The Relentless Man Behind the "Everything Store"

Amazon’s founder and CEO, Jeff Bezos, stepped down last week.

 

But did you know how the company got the name? Brad Stone’s aptly titled book The Everything Store tells the story. It was initially called Cadabra, Inc, derived from the word “abracadabra”. As in magic. The idea was eventually dropped (it sounded too similar to the word “cadaver”). Bezos, in a sign of his ambitions, even considered the name Relentless.com. (Try typing relentless.com into your browser, it will redirect you to the Amazon website). Friends though convinced him that the name sounded too sinister.

 

So why Amazon? Well, he was picking a name before the Internet had taken off. As Bezos wrote in his farewell letter:

“The question I was asked most frequently at that time was, “What’s the internet?” Blessedly, I haven’t had to explain that in a long while.”

Back then, alphabetical listings still existed, and Bezos wanted a name starting with “A” to be closer to the first set of names. But why ‘Amazon’ in particular? Here’s why, as Bezos told Stone:

“This is not only the largest river in the world, it's many times larger than the next biggest river. It blows all other rivers away.”

 

Amazon today isn’t just the world’s largest online retailer. As Om Malik wrote:

“Amazon isn’t a retailer — it is a data intelligence and logistics company. Those two areas of expertise are attached at the hip. There is virtually no industry that is not being redefined by machine learning, data, and resultant intelligence — and that includes logistics, which is how we get our same day deliveries.”

 

But do you know which division of Amazon makes (almost) all the profits? No, it isn’t their “everything store”! Rather, it’s their cloud service business. Aka AWS. Or Amazon Web Services. In fact, AWS was built to enable the online retail business to keep scaling up endlessly. As Tim Carmody said:

“It is impossible to do digital retail (and increasingly, brick-and-mortar retail) at Amazon’s scale without having the technological capacity a company like Amazon has.”

In other words, as Carmody puts it so colourfully:

“Amazon has a huge advantage in both digital and physical logistics; that’s better than a moat, it’s two moats. It’s a moat surrounded by a ring of fire with a dragon inside.”

 

Tech blogger, Ben Thompson, who lives in Taiwan wrote:

“Amazon doesn’t simply make buying thing easy from the other side of the world, they make dealing with shipping and customs trivial; they do it all, and refund me if they over-estimated the cost. It’s so easy that it is easy to forget how much work went into making this possible.”

 

Bezos took a gamble on the still-in-its-infancy-but-growing-phenomenally thing called the Internet. Bezos told in a college speech back in 1998:

“(The rate at which the Net was growing back then was) just not something we see in our everyday life. But things don’t grow this fast outside of Petri dishes. It just doesn’t happen. When I saw this, I said, okay, what’s a business plan that might make sense in the context of that growth.”

Looking back at that moment, Thompson writes:

“Bezos started with the solution and then looked for a problem. That solution, broadly considered was the Internet.”

 

Apart from boldness, Bezos had another rare quality for a businessman: to think long term. Thus, he believed that keeping prices low would build customer loyalty, which would (in the long run) more than compensate for any short-term losses. He believed that if you kept prices low, more users would flock in, and those increased volumes would then allow you to make profits even at the lower prices. Volumes-will-create-profits mantra is exactly why AWS is so profitable today: Bezos was advised to price AWS at 15 cents/hour; he slashed it to 10:

““You realize you could lose money on that for a long time,” van Viljon told him. “Great,” Bezos said.”

 

Bezos has always been in things for the long haul…