The Everything Store: Jeff Bezos and the Age of Amazon

by Brad Stone

  Jenson’s legacy at Amazon was hotly debated even a decade later. Some thought he was overly political. Others argued that he helped to direct the company away from its path of reckless growth and that he assembled an accomplished finance team that would go on to make significant contributions at Amazon and throughout the technology world. The evidence for the pro-Jenson case is difficult to dismiss. “Warren was the right CFO for the time,” says Dave Stephenson, a finance exec who worked for him at Amazon. “He forced hard decisions and hard debates. He would always stand up to Jeff a little bit more directly than anyone else.”

  To replace Jenson, Bezos recruited another chief financial officer from General Electric, Tom Szkutak, sealing the deal with an impassioned two-page letter to Szkutak and his wife about the impact they could make at a historic juncture for the Internet. Szkutak was also the right CFO for Amazon at the right time. He would facilitate rather than challenge Bezos’s ambitious forays into various new businesses in the years ahead.

  Perhaps the most rancorous exits in the company during this time stemmed from the intramural combat between two departments: Amazon’s editorial group and its personalization team. The editorial division, which dated back to Amazon’s earliest days, was composed of writers and editors who added a human touch to the Amazon home page and to the individual product pages. Bezos originally formed the group to cultivate the literary aura of an independent bookstore and recommend books to customers that they might not have otherwise found.

  But over the years, the personalization group started to infringe on the editorial group’s turf. P13N, as it was cleverly abbreviated (there are thirteen letters between the p and the last n in personalization), used analytics and algorithms to generate recommendations crafted to appeal to individual customers based on their previous purchases. Over the years, P13N kept getting better. In 2001, Amazon started making suggestions based on the items customers looked at, not just the products they bought.

  The juxtaposition between the two approaches was stark. Editorial was handselling products with clever writing and intuitive decisions about what to promote. (“We ain’t lion: this adorable Goliath Backpack Pal is a grrreat way to scare away those first-day-of-school jitters,” read the home page in 1999, promoting a lion-shaped backpack for kids.) Personalization was skipping the puns and building a store for every customer using cold, hard data to stock the shelves with the items that customers were statistically the most likely to buy.

  Bezos did not explicitly favor one group over the other, but he looked at the results of tests. Over time it became clear that the humans couldn’t compete. PEOPLE FORGET THAT JOHN HENRY DIED IN THE END, read a sign on the wall of the P13N office, a reference to the folktale of the steel driver who raced to dig a hole in competition with a steam-powered drilling machine; he won the contest but died immediately afterward.

  Most editors and writers were reassigned or laid off. Susan Benson—Rufus’s owner—took a sabbatical from Amazon. When she returned, Jason Kilar, then the vice president of media, invited her to a meeting that he described ominously in e-mails as an “editorial game changer.” She knew she was in trouble. “It had a lot do with how to dismantle editorial and turn it into part of the automated universe,” Benson says. “I thought, Yeah, my time here is done.”

  An algorithm called Amabot brought about the downfall of editorial. Amabot replaced the personable, handcrafted sections of the site with automatically generated recommendations in a standardized layout. The system handily won a series of tests and demonstrated it could sell as many products as the human editors. Soon after, an anonymous Amazon employee placed a three-line classified advertisement in the Valentine’s Day 2002 edition of the Stranger, an independent Seattle newspaper. It read:

  DEAREST AMABOT

  If you only had a heart to absorb our hatred… Thanks for nothing, you jury-rigged rust bucket. The gorgeous messiness of flesh and blood will prevail!

  * * *

  In January 2002, Amazon reported its first profitable quarter, posting net income of $5 million, a meager but symbolic penny per share. Marketing costs were down, international revenues from the United Kingdom and Germany were up, and sales from third-party sellers on the vaunted Amazon platform made up 15 percent of the company’s orders. The exclamation point on the accomplishment was that Amazon had turned a profit by both controversial pro forma accounting standards and conventional methods.

  Amazon had finally shown the world that it wasn’t just another doomed dot-com. The stock price immediately jumped 25 percent in after-hours trading, clawing its way out of the single digits. Kathy Savitt, a new Amazon publicist, told Bezos she wanted to frame some of the positive news articles and hang them on the office walls. He told her he would rather frame the negative stories like Barron’s infamous Amazon.bomb cover. When people wrote or said positive things about Amazon, he wanted employees to remember the Barron’s article and remain scared.

  The company wasn’t yet entirely clear of its balance-sheet problems but it was on its way. In the first quarter the following year, Amazon cleared $1 billion in sales for the first time during a non-holiday period, setting the stage for its first profitable year. In a sign of optimism, Amazon said it would prematurely redeem the bonds from its first debt round back in 1998, paying bond holders the full outstanding value of the bonds five years before their maturity date.

  As they prepared to make this announcement, someone on the finance team wondered what their old foe Ravi Suria was thinking. That revived the notion of the milliravi, a significant mathematical error. Mark Peek, the chief accounting officer at the time, joked that they should find a way to use the word in their press release. Everyone loved that idea, including Bezos, and they started exchanging suggestions over e-mail. Finally, investor-relations chief Tim Stone asked Bezos if he was serious about actually doing this, and Bezos said that yes, he definitely was.

  Thus, on April 24, 2003, in the press release announcing quarterly earnings, shareholders, analysts, and journalists were treated to this inexplicable headline, which doubled as a quotation attributed to Bezos: MEANINGFUL INNOVATION LEADS, LAUNCHES, INSPIRES RELENTLESS AMAZON VISITOR IMPROVEMENTS.

  Taking the first letter of each word and putting them together produced milliravi. A few of the analysts and reporters following the company scratched their heads over the unartful prose. No one outside Amazon knew what to make of it. But for Jeff Bezos, and for the employees who stuck with their implacably demanding leader through that first critical battle, the message was clear.

  They had won.

  PART II

  Literary Influences

  CHAPTER 5

  Rocket Boy

  Jeff Bezos did more than just refute Ravi Suria and other skeptics during the dot-com bust. He soundly defeated them, and then he surreptitiously encoded his victory for posterity in a press release. Similarly, he did more than just outmaneuver Barnes & Noble in the marketplace—he enjoyed telling the story of how he’d held his first meetings in its coffee shops.

  When Bezos’s longtime friends and colleagues try to explain his fierce competitive streak and uncommon need to best his adversaries, they often veer into the past—back almost fifty years—to the circumstances of his early childhood. Bezos grew up in a tight-knit family, with two deeply involved and caring parents, Jackie and Mike, and two close younger siblings, Christina and Mark. Seemingly, there was nothing unusual about it.

  Yet for a brief period early in his life, before this ordinary childhood, Bezos lived alone with his mother and grandparents. And before that, he lived with his mother and his biological father, a man named Ted Jorgensen. Bezos himself told Wired magazine that he remembered when Jackie and Mike, who is technically his adoptive father, explained this situation to him when he was ten. He learned Mike wasn’t his biological father around the same time he learned that he needed glasses. “That made me cry,” he said.1 Years later, as a college student, he confronted his mother and asked her a series of poin
ted questions about his birth. They both declined to discuss the details of that conversation but afterward Bezos hugged her and said, “You did a great job, Mom.”2

  Bezos says that the only time he thinks about Ted Jorgensen is when he’s filling out a medical form that asks for his family history. He told Wired in 1999 that he had never met the man. Strictly speaking, that is not true; Bezos last saw him when he was three years old.

  It is of course unknowable whether the unusual circumstances of his birth helped to create that fecund entrepreneurial mix of intelligence, ambition, and a relentless need to prove himself. Two other technology icons, Steve Jobs and Larry Ellison, were adopted, and the experience is thought by some to have given each a powerful motivation to succeed. In Bezos’s case, what is undeniably true is that from his earliest years, his parents and teachers recognized that this child was different—unnaturally gifted, but also unusually driven. His childhood was a launching pad, of sorts, that sent Bezos rocketing toward a life as an entrepreneur. It also instilled in him an abiding interest in the exploration and discovery of space, a fascination that perhaps one day may actually take him there.

  Theodore John Jorgensen was a circus performer and in the 1960s was one of Albuquerque’s best unicyclists. The archives of local newspapers contain a colorful record of his youthful proficiency. An Albuquerque Journal photograph taken in 1961, when he was sixteen, shows him standing on the pedals of his unicycle facing backward, one hand on the seat, the other splayed theatrically to the side, his expression tense with concentration. The caption says he was awarded “most versatile rider” in the local unicycle club.

  That year, Jorgensen and half a dozen other riders traveled widely playing unicycle polo in a team managed by Lloyd Smith, the owner of a local bike shop. Jorgensen’s team was victorious in places like Newport Beach, California, and Boulder, Colorado. The newspaper has an account of the Boulder event. Four hundred people turned out in freezing weather to a shopping-center parking lot to watch the teams swivel around in four inches of snow wielding thirty-six-inch-long plastic mallets in pursuit of a small rubber ball, six inches in diameter. Jorgensen’s team swept the contest, a doubleheader, three to two and six to five.3

  In 1963, Jorgensen’s troupe resurfaced in newspapers as the Unicycle Wranglers, touring county fairs, sporting events, and circuses. They square-danced, did the jitterbug and the twist, skipped rope, and performed tricks like riding on a high wire. The group practiced constantly, rehearsing three times a week at Lloyd Smith’s shop and taking dance classes two times a week. “It’s like balancing on greased lightning and dancing all at the same time,” one member told the Albuquerque Tribune.4 When the Ringling Brothers Circus came to town, the Wranglers performed under the big top, and in the spring of 1965 they performed in eight local shows of the Rude Brothers Circus. They also went to Hollywood to try out (unsuccessfully, as it happened) for the Ed Sullivan Show.

  Ted Jorgensen was born in Chicago to a family of Baptists. His father moved the family to Albuquerque when Jorgensen and his younger brother, Gordon, were in elementary school. Ted’s father took a job as a purchase agent at Sandia, then the largest nuclear-weapons installation in the country, handling the procurement of supplies at the base. Jorgensen’s paternal grandfather, an immigrant from Denmark, was one of the last surviving veterans of the Spanish American War.

  In high school Jorgensen started dating Jacklyn Gise, a girl two years his junior whose father also worked at Sandia. Their dads knew each other. Her father, Lawrence Preston Gise, known to friends as Preston and to his family as Pop, ran the local office of the U.S. Atomic Energy Commission, the federal agency that managed the nuclear-weapons program after Truman took it from the military following World War II.

  Jorgensen had just turned eighteen and was finishing his senior year in high school when Gise became pregnant. She was sixteen and a sophomore. They were in love and decided to get married. Her parents gave them money to fly to Juárez, Mexico, for a ceremony. A few months later, on July 19, 1963, they married again at the Gises’ house. Because Gise was underage, both her mother and Jorgensen’s signed the application for a marriage license. The baby was born on January 12, 1964. They named him Jeffrey Preston Jorgensen.

  The new parents rented an apartment in the city’s Southeast Heights neighborhood and Jackie finished high school. During the day, her mother, Mattie, took care of the baby. The situation was difficult. Jorgensen was perpetually broke, and they had only one car, his cream-colored ’55 Chevy. Belonging to a unicycle troupe didn’t pay much. The Wranglers divided their fees among all members, with Lloyd Smith taking a generous cut off the top. Eventually Jorgensen got a $1.25-an-hour job at the Globe Department Store, which was part of Walgreen’s short-lived foray into the promising discount-retail market being pioneered at the time by Kmart and Walmart. Occasionally Jackie brought the baby to the store to visit.

  The parents were young and immature and their marriage was probably doomed from the start. But Jorgensen also had a habit of drinking too much and carousing late at night with friends. He was an inattentive dad and husband. Preston Gise tried to help him; he paid his son-in-law’s tuition at the University of New Mexico, but Jorgensen dropped out after a few semesters. Gise then tried to get Jorgensen a job with the New Mexico State Police, but Jorgensen didn’t follow through on the opportunity.

  Eventually, Jackie took the child and moved back in with her parents on Sandia Base. In June 1965, when the baby was seventeen months old, she filed for divorce. The court ordered Jorgensen to pay forty dollars a month in child support. Court records indicate that his income at the time was a hundred and eighty dollars a month. Over the next few years, Jorgensen visited his son occasionally but missed many of those support payments. He was undependable, and he had no money.

  Then Jackie started dating someone. On several occasions when Jorgensen was visiting his son, the other man was there, and they avoided each other. But Jorgensen asked around and heard he was a good guy.

  In 1968, Jackie called Ted Jorgensen on the phone and told him she was getting remarried and moving to Houston. He could stop paying child support, but she wanted to give Jeffrey her new husband’s surname and let him adopt the boy. She asked Jorgensen not to interfere in their lives. Around the same time, Jackie’s father cornered Jorgensen and elicited from him a promise that he would stay away. But Ted’s permission was needed for the adoption, and after thinking it over and reasoning that the boy was likely to have a better life as the son of Jackie and her new husband, Jorgensen gave it. After a few years, he lost track of the family, and then he forgot their last name. For decades he wouldn’t know what had become of his child, and his own bad choices haunted him.

  The Cuban Revolution in 1959 blew apart the comfortable world of Miguel Angel Bezos Perez. Jeff Bezos’s future adoptive father had been attending the elite Jesuit private school Colegio de Dolores in Santiago de Cuba, on the south coast of the island, when the Batista government fell. Castro (himself a graduate of Dolores) replaced the schools with socialist youth camps and shut down private companies, including a lumberyard owned by Miguel Bezos’s father and uncle where Miguel worked most mornings. Miguel and his friends spent their days on the street, floating around and “doing things we shouldn’t have been doing, like writing anti-Castro slogans,” he says. When his parents heard about his antics, they worried he could get in trouble and, like many other Cuban families with teenage children, started making preparations to send him to the United States.

  They waited a year before they got his passport under the auspices of the Catholic Church. Miguel’s mother fretted about his moving to the frigid climate of el norte, so she and his sister knitted him a sweater from old rags. Miguel wore it to the airport. (The sweater is now framed and hanging on the wall of his home in Aspen.) His mother had to drop him off at the curb and then park in a nearby lot to watch the plane take off. But the family figured this was temporary and would last only until the political situation
stabilized and everything reverted to normal.

  Miguel Bezos arrived in Miami in 1962, sixteen years old and alone. He knew only one word in English: hamburger. He was one of the oldest members of Operation Pedro Pan, a rescue program run by the Catholic Church and heavily funded by the U.S. government, that removed thousands of teenagers from Castro’s grip in the early 1960s. The Catholic Welfare Bureau brought Bezos to a South Florida camp, called Matecumbe, where he joined four hundred other exiled children. By a stroke of good fortune, the next day his cousin Angel arrived at the same facility. “Immediately the two of us were joined at the hip,” Miguel says. A few weeks later, they were summoned to the camp’s office and given suitcases and heavy jackets—real ones. They were being moved to a group home in Wilmington, Delaware. “We looked at each other and said, ‘Boy, we’re in trouble,’ ” Miguel recalls.

  Miguel and his cousin joined about two dozen other Pedro Pans in a facility called Casa de Sales under the care of Father James Byrnes, a young priest who spoke fluent Spanish and enjoyed the occasional vodka tonic. They would later learn he was fresh from the seminary, but to his youthful charges, Byrnes was a towering figure of authority. He taught them English, forced them to focus on their studies, and gave them each fifty cents a week after their chores were done so they could attend a Saturday-night dance. “What he did for us we can never repay,” says Carlos Rubio Albet, Miguel and Angel Bezos’s roommate at the facility. “He took a houseful of exiled teenage boys who didn’t speak English and turned it into a real family. That first Christmas I was there, in ’62, he made sure everyone had something under that tree.” After the thirteen tension-filled days of the Cuban missile crisis in October of that year, the residents of La Casa, as they called it, knew they weren’t going home any time soon.