in a
lot of ways they're pioneers. Maybe in the Flasher Flasher
aspects of it, they've had a checkered history, But I
do think it's a matter of time. The resources that
this company is able to bring to bear, the deep pockets,
the fact that they really kind of don't explicitly charge
for Prime video, that it's wrapped up into this nebulous

(01:00:56):
idea of prime which includes UH ship and includes access
to music and kindle. People don't really think about what
they're paying for this as in the same way that
they might for Netflix every month. So I think Amazon
actually has a lot of tools at its disposal to
ultimately really succeed. Now, if you look at the purchase
of MGM, you know this is a whole separate issue

(01:01:19):
the percent perception of the Amazon's marketplace share relative to
the reality. But under conventional as employed in the last
couple of decades uh antitrust laws, it's hard to see
a problem with the purchase of MGM, But it does
appear that they overpaid for it. But it's just that
these companies, just like Microsoft buying Skype in Nokia, they

(01:01:42):
have so much damn money that it just doesn't make
a difference. Well, I mean, Senate, we're hearing Senator Klobascher
and other politicians grumble about this, But ultimately the FTC
or the d o J is going to ask is
this limiting? Is this still limiting competition? And when you
look at at the streaming landscape that we just talked about,
there are lots of alternatives in terms of studios and content.

(01:02:03):
MGM is not a big player, So I think it's
really hard to make the argument that this deal is
anti competitive. I think Amazon will get it approved despite
probably a hostile political environment. Um. And then the second
party of your question, which is now promptly escaped me, well,
the perception of Amazon in terms of market Here people

(01:02:25):
always saying Amazon is the enemy, but then they trot
out statistics, what percentage of retail they have and all
these other things to try to prove that, no, that's
not true. Right, Critics are trying to make the case
that Amazon is a monopolist, and the challenge there is
that it operates in such large markets, and so we
talked about cloud computing and and the very big competitors

(01:02:48):
it has with with Google and Microsoft. And then in
in retail, when you look at you know, Walmart and
Target and Costco and the large supermarket chains, it's gonna
be tricky for regulators or lawmakers to write law or
to to make judgments that applied just to Amazon that

(01:03:10):
don't apply across the board, and that don't end up
maybe even augmenting Amazon's power. I'll give you an example.
If you were to say tomorrow that retailers weren't allowed
to sell private label products or compete with their own vendors,
that would cripple a company like Costco, probably probably a
Walmart as well, certainly the drug store chains. And Amazon

(01:03:30):
might actually get more profitable because suddenly, uh, those vendors
or marketplace sellers that found their listings eclipsed by Amazon
products would be back there paying fees and advertising to
get in front of customers. So, I you know, Bezos
says he welcomes scrutiny. I think, and obviously they're deploying
quite a large lobbying force. I think there are lots

(01:03:52):
of outcomes that end up solidifying Amazon's power, you know,
rather than reducing it. And then to the original point,
it's not a monopoly and that monopolis in the traditional sense.
So I think it's gonna be challenging for regulators to
make that case. Let's talk about hardware. They have the
firephone disaster, you mentioned the firestick successful, you have the

(01:04:13):
fire tablet, you have the Kindle, you have the Alexa
hardware products. What do we know about Amazon traditionally? One point, oh,
is kind of crappy, and then they get it better.
They never get it to the level of Apple, but
they certainly get it to a serviceable level. Now Amazon's

(01:04:35):
Kindle is crippled by the Apple antitrust case. So when
something like that happens in Amazon, is there a conscious
because you know, Basil's philosophy was, we're gonna lower prices,
sell more books. We're gonna blow this world up to
the advantage of publishers. Okay, so when they put a
roadblock in, I mean, is the Kindle busines, Well, that's

(01:04:57):
a business and it'll run, but you know, we're not
focused thing on that anymore. I feel like the Kindle
is like the children from a child from a former marriage,
right that it was, it was the center of it
was the apple of his eye ten years ago. And
now they have moved on and the new kids are
Alexa and uh, you know maybe the the the Echo

(01:05:20):
buds and this whole other ecosystem of products. So they
it's it's interesting unlike Apple, which has this limited span
of products that they cherish and nourish and keep updating. Yeah,
they Amazon moves on right They produced a lot of stuff.
It's not to say they're not updating the Kindle right
all the time or the Kindle Fire tablet, but you

(01:05:40):
get the sense that it's a little bit of of
an afterthought right now. The company tries a lot of things,
a lot of strange things. Did you remember hearing about
the Halo wrist band which was reading people's moods or
the Alexas spectacles that I guess is maybe gathering some
diagnostic data because it came from their healthcare group. And
then you've got the Echo buds. It's the second generation

(01:06:03):
is out now, and it was just an example that's
on my mind. This thing is brutally reviewed on Amazon itself.
It's like two and a half stars, and yet they
keep and of course people don't even know about it.
It's and also ran to to obviously Apple's product, and
yet they keep iterating it's like they're bull headed in
the forward momentum. And Prime Day is coming up next month,

(01:06:24):
and I guarantee you Amazon will discount the heck out
of this thing. And they, you know, they've got so
many advantages, including including controlling the retail outlet, that they
kind of muscle their way to success. And we'll see
if Amazon cares about the the Echo buds and another
ten years, or even Alexa for that matter. But you're
you're right in which it's it's not a very refined strategy, right.

(01:06:46):
They try a lot of things. Do you remember the
Alexa microwave? Oh god, yeah, yeah, yeah, I mean we
haven't heard much about that, or there was an Alexa
wall clock. Yeah, they try a lot of things. They
orphaned some of them and they move on. Okay, talking
about physical retail, we know from Warby Parker. You know

(01:07:07):
a lot of people you can sell them the glasses
by shipping to them, but a lot of people just
want to try them on, so they open shops. How
big a deal? I mean, first, here's the Amazon stores.
You know, he started sort of his bookstores where they
have hus be very little inventory, then they buy whole foods.
Are they ever going to get this right? And you
talk in your book about the no cashier shopping and

(01:07:30):
all the development that took. Is there a big play
here or are they going to play around and move
here too. There's a massive play and they are moving here. Essentially,
ninetent of all retail is still conducted in physical stores.
Bezos has known that forever. He always said he wanted
Amazon to do it. Open a store, but do something differently.

(01:07:51):
And ten years ago they came upon this idea of
putting cameras in the ceiling and censors in the shelves
and automatically charging people instead of having them wait in
front of a cashier. And they have spent hundreds of
millions of dollars on that. It could be the most
expensive initiative and Amazon history. And they trialed them in
the seven eleven stores, where by the way, the sandwiches

(01:08:11):
are got awful and and it was seemingly unsuccessful. But
what it was was basically a technology trial, and they've
been they've been iterating on it, and now we're seeing
them stamp out full size Amazon Fresh supermarkets with either
the ghost store technology, the cameras and the sensors, or
these dash carts where it's a shopping cart that you

(01:08:32):
roll around and as you put a product in, it
scans it and automatically churches you. So they think they
have a novel way to enter physical retail, and I
suspect we're at the very earliest stages of seeing a
massive expansion where every shopping center, every every mall, every
retail set of retail outlets in our communities are going
to have at least one Amazon store of some kind,

(01:08:54):
and then Amazon can use those as kind of fulfillment nodes,
maybe to have people order and collect packages or maybe
even like a delivery station in the in the back,
as well as capturing that of retail that happens in
physical environment. So no, I don't think they're giving up.
They haven't made a lot of progress recently, but the
fact that we're seeing more and more of those ms

(01:09:15):
on Fresh supermarkets tells me that we're still really at
the beginning of this. Okay, you have the long history
delineated in your book. I have to ask you, does
this ghost store scanning work or they just have built
in shrinkage because we all know at first serious the example,
oh great concept doesn't work, but as time Alexa has
gotten better by the same token. Can't have a conversation

(01:09:37):
with it exactly. Yeah, No, you're right, alexis still a moron.
And the it does seem like the tech companies always
sort of overestimate the progress of of their AI systems,
and and no doubt that the Ghost Store is an
example of that, where they're they're mischarging or not understanding
certain transactions. But instead of shrinkage, I think they've got

(01:10:00):
create cadres of of workers, maybe contract workers, probably overseas,
who when there's a moment of ambiguity will be reviewing
the footage and making a manual determination. So I don't
know the extent to which they still rely on that
that would be a worthy focus of follow up. But
um I do think that I I don't know there
are employees who are concerned early on that the ghost

(01:10:22):
Star wouldn't scale because they had these crews that had
to monitor footage. Let's pull back the lens of the landscape.
What do we know The guy from Quidzy ultimately went
to Walmart during uh COVID Amazon posted amazing numbers. The
most recent Walmart. Walmart numbers are not that good. Let's
just talk about the business it's in, which is online retailing.

(01:10:45):
Will anybody ever compete, certainly in in in the US
and in parts of Europe, It's hard to imagine who
that would be. I mean, I I do think there's
room for competitors. I think Walmart's e commerce business has
has been growing, as many have during the pandemic. But
Amazon has such a tremendous headstart. eBay was so mismanaged
for so many years that no, I I think it's hard.

(01:11:08):
It's hard for anyone to get to that same scale.
Now companies like Shopify are showing, you know, of carved
out tremendous pieces of it, and Shopify might be one
of the best success stories of the past five years
in the technology world. But then you leave, you leave
the US in Europe, and you do find countries where
Amazon struggled, you know, India, it's it's run headlong into

(01:11:30):
a local competitor, flip Card that was acquired by Walmart,
and then Reliance Industries, which seems to have the backing
of the of the Modi administration. And you go to
different markets, and there's always this kind of nationalist champion.
So I think, you know, and its oldest Marcus, Amazon
has a little bit of a hammer lock, and you know,
but but the world is large, and it still has

(01:11:50):
There's a lot of countries where Amazon is not even
in and there are a lot of countries where it's
player number two or three. And to what degree is
a first move or advantage in scale, and to what
degree is it's special sauce referencing what we did before
with Bezos and whether that's you know, dribbled down into
the culture. Well, I mean, Amazon was very early in

(01:12:10):
China and it lost, It lost big and lost billions
of dollars. So I don't necessarily think it's the food.
First mover advantage has been important all around. But I
think you're asking, okay about the keys to Amazon success
in general. Yeah, okay, so Amazon wasn't the first online store,

(01:12:31):
but it was very early on. It was in large
part pays us taking advantage of the capital environment in
the in the late nineties and dreaming big and feeling
like books books were just the beginning and embracing you know,
kind of destiny. Destiny is the everything store and it
was Yeah, it was Bezos betting big and basically sinking

(01:12:51):
as profits into new product categories, and being willing to rethink,
completely rethink the operations arm and creating a warehouse network
that was tailored not for regular retail but for e commerce,
and hiring the right people and being so public and
bizarrely charismatic. These were all elements in the success story,
as well as good timing and then probably just some

(01:13:14):
luck in terms of them raising money during at the
very beginning of the dot com bus that allowed them
to navigate the shakeout when a lot of companies went out.
But you know, you look at the constant reinvention of
the company by Bezos, Aws the Kindle, Alexa, now Prime Video,
and I think it's hard to avoid concluding that there's

(01:13:35):
something about Bezos and his willingness to look around the
next hill change the company, bet his winnings again on
a new product category, reinvests his ambition, his competitiveness, his
savv nous about technology that's been key to its success.
Now in the music business, a truly legendary managers someone
who does it twice. So what do we know, Bezos,

(01:13:57):
who's built this the guy who ran the Apple Store
for Steve Jobs, reaching success went to J. C. Penny
couldn't do anything. If we plucked Basils out of the
Amazon and put him in another company that was struggling,
would he be able to reinvent it? Is he a
wonder kind? I think he has been in terms of

(01:14:18):
amplifying and building on Amazon's advantages. And the closest that
I can come to that hypothetical is Bezos at at
Blue Origin, the space company. Different company, different environment, different industry,
different set of competitors, and I would argue he hasn't
been very successful there. Now. In part that might be
because it hasn't really received a lot of his focus.

(01:14:38):
He's been funding it, but he's been managing it from afar,
and in part I think sowing some dysfunction because of
that choosing to who who to lead the company and
then kind of changing leaders halfway through, viewing Elon Musk
competitively and then amplifying his ambitions. So maybe it's a
poor example, but I think it's a way of saying
that the magic isn't as in broadly applicable that in

(01:15:01):
Space and with Blue Origin, he hasn't succeeded in the
same way and at least the way you might think now.
At the Washington Post, he took over a paper and
decline and he really revived its fortune. So yeah, I
think there's probably something that's broadly applicable about the Bezos
management style. But the guy has spread very thin now,

(01:15:22):
and I don't think he's given the care and attention
to blue origin that it's required. Okay, you've been following
the landscape for decades here, so what do we know?
Twenty years ago is all about hardware? Today it's about software.
Up until about ten years ago, every month, if not
more frequently, there was a new product, whether it be
hardware software. That is not the case. We've had consolidation

(01:15:46):
such we have the Amazon, Google, Facebook, and Apple. Maybe
you can throw Microsoft in there. Being this here, where's
this all going? I think we're living in an age
of oligopoly. I think at it's hard to evaluate these
companies alone. They you know, they they compete with each

(01:16:07):
other really not even on the margins, but in significant
business categories and um they you know, because of their
their fierce competition with each other, you know, they they're
they're moving quickly, They're they're in competition for the best engineers.
They're throwing elbows. I worry that it's blotting out a
lot of the opportunity and entrepreneurial opportunity. Um that's that's

(01:16:31):
been so historic to America's success in the vibrancy of
Silicon Valley. So you know, it's we're entering a really
interesting period where we have a presidential administration now that's
committed to reviewing the conduct of these companies. I think
we're gonna see a lot more high profile antitrust lawsuits
against the big tech companies. It'll be interesting to see

(01:16:52):
the government to grapple with their complexity. And it's all,
of course so fast moving, and these legal processes stretch
out over many years. Is and these companies change every
every year. So I don't know, I mean, I think
I think it'll it'll be it'll be interesting to watch.
But I see, you know, these big tech companies in
you know, continuing to grow and in some ways probably

(01:17:15):
sapping some of the vibrancy from the economy and some
of the opportunity for other companies. Now we talk is
the Internet mature. What I mean by that is if
you can look at certain things I'm a big skier, music, etcetera.
There's an element, there's a craziness when it develops and
then you have a business, but it's relatively regimented and managed.
You talk to other people and they'll say the power

(01:17:37):
of the smartphone is so strong computer in your hand
that the runway is incredibly long. So what's your viewpoint
and what might we see on the horizon technically or
with the Internet. I think it's probably the wrong move
to pad against the Internet, right it's I mean, just
in my professional career, I've seen the thing explain what

(01:18:00):
over over twenty five years and showed no signs of
slowing down. It does always seem like new kind of
transitions or new technologies are around the corner. The smartphone
gave us, you know, almost ten years of of runway.
My last book was about Uber and Airbnb and how
they basically built their businesses on on the smartphone. Um.

(01:18:24):
The fact is people are spending more time on their devices,
on their computers, interacting with the world. You know. Cloud
computing feels like a change, a revolution in its infancy. Still,
so I don't I don't see any reasons to think
that anything any anything any of our the slow creep
into UH technological society is slowing down. Okay, then drilling

(01:18:47):
down a little bit more to your work directly. You
work for Bloomberg, and what do we know? A lot
of media companies have been hurt by the lack of
advertising of during COVID. Bloomberg makes most of its money
from its UH quote machines and information machines that brokers use.

(01:19:09):
Bloomberg was a three sixty degree news company, then they
refocus it to business. Bloomberg will last. But being in
this publishing news industry, and I'll make it pretty broad.
Our physical magazines going to survive? Is there a hope
for local newspapers? I'm not asking for you to be optimistic,

(01:19:31):
but where is it going? There? Are we going towards
a winner take all landscape in news too. I'm extremely
concerned about the health and the future of local newspapers.
I'm from Cleveland, Ohio, and I grew up reading the
Cleveland Plane Dealer and it's where I really got my
interest in news. That and reading Newsweek magazine actually, which
ended up being my first employer. And you know, recently

(01:19:54):
the sale of the of the Tribune Company assets to
private equity, and just the deteriorating health of local newspapers
and media outlets and how that's ended up polluting the
democratic process. It's really worrisome and I don't see, really
it's hard to be optimistic about that, you want. I mean,
what Basos has done with the Washington Post has been remarkable,

(01:20:15):
and it would be great to see him or a
billionaire like him, pursue a kind of Carnegie like philanthropy.
You know what Carnegie did with the libraries? Was it?
It was Carnegie? I guess it was Okay, great, I'm
not embarrassing myself with my history there uh to to
do something like that for local newspapers. And unfortunately that
that billionaire philanthropist is not has not made him or

(01:20:37):
herself known yet. And meanwhile newspapers are languishing, the business
model is deteriorated, and the democratic process I think has
been polluted because of that. As for magazines, you know,
we're we're still I think, and now the second or
third decade of a slow transition, and properly, these properties
have to become digital and they have to build events,

(01:20:58):
businesses and create new relationships with there. There they're subscribers
and I think we've seen there have been remarkable examples
of magazines. I'm gonna just gonna pick one The Atlantic
that I think it's really successfully made the transition. Business
Week I think is another good example. It's now inside
the Bloomberg empire. It nourishes what we do at Bloomberg
in so many different ways. But it's still a time

(01:21:21):
of transition. And the old the the the physical ads
and the actual subscriptions. Of course, you know, the analog
print subscriptions, as you would expect, have continued to deteriorate.
That's not changing soon. So the magazines that are going
to survive are going to have to really complete their
their transition. I've written two books on Amazon. What is
your personal focus? What is the subject that you're putting

(01:21:43):
paying attention to going forward? I mean, right now, Bob,
I'm still locked in the Amazon jail. The book came out, Um,
you know I'm talking about it. I I don't actually
see the light at the end of the tunnel in
terms of I mean, the challenge of the Amazon is
they make news every single day or every single week,

(01:22:04):
and you know it's it's MGM or it's a shareholder meeting.
Or it's something with the workplace or Bezos news, and
so there there is a near future for me of
continuing to to blab about Amazon and my books. But
longer term, I run a tech team at Bloomberg. It's
I'm extraordinarily proud of it. It's you know, we cover
all the big tech companies and investors and trends, and

(01:22:26):
so that gives me a great purview to kind of
see all these changes in our society and our business
landscape and try to find the stories I'm interested in.
I have no idea what that is next. I have
to kind of lick my wounds from from this ordeal
and then hopefully I'll find something that interests me. Thanks
so much, Brad. This has really been great. Thanks for
taking the time to tell the story, Bob, It's been

(01:22:48):
a pleasure. I also want to say for people, these
are easily read books. They're written as stories. These are
not hardcore business books where your eyes rolled back into
your head. And if you want to know what Amazon
is doing, Brad literally is the guy in these books?
Are the definitive statements. I just want to emphasize that's
not a hype. I've certainly read both of them. That's
why I wanted Brad on the podcast. Until next time.

(01:23:12):
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