50 minutes | May 13, 2021

EP263 - Amazon Unbound Author Brad Stone

EP263 - Amazon Unbound Author Brad Stone  In 2014 Brad Stone wrote the seminal biography of Amazon, "The Everything Store." In it, he discovered Jeff Bezos birth father, and even earned a negative review on Amazon, from Amazon's co-founder Mckinsey Scott (then McKinsy Bezos). Brad is also a Senior Executive Editor with Bloomberg News, and can be found at his personal website brad-stone.com. This year Brad followed it up with Amazon Unbound, which released on May 11, 2021. Chronicling the dramatic growth of Amazon and Jeff. Bezos (now the richest person in the world). In this episode we interview Brad to find out all about the Amazon Unbound. Episode 263 of the Jason & Scot show was recorded on Wednesday May 13, 2021. Disclosure: Links are affiliate links http://jasonandscot.com Join your hosts Jason "Retailgeek" Goldberg, Chief Commerce Strategy Officer at Publicis, and Scot Wingo, CEO of GetSpiffy and Co-Founder of ChannelAdvisor as they discuss the latest news and trends in the world of e-commerce and digital shopper marketing. Transcript Jason: [0:24] Welcome to the Jason and Scot show this is episode 263 being recorded on Wednesday May 12th 2021 I'm your host Jason retailgeek Goldberg and as usual I'm here with your co-host Scott Wingo. Scot: [0:40] Well Jason had would not be a Jason Scott show if we didn't talk a little bit about Amazon and for all you Amazon lovers out there this whole episode is a hundred percent Amazon in fact when you think of Amazon V book that is the defining book about Amazon is called the everything store one of my favorite books and it's by this dude I know bradstone well we have some exciting news Brad has a follow-up book called Amazon Unbound and we are really excited to have him on the Jason Scott show to talk about the book and all things Amazon welcome to the show Brad. Brad: [1:16] Thank you guys it's great to be here. Jason: [1:19] Oh my God we are thrilled to have you I'm pretty sure that when we put together the show schedule for the year Scott circled this date on his calendar back in back in January he's so excited about Amazon books. Scot: [1:33] Close to me fourth which is also one of my. Brad: [1:35] Let me just say also you know I've been covering Amazon for you know probably 20 years to date all of us and you know through the years I can count on one hand like the people who've been like my guides and you both you guys have been like tremendous sources of insight over the years Scot like when I was at the times I would always bug you for insight and Jason and I think you were at retailgeek the same and so it's just great to great it's I've been a fan of the podcast and it's great to now be a guest. Jason: [2:09] We are thrilled to have you we're I want to jump in but for. The the Casual with our core listeners are super familiar with you to be quite honest bread but for the Casual listener who maybe isn't familiar with you when you are not writing Amazon books what is your day job can you give. Brad: [2:31] I am an editor at Bloomberg News and I actually run the technology team at Bloomberg and so that's 65 journalists around the world who cover the big tech companies and the disruptive startups and venture capital and cybersecurity and cyber crime and it's a great gig Bloomberg's a great organization I've written three books while I'm there they're really supportive and we have a TV show we do a podcast we do a newsletter you can find it all at bloomberg.com Tech and it's a really great team. Jason: [3:07] That is awesome and can you tell us how you sort of got the original Amazon bug that I assume triggered the first book. Brad: [3:15] So you know I'm at the New York Times in the late mm first decade of the 2000s what do we call that the two thousand owes and I'm writing about the Kindle and I'm calling up you know Scott Wingo every time they have earnings or some announcement to try to make sense of it all and and then eventually I think I sort of decided. [3:41] I was looking for another book I had written one book that was not well received it was about robots and I was looking for like the you know the the the makeup project the dignity restoration project and I just you know saw that there were Facebook books and Apple Books and Google Books and and no one had I felt it done a great job with Amazon and I was the Amazon reporter at the times and the Kindle had had kind of upended the book publishing industry and Amazon maybe for the first time since the.com boom was sort of seen as interesting and disruptive. [4:18] And I had no foresight that this was like the defining Juggernaut company of our time or that Bezos would be the wealthiest person in the world it was it was simply like it it felt like a little bit of a clear Avenue for me to try it again to be an author and and to take on this really complicated company so that was the inspiration for the first book and you know and then I know you're probably wondering like why why the heck am I such a glutton for punishment that I would do it again and simply the story just kept on evolving and you know I'd written about the Kindle company, but it was the Alexa company and the 100 billion dollar company was the trillion dollar company and the marketplace have been globalized and they had bought at Whole Foods and acquired a transportation arm built a transportation arm I should say and and it's just seemed like chapter to Scotts a big Star Wars fan and you know I had written Star Wars and I felt like okay it was time for The Empire Strikes Back. And that was kind of the inspiration. Scot: [5:18] Yeah you could you could squeak at work Trilogy out of this and maybe even a saga if you keep going. Brad: [5:23] Yeah that sounds painful right now but the metaphor does suggest that at some point there needs to be Return of the Jedi. Scot: [5:29] Yeah one of when you I remember you know when the first book came out you know you broke some news you had discovered Jeff's biological father and that was kind of a really big breaking news and today actually the timing is perfect because you had breaking news and that you discovered something about a tiny little boat that Jeff was was was buying tell us more about this I think it's called a dinghy is that right a dinghy. Brad: [5:55] Exactly well as I was sort of like charting his personal transformation you know the guy who you know. I had interviewed and who was the leader of Amazon 2010-2012 you know he never really went for big extravagant personal Indulgence has a lot of his a lot of his like assets or you know luxury is tended to be like time-saving things a home in New York so he could crash there when he was on the East Coast or an airplane a personal jet you know as one has to to save himself time but he wasn't a boat guy and and so. A couple things happened which may it just made me sort of wonder if he was embracing the lifestyle he was photographed on David Geffen's yacht or maybe was Barry Diller Jack probably both and you know and of course. Lauren Sanchez his new partner you know moved in those circles and at the same time I saw a Facebook post from Ocean actually with someone observing an ocean Co yacht and it was like the whole of what they described as like the largest sailing yacht in existence and that sent me down this path of wondering well I should say people were speculating that Bezos had bought another boat. Now and I was looking into that and that proved to be incorrect but yes he he has he is spending hundreds of billions millions of dollars to build a one of the. [7:20] Biggest sailing yachts in the world and part of the Revelation and the book is it has a support yeah because you can't land a helicopter on the sailing yacht because of the mass so. PCS gotta is building two boats. Scot: [7:33] It's tonight so it kind of brings another boat just to hold the helicopter kind of a think very cool wonderful and smart rockets on there at some point. Brad: [7:41] I wonder if any of us will be invited to the party on the boat it's probably not I would think. Scot: [7:48] Jason because of the successful podcast we have a jet and that the hardest part about it is sharing it with Jason you always he spills the Starbucks on their his kid comes on and makes a mouse so so if you're going to get a jet like get your own it's not really nice to share this. Huh. Jason: [8:05] It's a good goal for Scott to be successful enough to not have to share my jet anymore Brett I have to be honest like when I first read the yacht thing I assumed it was a hoax and. And I don't mean that like I don't mean to be light of that but there actually was. I want to say like a almost equally credible news organization the Telegraph and London like into 2020 reported that Bill Gates had bought like a 650 million dollar yacht, I don't know if you remember this but it was kind of like a meme for for a month and it turned out to be totally untrue. Brad: [8:48] Hmm. Jason: [8:49] Um and so when I and a largely like in the past Bill Gates had talked about like. What atrocious thing it is for the earth and the planet for one you know human being too. To own a half billion dollar yacht and so it seemed wildly out of character for him to have bought one so then fast forward in this year and I like we're maybe jumping way ahead but I it kind of feels like there's a little bit of a Jeff Bezos reputation. Repair program underway an element of which went live today I think he announced a billion-dollar Earth Earth fund and you know for sure in the shareholder letter he's weaning heavily into. For a well wellness and all these things it just seems like buying a half billion dollar or more yacht like. Is not does not fit very well in that neck. Brad: [9:45] It doesn't do wonders for the for the reputation and and yeah the the accumulation of wealth is so controversial and polarizing these days that you know time of like income inequality and suffering through the pandemic but this is the transformation this is why the book I think is in it cat tries to tell an interesting story because it's not just as a business story you know a small or a big company getting bigger it's the story of a person changing and and like a human right who is. You know probably vulnerable to you know everything that you know from flattery to the attention that comes with being really famous to the luxuries that come with extravagant wealth and he didn't start out as a boat guy but he seems to have ended up as one and so that is you know I hope that that runs that theme runs through the book that getting getting into Hollywood. You know bringing Amazon to Hollywood owning The Washington Post fighting with Trump fighting with MBS and Saudi Arabia that these are always stations on like an incredible transformation of one of the most famous business people in the world that's been happening really before our eyes. Jason: [11:03] Yeah and I mean just side know like if you're gonna pick enemies I feel like president of the United States and like Sovereign leader of Saudi Arabia are like the perfect two guys to make enemies I do want it you alluded to it I want to jump right into the structure of the book so it's interesting this time you you sort of broke the narrative up into these three big chunks you have the invention chunk The Leverage Chunk in the inventor, invincibility chunk can you kind of walk us through the thought process there and what readers should expect. Brad: [11:38] Yeah sure I mean one it was an incredibly challenging book to organize because as you guys can appreciate it's all happening at once right Marketplace and Alexa and India and Hollywood and groceries Transportation advertising and then the personal stuff blue origin Washington Post, HQ to the personal Scandal I mean you know and readers want to read a chronological story and if you're going to. Describe a story of change you know you started the beginning and you know the caterpillar morphs into the butterfly and so that was a useful way to organize it um I kind of fit into a narrative chronology but invention is essentially the new stuff it's the story of Alexa the the retail technology is like the ghost or the expansion into India and Mexico and then Hollywood and also Jeff's. Ownership of the Washington Post a little bit of AWS and I and that's like or I think of that is fundamentally 2010 to 2015 with a lot of fast forwards leverage or really operating Leverage is the acceleration of the Core Business and how. [12:52] You know Bezos and his lieutenants built these platforms at where the revenues were able to grow as they slow down the growth of the fixed cost and they did that by building these Self Service platforms. Like Marketplace. [13:08] Or you know the automation the Fulfillment centers or the algorithms that govern the drivers or the ad system you know that lead to tremendous growth but also have some really significant unintended side effects. Exploding hoverboards or fraud in the ABS system or. You know accidents on the road so that's that's part two and then invincibility for part 3 are sort of trying to come up with a way to describe the last part of the book which includes hq2 and the National Enquirer drama an antitrust in the pandemic. And I probably cycled through a bunch of names and I thought you know what these are all great stories but none of it's slow to Amazon down at all you know the the company if anything grew more in the past four years than at any time in its history at least in terms of economic growth and market cap and sales growth and so I can't I just struck upon like in this company's Invincible they keep making mistakes and keep steering into controversy and it never seems to hurt them so that's where I that's where I kind of gave up with that. Jason: [14:14] That makes total sense and I really enjoyed that structure I have to say because I probably. Open the book expecting sort of a chronology of everything that happened since the last book but I found myself really enjoying. Being able to follow each each individual thread in its entirety sometimes going back further than than I expected and kind of giving you the whole story. I like to think I follow the company pretty closely but I still, you connected a bunch of dots for me though there was interesting and useful and at one point during the book I kind of said like man this is a little bit like I'm horrible at American history but I imagine the people that are well-versed in American history like still read David McCullough. 1776 and and find it enjoyable and dramatic and in the same way like I knew most of the facts but like. Still like putting it together in a cohesive story was was sort of fun for me it made me remember a bunch of things and then for almost every story you uncovered new things that I didn't know so that I thought. Brad: [15:22] Well I was joking about Star Wars but sometimes I thought of it really is like The Godfather Part 2 which is like it continues the story picks up from the last book continue to the story but I do have flashbacks like the early years of Dave Clark in the Operations Division or Bezos ripping up a document in 2009 and chucking it down the table at an employee to illustrate how dramatically his his Co style has changed so yeah flashbacks and flash-forwards. Scot: [15:55] One of the so I've worked with a ton of large companies and the thing that always amazes me is even as Amazon's gotten so big you know they just passed like a million people I think in the company they're still so agile and they can still invent at scale and you know when you did that kind of kind of married invention and invincibility you know that that's kind of you know having watched them they just don't really miss a step they make some mistakes but it doesn't seem to hurt him I think a lot of it is this culture that they've built what are some of the cultural elements you've picked out as you've written both books that you think. Anna and and then my follow-up I'll go and ask my follow-up is you know with with Bezos leaving do you think that's so baked in that it will continue or do you think that that he's kind of the core of it. Brad: [16:41] Yeah it's interesting you know basis particularly lately is likes to call himself an inventor and he is an inventor he's come up with you know we talked about Alexis kind of springing from his mind and and some bad ideas like the fire phone too but what he's really created is a system of invention. Like a culture that seems to to be fertile enough that you know lots of decentralization. Lots of employees or teams moving quickly sometimes in competition with another and. He's he's put together a lot of the building blocks and you know yeah people talk about the 14 leadership principles and folks are probably familiar with those but it's also you know the gist the customs and the rituals of Amazon starting every meeting with the meditational reading of a six-page document. Or you know the quarterly business reviews and the opieop 1 and op2 and the fact that senior Executives can kind of hover above everything but then audit individual business units when they get an email from a customer complaining about a problem and the idea single-threaded leaders or a sort of team leader whose sole responsibility is the success of that team was kind of the CEO of their own fiefdom and all this stuff. [18:03] You know the culture can be kind of criticized as mean and I think sometimes it is but it has been remarkably effective right and and they've the reason I call it Amazon Unbound is because Amazon's been kind of. [18:16] Immune from the laws of gravity that can often bring down or slow down large companies and it's it's Unbound from that and those sort of playing with that and I think it's the culture that bezos's invented and they answer the second question. It's a it's a it's like the great Challenge and question for Andy Jassie you know because Bezos made it work because people respected and admired and maybe feared him a little bit you know and he could keep the plates spinning and then return to them and you know spin him again disappear for a while come back. Now he's not going anywhere he says he's going to be executive chairman so you know maybe it doesn't make a difference I think eventually he does drift away slowly but you know Jesse doesn't have the same Founders magic so yeah I can't answer it so I'll just say it's a good question does the culture work as effectively when the the magic of the founder isn't isn't you know, present as it is now. Scot: [19:13] Yeah I kind of wonder if he'll be able to keep his hands out of there that's you know I've done the same thing on a very very tiny set scale and it's it's a hard discipline to kind of it's almost like putting on your kids up for adoption or something there hark there's not a great analogy for you know think of all the time and effort he's put in to hold those. Brad: [19:29] Why you didn't even have a luxury yacht to go Retreat to you know. Scot: [19:33] True yeah. Brad: [19:34] Yeah or 10 billion dollar philanthropy so I don't know it'll be interesting will be and also a reputation on the line with the space company that hasn't produced anything so there's a lot of other stuff that could draw Bezos away. Jason: [19:49] Yeah side note on now that one you know people are always I get asked these questions all the time like what what event how does someone eventually beat Amazon. And in they ask in the context of retail and one of my hypothesis is always that that retail gets to be too irrelevant and uninteresting for them that you know that they it just doesn't get the attention anymore because so many of these new things become so successful. Brad: [20:20] Yeah I think that's true and and also you know they get so big and they have so many constituencies that they need that they have to make choices and I think a good example is how you know the retail you know the consumer division has really tilted towards Marketplace and and the opportunities of third for third-party Sellers and Global Sellers and one of the things that suffered a little bit I think is Amazon's relationship with brands and Brands feeling like Amazon can be a safe space to sell you know we've seen that with Nike Etc and that has created an opportunity for you know companies like Shopify and you know and and like those competitors don't can't take on Amazon you know the whole thing but there's a lot little. Avenues of opportunity for competitors who want to focus because Amazon's doing so much it it can't satisfy everyone. Jason: [21:14] Yeah no I for sure one of the the big topics in the book that was kind of fun to have laid out was the whole invention of the Alexa and I'll confessed I wasn't quite aware of how directly Jeff was involved in the original ideation so that was fascinating and and frankly at the very beginning when Scott asked if you broke any big news in the new book, I was expecting you to say that you you uncovered the voice actress behind Alexa. Brad: [21:49] Well I thought he was going there but then he brought up the yacht but I'm happy to tell that's I'm happy to tell that story. Jason: [21:55] Yeah yeah please do. Brad: [21:56] Okay well actually it sort of started with me thinking for this book How will I ever top the the discovery of the biological dad from the first book and if you guys remember and of course you can't top that and sadly there no there no hidden long lost relatives to an earth and but I thought you know I remembered that Susan Bennett was the voice actress behind Siri. And that was a big Revelation in 2013 and no one had ever asked the question well who the heck is coming out of the echo speakers and you know long story short so I put that as one of my goals to figure that out. [22:36] And in the in the in my research and yeah Alexa was totally Jeff's idea it was an email to Executives can we create a 20 dollar computer whose brains are in the cloud that's completely controllable but by voice in the book I have is first whiteboard sketch of a of an echo speaker and but one of the things they did early on was they bought a Polish company called a vona. And that was the let me get this right the text-to-speech engine so they created synthetic voices and you know so I was like okay I'll start there in trying to figure out who the voice is. And I learned that actually they had contracted with the same studio in Atlanta that did the Siri voice company called GM voices and I spent you know months trolling LinkedIn and figuring you know trying to contact people in who work there who knew people who work there and I heard little tidbits she'll never find out it's a closely guarded secret but she's a singer and she lives in Colorado. And then finally I got a couple of more clues and I found I found I got her name Nina Raleigh and I went to her website. [23:48] I wasn't completely sure but I went to her website and she had a clips of herself doing advertisements from years ago before she started working for Amazon and I clicked play on a couple of them and I was like my God that is the voice of a all right. And I called her up and she you know immediately like you know awkwardness like felt like High School and she said she wasn't allowed to talk to me and you know in some. Weird awkward way it was like the final bit of confirmation that I needed but and then I asked Amazon if I could talk to her and they said no and you know you could kind of put the pieces together. Jason: [24:27] Yeah and side note how the heck did you get that diagram by the way. Brad: [24:31] I asked Amazon for it and they give it to me. Jason: [24:34] Now that's a clever way yeah I ask them for things all the time and they almost never give up. Brad: [24:40] You know and I interviewed Greg Hart who is just hiei and who built the Alexa business in the early years and you know he was he was he had never given an interview before I think about the early days of Alexa and it was it was a lot of the I think the untold story there and yeah a lot of it maybe yeah was actually like credit to Amazon right. They decided that it was you know better to work with me and to tell some elements of the story I think I think big tech companies realize now that you know when they when they shut the door to everyone you know the depictions aren't you know let's put it this way if they cooperate at least they're relaying their side of the story and things are likely to reflect their point of view. And so on this one they agreed to cooperate. Jason: [25:27] Very cool and another thing that I learned in that version of the store a the original Kindle had a microphone in it that wasn't used. Brad: [25:39] Books like the second or third I can't remember the maybe the third version yeah yeah. Jason: [25:44] But it sounds like the germ of the idea was starting to form like even in this this vestibule vestigial feature in the Kindle and it sounds like Jeff fought for that feature women when the product team wander accent. Brad: [26:02] Yeah yeah I mean he's a Star Trek fan like like Scott and he you know he always thought that we would talk to our computers one day like like the Star Trek computer and that was like a big part of the vision and the reason why he fought for it to be more conversational and not just the music player or a thing that recites the whether he really wanted a conversational agent and actually today I would say Amazon is not eat not even there yet I mean my and about your guys Alexa but mine is dumb as a rock so you know they still have a lot of work to do there. Scot: [26:36] Yes still still still working the so folks if you haven't read the first book so go go get that one so go get the anything store in the the thing I always enjoy about Brad's writing is its kind of see your tech-savvy so you kind of you're not afraid to go into some of the technology side of it but then you're also an investigative reporter and that's where you find all these really cool tidbits and the real story behind so always enjoy you doing that on that side you cover in the book you cover a bunch of the rough spots which of those do you think has been has had any impact so the ones are kind of the antitrust which is Jason Jason's favorite con that kind of thing to talk about losing the Jedi you know kind of over politics I think. The hq2 thing was I think everyone agrees was a bit of a debacle that kind of over overplayed that are any of those things unraveling them at all or bother them at all or just doesn't seem to bother me at all. Brad: [27:31] The three you listed I mean the antitrust threat is still in the future HQ to they suffered some bad press and it went away quickly. What was the other thing that you. Yeah Jedi they might the government might reward that contract a judge ruled that the legal scrutiny will continue and we might see the Pentagon basically just start the process all over again so none of those things so far I would say antitrust maybe the most but I would put. The controversy over the quality of work in the Fulfillment centers and the unionization effort even though Amazon one that in Alabama that to me feels more impactful because really you know none of these things make a difference unless people start to feel or think twice or feel ambivalent about clicking the buy now button and I look the the results in the last quarter were Stellar so clearly it's not having much of an impact but you do see mostly I think because of the labor tangling. Some stain on the Amazon reputation and I think the labor stop is more important and has had more of an impact in the other things that you mentioned. Scot: [28:47] Yet I think the ultimate play is they'll eventually be able to get rid of the labor with robots and that oddly that maybe a the best political move you know even though there be a lot of jobs lost it you know robots don't pee in bottles and. Brad: [29:01] Isn't that years off I mean how long before robot before you can have a ghost fulfillment center with no workers. Scot: [29:09] Well you can get it down to Cuba system gets it down to just the pickers and Packers which is which is a very small fractional I think it's like a quarter Jason fact check me like 25% of the. The people footprint which is funny it goes back to your first book and I just saw today maybe it was yesterday that Amazon's investing a fair amount in a robot Factory which I kind of made my Spidey Sense tingling little bit that's the. A it feels a little bit like the Terminator but then be you know you don't start building a factory for these things until you unless you're going to really start scaling them up so, most of the see if they'd go that way. Brad: [29:46] Yeah well though there will be another political storm that just as there were for the cash earless robots right the cashier Le stores you know yeah the that's going to make Amazon a Target in the different way. Jason: [30:00] Yeah it is into I think there are parts of their business that will you know the Amazon could certainly automate a lot of Labor out of pretty quickly but there are other parts of their business that that that's not in the short term Horizon right like I I'm a big believer in driverless cars but driverless Last Mile. Or you know human let's last mile is going to be a long time and at this point like the labor force in last mile is growing faster than the the Fulfillment center labor force. Brad: [30:33] Yeah and we'll all we should say write a contract labor force and that's another threat to Amazon like well it's another critical decision at what point you know do they feel like those drivers need to be employees or do they do this the criticism get much louder because you know they can't control the last mile or they're exerting so much control over those drivers in terms of the uniforms and the surveillance cameras and the rules that ultimately you know the lawsuits basically I mean FedEx fought these battles for years but ultimately a judge somewhere says you know. Like if they have with Uber drivers these are employees you got to start treating them like like employees. Jason: [31:14] Yeah although Uber found a way out of that is it if you spend 200 million dollars you can just make your own laws. Brad: [31:20] All right. Jason: [31:21] And Jeff has that kind of money but I did want to ask you a question about that because you you kind of painted a picture that like anti-union is much more in Amazon's DNA than. Then maybe was like. Super obvious right in you you highlighted that like they made decisions about how to scale their their last Mile in their Logistics. Based on you know avoiding the traditional fulfillment model which like is heavily unionized right. And I'm kind of curious if you have a hypothesis why I like you you had an interesting sentence in the book that kind of you know made me think for a second. I'm not sure Jeff is just like fundamentally unions are bad for America and I don't want unions because then I can't exploit the workers the way I want like I almost wonder if it goes back to his day one. Philosophy and just this fear that if you. If you you know get this a large entrenched Workforce you know which is often epitomized by unions that it reduces your ability to be as agile as. He aspires to be. Brad: [32:42] There's a canonical story inside Amazon I tell this in the in the day of Clark Logistics section of the book of like. You know one of the early fulfillment centers 2001 2002 and Dave Clark and the colleague named Arthur Bell devs are like themselves in a Ryder Truck delivering the last batch of packages to the UPS facility and I think it's Lexington through a snowstorm eating Burger King on the way and they get there you know with Christmas in the back of this truck and the and the the teamsters at UPS won't let them in because they're not union workers and eventually they get managers to allow them to come in and the union guys are banging it on the truck and and yelling at them and that is is a you know a story that's passed on like lure at Amazon because yeah what you were saying Jason it's like they want to be flexible the customer is Almighty they want to fulfill their promises to customers and they view you know an inner mediating Force like a union as as you know interfering with that and and I and Amazon fire me bitterly on this because I quote Jay. [33:57] Jeff saying to a colleague an HR colleague in the book one of the greatest dangers to Amazon is an entrenched and hourly work force and he was looking at the the auto makers and other you know manufacturers and and concluding that you know the unions were really impeding their ability to be flexible and to innovate and their little things that he encoded in the worker relationship and Amazon for example you know you the raises stop after three years unless you're promoted. That doesn't get a lot of attention it seems really unfriendly frankly but he does doesn't want employees sticking around getting entrenched getting comfortable. Possibly organizing and you know and and it's maybe a little bit lacking in empathy but it's just a brutal kind of Ruthless tactics tactical decision that Amazon is better off having a direct relationship with its employees. Scot: [34:54] One one question I wanted to just kind of explore is in lately here on the show there's been an increased tension between Shopify and Amazon did you pick up on any of that as you're writing the book. Brad: [35:06] You know I didn't really Veer in that direction I would say that you know the the the tent and you know now I'm like in the territory where you guys are probably you know much more deeper you know than I am but I what I sense was that Brands felt increasingly uncomfortable and the detention is between Western brands and a Marketplace that seems to favor, overseas Sellers and scrapping newcomers and people with lower cost structures and and you know the brands on Amazon are like crazy right it's like sometimes you feel like maybe there's some software coming up with some of these names and the and the big Brands you know who may be charged a premium. For their label I don't feel comfortable there and they don't feel like their brand is protected and they don't feel like their prices are protected and that's maybe more the tension and Shopify has come in you know to take advantage of that and Amazon which you know fights on all fronts all the time you know has identified the competitive incursions try to do some things to kind of shore up that flank I haven't spent enough time looking at Shopify and I'm looking forward to doing that a little bit more but that seems like a tremendous success story and the virtue for Amazon is that when they get hauled in front of. Congress you know to get the Jason's favorite topic you know they can point to. [36:31] Strong competitors on all fronts and it's not just Google and Microsoft in the cloud or Walmart in retail but now it's a company like Shopify which is a real competitive threat when it comes to you know online retail and representing Brands online. Scot: [36:47] Yeah it's funny you mentioned the brand thing because we've also followed on the show really closely and we've had a couple folks representative of this is there's these new kind of like super combinations of FBA sellers they call them that if you know like thrashy oh and. I think what are they raised Jason like two billion dollars globally were tracking no to go yet to go buy these little micro brands that are kind of born and on Amazon's that that's kind of yeah if anything that's going to accelerate it. Excuse me how about you mentioned ads anything interesting going on in the Amazon ads world. Brad: [37:24] I am so in Amazon Unbound I tell the story of the ad business and you know so interesting how they started out a decade ago and they were bands also skeptical of ads you know he thought it could interfere with the customer experience that it could jeopardize you know the the main. Revenue model of you know selling things on amazon.com and they experimented they went through banner ads they went to. Sponsored links that send you off the site to like Nordstrom you know or another retailer and then finally they kind of ReDiscover the Google gold mine and start search. Advertising and first it's the bottom of the search page and then it's on the side of the search page and here's the interesting point Bezos himself. Makes a decision to start toying with them at the top of search results and they study it and they determine that there is a decrease in customer satisfaction and in customers purchasing items the. [38:28] The app the tabs on the top of search results are meaningfully like harmful to the customer experience small but but trackable. And this is a little bit of a turning point in the book I think because basil says you know this impact would have to be implausibly large to really outweigh the gold mine the new Revenue source and he agrees to do something that you know arguably is not a great customer experience if you look at, searches the search results on Amazon it's kind of you know I'm over merchandise like it's ads and private label stuff and. You know pay-for-play but the revenue stream is so enticing to him because he can invest in movies and TV shows you can build the next Alexa he can expand internationally and maybe that is the Turning Point the inflection point and Amazon being fully customer-focused and really compromising a little bit on the customer experience to pursue these grander goals of world domination. Jason: [39:32] Yeah it was interesting too well a on the I did want to touch on one thing on the add thing first the we get asked all the time you know we do all these Amazon talks and and we still have to debunk that Amazon's not profitable and so we talked about you know obviously the marketplace is overwhelmingly profitable and and AWS but I have a hypothesis that the ad business is now as much or more profitable than a WS. Brad: [40:03] Yeah yeah. Jason: [40:05] And I. You know it's interesting that that Jeff is like accepting the revenue even at the expense of customer when you think of kind of the original premise that will be the most customer-centric. Brad: [40:19] I mean when just on that point Jason like AWS profits go into building more aw s right you have to keep building data centers advertising like what are the fixed costs right they built an auction system and they basically you know I call that chapter the gold mine in the backyard because it's there all along and they just have to go kind of dip into it. Jason: [40:39] Yeah I was there's one Inconvenient Truth in that like in general I like to say like oh gosh that ad business is 96 percent margin for them because there's no. There's like you know there's almost no costs against it the one Inconvenient Truth in that fact as Amazon is also the largest Advertiser on Google so like there's a way in which you can almost think of it as Arbitrage that. Did they buy 11 billion dollars worth of customers from Google and then sell it for 20 billion dollars on Amazon. Brad: [41:08] Right right. Jason: [41:09] Um what yeah so it is interesting I a couple of the things that also jumped out at me you. Wait I know Scott wants to go deep into the antitrust story and obviously you know Amazon you know. Often says like hey we don't see search we would never you know play games with prioritizing Surge and we never use. Brand sales data to inform our own private label but you had people go on the record in both cases that are X Amazonian saying we absolutely did do that. Brad: [41:45] I mean I think yeah the truth is the Inconvenient Truth for Amazon is that it's a decentralized place. And employees are given ambitious goals and they're trying to keep their jobs and the safeguards the guardrails weren't there for a couple of years and it's not just my book yes in my book and I've got I had employees showing me the data the spreadsheets that they took. You know from looking at third-party sellers to go build private Brands but it's also been reported elsewhere and frankly I think Amazon said in DC that they were going to study it. And I've never seen anything I don't know why they are incapable of admitting an error and announcing maybe a new set of precautions because it really does call into question The Trusted third-party sellers have in the marketplace but no clearly you know they had they were exploiting their data Advantage I don't know if it was that significant I mean what they might say is that look every retailer has the data at their disposal and you don't necessarily need the third party sales data to go you know look at Nielsen report or whatever to see you know what the customer trend is but. Clearly for a Time gave Amazon at an advantage and building that private label business and and in prioritizing their private label Brands giving them a head start in search results. Scot: [43:11] Yep another one of my favorite topics is fulfillment and you and I have had this conversation probably for 20 years and I've every year on this podcast we do a prediction and I've historically predicted that old Bill compete more directly with with FedEx and UPS is taking longer than I thought it would but I think I think most people can kind of see that did you get any any kind of Vibes off of what's going on in the Fulfillment side. Brad: [43:37] I don't I don't see that in the short-term just because their own needs are ramping so quickly that you know it's hard to imagine them being able to kind of offer turn around and offer that, the third parties and if they did they get into the awkward situation of you know Peak comes along and will absolutely of course Amazon's going to start prayer you know prioritize its own packages particularly you get closer to Christmas and. You know in suddenly UPS runs out of capacity or FedEx and you know that would be just awkward right so I don't. I don't know that I see that in the near future I think Amazon. Yeah is its own biggest customer for its Logistics arm and I don't you know and it's only customer I don't necessarily see that changing in the short-term. I don't know maybe we settle that in five years. Jason: [44:34] Yeah that that that's going to be an interesting one I mean even if ba which is I would argue wildly successful for them you know you still see like them them strain to scale that and you know kind of curtail the amenities that they offer to have ba. Brad: [44:52] And during the pandemic they did that right yeah. Jason: [44:55] Yeah absolutely the. We are running up on time I want to make sure that we get all the good stuff in are there any favorite stories or topics you have from the book that we failed to ask you about. Brad: [45:13] There's one okay here's the here's the one of the stories I like the most the story of the single cow Burger you know we talked about Bezos the inventor you know his love for new technologies but he really is like this maniacal sponsor of. Of all sorts of bizarre wacky ideas and basically in like 2050 nereids a Washington Post article about how a burger can contain the meat from like a hundred cows and the article says that making burger from a single cow would be hard and expensive and those of course you know those are the keywords for Bezos and he authorized the see the creation of a single cow burger inside Amazon Fresh and then he like he taste test the early burgers and he'd like rejects them for being too fatty here heard the grill and and he makes everyone's life miserable on the team. [46:08] And you know and illustrates a couple things one you know as he has gotten wealthier maybe he like has a little bit lost the the touch in the taste of the Common Man dare we say but that it's not just technology like he says advocate for all sorts of new things inside Amazon and he is kind of capable of turning up you know like like Samantha and bewitched I guess Rick did she twinkle her nose I can't remember you know at the desk of any unsuspecting employee and suddenly their life is you know they're they're off searching for a single cow Burger so to speak and to me it was like this weird bizarre wacky delightful story oh and by the way that thing is still for sale and that hasn't certain been a game-changer and yet you had the CEO of the company and probably at the time one of the wealthiest people in the world spending all this time trying to advocate for it. Jason: [47:02] Yeah I have to say though just like superficially it sounds like a brilliant idea we my family rushed out to try the single cow Burger I have to admit. Brad: [47:10] How was it how was it. Jason: [47:12] It was good and you know I'm not I can't remember if you mentioned this in the book or not but. You know people have different preferences for their temperature of meat and and like traditionally you have to cook ground beef much higher than other flavors of beep because of the risk of mad cow because. Of all those cows in there so you can actually it's safer to eat that single cow Burger more rare of that sir. Brad: [47:37] Yeah I mean he he looked at all that stuff and he he advocated for a couple different varieties of it and I you know it is a little distillation of Life at Amazon. Jason: [47:47] Yeah you well the distillation of me was like you relayed the conversation when he was you know he's like how hard could it be and I might thinking like that's got to be the worst question to ever get from Jeff Bezos. Brad: [47:58] Totally totally. <!-- wp:paragraph --> Jason: [48:00] Well you also during that story you kind of highlighted his increasingly exotic taste you talked about the iguana and whatnot and it reminded me of a story in your first book. Of the Blackhawk ink octopus breakfast which was also a fun. <!-- /wp:paragraph --> <!-- wp:paragraph --> Brad: [48:16] Oh that's right wasn't that the CEO of woot Maybe. <!-- /wp:paragraph --> <!-- wp:paragraph --> Jason: [48:19] It was Matt Rutledge yeah yeah I talked to him occasionally and I always remind him of that story because of you. We'll listen Brad we could talk all night but it is happen again we have used up all of our allotted time so we're going to have to leave the audience wanting a little bit more. As always if folks enjoyed this show we sure would appreciate that five-star review on iTunes and if you have any questions or comments about the show please hit us up on Twitter or Facebook. <!-- /wp:paragraph --> <!-- wp:paragraph --> Scot: [48:52] Yeah the name of Brad's book is Amazon Unbound it's available now your favorite book sellers and hardcover it's on e-readers and then also the audio book is available for those of you that like to listen to things while you commute Brad if you working obviously people can find you at Bloomberg so you're right there on their TV but but do you where is your favorite place to kind of for people to check what you're up to is it Twitter or. <!-- /wp:paragraph --> <!-- wp:paragraph --> Brad: [49:16] Brad Brad - stone is my website at bradstone on Twitter and let me just thank you guys you know you both have been sort of mentors to me and the in the wild. World of Amazon e-commerce and it's like a pleasure to be on this podcast. <!-- /wp:paragraph --> <!-- wp:paragraph --> Scot: [49:32] Thanks Brad we really appreciate you taking time to join us. <!-- /wp:paragraph --> <!-- wp:paragraph --> Brad: [49:37] Okay thanks guys. <!-- /wp:paragraph --> <!-- wp:paragraph --> Jason: [49:38] It was entirely my our pleasure and until next time happy Commercing. <!-- /wp:paragraph -->
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