The Invention of a Global Empire — Brad Stone

The Invention of a Global Empire — Brad Stone

The Invention of a Global Empire — Brad Stone

We can’t live without it … Amazon is everywhere. We use its services for gifts, groceries, home goods and just about everything else. And with over 200 million Prime members, the retail giant is now an unstoppable, global force. This week’s guest, Brad Stone, details the company’s spectacular rise in Amazon Unbound. And in this episode, the bestselling author discusses all things Amazon and Jeff Bezos with host Charles Mizrahi.

Topics Discussed:

  • An Introduction to Brad Stone (00:00:00)
  • Key to the Castle (00:02:27)
  • Bezos Idea Factory (00:08:01)
  • Alexa and Echo (00:15:08)
  • The School of Bezos-ology (00:22:55)
  • Unintentional Consequences (00:29:31)
  • The Spectacular Rise of Prime (00:40:16)
  • America Runs on AWS (00:49:40)

Guest Bio:

Brad Stone is an author, journalist and senior executive editor for global technology at Bloomberg News. Over the past decade, he’s written dozens of cover stories for Bloomberg Businessweek — covering tech giants such as Apple, Google, Amazon, Facebook and Twitter.

Stone is also a bestselling author of four books. His latest book, Amazon Unbound, tracks the unprecedented growth of one of the most dominant and feared companies in the world. In addition, Stone shares special insights on the company’s founder and former CEO, Jeff Bezos.

Resources Mentioned:

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Read Transcript

BRAD STONE: Prime, right now, is the crank that turns the entire Amazon wheel. Look at how many things it’s into now — from Prime Video, Prime Music, photos and all the devices. Bezos has this quote. I think it’s in The Everything Store. The quote is: ‘We don’t have many big advantages, so we have to weave a rope of smaller advantages.” And Prime is the rope. It’s the connective tissue between all the different businesses.

CHARLES MIZRAHI: My guest today is Brad Stone. Brad is the senior executive for technology at Bloomberg News and an award-winning author of several books on the world of technology. His latest book is, Amazon Unbound: Jeff Bezos and the Invention of a Global Empire.

CHARLES MIZRAHI: In Amazon Unbound, Brad gives us a behind-the-scenes view of how the retail upstart became one of the most powerful and feared entities in the global economy.

CHARLES MIZRAHI: I recently sat down with Brad, and talked about the evolution of Bezos. He started as a geeky technologist who was totally devoted to building Amazon. And he transformed into a fit, disciplined billionaire with global ambition.

CHARLES MIZRAHI: Brad, thanks so much for coming on the show. I’ve really been looking forward to it — especially now that you have this new book here. The name of the book is, Amazon Unbound: Jeff Bezos and the Invention of a Global Empire. Brad, welcome to the show.

BRAD STONE: Thanks, Charles.

CHARLES MIZRAHI: I first read your book, The Everything Store, in 2015. I think it was published in 2013 or 2014. It was somewhere around there. A friend of mine gave it to me and said: “Charles, you’re going to like this book.” I think I read the book in two sittings. I was really interested. When I read that, I could understand where Bezos was going with Mars. Everything he did as a kid was toward colonizing Mars. It was really cool.

CHARLES MIZRAHI: And I was so happy to see that you came out with another book because, since then, Amazon has more than doubled and gotten into AWS. The cloud computers. There’s so much more. And I’m so happy to have you on the show today. We’re going to talk about all this.

BRAD STONE: Thank you. I’m happy to be here.

CHARLES MIZRAHI: OK, the first thing I want to know is: How do you get inside? How many people do you have to interview to find out what’s going on at Amazon? It jealously guards its secrets. It’s almost its own country.

BRAD STONE: That’s true. And what’s interesting about Amazon is that people in one corner of the company have no idea what others in a different corner are doing. There are very few people with extensive visibility across the whole company. It’s only a handful who sit on the senior leadership team. And that’s what makes it interesting. But that’s also maybe doable. It’s such a siloed company. It’s so decentralized. But as a result, there are thousands and thousands of people that you could conceivably go to get little pockets of the story or history.

BRAD STONE: Bezos is the central character. And he kind of disperses his time — or did when he was CEO — across the company. So, it’s simply a matter of mathematics. I spend my years working on these books, reaching out to current and former employees and asking: “What did you see at the revolution?” And then, I just listened.

BRAD STONE: It’s everything from the people who worked on the online grocery delivery businesses to Prime Video and the Hollywood initiative. And then, there are Bezos’ personal pursuits like The Washington Post and Blue Origin — the space company you mentioned. And so, to answer your question, it’s a couple hundred people. But I’m obsessed with Amazon and its tremendous growth. This company has impacted all of our lives and potentially awakened the fears of regulators and legislators around the country. So, it’s not work. It’s kind of fun.

CHARLES MIZRAHI: When you approach these people at Amazon — when they’re working there — do they go off the record with you?

BRAD STONE: Some of them. I quote many people at Amazon Unbound on the record. In fact, Amazon cooperated with the book and allowed me to talk to current executives. But it’s a variety — as it is with all tech companies. Some people are fearful. They feel like their NDA precludes them from talking. Some want to be careful. Some don’t want their names used. Others don’t care.

BRAD STONE: Amazon is almost a public utility at this point. And I think that for Amazon and other tech companies, there’s a growing awareness that former employees should share what they’ve seen and keep these tech companies accountable. We’re talking during the week that a Facebook whistleblower is going to testify before Congress. And so, people are more willing to talk about not just the story of its success but also the problems that the company has made along the way.

CHARLES MIZRAHI: The persona that Jeff Bezos puts out there is almost like Warren Buffett, right? In a sense. Warren Buffett puts himself out there as a country bumpkin — a nice guy. Buy low and sell cheap. But 12 or 13 years ago, when I spoke to Alice Schroeder — who wrote The Snowball — she said: “A lot of people didn’t want to speak to me on the record because they were scared of Buffett coming after them afterwards.” And she said: “Charles, you don’t get to become one of the richest people on Earth by selling Girl Scout cookies.” I do remember that. So, [he’s] kind of ruthless.

CHARLES MIZRAHI: When I read your book, I found it to be very balanced. You weren’t judgmental. You called it the way you saw it. I guess it could be pretty hard to do something like that because I’m sure you felt certain ways about certain points. But working for Jeff Bezos in that environment is not easy. It’s pretty difficult.

BRAD STONE: Yeah, that’s right. Amazon has a reputation for being a difficult, transactional employer. There are many stories in the fulfillment centers and offices of a challenging workplace. They’re not there to fool around. The company is growing by leaps and bounds. They try to give people a lot of authority. They expect them to make immediate contributions. But at the same time, it’s still very bureaucratic. It has over a million employees.

BRAD STONE: Bezos himself strikes fear in the hearts of a lot of people. But I was helped by the fact that the company cooperated. And I had the earlier book, The Everything Store, as a calling card. People were familiar with it, and they knew I was writing what I hoped would be the authoritative, definitive Amazon history. And it’s the history of one of the greatest entrepreneurs of our time. I think that helped. That opened doors. People wanted to contribute to that.

CHARLES MIZRAHI: Jeff Bezos’ wife gave you a one-star rating on that book, right?

BRAD STONE: And everybody went right. So, if people don’t remember that, MacKenzie Scott — and other Amazon executives who were probably motivated by Jeff himself — gave the first book one-star reviews. But that was seven or eight years ago. And now, Bezos cooperated with this book and allowed me to talk to friends and employees. People asked me about that. And I said: “I don’t know if they’ve necessarily come around, but they’re not fighting this.” That helped open doors.

CHARLES MIZRAHI: OK. So, I want to talk about all the businesses that Amazon now dominates and how it got into them. How many of them are from the mind of Jeff Bezos? It’s absolutely staggering. I always thought there were committees and groups. But many of the ideas, businesses and names came out from him — which was amazing. But before we get into that, Amazon has a culture. And you mentioned it in your previous book, but you really expanded upon it here. There were no PowerPoints, keynotes or flip charts. You had to write out a six-page … what do they call that?

BRAD STONE: A narrative.

CHARLES MIZRAHI: You have to write a six-page narrative about your idea of progress — or whatever it is. And there’s a meeting of the committee. The S team sits there — with Jeff at the head — and there’s silence while everyone reads through the report. My first question is: “Why a six-page narrative? What did that teach you — or could teach American business — about having clear ideas instead of quick presentations?

BRAD STONE: Yeah. It started almost 20 years ago. Bezos was really frustrated by the inefficiency of most meetings at Amazon. He didn’t have time for the PowerPoints or theatrics of a presentation. He wanted more thinking to take place before the meeting started and see a document when the thinking had been crystallized in its most dense form. Then, the discussion and decision could be made.

BRAD STONE: He’s a reader. This is how he processes information. To see an appendix full of stats means nothing to Bezos and other Amazon executives. At first, there were no page limits on the narratives. And then people went on forever. So, adding the six pages was a bit of a compromise to try to get people to edit.

BRAD STONE: I know that a lot of former Amazon executives have tried to bring the narratives to their other companies. And it hasn’t always worked. I think it might be particular to a certain kind of company — or Amazon in particular. But it’s effective for them. And the narratives are happening at every level. It might be a small team working on grocery delivery, and they’ve got their six-pagers.

BRAD STONE: But eventually — maybe once or twice a year — they’re passing their papers up through the ranks. And then, as you said, the senior leadership team — Bezos is not always in the room anymore because he’s the executive chairman — reviews the highest-level papers and makes the big decisions. So, it’s a way — as this company has gotten so sprawling and distributed — of making the most efficient decisions and making sure they’re data-based. It’s using everyone’s brains as they go through the most critical business reviews and projections for the years ahead.

CHARLES MIZRAHI: Yeah. You highlight some team members who got to this room and prepared the six-page narrative — which I’m sure caused people a lot of sleepless nights because they were making sure everything was perfect. And you discuss how Bezos was looking through one. On the back page was a footnote, and the number was wrong. He ripped it up, and that person was left in tears.

BRAD STONE: That’s right. He has evolved somewhat as a manager. And I had a lot of fun in The Everything Store. The early Bezos would fly off the handle and punish his employees. There’s even a greatest hits section of the harshest things he said.

BRAD STONE: And then, in Amazon Unbound, I was trying to show some of the growth. There was this early — I think it was 2008 — example of where he finds a mathematical error in a six-page document. He tears it up, and throws it down on the table. I don’t know if he does that anymore. I think the sharp edges do come out a little bit at Blue Origin, which is having some cultural problems right now.

BRAD STONE: But it was a great illustration of how exacting and smart he is. He was able to analyze a document and pick out the mathematical error that even the domain expert — who had prepared the document painstakingly over the course of months — hadn’t identified.

CHARLES MIZRAHI: Yeah. It’s so amazing that one guy has the ability to be extremely creative. And we’re going to discuss some of his amazing innovations. But at the same time, he’s so left-brain and analytical. He’s a gatherer, keeper and analyst of so much data. And he knows where to put the chess pieces.

BRAD STONE: That’s true. Certainly, you don’t create a $1.7 trillion company without a remarkable package of talents and skills. But I’m starting to wonder: “What is missing in that package?” And that’s as interesting of a story.

BRAD STONE: On the one hand, my book paid a lot of attention to the lack of empathy and Amazon’s relationship with its employees — and the lack of understanding of what kinds of problems can be created in a global marketplace without rules.

BRAD STONE: And then, we’re also talking during a week where — I don’t know if you saw it. And I don’t want to date the show. But let’s just say that there was a recent Saturday Night Live episode. Owen Wilson was hosting. And there was a commercial spoof on Bezos and a space company — Blue Origin. It was a fake promotion for a Star Trek show that was going to be called “Ego Quest.”

BRAD STONE: It strikes me that some of the things he’s been doing publicly have a remarkable lack of self-awareness. And unfortunately, people are making fun of him for that.

BRAD STONE: So, on the one hand, he has enormous skills and a combination of talents. On the other hand, there are a couple of missing variables. He goes up there in a space suit and cowboy hat. And the world makes fun of him. I’m not saying he cares.

CHARLES MIZRAHI: He wore cowboy boots. That was so dorky. He was laughing. He was having the time of his life.

BRAD STONE: And now, people are dunking on him. So yeah, he’s a technologist. He’s far-seeing. He’s an amazing engineer. He can understand the details of the projects that his employees are working on. But at the same time, he seems to have emphasized breakneck growth among other softer things at Amazon. And he has a bit of a blind spot in how the world looks at its wealthiest citizens.

CHARLES MIZRAHI: Right. OK, so I want to go back a bit. I want to go to Alexa. I had one near my bed that I had connected because I got the Echo as a gift. We have Google Home in our house, and we have the Echo. I want to tell you: I like Google Home much better. But OK. We have that. This is amazing. It’s in the dining room. And all of a sudden, it would blurt out something. We would always joke that they’re listening in — and they are!

CHARLES MIZRAHI: After reading your book, I saw how the engineers were listening in to all these conversations. I didn’t even think about all the different dialects throughout the United States. They taught Alexa what to listen for. Could you walk us through that?

CHARLES MIZRAHI: I think it gives us a window to a few things. One is coming up with the idea from Star Trek. There wasn’t a prototype for [that]. And No. 2, he had all of the technological barriers that continue to get in front of him. He figured out a way to get out of them. Even when it did come out — and there were mistakes — he kept persevering until it was where he thought it could be.

BRAD STONE: I start the book with Alexa. Chronologically, it was the beginning of the story I was telling — the last decade of Amazon. And in 2010, Bezos had an intuition that artificial intelligence and voice recognition were good enough that you could put a speaker on the other side of a room, have it recognize what people were saying and answer. He drove the project. He got in there and decided things like the wake word and the name of the device.

CHARLES MIZRAHI: Hang on a second. I want to say this: We all watched Star Trek. I know I did. I watched Star Trek — the original. And when I got married, my wife was a Trekkie. I didn’t watch that religiously. Every night, we used to watch the old ones — until they came out with the next generation. So, she’s really a Trekkie. And everyone saw that. “Computer, set us on a course…” We all saw that. Bezos said: “I’m going to make this a reality.”

BRAD STONE: It’s remarkable. The technology didn’t exist. Siri was around. But with Siri, you spoke into your phone. So, you didn’t have the problems of acoustic echoes or crosstalk.

Bezos, These are some basic things that we kind of take for granted that Alexa — and now its imitators — do extraordinarily well.

CHARLES MIZRAHI: And we get pretty pissed if it doesn’t hear you. I’m across the room, it’s echoing, my dog is barking and a fire truck just passed by. It couldn’t hear that?

BRAD STONE: Exactly. But you raise an interesting point. There’s a wizard behind the curtain. And that’s the engineer — or even the contractor. They listen, occasionally — not just to Alexa recordings but also Google Home and Siri.

BRAD STONE: Basically, all these tech companies are auditing the inputs to their devices and the instances when the computers didn’t get it right. And they’re trying to figure out: The next time, when people ask the same question, can we answer better?

BRAD STONE: They didn’t advertise the fact that they did that. And it probably creeped some people out. But they had to. That was something Amazon did in the earliest days of Alexa — before the device was even public. They were listening and transcribing the requests. And then, they’d figure out how Alexa could answer. That’s why, in part, it got so good. It was a mass effort of data collection. And that was one variable in how you made these things good.

CHARLES MIZRAHI: What was so fascinating — and should not be forgotten — was that the whole point of Alexa was to order more products on Amazon. It was all the flywheel.

BRAD STONE: That’s not necessarily true. They came to that late, and I don’t think they’ve ever quite figured it out. But no, I don’t think so. I think the original point was to create a voice agent in the house. I would say what’s more important to Amazon’s strategic roadmap is to allow it to be the home networking hub — to control appliances, lights and things in the home.

BRAD STONE: Remember: Amazon failed with the phone. So, this is another way to integrate into people’s daily lives. And yes, it’s supposed to also be an ordering mechanism. I don’t know that they’ve ever quite gotten that right — or if it really matters. This is a standalone business that probably generates hundreds of millions of dollars each year — just with device sales.

CHARLES MIZRAHI: That’s interesting. I remember they had that button that you could click or order continually with. What was that called?

BRAD STONE: Right. What was that called? It’s going to come to me later. But they discontinued it.

CHARLES MIZRAHI: I didn’t see that in the book. I don’t think you mentioned that. But it was something that you’d put in all different parts of your house. And with the washing machine, to order more Tide, you’d click the button. We’ll figure it out later. It failed. It didn’t work. But it didn’t matter.

BRAD STONE: No, it didn’t. And maybe that’s one of the things they thought: “Well, maybe Alexa does this better.” Oh, it was the Dash button! And you’re right. I didn’t include it. The tough thing with a company like Amazon — that throws so much against the wall … It tried so many different things — from enterprise computing to consumer devices to the core retail business. And then, [there are] Bezos’ own misadventures. It was about figuring out what to include and what not to. And that was one that probably ended up on the cutting room floor.

CHARLES MIZRAHI: Yeah. I think you outline it great here — when he was in the Smithsonian, and they were unveiling his picture. Could you share his speech to the crowd with us?

BRAD STONE: Right. So, he’s being inducted into the Portrait Gallery of the Smithsonian. And his oldest son, Preston, is making the introduction. It’s a moving speech. Then, he comes up there and says — with humility that he’s not known for — “My life is a series of mistakes.” And he asks the crowd: “How many of you own a Fire Phone?”

BRAD STONE: Now look, I think this might be practiced or intentional humility. He’s the richest guy in the world at that point. Since then, Elon has eclipsed him. But at that point, he is. And his company is coming under regulatory pressure. And two, there’s a little bit of criticism because [Amazon] has thrived during the pandemic. So, he’s a target right now. I think leading with his chin and saying: “I’ve failed in a lot of ways” is probably a clever strategy. I don’t know how effective it is, but it’s part and parcel with his philosophy. Sometimes, you have to trudge through the desert of failure before you reach success.

BRAD STONE: The Amazon story is replete with failed initiatives. The company almost went out of business in 2000 and 2001. It revived itself and pulled off one of the greatest comebacks in business history. And there are many initiatives — like the Fire Phone and its initiative in China — where it lost billions of dollars. You could say that it’s still on a quest with things like grocery delivery or even Prime Video — Amazon’s TV shows and movies. But Bezos is right. If you take enough swings, you’re bound to hit some home runs.

CHARLES MIZRAHI: Reading this from a business perspective, it’s like a gambler who only remembers the winners and forgets the losers quickly. The way you described it intricately in the book was there were challenges every step along the way — from the simple days of getting tables to do packing so you don’t have to go on the floor to delivering goods to the last mile and working with the U.S. Postal Office. They [had to] bypass UPS. One might take it for granted, but these were hurdles that Amazon not only overcame but perfected.

BRAD STONE: That’s right. I have a whole chapter on the transportation division. And as we all know — or at least those of us in major cities — Amazon is delivering most of its packages itself now. It has vans that say “Amazon,” and delivery drivers wearing Amazon uniforms. They aren’t necessarily Amazon employees. They’re contractors. And those are interesting stories.

BRAD STONE: Hopefully, you appreciate some of the personalities involved. The head of that division basically sues the best man at his wedding — his best friend — because the guy leaves Amazon and tries to go to Target. These are really driven individuals who bleed Amazon colors.

BRAD STONE: The other interesting thing to me was that we saw them as Amazon’s expansionist impulses. But when I started diving into it, the company was forced to do it because it was growing faster than UPS, FedEx and the U.S. Postal Service. And so, five or seven years ago, it was in a position of trying to implore its partners to go and build new capacity and buy new airplanes.

CHARLES MIZRAHI: By the way, at the end of your last book, you do discuss that. They call the UPS people and say: “We’re not paying this.” It was like a game of chicken, and UPS blinked.

BRAD STONE: And then, in this book, I talked about how Amazon desperately needed UPS to keep up with its growth, and UPS wouldn’t do it for understandable reasons. It didn’t trust Amazon. It didn’t want to build new capacity and have Amazon’s low margins eat away at its business.

BRAD STONE: And then, back in 2013 and 2014, Amazon had some really crummy holidays where it was disappointing customers because it didn’t have enough capacity. So, it had to do this.

BRAD STONE: But then, it has brought its anti-union, pro-contractor mentality. And that has created a lot of disruption and heartache among this class of workers. That’s an interesting avenue that I explore in the book.

CHARLES MIZRAHI: Before you do that, I want to talk about the anti-union [efforts] and how careful [Amazon] was to keep away from that. And Zapolsky from Brooklyn…

BRAD STONE: He’s the chief lawyer.

CHARLES MIZRAHI: He’s a Brooklyn guy. That’s where I’m speaking to you from. He’s very particular with what words to say and not say. And he goes on a tirade at the end — which we’ll talk about in a moment.

CHARLES MIZRAHI: But I want to go back to one thing. You talk about the people. What I found was out-of-the box thinking from some of the people who were in senior positions. One was a former high school teacher — who was a band leader — and someone else was in a mundane industry. They weren’t MBA types. They weren’t Harvard types. They weren’t Wharton types. And the brilliance, challenge, culture and environment that these people were in made them not just good but at the top in the world in their positions.

BRAD STONE: I think that some of the people you’re describing did get their MBAs. Some of them did go to Harvard Business School. But I think your point is right in that they went to Amazon, and none of that training mattered anymore. They got their master’s degrees or Ph.D.’s in the school of Bezos-ology. These were characters in my book who had been at Amazon for 20 or 25 years. Some of them were basically disciples of Bezos. They were his technical assistants. They got showered with his unique operating philosophy.

BRAD STONE: It’s good and bad. It’s long-term thinking and continuing to reinvent. But it’s also a pretty harsh and unempathetic relationship with workers and driving ahead. There are low expectations on what you might get from your blue-collar workers. So, they are always pushed — graded with algorithms and pushed out if they don’t meet expectations. And they hired more people. They don’t teach this stuff at business school — in part because Amazon is seeing growth numbers that are unknown to traditional business. It has to improvise at every stage of its growth.

BRAD STONE: And so, they forged their own unique business minds. You’re talking about folks like Dave Clark — who now runs all of retail — and Andy Jassy — who’s the CEO of Amazon. These are longtime Amazon folks who, even though they went to business school, got their degrees at the school of Bezos.

CHARLES MIZRAHI: Just think for a second. For those who are younger than me, back in the day, if you saw a TV advertisement for a product, you would have to call an 800 number or mail away. And at the bottom, it said: “Four- to six-week delivery.”

CHARLES MIZRAHI: Four to six weeks. Amazon has conditioned us for two-day delivery — and one-day delivery! I’m in New York. So, at one point, I was getting my stuff the same day. They opened up big terminals in Brooklyn and Staten Island.

CHARLES MIZRAHI: I was talking about it with my kids. Go away without anything. End up in a hotel in any part of the United States. See if you can get everything you need in one to two days. Don’t even go with a toothbrush. And it’s possible!

CHARLES MIZRAHI: Something that business — for whatever reason — couldn’t, wouldn’t or wasn’t able to do was quick delivery. And not only did Amazon do it, but it created a unique system of getting goods to the last mile by working with so many different carriers. As you pointed out, it didn’t originally work when you had contractors who ran over an old lady.

BRAD STONE: There have been costs. And I hope that comes through in the book. When you’re growing 35% or 40% a year, changing models midstream, trying to deliver more packages yourself and relying less on union shops like UPS, there have been costs. Hopefully, some of the things that come out of the book are the unintended consequences of trying to grow with an overreliance on algorithms, technology and self-service systems. Amazon has demonstrated it every step of the way.

BRAD STONE: In the transportation department, they hire all these contractors and manage them with machines. And yeah, the outcome is some tragedies on the road. And then, there are a whole legion of lawsuits — some of which are still going on against Amazon. It’s throwing up its hands and saying: “Those aren’t our employees. That’s a contractor who works for someone else.”

CHARLES MIZRAHI: Brad, I do hear that. And please don’t take what I’m saying to be unsympathetic because it’s not intended to be.

CHARLES MIZRAHI: During COVID-19, when they were only sending certain items to first responders and health professionals, I was pissed at some points. I said: “What do you mean? It’s going to take four days to get my T-shirts?” But I said: “Wait a second. People are dying.” OK, I got that. But in any type of innovation — like with Henry Ford and the assembly line — it produced things quicker, yet it turned people into robots by doing the same thing over and over again.

CHARLES MIZRAHI: I think that once businesses expand into uncharted territory and stretch the imagination to the point where the impossible is done on a matter-of-fact basis — we take one- or two-day delivery for granted. It still boggles my mind. There are going to be costs. Agreed. But as much as we don’t like those costs, many of us don’t like the other side of the equation —not getting what we want.

CHARLES MIZRAHI: Many have said: “Let’s cut off China right now!” Hey, 90% of the stuff we get — our supply lines are gone. Our pharmaceuticals are going to be gone. A lot of stuff is going to be gone. I talk the talk. But do you know what? It comes down to reality. It’s really difficult. So, I’m not judging what Amazon and Bezos have done. There will always be a cost for stretching the envelope, innovating and creating stuff that wasn’t there before. The company tracks movements and tries to make them more efficient. What’s the other alternative? Robots do it, and all these people are unemployed?

BRAD STONE: Well, Amazon might get there. It would love to get there.

CHARLES MIZRAHI: There’s no reason to think that they wouldn’t get there, right? I’m sure that when they first came out with the typewriter, the people who had beautiful penmanship — and were paid to write things — were put out of business. I think that’s what happens. It doesn’t come in a gradual sense. It smacks you in the face. It hurts for a while. But look at the buggy whip makers. We feel bad for them, too, but…

BRAD STONE: Right. I would just say that, going back to Henry Ford, it’s the attention that’s brought to the plight of the workers who are caught up in the machine. And then, society self-corrects. And you have the organized labor movement.

CHARLES MIZRAHI: And it self-corrects the other way, too. The pendulum keeps swinging.

BRAD STONE: Right. This is a story as old as time, and Amazon is the current incarnation of it. That’s why I try to take a balanced view. Amazon is simply fulfilling its promises to customers, and customers want quicker delivery.

BRAD STONE: If they were ever to slow it down and say: “Hang on. It’s not safe. We need to be safe. Delivery is going to take three days. We don’t want to push our people that much” — I’m not naive about this. There would be plenty of startups and companies like Walmart that would rush into the breach. And Amazon would be in trouble. So, it’s the incentives and financial structure. These companies are all running as fast as they can.

CHARLES MIZRAHI: That’s what you get in a capitalist society. We want our products, but we don’t want them to be made in sweatshops or by people who live in substandard [living conditions]. But we don’t want to pay too much for them. So, you tell me: How are you’re supposed to deal with that balance?

BRAD STONE: Right. Amazon is trying. Since my book came out, it has announced major product safety, anti-counterfeit and anti-fraud initiatives for the marketplace. It’s all great stuff. Arguably, it’s the stuff it should have been doing four or five years ago when it globalized the marketplace and there was a flood of unsafe and counterfeit products.

CHARLES MIZRAHI: Maybe. But it was coming really quickly. We’re sitting here on the outside and saying: “Well, of course they should have.” But they were going at lightspeed and trying to get your stuff to your house in two days. It was getting that last mile — and we know how difficult that is. The post office had been losing zillions of dollars for the last hundred years. And Amazon found a way to be a profit center for it. So, that’s a good thing. I think that when you’re going quickly to service one end of the marketplace, there’s going to be collateral damage. I’m not saying that in a glib manner. It’s unfortunate, but you can’t have A without B.

BRAD STONE: Yeah, that’s fair. It’s not my job to excuse them for the collateral damage. It’s my job to call it out. It’s interesting because when you talk to former Amazon executives — who were part of these initiatives — they’re enormously proud of what they’ve accomplished. But at the same time, they see the unintended consequences. And I think they have some regrets that they didn’t move more quickly. So, I think both are true.

CHARLES MIZRAHI: You did mention one lady who worked for the company. I forgot who it was. She was working with Alexa I think. She disconnected. She left the company, disconnected Alexa and didn’t use Amazon again.

BRAD STONE: She was working on Prime Day.

CHARLES MIZRAHI: Explain that. I’m sorry. I don’t want to cut off your story.

BRAD STONE: That was an extraordinary story. [She was] one of the first product managers in charge of Prime Day. I think the first one was in 2015 or so.

CHARLES MIZRAHI: What was her name? Do you remember? Forget it. You wrote a lot of names in this book. Go ahead.

BRAD STONE: Now I’m going to have to search my own book. It’s going to come to me in a second.

CHARLES MIZRAHI: I want to tell you: I was at the beach — on a Sunday — and reading it on my Kindle. Ha. Funny. I was reading it on my Kindle, and I saw that she disconnected her Alexa. I went home. I disconnected the one that was near my bed. I said: “I hardly ever use it. I don’t want it listening in. I don’t want to keep being prompted to order stuff.”

BRAD STONE: Well, she was proud of what she accomplished with Prime Day. It was years later — she had a pretty good career at the company — when Bezos got into some scandals and tabloid trouble. I talk about that in the book. And after the HQ2 fiasco — where they had to pull out of Long Island City after they chose that as one of their destinations — she kind of lost faith that she and other employees should be working so hard and giving up so much in their personal lives for Bezos — who was becoming extraordinarily wealthy.

BRAD STONE: And so, she made a personal choice to leave the company and disconnect from it. She also felt that it was a male-dominated internal culture.

CHARLES MIZRAHI: It was.

BRAD STONE: Yeah, it is. Right. And they’re trying to address that. It’s these voices — these dissenters — who make it so interesting, right? It’s not necessarily a majority view, but she was someone who made a big contribution to Prime Day at the company. And now, she looks back and questions: What is all of it for? Is it just an orgy of spending on stuff we don’t need?

CHARLES MIZRAHI: That’s exactly what you wrote. People could keep buying more stuff. That was the whole aim. She said: “I’m getting off this train.”

BRAD STONE: Right, exactly. I included her voice because she was very thoughtful about it. She said: “Did we all just buy rice cookers that are sitting in our kitchen closets?” The funny thing was that I had a rice cooker that was sitting in my cabinet. No, it was an Insta Pot. That was the example. I might have used it half a dozen times.

CHARLES MIZRAHI: It was a good deal.

BRAD STONE: It was a good deal. But did I need it? Did I really need it?

CHARLES MIZRAHI: Do we really need much of what we want? You don’t have it. One thing that I think is so telling is the number of Prime customers. You put it in the book. I think it was 100 million or so. I think the number increased during COVID-19. I forgot the exact number.

BRAD STONE: I think it’s more than 200 million.

CHARLES MIZRAHI: OK. Think about that for a minute. I was at an investment conference in 2006, and Bill Miller of Legg Mason was speaking. He was one of the early investors in Amazon — and that’s when Amazon wasn’t showing any profits.

BRAD STONE: He was a believer.

CHARLES MIZRAHI: He said something that was so interesting at the time. It was a little late. When did Prime come out? What year? Do you remember?

BRAD STONE: It was 2005.

CHARLES MIZRAHI: OK, so it was 2006. He says: “Amazon doesn’t release the Prime numbers.” For those folks who don’t know what Prime is, you pay a certain amount — then, it came out of $79 — and you get free shipping. And later on, they added on so many bonuses to keep you. Now, Prime is up to $119.

CHARLES MIZRAHI: Full disclosure: I’ve been a Prime member since day one. And I gladly pay the $119. I remember you used to have a $25 minimum. I used to put stuff on my card and not order until it was $25. So, it was a brilliant innovation. And Bill Miller caught on early. He said: “They don’t break out the Prime numbers, but all my research is showing that it’s going to be a force.” And he was so right about that.

BRAD STONE: Prime, right now, is the crank that turns the entire Amazon wheel. Look at how many things it’s into now — from Prime Video, Prime Music, photos and all the devices. Bezos has this quote. I think it’s in The Everything Store. The quote is: ‘We don’t have many big advantages, so we have to weave a rope of smaller advantages.” And Prime is the rope. It’s the connective tissue between all the different businesses.

BRAD STONE: The fundamental fact underlying it all is that when you sign up for Prime, you become a mega Amazon customer. So, everything is focused on getting people into that funnel.

CHARLES MIZRAHI: I want to tell you that it’s almost like a spider’s web. Once you get caught in it, you don’t want to get out. Yesterday was a perfect example of that. I have the Amazon Prime card — which gives you 5% back. So, my mind thinks: “Anytime I buy something on Amazon, I’m getting it cheaper” — even though it costs more sometimes.

CHARLES MIZRAHI: Yesterday, my wife dragged me to Home Depot to buy a garden hose. And my first thing was: “Why aren’t we buying this on Amazon?” Well, we wanted to buy something else — a garbage can that that Amazon didn’t sell because it was too big to ship. So, you had to go to Home Depot.

CHARLES MIZRAHI: So, I’m in Home Depot, and she’s looking at the hoses. I say: “I’m out of here.” The trip, the people, they didn’t have what I wanted, I didn’t see reviews — I didn’t want it. I said: “Let’s look.” I took out my phone. You had to pull up the app and scan the barcode. Amazon had it for $4 or $5 cheaper. We got 5% back. And if there were any problems we could send it back a without problem within 30 days. How could you beat that?

CHARLES MIZRAHI: The more I keep thinking about what Amazon Prime has done to me — I think about this every now and then. And then, I stop thinking about it. As long as Amazon sells it, I make sure my family buys everything they need on there. Period. End of sentence. Don’t waste your time. Order it now. And the delivery people from UPS, USPS and the Amazon trucks take a picture of the delivered item and send it to your email. Go outside. It’s there, and boom. How could you beat that? How could there be 200 million people signed up if it didn’t work? But it does!

BRAD STONE: Well, I don’t…

CHARLES MIZRAHI: That wasn’t a question. It was a statement.

BRAD STONE: Charles, I like Home Depot. I buy the hose at Home Depot. Maybe I’m less methodical. But there are certain things that I just need to see.

CHARLES MIZRAHI: OK, but my point is: If I get it delivered and don’t like it, the postal center is four blocks away from my house. There are mountains of cartons there. Those have become Amazon’s warehouses.

BRAD STONE: That’s true. And one day, you won’t need to go to the post office. They’ll come and pick stuff up.

CHARLES MIZRAHI: Oh, they do have that — where you check off. But they’re not that reliable. You leave it outside, and sometimes they ring the bell. It’s not even worth it to me. But circling back to what you said about the human cost that’s involved in doing this — if Amazon wasn’t providing the service, value-add, convenience, accessibility etc., it wouldn’t mean squat. The fine edge here is that they’re so good at what they do. And in a way, it becomes dangerous to most people. Is that an accurate assessment?

BRAD STONE: Yeah. The way I think about it is there are certain companies that take time from us, and there are other companies that give time back to us. The companies that take time from us — I’m thinking about some social networking companies — we might be a resentful toward them. At least, I am. I can’t believe I spent this much time on this. Amazon does tend to give us time back. People appreciate that in this day and age. They can shave off a couple of car trips. You can click, and you don’t have to think about it.

CHARLES MIZRAHI: It was one hour in traffic — back and forth — for $30 garbage can. If Amazon had it for $40, I would have bought it because I can’t get that hour back.

BRAD STONE: As long as it works, it’s tremendously compelling. And the conscientious objectors — like the ones we were speaking about — are few and far between. I think most people [aren’t] — even though they have trepidations about Amazon’s impact on society, competitiveness and relationship with workers. I’m up front with this. I’m a prime member, too. It has been good for me and my family. We order. We watch the TV shows and movies. And we have Alexa. So, there’s a critique in that book, but I want to be balanced and say that Amazon has done some good things for society.

CHARLES MIZRAHI: I would beg to differ slightly and say that it did a lot of great things for society. I remember the one-horse town. Even in Brooklyn, there was one store that sold comic books and books. And that was the price. There was no price comparison. And I happened to go there about 20 years later when one of my youngest sons and I were walking.

CHARLES MIZRAHI: We walked in the store, and I asked: “How’s business?” We started talking. I used to bring my oldest child there. She remembered that kid. She said: “Business has gone down since the internet. It’s terrible for us.” I said: “Terrible for us? You sold a baseball card or comic book at any price you wanted because there was no price discovery. You couldn’t get it anywhere. And if I took it and didn’t like it, you deducted a 20% restocking fee because you couldn’t sell it new. And you’re wondering why?”

CHARLES MIZRAHI: Now, I can buy anything from Amazon. Pop it. Use it. And if don’t like it, I can return it within 30 days and get my money back without a problem. And if they can’t get it back, I’ll go on the chat. They’ll apologize and give you a $10 coupon to something.

CHARLES MIZRAHI: People forget those one-horse towns where there was only one place to buy sweaters, shoes or anything. There was limited supply, availability and selection. And if you tried to return these things, they only gave you store credit. But I don’t want to go in your store. They’d say: “Sorry that’s our policy.”

BRAD STONE: I’ll just say: I do have some sympathy for the small business owner who finds himself competing with a juggernaut with almost limitless pockets for the kinds of discounts and refunds that you’re talking about.

BRAD STONE: And yes, maybe some of them had slightly predatory business practices when they had monopolies on their customers. But that’s, hopefully, somewhat of a minority. This is a much tougher business climate. But it’s also true that some independent bookstores are thriving right now. So, it’s all about finding your niche and taking care of your customers.

CHARLES MIZRAHI: Right. I think it makes the marketplace sharper. You have to be sharp. You can’t coast anymore.

BRAD STONE: You can’t coast, right.

CHARLES MIZRAHI: There’s one last thing that I want to talk to you about, and we’ll wrap it up there. I could speak to all day because I love this book. I love the other book. You give such great insights into the company. Standard Oil — John D. Rockefeller’s company. And that’s what I want to come to.

CHARLES MIZRAHI: A few years ago, Warren Buffett said that he watched Jeff Bezos and called him one of the greatest businessmen of our time. He’s the John D. Rockefeller of our generation. He said — and I’m not quoting exactly — that he watched how Bezos mastered retail. And then, he went on to master and dominate the cloud.

CHARLES MIZRAHI It seems that with every business this guy gets into, it’s “go big or go home.” If I had one comment for a revision on this, I would have loved to see more about the cloud. You talked about JEDI and the whole thing there, but I would have loved to know more about that cloud business because it revolutionized everything.

BRAD STONE: [It was] $60 billion a year.

CHARLES MIZRAHI: Talk about that for a minute.

BRAD STONE: Right. So, this is one of the challenges of including it in the books. And I have the origin story of the cloud business in The Everything Store. In this book, I talk about how it started reporting its financial results, why it was kept secret for so long and how it grew to a business with $60 billion in revenue.

CHARLES MIZRAHI: What were the profit margins? There were huge profit margins.

BRAD STONE: Yeah, it’s among the highest at Amazon — probably 25% or 30%.

CHARLES MIZRAHI: It was 30%, yeah.

BRAD STONE: Yeah. Most of the internet is running on Amazon. We think of Netflix, Disney+, Apple TV+ as competition for Prime Video. And yet, those services run on Amazon’s computers via AWS. Amazon.com itself runs on AWS. So, it’s a fast-growing business and in competition with Google, Microsoft, Oracle and the rest. It’s very competitive. And it allows Amazon to continue to invest in new things. That’s probably part of the reason why we have Alexa, the robot that they just announced and new businesses in different parts of the world.

BRAD STONE: Part of the reason why Amazon is a growth company is because divisions like AWS and Advertising generate a lot of cash. Amazon can go invest. Until these kinds of nuclear generators of revenue and profit slow down, this company will continue to expand.

CHARLES MIZRAHI: Wow. It’s staggering how dominant AWS has become and how its runway is so long. It has such a jump on everyone else, and it works. If these things didn’t work, we wouldn’t be discussing them. It wouldn’t be a thing.

CHARLES MIZRAHI: One last thing for you. And I want you to give me a 60-second [answer] — no more than that — because we could probably speak about it for hours. With Congress’ focus on technology companies, monopolies and bad press — this country likes the up-and-coming struggle. But when you become king of the mountain…

CHARLES MIZRAHI: They loved Bezos 20 years ago. But now, he has a bull’s eye on his back. Based on all the knowledge and insights you have — no one has a crystal ball, but what do you think Amazon’s next steps are with Bezos off to the side? What do you see as its new direction? What’s the new softer, kinder Amazon — if you see something like that?

BRAD STONE: Well, there’s a lot to unpack there. I’ll try to go quick. Some of the big things that I think loom in the near future are more physical Amazon stores, grocery stores, bookstores and maybe even department stores. E-commerce is 15% of all of retail, and Amazon wants to top that other 85%. It’s going where its customers are.

BRAD STONE: So, you’ll see more of Amazon as you drive to work and back. That’s a big thing. Amazon could get into health care or satellite internet access. There could be more Amazon devices, data centers and fulfillment centers that are closer to populations. So, there will be more of Amazon. That’s the easiest prediction to make. And then, there will probably be more regulatory scrutiny.

BRAD STONE: And no, I don’t think that Congress will break Amazon up. I think it’s going to have a very hard time demonstrating that Amazon is a monopoly because, as I said, Amazon competes with very big companies in most of its businesses. And it competes in very large markets. But I do think we’ll see Amazon’s wings clipped a bit. And I think we’ll [see changes in] the kinds of relationships it has with marketplace sellers, drivers and warehouse workers. Who knows? Maybe we’ll get some Amazon unions.

BRAD STONE: But, by and large, I don’t see an existential threat to the company right now. It’s going to be interesting to watch because Bezos has brought a lot of energy and passion. And I do really think he’s off to the side right now. But that’ll be interesting to see. Can this company continue to innovate when the founder is not around? That, Charles, is the thing we’ll talk about next time.

CHARLES MIZRAHI: Is this going to be another Apple — a Tim Cook kind of thing — where the company got stronger? I just hope that I buy my health insurance from Amazon one day. The rates that major insurers have…

BRAD STONE: They would love to do that.

CHARLES MIZRAHI: Yeah. All right. The name of the book is, Amazon Unbound: Jeff Bezos and the Invention of a Global Empire. It’s a really quick read. Brad threw a lot of stuff in here. I think it’s balanced. Has anyone said that it’s unbalanced? Do you have critics who say that?

BRAD STONE: I feel the consensus is that it’s balanced.

CHARLES MIZRAHI: Do the Amazon-haters view this as you being a cheerleader, or no?

BRAD STONE: I actually take pride in the fact that different factions can pick it up and take things out of it. And there’s a critique in there that probably does appeal to the critics. But there’s enough of the story in there that probably appeals to the true believers.

CHARLES MIZRAHI: Did you get a rating from Bezos or MacKenzie Scott on this one?

BRAD STONE: No reviews this time around.

CHARLES MIZRAHI: All right. That could be a good thing, huh? They kind of liked it.

BRAD STONE: Well, I think the one-star review of The Everything Store ended up helping. But again, I wouldn’t wish that in another go-around.

CHARLES MIZRAHI: Five stars would have helped you so much better. All right, Brad. Thanks so much, man. It’s been my pleasure. I really enjoyed this conversation. I enjoyed the book Amazon Unbound: Jeff Bezos and the Invention of a Global Empire. Thanks so much for being on the show.

BRAD STONE: Thank you, Charles.

CHARLES MIZRAHI: Thanks for listening to this episode of The Charles Mizrahi Show. If you’re a new listener, welcome! If you’ve been listening for a while, we’re glad to have you back. Either way, we’d love to know what you think of the show. Please leave a review if you listen on Apple Podcasts. Reviews make it easier for others to find the show. You can also see the video of the interview on The Charles Mizrahi Show channel on YouTube.

 

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