Tuesday, December 24, 2013

Review: The Everything Store

The Everything Store is a history of Amazon from inception to circa 2012. Of all the tech companies that affect our lives, Amazon is the least sexy to the business press. There's nothing more boring than retail, and it's easy to categorize Amazon as a simple retailer. The truth is, there's nothing simple about what Amazon does. I remember first ordering books over the internet from a bookstore that is now defunct. When I called them up to ask about my order, the woman said, "Oh, it's so nice to talk to you! So you're the guy who's been ordering these great books that I wished everyone would read." Further discussions led to my realization that she and her husband were basically doing all the shipping themselves, and were too overwhelmed with orders to do anything interesting with the website like setting up a review system, etc. When Amazon launched I ordered books from them instead (largely because of the large discounts they offered), I was impressed immediately by how complete their review system was.

Fast forward to just a few years ago, and it's astounding to see what Amazon has done with their razor-thing profit margins that Apple, Google, and Netflix would all sniff at. Amazon has dominated cloud services to the point where Google is an also ran with AppEngine and Google Compute Engine. Amazon has effectively outflanked Apple with the Kindle and continues to dominate ebooks even despite Apple's attempt to raise prices for consumers by entering the market. And I'm not a Netflix subscriber, but as an Amazon Prime customer, my son watches Blue's Clues and Curious George in addition to getting his diapers delivered by Amazon. My wife and I once calculated that the savings from buying diapers alone from Amazon as opposed to Babies R Us more than paid for Amazon Prime.

The book does a fantastic job of describing Jeff Bezo's background and how he came to start Amazon. We get interesting insight into several business decisions, including how Amazon negotiated to buy Diapers.com, and what happened back then. There's also some details about the launch of EC2 and S3, and Stone does a great job of debunking the myth that Amazon launched those cloud services because of excess capacity. And here's information I head from a former Amazon employee that's also in this book: that Amazon initially launched it's cloud services at a loss. "Fat Profits only attract competitors," is a classic Bezos quote.

Lest you think the book paints a rosy picture of Amazon, there's a lot of the ugly exposed as well, which is something that I don't see in books about Apple or Google, for instance. Stone does not shy away from the stories of burnout, the executive politics, mis-steps, and ruthless competition that Amazon imposed on others in the industry. It's quite clear that Amazon is willing to take deep losses in order to hurt competition, but that ruthlessness is tempered by one thing: Amazon's never willing to hurt the competition without also helping its customers, and Amazon is willing to work hard to understand its customers in a way that other successful companies don't.

All in all, this book is well balanced, and does not go overboard in worshiping Jeff Bezos or treating Amazon as a company free of blemishes. In a world filled with books written by sycophants such as Steve Levy, that's a rare thing and worth a read. Recommended.
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