An Interview with Richard L. Brandt

Richard L. Brandt, author of "One Click: Jeff Bezos and the Rise of Amazon.com" — Richard L. Brandt, author of “One Click: Jeff Bezos and the Rise of Amazon.com”

Richard L. Brandt has been covering Silicon Valley for over 20 years as an editor and columnist and correspondent. His first book profiled financier/entrepreneur Thomas Weisel, and his second, The Google Guys was a well-regarded foray into the minds of Larry Page and Sergey Brin. In 2012 he turned his sites on Jeff Bezos in One Click: Jeff Bezos and the Rise of Amazon.com (which we reviewed here), a challenge made all the more difficult by Bezos’ notorious reluctance to engage with the press except on the most restrictive of terms. A multi-award winning journalist whose work has appeared in BusinessWeek, L’Express, Science magazine and others, and who regularly appears on the BBC, CNN, NPR and elsewhere, Brandt took time from work on his next book to talk with us at length about Bezos, Amazon, and what their future means for the rest of us.

brevity

Agency Review:

We allude in the review to the fact that One Click, while informative, is very brief. And while the internet is full of paens to brevity being the sole of wit, that’s not usually a quality one expects from a biography of one of the most powerful and influential companies on the planet. So just why is One Click so short? Did you feel you covered everything that needed to be said? Did you intend to write a longer piece but couldn’t get the access you were looking for? Did you feel that there already were longer pieces and that this work’s brevity would make One Click more compelling and distinctive? What was the strategy?

Brandt:

The idea of a brief book was actually a noble idea by the editor with whom I worked. Most biographies come in one format; extra large, whether or not the subject or the writing deserves it.

A 400- to 500-page biography is great for the core audience of biography fans, but not necessarily for everyone else. The idea for this book and for my previous book about the founders of Google was to try and reach a broader audience. There are a lot more people interested in Jeff Bezos, Larry Page and Sergey Brin than just the dedicated biography readers.

Also, as you note, the conventional wisdom is that the age of television, YouTube and Twitter calls for brevity. People are supposed to have short attention spans. Going into these projects I was hoping to explain some important people and companies to people who might not want to know every detail of the subjects’ lives, but would like to get the big picture from a smaller book. The essential elements are supposed to be there.

Agency Review:

Well, do you think it worked?

Brandt:

I don’t know. I still don’t know if the concept is valid. My book about Page and Brin (The Google Guys) got better professional reviews than another (much larger) book about Google that came out at nearly the same time, but did not sell as well. My book about Jeff Bezos did much better, but there was no competition. Both books were translated into 13 or 14 languages, but I do not get results of overseas sales.

The main criticism of the books, from reader reviews on Amazon.com, was that there was not enough “new” in there. One reader of One Click claimed you could find all the information in my book in all the Time and Newsweek articles written over the years! I’m very glad he read all those articles, but he was not part of the intended audience. Happily, he can now read Brad Stone’s The Everything Store, released in October, a much larger, more comprehensive and ambitious book than mine.

I will add one more ironic note about reviews and expectations. I read a review of The Everything Store recently in which the reviewer praised it for all the interesting new and unexpected detail about Bezos. The most surprising revelation: that Bezos didn’t start an online bookstore because he loved books but because books offered the best business model for online sales. That information was in both my book and in Robert Spector’s Get Big Fast, published in 1999.

Agency Review:

Glad to hear that there are reviewers who are both more and less knowledgeable than we are. But with all that said, do you think you covered everything that needed to be covered?

Brandt:

No, but not because of the size of the book. The problem is that Jeff Bezos does not feel it’s necessary to tell his story or offer his opinions to the world. Ironically for someone who created the word’s biggest bookstore, he does not like seeing anything written about himself unless he has complete control. Usually, he originates the interview and the story line (such as introducing a new product). Otherwise, he does not give interviews, does not answer questions, does not respond to the simple question of whether a piece of information is right or wrong. In fact, he does not let anyone at Amazon do so, not even the public relations department. He loves the aura of mystery.

And that is one reason I decided to write the book. Spector’s book was the only previous book about Amazon and Bezos (except for a few that were collections of Bezos quotes or other public information). Bezos and Amazon are big, important and influential. They affect our lives and transform business. The public has a need and a right to know more about Jeff Bezos, just as they have a right to know more about powerful politicians, great reformers, influential terrorists and others who have the power to affect their lives.

Brad Stone, who currently covers Amazon.com for Bloomberg Business Week, was able to get access to others at Amazon and wrote a much more ambitious and comprehensive book than mine. I hope it sells extremely well. I’ve ordered the book but have not yet had the chance to read it.

Agency Review:

And yet recently (November 2013) the esteemed newsmagazine “60 Minutes” ran a highly publicized segment on Bezos. Does this indicate a shift in his approach, or just a tactical change to achieve some end?

Brandt:

That program was an example of Bezos manipulating the press, not opening up more. He gave one select interview to one news organization with the promise to offer something new and exciting—the drone delivery system. That drone system became the item of the week in technology news, and everyone had to just refer to the 60 Minutes piece because apparently nobody else can get an interview with anyone at Amazon about it.

My concern is that, by giving very rare, exclusive interviews, Bezos is successfully manipulating the press. How often do you see anything negative written about Bezos and Amazon? The 60 Minutes interview wasn’t exactly a hard-hitting Mike Wallace-style piece. Charlie Rose seemed star-struck and unquestioning of anything Bezos said. Bezos had almost complete control of that interview. Why no questions about the class-action lawsuit by Amazon employees, the class-action suit from retailers selling through Amazon who say the company isn’t paying them within the promised 90 days, or even Bezos’ long fight with states that wanted him to charge sales tax?

This ‘rare audience with royalty’ approach to granting interviews is going to make the most jaded journalist wary of saying anything negative, both because it will destroy the chance of getting another interview and because it is so hard to confirm negative information.

fear, part one

Agency Review:

Google, Amazon, Facebook, Apple – the amount of ink, digital or otherwise, spilled figuring out what they will do next could raise the sea levels higher than global warming. So what’s a little more, especially if it comes from the man who has written so insightfully about two of them? What do you think is next for Amazon. As of this writing, Bezos has recently personally purchased “The Washington Post”, so, of course, there’s speculation that he’s going to mine it for data or perhaps content. But that’s Bezos and not Amazon. What do you think is next for the online retailer? Or said slightly differently, who do you think should be the most afraid of Amazon next, and why?

Brandt:

Next on the Agenda for Bezos and Amazon? Total global domination. Jeff Bezos sees himself as one of the greatest businessmen and one of the greatest visionaries to enter the world of business. He is certainly the former. He’s ambitious and wants to keep growing.

There’s an interesting new article from the Wharton School at the University of Pennsylvania that suggests a mini-apocalypse in retailing (“In Amazon and Walmart’s Battle for Dominance, Who Loses Out?”) The idea is that Amazon and Wal-Mart are trying to kill each other, and the that real victims may be every other retailer. The article suggests that Wal-Mart is “finally getting serious about e-commerce” and that the competition to sell goods from every manufacturer in the world at Chinese peasant prices could finally kill off all but the most interesting specialty stores.

I believe this is actually true, except for the part about Wal-Mart playing a significant role.

Agency Review:

Why?

Brandt:

Because when has a legacy company ever survived the onslaught from a new technology company with a better business model? Especially when that legacy company is “late to the game” – which is just another way of saying “dead from the start”?

Look, Amazon destroyed the big book retailers who had the same business model that Wal-Mart has – high volume/low prices/big selection but with an inferior technology (actual brick and mortar stores). Physical stores cannot compete on price – and no one knows that better than the big retailers themselves, because it’s how they beat the small independent bookstores. Their technological innovation was larger stores and chain buying in bulk – which allowed them to drive down prices while driving up selection relative to cost per square foot of retail.

And it worked great until Amazon came along and offered an almost infinite selection and volume and no retail presence to pay for in expensive malls. Fifteen years later and the big-box stores still haven’t figured out how to compete successfully with Amazon.

So the first victim, the first group who should be afraid of Amazon next, are the stores with the same business strategy as Amazon (price) but the wrong structure (physical stores in which products are stocked months in advance rather than just-in-time). In other words, Wal-Mart. Then the other retailers will follow unless they adopt the small, specialty bookstore strategy.

Agency Review:

So your advice to, say, Target, which is a complicated mix of style and price, would be to run from price and towards style, towards the boutique-y qualities of specialty stores? And to, say, Best Buy, would be to run from price and towards Geek Squad?

Brandt:

You don’t necessarily have to run from price, you just have to offer service (although it’s easier to do that for expensive items). Amazon does offer some style items; shoes, for example. Physical retailers need to offer great service—advice on styles like the clothing boutiques, help with technology purchases like Best Buy. If your only strategy is price, you have a tough future.

Agency Review:

Okay, so Wal-Mart and then other retailers who trade on price are first in line on Amazon’s gangplank. Anyone else?

Brandt:

Well, you have to ask yourself, who are even more clueless than big box retailers? For my money, it’s the actual creators of entertainment media — movie, TV programs and music companies. They’re lost in the Internet, where enormous distribution enables much lower prices, repeat sales and where giving away slightly dated products is the great opportunity – although they consistently see it as the great threat. You want to end piracy? Sell music at prices low enough to make piracy unnecessary and at volumes high enough to make a profit.

I’ll give you an example: My wife and daughter love “So You Think You Can Dance.” But they missed the last two episodes. Fox, in its idiocy, decided to make everyone wait a month before selling them the episodes online. Of course, by then, my wife and daughter had lost interest – and Fox loses revenue, ad and otherwise. Because Fox does not think in Internet speed and misses a golden opportunity to truly engage its customers where they are increasingly living – online. The shows should have been available online the day after they aired on TV. Oh, and by the way, posting Twitter feeds during the program is not engaging customers online in any way that helps build the franchise.

And that’s why Amazon is fast becoming a media company.

Agency Review:

So the second group of companies to be afraid is media content creators – movie, TV, music. Anyone else?

Brandt:

Isn’t that enough?

fear, part two

Agency Review:

Now let’s take the other side of that question. Because while everyone is always talking about why we should all be afraid of Amazon they tend to overlook the fact that Amazon is a business, not a mythological beast, and like every business, has weaknesses they jealously protect and threats that they’re afraid of. So what do you think Amazon’s are? Is it something about one of the other horses of the digital apocalypse? Is it demographic? Economic? Political? Logistical? Technological? There must be something, so, what do you think it is, why, and what do you think they’re doing to protect themselves from it or to eliminate it altogether?

Brandt:

Amazon.com has few weaknesses as a business right now. This is IBM, Microsoft, Apple, Intel at the peak of their power. I do not see any current direct competitors to threaten it.

Agency Review:

Okay, but peak implies there’s no where further to go – and we have observed elsewhere that it’s often when an organization is at it’s most dominant that we find, in retrospect, there were little beasties crawling around in the shrubbery that would change the game.

Brandt:

Right, and IBM was forced to undergo a huge transformation to survive once PCs came along, and Microsoft and Intel are currently facing huge life-or-death struggles now that PCs are being displaced by different portable devices that do not rely on Windows or Intel chips. And of course, Apple is in danger because Steve Jobs is gone.

A new major innovation in technology will challenge Amazon at some point. I don’t yet know what that is. Bezos managed to get into a new technology, cloud computing, very early on. That’s a level of diversification that Microsoft and Intel have never achieved, although Intel is working on it. If Bezos can keep doing that – and as long as the Internet continues to be the major transformative force in business that it has been thus far – Amazon has a long future ahead of it.

Now, that said, it is entirely possible that the loss of Steve Jobs could actually be a loss for Amazon. Bezos only created the Kindle Fire after Jobs led the way with the iPad. That’s because, in part, Bezos is not a Jobs-like visionary. In a sense he’s not even a Gates-like visionary – who had trouble seeing beyond PCs and the business model he created there.

Agency Review:

So no threats? Really? Not from Google? Not from Apple in spite of no Steve Jobs?

Brandt:

Google could end up being the major threat to Amazon. Google is becoming an operating systems company which you would think would put it in direct competition with Microsoft, except it’s out-Microsofting Microsoft, by giving it away – which is what’s killing the folks in Redmond.

Bezos can follow a similar strategy by selling the Kindle Fire at a loss because what he really wants to do is use them purely as a vehicle for delivering the product he really wants to sell, which is electronic media.

Google however, has an extra advantage. Because it’s really a very clever advertising company. It makes money by giving away technology products and using them as a pathway to advertising. Now, if that model can be applied against Amazon, it’s a threat because Bezos does not have an advertising model and it’s too late for him – anyone – to take on Google in that space without some new breakthrough or game-changing insight.

Agency Review:

So Google is the threat?

Brandt:

Yes, but it’s a little more complicated than that. Here’s a scenario that makes sense to me:

Start with what we know, that Amazon is willing to sell hardware at a loss in order to make most of its money selling media. And that it’s becoming a power in media creation and distribution but that it doesn’t do advertising supported products yet.

Also start with the reasonable expectation that Chinese companies will become a major force in hardware such as cell phones and iPad- and Kindle-like products and will be able to sell them very cheaply.

Agency Review:

But it doesn’t create content and it doesn’t do advertising.

Brandt:

Right, which is what Google does –it uses the creation of software and media and content (via YouTube) to drive people to its advertising, which is its source of revenue.

Now suppose Google teamed up with those Chinese manufacturers in order to distribute that media through its products –competing directly with Kindle Fire (and, of course, iPad). Of course, YouTube isn’t nearly as far along as Amazon is in creating more professional media products, but if Google does move in that direction – keep an eye open for it to partner with young and innovative media companies – then the Google/China combination could be a direct threat to Amazon’s media business, which looks to be a big part of its future revenue.

So Google figures out how to cheaply go head-to-head with Kindle, but at the same time has an advertising business which is a huge revenue stream that Amazon can’t compete with – combined with the fact that anti-trust organizations around the world will probably also be going after Amazon in the future, and you have a recipe that, one would think, would keep Bezos up at night.

why?

Agency Review:

As one gets about halfway through the book we see Amazon begin to morph, adapt, evolve and change as the internet and America’s acceptance of e-commerce does all those things too. And as it does, one can’t help but look for some kind of through-line in Bezos’ character that explains why he is able to make such smart choices. What is it in him that, like Zuckerberg a decade later, made him so adept at adapting? Because people – even really smart people – don’t really “change”; they tend to have a distinct and often complex way of looking at things that is applicable uniquely to their changing times and which they take advantage of. But Bezos had that and the ability to adapt and change. How? Why?

Brandt:

You’ve hit on Bezos’s big strength. Very few executives can diversify. Almost none have. That’s especially true for entrepreneurs, most of whom who come up with one good idea and have a passion about that idea. Bill Gates loved software. Bob Noyce, co-founder of Intel was a brilliant scientist who invented the first successful integrated circuit.

Agency Review:

But Steve Jobs wasn’t a tech guy…

Brandt:

No, but he loved technology. And he teamed up with Steve Wozniak, who created the product. Jobs was unique. His real passion and talent was product design, not creation. His love of technology was broad enough, and his design sense good enough, that he managed to diversify Apple into a wide range of electronic products. Jobs faded for a while because he was difficult to get along with, but he made a comeback when he matured enough to keep from killing his employees (just) and because he had a great design sense.

Bezos, however, has none of those traits. He wanted to be an entrepreneur, but did not know what kind of company he wanted to create. Absolutely no idea. He did, however, understand technology, was an extremely talented programmer himself for a while, and has a computer-like analytical mind for business. So from his perspective, all he had to do was figure out what kind of technology business to get into.

He did that when his boss at the time (David Shaw, who ran a stock trading company that used computers to conduct the trades) told him to look into this new thing called the Internet for business opportunities. Bezos compared a bunch of different products that might be sold through the Internet, analyzing their business strengths and weaknesses, choosing the best one (books) based on business analytics, and figuring out how to make the business work. He didn’t let a passion or a narrow expertise for one particular product or technology get in his way.

He was never driven by passion for a particular product or business, but by the simple passion of wanting to be the world’s greatest businessman and the confidence that he could do it.

Agency Review:

Do you think he is? The greatest businessman in the world?

Brandt:

He just may be. He can succeed at just about anything he puts his calculating brain to work on. Consider this:

He succeeded in books and started thinking about selling other things through the Internet – which turned him into the Internet’s greatest retailer.

The Internet grew, and to grow with it, he built up huge computing power at Amazon – and then he realized (with helpful suggestions from others) that he could use those very same computers to offer computer services in the cloud. Which he did. Amazon is now the biggest cloud computing company in the world.

He saw others trying to sell their unsuccessful e-book readers at a profit (and work out deals with enough publishers to give the e-books something to read), and created the first successful e-book. He took a page from Apple’s strategy with the iPad – and created a tablet computer and the media business that would deliver products to the Kindle Fire.

That’s quite a track record, and it’s across multiple businesses. But that’s because all of it was based on analytics, and not on his particular love of one piece of technology. It was based on his love of technology in general and an incredible business acumen.

Oh and one more thing: I wouldn’t put much faith in Mark Zuckerberg yet. He knows social media, but not much else from what I can see.

perspective

Agency Review:

One of the challenges inherent in writing a history like the one you wrote of Amazon is, in the later chapters, one of perspective. It’s difficult enough to have enough context to write about a completed event, but you necessarily lose that the closer to the present you get. And with Amazon, even the ancient history is, at best 19 years old. So how difficult was it to maintain perspective as you wrote and as Amazon continued to make news that must have changed your thoughts mid-draft? And now that you have the additional distance of two years, what new observations about the company, especially the one you were writing about in the final chapters, would you add?

Brandt:

Perspective is always difficult. For events and people whose history has ended you have the perspective of hindsight, but then you may not have actually witnessed events happening. The value of a journalist is providing an eyewitness account. The more removed you are from the event, from the people involved in the event, the less reliable your information and perspective. Armchair accounts of a foreign war are always flawed.

That made this book doubly difficult. As I noted earlier, Bezos is controlling in the extreme and thus would not allow access to the people involved. I did as much original reporting as I could, but there is never enough. That said, I have covered technology since before Amazon’s founding, so I have some perspective from past first-hand accounts.

It was also difficult because, as you note, things are still changing at Amazon. And that’s mainly frustrating because every move reveals more about Bezos’s current thinking and his strategy. For example, after the hardcover was released Bezos introduced the Kindle Fire. (In the paperback version of the book I added an afterword to address this issue).

Agency Review:

So what did the release of the Kindle Fire tell you?

Brandt:

That Bezos believes that since he’s conquered the sales of physical goods through the Internet, Amazon’s future growth is in electronic goods. Amazon is producing its own movies (http://studios.amazon.com/) and TV-style episodic programming (http://insidetv.ew.com/2013/11/07/alpha-house-john-goodman-amazon/). That’s why he will probably always sell the Kindle Fire at a loss – because making money from the hardware is irrelevant.

Agency Review:

Irrelevant?

Brandt:

Bezos makes Kindles purely to give consumers easy access to his media products. Bezos wants to be bigger in distributing music and programming. That much I got in the afterword.

Of course, to your original question, it didn’t stop there. Because after the paperback was released, the big news was Bezos buying the Washington Post.

Agency Review:

Did that surprise you or did you see it coming?

Brandt:

That was something new, and yes, initially it did surprise me. Now, as you pointed out earlier, he didn’t buy it through Amazon; that would make it a clear business move and a conflict of interest. And in my opinion – if I can go off on a tangent here for a second – media outlets need to be independent. How can a business reporter be trusted to write fairly about a parent company or its competitors? Conflict of interest is dangerous. So the fact that he did not buy it through Amazon said to me that he does not want Amazon to be a news media company, and I’m willing to believe that’s because he recognizes the conflict, and realizes the difference between news and entertainment media – although we’ll all have to watch future developments to be sure.

But, as with everything else he’s gotten involved with – bookselling, the internet, cloud computing – he never showed any interest in running a newspaper before. That is, he didn’t buy it because, like Charles Foster Kane, he thought it would be fun to run a newspaper. He shows no passion for the news outwardly, has never championed it in any way. And as I’ve said, he won’t even talk to the press unless he can control what is said.

It’s also worth nothing that when he does want to invest in something he’s passionate about, he does it through Bezos Expeditions. That’s where he’s funding his space exploration company, Blue Origin, his thousand-year clock, and the effort to recover spent Apollo mission engines from the ocean. Science fiction and space, looking toward the far future are the things he was always passionate about as a youth.

So he didn’t buy the Post either through Amazon or through Bezos Expeditions. Which means it must be, at least in his mind, in some third category.

Agency Review:

And that category is?

Brandt:

Well, that’s the $64 billion question, isn’t it? My hunch is that he wants to figure out how to sell the news, not create it. That’s why he has assured the editorial staff at the Post that he does not want to affect the news gathering business – which he would probably say regardless of his intentions – but it makes sense because the problem in the news business today is not reporting and writing the news, it’s figuring out how to make money doing it.

Agency Review:

Okay, but why? On the one hand, it’s not for altruistic “I have always loved newspapers” reasons. And on the other hand, he’s not in the content business.

Brandt:

But he is in the content business. Just not news content – yet. And the best way for Bezos to figure out a good retail model for news content is to own a respected newspaper. He sits on the board, analyzes all the business issues, sees first hand where the problems are, and has the power to change the business side as he sees fit. He has complete control over the money-making side of the business, combined with his complete faith in his own ability to figure out how to make money.

Agency Review:

So, in other words, Bezos bought the Post, but he might just as well have bought, say, Paramount Studios, or CBS or HarperCollins – any large content-generating entity – so he could dig into the machinery of it from the inside.

Brandt:

Not quite. Most content, such as films and music, has always been sold—what Internet folks call Pay Per View. But news – and television – has always been supported by advertising. Bezos doesn’t know that business. He seems to believe he can sell TV programs, but so far, on the Internet, nobody has had much success either selling news or supporting it by advertising. The Post gives him a unique opportunity to experiment with different business models.

And then, looking down the distribution chain, if you were Bezos, what online electronic retailer would you be likely to use to distribute that content? Amazon.Or, if necessary, an entirely new and separate retail channel within Amazon for news distribution, delivered to the Kindle product line. In this model, Amazon is just the newsstand—the distributor of the news—not the owner or producer, which eliminates potential conflict of interest. And, of course, if Bezos figures out how to do it for the Post, he can then offer the service to any news media organization. Which is a whole new line of business that nobody owns yet.

And that’s the future of Amazon – which is also the history of Amazon – developing businesses that nobody yet owns.

You can read our review of Richard’s book here, or order it from Amazon here or from Barnes & Noble here – or pick it up at your local bookseller (find one here). Or you can reach out directly to Richard here.

Illustration of Richard L. Brandt by the brilliant Mike Caplanis