Innovative Competition: The Zappos Strategy Against Giants

What I learned from The Everything Store: Jeff Bezos and the Age of Amazon by Brad Stone.

This is part one of a three part series on Jeff Bezos. The next two books are Working Backwards: Insights, Stories, and Secrets from Inside Amazon and Amazon Unbound: Jeff Bezos and the Invention of a Global Empire.

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(0:54) It may very well be that the absolute intensity of drive and focus is essential and incompatible with all of the nice management thought about consensus and gentle demeanor.

(2:07) Jeff’s clarity, intensity of focus, and ability to prioritize is unusual.

(4:05) As I read the Steve Jobs biography I even had an insight and question about myself, that maybe I haven’t begun to really find my own limits.

(10:49) You have to be able to think what you're doing for yourself. 

(11:42) There is probably no limit to what he can do. 

(12:34) People forget that most people believed Amazon was doomed because it would not scale at a cost structure that would work. It kept piling up losses. It lost hundreds of millions of dollars. But Jeff was very smart. He’s a classic technical founder of a business, who understands every detail and cares about it more than anyone.

(13:45) Bezos has proved quite indifferent to the opinions of others. 

(13:58) Bezos is extremely difficult to work for. 

(15:58) Amazon's internal customs are deeply idiosyncratic. 

(16:15) He is highly circumspect about deviating from well established, very abstract talking points. 

(18:08) The financial community knew very little about D. E. Shaw, and its polymath founder wanted to keep it that way. 

(20:15) Jeff was not concerned about what other people were thinking. 

(20:26) Bezos had closely studied several wealthy  businessmen. 

(21:13) Bezos was disciplined and precise. 

(22:14) Bezos seemed to love the idea of the nonstop workday. 

(22:23) The rest of Wall Street saw D. E. Shaw as a highly secretive hedged fund. David Shaw didn't view the company as a hedge fund but as a versatile technology laboratory who could apply computer science to different problems. 

(25:51) Web activity had grown that year by 230,000%. Things just don't grow that fast Bezos said. It's highly unusual and that started me thinking what kind of business might make sense in the context of that growth? 

(31:59) He swept me off my feet. He was so convinced that what he was doing was basically the work of God and that somehow the money would materialize. The real wild card was, could he really run a business? That wasn’t a gimme. Of course, about two years later I was going, Holy shit, did we back the right horse!

(34:05) Bezos plowed through them at a rapid clip, looking for someone with the same low regard for the usual way of doing things that Bezos himself had.

(34:46) Bezos looked right at Schultz and told him We are going to take this thing to the moon!

(35:16) Jeff was always a big believer that disruptive small companies could triumph. 

(35:55) I think you are underestimating the degree to which established companies will find it hard to be nimble or to focus attention on a new channel. 

(36:45) I brought him very bad news about our business and he got excited. 

(37:28) I think our company is undervalued. The world just doesn't understand what Amazon is going to be. 

(39:30) Bezos had imbibed Walton's book thoroughly and wove Walmart's founder's credo about frugality and a bias for action into the cultural fabric of Amazon. 

(44:54) We were all running around the halls with our hair on fire thinking What are we going to do? But not Jeff. I have never seen anyone so calm in the eye of a storm. Ice water runs through his veins. 

(53:20) Bezos met Jim Sinegal, the founder of Costco. Sinegal explained the Costco model to Bezos. It was all about customer loyalty. I think Jeff looked at it and thought that was something that would apply to his business as well. Sinegal doesn’t regret educating an entrepreneur who would evolve into a ferocious competitor. I’ve always had the opinion that we have shamelessly stolen any good ideas. 

(57:45) Perhaps Amazon’s founder realized he owed Sinegal a debt of gratitude, because he took the lessons he learned during that coffee in 2001 and applied them with a vengeance.

(59:37) He just never stopped believing. He never blinked once. 

(1:00:09) Slow steady progress can erode any challenge over time.

(1:01:40) Communication is a sign of dysfunction. It means people aren’t working together in a close, organic way. We should be trying to figure out a way for teams to communicate less with each other, not more.

(1:04:43) Like a warlord leaving the decapitated heads of his enemies on stakes outside his village walls, he was using the mounts as a symbol, and as an admonition to employees about how not to behave.

(1:06:29) I want you to understand that from this day forward, you are not bound by the old rules.

(1:12:46) I think the thing that blindsided Jeff and helped with the Kindle was the iPod, which overturned the music business faster than he thought.

(1:14:27) Bezos is not tethered by conventional thinking. What is amazing to me is that he is bound only by the laws of physics. He can’t change those. Everything else he views as open to discussion.

(1:15:01) Bezos learned that Zappos was advertising on the bottoms of the plastic bins at airport-security checkpoints. They are outthinking us! he snapped at a meeting.

(1:16:15) Companies that make things and companies that sell them have waged versions of this battle for centuries.

(1:19:04) Every anecdote from a customer matters. We research each of them because they tell us something about our metrics and processes. It’s an audit that is done for us by our customers. We treat them as precious sources of information.

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