Brad Stone (03:18): Then, I didn’t know what an opportunity that was, because as I was working on the book, there was HQ too, and Bezos entanglement with the tabloids, and then a bunch of antitrust questions and ultimately, the pandemic. It really was even a better story than the one I told in The Everything Store. Trey Lockerbie (03:37): You mentioned Bezos’ transformation. What was coming to mind for me was his physical transformation. He went from being the bookworm selling books to now this Terminator-esque figure walking around selling anything you want. Beyond maybe the physical transformation, how else have you seen Bezos evolve since your last book? Brad Stone (03:57): That’s an interesting question. It was one of the main questions that I had in the book. How and why has this guy changed so much? I’ll give you a couple of pieces of evidence of that change. One, fighting with Donald Trump on Twitter. Two, building a luxury yacht in secret in Amsterdam, a yacht that is going to launch later this year. Bezos was never… Not only was he never a yacht guy, my impression was that he would have frowned upon that kind of extravagance. Brad Stone (04:26): He loved his private jet in the early days because it saved him time. It was all about using his time, most efficiently. His interest in Hollywood and throwing parties at his property in Los Angeles. All sorts of ways that he had fundamentally changed. Brad Stone (04:40): I went in to explore that. One of the people I talked to was Jamie Dimon, and they’ve been friends and colleagues on some projects. Dimon basically said, “Bezos’ eyes just opened up to a larger world.” Early Jeff had been so focused on Amazon and the mechanics of the business, and I’m just trying to survive and then the Bezos that we see, that I write about in Amazon Unbound is someone who, bit by bit starts to realize the challenges and joys of the world beyond Amazon, and it happens incrementally. Brad Stone (05:11): It’s buying the Washington Post in 2013, starting to direct Amazon into Hollywood, about 2015. Not because of any vanity project, but because he needed to put something else in Prime because shipping wasn’t going to be the differentiator that it once was. Brad Stone (05:30): Then the requests upon him to give more back, to do philanthropic initiatives, that starts to open his eyes up to the challenges of climate change, and accompanying personal change in his life. I get into this a little bit in the book, even though I’d set up to write a business book, I had to do it. But as he’s becoming more of a figure on the world stage, it became clear that his former wife, MacKenzie wasn’t really that interested in going to the parties and hobnobbing with the celebrities and the elites in the way that Bezos seemed to enjoy. Brad Stone (06:02): Of course, that accompanied another dramatic change, his divorce, the relationship with Lauren Sanchez, and now we see him sitting courtside at Wimbledon and meeting the French President posing in fantastic clothes in front of the Taj Mahal, clearly a different guy than the early Bezos. Trey Lockerbie (06:20): You brought up MacKenzie. I have to ask, MacKenzie Scott, formerly Bezos left you a one-star review of your prior book. What was that about, and how do you think she might rate this new book of yours? Brad Stone (06:31): That’s a fond memory, 2013, looking at the Amazon website, and the one-star review from MacKenzie Bezos pops up. But you also might remember, Trey, it wasn’t the only one. Andy Jassy who’s about to be the new CEO of Amazon, he also left me a one-star review. The PR guy at the time, the head PR guy left me a one-star review. Brad Stone (06:53): What that was about was a very upset and angry Jeff Bezos trying to throw an asterisk against the book and object to things in it that he didn’t like. I understand that looking back, perversely, maybe ended up helping my book a little bit, it certainly drew more attention to it. I don’t think they raised anything all that substantive at the time. Brad Stone (07:17): I think, in retrospect, The Everything Store really did become the definitive account of the early days. We don’t know what MacKenzie Scott thinks of this book, and I presume I won’t be fortunate enough to get the one-star review this time. If I had to guess, I’d guess that she probably hasn’t read it. It really does seem like she’s moved on and is now spending her time on other things, including her philanthropy. Trey Lockerbie (07:39): Fair enough. The reason I asked is mainly because that asterisk, as you mentioned, could have the potential to tarnish the reputation behind the book saying this guy didn’t do his research. But if I read correctly, you did over 300 interviews for this new book. You do plenty of research, and maybe walk us through a little bit about those interviews that took you to this book. Brad Stone (08:01): Well, look, Amazon’s a tough company, it’s secretive, it exerts a kind of influence even on employees who have left. There’s some fear there. There’s a lot of fear of Bezos himself. It’s always been a mixture of going to current employees and going to former employees, finding whether people are comfortable talking, off the record or on background, or for the record. Brad Stone (08:24): Amazon itself, I feel like, has come out of its shell a little bit, they did work with me on this book, they allowed me to talk to more than a dozen senior executives and employees, maybe even two dozen. Bezos allowed me to talk to some of his personal friends. He didn’t cooperate for this book. Maybe the old wounds haven’t quite healed, but I was happy with the cooperation. Brad Stone (08:45): It’s really like, look, the company is so decentralized and distributed across so many things, that really, it’s just a function of talking to as many people as you can, and trying to put together a mosaic of history. Because not everybody, in fact, maybe nobody has the full picture. It’s like a numbers game, it’s trying to talk to as many people as you can. Trey Lockerbie (09:05): Well, Unbound is such a great name for it, because not only, as you mentioned, is Amazon so decentralized in a multitude of different industries. But Jeff himself has diversified a little bit, going into different industries; Space, Wall Street Journal, et cetera. It’s really hard to pin down Jeff Bezos, for me, especially. You read about how he’s a technologist and he was an old hedge fund guy. Man, how do you define Jeff Bezos? Brad Stone (09:37): Probably is the most successful business person of our age or most successful entrepreneur, man, maybe even inventor of our time. I think that’s where you have to start. But I do think despite the current skepticism and even bitterness towards him right now, and we can get into that, that ultimately he will be remembered as someone who changed the economic landscape, and not just once but in a couple of ways. It’s like a hattrick. It was with eCommerce and then cloud computing, and now Alexa, and voice computing. Brad Stone (10:08): Really all three of those things spring not only from his mind in terms of the creation, but then managing the details of the business, having the long-term vision, sponsoring the investments, and being really long term about it. Brad Stone (10:23): I think ultimately, that’s how I think about him as a creator. I think that’s probably how he wants the world to see him as well. But it has become more complicated because there is so much skepticism about Amazon and how it exerts its market power. I think he’s probably seen now a little bit as a monopolist, and maybe a conqueror, instead of a creator. Brad Stone (10:45): I think he realizes that and it’s a reputation that he’s laboring to change, not all that successfully. But ultimately, we’re going to evaluate his legacy based on his philanthropic contribution, and that’s still a lot of work that is yet to be done. He’s got $200 billion right now of a fortune to give away. Trey Lockerbie (11:05): You mentioned him sponsoring all of these endeavors over the years. That’s what I’m most blown away by because he’s somehow been able to fund this behemoth through a very low-margin, money-losing business, for most of the time. It’s at scale now, and he can change it in any way he wants. But it’s really antithetical to almost every playbook we’ve probably ever seen in our lifetime. Brad Stone (11:31): Well, I would say that they weren’t able to invest, despite being unprofitable, they looked unprofitable because they were investing. Even starting in 2005, probably after they really recover from the near catastrophe of the dot com bust, Amazon was always much more profitable than it looked. But it was building new fulfillment centers and new data centers and ultimately subsidizing shipping in the form of Prime. Every step of the way, when they could have flashed a larger net income and oppressed investors, and had a larger short-term bump in the stock price. Instead, they were investing. Brad Stone (12:11): I have this part in Amazon Unbound, where I’m quoting Steve Ballmer, I think it’s in late 2014, talking on the Charlie Rose show saying they’re not a real company, Charlie, they don’t make any money. A couple of weeks later, Amazon announces its first-quarter earnings in 2015, and they reveal the actual financials of AWS, and they show a profit, and the stock booms, and it’s the beginning of this rise to a trillion-dollar market cap. It didn’t just happen, but they started to reveal more about how they were operating the business. It always was profitable, and Bezos has just always been reinvesting and gambling and trying a lot of new things. Trey Lockerbie (12:51): Yeah, and is now nearing a $2 trillion company. The stock price has actually doubled since the trough of the pandemic breaking through just to its all-time high, way above its previous all-time high. I’m wondering, how much of this growth over that period through the pandemic will be sustained, now that the world is opening back up again, and maybe people might go back to old habits? Brad Stone (13:15): Look, there could be… I’m not going to, nor can I predict the next quarter, and certainly, I think what we just saw on Prime Day that seemed a little bit lackluster. It made me because people feel like they’ve stocked up on stuff during the pandemic, and they’re going to power back, they want to spend on experiences and not more crap for their homes. Brad Stone (13:34): But look, I actually think that most of the momentum will be preserved. Because, Amazon had this insane advantage, during the pandemic. People got more dependent on it, much of its competition had to shut its doors. When Amazon, the revenues rose, the profits rose, and as we just talked about, what do they do with that? Well, they build more Amazon, they build more fulfillment centers, closer to customers, they hire more delivery drivers, contract transportation companies, they bought more planes, they enabled more and faster Amazon. Brad Stone (14:05): That, say what you will about the fluctuation of people’s habits, but the fact that Amazon is now, because of the pandemic, in a position to offer more selection, faster Amazon Web Services, and faster delivery, they have actually extended or deepened their competitive moat. It’s now even harder. People have forged new habits during the pandemic. Online grocery ordering, at least in the US hadn’t really caught on before the pandemic, and now I would argue is probably a habit for a lot of household. Amazon, of course, is in a position to succeed. I think that actually, they come out of it looking stronger than ever and that a lot of their momentum can be preserved. Trey Lockerbie (14:47): Let’s talk about some of the wins and losses of Amazon. There are two stories especially fascinating in the book. One is the spectacular failure of the Fire Phone and the other was the massive success of Alexa, and we might touch on AWS, as you mentioned, as well. But let’s just start with the failure of the Fire Phone. What went wrong there? Brad Stone (15:08): Well, first of all, we can look back and say, was it really that much of a wound for Amazon? Bezos loves to bring it up. When he was inducted in the Smithsonian Portrait Gallery, this is where I start the book, his speech there, and he’s talking about, “How many of you own the Fire Phone?” Nobody does, and he talks about how his life has been built on failures. Brad Stone (15:28): The funny thing is, as embarrassing as that was, in 2014, when they took the write off, I feel like the Fire Phone has come to represent, for Amazon, at least, something positive, which is its tolerance for failure, its willingness to try new things, and how embarrassments can be way stations on the road to success. I think the Fire Phone when it failed, a lot of that energy went into Alexa. Brad Stone (15:50): If you want to go back to the details of that project, that was a Bezos idea of a 3D screen and some augmented reality and- Trey Lockerbie (15:58): Very Star Trekky. Brad Stone (16:00): Yeah. But it turns out that when you’re a billionaire, you’re not all that in touch with the needs of the common folk, particularly when it comes to everyday items. He was just wrong about that. Then it failed, and they took their lumps, and they moved on. Now, he was also the inventor in chief with Alexa. Again, he’s a science fiction fan, and he had this idea, he sent an email to his colleagues in 2010, and I have it in the book, we should build a $20 computer whose brains are in the cloud that’s completely controllable by your voice. Brad Stone (16:33): There was a number of things colliding there. He always has had a conviction that people will compute with their voices. Part of that probably goes back to his Star Trek love and because he’s a science fiction fan. He just had belief in that. Then seeing things like Google Voice, and probably Siri started to get good enough. Then a real confidence that Amazon had the tools like AWS, where you could put the brains of artificial intelligence in Amazon’s data centers, and then put an end device in people’s homes, and that device would be constantly upgraded, as you improve the computing capacity in Amazon’s data centers. Brad Stone (17:12): All his engineers told him, you can’t do it, we can’t recognize people’s commands from across a garage or kitchen. He said, “Doesn’t matter. Hire people, we’ll figure it out.” And they did. That is an example of where his instincts were right. But not just his instincts, but the ability of a founder to wield that kind of combination of inspiration and intimidation, to get people to do heroic things. Trey Lockerbie (17:35): These lumps, Jeff Bezos coming out on top is a big theme, I think, to take away from this book. You just mentioned that the Fire Phone is no exception. Even Alexa had its lumps. There was a period there where it was replaying back conversations, it was recording and sending it to colleagues at someone’s office. This is a PR disaster, this should have killed that product, probably. People don’t like knowing that some device is recording them all the time. How do we recover from that? Brad Stone (18:07): It’s a good question. There were other ones like at Bloomberg, where I work, we reported that Amazon had a small army of contract workers who were reviewing customer utterances to Alexa, not for any nefarious reason, but to make the device better. But that was not something that most Alexa users understood that you might have someone in Bangladesh or Mumbai or wherever listening, and inputting data from your commands. How did they survive it? Brad Stone (18:37): Look, for whatever reason, we as a society and as consumers have agreed to carry around smartphones with arrays of microphones and video cameras to put doorbells with video cameras outside our homes and all sorts of devices with cameras and screens and microphones inside our homes. It may be how Amazon survived it because people really don’t, in the end… We can wring our hands about privacy, but I’ve never been convinced that at least mainstream consumers make buying decisions about that privacy. Seems to be something that we compromise on when a device changes our lives in a positive way. Trey Lockerbie (19:19): One other element you uncover in the book is the actual person behind the voice of Alexa, and she was unknown to this point. How did you discover her? What led you to doing that? What was the reaction of exposing that so far? Brad Stone (19:35): Yeah. Trey, I’ll tell you what led me to doing that. You remember in the first book in The Everything Store when I identified Bezos’ biological father, who he hadn’t seen when he was two years old. The guy didn’t even know who his son had become. In this book, my natural thought was, well, who am I going to identify this time? Presumably, there are no more long-lost relatives. Brad Stone (19:58): I actually have put some thought into where are the secrets? Where would I be curious as a reader? I had remembered, yes, Siri, the voice of Siri had been identified many years ago, and she hadn’t even known that Apple was using her voice as the basis for Siri. I thought that’s interesting, I had assumed it was a synthetic voice. But the Siri revelation learned that okay, now these are voice actors or actresses, and the technology companies mix and match their voice to produce the answers. Brad Stone (20:29): The goal was, who was the voice of Alexa? I was scouring the voice-over community and the text-to-speech world and following the clues. Finally, I found a singer and voiceover actress named Nina Raleigh, from Boulder, Colorado. I went to her website and played some clips from her work, and I could tell right away, this was the voice of Alexa. Trey Lockerbie (20:54): I’m presuming that she knows she’s the voice of Alexa, unlike the Siri artist? Brad Stone (20:59): Yes. Well, I should say that when I reached her to explain my revelation to her, she wasn’t able to talk. But yes, I think that, unlike the Siri, and I’m completely blanking on her name right now, the voice of Siri, we can Google it. But that was a very unusual situation, where she had recorded something, I think for a company called ScanSoft, and then it was acquired. Then Siri, when it was a startup picked it up. Brad Stone (21:24): No, my impression from my reporting was that the voice of Alexa is not an employee of Amazon, but as a contractor who spends much of her time recording new things for the company. Trey Lockerbie (21:36): In talking about the team that was behind Alexa, one of the things you pointed out in your book that stood out to me, is this discrepancy or bifurcation of sorts of the Jeff Bezos profile where he is known as almost this tyrannical leader, but he seems to have the soft spot for these technologists who are working on these bigger projects. Brad Stone (21:58): Well, I think, yeah. In the first book, it’s really a picture of Bezos, almost a micromanager managing very closely all parts of the business. Of course, now, the company is so big that he can’t possibly distribute his time in an efficient way if he’s going to manage it like that. When I started to do this research, I was immediately struck by folks who I talked to in Amazon Web Services or retail, the marketplace, logistics, who said, maybe we talk to Jeff once or twice a year, but not only does he not have much to do with this business, but he can’t possibly even understand the complexity of it. Brad Stone (22:36): Then there were other businesses, the Amazon Studios folks, or Alexa or the Amazon Go folks, or even today, like some of the folks who work on the healthcare initiatives, who are like, yeah, we’ve met with them before launch, we were meeting with them every day, or three times a week. It made me realize how he operates, at a very high altitude, for the older businesses, with the capable deputies that have become really complex. Brad Stone (23:02): At a low altitude, close to the ground, watching over the details on the new thing. That’s actually why, Trey, when he says he’s going to become executive chairman, but still stay at the company and be involved in the new projects, I tend to think, it’s interesting, I wonder how much will really change because that is the way he’s been running the company. I do expect he’ll continue to be the loudest voice in the room, at least at the beginning. I do think he’ll probably withdraw even further over time. Trey Lockerbie (23:31): Let’s talk a little bit about that. Because you’re right, he did announce last year that he’s going to move on to be executive chairman, step away as CEO, and put Andy Jassy in his place there. Is the skeptic in some of the literature we’ve seen is that Andy Jassy is just a much more, maybe lovable, it’s not the right word, but at least, not as… You know what I’m saying, he’s a little bit more… Jeff, I would say, is getting a lot of time in the limelight, and maybe they’re just looking to have someone in the role who is a little less of that? Brad Stone (24:02): Here’s the way I think about it. He presents a humbler target for Amazon’s critics. When Bezos was sitting there talking to Congress, he’s talking not just as the CEO of Amazon, but as the wealthiest person in the world, a $200 billion fortune that epitomizes the grotesque problem of income inequality, particularly in the US, and he just can’t escape that. Brad Stone (24:26): Also, frankly, because he’s the architect of some of Amazon’s more heartless employment systems. There’s a lot of baggage. He’s been this tyrannical builder, with a tremendous record of success, but also a little bit of carnage in his wake. Jassy, first of all, AWS has none of the historic baggage, the problems in the fulfillment centers, and the transportation network. He can come to that with a fresh perspective. But he’s a humble guy. He doesn’t dress up, he’s not flashy, he’s not, as far as I know, flying around in a private jet, a family man. Brad Stone (25:05): Even though he’s extraordinarily wealthy, he’s not as explicitly conspicuously wealthy as Bezos is. I think actually in some weird way that might help Amazon, which has become this amazing target right now. It’s like the world almost is uniformly piling on, in the way that we have in the past on Facebook and a couple of years ago for Uber. I’m not saying it doesn’t deserve it. There are plenty of reasons to critique Amazon, and both of my books can be read as critiques. But I do think that maybe Bezos stepping away, at least visibly could end up helping the company. Trey Lockerbie (25:40): Yeah, in fact, there’s actually even a recent article in Insider stating that Amazon churns through employees so much that the executives there are starting to worry that they’ll be running out of people to hire. Even Bezos has been pretty notorious for not prioritizing employees’ pay. The $15 increase was material, especially outside the US. But Jeff has gone as far as to say that if they were in the best place to work a war, that they fail. Do you think the overall culture will improve under the leadership of Andy Jassy? Brad Stone (26:14): I think the reasonable critiques of Bezos was that the empathy gene was not pronounced. He’s a builder, he’s a long term thinker, he’s a creator, an inventor, but he was transactional when it came to the people around him and willing to churn through people, get the best out of them, and then discard them or have them move on and on to the next. Brad Stone (26:37): Bezos, I think has realized the limits of that philosophy now with a million employees, and has talked in his last shareholder letter about revising it. I think Jassy will come to a little bit of a clean slate. But I just want to say one thing, Trey, which is this worry that Amazon can run out of employees, I think it’s a strange thing to say, because Amazon has so many advantages, and one of them, it’s just a ridiculous amount of resources to tap into. Brad Stone (27:05): Of all the companies that are now struggling to staff up post-pandemic in a very tight labor situation. Amazon, if they’re really facing a challenge in some part of the country, they will be the first company to go from $15 to $17 an hour, to offer a signing bonus. Brad Stone (27:21): A lot of the things that I think have characterized Amazon as a challenging employer, the performance improvement plans, the firing workers for time off task, managing by algorithms, and firing a driver if they’re driving too fast or taking too many left turns. They can change all that tomorrow. I think that’s probably overdue. Brad Stone (27:46): But I do think, of all the companies that might have hiring problems, I would put Amazon at the bottom because they can raise their wage in a way that competitors, including other retailers, cannot and fast-food franchises. A lot of the things that are wrong with, I think the company’s relationship with employees can and should be fixed. There is another issue that maybe I’m neglecting here, which is the union issue. I do think that could be a threat to the company’s labor model, which is why they fight so hard against it. Trey Lockerbie (28:17): Talk to us about the S group. This is the senior leadership group at Amazon. It’s interesting to hear your perspective about maybe Jeff is stepping away, but not really. But I’m curious to know if a lot of this top talent that’s sitting in the S group right now, they’re obviously weighing out other opportunities all the time. As you just mentioned, Amazon has the ability to retain them. But with Jeff stepping away, do you think that that changed that dynamic at all? Brad Stone (28:44): Yeah, interesting. The leadership team, the S-team is like 25 people right now, at Amazon. It’s a more diverse group than it’s ever been. It was a bunch of white guys for a long time, and Amazon got the memo a little later than most companies. It’s an interesting group because I think it’s a little less technical than it has been in the past. There are only a few computer scientists in that group right now, and it’s very diversified. Brad Stone (29:11): I just wonder, you know, do the folks that are on that team representing HR or legal or the fashion group, even the folks in retail and devices, how much can they contribute to the big strategic decisions on AWS, and vice versa? The company’s become so diversified and complex, that may be the S-team in a weird way, is less of a useful body than it once was. Brad Stone (29:34): On some big company-wide issues, I’m sure it’s important. Navigating the pandemic, I think was important. But these businesses are so diverse and so complex now, that may be the consistency of the team is less important than it once was. Brad Stone (29:48): I don’t know but there’s one member of that team, Jeff Blackburn, who basically retired from the company. He was the head bizdev M&A guy, and he just came back to run Prime Video, Amazon’s content businesses. I don’t know, they’ve got a loyal bunch there. Sometimes you exist in the rarefied air of Amazon and your body acclimates to it. Even folks who leave, they end up coming back, because they found that, that way of working was particularly suited to them. Trey Lockerbie (30:18): Well, I love that you called out the awkwardness of Jeff being, as wealthy as he is, testifying in front of Congress. But I’m curious, is Jassy replacing Jeff, would that, in your opinion, prolong, maybe the ultimate breakup of Amazon’s monopoly that might be inevitable? I’m not sure saying you agree, but maybe you don’t agree. I’m curious, what’s your take on that? Brad Stone (30:41): Yeah. I think Jassy will do a better job. First of all, Congress will continue to ask for Bezos, and then they’ll give them Jassy, and that’ll be weird. In the same way that Sundar showing up is always a disappointment that it wasn’t Larry Page. But I think Jassy will do probably a better job than Bezos could ever do because of his stature. Brad Stone (31:02): But I don’t think it affects the timetable much. From my perspective, and I reserve the right to change my mind. But I don’t see an Amazon breakup as being plausible. I think that it’s not a monopoly in the way that we think of traditional monopolies like Standard Oil, or even Microsoft in the 1990s. These are massive industries, and breakups are long, complex legal proceedings that end up in court. There could be a political consensus today, but it doesn’t mean a judge is going to agree with it tomorrow. Brad Stone (31:40): I think the case isn’t that great. There are certain areas of Amazon conduct, the way it displays private label products in its search engine, or the most favored nation clauses that it has with marketplace sellers, where they can’t set lower prices elsewhere that are problematic. But Amazon could change… Again, like the problems with employees, it could change those tomorrow. I don’t know that it necessarily hurts its business all that much. Unless Amazon ends up willingly splitting up the company to unlock some shareholder value around AWS, I don’t see an easy line between what David Cellini and Lina Khan are saying today, and a forceful breakup of Amazon anytime in the near future. Trey Lockerbie (32:21): At the last Berkshire Hathaway meeting, Buffett’s keynote talked a lot about the last 30 years. He highlights that the top companies of the time, 30 years ago have fallen away or gone bankrupt for the most part. Bezos has actually echoed a similar sentiment to his employees, that eventually, even Amazon will go bankrupt. But Amazon is already coming up on the 30-year mark. In a lot of ways, it seems to just be getting started. It seems to have a very long runway to go. I’m curious how you see Amazon evolving over the next 30 years? Brad Stone (32:56): The protestations of doom that Bezos makes about being a day two company and the 30-year expiration date, I think, are motivational. There’s nothing in the near future… If anything, Amazon, the boulder is rolling faster downhill right now, and we’re going to see Amazon opening grocery stores and getting into health care and doing other things that if anything, just strengthen the frequency and relationship it has with customers. Brad Stone (33:21): I think he has actually set things up for sustained success, the challenges as you get so big, it’s impossible to satisfy all your constituencies. We’ve seen brands, for example, in Amazon retail, brands like Nike, go to other channels because they want to be there amid the chaos of the Amazon Marketplace. Brad Stone (33:42): For that reason, Shopify, a Canadian company has had extraordinary success catering to this one avenue of sellers of brands that Amazon isn’t really doing that great of a job of taking care of. I think as Amazon gets larger, it doesn’t necessarily slow down, but it creates opportunities for companies that are focused on specific opportunities. Brad Stone (34:03): That’s not existential for Amazon. If anything, it might be good for them. Because if I’m Amazon defending myself in court, I’m pointing to the success of Shopify, or Walmart, or Target and showing that there’s a lot of competition. Yeah, I think in terms of Amazon becoming a Sears or becoming a great A&P or the next retailer to fade, I don’t see it anytime soon. Trey Lockerbie (34:24): Well, I’m glad you brought up the grocery aspect because that’s one of the more intriguing projects that they have, especially this dual parallel growth of Whole Foods against Amazon Fresh and Amazon Go stores. What is the strategy? Why have two stores? Brad Stone (34:42): If we can look back to some Amazon acquisitions over the last decade and there’s a certain breed that stands out, Amazon buying Quidsi, the company that owned diapers.com, or Zappos and then Whole Foods. In the first case, it was buying to snuff out a competitor, but also to learn to understand the mechanics of a different difficult business. Brad Stone (35:08): I think that’s what they’ve done with Whole Foods. But there are some orthodoxies at Whole Foods, which won’t stock Diet Coke or Lay’s Potato Chips. Amazon is fine allowing the entrepreneurs to run these businesses. But the corporate compass at Amazon, really points in one direction, which is what do customers want? Even if it’s bad for her them, if it’s unhealthy, we’re going to give it to them. Brad Stone (35:32): The idea that Amazon would two-track it and start bringing out these Amazon Fresh grocery stores with lower prices and the wide selection seems really characteristic to me. But then the change is, they’re using technology as a lever to do something interesting in an area that hasn’t really evolved all that much since we’ve been alive. A supermarket’s been a supermarket, but Amazon wants to bring in these grocery carts that scan your items when you put them in, or the ghost store system with the cameras in the ceiling, so you can walk out without checking out. Brad Stone (36:05): I think that’s their main avenue for growth in grocery stores is Amazon Fresh supermarkets, where they can use technology to create a differentiated experience, and they can also set them up in such a way with large probably spaces in the back, warehouse-type spaces so that they can support order online, pick up at the curb or source from the shelves of the supermarket and drive to people’s homes. Trey Lockerbie (36:30): You got to admire the disruption from all angles. Amazon comes in, disrupts bookstores totally, makes them almost obsolete, and then says, oh, by the way, we’re going to come back and open up our own bookstores. They disrupt grocery by having home delivery, and now they’re going out there and saying, “Hey, you know what, we’ve actually reinvented the store as well.” You just have to admire that. Brad Stone (36:53): Well, those are different situations. I tell the story of the physical retail unit at Amazon, they hadn’t been having much success because they were trying to develop this technology to allow people to skip the checkout line, they just thought, let’s just launch a bookstore, we can experiment and we can use it as a showroom for devices. Brad Stone (37:12): I don’t know, there are probably like 20 Amazon bookstores, and I don’t see that as a major avenue for expansion. With the supermarkets, the grocery delivery before the pandemic wasn’t really succeeding all that much. and they realized, people want to see the bananas. A lot of people just aren’t going to get grocery delivery, they want to walk into stores, and then there are all sorts of things you can do. You can see what they buy, and then send that to them every other week. I think that’s this omnichannel approach is the future for grocery delivery. Trey Lockerbie (37:43): One thing I hadn’t realized was that Amazon was almost the white knight for Whole Foods at the time of acquisition. Brad Stone (37:51): Yeah, they were probably days away from getting sucked into like an Albertsons, and probably, which would have vanquished The Whole Foods brand. There were all sorts of activist investors and the activists had a good point. Whole Foods hadn’t grown in many years, and the financials look bad, and the stores were a patchwork of technology systems. Brad Stone (38:09): John Mackey had somebody call up Amazon, which was at this moment desperately wanting to learn about the supermarket business. Trey Lockerbie (38:18): There’s a quote in your book where Amazon is starting to infiltrate into the Indian market, and Bezos tells his team that he doesn’t need more computer engineers, he needs Cowboys. What did you take away from that quote? Brad Stone (38:34): Essentially, what he was saying, this was during one of their planning meetings, they call them OP1s. I think, in 2014, and they brought him basically a set of very conservative projections for how they might grow and market themselves in India. He wanted them to not be constrained by conservative estimates, but to be on the frontier, try a lot of new things, spend as much as they wanted, let him figure out where the limits were. Brad Stone (39:04): There’s something about being cowboys on the frontier, the kind of chaos and problem solving, and improvisation. What did I take away from it? I think when you’re a CEO at that level, and you manage so much, you need to find really crisp ways to convey your expectations. Bezos seems to have a talent for that, and he really was able to motivate the set of early employees there, to be innovative, to give it their all, to not be conservative and hamstring themselves, just with that one saying. They all remembered it. Brad Stone (39:36): It became also a company culture touchpoint in India, where they would have all-hands meetings and dress up as cowboys. Trey Lockerbie (39:44): They’d be wearing cowboy hats. Brad Stone (39:45): Yeah, exactly. Bezos, I think he’s very effective in doing that; finding ways to crystallize what he’s thinking and to do it in a way that motivates his people. That’s probably late-stage Bezos. Early-stage Bezos might have just chewed him out. Trey Lockerbie (40:01): Good point. You do dig into the personal drama that Jeff Bezos experienced, especially in the last few years. There’s an affair. There’s a divorce, there’s tabloid drama. This is an investing podcast. So, I don’t want to dig into the tabloid drama. What I’m trying to frame up here is how Bezos ultimately again, comes out on top because I think it just speaks to his strategic mind maybe, you can call it brilliance, I don’t really know. But yet again, it’s another example. Brad Stone (40:33): There’s a tolerance for embarrassment there. Most billionaires when confronted by a tabloid with hard evidence of their extramarital affair, would probably just curl up in a fetal position and declare defeat, try to move on. Bezos, he did a couple of things. He turned the tables by writing about and sharing their emails to him. It’s really probably a left turn to go into what they were fighting about at the time. But people can read the chapter in my book if they’re interested. Brad Stone (41:03): But the other thing he did is he was a little disingenuous in how he positioned it. Well, you can look at it as disingenuous or you can look at it as genius, a masterstroke. He suggested that the enquirers, motivations might be tied up with its well-known affiliation with Donald Trump, and in the very clear enmity that the government of Saudi Arabia had for him because of his ownership of the Washington Post. Brad Stone (41:27): None of those really had anything to do, or at least not much to do with the reason why the enquirer was running that story. They were running the story because they had a scoop about the wealthiest guy in the world having an affair. But he managed to manipulate the media in such a way as to really casting sympathy to his own side. Brad Stone (41:46): He came out as you said, he won again. Look, he understands the media very well, he’s got a great strategic mind, and he does tend to think outside the box when it comes to media entanglement. We were talking about the one-star reviews for The Everything Store. I view the one-star reviews and the medium posts as the same tool in his toolkit. When confronted with a critic or situation, he tends to think outside the box and to do something that’s totally unanticipated. That’s what he did with that medium post. Trey Lockerbie (42:19): It’s fascinating. You’ve written out two books on Amazon, and learned, probably more than most people, through this process about the species that is Amazon, the species that is Jeff Bezos. While I was reading it, I kept thinking back to the story of when Bill Gates and Warren Buffett met for the first time. Gates’ father apparently asked them, in one word, what would you say most attributes to your success? Both of them answered with the word focus. Trey Lockerbie (42:51): Bezos has been able to grow multiple billion-dollar empires using this Amazon platform. But also he’s running now Blue Origin and the Wall Street Journal. He has somehow balanced that kind of innovation, and distractions, I guess you would say with a certain amount of focus. I’m just baffled by it, quite honestly. I’m just curious, after everything you studied and researched on Bezos and Amazon, what is your biggest takeaway? What is Jeff’s superpower in all of this? Brad Stone (43:23): I think focus is a great one, I don’t know if it’s the most important one. But this is a trade that Jassy has too, and probably all the top Amazon executives have, the ability to sit in meetings for 10 hours, and every meeting starts with the reading of a six-page document that’s chalked full of dense numbers and technical terms and business strategies, and to focus on that and focus on the discussion and then to phase shift into the next topic, in the next meeting, which might have nothing to do with the previous one. Brad Stone (43:54): Imagine the life of Bezos, you might go from a presentation on Alexa to a presentation on grocery stores to a potential acquisition, to something on the ad strategy. Then you’re interviewing a senior executive, and then you’re in the AWS in the afternoon. It’s like, but his ability to focus and do topic shifts, I think is… And to go deep, and to remain focused. Brad Stone (44:17): Look, I’m like the rest of the folks, I’m an attention deficit disorder these days, times 10, and can’t do anything for 30 seconds without checking Twitter. That I’ve managed to somehow make it work, I guess. But I get the sense that Bezos has the ability to blot out distraction, and to not just focus but to do it for long periods of time across a lot of different topics, is a superpower. Trey Lockerbie (44:44): You mentioned earlier in the show that you think that one of the biggest things we’ll remember about Jeff Bezos is his philanthropic efforts, and they are still very nascent in some ways, given his wealth and what he’s accumulated. What has been your take on his efforts to date? Where is he focusing those efforts mostly? Brad Stone (45:03): I’m not going to overstate it. As much as I want to be optimistic, I feel like he still has a lot to prove that his legacy will be evaluated, in part, by how he conducts his philanthropy. I know that with the Bezos Earth Fund, the $10 billion to fight climate change, he spent a lot of time trying to find worthy recipients. So far, he’s contributed to a lot of well-known climate organizations. Brad Stone (45:27): My hope is that he applies his inventiveness and his creativity to the problem of climate change, and doesn’t just distribute money from afar. But I think, look, most of that energy, at least now seems to be going to Blue Origin. To me, I’m as much of a space aficionado as the next guy, but they’ve got a lot to prove there in terms of benefits to humanity, long-term vision, and to make this seem like anything other than a rich guys hobby. Brad Stone (45:54): SpaceX has built a successful orbital business, Amazon has been trying to do it for 10 years and has nothing to show for it, and in a couple of weeks, Bezos will go to the edge of space, he’s spending a lot of money to build what could be at best, an unprofitable tourism business. He still has a lot to approve there, and yet, that’s where he’s spending probably the most of his time and his resources. Trey Lockerbie (46:16): All right, Brad. Well, if I have to ask, this is the sequel, this is the Empire Strikes Back. Is there a Return of the Jedi coming? Is there a third book on Amazon in the works? Brad Stone (46:27): I suppose in 10 years if I reflect back in the same way that I did at the beginning of this book, and it seemed like there was another chapter, and it was because Bezos had done extraordinary things in space or with philanthropy, and the Amazon story had remained interesting and dynamic. I guess I could see it. At this point, I’m ready to think about something else, I have to say. Brad Stone (46:50): As interesting as the Amazon story is, after two books, it’s a lot of time thinking about one company and one guy. But I do feel like this is one of the most, if not the most important story of our age, and it’s not just about a company, entrepreneurship, but about the contract that we have with blue-collar workers and the geography of our cities and Main Street and economic opportunities. It ramps up a lot of the things that I’m interested in. It’ll be interesting. Brad Stone (47:19): I’m going to be watching, obviously. The best part of my day job at Bloomberg, is I get to stay pretty close to it, regardless. It’ll be interesting to watch, particularly once Bezos steps aside. Trey Lockerbie (47:30): Well, Brad, I really enjoyed the book. I can’t recommend it highly enough. It is a masterclass on so many topics, as you just highlighted there. It’s fascinating in so many ways. I really look forward to reading more from you down the road. Thank you again for being so generous with your time and coming back on the show, and talking to us about Jeff Bezos and Amazon. I hope we get to do it again soon. Brad Stone (47:53): Thank you, Trey. Trey Lockerbie (47:54): All right, you beautiful people. That is all we had for you today. If you’re loving the show, please go ahead and follow us on your favorite podcast app and leave us a review. We’re loving the feedback, it helps make the show better. You can also just get in touch with me over Twitter @TreyLockerbie, or go to asktheinvestors.com and ask a question that will actually play on the show. For doing so, we’ll reward you with a free course on our website. With that, we’ll see you again next time. Outro (48:22): Thank you for listening to TIP. Make sure to subscribe to Millennial Investing by The Investor’s Podcast Network and learn how to achieve financial independence. 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