Hello and welcome to the brand new year 2019! I hope the new year is treating you well so far. One of my 2019 resolutions is to read more books, so I thought why not start the year with a book review? Y’all ready? Let’s start!
If you are reading this post, it means you have access to internet. If so, chances are you have purchased something online at least once. And if you have, there is no way that you have not heard about the internet behemoth, Amazon. Built from scratch by Jeff Bezos, Amazon is the superstar of online marketplace, and The Everything Store is a lovely narrative that captures that journey.
Personally, I have been a huge Amazon fan, and I almost exclusively buy things on Amazon, even though Flipkart in India is not doing too bad. Why do I choose Amazon? Because most often than not, Amazon has the thing that I need, and it has a competitive prices. Plus, I can’t remember even one scenario since I started shopping online when I have received a product from Amazon late or not in the shape that I expected it to. Customer service is prompt and polite, and you feel like you are dealing with people who care for your concerns. So, I was more than a little excited to understand Amazon’s journey through this book.
The name of the book is depiction of Jeff Bezos’s vision for Amazon: to be that store where you can get anything that you want, so much so that, there was a time that he wanted at least one copy of every book that has been printed on Earth in Amazon’s catalog. That, coupled with the conviction of being a customer-centric company, is what makes Amazon what it is. And this book depicts Jeff Bezos’ never-ending dream of doing what is best for the customer: giving him what he needs at the least price that’s practically possible. To do that, he has not only gone to the extent of upsetting his board of directors, but also the Wall Street and more often than not, Amazon employees themselves.
Amazon’s journey can probably be divided into two parts: The Journey of a Fledgling Internet Company and The Journey of a Behemoth. The journeys may definitely have differently evolved, but at the core of it, Amazon’s guiding principles have remained the same throughout the years.
The Journey of a Fledgling Internet Company
Jeff Bezos, as depicted in the book, was nothing short of a child prodigy. He was focused and determined, and ended up working a good job at the hedge fund, DE Shaw. He also saw an early opportunity in the internet and bet on it, and like a lot of Silicon Valley startups. started Amazon in his garage. The challenges he faced were similar to an early start up, but he also managed to entice investors and raise initial capital for it. There were two stories from this period which helped me understand the fundamentals of Amazon.
One was the story of Toys ‘R’ Us and how Amazon embraced the very seasonal toy business. The toy industry runs on trends. What is in fashion on Christmas becomes useless once the new year starts. Knowing that, Bezos confidently got his executives to channel millions of dollars into the the toy inventory, saying that he would personally drive the remainders away in his truck if they did not sell. And Amazon did end up losing millions in that deal that year (probably 1999 or 2000), upwards of ~$30M if my memory serves me right. But in that effort, Bezos showed that he was willing to take chances that could mean huge financial losses, but he was all in. This is a key lesson for entrepreneurs: the stomach to take risks.
Similarly, during the period when analysts predicted fall of Amazon in the early 2000s, at the heart of the dot com bubble burst, and the stocks kept falling like a self-fulfilling prophecy, Bezos stood his ground and told his employees that when the stock rises by x times you don’t feel x times smarter, so there is no reason why you should feel dumber when the stock plunges. Here was a man who was thinking long term, and was able to steer his company through tough times to favorable grounds.
In this period, you cannot but admire the man behind the driving wheel, in spite of all the stories of his temper tantrums and poor treatment of his senior execs.
The Journey of a Behemoth
As Amazon grew from a toddler to a giant, it started doing business in a ruthless manner: cutting down prices that manufacturers and sellers could not sustain, forcing them to negotiation by removing their stock from Amazon and digging a hole in their balance sheet, and practically driving smaller startups to buyout. Meanwhile, Amazon bots constantly hunt for the lowest price on the internet, and provides the same or lower to customers, even if it means losing millions.
One story from this period is of Diapers.com, a startup selling diapers and other baby products. As Diapers.com started doing good business, they were on Amazon’s radar, and Amazon started wooing them for a buyout. When they would not agree, Amazon priced the diapers 30% less than Diapers.com, and after a while, during which they put up a great fight, the young startup had to give in. Similar was the story of Zappos.com. From that book, we learn that there is a dedicated team in Amazon which looks out for rising stars like Zappos or Diapers.com, and goes mercenary style in its acquisitions.
This is the period when you fear Amazon. This is the period when you question the ethics which guides the company. This is the period which reminds us that business in itself is a jungle, and that the Darwinian theory of survival of the fittest definitely holds true. Yet, to a large extent, as readers of the book or Amazon customers, we tend to forgive the giant because at the heart of it, they believe that customer is king, and that all inefficiencies from the supply chain must be eliminated so that the best prices can be delivered to customers. In that way, Amazon is almost a saint.
I believe the true assessment of this giant will happen in the years to come. I believe Amazon has a long way to go, especially in developing nations when internet penetration is increasingly gradually. And in the process, it will evolve too as a company, hopefully in the right direction. And while today it seems strange that some other company may overpower Amazon, history has taught us it is possible. So, I’ll be on the lookout to see how someone takes on this giant and emerges on the other side, victorious.
The Everything Store is definitely a well-researched book. The best part is, it is impartial in its approach: while this book makes you cringe at the prospect of working at Amazon, you also learn that there are some amazing things happening, and you can’t but be in awe of that. To keep a balance between that is not easy, and the depth of the research is simply commendable.
If any of you is interested in biographies of people and companies, you should definitely give this book a try!
That’s it for today! Watch this space for more updates, as we proceed into the new year. See you guys very soon!