Wednesday, December 3, 2014

The Everything Store by Brad Stone

 I have been playing around on Goodreads, adding as many of the books as I can recall having read to my shelves, aided by the list of books that are actually present in my personal library. Fairly often, I've run across authors whose works I absolutely loved, and was following closely, and realize that I missed the last few (or more) books in a series.

For those of you who are too young to comprehend how something like this could happen, who were born too late to recall how things were, B.A. (Before Amazon), let me tell you how things were, back in the olden days. Unless you lived in a major metropolitan area, most cities had perhaps two or three family-owned small bookstores, that had to be careful how much inventory they brought in, because if it didn't sell, it mostly counted as a loss (I'm not going to get into strip-covers here). If you were lucky, and the book store owner either liked the same authors that you did, or you were tied into fandom well enough to be fully aware of what books your favorite authors were coming out with next, you might get new books via special order, otherwise you ended up pretty much at the mercy of random chance in finding works by authors you liked, unless they were bestsellers - not a common occurrence in Science Fiction and Fantasy in those days.

I recall how, when I moved away from my home town and discovered the amazing phenomenon of used bookstores out in the wide wide world, I went plum crazy, buying tons of books that I never saw back home in the local stores. My book collection grew exponentially during those early years, but it was still pretty random whether I could find a particular author's latest works by anything other than pure serendipity. Amazon changed all of that...forever.

Biographies come a number of flavors. There's the hit piece, where the author tries to dish on all the dirt about the celebrity - think Kitty Kelly, and there's the puff piece, where the author shows us how wonderful their subject is. There are also the dry, historical and scholarly works, like a recent biography of Heinlein I recall, and there are also some that are meant to be amusing and entertaining. I think Stone strikes a good balance here between assassination and puffery, as well as showing that while he admires Jeff Bezos' accomplishments, he still sees a flawed and often controversial human being.

So, at this point, we're all aware of just how massively the 800 lb gorilla called Amazon has influenced the publishing and internet marketing businesses. Bezos' success is not a surprise, though it wasn't always that straightforward, and required some out-of-the box thinking.

"One early challenge (1995) was that the book distributors required retailers to order ten books at a time. Amazon didn't yet have that kind of sales volume, and Bezos later enjoyed telling the story of how he got around it. "We found a loophole," he said. "Their systems were programmed in such a way that you didn't have to recieve ten books, you only had to order ten books. So we found an obscure book about lichens that they had in their system but was out of stock. We began ordering the one book we wanted and nine copies of the lichen book. They would ship out the book we needed and a note that said, 'Sorry, but we're out of the lichen book.'""

I learned a couple of new terms early on,

"He (Bezos) later famously admitted to thinking about how to increase his "women flow," a Wall Street corollary to deal flow, the number of new opportunities a banker can access."

In a 1997 speech to HBS students, Bezos said,

"I think you might be underestimating the degree to which established brick-and-mortar business, or any company that might be used to doing things a certain way, will find it hard to be nimble or to focus attention on a new channel."

Especially with the rapid pace of change we are seeing today, you've got to be flexible to adapt and survive, much less to anticipate the trends and to remain profitable.

Regarding work/life balance for Amazon employees,

"The reason we are here is to get stuff done, that is the top priority. That is the DNA of Amazon. If you can't excel and put everything into it, this might not be the place for you."

One of the most difficult times for Amazon was right after the dot-com boom. One thing that many people forget is that the dot-com boom was also accompanied in all of the high tech industries by the "tech boom". Computer and network hardware manufacturers couldn't keep up with the demand, nor could any of their suppliers, so huge amounts of manufacturing capacity were brought online, and cutthroat hiring practices abounded, until things fell apart in 2001.

"There were several immediate reasons for the stock market's reversal. The excesses of the dot-com boom had begun to wear on investors. Companies without actual business models were raising hundreds of millions of dollars, rushing to go public, and seeing their stock prices roar into the stratosphere despite unsound financial footing...nudged along by other events over the course of the next two years, like the collapse of Enron and the 9/11 terrorist attacks."

Bezos gained a reputation as a ruthless competitor, and demanding customer.

In negotiations with UPS, Amazon's people threatened to go to Fedex if their demands weren't met, and UPS officials tried to call their bluff.

"In twelve hours, they went from millions of pieces a day to a couple a day. The standoff lasted seventy two hours and went unnoticed by customers and other outsiders...UPS execs caved and gave Amazon discounted rates."

I've noticed recently how, even when you don't select the "rush" type of shipping from Amazon, items still arrive far more quickly than estimated.

In 2003  "click-to-ship time for most items in the company's FCs was as minimal as four hours. The standard from the rest of the e-commerce industry at the time was twelve hours."

Why doesn't Amazon get called out like Wal Mart does over worker issues? In their distribution centers temporary workers only make $10 to $12 per hour, with high pressure to deliver and a point system which penalizes workers for minor infractions.

"The number one thing standing in the way of Amazon unionization is fear. Employees are afraid they'll fire you - even though it's technically not legal. You're the one who has to fight to get your job back if they do."

There are several great chapters on the rise of eBooks towards the end of Stone's book, which explain a number of things I've found puzzling about the industry. I remember the early faltering times, and I've been pleasantly surprised to see where things have gone so far, though costs are still, in my opinion, too high.

A good read. Even if you hate Amazon, I wouldn't bet against Bezos and his team.

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