Books: Taking on all dot.comers - Geoffrey Owen savours a history of the world's largest and fastest-growing e-tailer and discovers that, for once, there is substance behind the hype

Books: Taking on all dot.comers - Geoffrey Owen savours a history of the world's largest and fastest-growing e-tailer and discovers that, for once, there is substance behind the hype - Get Big Fast by Robert Spector

by SIR GEOFFREY OWEN, author of From Empire to Europe
Last Updated: 31 Aug 2010 Get Big Fast by Robert Spector

Random House Business Books, pounds 18.99

The US used to be regarded as the home of short-termism, with companies under pressure to increase their profits quarter by quarter and liable to be punished by investors if they failed to do so. Now, it seems, long-termism is the rule, at least in the new world of the internet. One of the many extraordinary features of, the largest and fastest-growing of the new companies, is the apparent indifference of top management - particularly Jeff Bezos, the founder and CEO - to the need to earn any profits.

Get big fast has been the guiding principle of the business since its creation in 1994. The focus is on sales growth and market share, and on establishing Amazon as the dominant brand, not just for selling books, but for music and a vast range of other products. Thanks to the way it buys and sells its merchandise, the company never appears to be short of cash, and it uses its highly valued shares as the currency with which to acquire other firms. The fact that Amazon continues to report losses (dollars 390 million last year, on sales of dollars 1.64 billion) is not of great concern to most investors.

How long can this model last? Will Amazon be blown away when the internet bubble finally bursts? This book does not claim to provide definitive answers to these questions. What it offers is a clear and readable description of the origins and early growth of the company, as well as some useful insights into Bezos' business philosophy and style.

The son of a Cuban refugee who became a senior manager in Exxon, Bezos was brought up in a comfortable, middle-class environment. After graduating in electrical engineering and computer science at Princeton, he joined a start-up financial telecoms firm in New York, where he developed an expertise in computer programming techniques. In 1988 he went to Bankers Trust, but the crucial move came two years later when he moved to DE Shaw & Co, a quantitative hedge fund widely regarded as the most technologically sophisticated firm on Wall Street.

At that time the internet was just beginning to evolve from a medium through which scientists communicated with each other to a marketplace where goods and services could be bought and sold. Asked by Shaw to investigate internet opportunities, Bezos came up with the idea of an online bookstore.

He saw that buying books over the internet would offer huge attractions - a much wider selection than a physical store and, thanks to the search and retrieval technology that had been developed for the world wide web, a much quicker means of identifying the books that customers wanted. When Shaw rejected the idea, Bezos decided to strike out on his own.

The Amazon web site was launched in 1995 and within a few months was one of the most widely used on the internet. In 1996 Silicon Valley venture capital firm Kleiner Perkins invested dollars 10 million for a 13% stake in The IPO came a year later. Since then sales of all its products have soared. Amazon has also made a large number of acquisitions, at the same time forming partnerships with specialist firms such as the auctioneer Sotheby's.

The ambition is huge - to be the company where consumers can find anything they may want online. Is it realistic? There is no doubt that Amazon has established a powerful first-mover advantage. It is also clear from this book, which is not uncritical, that Bezos is a very remarkable entrepreneur. He combines a deep understanding of technology with a single-minded determination to put the customer at the centre of his business strategy. To this should be added an impressive ability to attract and retain top-class executives, and a real flair for public relations.

There is, in short, real substance behind all the hype; comparisons between Bezos and Bill Gates are by no means entirely fanciful. It is possible that Bezos will ruin what he has built by trying to do too much, in which case could become just a footnote in the history of the internet. But on present evidence such an outcome looks unlikely.

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