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Page 3 of "Inside The Mind Of Jeff Bezos"

Business Weirdness

While Amazon has been highly innovative, Bezos seems as comfortable stealing ideas as he does inventing them. EBay is the rage? Amazon begins holding auctions. Google is getting the headlines and Web searching is the hot business? Bezos starts A9, a subsidiary that created its own search engine. Bezos has admitted to his copycat streak. In a speech at Lake Forest College, he said, "We watch our competitors, learn from them, see the things that they were doing for customers and copy those things as much as we can."

To be sure, Amazon hasn't enjoyed the kind of success with its imitations as it has had from its original ideas. When Amazon's auctions proved disappointing, its executives realized that eBay was just too strong, says Risher. But Bezos is persistent, tenacious, and adaptive. Auctions opened up Amazon to the idea of letting third parties sell things on the site. Bezos tried again with zShops, an online mall with third parties selling things at fixed prices from their own "storefronts." That disappointed, too, but Amazon learned from the experience and created Marketplace, which has had far greater success letting third parties sell their goods side by side with Amazon's own offerings on Amazon's product-detail pages.

Right now, Amazon and Google are copying each other in the Internet search business. In Silicon Valley, Google is widely believed to be preparing its own riposte to Amazon's Search Inside the Book, while A9 is looking to expand Amazon's search capabilities to help people find what they want to buy anywhere on the Web, much like Google's Froogle feature.

Bezos has learned even more from his critics than from his competitors. Tim O'Reilly, who's a free-software enthusiast and an influential voice in Silicon Valley, had never met Bezos before he publicly attacked Amazon's move to patent its "1-Click" checkout. The feature lets customers purchase items with a single mouse click, since the Web site has already stored their billing and shipping information. "Jeff brushed me off at first," O'Reilly recalls, "but then he engaged thoughtfully and substantially on the issues. He got the message from the marketplace that using patents aggressively was bad PR." Ultimately the two men went to Washington, DC, together to lobby for changes in the patent laws.

During the crash, people openly wondered whether Bezos was a fraud. He responded with self-confidence and optimism.

It's hard to predict how Amazon will change in the next few years because Bezos is so committed to radical innovation. Bezos himself doesn't really know what will happen. "We have this weirdness in our business," he says. "The raw ingredients that make our business -- things like CPU processing power, bandwidth, and disk space -- get twice as cheap every 12 to 18 months. Disk space is 30 times cheaper today than it was five years ago. Thirty times cheaper! So the real question becomes, What can you do with 30 times as much disk space, 20 times as much computing power, and 30 times as much bandwidth? All right, how are you going to make customers happy with that? It turns out that these are not easy questions to answer."

A Warren Buffettism