The article I’m referring to appeared in Wired magazine. “Jeff Bezos Owns the Web in More Ways Than You Think” by Steven Levy was posted November 13, 2011, at Wired.com. Last check, it’s still posted online. You can also read it in the December 2011 print edition of Wired.
Of course, I read the article on my iPad2, which is ironic. This article is about Jeff Bezos, Amazon’s resilient and innovative CEO. The article says that he “Owns the Web.” So, I’m sure Bezos read the piece on a Kindle Fire, his bet on the future.
Jeff Bezos, CEO, Amazon*
You don’t hear quite as much about Bezos as you do about former Apple chairman Steve Jobs. There’s a best-selling book out on Jobs. Jobs is even profiled in the same print edition of Wired (see page 230, “The Revolution According to Steve Jobs,” for reflections on Jobs’ legacy.) But in my opinion, I think you’re going to hear more and more about Bezos and his view of the world.
Jeff Bezos, CEO, Amazon
Kindle Fire, Bezos says, “is the culmination of the many things [Amazon.com has] been doing for 15 years.”
He’s thinking that Kindle Fire will set the world ablaze. I read how Kindle Fire is considered by many to be the first serious challenger to the dominance of iPads. This season, Kindle Fire ($199 at retail) is making its mark in stores, in ads and on TV, and of course on Amazon’s website.
But the story isn’t really about the devices, Kindle and iPad. It’s about cloud computing and the ability of users to access content. The story is about touch-screen technology and the move away from the mouse. It’s about users being delighted by the staggering amount of media they can now access in the palm of their hands.
Touch screens allow your fingers to swipe, stroke and flick your way through the Web and through apps. I remember the technology being new in the ’80s and ’90s. This time, it’s here to stay.
The future is here – iPad and Kindle Fire are powering it. Our book and audio collections now exist in cyberspace, in what technologists call “the cloud” — the collection of online storage where digital media is kept. “The cloud” is just a bunch of computers used for storage. In it, Netflix stores your movie downloads. NASA uses it for its Jet Propulsion Labs. So does the Harvard Medical School. In fact, they all use Amazon’s cloud storage services.
So, you can now tote the content you own (or rent). You just need a device to stream live content or download content. Kindle is built to stream. iPad, iPod and iPhone had been built to download, but Apple has introduced iCloud and with it is moving toward the streaming model like Amazon.
This is what amazes me …
Normally, tech companies move like lightening. They have to. Rapid-fire changes in engineering design, material costs and production make the life of a tech product and product category tenuous. The tech world lives in the moment. I’m not saying technology companies don’t plan or consider long-term goals and market trends. However, they live in a world of immediacy. Standards change quickly. Gadgets come and go. When you design and manufacture them, you have second, third and fourth iterations already in the pipeline just as the first generation device hits the stores.
Bezos sees things differently. After reading the Wired article, he strikes me as a long-term player. He thinks of technology not in the form of devices, but services…
- “Indeed, Bezos doesn’t consider the Fire a mere device, preferring to call it a ‘media service,’” the Wired article states.
Bezos takes pride in Kindle Fire’s design. More important, though, is its function. “He really sees it as an advanced mobile portal to Amazon’s cloud universe,” the article says.
Wherever you go, your device can access “the cloud” to stream books, music and video. Upgrade your Kindle Fire, and you still have access to your content. “Replacing the hardware is no more complicated or emotionally involved than changing a flashlight battery,” the Wired article states. With the right subscriptions, you can watch episodes of Lost today. Then, 15 years from now, you can still watch those Lost episodes on your “Kindle Fire15,” the version I imagine would be out at that time. “What we really built is a fully integrated media service. Hardware is a crucial ingredient in the service,” Bezos says, “but it’s only a piece of it.”
A big piece of Bezos world is low margins
The lower, the better. “We’re a company very accustomed to operating at low margins,” Bezos says. “We grew up that way. We’ve never had the luxury of high margins, there’s no reason to get used to it now.”
Amazon works the “high volume + low margin” formula very well. As the company enters each new market, it uses this formula. But, it’s willing to make the necessary investments so as to succeed. For example, many may credit Amazon with permanently changing the physical bookstore business, and I would agree. Yet, in moving into e-publishing, Bezos understands the need to structure the business for the long term. “We believe that some of the royalty streams being paid for e-books are not high enough,” he says. “That’s why, in our Kindle Direct Publishing program, if you price your book between $2.99 and $9.99, we give you 70 percent of the revenue.” Think about that. In doing business with authors, Bezos will give a 70-percent share for their book rights. Of course, that lowers Amazon’s margins, but Bezos feels he can sell a lot of books. Time will tell whether or not the model will work in direct publishing. But I like how Bezos has a clear strategy and sticks to it.
Not in it for the quick strike
So, then, in Bezos I see a company founder who’s not in it for the quick strike. Here today, cash out tomorrow. No. Bezos wants to build something. He wants his work to last.
I think you can see that there are some principles here that translate into the world of financial planning. My world.
- Focus your planning on the long-term.
- Keep an eye on expenses.
- Don’t make investment choices simply for “quick strike” opportunities.
More Jeff Bezos quotes …
On customer service: “Our version of a perfect customer experience is one in which our customer doesn’t want to talk to us. Every time a customer contacts us, we see it as a defect. I’ve been saying for many, many years, people should talk to their friends, not their merchants. And so, we use all of our customer service information to find the root cause of any customer contact. What went wrong? Why did that person have to call? Why aren’t they spending that time talking to their family instead of talking to us? How do we fix it?”
On staying focused: “I like to say, ‘Maintain a firm grasp of the obvious at all times.’”
On being patient: “In some cases, things are inevitable. The hard part is that you don’t know how long it might take, but you know it will happen if you’re patient enough. E-books had to happen. Infrastructure web services had to happen. So you can do these things with conviction if you are long-term-oriented and patient.” “I like invention. For me, it feels like the rate of change on the Internet today is even greater than it was in 1995. It’s hard for me to imagine a more exciting arena in which to invent. And so, it’s pretty easy to wake up excited.”
* My disclosure …
I want you to know that I personally do NOT have any investment positions with Amazon stock. I am not making a recommendation for you to buy Amazon. I simply am recommending that you think broadly and long-term.
