Brian Dumaine - How Amazon Is Changing Our Lives and What the Worlds Best Companies Are Learning from It

For Caroline

In the early days of Amazon, Jeff Bezos held biannual all-hands meetings for his employees at a small movie theater across the street from the companys old downtown Seattle headquarters. Since then Amazon has grown, and the all-hands meeting that Bezos called in the spring of 2017 was held at the citys KeyArena, a sports center on the site of the 1962 Worlds Fair, which holds 17,459 people. On that day, the place was packed. The last question Bezos took from the audience was: What does Day 2 look like? The question got a laugh from the crowd, because Amazonians are programmed to think in terms of Day 1 from the first minute they start working at the company. In Bezoss lexicon, Day 1 means that Amazon will always act as a start-upevery day has to be as intense and fevered as the first day of running a new business. Even the downtown Seattle high-rise where Bezos has his office is named Day 1.

Dressed in a white-collared shirt and gray jeans, Amazons founder, letting out one of his explosive signature guffaws, said: I know how to answer this. Day 2 is (and then he took a long pause) stasis. After another long pause, he continued: Followed by irrelevance (pause), followed by excruciating, painful decline (pause), followed by death. Bezos smiled, and the crowd broke into laughter and applause as he walked off the stage. Their leader had articulated what these employees knew in their gut: that Amazon may be a gigantic tech company, but its a very different kind of company, a place where intensity and drive are expected and where complacency is strictly taboo.

Despite his massive success so far, Bezos really does run his corporation, which was worth $1 trillion as of 2018 (at the time more than any other company in the world), as if it were a small business whose very existence is threatened daily. At another all-hands meeting in November of 2018, in response to an employee question about big companies like Sears going bankrupt, Bezos rattled the crowd by saying: Amazon is not too big to fail. In fact, I predict one day Amazon will fail. Amazon will go bankrupt. If you look at large companies, their life spans tend to be thirty-plus years, not a hundred-plus years. At the time he made that comment, Amazon was twenty-four years old.

Why would Bezos talk to his troops about the demise of Amazon? Perhaps he didnt want to jinx all the good luck the company had experienced by sounding smug and invincible. Perhaps he worried that some huge competitor such as Walmart or Alibaba would figure out Amazons magic and take the company by surprise. Theres some truth in both of those things, but at heart Bezos fears most that Amazon will succumb to what is known as big-company disease, where employees focus on each other instead of on their customers, and where navigating a bureaucracy becomes more important than solving problems.

At his all-hands meetings, Bezos was making a heartfelt plea to his employees not to bask in Amazons success but to work even harder to invent new products and services that please customers, thereby delaying that day of reckoning for as long as possible. The best way to make customers happy, in Bezoss playbook, is to make living their lives cheaper and easier. As Bezos put it: Its impossible to imagine a future ten years from now where a customer comes up and says, Jeff, I love Amazon; I just wish the prices were a little higher. Or, I love Amazon; I just wish youd deliver a little slower. Impossible.

This is textbook Bezos. Hes a hard-driving leader and unconventional thinkerimagine the CEO of GM or IBM talking about bankruptcy without panicking the troops or triggering a run on its stock. In many ways, Amazon is Amazon because Bezos built a culture in which everything is questioned, and nothing is taken for grantednot even the very existence of the companyand everyone must focus on the customer because all else flows from that. As Bezos put it in Brad Stones 2013 book, The Everything Store, which adeptly tells the origin story of the company: If you want to get to the truth about what makes us different, its this: We are genuinely customer-centric, we are genuinely long-term oriented, and we genuinely like to invent. Most companies are not those things. They are focused on the competitor, rather than the customer. They want to work on things that will pay dividends in two or three years, and if they dont work in two or three years, they will move on to something else. And they prefer to be close followers rather than inventors because its safer. So if you want to capture the truth about Amazon, that is why we are different. Very few companies have all of those three elements.

All this might sound like trite management-speak, but Bezos is one in a billiona leader who stands apart from other business titans because he figured out how to use his high IQ, combative style, and boundless energy to build a culture at Amazon that really does care about the customer. He chastises executives who worry more about the competition than the customer. When he sees an email from an unhappy customer, he forwards it to the appropriate executive with a simple ? This sets off an alarm bell in the mind of the poor soul receiving the message, a Pavlovian response that makes that person drop everything and solve that problem for the customernow. Of the scores of Amazon employees, both current and former, whom I interviewed for this book, all at some point mentioned the line Everything starts with the customer, as if their brains had been hardwired by one of the companys ace computer scientists.

Yet, as I dug deeper while researching this book, I became dissatisfied with the Everything flows from the customer mantra. Yes, it helped explain Amazons success, but it was far from the whole story. I wanted to find the answer to the question: What does Amazon really want? After spending two years on research and interviewing more than a hundred sources, including many of the companys top executives, I came to this conclusion: Amazon wants to be the smartest company the world has ever seen.

A lot of businesses do smart things all the time, but Bezos has built a company that runs largely on big data and artificial intelligence. A lot of hype surrounds AI, but in essence, this entrepreneur has created one of the first and most sophisticated AI-driven business model in history, one that gets smarter and bigger on its own. Increasingly, the algorithms are running the company. The algorithms are becoming the company.

Bezos has designed Amazon to spin like a flywheela term Amazonians use religiously. Less a formula and more a high-tech perpetual-motion machine for growth, the flywheel paradigm is deeply embedded in Amazons culture. Picture a three-ton stone wheel resting on a suspended axle. Getting it moving is tough. The trick is to apply enough energy day in and day out to get the flywheel spinning faster and faster until it keeps moving on its own. When Amazon offers perks to its Prime members, such as free one- or two-day shipping, free Amazon TV shows, or a discount at Whole Foods, it brings more customers to its site. More customers attract more third-party sellers to Amazon.com because they want to reach this large pool of potential customers. (Today, independent, third-party sellers account for more than half of all the products sold on Amazon. The company sells the rest directly to consumers.) Attracting more sellers increases Amazons revenues and creates more economies of scale that allow it to lower prices on its site and offer more benefits. That attracts more customers to Amazon.com, and that brings more sellers, and the flywheel keeps turning faster and faster and faster.