Inside the Mind of Jeff Bezos

Amazon faced similar dilemmas with its dramatic moves to cut prices and offer free shipping on orders of $25 or more, which is very costly for the company. "You can do the math 15 different ways, and every time the math tells you that you shouldn't lower prices 'cause you're gonna make less money," Bezos says, laughing inevitably. "That's undoubtedly true in the current quarter, in the current year. But it's probably not true over a 10-year period, when the benefit is going to increase the frequency with which your customers shop with you, the fraction of their purchases they do with you as opposed to other places. Their overall satisfaction is going to go up."

Another decision that defied quantitative analysis was Bezos's move to let third parties compete with Amazon by selling products on what he calls the Web site's "prime real estate": the product-details pages. Now you can see other companies -- and many small-timers, including Amazon's own customers -- offering the same digital camera side by side with the one Amazon sells, but perhaps at a lower price, or a used copy of a book that Amazon sells new. "The decision was very controversial inside the company," Bezos says. "There was a lot of anxiety around it." Once again, though, Bezos acted from his inherent faith in giving greater choice to customers.

That faith has motivated Bezos throughout the company's history. From Amazon's early days, his vision was "to create the world's most customer-centric company, the place where you can find and buy anything you want online." Within weeks of first publishing customers' reviews of products, Bezos says, "I started receiving letters from well-meaning folks saying that perhaps you don't understand your business. You make money when you sell things. Why are you allowing negative reviews on your Web site? But our point of view is we will sell more if we help people make purchasing decisions."

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