STEVE JOBS INVITED JEFF BEZOS OVER FOR SUSHI.
It was the fall of 2003, which were consequential days for both Apple and Amazon. Only two years earlier, Apple released its first iPod and Amazon turned a quarterly profit for the first time. Now Steve was inviting Jeff, me (Colin), and another Amazon colleague down to Cupertino for a chat.
We arrived and were ushered into a nondescript conference room with a Windows PC and two platters of takeout sushi. Everyone chatted about the state of the music industry while doing some serious damage to the food. After dabbing his mouth with a napkin, Jobs segued into the real purpose of the meeting: He announced that Apple had just finished building its first Windows application. He calmly and confidently told us that even though it was Apple’s first attempt to build a Windows application, he thought it was the best Windows application anyone had ever built. He then personally gave us a demo of the soon-to-be-launched iTunes for Windows.
During the demo, Jobs talked about how this move would transform the music industry. Up until this point, if you wanted to buy digital music from Apple, you needed a Mac, which made up less than 10 percent of the home computer market. Apple’s first foray into building software on the competing Windows platform showed how serious it was about the digital music market. Now anyone with a computer would be able to purchase digital music from Apple.
Steve said that CDs—which Amazon sold many of—would go the way of other outdated music formats like the cassette tape. His next comment could be construed as either a matter-of-fact statement, an attempt to elicit an angry retort, or an attempt to goad Jeff into making a bad business decision by acting impulsively. He said, “Amazon has a decent chance of being the last place to buy CDs. The business will be high-margin but small. You’ll be able to charge a premium for CDs, since they’ll be hard to find.” Jeff did not take the bait. We were their guests, and the rest of the meeting was uneventful. But we all knew that being the exclusive seller of antique CDs did not sound like an appealing business model for Amazon.
Remember, this was 2003. The shift to digital had just begun. No one wanted to get in too early with a product that did not yet have a market. But no one wanted to miss the moment, either, and be unable to catch up. We knew that we’d need to invent our way out of this dilemma by obsessing over what the best customer experience would be in this new paradigm.
Did that meeting with Steve Jobs impact Jeff’s thinking? Only Jeff can speak to that. All we can say is what Jeff did and did not do afterward. What he didn’t do (and what many companies would have done) was to kick off an all-hands-on-deck project to combat this competitive threat, issue a press release claiming how this new service would win the day, and race to build a copycat digital music service. What he did do was take his time, process what he learned, and form a plan that revolutionized the company—and did the exact opposite of chasing Apple into the music-selling business. This is the story of the creation of the Kindle. We were there to help it happen: Colin started at Amazon in 1998, Bill joined in 1999, and we spent decades as senior executives working with Jeff. In developing the Kindle, we learned a critical lesson in business longevity—and in what it takes to define the change around you.
A FEW MONTHS AFTER that meeting with Steve Jobs, in January 2004, Jeff made his first move. He put Steve Kessel, Amazon’s VP of media retail, in charge of the company’s digital business. This seemed strange at first. Steve Kessel had been overseeing sales of physical books, music, video, and more—a core component of Amazon’s business. The company’s digital media business, meanwhile, consisted of a new “search inside the book” feature, plus an e-books team of roughly five people, which generated a few million dollars in annual revenue and had no real prospects for growth.
But there was wisdom here. Jeff wasn’t making a “what” decision; he made a “who” and “how” decision. This is an incredibly important difference. He did not jump straight to focusing on what product to build, which seems like the straightest line from A to B. Instead, the choices Jeff made suggested—even then!— that he believed the scale of the opportunity was large and that the scope of the work required to achieve success was equally large and complex. He focused first on how to organize the team and who was the right leader to achieve the right result.
Steve asked me (Bill) to join him in this new division, leading the digital media business team. I was hesitant. But then Steve explained Jeff’s thinking: Amazon was at an important crossroads, and now was the time to act.
Though the physical media business was growing, we all understood that over time it would decline in popularity and importance as the media business shifted to digital. In the beginning of that year, 2004, Apple announced that it had sold a total of more than two million iPods—and the proliferation of shared digital music files online had already prompted a decline in sales of music CDs. It seemed only a matter of time before sales of physical books and DVDs would decline as well, replaced by digital downloads.
Jeff was a student of history and regularly reminded us that if a company didn’t or couldn’t change and adapt to meet shifting consumer needs, it was doomed. “You don’t want to become Kodak,” he would say, referring to the once-mighty photography giant that had missed the turn from film to digital. We weren’t going to sit back and wait for that to happen to Amazon.
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