Amazon Unbound
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In his annual letter to investors the following April, Bezos trumpeted that benchmark and tried to get in the final word in the debate over Amazon’s culture. “You can write down your corporate culture, but when you do so, you’re discovering it, uncovering it—not creating it,” he wrote. “It is created slowly over time by the people and by events—by the stories of past success and failure that become a deep part of the company lore.”
The events of 2015 would be added to that already rich history. Over the course of a critical twelve months, the dramatic transformation of Amazon in the eyes of the world was matched in scope only by the makeover in the image of the founder himself. He was now known as a corporate taskmaster who had architected a culture of unquestionable efficiency; the genius inventor behind the Kindle and Alexa, but also a versatile CEO who had authored an enterprise computing platform capable of generating lucrative profits. He continued to be dubious of most media coverage of Amazon; yet at the same time, through a set of unlikely circumstances, Jeff Bezos was about to become known as the voluble defender of a free press.
CHAPTER 5 “Democracy Dies in Darkness”
Who can say what set Donald J. Trump on a tirade against the Washington Post? It could have been the months of critical coverage of his presidential campaign from the nation’s third largest newspaper. Or perhaps it was the edition of the column “Fact Checker,” published by Glenn Kessler on December 7, 2015. That morning, the reporter scrutinized the Republican’s absurd claim that he had foreseen the threat posed by Osama bin Laden before September 11. “I predicted Osama bin Laden,” Trump had declared on the campaign trail in Knoxville, Tennessee. “I predicted terrorism. I can feel it, like I can feel a good location in real estate.” For this assertion, Kessler assigned Trump the highest grade on his scale of mendacity: “four Pinocchios.”
A little after 7 a.m. EST that morning, Trump responded with a fusillade of tweets aimed at Amazon.com, the Post, and the man who owned it: Jeff Bezos.
Donald J. Trump
@realDonaldTrump
The @washingtonpost, which loses a fortune, is owned by @JeffBezos for purposes of keeping taxes down at his no profit company, @amazon.
7:08 AM
Donald J. Trump
@realDonaldTrump
The @washingtonpost loses money (a deduction) and gives owner @JeffBezos power to screw public on low taxation of @Amazon! Big tax shelter
7:18 AM
Donald J. Trump
@realDonaldTrump
If @amazon ever had to pay fair taxes, its stock would crash and it would crumble like a paper bag. The @washingtonpost scam is saving it!
7:22 AM
Trump’s claims were as tenuous as his boasts about bin Laden; the Post’s financial results had no impact whatsoever on Amazon’s corporate taxes. Bezos had personally acquired the ailing newspaper in August 2013 for $250 million in cash and tried to keep his two high-profile concerns separate. Now the opportunistic GOP candidate was trampling over Bezos’s careful attempts at compartmentalization.
Later that morning, across the country in Seattle, Bezos emailed Jay Carney, his senior vice president for global corporate affairs. The response not only exhibited Bezos’s surprising fondness for emoticons but kicked off a revealing exchange that was forwarded to me a few years later.
From: Jeff Bezos
To: Jay Carney
Subject: Trump trash talk
Trump just trash talked Amazon/me/WaPo. Feel like I should have a witty retort. Don’t want to let it go past. Useful opportunity (patriotic duty) to do my part to deflate this guy who would be a scary prez. I’m an inexperienced trash talker but I’m willing to learn. :) Ideas?
Also tactically I’m about to be interviewed by some German pubs set up a long time ago and they might ask about it.
Carney’s style with the media on articles about Amazon that the company didn’t like (e.g., most of them) was nakedly pugilistic. He had helped to persuade Bezos, who felt that responding to media critics only gave their attacks more oxygen, to allow him to challenge coverage like the New York Times exposé of Amazon’s corporate culture. But when it came to Donald Trump, the politically savvy Carney recognized a cynical game and advised Bezos to stay out of it:
From: Jay Carney
To: Jeff Bezos
re: Subject: Trump trash talk
We’ve been discussing and decided to make sure reporters know WaPo and Amazon are not connected. He’s playing to his base of disaffected voters by bashing the press and big business in one tweet. For him politically, it doesn’t matter that he’s got his facts all wrong. Much as I’d love to have you slap him down, I personally think you’d be helping him by trash talking him back. Every fight he gets into gives his campaign more energy.
If you get asked about [it] with the Germans, I recommend you say, ‘you know Amazon and the Washington Post are two entirely separate companies. I’m not sure what he’s talking about.’
For years, Bezos would have readily agreed with Carney’s advice and stayed quiet, but now their positions were reversed. Trump’s targets at that point had included his rivals in the GOP primary, high-profile journalists, and major business figures like Barry Diller. Bezos was seemingly eager to join that distinguished club and had a desire to engage Trump, counter his inaccuracies, and defend the newspaper.
From: Jeff Bezos
To: Jay Carney
re: Subject: Trump trash talk
This seems like one of those times when I might disregard really good advice! :) Can you guys come up with some good options just so we can look at the specifics.
Over the next few hours, Carney brainstormed over email and on the phone with Amazon PR deputies Drew Herdener, Craig Berman, and Ty Rogers. They considered and discarded the idea of proclaiming that Amazon and the Post “are as separate as the two sides of Trump’s hair.” Berman suggested reserving a seat for Trump on a Blue Origin spacecraft, a clever bit of misdirection that drew in a third Bezos company. Carney liked that idea and suggested it to Bezos, who asked that they include his feeling of being “left out” until now of Trump’s unmoored denunciations.
Finally, after an afternoon of wrangling over the precise wording and the decision to include a link to a Blue Origin launch video, Ty Rogers responded from Bezos’s Twitter account:
Jeff Bezos
@JeffBezos
Finally trashed by @realDonaldTrump. Will still reserve him a seat on the Blue Origin rocket. #sendDonaldtospace http://bit.ly/1OpyW5N
3:30 PM
Inexorably drawn to chaos and conflict, Trump eagerly responded, charging in a television interview that Bezos had acquired the Post for political influence and promising that Amazon was “going to have such problems” if he got elected. He later honed his attempt to delegitimize the newspaper by branding it the #AmazonWashingtonPost.
Jeff Bezos had officially entered the political fray.
* * *
“Why would I even be a candidate to buy the Post? I don’t know anything about the newspaper industry.”
With such indifference, expressed to investment bankers representing the Washington Post, Jeff Bezos kicked off one of the more illustrious chapters of his career. The Post would expand and fortify Bezos’s reputation as one of the most successful businesspeople of his generation, an organizational theorist whose management practices could be applied not just inside fast-growing tech companies but outside them as well.
The Post was owned by the venerable Graham family and run by Donald Graham, the son of legendary owner Katharine Graham, and for years it had been on shaky financial footing. It remained a local paper serving the D.C. region, with a specialization in national politics, at a time when local advertising was moving to the web and the classified ad business was being vaporized by websites like Craigslist. The financial crisis of 2008 only compounded that decay. Seven straight years of revenue declines tended to “focus the mind,” as Don Graham liked to say.
Graham was beloved in
the Post newsroom for his first-name familiarity with staff and his zeal for the journalistic mission. But under his cautious eye, the Post had reached an impasse. Graham had reached an agreement in 2005 with Facebook founder Mark Zuckerberg to invest in the budding social network, but then he allowed Zuckerberg to withdraw from the deal and take money at a higher valuation from the Silicon Valley venture capital firm Accel instead. Having forfeited a historic company-enriching windfall, Graham joined Facebook’s board of directors, where for the next few years he listened to Zuckerberg preach that content on the web should be free. When major media organizations like the rival New York Times started adding paywalls in 2011, the Post was late to the trend; its paywall was porous and easily circumvented by readers.
By 2013, an atmosphere of melancholic decline had gripped the boxy, mid-century concrete headquarters of the Washington Post Co. at 1150 15th Street NW in downtown Washington. Its once profitable Kaplan educational division had been decimated by a regulatory overhaul of the often scammy for-profit education industry. The newsroom, once more than a thousand journalists strong, had been reduced by waves of layoffs to around six hundred. Morale was low, with deep distrust between the business and editorial divisions. The company didn’t have the resources to invest in national and international news and distribution, or to free itself from the straitjacket of regional news and its deteriorating economics. So Graham agreed to sell the paper.
Post executives sought a wealthy, technologically sophisticated individual who cared about the paper’s journalistic mission. Jeff Bezos was at the top of the list, alongside other internet billionaires like eBay founder Pierre Omidyar. Bezos’s initial response to the Post’s investment bankers, and sporadic conversations with Graham, a longtime friend, was cool. Only that July 2013, when Bezos asked Graham to meet privately at the annual Allen & Company conference in Sun Valley, did Graham realize that Bezos had researched the opportunity and was more interested than he had previously let on. In the brief talks that followed, Bezos accepted Graham’s initial $250 million asking price and paid cash. Amazon’s founder acquired the newspaper—not via Amazon but personally.
Bezos was the platonic ideal of a Post owner—a leader with boundless resources, a widely known reputation as a digital innovator, and a corona of credibility that seemed to extend to whatever he touched. He expressed a staunch commitment to the paper’s editorial independence and seemed to have little interest in using it to serve any political agenda. When Fred Hiatt, editor of the opinion page, offered to resign that fall, explaining that “it’s entirely legitimate for an owner to have an editorial page that reflects his world view,” Bezos declined the offer.
Bezos had a traditionalist’s view of the media business. In his first address to Post employees at the 15th Street building in September, he declared his faith in “the bundle,” the collection of news, culture, and entertainment coverage that makes up a newspaper. He also lamented the rise of so-called aggregators, which summarized other organizations’ work, like the Huffington Post. But he had no compunctions about casting aside the paper’s local ambitions and deprioritizing its print edition in favor of a more ambitious future online. “You have to acknowledge that the physical print business is in structural decline,” he told his new employees. “You have to accept it and move forward. The death knell for any enterprise is to glorify the past, no matter how good it was—especially for an institution like The Washington Post.”
Their new owner was ready to break from the disciplines of that past. And when Bezos invited the Post’s management team to spend a weekend with him in Seattle that fall, he wanted its cerebral executive editor, Marty Baron—the former Boston Globe chief who would later be depicted in the movie Spotlight—to be included. “If you are going to change the restaurant, the chef has got to be on board,” he reasoned.
Baron joined publisher and CEO Katharine Weymouth, president Steve Hills, and chief information officer Shailesh Prakash on the cross-country trip. On the first night, they had dinner with Bezos at Canlis, an upscale restaurant with majestic views over Lake Union; during the meal, they saw a perfect double rainbow over the lake (the future name of the paper’s magazine-like national edition for tablets: the Rainbow app). The next morning, the group met MacKenzie and the four Bezos children at their twenty-nine-thousand-square-foot home on the shores of Lake Washington. Bezos made everyone pancakes for breakfast (afterward the Post’s leadership team called themselves “the Pancake Group”). During the daylong review of the Post’s editorial and business strategies, Bezos never once looked at his cell phone. If he had other things on his mind, he kept them completely compartmentalized.
For the next few years, friends occasionally teased him about the purchase of the Washington Post. “The joke was ‘Jeff, when MacKenzie asked you to pick up a newspaper, she meant just one copy,’ ” said his high school pal, Joshua Weinstein. But interviewers and colleagues always asked the question: Why had he bought, of all things, that anachronistic digital relic, a newspaper?
It may have been that with his own fortunes soaring along with Amazon’s, Bezos understood that he could use his resources for things he valued, such as ensuring a strong and independent press. Saving the Post would not only help his friend Don Graham; it would be a significant boon to the American media establishment, as well as a symbolic contribution to the country, and democracy. But his public answer to that question was always much simpler and more earnest: “It’s the most important newspaper in the most important capital city in the Western world. I’d be crazy not to save [it],” Bezos said a few years later in an onstage conversation with Axel Springer CEO Mathias Döpfner. “I’m going to be very happy when I’m eighty that I made that decision.”
A year after the purchase, Fred Ryan, a cofounder of the politics news site Politico, asked Bezos the same question while they were having breakfast in the Amazon building Day 1 North. The conversation would lead to Bezos hiring Ryan to replace Weymouth as the company’s chief executive and publisher. Ryan, a former aide to Ronald Reagan, had been invited to Seattle after sending Bezos an unsolicited email expressing admiration for the paper. He later recalled thinking at the time that “sometimes wealthy people have passions and toys or might want to own a publication so they can influence things.”
Bezos surprised him with his response. “I remember his answer because he has lived it to this day,” Ryan said. “He said he feels that it is essential to have a strong and independent press for the health of our society and democracy.”
* * *
If members of the Pancake Group had fanciful notions that Bezos was going to rescue the Post by spending uncontrollably, he quickly dispelled them. In early 2015, they trekked back to Seattle and presented him with a multiyear operating plan that called for the paper to lose more than $100 million over the next four years. Bezos shot it down immediately. “Yeah, I’m not interested in that” is how one participant recalled his understated reaction. After the meeting, Bezos and Fred Ryan sat down and hashed out a plan to run the paper as a disciplined, stand-alone business, not as the hobby of someone with limitless resources. Over the next few years, there would be a quiet, targeted series of layoffs in the company’s print advertising division, which were partially offset by a smaller but louder number of hires of digital media specialists.
In addition to wanting the Post to operate within its means, Bezos applied elements of his well-tuned business philosophy to the paper. He preached the wholesale embrace of technology, rapid experimentation, and optimism about the opportunities of the internet instead of despair. “You’ve suffered all the pain of the internet but haven’t yet fully enjoyed its gifts,” Bezos told his new employees. “Distribution is free, and you have a massive audience.”
One of his first ideas was to give subscribers of other newspapers free online access to the Post. Some 250 papers, like the Toledo Blade and the Dallas Morning News, signed up for the new Post partnership program. While it didn’t result in a surge of new
subscribers, the program, plus Bezos’s patina of digital coolness, generated a fresh wave of buzzy news stories about the Post.
Another Bezos principle resulted in a more tangible outcome. The Amazon founder always looked for ways to “weave a rope” of connections between his different business units. Careful not to overtly push, he introduced Post execs to their Amazon counterparts and suggested it would be a good idea for them to talk. In the fall of 2014, Amazon’s Fire tablet owners got a free six-month digital subscription to the Post’s national edition on an app that was preinstalled on the device. A year later, tens of millions of Prime members got the same deal.
Between 2014 and 2015, unique visitors to the Post’s websites and apps grew by 56 percent. In October 2015, the Post briefly surpassed the New York Times in unique monthly visitors. Taking an opportunity to strafe a competitor and rally the troops, Bezos declared on CBS This Morning that the Post was “working on becoming the new paper of record.” The paper then took out ads that declared, “Thank you for making The Washington Post America’s New Publication of Record.”
Though the advertising staff was being pared back, Bezos did agree to methodical increases in hiring in the newsroom and the technology department. In the two years after the acquisition, Marty Baron added 140 full-time journalists, boosting his staff to around 700—compared to some 1,300 reporters and editors at the Times. The additions came mainly on the national, political, and investigations desks, as well as in business and technology coverage. Resources devoted to regional news, the unprofitable mainstay of the Post’s previous leadership, remained largely flat.