Amazon Unbound

by Brad Stone

  Bezos planned his public appearance himself, hoping to make a big enough statement that even Flipkart’s investors might hear it. He wanted to present an oversized $2 billion check to Agarwal while riding an elephant—a symbol in India that represents wisdom and strength. But all the elephants were occupied in a religious festival at the time, and after stubbornly pressing his colleagues to find one, he agreed to perform the publicity stunt instead atop a Tata flatbed truck festooned with ceremonial decorations. Sporting a formal cream-colored bandhgala suit and maroon dupatta scarf, Bezos presented the mock check as Agarwal played along.

  The local press devoured the pageantry and the crosstown rivalry between Amazon and Flipkart. Bezos tried to play it down, even as he worked to defeat Flipkart in battle. “My own view is that most companies spend too much time thinking about the competition,” he told the Indian publication Business Today. “What they should be doing is thinking about their customers.”

  Meanwhile, responding to Big Billion Day, Bezos conceived of a competing day of deals celebrating the successful orbit of Mars by an India-launched space probe, which dovetailed with his own passion for space. Amazon initiated a fresh marketing blitz to advertise the promotion, and traffic poured into both Amazon.in and Flipkart.

  During a quieter moment of his trip, Bezos talked to his local executives at a nearby hotel. He reiterated that he wanted them to think like cowboys, with India as the Wild West frontier of e-commerce. “There are two ways of building a business. Many times, you aim, aim, aim, and then shoot,” he said, according to three executives who were there. “Or, you shoot, shoot, shoot, and then aim a little bit. That is what you want to do here. Don’t spend a lot of time on analysis and precision. Keep trying stuff.”

  Bezos, Piacentini, and Agarwal also had lunch with their new corporate partner, Narayana Murthy, the sixty-eight-year-old Infosys cofounder. He regaled them with stories of backpacking through Europe as a broke college graduate, and about Infosys University, the company’s massive internal training program to furnish recent college graduates with practical technical skills. Bezos listened intently; Piacentini recalled that Bezos and the elder Murthy had “an immediate chemistry.”

  From there, Bezos and Agarwal flew to Delhi to meet with the true figure who controlled Amazon’s prospects in India: Prime Minister Narendra Modi. In interviews before the meeting, Bezos touted India’s entrepreneurial spirit, dangled the possibility of placing AWS data centers in the country, and said of the newly elected leader, “I am completely at his disposal; he has a fantastic international reputation.”

  But Modi said little publicly in return. Local merchants, a key part of his governing coalition, were eyeing Amazon suspiciously. If Modi ever needed to shore up their support by tightening the rules around foreign investment, he could blow up the economics of Amazon’s most promising overseas venture in an instant.

  * * *

  Back in Seattle, Amazon’s progress in India was emboldening. Bezos and the S-team figured that if e-commerce could take off in India, there must be untapped opportunity in other developing countries. Their next priority for international expansion, in 2014, came via the French-Canadian Amazon executive Alexandre Gagnon. Having served as the technical advisor to S-team member Diego Piacentini and helped with the launches in Italy and Spain, Gagnon had also been in charge of bringing Amazon north into Canada. He realized that one of their primary advantages in that move had been the proximity of U.S. warehouses, which helped to fulfill some items that were not popular enough to be stored in Canada’s local FCs. A single, networked continental supply chain could also work in Mexico, which had the fifteenth largest GDP in the world at the time. The episode that unfolded over the next year would include one of the more curious experiments in Amazon’s international expansion as well as one of the most notorious characters in its history.

  At the time, Walmart was the largest physical retailer in Mexico and had the largest e-commerce presence. The Argentine startup MercadoLibre also operated there, but the country represented less than 7 percent of its total sales in Latin America. E-commerce was constrained in Mexico by the same factors that had stifled it in India: low internet usage, balky wireless networks, and low credit card penetration. But Amazon now had experience solving these problems.

  Gagnon brought his plan for Mexico to the S-team in March 2014. His six-page proposal drew parallels with India. It also pointed out that many wealthy Mexicans were already buying from the U.S. website, paying extra to ship products across the border. One of Gagnon’s colleagues later said they were nervous going into the meeting, after hearing that Bezos was in a particularly foul mood that day. But the session, scheduled for ninety minutes, lasted only forty-five—always a good sign. “His reaction was generally that we were not early but not too late either,” Gagnon said. “He felt that we had a good plan and that we should launch as soon as we could.”

  Mexico received only a fraction of the multibillion-dollar investment that flowed into India. And while Bezos would make most of the important decisions about investment levels in India himself—a sign of the importance he placed on the country—Gagnon reported to Jeff Wilke, the head of the global consumer business, who was in charge of “anything that touches the I-5,” the interstate that threads down the western coast of the U.S.

  One of the first orders of business in Mexico was finding a local CEO who could manage the rollout and be the face of Amazon in the country. After a months-long search, Amazon’s lead recruiter, Susan Harker, reached out to Walmart de México e-commerce executive Juan Carlos Garcia, who was ready for a change after an infamous bribery scandal in the country had forced several of his colleagues to resign and eroded company morale. Garcia had previously founded and sold several e-commerce startups.

  Garcia visited Amazon headquarters that October and spent two days in back-to-back interviews. He was asked to write a six-page document explaining “the most innovative thing I’ve ever done” and “the most customer obsessed thing I had ever done in my career.” At the end of the grueling session, he was ushered into a surprise final meeting that wasn’t on his schedule: with Bezos himself. Bezos likes to say that he gets “all weak-kneed around entrepreneurs,” and the ten-minute talk stretched into an hour. Bezos revealed what no one had yet explicitly stated to Garcia—that Amazon was launching a business in Mexico.

  Garcia got the job and took over the small Amazon Mexico team, which moved into an office at a Regus coworking space in the affluent Polanco neighborhood of Mexico City. And they started planning. Garcia’s initial six-page proposal for the project—dubbed Project Diego, after Mexican painter Diego Rivera—was rejected by Bezos for being too conservative. Garcia had modeled the approach after the methodical rollouts in Italy and Spain, where the company introduced a few product categories to start, then later added others along with a third-party marketplace. But Bezos, capitalizing on what he had learned in China and India, wanted to quickly catch up with Walmart and MercadoLibre. Garcia rewrote the plan and “threw everything in.”

  The following March, as Amazon Mexico approached its launch date, Garcia was skiing on Whistler Mountain north of Vancouver when he was summoned to Seattle for an emergency meeting. Jeff Wilke was tired of paying Google $3–4 billion a year for search ads to promote product listings at the top of its monolithic search engine. At the time, Google was also expanding the Google Express shopping service to more cities and investing in a number of e-commerce startups to challenge Amazon around the world. Wilke wanted to know if it was possible to launch Amazon in a foreign country without using search advertising at all—as a test, to see if Amazon could wean itself from its dangerous dependency on an avowed rival. Wilke suggested using Mexico as the guinea pig.

  Garcia joined the meeting and pored over the document outlining the plan. He recalled Bezos walking in after an hour and asking anyone who was against it to raise their hand. Garcia later told me he was the only one who did. Google was the dominant search engine in M
exico, with some 24 million unique visitors a month. According to the analysis in the document, which I later obtained, Amazon estimated it would forgo 20 percent of its overall potential traffic to Amazon Mexico by spurning paid Google search. The document also estimated that cutting off Google ads would reduce the overall percentage of visitors who clicked on regular free search links from 14 to 11 percent.

  To recover that lost traffic, the paper concluded, they’d have to dangle discounts, offer free shipping, and wage a brand advertising campaign to get customers to begin their shopping searches on Amazon instead of Google. Later, Jeff Wilke explained his support for such a move by saying, “We have a reliance to varying degrees on Google in all of our established countries. I always want to ask the question, ‘Is the advertising that we do worth it?’ ”

  In the meeting, Bezos was circumspect, Garcia recalled. He seemed to side with Garcia against the plan. But then Wilke convinced him that it was a “two-way door”—Bezos’s phrase for a decision that can always be reversed later, as opposed to “one-way doors,” in which the choice is permanent. He agreed to try it out. Garcia had to “disagree and commit,” Amazon’s lingo for committing to a course of action you oppose.

  Amazon.com.mx went live on June 30, 2015, becoming the company’s first comprehensive online store in Latin America. The site was entirely in Spanish, promising “millones de productos en nuestra tienda en línea.” The Amazon Mexico team flew to Seattle for the launch, since the Wi-Fi in their local Regus office was spotty. They held a small party that night in a lounge on the ground floor of Day 1 North, where Wilke introduced Garcia to international chief Diego Piacentini, who told him, “Enjoy your five minutes of fame.” A few weeks later, the Amazon Mexico execs held a flashier affair at the St. Regis Hotel in Mexico City, where Garcia hired a popular Mexican party band, Moderatto, to play.

  For the next few quarters, Amazon avoided buying Google ads in Mexico and tried to compensate with billboards, radio, and TV ads, and shipping discounts. As Garcia had feared, it hobbled the site. The offline ads were more expensive and less effective. Google brought in $70 billion in annual advertising revenues because search ads worked and were a relatively inexpensive way for websites to attract visitors. “I wanted to see if we could get traction in a country launch without using Google,” Wilke later said, “and it turned out, the answer was no…. We weren’t reaching enough customers.”

  Garcia and his colleagues then ended the experiment, employing the internal system Amazon uses to manage its massive Google ad-buying campaigns, called Hydra (for the multiheaded sea organism, but also, Amazon employees snickered, for the terrorist organization in Marvel comics). A year later, in 2016, Amazon Mexico’s P&L statement recovered and started to show promise.

  Nevertheless, in Seattle, Garcia’s reputation was declining. Some executives complained that he “didn’t get Amazon culture,” and according to several accounts, he did not get along with Jeff Wilke or his direct manager, Alexandre Gagnon. While several Amazon Mexico employees remembered Juan Carlos Garcia as an approachable leader who often stayed at work late at night and represented the company well in the press, one colleague recalled a moment when Garcia revealed an alarming temper, leading up to Black Friday in 2015. He was arguing about matching a smaller website’s heavily discounted price on a sixty-inch television with a category manager, who insisted that the rival’s price must be a mistake and that Amazon would lose too much money if it matched it. As the debate grew tense, Garcia banged his hand on the table and said, “I am CEO! Do it!” Amazon matched the price, quickly sold thousands of TVs, and indeed lost a lot of money.

  In late 2016, Garcia later recalled, tensions with his Seattle bosses reached a boiling point when an Amazon board member ordered a shipment of shoes from his vacation home in Punta Mita and only some of them arrived. The problem was relayed to Jeff Wilke, to see if it might indicate a larger issue. Wilke forwarded it to Garcia and then asked him about it in a meeting. The resulting discussion grew heated, and Garcia later said he felt disrespected. He was fired from the company shortly after, in February 2017.

  Garcia reached out to me in September 2019 to relay his Amazon story over a long conversation in a café and a walk around downtown San Francisco. He said that he had looked into the board member’s shoe purchase and concluded that he had mistakenly ordered from the U.S. website, not the Mexican one. He said that before he was fired, he pointed that out to Wilke, who never responded.

  Alexandre Gagnon spent more time in Mexico after Garcia left, and eventually handed over the role to one of his U.S. deputies. Under their management, with full access to Google ads, Amazon Mexico thrived. By the end of that year, it was a leading player in the country’s $7.1 billion e-commerce market—slightly ahead of MercadoLibre and Walmart.

  But there’s a startling postscript to this story. After our talk, Garcia and I agreed to keep in touch. Despite sending a few follow-up emails, I didn’t hear from him for several weeks. Then, in November 2019, a news report caught my eye: ex–Amazon Mexico CEO Juan Carlos Garcia was wanted for questioning in the murder of his wife, Abril Pérez Sagaón.

  The horrifying tale started the previous January, eight months before I met with Garcia. After a fight, he had allegedly beaten his wife with a baseball bat and slashed her face with a knife. Their fifteen-year-old son witnessed the incident and their teenage daughter documented her mother’s injuries in grisly photographs. Pérez recovered and obtained a restraining order against Garcia, who was sentenced to pretrial detention for the next ten months. News reports differ on when he was actually held, but somehow he was allowed to travel to San Francisco. I was clueless about the earlier incident, which hadn’t made the news.

  Then a few weeks later, on November 25, 2019, Pérez flew to Mexico City for a custody evaluation for their three children. On the trip to the airport afterward, she was sitting in the passenger seat of an automobile driven by her lawyer, with two of the children in the back seat, when an assassin on a motorcycle drove alongside the car and shot her twice through the window. She died that night.

  The killing sparked a furor in Mexico and abroad. “Ex–Amazon Mexico CEO on the Run in the U.S. After Wife’s Mysterious Murder” one newspaper headline blared. Protests erupted around the country, with activists accusing the government of failing to protect women in abusive relationships or to take seriously the crime of femicide. In a terrible irony, an Amazon Mexico employee told me the company had to temporarily suspend its Google ad buying program, so that Amazon ads didn’t inappropriately pop up when users searched for updates on the crime.

  In March 2020, two men were arrested and charged with the murder. But police and even his children were convinced that Juan Carlos Garcia had hired the assassins, and he remained the primary suspect. According to Mexican police, he entered the U.S. on foot near Tijuana days after the killing and, as of this writing, hasn’t been seen since.

  * * *

  Back in India in 2015, Amazon and Flipkart swung at each other like heavyweight prizefighters. They jockeyed for exclusive deals with smartphone makers, offered steep discounts during their holiday bonanzas, and built warehouses around the country at a dizzying pace. Amazon’s catchy TV ads (“Aur Dikhao,” or “Show Me More,” what Indian customers tell salespeople at small shops) littered the airwaves. To help teach small Indian vendors how to buy and sell online, Amazon procured a fleet of three-wheeled wagons, dubbed Chai Carts, which rolled into India’s colorful local markets offering free tea, water, and lemon juice. Employees introduced sellers to tools like email and apps and showed them how to register on Amazon.in and upload their inventory.

  That fall, Agarwal and his execs returned to Seattle for the annual OP1 planning sessions. Two years prior, they had been asked to revise their conservative projections, and by now, Agarwal had internalized Bezos’s directive to put aside caution and pesky concepts like operating profit. The plan for the next year showed dramatic levels of investment, sales growth, and re
d ink. Still buzzing from the entrepreneurial energy he had witnessed in India, Bezos was inspired. “The future is going to be the U.S., China, and India,” he declared, according to a colleague who reports hearing him say it multiple times. “For Amazon to be a truly world-class global company, we have to be relevant in two out of the three markets.” At the end of the discussion, Agarwal and the India execs received a standing ovation from the S-team, an unusual commendation in a usually solemn and intimidating environment.

  On the ground in India, little applause existed, just intricate problems to solve. Agarwal realized early on he couldn’t depend solely on logistics partners like the India Post, the federal mail carrier. So Amazon, like Flipkart, created its own network of couriers in vans, motorcycles, bikes, and even boats to reach the remotest parts of the country. To get Indians more comfortable with the idea of digital payments, it introduced the option to deposit the change from a cash transaction as credit in their Amazon accounts.

  All these moves showed promise. By the summer of 2016, Amazon was preparing to introduce its Prime two-day shipping guarantee in the country. And in a momentous turn of market leadership, it was set to surpass Flipkart in sales. Galvanized, Bezos again met with Prime Minister Modi that June at the U.S.-India Business Council in Washington, D.C., and announced that Amazon would plug another $3 billion into Amazon India. Modi, on a goodwill tour to cultivate foreign investors, seemed more receptive to Bezos’s entreaties this time. He posed for photos with business leaders, and called India “much more than a market” and a “reliable partner” that would continue to make it easier to conduct business in the country.