The Bezos’s were there, with 17,000 others, to watch the Dota2 International championship, at which video gamers battled it out for an $18m prize. The whole thing was streamed to hundreds of thousands of Dota2 fans on the internet, via Twitch.TV.
“eSports has become a big thing. There were many, many thousands watching live…and it was really quite amazing,” says Bezos.
“I’m a consumer of media of all kinds. But that kind of media is a whole new segment that is very exciting.”
We can be pretty sure Bezos knows what he’s talking about; the founder and chief executive of Amazon is single-handedly responsible for changing the way the world accesses and consumes media.
From the humble origins selling books over the internet, to the plethora of products the company has on offer today – everything from its yet-to-be-sold-in-the-UK voice-activated Echo device, which provides information and controls light switches, to Amazon Fire TV, which now has over 2,000 channels – Amazon has been at the forefront of technological invention for the past two decades.
“Starting with customers, working backwards – that’s the kind of thing that has become a habit at Amazon,” says Bezos, when asked how the company remains innovative despite its size – having grown from three employees to in excess of 150,000 staff around the world, including 9,000 in the UK.
“We also have an eagerness to invent that is a deep part of our culture, as is a willingness to think long term. We can work on things that don’t need to work for five, six, seven years…there aren’t many companies willing to take that kind of time horizon.
“And then finally a culture of operational excellence, and I mean that in the sense that Toyota might mean it. Finding defects, doing root cause analysis, working to fix things – that kind of operational excellence has also become a big part of who we are.”
“So when you apply those four things [trust, invention, investment, and operational excellence] they work in a lot of different parts of our business.”
Back to the start
Hanging on the wall of the lobby of ‘Day One North’, a glass covered low-rise office building in the middle of Seattle’s growing South Lake Union technology district, is a piece of art by American artist Keith Haring called “Double Retrospect”. It is a 32,000 piece jigsaw made up of multi-coloured characters doing quirky things.
A small plaque to the left of the piece reads: “It makes total sense that the world’s largest store has the world’s largest puzzle.”
Day One? The building got it’s name from the Bezos’s insistence that it is still Day One of the internet. North? Because there’s also a South, just opposite, obviously.
It is one of 20 buildings in the Amazon campus – all with equally intriguing names, from Wainwright, the surname of the first customer, to Fiona, the original code-name for Kindle – that house the internet giant’s 20,000 or so Seattle staff.
It is all a far cry from the small garage, across Lake Washington in suburban Bellevue, from which the then 31-year-old Bezos, his wife and first employee Shel Kaphan began the business.
Twenty years after Amazon delivered its first book – the business began in 1994 as Cadabra but only became Amazon a year later after a lawyer misheard its original name as Cadaver – Bezos is sitting in a non-descript meeting room on the fourth floor of Day One North, wearing a trademark button-down blue checked shirt, and jeans, playing with a coffee cup.
“Twenty years? Isn’t that amazing,” he beams. “In some ways it seems as if it all just happened yesterday, and in some ways it seems like 100 years.”
The company started out as a business plan, written by Bezos while still at D. E. Shaw, the Wall Street hedge fund. On the back of the plan he raised $300,000 (£191,747) and headed west with MacKenzie to start their new adventure.
“The original Amazon plan was focused exclusively on books, and I expected the company to grow slowly over a large number of years. But it actually grew very quickly right from the beginning.”
“These are very humble roots I can assure you,” he smiles. “I drove the packages to the Post Office in my Chevy Blazer.”
But grow it did, from books to music to everything that can be delivered, Amazon developed from an online retailer into a multi-faceted business with offerings as varied as its cloud computing arm, AWS, and its original television production arm.
The company is now worth in excess of $245bn, and generated an unexpected profit of $92m on sales of $23.2bn in the second three months of this year. The profit was a rarity in Amazon earnings releases; Bezos prefers to reinvest earnings rather than return them to shareholders.
At the company’s heart over those past two decades, whether it has been going up against book retailers or publishers or even other technology giants such as eBay, appears to have been one concept: disruption.
But Bezos doesn’t wholly agree. “Disruption is a consequence of customers liking the new way. Maybe it’s just a mind-set…but a better mind set, and one that we use, is: How do you delight customers?
“We don’t seek to disrupt, we seek to delight. If you invent something completely new and radical and customers don’t care about it, it’s not disruptive. Radical invention is only disruptive if customers love it.”
Over its relatively young life, Amazon has had its fair share of failures, from its $175m investment in daily deal site LivingSocial to the Amazon Fire phone. But they have been more than outweighed by its successes. “Our three most durable inventions at this point – and we’re of course always looking for more – are Prime, Marketplace and AWS,” he says.
Prime is its membership club: in exchange for an annual fee customers get access to the most up-to-date services Amazon has to offer – from one hour delivery in certain cities to original programmes such as Ripper Street, rescued after being dropped by the BBC, and music streaming and Kindle book borrowing.
Marketplace allows anyone, from an individual to major companies, to sell products on the Amazon platform, and, thanks to recent innovations, even have the products delivered by Amazon, opening up export markets and international sales.
AWS – or Amazon Web Services to give it its full name – is the company’s business-focused cloud computing platform whose customers include Pinterest, AirBnB and Just-Eat.
There has been speculation among investors that AWS may be spun off at some point, but Bezos guides against that, saying: “I think that would be a big distraction and really there would be very little benefit from it.”
Although Amazon doesn’t strip out financial results for the first two – it only began separating numbers for AWS earlier this year – it is clear each plays its part in delivering the company’s numbers.
“I’m hopeful we might find a fourth over time, we have many things in the pipeline. But I would say those three are at the top of the list of the things we’ve created over the last 20 years that have a good chance, as long as we continue to work hard, of being here ten years from now, 20 years from now.”
Bezos insists each of the three is as innovative as the next, but acknowledges that it is Prime which is front and centre of most consumers’ minds.
“Prime is one that hundreds of millions of consumers know about. I think it’s the most important.”
The price – £79 for a year in the UK – has causes some to describe Prime as a loss-leader. “I don’t really think of it in that way – I think of it as a single piece.”
But does he admit that there are a lot of new products being funded out of Prime? “The same was true when we launched it ten years ago. There’s a sense that Prime is an all you can eat buffet – and of course when you have an all you can eat buffet, the heavy eaters turn up first. So it’s very common for something like this to be in an investment phase for a certain period of time.” In other words, it’s a loss-leader.
Prime’s profile in the UK was boosted last month with the announcement that Jeremy Clarkson, Richard Hammond and James May will present a new car show via Amazon Prime from next year.
Bezos doesn’t say if he’s met the trio, but will admit he’s “very excited” about the concept. He also won’t discuss how much the three men are making from the deal, but does admit the show will be “very, very, very expensive,” for Amazon. “They’re worth a lot and they know it.”
Asked if the new programme will come to define Prime, Bezos says: “It can’t just be one show, it has to be a number of things. We have a lot of things in the pipeline, which I think viewers in the UK and around the world are going to love. And I think Clarkson’s new show is going to be one of those.
“I think we’re in a golden age of television, so if you go back in time even just five years, you couldn’t get A-list talent to do TV serials, or, if you could, it was a rare thing. But that’s flipped completely.”
Bezos points to Amazon’s investment in series such as comedy drama Transparent, for which lead actor Jeffrey Tambor won a Golden Globe, as the main reason for the transformation.
“The investment is very high now in serialised TV, and the amount of time you have to tell a story is much greater. That format change opens up a lot of storytelling possibilities, which, when mixed with the movie-like production standards, and the A-list talent, is why we’re seeing amazing television.”
Two pizzas, many ideas
But Clarkson and co. are far from the only new innovation Bezos is backing. As the company seeks to find a fourth important buisness line, small teams – Amazon has a two pizza rule, which stipulates that no meeting should involve more people than could be fed by two pizzas – are working on the next big bet.
One of these is drone delivery, first flagged by Bezos 18 months ago in an interview with American broadcaster Charlie Rose.
The drones, or Prime Air to give the project its official name, are being worked on in a number of research centres including one in Cambridge (in the UK, not Massachusetts).
“One day Prime Air deliveries will be as common as seeing a mail truck,” says Bezos. “The technical problems are very straight ahead. The biggest issue, or the biggest thing that needs to be worked on, is the regulatory side.”
Although tight-lipped about which country the service will launch in first, Bezos hints strongly that the UK is near the front of the pack. “What I would say is that in the scheme of things the UK regulatory agencies have been very advanced. The FAA [the US aviation regulator] is catching up a little here in the US, but the UK has been, I’d say, a very encouraging example of good regulation. I think we like what we see there.”
On timing, Bezos admits it is hard to call – “months sounds way too aggressive to me, so the timescale is measured in years.
“But it will happen,” he adds defiantly.
He is more tight-lipped on the likelihood of whether Amazon Fresh – the company’s fresh food delivery service – will make it to the UK. Despite suggestions a trial could begin in Hackney, central London, before the end of this year, Bezos won’t comment other than to point to its success in Seattle and seven other American cities, and to suggest we “stay tuned on the UK”.
He is somewhat more open as to the possibility of more physical Amazon stores, following on from the hype generated by its first ‘pop up’ store in Manhattan last Christmas. Bezos points to the small number of college bookstores it has opened in the US since the start of the year as a possible way forward. Each is essentially a delivery portal on campus, with Amazon staff to help consult on set texts and syllabuses.
“Physical stores have obviously been around for hundreds of years. And the companies that are experts at them are very good at their businesses. So I think it’s an area where we need to be very humble.
“If Amazon were to do physical stores we’d need to have something that’s a little different.”
Working in the future
Given his rather considered management quirks – he doesn’t allow PowerPoint presentations as he believes bullet points don’t convey quality information, and rotates senior managers as his ‘shadow’ every 12 to 18 months to create “ambassadors” around the business who can “model” his thinking – Bezos is a little less considered when it comes to managing his own money.
“I just get all weak-kneed around entrepreneurs. I just love it. If I have a meeting with an entrepreneur, I’m always charmed by them,” he smiles.
Is it important to him to share his wealth with fellow inventors?
“Absolutely. In my personal investments I’m mostly doing things that I’m curious about. And passionate about. In many cases I don’t necessarily expect them to be good investments.”
His list of personal investments is wide-ranging, from tech companies including Uber and AirBnB to more unusual projects such as the 10,000 Year Clock in the San Diablo mountain range in California to a centre at Princeton, his alma mater, dedicated to neural circuit dynamics (understanding how the brain works).
But perhaps his most public investment was the $250m acquisition of the Washington Post in 2013.
“I was not seeking to buy a newspaper,” he says, pinpointing a telephone call from owner Don Graham’s investment banker as the start of the process.
Despite having known Graham for 15 years, Bezos was still surprised by the call. “I ended up having some long conversations with Don, and the actual details of the acquisition were incredibly simple.
“I know him so well and he’s such a high integrity person, I didn’t negotiate with him, I paid the price he asked, I did no due diligence, he told me everything about the company including all the wonderful things and all the terrible things and he walked me through every nook and cranny and I would say it’s turned out to be exactly how he described it in every way.”
Bezos hints that the purchase was a one-off, rather than part of a desire to become a newspaper mogul. “The financials of the Post are very difficult. And that’s not unique to the Post, it’s a problem that many newspapers have.”
Despite the fact that he sold $534m worth of Amazon shares ten days ago, Bezos remains focused on the job in hand, even 20 years on.
“I’ve liked every phase of the company. I loved the beginning, and I love it just as much now,” he says.
“I took my extended family on vacation in the south of France, and we had an unbelievable time, and we had great food, and we were there for a week.
“But when I got back to Seattle I ran in to the office, I danced in. I love my job and consider myself incredibly lucky – and that’s been true for 20 years, it hasn’t changed.”
Can he see himself at the helm in another 20 years, by which point he’ll be 71?
“I hope so.
“Almost all the people I work with on a daily basis, are paid volunteers – at this point I’ve been working with them for more than a decade, and they can do whatever they want, they could be sipping margaritas on a beach, but they’re here. Paid volunteers are the best people to work with as they’re here for the right reasons. I have a team of people that I love. And we get to work in the future, and that’s so fun, so I hope so.”
Working in the future. For Bezos that isn’t a mission impossible, it’s what the last 20 years have been all about.