Farewell, Jeff Bezos
In October 1994, a husband-and-wife startup in Washington state hired its first employee, a computer programmer called Shel Kaphan. Kaphan wasn’t sure about the startup’s business model—selling books on the “world wide web”—or its name, Cadabra, which sounded a bit too much like “cadaver.” But the man who hired Kaphan, Jeff Bezos, soon came up with a new name that hinted at the company’s ambitions: Amazon.com. “It’s not only the largest river in the world,” Bezos explained, “it’s many times larger than the next biggest river. It blows all other rivers away.”
Kaphan, whom Bezos has called “the most important person ever in the history of Amazon.com,” has emerged in recent years as a slightly anguished critic of a company he did much to build. Speaking to last year’s excellent PBS documentary Amazon Empire, Kaphan characterised Amazon as “a ruthless competitor.”
PBS’s James Jacoby pressed him: “Isn’t this just capitalism? Isn’t this just a company doing what a company does?”
“Yes, it is,” Kaphan replied. “I think they’re doing what the business schools teach people to do. And they’re doing it aggressively and skillfully and with great intelligence.”
To study modern capitalism in its most streamlined form, then, is to study Amazon, and to study Amazon means studying Jeff Bezos. As his friends and enemies agree, few large companies are shaped to such an extent by one figure. Executives who implement his ideas have been known teasingly within Amazon as “Jeff Bots.” One of his closest allies, Jeff Wilke, told the journalist Brad Stone, author of the definitive book on the company, “Everyone is expected to think as much as they can like Jeff.”
How did Bezos become the world’s richest man? You could point to his less appealing qualities—the pressure he puts on his subordinates, the glee with which he wipes out his rivals—or to his intelligence and exuberance, his calm resourcefulness at times of crisis. But none of this quite explains how he has built a company that boasts a 74 percent share of U.S. e-commerce, employs 1.3 million people around the world, and rivals Apple as the planet’s most valuable brand. Perhaps a better explanation can be found, not in Bezos’s vices and virtues, but in his imagination.
In Bezos’s world, no human problem cannot be solved by the two great imperatives: Maximize! Minimize! His favorite novel is Kazuo Ishiguro’s The Remains of the Day: “It teaches,” he has said, “the pain of regret for a course not taken.” Bezos’s understanding of this lesson is highly practical. He has developed a “regret minimization framework,” a method for avoiding such pain in one’s old age. In his 20s, similarly, he described his dating strategy as maximizing “women flow,” the equivalent of the banker’s “deal flow.”
It might seem a truism to say that Amazon has been built on an obsession with scale. But it is the key to Bezos. He is, famously, a Star Trek fan who has been fascinated by NASA since the age of five. One ex-girlfriend told the media that Bezos only wanted all that wealth so that he could get to space. Now Bezos is stepping back from Amazon so that he can devote more time to his Blue Origin space infrastructure project. “We could have a trillion humans in the solar system,” Bezos has rhapsodized. “We could have a thousand Mozarts and a thousand Einsteins.”
When giving speeches about his interplanetary ambitions, he concludes by telling the audience, “I want to inspire you, and so think about this: Big things start small.” This triumphant line is accompanied by a photograph of a young Bezos at his first, tiny Amazon office. The space program is the New Testament, prefigured in Amazon, the Old. When, in Amazon’s early days, Starbucks founder Howard Schultz expressed skepticism about the business model, Bezos insisted: “We are going to take this thing to the moon.” Alan Atlas, who worked on what would become Amazon Web Services, told Brad Stone that Bezos would instruct him: “This has to scale to infinity with no planned downtime. Infinity!”
“Domination was on Jeff’s mind from the beginning,” James Marcus, who joined Amazon in 1996, told PBS. And the nature of that domination was spotted by the writer Peter de Jonge as early as 1999. For a New York Times article, de Jonge spoke to Bezos’s former boss and mentor D.E. Shaw, who recalled that in the early ’90s, Bezos had quickly grasped the potential of the internet. Somewhere between online sellers and online customers, there would have to be an intermediary. “The key question,” Shaw said, “is who will get to be that middleman?” As de Jonge noted: “Despite presenting the face of an underdog, Amazon.com has always had the agenda of a would-be monopolist.”
That is exactly what Amazon’s critics accuse it of becoming: a tollbooth which, since so much of the economy flows through it, can extract whatever favors and fees it wants. Stacy Mitchell, of the Institute for Local Self-Reliance, has noted that Bezos’s 1998 letter to shareholders (a sacred text which Bezos reprints every year with the annual report) promised that “the shareholder value we create over the long term . . . will be a direct result of our ability to extend and solidify our current market leadership position.”
For Mitchell, this “essentially says we are going to forgo profits in order to take market share. Our strategy is to lose money, which enables us then to put other companies out of business who can’t afford to lose money. In essence, at the very beginning, he’s signaling to shareholders, ‘I have a strategy to monopolize the market. And that’s going to reward you, but it’s going to be far down the road.’”
The first group to be “Amazoned” was publishers. When Amazon started demanding higher fees, some were reluctant. As Randy Miller, who ran Amazon’s European book team, explained to PBS in a cheerfully candid interview, “In order to bring them into line . . . we would put references on their product page saying, ‘You want this book on this topic for a way cheaper price? Click here!’ And we’d send them to whoever we thought their worst competitor was.” The publishers backed down. Bezos, Miller added, was “excited” by this strategy.
For Bezos, books were just the start. “Get Big Fast” soon became the company’s unofficial motto, as it expanded into music, then toys, then everything you could fit into a warehouse. Bezos hired Walmart’s former vice president of distribution and ordered him, with typical expansiveness, to “design me [a system] that will handle anything.”
In the rush to maximize, there was little time to consult the workers packing the boxes. Their experiences only became unignorable after a 2011 story in Allentown’s Morning Call described a warehouse so hot that on a single day, 15 workers collapsed on the job. Only after a wave of negative publicity did Amazon upgrade its air conditioning. The subsequent list of stories about poor working conditions around the world could fill an issue of this magazine. The traditional remedy—for a company to allow its workers to unionize, and so reach an agreement on conditions—is anathema to Bezos, which is part of why so many employees say they feel treated “like robots.” That is, like the most easily optimized kind of worker.
Small businesses, which have no choice but to sell in Amazon’s marketplace, have also suffered from the Bezos imperatives: Minimize! Maximize! According to the Institute for Local Self-Reliance, “Amazon keeps an average of 30 percent of each sale made by independent sellers on its site, up from 19 percent just five years ago.” If the fees sink small businesses, it doesn’t harm Amazon: there are always more sellers who need to sign up. This particular tollbooth rakes in $60 billion a year.
As a series of investigations by the Wall Street Journal and the House Antitrust Committee have revealed, Amazon also minimizes the competition by a variety of tricks, the crudest of which is to imitate an existing product and sell it at a much lower price. Amazon’s size means it can take the temporary loss of profits. It also means Amazon can push around elected governments. When Texas, for example, legislated to charge Amazon sales tax, the company threatened to fire hundreds of local workers and abandon its expansion plans in the state. Governor Rick Perry vetoed the bill.
According to Brad Stone, when Shel Kaphan asked Bezos why he seemed so bent on rapid expansion, the reply came back: “When you are small, someone else that is bigger can always come along and take away what you have.” It is an unimprovable description of what capitalism has become over the last half-century. Jeff Bezos may end up taking us into a new space age, but he will remain, in the last analysis, a man of his time.
Dan Hitchens is former editor of the Catholic Herald.