As Hillsborough celebrates Amazon, check out this must-read BusinessWeek piece on Jeff Bezos

While Hillsborough County celebrates the announcement this week of a 1.1 million-square-foot Amazon fulfillment center to be built in Ruskin, interested residents are starting to look a little closer at the giant online retailer poised to bring 1,000 new jobs to the area. They want to know more about a company that will take in about $75 billion in revenue this year.

“Secret Amazon: An explosive new account will change everything you know about Jeff Bezos,” is a new piece by Brad Stone for Bloomberg BusinessWeek. Stone, a San Francisco-based writer, adapted the article from his book The Everything Store: Jeff Bezos and the Age of Amazon.

Stone’s account of the genius behind Amazon begins with a revelation — perhaps unsurprising — that even though Bezos often amazed and irritated employees, he always provided criticisms that were right on target.

Bruce Jones, former vice president of Amazon’s supply chain, tells of one occasion that perfectly illustrated Bezos’ management style. 

Jones supervised a five-engineer group to explore ways to maximize efficiency in the movement of workers at fulfillment centers. After spending nine months of hard work on the task, the group finally presented their findings to Bezos.

“We had beautiful documents,” Jones remembers, “and everyone was really prepared.”

Reading the information, Bezos became visibly frustrated. “You’re all wrong,” he exclaimed, getting up to write on a whiteboard in the room.

Bezos had no background in control theory or operating systems, Jones says, and only minimal experience in the distribution centers — he wasn’t the one who spent weeks and months out on the line.

As Bezos set out his argument on the whiteboard, Jones recognized “every stinking thing he put down was correct and true.”

“It would be easier to stomach if we could prove he was wrong,” Jones says, “but we couldn’t.”

The whiteboard incident became a model of the typical interaction with Bezos. The man  behind Amazon had an uncanny ability to be amazingly intelligent about things he had little working knowledge of; while at the same utterly ruthless about the method he communicated his ideas.

A few of Bezos’ ideas took a while to take root. But when they did, they worked.

“In 2002, Amazon changed the way it accounted for inventory,” according to Stone. The company transformed the LIFO (last-in, first-out) system to one relying on FIFO (first-in, first-out).

This strategy allowed Amazon to tell the difference between inventory it owned, and inventory stored in fulfillment centers owned by partners such as Target and Toys ‘R’ Us.

Jones’s supply-chain team was in charge the tremendous effort — a complicated task on its own — as well as the software, often filled with glitches. The result was a series of extremely stressful days where Amazon’s systems could not express any revenue.

After three days of frustration, while getting an update on the transition, Bezos had what Jones called a “nutter.”

“He called me a ‘complete f—— idiot’,” Jones said, adding that Bezos told him he “had no idea why he hired idiots like me at the company.”

“I need you to clean up your organization,”‘ Jones recalls Bezos saying. “It was brutal. I almost quit. I was a resource of his that failed.”

 Almost an hour later, Bezos was the same as he always was, and the interaction would have been different.

“He can compartmentalize like no one I’ve ever seen,” Jones said.

Stone also writes about a clandestine unit at Amazon, with “a name worthy of a James Bond film: Competitive Intelligence.”

The team, supervised by longtime executives Tim Stone and Jason Warnick, spent four years focusing on buying large volumes of goods mainly from other online retailers. Their task was to measure quality and speed of service, things like the ease of purchase, shipping speed, and so forth.

The existence of the secret Amazon team was to ascertain if a competitor was doing a better job than Amazon, then presenting information to Bezos and a variety of senior executives. The goal was to give the company a signal of threats, allowing them the opportunity to react quickly.  

It was Bezos’s “Khrushchev-like willingness” to use a “thermonuclear option” which had the intended result, Amazon’s dominance in the online marketplace.

Read Stone’s complete “Secret Amazon” piece on the BusinessWeek website.