The Everything Store: Jeff Bezos and the Age of Amazon

by Brad Stone

  In April of 2011, a month after Random House moved to the agency model, an Amazon recruiter sent e-mails to several accomplished editors at New York publishing houses. She was looking for someone to launch and oversee an imprint that “will focus on the acquisition of original commercially oriented fiction and non-fiction with the goal of becoming bestsellers,” according to the e-mail. “This imprint will be supported with a large budget and its success will directly impact the success of Amazon’s overall business.” Most of the e-mail’s recipients politely declined the offer, so Kindle vice president Jeff Belle asked the man who’d been steering him toward possible recruits if he himself might be interested in the job. “Well, the thought had crossed my mind,” replied Larry Kirshbaum, a literary agent and, before that, the head of Time Warner’s book division.

  Kirshbaum, sixty-seven at the time, was the ultimate insider, widely known and, until then, almost universally liked. He had a well-honed instinct for big, mass-culture books and an intuitive feel for survival inside large corporations. When AOL acquired Time Warner in 2000, he directed the staff of Warner Books to wear I Heart AOL T-shirts and made a video of everyone standing around a piano singing “Unforgettable” (the company had just published Natalie Cole’s autobiography). He was thinking about e-books—and losing money on them—long before almost anyone else in the industry.

  Kirshbaum reentered a very different environment than the one he had left in 2005 when he departed AOL Time Warner to become an agent. Animosity toward Amazon had become a defining fact of life in the book business. So he was considered by many of his former peers to be a defector, someone who had gone over to the dark side, a sentiment they did not hesitate to express to him, sometimes in pointed terms.

  “There have been a few brickbats I’ve had to duck,” Kirshbaum says, “but I have a message I really believe in, which is that we’re trying to innovate in ways that can help everybody. We are trying to create a tide that will lift all boats.” He points to the industry’s similarly negative reaction to Barnes & Noble’s acquisition of the publisher Sterling back in 2003, which raised the same fear that a powerful retailer was trying to monopolize the attention of readers. “We all worried the sun wasn’t going to come up the next day, but it did,” he says. Of Amazon, he says, “We certainly want to be a major player, but there are thousands of publishers and millions of books. I think it’s a little bit of a stretch to say we are cornering the market.”

  Kirshbaum’s bosses in Seattle sounded a similarly conciliatory note. “Our entire publishing business is an in-house laboratory that allows us to experiment toward the goal of finding new and interesting ways to connect authors and readers,” Jeff Belle told me for a Businessweek cover story on Amazon Publishing in early 2012. “It’s not our intention to become Random House or Simon & Schuster or HarperCollins. I think people have a hard time believing that.”13

  Amazon executives charged that the book publishers were irrationally consumed with the possibility of their own demise and noted that resisting changes, like paperback books and discount superstores, was something of a hallmark for the industry. And when it came to fielding questions on the topic, Amazon executives perfected a sort of passive-aggressive perplexity, insisting that the media was overplaying the issue and giving it undue attention—sometimes with explanations that compounded and confirmed publishers’ concerns. “The iceman was a really important part of weekly American culture for years and his purpose was to keep your food from spoiling,” says Donald Katz, the founder and chief executive of Amazon’s Audible subsidiary. “But when refrigerators were invented, it was not about what the iceman thought, nor did anyone spend a lot of time writing about it.”

  Book publishers needed only to listen to Jeff Bezos himself to have their fears stoked. Amazon’s founder repeatedly suggested he had little reverence for the old “gatekeepers” of the media, whose business models were forged during the analogue age and whose function it was to review content and then subjectively decide what the public got to consume. This was to be a new age of creative surplus, where it was easy for anyone to create something, find an audience, and allow the market to determine the proper economic reward. “Even well meaning gatekeepers slow innovation,” Bezos wrote in his 2011 letter to shareholders. “When a platform is self-service, even the improbable ideas can get tried, because there’s no expert gatekeeper ready to say ‘that will never work!’ And guess what—many of those improbable ideas do work, and society is the beneficiary of that diversity.”

  A few weeks after that letter was published, Bezos told Thomas Friedman of the New York Times, “I see the elimination of gatekeepers everywhere.” In case there was any doubt about the nature of Bezos’s convictions, Friedman then imagined a publishing world that includes “just an author, who gets most of the royalties, and Amazon and the reader.”14

  “At least it’s all out in the open now,” one well-known book agent said at the time.

  A kind of industrywide immune response then kicked in. The book world rejected Amazon’s new publishing efforts en masse. Barnes & Noble and most independent bookstores refused to stock Amazon’s books, and New York–based media and publishing executives widely scoffed at the preliminary efforts of Kirshbaum and his fledgling editorial team. Their $800,000 acquisition of a memoir by actress and director Penny Marshall, for example, was targeted for particular ridicule and later sold poorly.

  Meanwhile, Amazon continued to experiment with new e-book formats and push the boundaries of publishers’ and authors’ tolerance. It introduced the Kindle Single, a novella-length e-book format, and the Prime Lending Library, which allowed Prime members who owned a Kindle reading device to borrow one digital book a month for free. But Amazon included the books of many mid-tier publishers in its lending catalog without asking for permission, reasoning that it had purchased those books at wholesale and thus believed it could set any retail price it wished (including, in this case, zero). In the imbroglio that ensued, the Authors Guild called the lending library “an exercise of brute economic power,” and Amazon backed off.15

  Bezos and colleagues dismissed the early challenges Kirshbaum’s New York division faced and said they would gauge its success over the long term. They were likely positioning their direct-publishing efforts for a future where electronic books made up a majority of the publishing market and where chains like Barnes & Noble might not exist in their present form. In that world, Amazon alone will still be standing, publishing not just scrappy new writers but prominent brand-name authors as well. And Larry Kirshbaum could once again be one of the most popular—and possibly one of the only—publishing guys left in New York City.

  * * *

  In December of 2011, as if seeking a fitting conclusion to a year filled with controversy over sales tax, acquisitions, MAPs, and the economics of electronic books, Amazon ran a ham-fisted promotion of its price-comparison application for smartphones. The app allowed users to take pictures or scan the bar codes of products in local stores and compare those prices with Amazon’s. On December 10, Amazon offered a discount of up to fifteen dollars to anyone who used the application to buy online instead of in a store. Although certain categories, like books, were exempt, the move stirred up an avalanche of criticism.

  Senator Olympia Snowe called the promotion “anti-competitive” and “an attack on Main Street businesses that employ workers in our communities.” An employee of Powell’s Books in Portland, Oregon, created an Occupy Amazon page on Facebook. An Amazon spokesperson noted that the application was meant primarily for comparing the prices of big retail chains, but it didn’t matter. The critics piled on, charging that Amazon was using its customers to spy on competitors’ prices and was siphoning away the sales of mom-and-pop merchants. “I first attributed Amazon’s price-comparison app to arrogance and malevolence, but there’s also something bizarrely clumsy and wrong-footed about it,” wrote the novelist Richard Russo in a scathing editorial for the New York Times.16

  The confl
agration over the price-checking app diminished quickly. But it raised larger questions: Would Amazon continue to be viewed as an innovative and value-creating company that existed to serve and delight its customers, or would it increasingly be seen as a monolith that merely transferred dollars out of the accounts of other companies and local communities and into its own gilded coffers?

  During these years of conflict, Jeff Bezos sat down to consider this very question. When Amazon became a company with $100 billion in sales, he wondered, how could it be loved and not feared? As he regularly does, Bezos wrote up his thoughts in a memo and distributed it to his top executives at an S Team retreat. I received a copy through a person close to the company who wished to remain anonymous. The memo, which Bezos titled Amazon.love, lays out a vision for how the Amazon founder wants his company to conduct itself and be perceived by the world. It reflects Bezos’s values and determination, and perhaps even his blind spots.

  “Some big companies develop ardent fan bases, are widely loved by their customers, and are even perceived as cool,” he wrote. “For different reasons, in different ways and to different degrees, companies like Apple, Nike, Disney, Google, Whole Foods, Costco and even UPS strike me as examples of large companies that are well-liked by their customers.” On the other end of spectrum, he added, companies like Walmart, Microsoft, Goldman Sachs, and ExxonMobil tended to be feared.

  Bezos postulated that this second set of companies was viewed, perhaps unfairly, as engaging in exploitative behavior. He wondered why Microsoft’s large base of users had never come out in any significant way to defend the company against its critics and speculated that perhaps customers were simply not satisfied with its products. He theorized that UPS, though not particularly inventive, was blessed by having the unsympathetic U.S. Postal Service as a competitor; Walmart had to deal with a “plethora of sympathetic competitors” in the small downtown stores that competed with it.

  But Bezos was dissatisfied with that simplistic conclusion and applied his usual analytical sensibility to parse out why some companies were loved and others feared.

  Rudeness is not cool.

  Defeating tiny guys is not cool.

  Close-following is not cool.

  Young is cool.

  Risk taking is cool.

  Winning is cool.

  Polite is cool.

  Defeating bigger, unsympathetic guys is cool.

  Inventing is cool.

  Explorers are cool.

  Conquerors are not cool.

  Obsessing over competitors is not cool.

  Empowering others is cool.

  Capturing all the value only for the company is not cool.

  Leadership is cool.

  Conviction is cool.

  Straightforwardness is cool.

  Pandering to the crowd is not cool.

  Hypocrisy is not cool.

  Authenticity is cool.

  Thinking big is cool.

  The unexpected is cool.

  Missionaries are cool.

  Mercenaries are not cool.

  On an attached spreadsheet, Bezos listed seventeen attributes, including polite, reliable, risk taking, and thinks big, and he ranked a dozen companies on each particular characteristic. His methodology was highly subjective, he conceded, but his conclusions, laid out at the end of the Amazon.love memo, were aimed at increasing Amazon’s odds of standing out among the loved companies. Being polite and reliable or customer-obsessed was not sufficient. Being perceived as inventive, as an explorer rather than a conqueror, was critically important. “I actually believe the four ‘unloved’ companies are inventive as a matter of substance. But they are not perceived as inventors and pioneers. It is not enough to be inventive—that pioneering spirit must also come across and be perceivable by the customer base,” he wrote.

  “I propose that one outcome from this offsite could be to assign a more thorough analysis of this topic to a thoughtful VP,” Bezos concluded. “We may be able to find actionable tasks that will increase our odds of being a stand out in that first group of companies. Sounds worthy to me!”

  CHAPTER 11

  The Kingdom of the Question Mark

  As it neared its twentieth anniversary, Amazon had finally come to embody the original vision of the everything store, conceived so long ago by Jeff Bezos and David Shaw and set into motion by Bezos and Shel Kaphan. It sold millions of products both new and used and was continually expanding into new product areas; industrial supplies, high-end apparel, art, and wine were among the new categories introduced in 2012 and 2013. It hosted the storefronts of thousands of other retailers in its bustling Marketplace and the computer infrastructure of thousands of other technology companies, universities, and government labs, part of its flourishing Web Services business. Clearly Jeff Bezos believed there were no limits to the company’s mission and to the variety of products that could be sold on the Internet.

  If you were to search the world for the polar opposite of this sprawling conglomerate, a store that cultivated not massive selection but an exclusive assortment of high-end products and thrived not on brand loyalty but on the amiable personality of its proprietor, you might just settle on a small bike shop north of Phoenix, in Glendale, Arizona. It’s called the Roadrunner Bike Center.

  This somewhat grandiosely named establishment sits in a shoe-box-shaped space in an otherwise ordinary shopping center next to the Hot Cutz Spa and Salon and down a ways from a Walmart grocery store. It offers a small selection of premium BMX and dirt bikes from companies like Giant, Haro, and Redline, brands that carefully select their retail partners and generally do not sell to websites or discount outlets. Many customers have patronized this store for years, even though it has moved three times within the Phoenix area.

  “The old guy that runs this is always there and you can tell he loves to fix and sell bikes,” writes one customer in a typically favorable online review of the store. “When you buy from him he will take care of you. He also is the cheapest place I have ever taken a bike for a service, I think sometimes he runs a special for $30! That’s insane!”

  A red poster board with the hand-scrawled words Layaway for the holidays! leans against an outside window of the store. It is no different than any mom-and-pop shop anywhere in the world that’s been carefully tended and nurtured by its owner over the course of thirty years. Except in this case, the store offers more than just a strong contrast to Amazon, and the evidence hangs inside, under the fluorescent lights, next to the front counter. Framed on the wall is a laminated old newspaper clipping with a photograph of a sixteen-year-old boy sporting a flattop haircut and standing up on the pedals of his unicycle, with one hand on the seat and the other flared daringly out to the side.

  I found Ted Jorgensen, Jeff Bezos’s biological father, behind the counter of his store in late 2012. I had considered a number of ways he might react to my unannounced appearance, but I gave a very low probability to the likelihood of what actually happened: Jorgensen didn’t know who Jeff Bezos was or anything at all about a company named Amazon.com. He was utterly confused by what I was telling him and denied being the father of a famous CEO who was one of the wealthiest men in the world.

  But then, when I mentioned the names Jacklyn Gise and Jeffrey, the son they had during their brief teenage marriage, the old man’s face flushed with recognition and sadness. “Is he still alive?” he asked, not yet fully comprehending.

  “Your son is one of the most successful men on the planet,” I told him. I pulled up some photographs of Bezos from the Internet, and, incredibly, for the first time in forty-five years, Jorgensen saw his biological son, and his eyes filled with emotion and disbelief.

  I took Jorgensen and his wife, Linda, to dinner that night at a local steakhouse, and his story tumbled out. When the Bezos family moved from Albuquerque to Houston back in 1968, Jorgensen promised Jackie and her father that he would stay out of their lives. He remained in Albuquerque, performing with his troupe, the Unicycle Wranglers, an
d taking odd jobs. He drove an ambulance and worked as an installer for Western Electric, a local utility.

  In his twenties, he moved to Hollywood to help the Wranglers’ manager, Lloyd Smith, start a new bike shop, and then he went to Tucson, looking for work. In 1972 he was mugged outside a convenience store after buying cigarettes. The assailants hit him with a two-by-four and broke his jaw in ten places.

  Jorgensen moved to Phoenix in 1974, got remarried, and quit drinking. By that time he had lost touch with his ex-wife and their child and forgotten their new last name. He had no way to contact his son or follow his progress, and he says he felt constrained by his promise not to interfere in their lives.

  In 1980, he put together every cent he had and bought the bike shop from its owner, who wanted to get out of the business. He has run the store ever since, moving it several times, eventually to its current location on the northern edge of the Phoenix metropolitan area, adjacent to the New River Mountains. He divorced his second wife and met Linda, his third, at the bike shop. She stood him up on their first date but showed up the next time he asked her out. They’ve been married for twenty-five years. Linda says they’ve talked privately about Jeffrey and replayed Ted’s youthful mistakes for years.

  Jorgensen has no other children; Linda has four sons from a previous marriage, and they are close with their stepfather, but he never divulged to them that he had another child—he says he didn’t think there was any point. He felt it was a “dead-end street” and was sure he would never see or hear anything about his son again.

  Jorgensen is now sixty-nine; he has heart problems, emphysema, and an aversion to the idea of retirement. “I don’t want to sit at home and rot in front of the television,” he says. He is endearingly friendly and, his wife says, deeply compassionate. (Bezos strongly resembles his mother, especially around the eyes, but he has his father’s nose and ears.) Jorgensen’s store is less than thirty miles from four different Amazon fulfillment centers, but if he ever saw Jeff Bezos on television or read an article about Amazon, he didn’t make the connection. “I didn’t know where he was, if he had a good job or not, or if he was alive or dead,” he says. The face of his child, frozen in infancy, has been stuck in his mind for nearly half a century.