– Jeff, welcome to Berlin.
– Thanks, it’s great to be here.
– I have to tell you when we were sitting in the first row just a couple of minutes ago when the heartbeat was there Jeff looked at me and Iwas breathing in and out and he looked at me and asked, “Matias are you nervous?” I said, “Yes, I’m alwaysnervous on occasions like that.
” And he said, “So am I.
” I said, “Really? “The richest man in the world is nervous “because he receives theAxel Springer Award?” So be a bit forgiving, we are both nervous.
Jeff, we are so glad toreally celebrate you tonight.
Most importantly apart fromall the reasons that we heard because you are a role modelfor other young founders, entrepreneurs who really havegreat ideas, crazy ideas, unconventional ideas and need encouragement to simply do it and go for it and you have shown that to the world.
So that is really, for me, the most important thing and in that context the first question, you used to work in New Yorkas an investment banker.
So an investment banker is actually the exactopposite of an entrepreneur, he’s delegating risk to other people and basically, how did you find out or how did you think that you should move from investment banking toreally launch a company? – I think I’d always wanted to do it even since I was a kid, had the idea, every timeI look at something, it looks like it could be improved, there’s something wrong with it so I go through it like howcould this restaurant be better, so I’ve always had that kind of idea.
By the way, before wereally get into this, how about this amazing production that you and your team have put together? This is truly incredible for it’s originality like these boxes thatyou were filming live that’s just crazy cool so thank you.
(audience applause) Truly it’s incredible.
But I think the great thingabout humans in general is we’re always improving things.
And so entrepreneurs and inventors, they follow their curiosity and they follow their passions and they figure something out and then they figure outhow to make it better and they’re never satisfied.
And you need to harness, in my view, you needto harness that energy primarily on your customers instead of on your competitors.
And so I sometimes see companies and even young small startup companies, entrepreneurs, go awry is they start to payattention to their competition than they do to their customers.
And I think that in big mature industries that might be a winningapproach in some cases, kind of close following, let other people be the pioneers and go down the blind allies, there are so many things that a new, inventivecompany tries won’t work and so those mistakesand errors and failures do cost real money.
And so maybe in a mature industry where growth rates are slowand change is very slow.
But as you see in the world more and more, there aren’t very many mature industries, change is happening everywhere.
You see it in the automobile industry with self driving cars but you could go right down the line of every industry and you would see it.
– Do you have any idea where your ambition really comes from? What was driving you? – I really don’t know.
I’ve been passionate aboutcertain things forever and I fell in love withcomputers in fourth grade.
I got very lucky.
My elementary school had a teletype that got connected to a mainframe computer that some business in downtown Houston donated a little bit of computer time too.
This is, you can picture these teletypes, they had the punch tape and they had a 300 bot modem, you would dial up the phone, you’d put it in the cradle.
And so we had some time sharingon that mainframe computer and none of the teachersknew how to use it so me and two otherkids stayed after school and sort of figured out how to do it, figured it out and kind oftaught ourselves programming from books.
I think one thing that is, I got very lucky early in my childhood.
Look, we all get gifts, weget certain things in our life that we’re very lucky about and one of the most powerful ones is who your early role models are.
– [Matias] It was your grandfather.
– It was in a big sense.
My mom and dad but my grandfather too.
My mom had me when she was 17 years old and she was still in high schoolin Albuquerque, New Mexico and this is in 1964.
I can assure you thatbeing a pregnant teenager in high school was not coolin Albuquerque, New Mexico at that time.
So it was difficult for her.
My grandfather went to bat for her, they tried to kick her out of school, they’re incredible.
So the gift I had is I had this incredible family.
– Could you describe a little bit the role of your grandfather? Because John has mentioned it and I think it was really important.
– It was super important for me and I spent an unusual amount of time with my grandparents, especially with my grandfather on the ranch.
So he had a ranch in south Texas and I would spend my summers there from age four to 16.
And when I was four, theywere taking me for the summer to kind of give my parents a break ’cause they were so young and it was useful.
I was a handful I’m sure.
Anyway, he created the illusion for me when I was four years old that I was helping him on the ranch which of course could not have been true but I believed it and then by the time I was 16 of course I was actually helping on the ranch.
I can fix prolapsed cattle, we did all of our own veterinary work.
Some of the cattle even survived.
And we fixed windmillsand laid water pipelines and built fences and barnsand fixed the bulldozer that you guys talked about and so one of the thingsthat’s so interesting about that lifestyleand about my grandfather is he did everything himself.
He didn’t call a vet if oneof the animals was sick, he figured out what to do himself.
– So what does it mean, no delegation? – Being resourceful, I think is the, if there’s a problem, there’s a solution and of course as you matureand get into the business world and anything you do on a team, you very quickly realizethat it’s not about just your own resourcefulness, it’s about team resourcefulnessand how does that work.
But that attitude of mygrandfather’s was very, but he was full of wisdom.
John mentioned the story about the words my grandfathergave to me at one point of it’s harder to be kind than clever.
That story, the slightlylonger version of that story, ’cause this was really powerful wisdom is that I made mygrandmother burst into tears and the way I did it was we were driving on a long road trip and she was a chain smoker and this was, I was probably, I don’t know 10 years old so this was around 1974 and it was in a period of time where there were heavyradio advertisements sort of anti smoking radio advertisements trying to convince people to stop smoking.
And one of the advertisementshad this figure in it that said something like, every puff of a cigarette takes so many minute off of your life, I think it was two minutesbut I can’t remember.
So I sat there in thebackseat on this long car ride and calculated how many yearsshe had taken off of her life and in my 10 year old mind, I had been extremely clever to do this.
And so when I was finishedwith my arithmetic, I proudly announced to her how many years she hadtaken off of her life and I got a reaction I did not expect with her bursting into tears.
So my grandfather stopped the car and he took me out of the car and I had no idea what was about to happen because he had neversaid a cross word to me and I thought, he mightactually be angry with me but he wasn’t.
He took me out so we hadsome privacy from her and he said these incredible words, he said, “You’re gonna figure out one day “that it’s harder to be kind than clever.
” – Wonderful.
Actually, your brother alsoplays an important role, you have a very good relationship.
Is it actually true thathe’s still a firefighter? – He is, he’s a volunteer firefighter in Scarsdale, New York.
He’s also the funniest person I know.
When I’m with him, I’mjust laughing continuously.
First of all, I’m a good audience.
I laugh easily but he is really very funny and my sister too, we’re all very close and I have my mother to thank for that because she worked hardto make sure as we grew up that we stayed close together and she takes all the grandkidsfor one week every summer so that me and my sister and our spouses can go on a trip together.
So we end up spendinga lot of time together.
– For me the most movingimage that we saw tonight is the one that John showed where you and Mackenzieare preparing the table, the famous table which is very moving because it shows how you really startedfrom the very scratch and also it illustrates symbolically that the launch of Amazon was really somethingthat you did together.
Could you describe a littlebit what Mackenzie’s role was? – Well first of all, Mackenzie, she had married this stableguy working on Wall Street and a year after we got married, I went to her and said, “I want to quit my job, move across the country “and start this internet bookstore.
” And Mackenzie of course like everybody that I explained this to her first question was, what’s the internet? Because nobody knew, this is 1994.
But even before she couldsay what’s the internet she said, “Great, let’s go.
” Because she wanted to support it and she knew that I had always had this passion for inventionand starting a company.
And so again, I think, Mackenzie is an example of this but I was talking about with my mom and my dad, who’s a Cuban immigrant, and you have, he cameto the US when he was 16 and refugee camp in the Everglades, they are so loving and supportive that when you have loving andsupportive people in your life like Mackenzie, my parents, mygrandfather, my grandmother, you end up being able to take risk because I think it’s one of those things, it doesn’t, you kind of knowsomebody’s got your back and so it’s just an, I don’t even think you’rethinking about it logically, it’s emotional thing.
– That’s really interesting, you think that unconditional love, if you feel and experienceunconditional love, it helps you to take risk? – And by the way, I think it’s probably true ofall kinds of risks in life, not just starting a business.
Life is full of different risks.
So I think that when you think about the things that youwill regret when you’re 80, they are almost always thethings that you did not do, they are acts of omission.
Very rarely are you gonnaregret something that you did and it failed and didn’t work or whatever but the acts of omission, and again, I’m not justtalking about business things, it’s like, I loved that person and I never told them and 50 years later you’re gonna be like, why didn’t I tell her, why didn’t I go after it? So that’s the kind of life regret that is very hard to be happy about when you’re tellingyourself in a private moment that story of your life.
So I think it’s, anyway, I won that lottery, I won that lottery of havingso many people in my life who have given me that unconditional love and I do think Mackenzie’sdefinitely one of those.
And so we moved and then Mackenzie, who has basically noskill in this area at all, really, I mean you’re theleast suited person for this, she did our accountingfor like the first year, was it the first year? Something like that.
And she did it well, that’s what’s amazing.
My wife is a novelist, she’s won the American Book Award, Toni Morrison, the Nobelprize winning author who was Mackenzie’s teacher at Princeton said on the Charlie RoseShow that Mackenzie, Toni Morrison, the Nobel prizewinner said about Mackenzie that Mackenzie was her best student ever.
Anyways, Mackenzie is avery talented novelist but she is not an accountant but she pulled it off.
Again, we all get donewhat we need to get done.
– Did she then suggest that you focus on bookbusiness at the beginning being an author? – No, I picked books, it is true, she’s a bigreader, I’m a big reader but that’s not why I picked books.
I picked books because there were moreitems in the book category than any other category and so you could builduniversal selection.
There were three million in 1994 when I was pulling this idea together, three million different books active in print at any given time and the largest physical bookstores only had about 150, 000 different titles.
And so I could see how youcould make a bookstore online with universal selection, every book ever printed, even the out of print ones was the original vision for the company and so that’s why books.
– And when did you know that Amazon is going tobe something way bigger than just a bookstore? – Well, I knew that the books, strangely, ’cause I was very prepared for this to take a really long time, I knew that the books businesswas gonna be successful in the first 30 days.
I was shocked at how many books we sold.
We were ill prepared.
We had only 10 people inthe company at that time and most of them were software engineers.
So everybody includingme and the softwares were all packing boxes, we didn’t even have packing tables and we were on our hands andknees on a concrete floor packing the boxes and at about one or two in the morning I said to one of my softwareengineering colleagues, I said, “Paul, this is killing my knees, “we need to get knee pads.
” And Paul looked at me and he’s like, “Jeff, we need to get packing tables.
” And I was like, “Oh my God, that is such a good idea.
” The next day I bought packing tables and it doubled our productivity and probably saved ourbacks and our knees too.
– But nevertheless, Amazon had serious crises.
In 2002, you went almost bankrupt.
So what went wrong and what did you learn from that? – We had so many, there’ve been so many, I haven’t had any existentialcrises, knock on wood, I don’t want to jinx anything but we’ve had a lot ofkind of dramatic events.
I remember early on, we only had 125 employees when Barnes and Noble, the big United States bookseller opened their online websiteto compete against us, barnesandnoble.
We’d had about a two year window.
We opened in ’95, they opened in ’97 and at that time, all of the headlines and the funniest were about how we were about to be destroyed by this much larger company, we had 125 employees and $60million a year in annual sales, $60 million with an m and Barnes and Noble at thetime had 30, 000 employees and about three billion dollars in sales.
So they were giant, we were tiny and we had limited resources and the headlines werevery negative about Amazon and the one that’s most memorable was just amazon.
toast and so I called an all hands meeting which was not hard todo with just 125 people and we got in a room ’cause it was so scary for all of us, this idea that now wefinally had a big competitor that literally everybody’sparents were calling and saying, “Are you okay?” It was usually the moms calling and asking their children, are you gonna be okay? And I said, “Look, it’s okay to be afraid “but don’t be afraid of our competitors “because they’re nevergonna send us any money, “be afraid of our customers.
“And if we just stay focused on them “instead of obsessingover this big competitor “that we just got, we’ll be fine.
” And I really do believe that.
I think that if you stay focused and the more drama thereis and everything else, no matter what the drama is, whatever the external distraction is, your response to it should be to double down on the customer, satisfying them, not just satisfying them, delighting them.
– Today Amazon isemploying 566, 000 people.
You’re probably the biggestjob creator of recent times.
At the same time, you’re aggressively criticizedby unions and by media for paying low wages, for inappropriate working conditions.
How do you deal with these accusations? – Well, first of all, when any criticism, my approach to criticism and what I teach and preach inside Amazon is when you’re criticized, first look in a mirror anddecide are your critics right? If they’re right, change, don’t resist.
– Are they right? – No, not in this case but we’ve had critics be right before and we’ve changed.
We have made mistakes and I can go through a long list of, probably one of theearly most painful ones is it’s so stupid it’s hard to believe how we ever did it but in the early on with the kindle maybe the first year of the kindle or the second year of the kindle, we had accidentally illegally sold or given away I guess, copies of the famous novel 1984 because it had a complicatedcopyright history, it was in copyright inthe US and not in the UK or something strange like this so it was in the public domain but only in certain geographies and we had screwed that up and somehow, and this is the kind of mistake that only a corporation can make, an individual can’t make this mistake because somehow it happensat the intersections of the different teams.
So you’ve got the legal department saying, “Oh crap, we’ve made this mistake” and you’ve got the books team.
Anyway, the answer thatthe company came up with was to without any notice or warning just electronically gointo everybody’s kindle who had downloaded that book and just disappear it.
So it would be as if we walked into your bedroomin the middle of the night found your bookshelf and just took that book away.
And so we were rightly criticized for that and we responded to that.
On the issue of working conditions, I’m very proud of our working conditions and I’m very proud ofthe wages that we pay.
In Germany, we employ 16, 000 people, we pay at the high end of the range for any comparable work.
– Will the union fight because the union want to makesure that you are unionized or what is the realsubstance of the conflict? – Well, it’s a good question and this is in my longer version of how to deal with critics, there are two kinds of critics, there are well meaning critics who, they’re worried it’s not gonna work but they do want it to work so I could give you anexample of customer reviews would be one of those.
When we first did customerreviews 20 years ago, some book publisherswere not happy about it because some of them were negative and so it was a very controversialpractice at that time but we thought it was right and so we stuck to our guns and had a deep keel on that and didn’t change.
But there’s a second kind of critic which is the self interested critic and they come in all shapes and sizes.
So they can be any kind of institution, competitors, of course, and so when you are doingsomething in a new way and if customers embrace the new way, what’s gonna happen is incumbents who are practicing the older way are not gonna like you and they’re gonna beself interested critics.
And so you do need as you’relooking yourself in the mirror to try and tease those two things apart.
In our view, we haveworkers counsels of course and we have very goodcommunications with our employees.
So we don’t believe that we need a union to be an intermediarybetween us and our employees but of course at the end of the day, it’s always the employees choice and that’s how it should be.
But for sure, we would be very naive to believe that we’renot gonna be criticized.
That’s just part of the terrain, you have to accept that.
One other thing I tell people is if you’re gonna doanything new or innovative, you have to be willingto be misunderstood.