tv The David Rubenstein Show Peer to Peer Conversations Bloomberg September 22, 2018 1:00pm-1:31pm EDT
david: you have become the wealthiest man in the world. jeff: it was fine being the second wealthiest person in the world. [laughter] david: what compelled you to sell things more than books? jeff: i thought we can sell anything this way. what happens when you offer a free, all-you-can-eat buffet? who shows up first? the heavy eaters. david: there are some things you criticize what the washington post says. jeff i have no idea what you are : talking about. [laughter] >> would you fix your tie, please? david: well, people wouldn't recognize me if my tie was fixed, but ok. just leave it this way. alright.
♪ david: i don't consider myself a journalist. and nobody else would consider myself a journalist. i began to take on the life of being an interviewer even though i have a day job of running a private equity firm. how do you define leadership? what is it that makes somebody tick? your stock is up 70% this year. is there one thing you think is responsible for that? 70% is pretty good. [laughter] jeff: i, it, i have been lecturing.
we have all hands meetings at amazon. 21 years now, 1997, i say, look, when the stock is up 30% in a month, don't feel 30% smarter, because when the stock is down 30% in a month, it will not feel so good to feel 30% dumber. that is what happens. i never spend time thinking about the daily stock price. i don't. david: as a result of going up 70%, you have become the wealthiest man in the world. is that a title you really wanted? [laughter] jeff: i have never sought that title. it was fine being the second wealthiest person in the world. that actually worked fine. [laughter] jeff: it isn't, i would say, some people are naturally curious. the thing, i would much rather they said inventor jeff bezos or entrepreneur jeff bezos or father jeff bezos. those kinds of things are more meaningful to me.
it is an output measure. if you look at the financial success of amazon and the stock, and i own 16% of amazon. amazon is worth roughly $1 trillion. that means what we have built over 20 years is $840 billion of wealth for other people, and that is great. that is how it should be. i believe so powerfully in the ability of entrepreneurial capitalism and free markets to solve so many of the world's problems, not all of them. david: you live in washington state, outside of seattle. the man who was the richest man is named bill gates. what is the likelihood that the two richest men in the world live not only in the same country state, city, but same neighborhood? is there something about that neighborhood we should know about? are there any more houses there for sale? [laughter] jeff: after i saw bill not too
long ago, we were joking about the world richest man thing. -- the world's richest man thing. i basically said, you are welcome. he immediately turned to me and said, thank you. it is a suburb of seattle. i don't think there is anything special in the water there. i did locate amazon in seattle because of microsoft. i thought that pool of technical talent would be a good place to recruit people from. that did turn out to be true, so it is not a complete coincidence. david: when you want to buy something, do you have put a credit card down? you just say you are jeff bezos? you carry cash around? [laughter] jeff: i do carry cash. [laughter] jeff: i have credit cards. i have to show my driver's license. david: have you ever had a credit card denied? [laughter]
jeff: i have had my credit card denied. david: what do you say? do you say don't you know who i am? jeff: i give them another credit card. [laughter] jeff: i say here, try this one. david: you made an announcement that is the most significant philanthropic gift you have made. [applause] jeff: thank you. david: about a year ago, you said you wanted to look for some good philanthropic ideas. you got 47,000 of them? jeff: yeah. david: you review them. so how did you decide where to put this $2 billion? jeff: that process was very helpful. i solicit ideas, i crowd sourced -- i solicited ideas, i crowd sourced. and i got literally something like 47,000, maybe a little more, most of them came on
social media. i read through thousands and thousands of them. my office correlated them all and put them into buckets. there were some themes that emerged. the other thing that is fascinating about that exercise, you see just how long-tailed it is. people are interested in helping the world in so many different ways. a lot of people are interested in homelessness, including me. a lot of people are interested in education of all kinds. i am interested in early education. the apple does not fall far from the tree. my mother, in running the bezos family foundation, has become an expert in early education. i am a student of montessori schools. [applause] jeff: i started at montessori when i was two years old. the teacher complained to my mother that i was too task-focused and she could not get me to switch tasks, she would have to pick up my chair and move me. [laughter]
jeff: if you asked the people who worked with me, that is probably still true today. david: has the teacher ever called you since and said she is responsible for your success? jeff: i am in touch with several of my elementary school teachers, but i don't know my montessori school teachers. david: the gift you are giving, essentially preschool for children who need free preschool. jeff: full tuition preschool. montessori inspired. i am very excited about that. i will operate that. that will be an operating nonprofit. we will put them in low income neighborhoods. we know if a kid falls behind, it is really hard to catch up. if you can give somebody a leg up when they are two years old, three years old, four years old by the time they get to kindergarten or first grade, they are less likely to fall behind. it can happen but you improved their odds. the money spent there will pay gigantic dividends for decades. david: the other part of your gift will be to give awards out? jeff: that will be more
traditional grant-making philanthropy. i will identify with the help of a team and fund, vet and fund, family homeless shelters. david: you said you would give an initial $2 billion. do you expect to add to that? jeff: everything i have ever done started small. [laughter] jeff: amazon started with a couple of people. blue origin started with five people. the budget of blue origin was very small. now it approaches $1 billion a year. next year will be more than $1 billion. amazon is 500,000 people. it's hard to remember for you, but for me, it was like yesterday i was driving the packages to the post office myself. i was hoping one day we could afford a forklift. so for me, i have seen small things get big.
it is part of this mentality. i like treating things as if they are small. amazon, even though it is a large company, i wanted to have the heart and spirit of a small one. the day one foundation will be like that. we will wander a bit too. we have some specific ideas about what we want to do, but i believe in the power of wandering. all of my best decisions in business and life have been made with heart, intuition, guts, you know, not, not analysis. when you can make a decision with analysis, you should do so, but it turns out in life that your most important decisions are always made with instinct, intuition, taste, heart, and that is what we will do with this day one foundation. the customer will be the child. this is so important.
the secret sauce of amazon, the number one thing that has made us successful by far is obsessive, compulsive focus on the customer, as opposed to obsession over the competitor, and i talked so often to other ceos, some other ceos, and also founders and entrepreneurs, and i can tell that even though they are talking about the customers, they are really focusing on competitors. it is a huge advantage to any company if you can stay focused on your customer instead of your competitor. then you have to identify who is your customer? at the washington post, is the customer the people who buy advertising? no, the customer is the reader. in school, parents, teachers? no, it is the child, and that is what we will but do.
-- that is what we will do. we will be of sense obsessively, compulsively focused on the child, we will use science when we can and use heart and intuition when we need to. david: when you use your intuition to make decisions, where is the intuition leading you now on your second headquarters? [laughter] [applause] jeff: all right. [applause] jeff: can we just take a moment to acknowledge that that may be the best segue in the history -- [laughter] [applause] jeff: -- of interviewing. david: right. jeff: seriously, david. david: all right. jeff: that is amazing. david: the answer is? [laughter] jeff: the answer is simple. we will announce a decision before the end of this year. we have made tremendous progress. the teams are working on it, and we will get there. no, no, be nice. jeff: it is dangerous to demonize the media, call them
♪ david: why did you buy the washington post? you had no background. what convinced you to do that? jeff: first of all, i was not looking for a newspaper. i had never thought about the idea, had never occurred to me. it was not like a childhood dream, nothing. my friend, don graham, who i had known 15 years. i know him 20 years now. he approached me through an intermediary and wanted to know if i would be interested in buying the washington post. i said i would not because i did
not know anything about newspapers. and don, over a series of conversations, convinced me that was unimportant, because we had inside the washington post, we have so much talent that understands newspapers. that wasn't what the problem was. what they needed was somebody who had an understanding of the internet. so that was the first thing. that is how i got started. i did some soul-searching. my decision-making process, this would be intuition and not analysis. the financial situation of the washington post in 2013 was upside down. the internet was eroding all the traditional advantages that local newspapers had, all of them. i said, you know, is this something i want to get involved in? if i do it, i will put heart and work into it. i decided i would do that if i
believed it was an important institution. i said if this were a financially upside down salty snack food company, the answer would be no. i started thinking about it that way i realized this is an important institution. this is the newspaper in the capital city of the most important country in the world. the washington post has an incredibly important role to play in this democracy. there is no doubt in my mind about that. [applause] jeff: and so -- [applause] jeff: and when i passed through that gate, i had a only one more gate, and that was i wanted to look myself, be really open with myself and look in a mirror and think about the company and be sure i was optimistic that it could work, because if it were hopeless, that would also be not
something i would get involved in. i looked at that and was super optimistic. it needed to transition to a national and global publication, and there is one gift the internet brings newspapers, free global distribution. we had to take advantage of that gift. that was the basic strategy. we had to switch from a business model where we made a lot of money per reader with a relatively small number of readers, to a tiny bit of money per reader on a very large number of readers, and that is the transition. i am pleased to report the post is profitable today. the newsroom is growing. [applause] jeff: it has been growing every year since i have been there. it is working. i am so proud of my team. i know for a fact when i am 80, i always project myself forward to 880, but as i get older i been projecting to 90. [laughter]
jeff: i know that when i am 90 it will be one of the things i am most proud of, that i took on the washington post and helped them through a rough transition. [applause] david: when you agreed to buy it, the asking price was $250 million. did you negotiate? jeff: i asked him how much he wanted. i did not negotiate with him and did not do due diligence. [laughter] david: i have something i would like to sell. [laughter] david: now that you own the washington post, sometimes there are people who criticize some things the washington post says, and you have been remarkably quiet. jeff: i have no idea what you are talking about. [laughter] david: you have been remarkably quiet in not defending yourself. jeff: i do defend the post. it is a mistake for any elected official in my opinion. i don't think this is an out there opinion, to attack media and journalists. [applause] jeff: i believe it is an essential component of our democracy.
there has never been, i was going to say there has never been an elected official who has likes their headlines. i think there has been no public figure who has ever like their headlines. it is ok. it is part of the process. if you are the president or governor, you don't take that job thinking you will not get scrutinized. you are going to get scrutinized. it is healthy. somebody very, you know, what the president should say is, this is right. this is good. i am glad i am being scrutinized. that would be so secure and confident. but it is really dangerous to demonize the media. it is dangerous to call the media lowlifes. it is dangerous to say they are the enemy of the people. we live in a society where it is not just the laws of the land that protect us, we do have freedom of the press in the
constitution, but it is also the social norms that protect us. it works because we believe those words on that piece of paper, and every time you attack that, you are eroding it a little around the edges. i don't want to be dramatic here. we are so robust in this country that the media will be fine. david: let's talk about how you came to where you are today. you grew up in texas, initially. jeff: yes. david: from early age were you a smart student? did your teachers tell you you were good? jeff: i have always been academically smart. by the way, the older i get i realize how many kinds of smart there are. there are a lot of kinds of smart, and a lot of kinds of stupid too. [laughter] jeff: i see people all the time i know they would not have gotten a pluses on their calculus exam, but are incredibly smart, but yes, i was
a good student. david: you move to high school in miami and were valedictorian in every class. you gave a speech as valedictorian saying we should colonize space or something like that? jeff: i did. i graduated from high school in 1982. a big public high school, miami, palmetto senior high, go panthers. [laughter] jeff: there were 750 kids in my graduating class. i loved high school. i had so much fun. i lost my library privileges because i laughed too loudly in the library. david: what about that laugh? where did you get that laugh from? it is distinctive. jeff: i have have that laugh all my life. there was a multiyear period where my brother and sister would not see a movie with me because they thought it was too embarrassing. [laughter] jeff: i don't know why i have this laugh. i laughed easily and often. you ask my mom or anybody who
knows me well and they will say that if jeff is unhappy, wait five minutes. ♪ jeff: i was packing boxes on my hands and knees with somebody else standing next to me, kneeling next to me. we are packing and i said, you know what we need? kneepads. this is killing my knees. this guy packing alongside me said we need packing tables. [laughter] jeff: i was like, that is the most brilliant idea i have ever heard. ♪
david: you graduated summa cum beta kappa? jeff: phi beta kappa. david: then you went into the highest calling of mankind, finance. [laughter] jeff: yes, i worked at a quantitative hedge fund, d. e. shaw & co. i used a lot of his ideas and principles, hr, recruiting, what kind of people to hire. david: a very good, well-known hedge fund. you were a star there. what propelled you to say i am quitting this, and will start a company selling books over the internet from seattle? where did that idea come from? jeff: this is 1994. nobody has heard of the internet, very few people. i came across the fact the world wide web was growing at something like 2300% a year in 1994. anything growing that fast, even if it's baseline usage is tiny,
it is going to be big. i looked at that and said there has to be, i should come up with a business idea on the internet, then let the internet grow around this and keep working on it. i made a list of products on might sell, i started force ranking them. i picked books because they are super and usual in one respect, there are more books in the book item in one category than any other item. there are 3 million different books active in print around the world at any given time. my founding idea of amazon was to build universal selection of a book, the biggest bookstores had only 150,000 titles, so that is what i did. i hired a small team and we built the software and moved to seattle. david: you told your parents you were going to quit d. e. shaw & co, making i presume a fair amount of money, and told your wife, mackenzie, that you would move across the country. what did they all say? jeff: they were immediately and reflexively supportive after
they asked the question, what is the internet? [laughter] jeff: so, you know, with your loved ones, you bet on them, not the idea. you are betting on the person. that was one of those decisions i made with my heart and not my head. i basically said when i am 80, now 90, i want to have minimized the number of regrets that i have in my life, and most of our regrets are acts of omission, the things we did not try. the path untravelled. those are the things that haunt us. david: you were telling me you had to go deliver the books to the post office yourself? jeff: i was doing that for years. and i was packing boxes on my hands and knees. in the first month, i was packing boxes on my hands and knees on the hard cement floors with somebody else standing next to me, kneeling next to me. we were packing and i said, you know what we need?
kneepads. this is killing my knees. this guy packing alongside me said, we need packing tables. [laughter] jeff: i was like, that is the most brilliant idea i have ever heard. [laughter] jeff: the next day i went and bought packing tables and doubled our productivity. david: think about it, as a senior executive, what do you get paid to do? jeff: you get paid to make a small number of high-quality decisions. ♪
beyond having questions. to getting answers. "activecore, how's my network?" "all sites are green." all of which helps you do more than your customers thought possible. comcast business. beyond fast. ♪ david: what propelled you to sell things more than books? jeff: after books, music, then we started selling videos, then i got smart and i emailed 1000
randomly selected customers and asked them besides the things we sell today, what would you like to see us sell. that answer came back long-tailed. they answered the question with whatever they were looking for at the moment. one was, i wish you sold windshield wiper blades because i really need new windshield wiper blades. i thought to myself we can sell anything this way. so we launched electronics, toys, and many other categories over time. you read the original business plan, it is just books. david: your stock went to $100, and then it went down to six dollars or something like that. jeff: at the peak of the internet bubble, $113, and after the internet bubble busted open, our stock went down to six dollars. that was less than the year. my annual shareholder meeting