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The Secrets of Bezos

Frugality

We try not to spend money on things that don’t matter to customers. Frugality breeds resourcefulness, self-sufficiency, and invention. There are no extra points for head count, budget size, or fixed expense.

Bezos molded Amazon’s business principles through two decades of surviving in the thin atmosphere of low profit margins and fierce skepticism from the outside world. In a way, the entire company is built around his brain—an amplification machine meant to disseminate his ingenuity and drive across the greatest possible radius. “It’s scaffolding to magnify the thinking embodied by Jeff,” says Wilke, the senior vice president for North American retail. “Jeff was learning as he went along. He learned things from each of us who had expertise and incorporated the best pieces into his mental model. Now everyone is expected to think as much as they can like Jeff.”

Bezos runs the final meetings in the biannual operating reviews, dubbed OP1 (held over the summer) and OP2 (after the holidays). Teams work intensely for months preparing for their sessions with the CEO, drawing up six-page narratives that spell out their plans for the year ahead. A few years ago, the company refined this process further to make the narratives more easily digestible for Bezos and other members of his senior leadership group, called the S Team, who cycle through many topics during these reviews. Now every narrative includes at the top of the page a list of a few rules, called tenets, that guide the group’s hard decisions and allow it to move fast, without constant supervision.

Once a week, usually on Tuesdays, various departments meet with their managers to review spreadsheets of data important to their business. Customer anecdotes have no place at these meetings; numbers alone must demonstrate what’s working and what’s broken, how customers are behaving, and ultimately how well the company overall is performing. “This is what, for employees, is so absolutely scary and impressive about the executive team. They force you to look at the numbers and answer every single question about why specific things happened,” says Dave Cotter, who spent four years at Amazon as a general manager in various divisions. “Because Amazon has so much volume, it’s a way to make very quick decisions and not get into subjective debates. The data doesn’t lie.”

The metrics meetings culminate every Wednesday with the Weekly Business Review, one of the company’s most important rituals, which is run by Wilke. Sixty managers in the retail business gather in one room to discuss their departments, share data about defects and inventory turns, and talk about forecasts and the complex interactions between different parts of the company.

Bezos does not attend these meetings. He spends more time on Amazon’s newer businesses, such as Amazon Web Services, the streaming video and music initiatives, and, in particular, the Kindle and Kindle Fire efforts. (Executives joke darkly that employees can’t even pass gas in the Kindle buildings without the CEO’s permission.) But Bezos can always make his presence felt anywhere in the company.

After the lubricant fracas of 2010, for example, e-mail marketing fell squarely under his purview. He carefully monitored efforts to filter the kinds of messages that could be sent to customers, and he tried to think about the challenge of e-mail outreach in fresh ways. Then, in late 2011, he had what he considered to be a significant new idea.

Bezos is a fan of e-mail newsletters such as veryshortlist.com, a daily assortment of cultural tidbits from the Web, and Cool Tools, a compendium of technology tips and product reviews written by Kevin Kelly, a co-founder of Wired. Both are short, well-written, and informative. Perhaps, Bezos reasoned, Amazon should be sending a single well-crafted e-mail every week—a short digital magazine—instead of a succession of bland, algorithm-generated marketing pitches. He asked Shure, the marketing vice president, to explore the idea.

From late 2011 through early 2012, Shure’s group presented a variety of concepts to Bezos. One version revolved around celebrity Q&As, another highlighted interesting historical facts about products. The project never progressed—it fared poorly in tests with customers—and several participants remember the process as being particularly excruciating. In one meeting, Bezos quietly thumbed through the mock-ups as everyone waited in silence. “Here’s the problem with this,” Bezos said, according to people who were present. “I’m already bored.” He liked the last concept the most, which suggested profiling a selection of products that were suddenly hot, such as Guy Fawkes masks and CDs by the Grammy-winning British singer Adele. “But the headlines need to be punchier,” he told the group, which included the writers of the material. “And some of this is just bad writing. If you were doing this as a blogger, you would starve.”

Finally he turned his attention to Shure, who, like so many other marketing vice presidents throughout Amazon’s history, was an easy target.

“Steve, why haven’t I seen anything on this in three months?”

“Well, I had to find an editor and work through mock-ups.”

“This is developing too slow. Do you care about this?”

“Yes, Jeff, we care.”

“Strip the design down, it’s too complicated. Also, it needs to move faster!”

Jeff Bezos grew up in a tight-knit family, with two deeply involved and caring parents, Jackie and Mike, and two close younger siblings, Christina and Mark. Jackie, who gave birth to Bezos just two weeks after she turned 17, was a towering figure of authority to Bezos and his friends. Mike, also known as Miguel, was a Cuban immigrant who arrived in America at age 18, alone and penniless, knowing only one English word: hamburger. Through grit and determination, he got a college education and climbed through the ranks of Exxon (XOM) as a petroleum engineer and manager, in a career that took the Bezos family to Houston, Pensacola, Fla., Miami, and, after Bezos left for college, cities in Europe and South America.

Yet for a brief period early in his life, before this ordinary if peripatetic childhood, Bezos lived alone with his mother and grandparents. And before that, he lived with his mother and his biological father, a man named Ted Jorgensen. Bezos has said the only time he thinks about Jorgensen is when he’s filling out a medical form that asks for his family history. He told Wired in 1999 that he’d never met the man. Strictly speaking, that’s not true: Bezos last saw him when he was 3 years old. And while Bezos’s professional life has been closely studied and celebrated over the last two decades, this story has never been told.

Jorgensen was a circus performer and one of Albuquerque’s best unicyclists in the 1960s. A newspaper photograph taken in 1961, when he was 16, shows him standing on the pedals of his unicycle facing backward, one hand on the seat, the other splayed theatrically to the side, his expression tense with concentration. The caption says he was awarded “most versatile rider” in the local unicycle club.

That year, Jorgensen and a half-dozen other riders traveled the country playing unicycle polo in a team managed by Lloyd Smith, the owner of a local bike shop. Jorgensen’s team was victorious in places such as Newport Beach, Calif., and Boulder, Colo. The Albuquerque Tribune has an account of the event: Four hundred people showed up at a shopping center parking lot in freezing weather to watch the teams swivel around in four inches of snow wielding three-foot-long plastic mallets in pursuit of a six-inch rubber ball. Jorgensen’s team swept a doubleheader, 3 to 2 and 6 to 5.

In 1963, Jorgensen’s troupe resurfaced as the Unicycle Wranglers, touring county fairs, sporting events, and circuses. They square-danced, did the jitterbug and the twist, skipped rope, and rode on a high wire. The group practiced constantly, rehearsing three times a week at Smith’s shop and taking dance classes twice a week. “It’s like balancing on greased lightning and dancing all at the same time,” one member told the Tribune. When the Ringling Brothers and Barnum & Bailey Circus came to town, the Wranglers performed under the big top, and in the spring of 1965 they performed in eight local shows of the Rude Brothers Circus.

Jorgensen was born in 1944 in Chicago to a family of Baptists. His father moved the family to Albuquerque when Jorgensen and his younger brother, Gordon, were in elementary school. Ted’s father took a job as a purchase agent at Sandia Base (today’s Sandia National Laboratories), then the largest nuclear weapons installation in the country, handling the procurement of supplies at the base.

In high school, Jorgensen started dating Jacklyn Gise, a girl two years his junior whose father also worked at Sandia Base. Their dads knew each other. Her father, Lawrence Preston Gise, known to friends as Preston and to his family as Pop, ran the local office of the U.S. Atomic Energy Commission, the federal agency that managed the nuclear weapons program after Harry S Truman took it from the military following World War II.

Jorgensen was 18 and finishing his senior year in high school when Gise became pregnant. She was a sophomore. They were in love and decided to get married. Her parents gave them money to fly to Juárez, Mexico, for a ceremony. A few months later, on July 19, 1963, they repeated their vows at the Gises’ house. Because she was underage, both of their mothers signed the application for a marriage license. The baby was born on Jan. 12, 1964. They named him Jeffrey Preston Jorgensen.

The new parents rented an apartment in Albuquerque’s Southeast Heights neighborhood. Jackie finished high school, and during the day, her mother, Mattie, took care of the baby. Life was difficult. Jorgensen was perpetually broke, and they had only one car, his cream-colored ’55 Chevy. Belonging to a unicycle troupe didn’t pay much. The Wranglers divided their fees among all members, with Smith taking a generous cut off the top. Eventually, Jorgensen got a $1.25-an-hour job at the Globe Department Store, part of Walgreen’s (WAG) short-lived foray into the promising discount retail market being pioneered at the time by Kmart (SHLD) and Wal-Mart. Occasionally Jackie brought the baby to the store to visit.

Their marriage was probably doomed from the start. Jorgensen had a habit of drinking too much and staying out too late. He was an inattentive dad and husband. Jackie’s father tried to help him; he paid his son-in-law’s tuition at the University of New Mexico, but Jorgensen dropped out after a few semesters. Preston Gise then tried to get Jorgensen a job with the New Mexico State Police, but Jorgensen wasn’t interested.

Eventually, Jackie took the child and moved back in with her parents at Sandia. In June 1965, when the baby was 17 months old, she filed for divorce. The court ordered Ted to pay $40 a month in child support. Court records indicate that his income at the time was $180 a month. Over the next few years, he visited his son occasionally but missed many support payments.

Then Jackie took a job working in the bookkeeping department of the Bank of New Mexico and met Miguel Bezos, who was working the overnight shift while he attended the University of Albuquerque. On several occasions when Ted was visiting his son, Bezos would be there, and they avoided each other. But Ted asked around and heard he was a good man.

In 1968, Jackie called Ted and told him she was marrying Miguel and moving to Houston. She told him he could stop paying child support and asked him not to interfere in their lives. Her father confronted him and made him promise to stay away. Jackie also wanted to give Jeffrey her new husband’s surname and let Miguel adopt him. Ted’s permission was needed for the adoption. After thinking it over and reasoning that the boy would probably have a better life as the son of Jackie and her new husband, Ted obliged. After a few years, he lost track of the family and then forgot their last name.

If you were to search the world for the polar opposite of sprawling, secretive, powerful Amazon, you might arrive at a small bike shop in Glendale, Ariz., just north of Phoenix. It’s called the Roadrunner Bike Center. It sits in a shoebox-shape space in an ordinary shopping center next to the Hot Cutz Salon & Spa and down a ways from a Walmart grocery store. It offers a small selection of premium BMX and dirt bikes from companies such as Giant, Haro, and Redline, brands that carefully select their retail partners and generally do not sell to websites or discount outlets. “The old guy that runs this is always there and you can tell he loves to fix and sell bikes,” writes one customer in a typically favorable online review of the store. “When you buy from him he will take care of you. He also is the cheapest place I have ever taken a bike for a service, I think sometimes he runs a special for $30! That’s insane!”

A red poster board with the hand-scrawled words, “Layaway for the holidays!” leans against the window. Hanging on a wall next to the front counter, there’s a framed newspaper clipping with a photograph of a 16-year-old boy with a flattop haircut, standing up on the pedals of his unicycle, one hand on the seat and the other flared daringly out to the side.

I found Ted Jorgensen, Jeff Bezos’s biological father, behind the counter of his bike shop in late 2012. I’d considered a number of ways he might react to my unannounced appearance but gave a very low probability to the likelihood of what actually happened: He had no idea what I was talking about. Jorgensen said he didn’t know who Jeff Bezos was and was baffled by my suggestion that he was the father of this famous CEO.

I mentioned Jacklyn Gise and Jeffrey, the son they had during their brief teenage marriage. The old man’s face flushed with recognition. “Is he still alive?” he asked, not yet fully comprehending.

“Your son is one of the most successful men on the planet,” I told him. I showed him some Internet photographs on my smartphone, and for the first time in 45 years, Jorgensen saw his biological son. His eyes filled with sorrow and disbelief.

I took Jorgensen and his wife, Linda, to a steak dinner, and his story tumbled out. When the Bezos family moved from Albuquerque to Houston in 1968 and Jorgensen promised Jackie and her father that he would stay out of their lives, he remained in Albuquerque. He performed with his troupe and took odd jobs. He drove an ambulance and worked as an installer for Western Electric, a local utility.

In his twenties, he moved to Hollywood to help Smith, the Wranglers’ manager, start a new bike shop, and then to Tucson, looking for work. In 1972 he was mugged outside a convenience store after buying cigarettes. The assailants hit him with a two-by-four and broke his jaw in 10 places.

Then he finally started to take control of his life. In 1974 he moved to Phoenix and quit drinking. Six years later he put together every cent he had and bought the bike shop from its owner. He’s run the store ever since, moving it several times, eventually settling into its current location on the northern edge of the Phoenix metropolitan area, adjacent to the New River Mountains. He met Linda at the bike shop. She stood him up on their first date but showed up the second time he asked her out. They’ve been married for 25 years. Linda says they’ve been talking privately about “Jeffrey” and replaying Ted’s youthful mistakes for years.

Ted has no other children; Linda has four sons from a previous marriage. All are close with their stepfather, especially the youngest, Darin Fala, who spent the most time with him growing up. But Ted never told them that he had another child. He says he was sure he would never see or hear anything about his son again, so what was the point?

Ted is 69 now and has heart problems, emphysema, and an aversion to the idea of retirement. “I don’t want to sit at home and rot in front of the television,” he says. He’s friendly and, his wife says, deeply compassionate. The store is less than 30 miles from four Amazon fulfillment centers, but if he ever saw Bezos on television or read an article about Amazon, he didn’t make the connection. “I didn’t know where he was, if he had a good job or not, or if he was alive or dead,” he says. The face of his child, frozen in infancy, has been stuck in his mind for nearly half a century.

He says he always wanted to reconnect with Jeffrey—whatever his occupation or station—and seems ashamed that he agreed to stay out of his life all those years ago. “I wasn’t a good father or a husband,” he says. “It was really all my fault. I don’t blame Jackie at all.”

When I left Ted and his wife after dinner, they were still in shock and decided that they weren’t going to tell Linda’s sons. The story seemed too far-fetched. But a few months later, in early 2013, I got a phone call from Fala, a senior project manager at Honeywell (HON) who also lives in Phoenix. Ted, Fala said, had called a family meeting the previous Saturday afternoon. “I bet he’s going to tell us he has a son or daughter out there,” Fala’s wife had guessed correctly.

The gathering was wrenching. “My wife calls me unemotional because she has never seen me cry,” Fala says. “Ted is the same way. Saturday was the most emotion I’ve ever seen out of him, as far as sadness and regret. It was overwhelming.” Ted decided he wanted to reach out to the Bezos family and reestablish contact and asked Fala to help him craft letters to Bezos and Jackie.

Curious about Bezos, Fala had watched online clips of the Amazon CEO being interviewed, including one from The Daily Show with Jon Stewart. He was startled to hear Bezos’s laugh. He’d heard it before. He grew up listening to it. “He has Ted’s laugh!” Fala said in amazement. “It’s almost exact.”

This article was originally posted on Businessweek

Cover image sourced from Flickr

Excerpted from the book THE EVERYTHING STORE: Jeff Bezos and the Age of Amazon, by Brad Stone. Copyright © 2013 by Brad Stone. Reprinted with permission of Little, Brown and Company; all rights reserved.

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