Special Amazon Unbound (with Brad Stone)

Abstract
Summary Notes

Abstract

In this episode of the "Acquired" podcast, hosts Ben Gilbert and David Rosenthal are joined by repeat guest Brad Stone to discuss his latest book, "Amazon Unbound." Stone reveals his investigative journey into the expansion of Amazon since 2013, including the development of Alexa, Amazon Go, and the third-party seller ecosystem. He also delves into Jeff Bezos's activities outside of Amazon, such as his space venture, Blue Origin. The episode, recorded live with "Acquired" LPs, also touches on Amazon's international growth, particularly in India and Mexico, and the controversies surrounding its marketplace due to an influx of overseas sellers. Additionally, the hosts discuss Amazon's acquisition strategy and the personal saga of Bezos's relationship with Lauren Sanchez. Stone, an angel investor based in San Francisco, and Gilbert, co-founder of Pioneer Square Labs, provide insights into Amazon's innovation culture and the challenges of writing about a constantly evolving company.

Summary Notes

Early Fan of the Podcast

  • Speaker A has been a fan of the podcast from its early days.
  • The podcast has covered various companies including Amazon, Zappos, Uber, and Didi.

Speaker A: Oh, yeah, no, I mean, I've been a fan of the podcast from the early. Speaker B: One. Speaker A: We did. Speaker B: Did we do Amazon, Zappos, Uber and Dee Dee? Speaker A: Uber and Dee Dee. That's right.

These quotes show Speaker A affirming their long-term interest and engagement with the podcast, which has discussed multiple major companies.

Unique Situations for Podcasting

  • Speaker C booked an Airbnb for better Wi-Fi to participate in the podcast.
  • There was an awkward exchange with the host due to the unusual booking request.

Speaker C: 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 who I was like, I just want to come for an hour, but it's not what you think, I swear.

This quote illustrates Speaker C's dedication to ensuring good quality participation in the podcast, leading to a humorous situation with an Airbnb host.

Introduction of Hosts and Podcast Focus

  • Ben Gilbert introduces himself as co-founder and managing director of Pioneer Square Labs and PSL Ventures.
  • David Rosenthal introduces himself as an angel investor based in San Francisco.
  • The podcast focuses on great technology companies and their stories.

Speaker B: 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. Speaker C: And I'm David Rosenthal, and I am an angel investor based in San Francisco.

The quotes provide context about the hosts' backgrounds and the thematic focus of the podcast on technology companies.

Book Club Discussion with Brad Stone

  • Brad Stone joins the book club discussion on the podcast.
  • His book "Amazon Unbound" is a successor to "The Everything Store" and covers Amazon's developments since 2013.
  • The live recording included questions from acquired LPs (limited partners).

Speaker B: 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.

The quote sets the stage for the episode's content, highlighting the discussion of Brad Stone's book about Amazon's evolution.

Pilot as a Sponsor

  • Pilot is a company that provides accounting, tax, and bookkeeping services for startups and growth companies.
  • It is endorsed as a trusted partner for financial services and has grown to be the largest startup-focused accounting firm in the US.
  • Pilot's services include finance, accounting, tax, and CFO services.

Speaker B: Our next sponsor for this episode is one of our favorite companies and longtime acquired partner pilot for startups and growth companies of all kinds. Pilot is the one team for all of your company's accounting, tax and bookkeeping needs, and in fact, now is the largest startup focused accounting firm in the US.

The quote introduces Pilot as a significant sponsor of the podcast and outlines the range of services they offer to startups and growth companies.

Epigraph of "Amazon Unbound"

  • Brad Stone discusses the epigraph of his book, which includes quotes from "The Last Days of Night" and "Cannery Row."
  • The quotes were chosen to provoke thought about Amazon's impact, both positive and negative.
  • The discussion also touches on the system of invention at Amazon and the broader implications of building systems at scale.

Speaker A: 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 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.

The quote explains the reasoning behind the selection of the epigraph for "Amazon Unbound," linking it to the themes of invention and impact.

Decision to Write a Sequel

  • Brad Stone began interviews for "Amazon Unbound" in 2017, before several significant events in Amazon's history.
  • The motivation for the sequel was the realization of how much Amazon had changed, particularly with the introduction of Alexa.
  • Stone anticipated that the story of Amazon would continue to evolve and provide more material for the book.

Speaker A: 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 HQ two was announced and before Bezos became a figure of tabloid interest and obviously before some of the more recent antitrust stuff and the pandemic.

The quote indicates the early stages of research for the sequel and the foresight that Amazon's story was far from complete.

The Impact of Amazon's Growth

  • Since the publication of "The Everything Store," Amazon's market cap has increased significantly.
  • The company has diversified into various sectors, including AWS, global marketplaces, and entertainment.
  • Stone reflects on the numerical and qualitative changes at Amazon, emphasizing its expansion and public perception.

Speaker A: 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. Marketplace became global and on and on.

This quote captures the magnitude of Amazon's growth and the various areas where the company has made significant strides since the first book.

Perceptions of "The Everything Store"

  • Stone's first book on Amazon, "The Everything Store," is seen as a balanced portrayal that can be interpreted differently by critics and fans.
  • Stone discusses his intention to tell a comprehensive story rather than being a critic or overly flattering.
  • The book has influenced people's perceptions of Amazon, with some readers becoming more interested in working for the company after reading it.

Speaker A: 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.

The quote reflects on the diverse reactions to "The Everything Store" and the nuanced portrayal of Amazon within its pages.

Amazon's Response to COVID-19

  • Stone provides a balanced view of Amazon's actions during the COVID-19 pandemic.
  • He acknowledges both the company's missteps and its significant contributions to society during the crisis.
  • The discussion highlights the complexity of Amazon's role and the challenges it faced.

Speaker A: 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.

This quote shows Stone's effort to present a fair assessment of Amazon's performance during the pandemic, acknowledging both positive actions and controversies.

Writing Process and Relationship with Amazon

  • Stone began communicating with Amazon about writing "Amazon Unbound" in 2017 or 2018.
  • Amazon was initially receptive and provided access to various executives, though Jeff Bezos did not participate in an interview.
  • Stone discusses the challenges of writing about a rapidly changing company and the risk of the story evolving during the writing process.

Speaker A: 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.

The quote describes Stone's interaction with Amazon while researching and writing "Amazon Unbound," highlighting the company's cooperation and his own challenges as an author.

Bezos's Philosophy and Leadership Style

  • Jeff Bezos's leadership style prioritizes the company and customer over personal relationships and consensus building.
  • Executives at Amazon are expected to demonstrate a lack of empathy and focus on getting to the right answer for the company.
  • Dave Clark's actions towards a fellow friend exemplify Bezos's philosophy.

"Consensus building is really subjugated to getting to the right answer and doing what's best for the company and the customer."

This quote emphasizes Bezos's approach to leadership, which values company success and customer satisfaction over building consensus or empathy towards colleagues.

The Concept of "Jeff Bots"

  • Amazon executives, like Steve Kessel, have a method for evading difficult questions, similar to Jeff Bezos.
  • The term "Jeff bot" originated from the observation of this evasive behavior.

"They were just so, all so skilled in the same exact way of speaking publicly and not saying anything."

This quote refers to the communication strategy of Amazon's executives, who are adept at publicly speaking without divulging substantial information.

Amazon's Interlocking Business Model

  • Amazon's businesses are not independent but interlock and reinforce each other.
  • The realization of this interlocking model was a significant insight in the study of Amazon's growth.
  • Amazon's strategy involves expanding into diverse markets and finding ways to link them to the same customer base.

"You've got this set of really opaque and hidden connections between all these businesses that is at the center of how Amazon operates."

This quote captures the essence of Amazon's business strategy, which relies on creating synergies between different business units to reinforce the overall company's operation.

Retail and AWS Synergy

  • Amazon's retail business is the biggest customer of AWS.
  • AWS benefits from having a built-in beta tester in Amazon's retail division, which helps services to scale quickly.
  • The retail side likely receives AWS services at wholesale prices and has the support of a robust cloud provider.

"Retail is the biggest customer of AWS. It's the first customer."

This quote highlights the symbiotic relationship between Amazon's retail arm and AWS, with each benefiting from the other's existence and growth.

Prime Video as a Reinforcement to Amazon's Ecosystem

  • Prime Video is not just about content; it serves as a consumer application of AWS.
  • The evolution of Prime from a shipping club to a content club reflects Amazon's strategic foresight.
  • Prime Video's integration with Prime reinforces the retail business and is an example of leveraging Amazon's existing assets.

"Prime Video is in some ways a consumer application of AWS."

This quote explains how Prime Video is not just an entertainment service but also an application of Amazon's cloud computing infrastructure, AWS.

The Campfire Event

  • Bezos hosted a secretive event called "Campfire," which started as a literary gathering and then included Hollywood elites.
  • The event is symbolic of Amazon's evolving ambitions and Bezos's interest in content creation.
  • Amazon pays for the event, which includes extravagant hospitality and networking opportunities for guests.

"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."

This quote reveals the existence of an exclusive event organized by Bezos, reflecting his strategic efforts to build relationships with influential figures in literature and entertainment.

Amazon's International Ventures

  • Amazon's experiences in China, India, and Mexico offer insights into its international strategy and challenges.
  • The company has faced political and operational hurdles, especially in India and China.
  • Amazon's international ventures are costly but reflect the company's commitment to global expansion.

"The future of the world is the United States, China and India. We need to succeed in two out of three."

This quote from Bezos underlines the strategic importance of succeeding in major global markets for Amazon's long-term vision.

Amazon's Video Investment

  • Amazon has invested significantly in Prime Video, which is now seen as a valuable part of the Prime ecosystem.
  • The investment in video content is tied to the future of entertainment and Amazon's retail flywheel.
  • Prime Video has led to the development of an advertising business, further monetizing the platform.

"The more programming and content they add to that, the larger the video ad component of that becomes."

This quote explains how Amazon's investment in video content not only enhances the Prime membership but also creates a new revenue stream through advertising.

Amazon's Response to Competition

  • Amazon does pay attention to competition, contrary to the popular belief that they only focus on customers.
  • Jeff Bezos personally studied competitors like Flipkart during his visit to India.
  • Amazon's initiatives like Prime Now and grocery delivery were accelerated in response to competitors like Google Express and Instacart.
  • Amazon's competitive responses are often triggered by news stories, fundraising rounds of competitors, or internal communications expressing concern over competitors' moves.

"Of course we pay attention to them, but we study them, but we just don't obsess over them. We obsess over customers." "And Bezos comes to India in 2014, and Flipkart's got billboards lining the road from the airport, and he's there studying their methods, and they launch Big Billion day." "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."

The quotes demonstrate that while Amazon claims to prioritize customers over competitors, they do actively monitor and respond to competitive threats. Bezos' actions in India and the launch of Prime Now in response to Google Express illustrate Amazon's strategic moves to maintain its market position.

Instacart and Amazon's Competitive Dynamics

  • Amazon's reaction to competitors, especially those founded by former employees like Instacart, is aggressive.
  • Amazon tried to emulate Instacart's model with a program called Copperfield.
  • Amazon faced challenges in partnering with grocery stores due to their existing threat perception of Amazon.

"And Amazon's like, we're doing in the, in that chapter. It's not just Google Express, it's Instacart and their successive fundraising rounds." "And what they found when they tried to emulate Instacart was that no grocery store was going to work with Amazon."

These quotes highlight Amazon's attempts to replicate successful models of competitors like Instacart, and the resistance they faced from potential partners who viewed Amazon as a threat. This reflects Amazon's willingness to adapt to competitive pressures and seek new market opportunities.

Amazon's Acquisition of Whole Foods

  • Amazon and Whole Foods had been considering each other for a while before the acquisition.
  • A Bloomberg article about Amazon's interest in Whole Foods prompted John Mackey to reach out to Amazon.
  • The acquisition was facilitated by a mutual contact with connections in democratic politics.

"Activist investors were kind of pumbling Whole Foods Market. My colleague at Bloomberg, Spencer Soper, wrote an article that suggested that Amazon had considered buying Whole Foods in the know, which they had." "And that was a precipitating event to Mackie saying, maybe we should pick up the phone and call these guys."

The quotes reveal the backstory of how Amazon's acquisition of Whole Foods came about, showing the influence of media coverage and strategic connections in facilitating major business deals.

Amazon Marketplace's Dark Side

  • Amazon Marketplace's explosive growth was driven by a series of logical choices that opened up opportunities.
  • Concerns about Alibaba and Wish's expansion strategies influenced Amazon's decisions to open up the marketplace to Chinese sellers.
  • This led to a wave of competition from overseas sellers, which negatively impacted Western sellers on Amazon.

"And so they open up marketplace. They basically reduce all the friction to selling from China to the rest of the world." "And then every seller in the west is suddenly blown out of the water by a wave of competition from overseas sellers."

These quotes explain the transformation of Amazon Marketplace and its consequences for Western sellers. It shows how Amazon's strategic decisions to compete with Alibaba and Wish led to a significant shift in the competitive landscape of the marketplace.

The Bezos Scandal

  • The chapter on Bezos's personal scandal is filled with new revelations and intricate details.
  • Bezos's interest in helicopters and his relationship with Lauren Sanchez, a helicopter pilot, played a role in the HQ2 helipad requests.
  • The National Enquirer's acquisition of explicit photos and the involvement of Michael Sanchez, Lauren's brother, is discussed.
  • The potential hacking of Bezos's phone by Saudi agents is ambiguous.

"The idea that the request for helipads in Long Island City and Crystal City that were part of HQ2, that instituted a political backlash in New York that Amazon claimed was really just normal, ordinary corporate request for aerial access. And that Bezos." "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."

These quotes delve into the personal life of Jeff Bezos and how it intersected with Amazon's corporate affairs, particularly the HQ2 project. It also touches on the complexity and sensationalism of the scandal involving Bezos, highlighting the challenges of reporting on such a multifaceted story.

Feedback from Amazon and Jeff Bezos Post-Publication

  • The author has not specified if there has been any feedback from Amazon or Jeff Bezos since the book's publication.

"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 wro"

This quote suggests an inquiry into whether there has been any direct response from Amazon or Jeff Bezos regarding the content of the book, though the transcript cuts off before the author's response is given.

Amazon's Response to the Book

  • Amazon did not respond officially to the book's release.
  • Informal feedback has been positive, with the book seen as factual and well-told.
  • No response from Jeff Bezos was expected or received.

"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."

This quote implies Amazon learned from previous experiences and chose not to engage publicly with the book's content to avoid drawing more attention to it.

Crusoe's Clean Compute Cloud

  • Crusoe is a partner of Nvidia and provides clean compute cloud services for AI workloads.
  • Crusoe's data centers use wasted, stranded, or clean energy, offering better performance per dollar.
  • The company's environmental strategy includes locating data centers at stranded energy sites, benefiting the environment and reducing costs for customers.
  • Crusoe's unique location strategy contrasts with other cloud providers who need to be near major internet traffic hubs.

"Crusoe's data centers are nothing but racks and racks of a because Crusoe's cloud is purpose built for AI and run on wasted, stranded or clean energy, they can provide significantly better performance per dollar than traditional cloud providers."

This quote highlights Crusoe's unique business model of using wasted or stranded energy to power their AI-focused cloud services, which provides better cost efficiency.

The Voice of Alexa

  • Journalistic efforts were made to uncover the voice actor behind Alexa, Nina Rolle.
  • Nina Rolle was discovered through networking and listening to her voiceover clips.
  • Amazon and Nina Rolle did not officially confirm her role.
  • The process of identifying the voice actor involved extensive research and networking.

"I just put finding Alexa as one of my challenges for the book. And then it was like, know where these voices come from."

The speaker explains the investigative process undertaken to find the voice actor behind Alexa, which was a challenge set for the book.

Amazon's Business Model and Opportunities

  • Amazon's business model covers a wide range of industries and services.
  • The speaker suggests that Amazon was slow to enter the physical grocery market due to a focus on technology.
  • Amazon's ghost store technology, while innovative, may not be a significant differentiator.
  • The speaker also discusses Amazon's use of AI in law enforcement and suggests they might abandon it due to societal discomfort.

"Hard to imagine what the missing pieces are in the Amazon quilt of businesses."

This quote reflects on the comprehensive nature of Amazon's business model and the difficulty in identifying any missing components.

Amazon's Acquisition Strategy

  • Amazon's acquisition strategy has included neutralizing competitors and learning from them.
  • The speaker discusses the Kiva acquisition and its impact on Amazon's operations.
  • Amazon's ability to acquire companies could be affected by antitrust scrutiny.
  • The process of deciding which acquisitions to cover in the book was influenced by the need to maintain a coherent narrative.

"It was the epitome of Amazon in terms of trying to automate systems and take humans out of the equation."

This quote explains the strategic rationale behind Amazon's acquisition of Kiva, highlighting their focus on automation and efficiency.

Amazon's Innovation Flywheel

  • Jeff Bezos is seen as central to Amazon's innovation process.
  • Bezos's involvement in new business ideas is considered key to Amazon's success.
  • The speaker questions whether successor Andy Jassy can replicate Bezos's innovative drive.
  • Bezos's willingness to take risks and face failure is linked to Amazon's innovative culture.

"Bezos is willing to be embarrassed, right? He humiliates himself with the firephone 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."

The quote illustrates Bezos's ability to take risks and face public failure, which is integral to fostering an innovative environment at Amazon.

Amazon and the Future of Space Exploration

  • The rivalry between Jeff Bezos and Elon Musk in space exploration is discussed.
  • Bezos's Blue Origin has been seen as lagging behind Musk's SpaceX.
  • The speaker suggests that Bezos may commit more time to Blue Origin to address its challenges.
  • There is speculation on whether Bezos will increase his involvement in Blue Origin following his CEO retirement.

"It'll be interesting to see whether Bezos commits more of his time to blue Origin now that he's retiring as CEO and tries to rescue it."

This quote speculates on the potential shift in focus for Jeff Bezos from Amazon to his space exploration company, Blue Origin, following his retirement as CEO.

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