Anecdotes from “The Everything Store: Jeff Bezos and the age of Amazon.com”

by Ian Rosenwach on 11.7.2013

I just finished reading “The Everything Store: Jeff Bezos and the age of Amazon.com“.  Appropriately, it was the first book I read on the Kindle.  Overall it was a good reading experience, I especially liked the highlighting and popular highlights features. Thanks to highlight, I’m just going to share a few snippets that I highlighted and why I found it interesting.

When deciding move west to start Amazon, Bezos used a unique framework to justify the decision.

…“the regret-minimization framework” to decide the next step to take at this juncture in his career. “When you are in the thick of things, you can get confused by small stuff,” Bezos said a few years later. “I knew when I was eighty that I would never, for example, think about why I walked away from my 1994 Wall Street bonus right in the middle of the year at the worst possible time. That kind of thing just isn’t something you worry about when you’re eighty years old. At the same time, I knew that I might sincerely regret not having participated in this thing called the Internet that I thought was going to be a revolutionizing event. When I thought about it that way… it was incredibly easy to make the decision.”

Much of the book appeals to the business-minded, but this paragraph in particular struck me as well-written and emblematic of the entrepreneurial zeal that has driven people out West for centuries.

A day later, they stopped at the Grand Canyon and watched the sunrise. He was thirty-one, she was twenty-four, and together they were writing an entrepreneurial origin story that would be imprinted on the collective imagination of millions of Internet users and hopeful startup founders.

Bezos saw the importance of search keyword-targeting in the late 90’s.

The portals were accustomed to receiving equity stakes for these kinds of deals, but Bezos refused to give that—he was as stingy about handing out stock as he was about allowing employees to fly business-class. Instead, he paid cash and convinced each portal to throw in a freebie: links to Amazon books within search results. For example, if someone searched AOL.com for ski vacations, he would see a link to books about skiing on Amazon

Jim Sinegal is the founder of Costco. He met with Bezos in 2001. I could see this being a formative discussion leading up to Amazon Prime.

Sinegal explained the Costco model to Bezos: it was all about customer loyalty. There are some four thousand products in the average Costco warehouse, including limited-quantity seasonal or trendy products called treasure-hunt items that are spread out around the building. Though the selection of products in individual categories is limited, there are copious quantities of everything there—and it is all dirt cheap. Costco buys in bulk and marks up everything at a standard, across-the-board 14 percent, even when it could charge more. It doesn’t advertise at all, and earns most of its gross profit from the annual membership fees. “The membership fee is a onetime pain, but it’s reinforced every time customers walk in and see forty-seven-inch televisions that are two hundred dollars less than anyplace else,” Sinegal said. “It reinforces the value of the concept. Customers know they will find really cheap stuff at Costco.”

A book called Creation talked about a concept called “primitives” that seems to have influenced the way Amazon built out their infrastructure. Each primitive developed into it’s own Amazon Web Service product. This type of architecture is also referred to as service-oriented or modular, but it makes it more fun when it’s sci-fi.

At the same time, Bezos became enamored with a book called Creation, by Steve Grand, the developer of a 1990s video game called Creatures that allowed players to guide and nurture a seemingly intelligent organism on their computer screens. Grand wrote that his approach to creating intelligent life was to focus on designing simple computational building blocks, called primitives, and then sit back and watch surprising behaviors emerge….

The book, though dense and challenging, was widely discussed in the book clubs of Amazon executives at the time and it helped to crystallize the debate over the problems with the company’s own infrastructure. If Amazon wanted to stimulate creativity among its developers, it shouldn’t try to guess what kind of services they might want; such guesses would be based on patterns of the past. Instead, it should be creating primitives—the building blocks of computing—and then getting out of the way. In other words, it needed to break its infrastructure down into the smallest, simplest atomic components and allow developers to freely access them with as much flexibility as possible. As Bezos proclaimed at the time, according to numerous employees: “Developers are alchemists and our job is to do everything we can to get them to do their alchemy.”

That’s it – thanks for reading!

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