Book SummaryThe Everything Store, by Brad Stone

1-Page Summary1-Page Book Summary of The Everything Store

The Everything Store is the story of Amazon, from its founding by Jeff Bezos as an online bookstore to its rise as a commerce giant. The book also covers a number of Amazon and Bezos’s management techniques.

Overall Amazon History

• 1994: Bezos notices the Web is growing fast - the number of bytes increased by 2057x fold from the previous year, outpacing other internet technologies at the time, like ftp and gopher.
  • At D.E. Shaw, Bezos is tasked with researching opportunities in the Internet.
  • They discuss the “everything store” - an intermediary between customers and manufacturers that sells every type of product worldwide, with unlimited shelf space on the Web.
  • Bezos leaves D.E. Shaw to start his online bookstore.
• In July 1995, Amazon launches and rides the wave of the internet. Its sales grow exponentially, with $16 million in revenue in 1996 and $148 million in 1997.
• From the beginning, Amazon has customer centricity as its focus. Bezos believes virtuous cycles (lower prices -> more customers -> more leverage on suppliers -> lower prices) will win the day.
  • After conquering books, Amazon expands into music, DVDs, toys, and electronics.
• Amazon raises over $1 billion at the height of the dotcom bubble and spends on acquisitions and investments.
• The dotcom bubble crashes. Some analysts predict the death of Amazon, suggesting it will run out of cash within a year. But Amazon is on sounder financial footing than the analysts realize, and Amazon survives.
• The early 2000s sees the rise of Google, which threatens to disintermediate and out-innovate Amazon and make it a relic. Bezos insists on continuous innovation to work their way out of the hole. Over the mid 2000’s, Amazon launches projects like Amazon Prime, Kindle, Amazon Web Services, Mechanical Turk, A9 search engine, Fire tablets. Some projects fail, but others become critical strategic pieces.
• Amazon’s virtuous cycles in retail start really kick off in the mid to late 2000’s. As more of the country relies on Amazon, Amazon in turn exerts pressure on suppliers to lower prices and better terms. It becomes its own media studio, starting a publishing arm and today producing new video content.
• Amazon also gets ruthless with e-commerce competitors like Zappos and Diapers.com. In both situations, Amazon cuts prices on shoes and childcare products...

The Everything Store Summary Shortform Introduction

The Everything Store is the story of Amazon, from its founding as an online bookstore to its rise as a commerce giant.

The book covers the book roughly chronologically, going out of sequence to group themes together into chapters, such as its culture and innovation problems in the early 2000s and its...

The Everything Store Summary Biography 1: Jeff Bezos Before Amazon

Jeff Bezos’s Early Life

1964: Jeff Bezos is born to a circus unicycler (Ted Jorgensen, then 18) and Jacklyn Gise (then 16).

June 1965: Jacklyn Gise files for divorce after Jorgensen is unable to hold a job and is an inattentive father. She soon meets Miguel Bezos, a Cuban emigrant, working at the Bank of New Mexico.

1968: Jackie moves with Jeff and Miguel to Houston, where Miguel has a job as a petroleum engineer at Exxon. They later have two more children, Christina and Mark.

• Miguel has tireless work ethic, love for America and its opportunities, and a libertarian aversion to government intrusion.

Jeff Bezos is a standout student in a gifted program in elementary school, which receives excess mainframe computer capacity from a local company. They learn how to program.

• Jeff is fascinated with space, spurred by the Apollo11 landing and Star Trek.
• Jeff spends summers with his grandparents at a ranch in Texas, where he performs everyman jobs (castrating bulls, repairing windmills) and learns the values of self-reliance, resourcefulness, and distaste for inefficiency.
• Jeff tells his smoker grandmother that she would die earlier by 9 years. This makes...

The Everything Store Summary Biography 2: The Start of Amazon

July 1994: The new company needs a name.

• Bezos registers Cadabra Inc., but this is often confused with “Cadaver.”
• They also like “aard.com” because it regularly arrives at the top of alphabetical website listings, and “relentless.com” for its description of the Amazon team.
• In October, Bezos leafs through A in the dictionary and comes across Amazon. “This is not only the largest river in the world, it’s many times larger than the next biggest river.” They register the URL on Nov 1 1994.
• (Relentless.com still redirects to amazon.com today.)

Early 1995: Bezos’s parents invest $100,000 in Amazon. Bezos tells them there is a 70% chance they would lose it all: “I want you to know what the risks are, because I still want to come home for Thanksgiving if this doesn’t work.”

Spring 1995: Amazon has a beta website and sends links to friends and colleagues. The slogan: “One million titles, consistently low prices.”

• Bare and rudimentary, the website looks uninviting to people who have happily shopped at bookstores. To some, it seems improbable that people would ever want to order books online.
• A former coworker places the first order on April 3, 1995,...

The Everything Store Summary Biography 3: Amazon Grows

June 1996: Amazon raises $8 million from Kleiner Perkins and John Doerr at a valuation of $60 million.

• Kleiner wants to put a junior member on the board, but Bezos requires famous investor Doerr in that position as part of the deal. He believes Doerr’s involvement is a public vote of confidence.
• People observe that this money enables Bezos, making him think bigger and move faster than before. The motto is now “Get Big Fast.” He believes that they are always at threat of a larger player taking away what they have. He also believes the company that gets the lead now would keep it.
• Using this money, Amazon begins hiring executives from other companies, some away from tech companies like Microsoft.

Summer 1996

• Amazon launches its affiliate marketing program, giving an 8% commission for sales referrals.
• They have 150 full-time employees, with fewer than 50 in the warehouse. They move offices again, and soon the warehouse expands to a 93,000 square-foot place.
• Bezos wants Amazon to IPO (just 2 years after founding).
  • This enables global branding that solidifies Amazon in customers’ minds.
  • It would help compete with Barnes & Noble, which...

The Everything Store Summary Biography 4: Amazon’s Crash and the DotCom Bubble

Spring 1999: Amazon’s stock price falls in half from April to May. Investors are questioning Amazon’s widening losses and its ability to ever reach profitability. Typical critical viewpoints are represented by Barron’s “amazon.bomb” article:

• “Despite all the hoopla surrounding Amazon, Bezos has not really revolutionized the book industry at all. In essence, he is a middleman, and he will likely be outflanked by companies that sell their wares directly to consumers. To begin with, publishing houses themselves could sell their books online.” “What's to stop famous authors from establishing their own Websites to sell their books?”
• “And new technologies promise to cut costs even further by allowing consumers to download books via the Internet. Books can be printed out on traditional computer printers or put into a new notebook-sized computer device that displays books on its screen a page at a time.”
• The article also cites B&N, Borders, CVS, and Wal-mart as threatening juggernauts that would inevitably move online. “Ingram and Barnes & Noble have enough distribution sites to offer overnight delivery at no...

The Everything Store Summary Biography 5: Amazon Regains Footing

March 2001: Amazon considers whether distribution is a commodity or a core competency.

• If the former, then it could outsource distribution to a third party. If the latter, it could develop a key competitive advantage, and eventually build a platform to dropship items from manufacturers and distributors.
• They visit a Reno fulfillment center, where they realize their shipping happens in large batches. Workers retrieve items ordered by customers, dump their items to a sorting machine, which rearranges products into customer orders. These pickers work in waves, with the entire shift dumping their orders. The problem is that a slow worker could hold up the entire team.
• Over the following years, Amazon moves away from wave-based picking, allowing individual workers to be controlled by algorithms and shipping orders in small batches. This allows Amazon to make accurate promises on when purchases will arrive.

Spring 2001: Bezos meets Costco founder Jim Sinegal, who changes Bezos’s mind on pricing.

• The Costco model is all about customer loyalty. It doesn’t advertise and earns most gross profit from annual membership fees. “**The membership fee is a one-time...

The Everything Store Summary Biography 6: Amazon’s Relentless Innovation

This period is marked by continuous innovation by Amazon. Many of Amazon’s biggest businesses and features today were developed during this period.

July 2002: Amazon launches Amazon Web Services, a slim shadow of its current form.

• This is inspired by Bezos’s early 2002 meeting with Tim O’Reilly, who suggests building APIs allowing third parties to get data on prices, products, and rankings. “Companies need to think not just what they can get for themselves from new technologies but how they can enable others.” Amazon soon launches these very services.
• Bezos speaks about the importance of becoming a platform at an all-hands.
• Another motivation: Amazon’s project teams need to plead for provisioned infrastructure resources from a central team, which slows down progress.
• Finally, Bezos becomes enamored with the idea of creating primitives - the building blocks of computing - and letting developers create emergently amazing things with it. They brainstorm primitives like storage, bandwidth, processing, messaging, and payments.
• Separate teams then work on services that will eventually become AWS services EC2, SQS, and S3, which will launch in...

The Everything Store Summary Biography 7: Amazon, the Giant

In this period, Amazon’s retail flywheel gains formidable momentum, and its experimental projects start yielding fruit.

August 2005: Bezos meets with Zappos execs (Tony Hsieh, Alfred Lin, Michael Moritz, Nick Swinmurn) and announces the intention of acquiring Zappos.

• Zappos has become synonymous with buying footwear online. It boasts sales growing from $8.6 million in 2001 to $70 million in 2003 and $370 million in 2005.
• Amazon has not done this well in footwear. Zappos has built strong relationships with brands like Nike, which fear Amazon for being a discounter and brand destroyer. Amazon’s website also is not suited for listing variations among a single good - it lists different colors, sizes, and widths all as separate items with separate web pages.
• The cultures between the two companies are somewhat similar.
  • Zappos is obsessive about customer experience, promising free 5-7 day delivery and trying to meet 2-day delivery. Customers can return items up to a year after the purchase. Customer center calls can take as long as needed, and customers sometimes enjoy hours-long calls.
  • Hsieh believes that everyone should take below-market...

The Everything Store Summary Biography 8: Amazon, the Unstoppable

January 2011: Amazon acquires Lovefilm for around $300 million.

• Amazon had been the largest shareholder in this European Netflix clone.
• In 2010, Lovefilm needed additional capital. Google had planned to acquire both Lovefilm and Netflix in 2009, but the deal fizzled due to opposition from its company Youtube and fears that it would not be able to acquire both.
• Instead of letting it seek additional capital, Amazon strongarms Lovefilm into accepting the acquisition deal. Lovefilm had an option to IPO, but with its large shareholder position, Amazon could effectively veto the IPO. This power also prevents other acquirers from entering a bidding war and makes it a toxic asset to invest further in. After a tough negotiation with Amazon, Lovefilm sells near the bottom of its valuation range.
• Soon after, Amazon unveils Amazon Video for the US, free for Prime members. This is a direct challenge to Netflix, which costs $5-8/mo.

2011: Knifemaker Wusthof decides to end its relationship with Amazon after a torturous relationship. (This is a good place to discuss Amazon’s general friction with manufacturers.)

• Manufacturers cannot enforce retail prices, but they...

The Everything Store Summary Amazon Company Values

Throughout the historical narrative, the book also discusses company values that Jeff Bezos tirelessly emphasized to his team. We’ve compiled the most important company values here, with representative quotes and anecdotes illustrating the value in action.

Customer Obsession

Bezos is known for his relentless focus on customer satisfaction.

“Leaders start with the customer and work backwards. They work vigorously to earn and keep customer trust. Although leaders pay attention to competitors, they obsess over customers.”

• Early in Amazon’s life, a publisher executive is angry at Amazon customer reviews, suggesting Bezos doesn’t understand his business is to sell books, not trash them. Bezos disagrees: “we don’t make money when we sell things. We make money when we help customers make purchase decisions.”
• Bezos edits press releases, speeches, and shareholder letters to remove anything that does not speak simply and positively to customers.
• In 1996, on sharing customer data: “Mr. Bezos knows his customers will erupt in outrage if he turns over their files to other marketers. The Web, he notes, is the ultimate word-of-mouth medium: ‘If someone thinks they...

The Everything Store Summary Amazon Management Tactics

A number of Amazon’s management practices have become well known. Here is a profile of the ones mentioned in the book.

6-Pagers, Narratives

Bezos dislikes Powerpoint for allowing people to “hide between bullet points” and avoiding complete expression of thoughts. Instead, he requires people to write presentations in prose. New product releases require a mock press release, to start with what the customer would see and work backward. Meetings start with everyone reading the document for 15 minutes.

High Hiring Bars

“Each hire should raise the bar for the next hire, so that the overall talent pool is always improving.”

All participants in the hiring process give one of four ratings: strong no hire, inclined not to hire, inclined to hire, strong hire. A senior interviewer, called a “bar raiser” talks to the candidate last and makes a final judgment on the hire. These are employees who have proven themselves to be intuitive recruiters of talent.

Amazon’s 1994 hiring ad: “You must have experience designing and building large and complex systems, and you should be able to do so in about one-third the time that most competent people think possible.”

Two-Pizza...