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Conquering Earth to reach the moon

Govindraj Ethiraj 

Brad Stone
Bantam Books

371 pages; Rs 461

Most successful entrepreneurs have managed not to stray from their primary vision. Jeff Bezos is no exception. From the time he founded Amazon in 1994 with $10,000 of his own cash, he stuck to a single belief. It was that the web had the power to fundamentally change the landscape for companies and customers.

Like most entrepreneurs, he faced scepticism and disbelief. Like Howard Schultz, CEO of Starbucks, another Seattle start-up, who had told Bezos in an early meeting, "You have no physical presence. That's going to hold you back." Bezos' response to Schultz: "We are going to take this thing to the moon". The two companies had explored a strategic alliance that fell through because Starbucks wanted a greater share in Amazon's stock than the latter was willing to part with.

During a presentation to Harvard Business School students in 1997, a student told him: "You seem like a really nice guy...but you really need to sell to Barnes & Noble and get out now." Bezos' response: "I think you might be underestimating the degree to which established bricks-and-mortar business, or any company that might be used to doing things a certain way, will find it hard to be nimble or to focus attention on a new channel. I guess we'll see." What happened then is what technology writer Brad Stone captures in The Everything Store, the Amazon story from start to now, with all the failures and missteps in between. The latter, incidentally, are worth reading with equal attention as Bezos' successes.

And the key Bezosisms; on being the most customer-friendly store in terms of ease of transactions with the best prices on any product. And all the technology and sweat that went into it. Working with the smartest team willing to toil in dreary Seattle in the most frugal work environment at sub-industry compensation levels. And to top it all, a ban on PowerPoint presentations, only written notes, styled like press releases.

Amazon had a classic start, in the garage of Bezos' family home. Several names were tossed around at the beginning. They ranged from (it still leads to Amazon) to Cadabra Inc, which folks tended to hear as cadaver, not a very pleasant association for a book store, even if it is online. One day Bezos pored through the A section of the dictionary and decided it would be Amazon: Earth's largest river; Earth's largest bookstore. There was a small number of believers in the house. Programming was done on a bunch of Sun Microsystems servers which drew so much power that they reportedly blew fuses. The site went live in July 1995. The internet adopters were the first to weigh in. They ordered computer manuals, Dilbert comic collections guides. First week orders were $12,000 and second week were $14,000.

Bezos wasn't the first to think of an online store, just as Steve Jobs wasn't the first to think of a MP3 player. But as it grew, Amazon began swinging away from the crowd. In two months, the website had a reviews feature that allowed users to trash they didn't like. A book publisher complained, saying Amazon's business was to sell and not to trash them. Bezos said, "We saw things differently. We don't make money when we sell things. We make money when we help customers make purchase decisions."

The hard focus on customers also led Amazon to create a marketplace - partly in response to eBay - where it would no longer fret about owning and storing all the stock but merely act as a platform to bring buyers and sellers together. And then on to creating Kindle, bringing the powerful forces of digitisation to bear on books, much the same way Steve Jobs had done with music and the iPod. And much later, the web services business, also thanks to an incessant urge to be seen as a technology company.

Bezos believed in hiring the best and the brightest, personally interviewing all candidates for years. He even asked them for their SSAT scores.

As did his desire to be frugal: "We try not to spend money on things that don't matter to customers. Frugality breeds resourcefulness, self-sufficiency and invention." This desire also caused people to leave en masse to the likes of Google which held out exciting work environments and, of course, compensations.

His frugality didn't necessarily win accolades on Wall Street. Because Amazon was an incessant borrower of capital. The early 1990s saw several and much-publicised run-ins with analysts. Notable amongst them was Indian-origin bond analyst, Ravi Suria, who ripped into Amazon's balance sheet saying it was overleveraged and would run out of money. Eventually, Suria was proved wrong. But his piercing analysis might have helped too.

Last week, Amazon announced it would ship parcels using drones, a move that came in for expected ridicule. But Bezos' ambitions have been audacious.

His high school girlfriend Ursula Werner summed up his ambitions once. "The reason he's earning so much money," she told journalists in the 1990s, "is to get to outer space". Right now, he's perhaps figuring what to do with an old media business like Washington Post which he acquired for $250 million. Cracking this would be a feat of similar proportions, some might feel.

First Published: Wed, December 04 2013. 21:40 IST