FutureBook 2013: Brad Stone Q&A

FutureBook 2013: Brad Stone Q&A

Brad Stone is senior journalist for Bloomberg BusinessWeek and speaker at FutureBook 2013.

You managed to penetrate Amazon’s culture of secrecy. Why do you think it is such a tight-mouthed company?

Genetically Amazon is a retailer: a low-margin, hyper-competitive business where your strategy and your perspective are your only asset. If you look in retail, that’s not unusual. WalMart doesn’t talk.
The second part is Jeff Bezos. He came from a very secretive Wall Street hedge fund where your perspective is your best weapon. He was mentored under David Shaw [a computer scientist who founded hedge fund company D E Shaw & Co], who was very secretive; he did maybe one or two interviews in his life.

You tracked down Bezos’ biological father, who didn’t know his son was the head of Amazon. Did that background affect how he runs Amazon?

There is a very similar situation with Steve Jobs, who was adopted. These moments in our tech visionaries’ lives are significant. Maybe Steve Jobs would not have been the Steve Jobs we knew if he knew the exact circumstances of his birth.

Maybe it has affected Bezos and his relentless drive to prove himself, to beat his competitors. It is outside of my purview as to how much that explains his personality, but to me it was a missing piece of the puzzle—I wanted to find his father and discover where he has been.

Is Bezos’ volcanic temper part and parcel of being the head of a successful company?

One element that I hope came through in the book was that any c.e.o. can be a jerk. But it doesn’t work for long: people hate you and they leave the company and tell others not to join. But why it works in the case of Bezos or Jobs is because they are so respected. They are feared, but they are loved. People want to please Bezos at Amazon. They live their careers trying to please this visionary founder who has seen the future . . . and turned out to be right more often than not.

Amazon is obviously a tough negotiator. Has that been counterproductive at times?

In the book business, I think it has. The music business, during its main period of digital disruption, had problems with piracy. So it went with Apple, which dominated the selling of music and in some ways led to high-street music retailers going out of business. But the music industry never hated Apple because the two had a common enemy in Napster.

In books, the piracy has been negligible. Bezos had to turn Amazon into the bogeyman, because if it wasn’t the bad guy, Bezos felt Amazon wouldn’t move fast to launch the Kindle in 2007; it feared that Apple or Google was going to get there first. Amazon was really mercenary. To some degree it had to push, but did it really need to not tell publishers about the $9.99 e-book price it had planned? Or did it have to yank publishers off the [list of its] recommendations—or in some cases, stop selling publishers’ titles altogether?

In some cases, that seemed to me self-destructive for Amazon. For example, when it tried to create the publishing arm no other stores would stock its titles because of the animosity. The hatred for Amazon in other book businesses is almost tangible and acrid—all because Amazon pushed and cajoled and threatened and blackmailed.

But does Amazon care about bad publicity?

There are signs that it cares. In 2011/12 it was fighting a tax collection effort in California and there was a ballot initiative to change the state law. All these big-box retailers got together and produced anti-Amazon TV ads, right before the launch of the first Kindle Fire. Amazon stopped fighting the law, because it discovered that the PR pit was going to tarnish its brand at a time when it was trying to be a consumer electronics company.

The real proof is the Amazon “love” memo, which Bezos sent out to the company about how the public perceives Amazon. He was very analytical about the company’s profile, and concluded that whether you are seen as an innovator or not, you would ultimately succeed. So it does care, but it also has the in-built arrogance of a company which believes it can engineer a favourable impression of a brand.

How do you see Amazon Publishing developing post-Larry Kirschbaum?

At this point I see it as an unstoppable wave, even given the current problem of other booksellers not stocking its titles. In the US retailers are struggling—quite frankly, how long does Barnes & Noble have left? In a world without B&N, the impact of the boycott is lost.

[Publishing] is a major investment area for Amazon. Just look at the flood of press releases about its publishing programme. It is going to keep assembling this chain of small features, from the Prime Lending Library to the new literary journal. It’s making sure it has a foundation in books. It’s tough to bet against Amazon, particularly when you have older publishing companies that aren’t innovating at the same pace.

Publishers are operating at a different rhythm and they don’t seem to understand that Amazon is coming for them. Every day something different comes out of that company that pertains to the Kindle and publishing.

Where is future growth going to come from for Amazon?

Amazon is expanding blob-like in all directions. The retail site is only in a dozen countries, so there are a lot of markets for it to enter and catch up with WalMart, for example. There are a lot of categories it is looking at; its mission is the “everything” store, so groceries and apparel are the big areas.

Bezos’ ambition has no natural limit; I think his vision is the everything store globally, and Amazon is probably only a fraction of the way there. In some territories it just has books or the Kindle. They want to bring the whole company everywhere, so there are a lot of territories for it to go into. The digital and hardware business is just getting started. Amazon wants to do a phone, it wants to do a set-top box. I’m sure it is dreaming big with Google and Apple about glasses and watches, too.

Will the competition authorities ever come after Amazon?

Anti-trust authorities are a lot more sophisticated in Europe than in the US. One real area of interest is the fact that Amazon is a retail platform that allows a lot of sellers to sell, and it is the largest seller on that platform. That creates a natural conflict in the way that Microsoft had in the 1990s. Amazon needs to be careful about tilting the playing field in its favour.

The Everything Store by Brad Stone is published by Bantam Press, £18.99

Brad Stone will be speaking at FutureBook 2013 on 21 November. Booking closes 15 November.