Oh, yeah.
No, I mean, I've been a fan of the podcast from the early days.
Oh, thank you.
And the first one we did, did we do Amazon Zappos?
Uber and Didi.
Uber and Didi.
That's right.
I don't know that I told you guys this.
I booked an Airbnb just to get better Wi-Fi, because the place I was living in Paris had crappy Wi-Fi.
So I had this really awkward message with the host.
I was like, I just want to come for an hour, but it's not what you think.
I swear.
That's funny.
Just book a love hotel for podcasting.
Welcome to this special episode of Acquired, the podcast about great technology companies and the stories and playbooks behind them.
I'm Ben Gilbert and I am the co-founder and managing director of Seattle-based Pioneer Square Labs and our venture fund, PSL Ventures.
And I'm David Rosenthal and I am an angel investor based in San Francisco.
And we are your hosts.
On today's show, we are sharing our most recent book club discussion with you all.
We were fortunate enough to have repeat acquired guest Brad Stone join us to talk about his most recent book, Amazon Unbound.
Brad is the best.
Yeah.
This book is the successor to Brad's first book, The Everything Store.
It is about everything that has happened at Amazon since 2013, including Alexa, Amazon Go, third-party sellers well, the further development of the third-party seller ecosystem anyway, their various grocery businesses and, of course, the activities of Jeff Bezos outside of Amazon.
This episode was recorded live, with our acquired LPs on the line, and you'll hear some questions from them at the end.
As always, if you want to become an acquired LP and be a deeper part of everything we do here, you can go to glowfm slash acquired.
All right, listeners, now is a great time to thank a new friend of the show, Koifin.
And it's funny, they're new, but actually I've been using their product for years.
My research project for every single new acquired episode involves Koifin.
So when they reached out to sponsor the show, I thought, well, this is convenient.
Indeed.
So Coifin is a financial research tool loved by both individual investors and financial advisors.
Individuals use it for stock research, graphing financials and portfolio tracking, and financial advisors use it to build model portfolios and create client proposals.
They have live market data and powerful analytics tools.
So it's kind of like a Bloomberg terminal, except without the huge price tag, right?
Yes, essentially.
It's a web app, and it's totally self-serve.
I've actually not talked to anyone at the company for the first few years that I used it.
So Koifin is a product that the broader market, like all acquired listeners, would use, not just Wall Street investment bankers.
It's where I pull things like growth rate or gross margins or the PE ratio or revenue multiples for every company we study.
And you can compare these things over time with historical graphs or against other companies.
It's often what I use when we're studying private companies too, like Rolex or Mars or Ikea, to look at the comparables, to estimate what these companies would be worth if they were public.
They also have a screener that lets you filter across thousands of stocks, so you can quickly surface investment ideas.
Yep.
So the general idea is, if you're someone who's used to living in data, you should have that at your fingertips as you think about investing.
Exactly.
It's got these great graphs for data visualization wrapped around institutional grade data.
So if you want to understand what assumptions are baked into the stock price today, Coifin is for you.
I was about to say that acquired listeners have a great offer.
But Koifin's free product is actually already really robust.
Which is what I was using for years.
I know, I know.
But indeed for Acquired listeners and also for you, Ben.
If you go to koifincom slash acquired and you end up upgrading to paid, you'll get 20 off your first year.
Our thanks to Koifin.
That's K-O-Y-F-I-N dot com slash acquired or click the link in the show notes.
Now, on to our conversation with Brad Stone on Amazon Unbound.
So we thought, kind of a fun way to start that I don't think we've heard you do on any of the other pods you've been on yet that I want to hear the story behind was is it called the monograph page at the front of the book?
Oh, the epigraph.
The epigraph.
You have two quotes.
And the second one I just loved as a lifelong Steinbeck fan myself.
You say, I think this is from Cannery Row.
It has always seemed strange to me, the things we admire in men kindness and generosity openness honesty, understanding and feeling are the concomitants of failure in our system.
And those traits we detest are Sharpness greed acquisitiveness meanness, egotism and self-interest are the traits of success.
And while men admire the quality of the first, they love the produce of the second.
Where did you find that?
Well, first of all let me start with.
The other quote on that page is from a book called The Last Days of Night about Thomas Edison.
And that one, you know, actually was an Amazon board member named Bing Gordon, who had pointed me to that novel.
And that's about Edison and the system of invention and how applicable that is to Amazon de Bezos.
He has created a system of invention at Amazon, not just being an inventor, but creating the processes and the rituals and all of that and then extended it to the Washington Post.
And that was my sole quote on that page.
But it's a little bit of a flowery quote.
And this book.
You know I wanted readers to really think about Amazon's impact, the good and the bad, not just the system of invention but the unanticipated consequences of building systems of scale.
They're supposed to move fast and never break things.
But in fact, with the marketplace globalizing and with the transportation network expanding, there have been repercussions.
And so I was searching for that alternate quote that can bring readers into the book with two things to think about.
And yeah, Cannery Row was a book I had read and probably had underlined that quote and was looking back and talking to my editor, Stephanie at Simon & Schuster about it.
And I just came back returned to that quote as being this great example of, maybe something that could get readers thinking about the things that we're celebrating in business figures like Jeff Bezos.
It's such a perfect quote.
So tell us, before we get into the content of the book and talking all about Amazon, what was the moment when you decided Everything Store needed a sequel.
I was thinking about that and I went back to my notes and I started to do interviews for this in 2017.
So that was before HQ2 was announced and before Bezos became a figure of tabloid interest, and obviously before some of the more recent antitrust stuff and the pandemic happened.
So I think it was around the realization that Alexa had changed the company, the market cap had expanded so quickly, the transportation business had started and that I was still on the road doing talks about Amazon, about the everything store.
But the story had changed.
Right, which came out in 2013?
Yeah.
Right.
So a $120 billion market cap was at the end of 2017, probably around an $800 billion market cap.
And I just felt like there was a lot of story.
And when you start in a book, you're also realizing that you'll be working on it for at least two or three years.
And so I figured it's probably going to get better.
And I had no idea, right?
They kept adding other chapters.
For a long time I was thinking how can I end this?
In the pandemic and its navigation of it, I think, ended up being the encapsulation of everything that's probably great and effective about Amazon and some of the dangers of it getting so big and dominant and having so many advantages.
That was crystallized during the pandemic, when all of its competitors basically stopped operating.
Yeah.
I hadn't quite thought about this until now, but it's a huge opportunity cost for you to decide to write a book because you're a full-time journalist editor.
You're running Bloomberg's technology team.
You had to take a full sabbatical to do this, right?
Yep, I took a couple months off to write it.
I'm fortunate in that at my perch at Bloomberg, we're working and writing and thinking about this stuff anyway.
And so doing this at least reporting it in addition to the day job, isn't as difficult as it seems.
And maybe I'm also fortunate that I'm a manager with a lot of support around me, so I can kind of pull that off.
But David, the one difficult thing is particularly writing about tech companies is they've changed so often.
I just sometimes think about it as jumping onto a train.
And you guys remember my last book was called The Upstarts about Uber and Airbnb.
I jumped and the train moved and I fell onto the tracks because it was like a month after that book came out.
2017 with Uber.
Yeah, the first Medium post by Susan came out alleging a discriminatory culture at Uber.
And then the story started rapidly changing.
And I came out with a paperback a year later that had an additional chapter on that.
And, you know, I'm proud of that book in retrospect, and it captures a moment in Silicon Valley.
But it was a great illustration of just the risks of writing about companies that change so often.
And at Bezos... postponed his CEO resignation announcement for another quarter.
That would have been a disaster.
And you definitely would have had to write the third book.
Yeah.
And so in this respect, in this one, I got lucky, as unlucky as I got with the upstarts, because I had time to add to the book.
And I also recognized that the story I was telling in some ways was very consistent with the idea of Bezos getting more and more distant from Amazon and then moving into a broader world and focusing on other things.
Right.
Well, just to frame how much has happened since the first book, I was reading my copy of Amazon Unbound and a friend said what is that?
And I was like, oh, it's the second book by Brad Stone on Amazon.
And he was like, he already wrote the book on Amazon, right?
And I was looking at the date that the Everything Store came out and Amazon has created over a trillion and a half dollars of market cap since you released the first book.
Oh, my God.
Crazy.
It's crazy.
And that's just the numerical representation of it.
The Kindle company became the Alexa company.
AWS was a cipher in 2013.
The company revealed the financials in 2015.
And the world recognized how good of a business that was.
The marketplace became global.
And on and on.
Amazon entered India.
I have a chapter about that in the book.
And Mexico and the high-profile battle with the Trump administration.
The Jedi contract.
HQ2.
The advertising business really germinated over the past few years.
The Prime Video and Amazon Studios business.
And Bezos' neck-deep involvement in that.
In some ways, maybe the momentum and some of the ideas were there back in 2013.
But certainly, it's all become very public now. and shaped the perception of Amazon ever since.
I don't know if listeners would agree or if you would agree.
I felt to a certain extent like everything store was.
It was kind of like the liar's poker or the social network of Amazon.
I don't think you intended it to be like a cautionary tale in the same way that those books were.
But for me, at least like I read that book and I was like, this is an amazing company.
It doubled, tripled, quadrupled my admiration for the company and drew me to it as a shareholder.
Did you feel that way in the company, whatever they felt initially?
Did they see that they got applicants who started coming to the company being like I read the everything store, I want to work here.
I do take a little bit of pride in the fact that people can come to both these books and take a lot of different things out of it.
And critics will come out of it.
The first book and then Amazon Unbound with dockets full of evidence that they have for the next attack on Amazon.
And fans of the company or employees of the company might find in it a flattering portrayal.
But my goal is really just to tell a good story.
Yeah, I'm an Amazon customer.
I mean, I don't think I would be writing two books about the company if I didn't on some level admire the entrepreneurship.
And I also find plenty of cause for concern in some of their anti-competitive tactics and some of the ways in which they've administered the marketplace or they build these transportation networks without really controlling them or employing the workers, and how there are repercussions there.
But I don't feel like I'm a critic and I hopefully am not a hagiographer.
And it's not an old school Silicon Valley book of how this triumph was accomplished.
But it's really I try to tell the warts and all story and then hope different people can take different things out of it.
Well, I'd finished it.
I came in right under the finish line yesterday.
I definitely felt like toward the end, your description of how the company did through COVID and basically what they did for the world was really well balanced.
And that was the thing that definitely hit me the most.
And your skill as a author of something that is currently unfolding is both looking back and saying here's the things that they really screwed up during COVID.
And they seem pretty unabashed about.
But balancing that with the fact that, between AWS and the incredible logistics networks they've built, we're all way better off over the last year, for them existing.
I think that is easier than it looks because in the moment everyone is telling a really simplistic version of that story.
You have critics inside and around the company, particularly in the organized labor movement, that are simply looking for the missteps and to characterize the company as irresponsible and putting employees at risk and obscuring the toll.
And that's obviously not true.
They're human beings at Amazon and they did their best during the pandemic amid incredibly challenging circumstances.
And then on the other side, you have Amazon wrapping itself up in the mantle of the pandemic hero who made no missteps and did everything by the book and were virtually perfect and are unfairly maligned.
You had the Jay Carney quote in the book that I think you said.
Like I'm confident when the short term and long term histories are written, no one will have done more for the world than Amazon here.
Right.
And so just purely, you know, talking to everyone and figuring out what they did.
They hired some world famous virologists to counsel them.
But they got lost in the confusion of March 2020 and they did make some mistakes and they did fire the whistleblowers.
And there were lots of employees and executives who left the company and felt that was just wrong.
And so talking to as many people as I could and combining their accounts and looking at both sides and trying to navigate the real story instead of the partisan stories that emerged over the last year and a half.
That's basically the formula.
I'm curious what your relationship with Amazon was as you were writing this, because I think you made it pretty clear that you didn't actually speak with Jeff.
But I imagine there's lots of conversations with Amazon, PR and, of course, many departed and current executives.
How does that dance go?
When I approached them in 2017, or maybe 18, when I first told them about it, they were pretty receptive, almost as if they had maybe had been anticipating it, or at least anticipating that somebody would do the update to the everything store.
They could see the sales data.
They were going to launch their own first party version.
Yeah, exactly.
The Amazon basics history.
I had sent Bezos a couple of notes explaining what I wanted to do and asking, of course, for access to him.
They assigned a PR person to me and they basically said you know after a while that they would give me access to anyone I wanted to talk to at the company and they would see about Bezos toward the end.
And so I did labor under the perhaps false hope that I would break down his reluctance and get him to talk.
And in the end, it didn't happen.
And I would just point to the recent history and his reluctance to really engage in a meaningful way with any kind of journalist over the past few years and to address the challenges and tension points in Amazon history.
When he's done it, it's always been about the broader things, Blue Origin or the Washington Post.
He's talked to fellow billionaires or an Amazon employee or his brother.
In the end, even though I did harbor some hopes.
Maybe it wasn't all that surprising that he's not willing to sit for a Steve Jobs-like end of career retrospective.
Plenty of time.
Yeah, he's got time.
But the other thing is I don't feel like the book suffered because of that.
He's incredibly disciplined.
He tells the same stories.
They're like polished little stones that he's crafted over the years.
And I've heard them all.
And frankly, I could probably recite them all.
I don't know to me, I thought it was almost better that you didn't A because you didn't get.
You knew what he would have given you if you had.
But B I thought one of the coolest things about this book that I don't remember as much being in the everything store was the access you had to the S team.
I feel like we really got the stories of Dave Clark, some of the other folks that most people don't know about but have had huge impacts.
People probably don't know who Dave Clark is.
He's now the CEO of the retail business.
One of the most powerful executives at Amazon.
He grew up in the operations and fulfillment part of the business.
He's obviously a genius and great at building big systems.
He devised and executed the whole transportation arm, Amazon Logistics.
And one of the interesting, revealing things that I found in my research was his original boss at Amazon, or one of his first bosses, became his best friend and was the best man at his wedding.
And then he gets promoted over that guy.
And when that executive leaves Amazon to go to Target, Dave Clark basically has Amazon sue him.
That was the most heartbreaking moment in the book.
And they never talk again.
And right there, encapsulated perfectly, is Amazon's ruthless, relentless, business-focused, competitive mindset where relationships and empathy don't really factor into it.
I don't want to say that there's a little bit of a heartlessness or a lack of empathy that goes into this empire building.
But okay, I did just say that.
And right there it was, illustrated, he sued his best man.
And he's one of the now most successful executives most prominent executives at Amazon sitting there trading tweets with Bernie Sanders and other Amazon critics.
How do you think about, given the fact that, I mean, this is Dave Clark.
This isn't Jeff Bezos.
This is an employee who rose up through the ranks, who was indoctrinated with the Amazon culture clearly bleeds into his personal life because he severed ties with his best man.
That's completely outside the scope of a business relationship.
How do you think about your comments that you had made in the everything store around Jeff bots in the current day?
And does that apply in this situation?
Well, I actually dropped that terminology.
I wanted to stand on its own and be fresh, in part because even though I was sort of kidding about that in the first book Well, Bezos McKenzie mentioned that in her one-star review, I think.
And there were definitely executives who took it really way too personally.
But I do make the same point.
I think at the end of that chapter on Dave Clark and operations I say that he had demonstrated in some ways some of the Bezos ideals the work and the company over everything else, and not a lot of empathy.
Consensus building is really subjugated to getting to the right answer and doing what's best for the company and the customer.
And so in some of these actions towards his fellow friend Clark had illustrated a little bit of Bezos's philosophy.
So maybe I said it without just using the phrase.
Oh, you know, it's funny on the Jeff bots.
I don't think the liar's poker analogy is super apt.
Like everything's story is its own thing.
But that was one of those things to me where I was like, McKenzie at least got so offended by that.
And probably Amazon and Jeff did too.
But there's another side of that where you're like yeah, if you're going to come to Amazon, you're going to be in charge of something and you get to be Jeff for something.
Yeah.
There's something appealing in that too, right?
I think what I originally was riffing on with that term was how he so effortlessly alluded difficult questions back when he gave interviews.
And then I noticed that when I would talk to an executive like Steve Kessel, who was running the Kindle business and then started to run the physical retail business, that he had the same method for evading questions.
And that was the origin of the JeffBot idea that they were just so, all so skilled in the same exact way of speaking publicly and not saying anything.
When David and I were reading it, we were talking about this beforehand.
The big sort of aha moment of this book, at least in my opinion, was that this concept of like, interlocking and self-reinforcing businesses, whereas in the previous book it was very clearly the Amazon flywheel.
And we've all seen the diagram a zillion times at this point.
How did you sort of come to that realization of the self-reinforcing businesses as the sort of point that you want to drive home this time?
It might have been in the chapter on Prime Video.
It just seemed like for a long time, even employees and some board members and investors at Amazon didn't understand Bezos' infatuation with Hollywood and his investment in video and almost saw it as sort of a personal weakness or a midlife crisis or a digression or a diversion.
But, as with all these things, so often, Bezos is just simply sort of ahead of the pack in thinking about it.
And you know, it was this idea that Prime was a two-day shipping club and then it was a one-day shipping club.
But the reality is that fulfillment centers are outside, you know every major American city and shipping really ceases to be a differentiating factor.
And Prime would have to be something more.
It would have to be a content club.
And so the way in which Prime Video feeds into Prime and reinforces the retail business, and Prime Video is, in some ways, a consumer application of AWS because it's streaming and sitting on Amazon servers.
And the same with Alexa, it being a consumer application of AWS.
And that's how Jeff conceived it with that first email to executives a 20 computer whose brains are in the cloud, controllable by voice.
And it also goes back to one quote from the Everything Store where he said To Tim O'Reilly we don't have many big advantages, so we have to weave a rope of smaller advantages.
And that's the way Bezos thinks and the way he's encouraging his executives to think.
What are you doing for the cloud business?
What are you doing for Alexa?
Getting everyone to go and exploit the assets and advantages Amazon has.
And so you've got this set of really opaque and hidden connections between all these businesses that is at the center of how Amazon operates.
And while they'll probably really resist mightily any effort or suggestion that they should break up.
Actually, I want to put a pin in antitrust for one second and ask this question sort of in a different way, which was when I heard you were writing this book.
I made the comment to David that the everything store is a pretty clean narrative.
It's one idea.
It's e-commerce starting with books, becoming everything.
It's the everything store.
And it's the story of this maniacal guy who's going to pull that off.
And for this one, I was like, oh, my God, Amazon has done so many random things.
And many of them have become very big businesses.
And they're not a conglomerate like Berkshire Hathaway, because the S-team is much more than capital allocators.
They're not just sending money to the head office.
These businesses really do, as you would later coin, interlock.
And I just think it's so fascinating that they occupy this middle ground between a classic conglomerate and what you would think of that a normal business should just go into near adjacencies, right where it's like.
Well, let's expand and address a very similar market.
Whereas Amazon has taken the strategy of we're going to go after completely different markets and find ways to link them together at the same customer.
It's just a super unique structure.
Well, they do both, right?
I where they're going to get into internet access if they can ever launch these satellites.
There's the physical retail initiative, the Amazon grocery stores that'll also function as e-commerce distribution centers and pick and pack.
In addition to using their AI strength to use the GoStore technology to do cashierless checkout, there is some sort of far-field business expansion at the same time, as they do kind of leech out into adjacent markets.
Do you think there's any advantage to AWS and the retail business being under the same roof at this point?
Totally.
Yeah, retail is the biggest customer of AWS.
It's the first customer.
AWS is going to have a beta tester for every new service.
It'll get to scale very quickly and enjoy the economies of scale, because Amazon retail would be a big, big customer.
And then on the retail side, I would assume they're going to sort of, you know, pay in quotes more of a wholesale price for the cloud instead of a retail price and then have the biggest and the best cloud provider behind them at moments of intense traffic during a pandemic or in the holiday season.
We did an LP show a couple of weeks ago with Oliver Sharp from Highspot about customer you know leg growth and customers said just it's like yeah, the number one customer is right there in the same building.
Just really quickly.
In the device business, the whole goal is to and the video business to intensify the relationship with the Amazon customer, is built atop AWS.
Things like Alexa are possible because the brains sit in the Amazon data center and are constantly being upgraded.
You mentioned this in the book, and I'd heard this before, that Amazon retail ran on Oracle.
Does it still in addition to AWS?
Did you find out if that's still the case, or have they totally transitioned off to Oracle now?
They made a big fuss online when Jeff Wilkie went and ripped out the last Oracle server or use in Amazon retail.
I think that was a couple of years ago.
They were very proud of it and that was part of the you know, the longstanding devolution of the relationship between the two companies.
Yeah.
Well, and everything that was to come.
Okay.
I have lots of friends there.
I had no idea that this campfire thing happened and that it started in 2010 or Way before.
Video and Hollywood and all like tell us more about this campfire thing.
And for people who haven't read the book yet, it's what you can tell.
Yeah.
And thank you, David.
That's one of those things that I feel like I got in the book and I was proud of, and it took a lot of detective work and not a lot of people picked up on it.
This has been mentioned a couple times in the press.
But basically for the last 10 years, at least before the pandemic, Bezos was hosting this secretive event, first in Santa Fe among the kind of literary elite, and then it migrated to Santa Barbara more and moved in the direction of the Hollywood elite.
And so Oprah and Shonda Rhimes and...
You know, every celebrity you can imagine is invited.
They're flown in private jets.
Their families are invited.
This is so not Amazon.
No, it's not.
And that's why no one ever knew or it was never reported who actually paid for this.
And I went into it thinking that actually Bezos paid for it personally because it's so not unfrugal.
They get bags of swag in their hotel rooms.
The kids, when the kids come, they're given an individual counselor.
It's like Sun Valley, the Allen & Company conference.
Combined with TED, because they'll bring in speakers and a networking event.
There are hikes.
There's a beach club.
They rent out a whole hotel and beach club in Santa Barbara.
They had Michael Lewis come speak that one year.
I've got a bunch of the guests and the attendees in the book.
When are we getting our invites for next year?
I am hoping for mine.
But in fact, as I looked into it, Amazon pays for it.
And Bezos always, he brought his family, called it the best part of his year.
He loved it.
And it was essentially you had to almost put this.
You know first the literary community and then the entertainment community.
Bring them into Amazon's orbit.
Get to know people.
Strengthen the relationships.
And yeah, showed how important that was to him as he was thinking, you know, more about Prime being a bundle of important content than not just a shipping program.
Yeah, I was blown away.
Everything about that just seemed so anti-Amazon to me.
And that it started in 2010.
It really is a symbol of its evolving ambitions because it was very much a literary weekend.
And you would have big name authors, George R.R.
Martin would be the center of attention.
Actually, he probably would still be the center of attention.
Well, Bezos, as you said in the book, he wants his Game of Thrones, right?
He wants his Game of Thrones, right.
And maybe if they purchase MGM in the next couple of days, they'll have their James Bond at least.
All right, listeners, it's time to talk about another one of our favorite companies, Statsig.
Since you last heard from us about Statsig, they have a very exciting update.
They raised their Series C, valuing them at $1.1 billion.
Timing is interesting because the experimentation space is really heating up.
Yes.
So why do investors value StatSeg at over a billion dollars?
It's because experimentation has become a critical part of the product stack for the world's best product teams.
Yep.
This trend started with Web 2.0 companies like Facebook and Netflix and Airbnb.
Those companies faced a problem.
How do you maintain a fast, decentralized product and engineering culture while also scaling up to thousands of employees?
Experimentation systems were a huge part of that answer.
These systems gave everyone at those companies access to a global set of product metrics, from page views to watch, time to performance.
And then every time a team released a new feature or product, they could measure the impact of that feature on those metrics.
So Facebook could set a company-wide goal like increasing time in app and let individual teams go and figure out how to achieve it.
Multiply this across thousands of engineers and PMs, and boom, you get exponential growth.
It's no wonder that experimentation is now seen as essential infrastructure.
Yep today's best product teams like Notion OpenAI, Rippling and Figma are equally reliant on experimentation.
But instead of building it in-house, they just use Statsig.
And they don't just use Statsig for experimentation.
Over the last few years, Statsig has added all the tools that fast product teams need, like feature flags, product analytics, session replays and more.
So if you would like to help your team's engineers and PMs figure out how to build faster and make smarter decisions, go to statsigcom slash acquired or click the link in the show notes.
They have a super generous free tier, a 50000 startup program and affordable enterprise contracts for large companies.
Just tell them that Ben and David sent you.
So three individual business lines I want to get your take on since you studied them so deeply.
Let's start with video.
There's now been what do we think 10 20 30, 40 billion dollars of capital from Amazon sunk into video easily.
Good use of capital.
Jury's still out because there's no way to know this from Amazon's financial reporting.
When you think about how valuable Prime is to the whole Amazon ecosystem and the fact that yes, shipping is receding as the centerpiece, as I said, and the direction that entertainment is going in, and the fact that Amazon wants to be the everything store and the DVD shelves disappeared.
This is the future of entertainment.
They tend to also move in these directions and then figure out how to monetize them later.
And so only now we're seeing the emergence of IMDb TV, which is a horrible name for anything.
But is this streaming service that is alongside Prime Video, and it's free but supported by ads?
And now you've got this massive advertising business, I think 6 billion in the last quarter.
Well, that's the other category.
Quarter.
It's a $6 billion a quarter business that's like 100% margin.
Yeah, right, exactly.
Yeah, that's one of the business lines I don't need your take on, whether it's good or not.
It's obviously good.
That's why in the book I call it that chapter, the gold mine in the backyard, because it was there and they kind of turned it on.
And so the more programming and content they add to that, the larger the video ad component of that becomes.
And so it's just another act of business building.
On its own, it's valuable.
And then it ties into the Amazon ecosystem in these really interesting ways and then drives the central retail flywheel.
Okay.
So that's video.
International.
You devote a few chapters to this.
And A, they screwed up China, just like eBay back in the day.
Unclear if any Western company ever would have won there in e-commerce.
Probably not.
Then India and LATAM that you talk about, too.
Another business line that they have sunk untold billions into the scene of Bezos wanting to ride in on the elephant and he has to settle for the flatbed truck to deliver the check to his team.
That's in India, right?
So India, I think they've built a big business there.
It wouldn't surprise me if it was still unprofitable, although I think the international part of the income statement in the last quarter was profitable for one of the first times.
But India strikes me as still probably a money-losing proposition, in part because the political climate there has become so hostile to international companies.
The Modi coalition has become nationalist.
And they're protecting the mom and pop shops that make up that economy.
And so Amazon's had to operate as a pure marketplace business and really has been restricted with some of its workarounds, like investing in the largest sellers on its marketplace.
But it's invested in prime video and TV shows and movies there and changed the way people shop, particularly in the larger cities.
And now, of course, everything has been thrown into chaos by COVID-19.
I wouldn't call that a failure.
It's still like a bit of massively expensive work in progress.
And you know I quote Bezos in the book as saying the future of the world is the United States, China and India.
We need to succeed in two out of three.
So they're not taking no for an answer.
Well, and the interesting thing in India is it does seem like the game is still afoot because Flipkart, to my mind I hadn't thought about this till reading the book totally screwed up by selling to Walmart.
If Flipkart were still an independent Indian national company...
Absolutely.
The Modi regime, to my mind, will be putting their fingers on the scale.
It would be where Reliance is right now.
It's the homegrown champion.
And I think I quote a Flipkart, maybe board member, investor in the book is saying if there was a mistake to make, we made it.
You had the great quote, too.
I don't know that you had a name on it, but an S-Team member said we didn't know if we were going to get it right in India, but we knew Walmart was going to get it wrong.
Exactly.
And then you have Reliance, who's now an offline conglomerate, who's now trying to be the national e-commerce champion.
And yet, as we know from experience, moving an expertise in physical stores into the online channel is not easy.
And it's really a completely different business.
And in some ways, it's really disruptive.
Yeah.
So yeah, that's a game in progress.
And then I tell a story in Mexico in part for two reasons.
One, they tried to launch in Mexico without Google.
And it was a great illustration of how concerned Bezos and Jeff Wilkie were about Amazon's reliance on Google and how they spent billions of dollars every year to advertise and acquire customers via search.
And so they launch in Mexico without search advertising, and it doesn't work.
Their numbers are upside down because they're trying to acquire customers with billboards and conventional ads.
And it's super expensive and ultimately unproductive.
So they turn on Google advertising.
And then the second reason that was interesting was it's a tragic story, but they hired the CEO of their business in Mexico, who ends up getting fired from the company and then is accused of having his wife assassinated and then goes on the lam and has never been seen since.
Yeah.
And you had coffee with him in San Francisco?
Before he hired the assassins, I had absolutely no idea.
And, you know, to me, it was an interesting look.
I mean I don't want to read too much of it, but you know they hired the guy and they had him run their business in Mexico.
And obviously he turned out to be an unsavory character.
You know, there was a little bit of interesting judgment and who knows, maybe unforeseeable.
But that was a story that ended in like really hard to believe tragedy.
Totally.
It is staggering that that nugget is in this business book.
And we haven't even gotten to the whole 2018, 2019 saga and Jeff's personal life.
But you're reading this.
It's not by any means dry.
It's one of the most interesting companies in the world, written in this thriller-like way, but it's a business book.
And then you hear that anecdote and you're like, I'm sorry, what?
Did you have to hold yourself back from wanting to dig in further to that as a drama?
Yeah.
A little bit.
I mean, I did dig in further and sort of had to measure it, because it is so startling and different in tone and in content.
I felt like it was interesting and I think it was relevant.
And the kicker of that whole section was how Amazon had to turn off Google AdWords after the assassination because the news story kept popping up.
And here it was just so interesting and showed the strange interdependence between the two companies.
Well, this is like a place where I really wanted to ask this question, because we were talking a lot about Flipkart.
It became very obvious to me reading this book that Jeff Bezos does indeed care about competition in addition to the customer.
And it's this famous anecdote and I've heard it quoted to me by a thousand startup founders over the years saying oh, I don't pay attention to the competition because Jeff Bezos doesn't.
And I'm only worried about my customer.
And like, sure.
But how would you, after diving in as deep as you have, how would you massage how he actually looks at competition and when to pay attention to it and when not to?
Whatever they say is disingenuous about that, right?
And it's theater.
But Brad, it's a leadership principle.
Right.
Of course we pay attention to them, but we study them, but we just don't obsess over them.
We obsess over customers.
And you know Bezos comes to India in 2014 and Flipkart's got billboards.
You know lining the road from the airport and he's there studying their methods and they launch big billion day.
And then he insists on launching a sort of celebration of India space program the next day.
And he wants to make a splash with the elephants and And it's all very explicit.
And the Google story in Mexico.
There's another part of the book where he authorizes Prime Now and a real foray into grocery delivery and fast two-hour delivery because Google is launching Google Express.
And at some point, they're launching it in Seattle, his backyard.
And this was an opportunity that he thought would be there for him down the road.
And suddenly he saw Google moving after it.
And this was a land grab.
I don't hold it against them.
It all seems like good business to me.
But yeah, the idea that they've got a higher ideal that puts them above or beyond focusing on competitors is definitely not true.
To that moment and this competitive dynamic of Bezos.
I don't think you wrote this in the book, but was Prime Now also partially a response to Instacart?
And I can't ignore the irony of both Instacart and Flipkart being founded by former Amazon engineers who were like we should do this.
And then Amazon was like, we're not going to do this.
And then they go do it and raise billions of dollars and Amazon's like, we're doing it.
No, it was.
And in that chapter it's not just Google Express, it's Instacart and their successive fundraising rounds.
And sometimes it's a story in the Wall Street Journal or the Times or Bloomberg that catches their eye and there's a competitive response.
And yeah, certainly Instacart.
The fact that this was a former employee had to hit them hard and they tried to copy it.
I talk about what Prime now was at the beginning, and one element of it, which they called Copperfield, was an effort to basically do the same thing as Instacart, kind of syndicate offline physical retailers and use their shelves as fulfillment centers and deliver those with contractors to people's homes.
And what they found when they tried to emulate Instacart is that no grocery store was going to work with Amazon.
That would be madness, particularly since, in a very amazon-like way, they also had this amazon fresh experiment happening in seattle and by that point probably san francisco and la.
That seemed like this big mortal threat to the grocery stores.
Well, little did they know.
Amazon fresh at the time was kind of a disaster, you know, and wasn't really being expanded.
But Instacart had the benefit of being a technology platform for other grocery stores, whereas Amazon was kind of doing both a little bit of 3P and 1P.
And so they even went to Whole Foods back in 2015 and got told no, which you know was interesting and precipitated a little bit the relationship down the line.
There was a fun little moment that just reminded me of in the book.
I think you either wrote or implied that John Mackey and Whole Foods reached out to Bezos either through Bloomberg or after having seen something in Bloomberg.
Yeah.
Right.
The companies had been circling each other.
Activist investors were kind of bubbling Whole Foods market.
And that was a precipitating event to Mackey saying maybe we should pick up the phone and call these guys.
Maybe Amazon's our way out.
And then I've got the name of whoever this was in the book and I'm not going to be able to remember it.
But somebody who was advising Mackey had been active in Democratic politics and called Jay Carney, And that precipitated the deal.
Fascinating.
It was like one of David and my first big episodes.
I woke up, saw the news, we texted each other and said, oh my God, we have to do this.
We have to cover Amazon and Whole Foods, even though we've never done like a live on the scene thing before.
And that was, of course, nowhere, not a part of the narrative at that point in history.
So it's just cool to hear it unearthed.
Yeah, okay.
So the third business line i want your opinion on is uh, not the og og, but pretty close, the.
The first kind of pillar of the stool of amazon is marketplace.
You know, i'd always assumed that like this is an unassailable, unbelievable business.
You know, even put aws aside, which on its own should be a fang company, us marketplace, also on its own should be a fang company.
You paint kind of a dark picture of what's going on with Marketplace right now.
What's your take?
Tell us more.
Well, they made a series of very logical choices over the years which unlocked a tremendous amount of opportunity and growth.
In fact, one of the big questions I had going into the book was how does retail growth of a 20-year-old company start to reaccelerate?
That seems to defy the laws of company gravity.
The bigger you are, the slower you grow.
And so what exactly happened there in 2015, 2016 that GMV kind of takes off?
Yeah, I remember looking into it and talking to former members of that team.
And essentially again back to the competition point.
They are quote unquote inspired their eyes open by two companies.
One.
Alibaba is expanding AliExpress with this idea that the sellers who have learned how to sell on Alibaba in China could now reach customers in the US and Europe.
That was a seductive idea, I think got the attention of Amazon executives.
But in fact, I think, except for maybe parts of Europe, it really hasn't worked out that well.
But in any event, that was sort of one inspiration.
And there was internal communication among Amazon executives that I cite in the book expressing fear that maybe Jack Ma would reduce fees to nothing in an effort to expand outside China.
Which is normal in China e-commerce, as we see on Acquired.
Yeah.
Exactly.
And then you know, the other inspiration was wishcom conducting a kind of geographic arbitrage, getting sellers in China and other countries to sell to the West with really low fees no name brands, generic products, sometimes low quality and weeks long wait shipping times, but nevertheless huge selection and really low prices and was raising money in silicon valley and kind of taking off.
And so bezos looks at his you know his lieutenants and says you're on this right and that was like that's all they need.
It's like the sly nod from the godfather.
And so you know, they open up marketplace.
They basically reduce all the friction to selling from China to the rest of the world.
You know, they're translating from Mandarin.
It's self-service, you know, sign up, sell anywhere.
They're aggregating product in the ports and shipping it at low cost to the West.
They're storing items in Amazon fulfillment centers.
They're making it really easy for cross-border commerce to happen.
And that sounds great.
And it was great.
Great for consumers, and the business is booming in terms of revenue.
And, by the way, Amazon has seen that if you offer a curated selection of branded items at a high price, a very orderly store in say shoes, and then you A-B test that with a disorderly selection of unbranded products at low prices, with extensive selection and even low quality, actually customers still gravitate to the chaos and the large selection of the low prices.
So they knew what customers wanted, and the corporate compass at Amazon is always pointed to what customers want.
So again, good for customers.
And then every seller in the West is suddenly blown out of the water by a wave of competition from overseas sellers who aren't paying the same taxes, who you know don't have the same labor costs, who are close to or in some cases are the manufacturers.
No brands, no markups on prices.
And then also you know a group of sellers in that community that are playing hardball, you know are wearing black hats.
Yes.
Yep, steal an IP or all sorts of stuff.
Butts with the reviews.
Oh man, the number of times I don't know about everybody listening or you, but like the number of times I get a little card on stuff I order from Amazon now saying write a review and email it to us at this address and we'll send you something.
And when you read about exploding hoverboards or you know sneakers that are self-destructing after the second wear or out and out fraud, it's because Amazon built these systems and scaled them and, in an Amazon-like way, ran them with algorithms and software and not a lot of, you know, human care and curation.
Yeah, I thought that was a really interesting point that you made.
That was like sure there's this big problem with counterfeiting and IP theft and factory selling direct even though really it's someone else's product.
But let's even put that aside for a minute.
There's a sort of legitimate battle going on between...
Chinese manufacturers with lower cost structures who are willing to play by the rules and are willing to build legitimate brands.
I think Anker is the brand that you cited that made the phone chargers and all sorts of gadgets.
And they just have a dramatically lower cost structure than the American brand that they're selling against, because everything about the company is China-based.
And as long as they can ship them to American customers, they can always undercut on the third-party seller marketplace.
Right.
Stephen Yang, the CEO of Anchor, says to a Western seller named Bernie Thompson, who's the CEO of Plugable, which is in the same business, accessories.
And he says to him at one point you know in a very kind way, because Stephen's a nice guy he says Bernie, we're going to run you over just because there's the acknowledgement that you really can't compete.
And Steven and Anchor.
They have the manufacturing relationships and they have an underlying cost advantage.
But I went back to a lot of the sellers who over the years, had been mentioned in Bezos investor letters to take their temperature and like here they are in the letters as the evangelists for Amazon Marketplace.
And I thought after many years, what would their tune be?
And all of them had become disgruntled because of exactly what we're talking about.
And yet one of them had that great quote.
I feel like I was invited for Thanksgiving dinner and I was the turkey.
This was the moment, I mean, for me, again, unapologetically, a huge Amazon fanboy.
Up until that moment, I was like, yeah, yeah, yeah, but it's good for customers.
It's good for customers.
It's good for customers.
And then when you went to every single person, every single seller that Amazon had championed in the past, even the guy that was sort of reluctant, you could tell he was pretty pissed off.
He just didn't want to say it.
But I will say that Bernie Thompson is one of those sellers who was mentioned in the investor letter.
This guy that Stephen Yang of Anchor said, I'm going to run you over.
And Plugable, among all those guys, still is doing well.
He's still selling on Amazon.
He wasn't as embittered, although he did bring some arguments to Amazon to try to get them to change some policy.
And look, sellers are being aggregated right now.
You guys have probably heard about this.
So there's obviously opportunity on the marketplace.
They're being rolled up by bigger players.
Thrasio and the like.
Yeah.
But pluggables constantly changed their product mix and kept bringing out new things and innovating.
And so that's the key, right?
Someone who was selling stand-up paddleboards five years ago and still wants to be selling stand-up paddleboards today in the same way.
That's commerce, that's capitalism, it's globalization plus Amazon on top.
It's not going to be possible.
The conclusion I kind of came to was like, There's a problem there in marketplace.
I do think Amazon will probably fix it enough in their Amazon way.
And I'm not too worried about Amazon, but it did make me think A not that I'm a shareholder or anything but less bullish on the Thrasio type model and aggregating sellers.
You were a commodity before and now you're a super commodity.
And whatever your cash flow dynamics are today is not going to be what they are tomorrow.
And two just also more bullish on the Shopify and arming the rebels thesis to existing alongside Amazon.
I agree with that.
Yeah.
Amazon's doing so much now and serving so many constituencies that the brand holder, who wants no part of this frontier chaos and wants to sell directly and have a relationship with their customers, Shopify is serving that need and Amazon kind of can't do it all.
For anyone listening to the show right now, we're live on the line with a bunch of our LPs live.
So we want to get to some questions that they have.
But we have to touch on the as David has it in quotes here the Bezos lapse of judgment in the 2018 and 19 timeframe.
And there's so much stuff that you said in the book that I don't think that we need to rehash.
But I did have one question for you, which was of all of the things that you found about the helicopter flying and the helipads of part of HQ2 and the insane leak from Lauren Sanchez's brother that was happening simultaneous with the hack from MBS and the Saudi Arabian involvement.
You can't make this stuff up.
Was there anything that was like original insights that you had found where you're like?
Oh my gosh, this hadn't been uncovered before.
No, I mean, I think there's a lot in there.
I mean, you mentioned the helipads, right?
Right.
Right.
Except that Bezos what I found out.
Not only was he seeing Lauren Sanchez, who's a helicopter pilot, but he has taken helicopter lessons at the time.
We got to stop for a second.
What is up with that?
The dude himself almost died in a helicopter accident.
Obviously, there's Kobe.
Does he not get that people die in helicopters?
Yeah.
He's flying them.
And although I looked for the pilot's license and I couldn't find it in any database, but I do know that he took lessons.
And I found that he had personally bought a Bell helicopter and that Lauren Sanchez's company had also registered a new Bell helicopter at the same time.
So my hypothesis, he bought his and hers Bell Textron state-of-the-art helicopter.
So anyway, there's a lot.
I mean, there's a lot in there.
Yeah.
Well, the yacht, the fact that he's building the super yacht, three-mass schooner, with an accompanying support yacht for the helicopters, that's all fresh in the book.
That took a lot of sleuthing.
And then, you know, little aspects of the three-way fight between...
The National Enquirer Bezos and his representatives, and Michael Sanchez trying to clear his sullied name.
Then you had MBS, and that really had nothing to do with the whole thing.
Yeah, I mean, people can go read it.
It's chapter 13 in the book.
There's the Businessweek excerpts.
It's a tangled, strange, bizarre Hall of Mirrors saga.
It's an unbelievable chapter.
Even if you feel like you know I know a lot of this story, I'm not going to read it.
Go buy the book and read chapter 13.
It is such a crazy story, completely on its own.
And do I have it right that his phone via WhatsApp was hacked by Mohammed bin Salman and that was very likely exfiltrating data?
But that has nothing to do with how the public found out about.
The second part is right.
It had nothing to do with the National Enquirer story, which was supplied.
The evidence filed in the voluminous court cases amply showed the evidence was supplied by the brother.
But I would say that there's just ambiguity around whether the Saudis hacked his phone.
There was a study done by a consulting company that Bezos's private investigator hired.
There's a lot of skepticism in the cybersecurity community about that study and what they found.
So I don't know.
And I don't know that we'll ever know.
And what's unfortunate is that the Saudi bots on Twitter have kind of taken what I wrote in that book to launch another wave of attacks against Bezos, you know, saying that he improperly accused them.
So the interesting thing is that there is obviously real enmity, you know, from the Saudi government and the crown prince and their agents, against the Washington Post and against Jeff Bezos.
So that is unequivocally true.
And the question of whether they employed Pegasus software and hacked his phone.
It's also true, by the way, that MBS was sending him very curious texts.
Yeah, that was suspicious.
Yeah.
But wait, I just wanted to say one other thing, Ben.
I just remembered you asked, you know, what was new?
And I'll just sort of like at a distance refer.
You remember that the center of this whole thing was whether the Enquirer had acquired explicit photographs.
Yes.
Yes.
The selfie, we'll just leave it there.
And the fact that they never had it.
What they had was a photograph that Michael Sanchez had taken from an escort website and passed off as an explicit photograph of the richest man in the world.
And that was one you just can't you cannot make up.
It was funny.
In retrospect, all of these parties were battling over a photograph that actually didn't exist.
That's unbelievable.
We could do a whole nother podcast that is not a business podcast about this.
But I do want to ask a meta question.
What was it like reporting that?
You were kind of going behind the scenes of this story and sources.
And you're a journalist yourself.
You have sources.
Obviously, you know the sanctity of sources and you're trying to report on this.
Meanwhile, there's all sorts of legal ramifications here.
People could be going to jail.
What was that like?
David, I'm not going to lie.
It was awesome.
I'm a business journalist.
We're writing about deals.
We're writing about business people who tend to be scripted and disciplined and boring.
And so to write about explicit selfies and Saudi agents and hacks and tabloid journalists and double-crossing, sibling betrayal oh it's great.
That's awesome.
That's awesome.
All right.
Last question, before we sort of open it up to the floor Brad, is have you heard from Amazon or Jeff or anyone in the book since publishing?
And have you gotten any more recent feedback than what you actually wrote in the book?
Not anything official.
And I think they, having maybe learned from the aftermath of the Everything Store, have realized that to respond publicly would only add oxygen to the fire.
As much as I might hope for a Dave Clark tweet or a Bezos Instagram retort, or even praying to the heavens, another McKenzie review or a Lauren Sanchez review?
That would be awesome.
I have a feeling that is not forthcoming yet.
And then informally, the feedback's all been good.
It feels like a factual account and well-told.
And so that's really informal reaction.
Obviously, nothing from Bezos, nor do I expect to.
The response so far that I've gotten has been favorable.
That's great.
Now is a great time to thank good friend of the show, ServiceNow.
We have talked to listeners about ServiceNow's amazing origin story and how they've been one of the best performing companies the last decade.
But we've gotten some questions from listeners about what ServiceNow actually does.
So today, we are going to answer that question.
Well, to start, a phrase that has been used often here recently in the press is that ServiceNow is the quote-unquote AI operating system for the enterprise.
But to make that more concrete, ServiceNow started 22 years ago focused simply on automation.
They turned physical paperwork into software workflows, initially for the IT department within enterprises.
That was it.
And over time, they built on this platform going to more powerful and complex tasks.
They were expanding from serving just IT to other departments like HR finance, customer service, field operations and more.
And in the process, over the last two decades, ServiceNow has laid all the tedious groundwork necessary to connect every corner of the enterprise and enable automation to happen.
So when AI arrived, well, AI kind of just by definition is massively sophisticated task automation.
And who had already built the platform and the connective tissue within enterprises to enable that automation.
ServiceNow.
So to answer the question, what does ServiceNow do today?
We mean it when they say they connect and power every department.
IT and HR use it to manage people, devices, software licenses across the company.
Customer service uses ServiceNow for things like detecting payment failures and routing to the right team or process internally to solve it.
Or the supply chain org uses it for capacity planning, integrating with data and plans from other departments to ensure that everybody's on the same page.
No more swivel-chairing between apps to enter the same data multiple times in different places.
And just recently ServiceNow launched AI agents so that anyone working in any job can spin up an AI agent to handle the tedious stuff.
Freeing up humans for bigger picture work.
ServiceNow was named to Fortune's World's Most Admired Companies list last year and Fast Company's Best Workplace for Innovators last year.
And it's because of this vision.
If you want to take advantage of the scale and speed of ServiceNow in every corner of your business, go to servicenowcom slash acquired and just tell them that Ben and David sent you.
Thanks, ServiceNow.
All right, well, anyone want to kick us off here with the first question?
Logan, I see your hand raised.
Yeah, obviously give a plug for the book.
Read the book, loved it.
Thank you for coming on.
So my question is related to Nina Roll, the voice of Alexa, and the question's more on the journalistic approach.
Basically.
Can you go into more detail or whatever detail you can provide that you didn't include in the book on how you were able to I don't know if this is the right phrase hunt Nina Roll down?
She sounds like none of the parties involved can confirm that she's the voice of Alexa.
So I was curious if you can basically say how you were able to confirm to the degree of confidence that you put her name in the book.
How did you find out that she was Alexa and what was that process?
Yeah, thank you, Logan.
Definitely love talking about this.
It was in the first book, I tracked down Bezos's biological father.
Unfortunately, there were no more long-lost relatives to hunt down in this one.
So I thought, well, what secrets are there to unearth?
And if you remember, Logan, the...
The voice of Siri a couple of years way back, maybe like 2012 was was unveiled.
And it was a woman named Susan Bennett, who actually hadn't even known, maybe early on, that she was the voice of Siri.
Like it was a data set that she had recorded for another company that had been acquired by Siri and then acquired by Apple.
And so you know, I knew and I remembered that you know that these synthetic voices start out with voice actors or actresses reciting yards and yards of scripts.
And then the AI takes that and produces a voice.
And so, yeah, I just put finding Alexa as one of my challenges for the book.
And then it was like understanding where these voices come from.
There's really only a couple of studios that do it.
There's one in Atlanta that produces Siri called GM Voices.
And just networking through employees, former employees and people in the community.
I found out that it was likely GM Voices that did Alexa.
And then networking around GM Voices, I had some candidates.
And I went to their websites.
And when I got to Nina Raleigh rhymes with trolley her website.
You know she had a bunch of voiceover clips that she had done in the past.
I remember one was for Mott's applesauce, I think.
And, you know, just playing it, I could tell.
And I played it for my daughters and they were like, yeah, that sounds familiar.
And, you know, and then I called her and she said, you know, she couldn't talk to me.
And that wasn't it.
I did sort of know and had confirmed that it was her beforehand just through networking.
And then, when Amazon wouldn't talk about it and she wouldn't talk about it, I had a pretty good signal.
Awesome.
Thank you.
I'll leave it at that.
Thanks, Logan.
All right, Ben Greinall.
Super interesting book.
Last week, I was part of another book club and it was for Working Backwards.
So two great Fridays in a row.
You've done so much reporting on Amazon and really dug deep.
So two-part question.
One, what is Amazon missing from their business model?
Like what is a new opportunity or revenue stream that they haven't pursued, which they could?
And what's something that you think they should drop that they're currently doing?
Did you ask the working backwards guys this question?
Well, side note.
So it was like an eight person book club.
And Wilkie came to it.
Very different conversation.
Okay, this is going to challenge me.
What is the thing that is missing?
Hard to imagine what the missing pieces are, right?
In the Amazon quilt of businesses, right?
Because they are sort of doing everything right now.
You know, I'm inclined to say, like the physical grocery opportunity was one that I think they were just laid on, you know, while they bought Whole Foods.
And then they've been waiting to perfect this go-store technology.
I think they're viewing technology as a differentiator.
The cameras on the ceilings and the weights on the shelves.
The idea that you can bypass the cashier is their big selling point for these stores.
But I don't know personally, like I don't think that's a really big impediment, waiting in line for a couple of minutes and checking your phone before you leave.
I mean, maybe I'm wrong about that.
I just feel like perfecting that which has been a super expensive 10-year-plus process has slowed them down when it comes to entering physical retail in a big way.
And maybe without that obsessive focus on finding a way to enter the market with a distinctive technology solution, they could have moved faster on physical retail and the opportunity of supermarkets.
Wasn't it $10 billion or something you said in the book?
I don't know that I had a number, but I definitely had some sources saying that it was the biggest single investment in Amazon history, at least alongside China as the biggest capital investment.
The Go store.
And then the second thing is, what are they doing that they should drop?
Yeah.
That's a tough one.
The AWS service recognition, the image recognition service and AI service that they have been selling to corporate customers but also police and government authorities.
They have suspended that.
They suspended it for a year after the sort of outcry and anxiety about image recognition.
And now I think they've suspended it in perpetuity.
There's just deep societal discomfort about the bias in those algorithms and the way in which police authorities have historically used them.
So that's an easy one for me to grasp onto and say maybe this suspension of selling recognition to governments should be following Google and other companies and actually really abandoning the technology.
Very cool.
Ooh, I have a sort of an answer to that, that I'm curious if Brad thinks is an answer.
And it's been a really long time since we covered this on Acquire.
But Brad, do you think the Zappos acquisition was value creative in a big way for Amazon, or has that just been a stagnant business?
It's a little bit like the acquisition of diaperscom, which was a little bit after it, in terms of neutralizing a competitor and then allowing it to run autonomously, maybe learning from it a little bit, but then pursuing their own strategy.
And Amazon's never slowed down in terms of selling shoes or expanding the selection of shoes and apparel on its own site.
It's been successful.
And the exact same thing with Diapers.com.
Mark Lurie did a How I Built This on NPR over the weekend where he tells the whole sort of bitter story of being acquired by Amazon and feeling like they closed some avenues for Quincy.
And so this is why regulators and lawmakers now think, wish that the FTC had taken a harder look at those acquisitions.
All right, let's do Brad Romney next.
I'm curious for your thoughts on Which elements of Amazon's innovation flywheel would you identify as being subtle yet impactful?
And which elements could you potentially separate from the more, maybe less, savory elements of the Amazon culture that we've reported on?
That's a good question, Brad.
You might stump me with that one.
I mean, I think that Bezos is central to the innovation process at Amazon.
As much as they like to talk about a culture I've been mentioning and decentralized teams, when you peel back some of the biggest ideas at Amazon, it tends to start with an idea from Bezos, like that Alexa email and then his sort of maniacal attention to it and sponsorship within the company.
And I think it's a long-term challenge for Amazon, because Jassy, for all his skills as an operator and he's been amazing at AWS I don't think is capable of wheeling off and emailing a new business idea in the way that Bezos is.
And then, as the founder and the CEO, Bezos just brought a level of magic to his sponsorship of these ideas.
And it was a combination of inspiring employees and terrifying them, you know, and getting them to jump through hoops and jump over high bars.
And he walks out of meetings.
I have that anecdote in the book where he believes the Alexa team isn't collecting data fast enough.
And he walks out of the meeting and they come up with the AMP program to go and bring Alexa out secretively into the world to collect data.
Those are the kind of heroic entrepreneurial feats he can inspire.
You can't bottle that up, right?
Because there's one Jeff Bezos.
And it really often comes to having someone who's inventive and creative but also has the fortitude and a little bit of the guts and the resources to make these huge investments and try them and also to fall flat on his face.
One theme in the book, I think, is Bezos is willing to be embarrassed, right?
He humiliates himself with the fire phone and then launches Alexa a couple of months later.
And he risks embarrassment and is embarrassed by the Lauren Sanchez saga.
And yet maybe doesn't really have the gene that he cares that much about, or he's at least willing to risk the humiliation.
And it turns out that maybe it's the susceptibility or allowing yourself to fail, and fail really publicly.
That's also kind of key to the innovative process.
Yeah.
Brad, it does seem also, just to chime in here, that founders get more leeway from the street.
Bezos is the guy that made this happen.
So therefore, he's got a lot of rope, not just from the board, but what activist shareholder is going to come in and try and say he's not doing a good job?
But you could see the successor whoever comes in, or we know who comes in, but future non-founder CEOs.
They get much shorter leash from investors.
Yeah.
Totally.
And when you think about what Doug McMillan or the CEO of eBay or even the CEO of Target have to deal with in terms of managing the street quarter to quarter and never really being able to go and have four lousy quarters so that you can have the potential of building something more promising down the line.
And Amazon can do that whenever they want.
It's not just because Bezos is the founder.
It's because he stuck around, but because he called the shots, right?
With the first shareholder letter, he said, this is how he's going to run his business.
And then he has reproduced that letter every year and said it's still day one, and repeated it all like a mantra.
And he's bought himself the leeway and the flexibility to do it.
Real quick on that.
You more than allude to this in the book, but there's a real rivalry between Elon and Bezos.
Is there any more that didn't make it into the book that you found on that?
I mean I talk about in the book how they met early on a couple of times that Elon tried to tell Jeff that some of his technical decisions were wrong, that they had really different philosophies.
Bezos was constraining his investment at Blue Origin and wanted to keep the team small and wanted to start with suborbital space.
And then Elon comes and does it all 10x, gets government contracts and commercial contracts to pay for everything.
And Bezos has kind of left, as a straggler, something that he's really not accustomed to, being in second place.
Yeah, I mean, I think the rivalry is real.
It's super entertaining to see Elon exchange barbs with Jeff over Twitter and sometimes vice versa.
And it'll be interesting to see whether Bezos commits more of his time to Blue Origin now that he's retiring as CEO and and tries to rescue it.
I do think that that company is a little bit dysfunctional in terms of Bezos owning it, operating it from afar, trying to keep its headcount small, but then really, in pursuit of SpaceX, changing directions abruptly, hiring aerospace folks from companies like Honeywell and changing the culture on a dime, and then investing a billion dollars worth of his returns from Amazon stock every year and turbocharging it.
And that kind of change of pace, I think, has yielded some dysfunctional outcomes.
But look... the story there might change.
And in the next couple of weeks they say they're going to go, New Shepard's going to fly paying tourists to suborbital space.
And maybe that'll be a big triumph and create some momentum.
But right now, they're sort of years behind all their projects and promises.
And a lot of these new contracts, like the Blue Moon contract, they're losing to SpaceX.
Josh Gutman, let's go to you next.
Yeah, I was kind of curious, because there's the time between the Everything Store and Amazon Unbound.
Amazon started acquiring way more companies than they previously had.
This was in a period where the company was much bigger too.
So in some ways the acquisitions look smaller, like on paper, like in hindsight.
Even Whole Foods, if you think about in terms of like market cap now, it feels like pretty insignificant.
What has changed internally to Amazon for how they think about acquiring companies and what made the cut for you in terms of what was worth talking about from an acquisition point of view?
I do tell the Kiva story in one of the chapters on operations.
And to me, it was a Dave Clark call.
It was the epitome of Amazon in terms of trying to automate systems and take humans out of the equation.
It was a little bit of a ruthless move, in that they negotiated the thing over many years and tried to suppress its growth, and then bought it and then made a promise to the Kiva founders that they could sell it externally and then reneged on that promise.
And it allowed the super scaling the fulfillment centers and made them incredibly more efficient.
And then it also furnished Dave Clark with some leadership credentials that allowed him to continue to grow inside the organization.
So I think you're right Joshua, in that I did take a little bit of a light pass on Twitch, definitely on Ring.
I did not do much.
Part of it was just streamlining the story and trying to shoehorn everything into a narrative without too many digressions.
And also while keeping Jeff Bezos at the center of the action.
That was like the main narrative challenge of the book.
But Amazon might acquire MGM in the next couple of days.
And I always thought that Amazon's ability to acquire companies was going to get severely curtailed because of all this antitrust scrutiny.
And, you know... we'll see what happens.
But it seems like that's an asset that they'll easily be able to buy and then increase their output of movies in their catalog.
So yeah, but you're describing one of the challenges I had in figuring out what to include, what not to include, how to keep things moving in this book that covers the entire arc of Amazon history and all these characters that populate it.
Brad, to wrap, where can listeners buy the book?
Well, Ben and David, it turns out that you can get it at your friendly local neighborhood bookstore.
You can certainly pick it up at Barnes & Noble.
Or, if you must resort to it, it is available from Amazon itself as an e-book, as a hardcover or as an Audible audiobook.
That's great.
You need to set up shop in your garage there, selling it out the front door.
Exactly.
Or I'll be selling it on my street corner this weekend.
And there's a couple parts that you actually read in the Audible, if I was hearing right.
I do.
I do the introduction.
And the acknowledgements.
That had to be you too, right?
Which frankly is probably about as much as anyone wants to hear me reading.
There's a reason professionals do it, which I've learned.
That's great.
Well, thank you so much.
Anywhere else listeners should find you on the internet or follow you or anything like that?
I'm at Brad Stone on Twitter.
That's great.
Well, really appreciate it.
LPs, thank you for joining us today.
Great questions.
And Brad, best of luck.
Thank you guys.
Cheers.
All right, listeners, that is all we have for you today.
Thank you for tuning in.
Obviously, you heard where you can find Brad on the internet, where you can buy the book.
And if you do buy the book, you should go leave a review.
I know Brad would greatly appreciate it.
And it is years of shutting yourself in a room and working through this crazy process.
And so we should all go and help Brad get the most out of this incredible story that he has unearthed.
So go leave him a review.
Totally.
I left a review.
I was very excited.
I put a photo of my copy of the book with all my notes on it.
I aim to be the top reviewer for all the books that I review.
I think... I think you are on seven powers.
I'm number one on seven powers right now.
Yeah.
It's all because of the image.
So when you leave a review, put a photo in there.
Growth hack.
All right.
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