Creature but shes not somebody that people want to be. So from that kind of perspective it wasnt as terrifying as making on Something LikeElizabeth Bennett. But it was definitely challenging. She is a very odd one. Rose bezos and knightley when we continue. Funding for charlry rose was provided by the following captioning sponsored by Rose Communications from our studios in new york city, this is charlie rose. Dns jeff bezos is here, the c. E. O. Of amazon. Com. He founded the company in 1994 out of his garage as an online bookseller. Today it is a 100 billion dollar empire and the Worlds Largest ecommerce retailer. This week fortune named him as 2012 businessperson of the year. The magazine writes that he is the ultimate disrupter. Bezos has upended the book industry and displaced electronic merchants. Now amazon is pushing into everything from couture retailing and feet Film Productions to i pad worthy manufacturing. Im pleased to have him back at this table. Welcome and congratulation this very nice. Thanks, charlry, it is great to be here. Rose tell me where amazon is and where its going. Well, you know, weve been at it for 18 years now. And the happiest thing i can tell su were still having fun. So it is a big team of people working hard. We have an unusual business approach in some ways. Were not competitorobsessed, were customer obsessed. We start with the customer and work backwards. We are willing to take a longterm point of view. We dont need things to pay back in just one or two or three years. Rose not obsessed by quarterly earnings. No. And were also willing to invent and invention does take a certain amount of willingness. You have to be willing to be misunderstood, you have to be willing to fail. But invention is really important. And thats so thats kind of, if i were to say what are the three big ideas about amazon, those would be the three. Long term thinking, Customer Obsession and willingness to invent. Exactly. And those things will still be true, i hope, ten years from now. Rose but do you know where you will be ten years from now in terms of its really hard to know. You know, i think some of the things about our business as we know ten years out, technology is hard to predict ten years out. But i know that customers will still want low prices ten years from now so well be still working on that i know theyll want fast delivery so well still be working on that i know that theyll want, you know, books in 60 seconds so well still be working on that. So theres a bunch of things we will count on. We do that now on our kindle fire line. Rose there is so much to talk about. First this, what is this new product you have. This is shipping today. This is our, theo our kindle fire hd, the big one. So this one is our 8. 9 inch device. It comes in a 4 g model and it comes in a wifi only model this is our latest tablet. Rose what will it sell for . This is 299. And so part of what you are seeing here are seven inch tablet is 199. And we take a very unusual approach in the tablet business which is we want to make money when people use our device, not when they buy our device so we sell the device at near break even. So we can pack for 1 9 in the case of the big one, 299, we can pack a lot of Sophisticated Technology into a very low price point. Were working hard to charge less. Rose do you have more in common with sam walton than steve jobs . You know, sam walton is somebody who i have read his autobiography. Ive thought a lot about him. And i think there is there was a lot to admire in the way that he started walmart and he was a customerobsessed guy. Rose and he believed in low margins and huge volume. He really, what i think he believed in is trying to figure out what customers wanted and trying to figure out how to give it to them. Certainly one of the things customers want is efficient operations so you can afford to lower price. Internally i think it is easy to lower prices. Its hard to be able to afford to lower price. So theres a lot of hard work involved in charging less. Youre also like steve in that you are a founder operator. I mean you founded the company. Steve founded apple and left and came back. You have been there from the beginning. And you stay with it. Absolutely. And i stay with it because its fun. I love invention. I love my teammates. I like working on part of a team where we all count on each other. Its a stimulating environment if you like change and rapid change, amazon is a great place to be. Rose beyond what you have said characterize the culture of amazon today. Well, i would say that the culture of amazon starts with an externally facing culture looking at customers as our touchstone. So companies can be kind of competitor focused. And that approach can be successful. Or i think they can start with the customer and that can also be successful. So some companies have kind of a conqueror mentality. If you look at their annual Strategic Plan it starts with their three top enemies and who they are going to crush this year. And some companies, and certainly amazon is in this group. We have an explorer mentality. So we like to go pioneering. We like to find dark alleyways and wander down them and see if they open up into broad avenues. And sometimes they do. With that pine earring exploring mentality is what drives us. The core of the culture. And over the years its selfselecting. The people who thrive at amazon and stay at amazon and love amazon they have that. They wake up in the shower motivated by what are we going to invent, not by which company are we going to kill. This article in Fortune Magazine im looking for it here but it describes staff meetings. In which there is often a 30 minute silence. Yes, we have study hall the beginning of our meeting. Explain that. Well, the traditional kind of corporate meeting is somebody gets up in front of the room and presents, a power point presentation or some kind of slide show. And in our view, that is a very kind of, you get very Little Information that way. You get it is kind of easy for the presenter but difficult for the audience, so instead what we do is all of our meetings are structured around a 6 page narrative memo. And when you have to write your ideas out in complete sentences and complete paragraphs it forces a deeper charity clarity. There really is something to that. Few people know that these days. Yes. And so what we do is we just sit and you know, he says why dont you read the memos in advance. Part of the problem there is that time to read them in advance doesnt materialize out of nowhere. So this way you know everybody has the time because were all sitting around the table reading simultaneously. You know everybody has actually read the memo. The author who has put a tremendous amount of work into writing the memo gets the warm feeling of seeing everybody read it so they know actually it hasnt been a waste of time t is getting read. And there is another nice thing about this approach too. If you have a kind of a traditional power point presentation, executives are very good at interrupting. And so the person will get halfway into their presentation and then some executive will interrupt the conversation. And that question that the executive asks probably was going to be answered five slides in. So if you read the whole six page memo, it often happens to me, i get to page two and i have a question, i jot it in the margin, and by the time i get to page four the question has been answered so i can cross it off and it saves a lot of time. I mentioned this in the introduction, this is a quote from Fortune Magazine. Bezos is the ultimate disrupter. He is upended the book industry an displaced electronic merchants. Now amazon is pushing from everything from couture ree tailing and feature Film Production to ipad worthy tablet manufacturing. Amazon even sells ultra cheap Database Software for businesses, auricle take note. He is willing to take risk and money and amazon stock up 30 so far this year. You like that title, disrupter . Well, we, internally we think of ourselves as inventors. Rose and explorers. And explorers. And i think what happens, a consequence of successful invention is disruption of the old more traditional method. So that, disruption if an invention is a good invention, and customers embrace that invention, take kindle as an example. So ebooks, kindle, books in 60 seconds, carry your whole library with you. Customers is have embraced kindle. And so thats an invention. Our guil is not to disrupt. But its a consequence of invention. So when you invent Something Like kindle, it is going to change the publishing industry. Its going to change the book selling industry. So it does have a disruptive effect on the incumbents. But thats not the goal. Youre in the cloud. Yes. Rose you pioneered that. My best friends told me im in the clouds. laughter rose some i know. Hes up there in the cloud somewhere. Is that moving along as we expected it to, data in the cloud. Even much faster than they would have ever anticipated. We really started this business seven years ago called amazon web services. And it has accelerated much faster than we could ever have hoped for. Its really an easier way for Software Engineers and companies that employ Software Engineers to build applications. So they can do it faster, have Higher Quality software. They dont have to fool around with building their own data centers. Basically you can buy compute by the drink instead of having these expensive capexfixed expenses. Take me back to the moment that you decided to go back into that business. What was the motivation there . We were inside amazon, amazon. Com itself, the web site is a big server heavy, data center heavy application. And what we found is that our applications engineers, the people who write the code that you actually interact with as a customer, were having to do a lot of finegrained coordination with our networking engineers. The people who organize the data centers and make all the servers work. And that finegrained coordination was a lot of heavy lifting but it didnt provide any differentiation it was kind of the price of admission rather than something that our customers cared about. So we realized is we needed to create a set of they call them apies, application programming interfaces that would kind of stabilize and harden the environment that our applications engineers worked in. So that they wouldnt have to do all these weekly conversations with the data center team. And thats what we did. We started planning out these things. We started planning them out just for our own use. And as we were planning out all of this infrastructure, all these Infrastructure Web Services we realized wait a second, if we need this, everybody is going to need this. Were just the canary. Were just seeing it a little bit sooner. And so we decided to do a little extra work to externalize it and make it a service that people could buy. Thats the way great ideas yeah, necessity is the mother of invention. Yeah there are people who wonder about two things. Are you headed to brick and mortar. You know, i get asked this question a lot. And the answer is we would love to but only if we can have a truly differentiated idea. So one of the things that we are we dont do very well at amazon is do a me two product offering. So when i look at physical Retail Stores its very well served. The people who operate physical Retail Stores are very good at it. And so its you know, the question we would always have before we would embark on such a thing is what is the idea what would we do that would be different. How would it be better. We dont want to just do things because we can do them. We want to do something we dont want to be redundant. So its not beyond the imagination, would you do it if you had an idea that we could do it better and different. Exactly right. We dont have a religion. In fact our brand name would extend. The reason i get asked that question from time to time is because people know that the amazon brand name would probably work well, the physical world environment. So there are some, we have some of the assets in place that we would need to do that. Would it have any advantage other than being a Profit Centre . Which is a pretty good advantage. But thats the kind of question that we ask ourselves when were looking for something that would make it not a me too offering. We want it to be differentiated. We want you know, if you if somebody is already if 100 Companies Companies are doing something and youre the 101s youre not really bringing any value to society. And so and typically by the way the Business Results arent very good for Something Like that either. And so what we want to do is we want to do something that is uniquely amazon and if we can find that requested, and we havent found it yet but if we can find that we would love to open physical stores. What have you worried about that might be a change to your business . In terms of being a threat to your survival. One of the things that we think about, we think about every time we see a big new phenomenon we try to figure out tablets like that. Mobile, tablets for sure but mobile in general, smart phones, tablets. We definitely think about mobile because if its good for our business, bad for our business s there something we could be inspired by. Social networks. We look at that too. We say is there some way this could inspire us to do something in the ecommerce arena. Or give birth to things that could challenge you in terms of where you are. Absolutely. It turns out on the mobile side what we see so far is encouraging is that it is kind of a tailwind for our business because people can take a tablet like the kindle fire or i pad or any other tablet and lean back on their sofa and shop on amazon. It he is a behavior we encourage, by 9 way, and but so we have to Pay Attention to that. We have to make sure that were building the right apps for people. Weve taken an unusual approach with our kindle book store which is that not only can you read when you buy a kindle book not only you can read it on kindle hardware but you can read it on every platform. You can read it on your i pad. We call it whisper sync, you can read it on your ios device. You can read it if you have another kindle somewhere else pick up where are you. If are you in line at the Grocery Store and you want to read a few page os on the iphone, you can do that, it syncs up with your kindle. Or watching my show one place, watch it another place, pick up exactly where it was. True story. All right, the other thing people wonder about are phones, amazon phones. Yeah. Well, here is one where were very reluctant to discuss our future road map. Yes, i know,. So i will have to decline to answer that question. But. Rose otherwise it might incriminate you. I will just have to ask you to stay tuned. I wouldnt want to speculate there are a bunch of rumor, i agree there are a bunch of rumors that we might do a phone. Rose that answer leads us to believe that you are going to do it, are you just waiting for the right opportunity. Well, youll have to wait and see. Rose what would you believe that the internet is in its infancy. Absolutely, still today. I think its still day one. Rose day one. Absolutely i dont even think. Rose not day 25. The alarm clock hasnt gone off yet. You havent even hit the snooze alarm once. Its early. Rose make the case why its early. What i would say, i think its day two in the rate of change slows. And so far the rate of change on the internet if anything is accelerating. You know, if i go back in time to 1999, i could keep track myself of most of the things happening online. Today there is so much innovation, so many tiny startup companies, and not just in the u. S. All over the world. This is a big global phenomenon. And its now impossible to keep track of how every company and how people are using the internet. There is so much dynamism. Thats what makes me optimistic that its still at the very beginning. Rose cyberwarfare has a new urgency in washington as the president has. As it should. Rose talk to me about that, as you see it. Well, i think stucksnet, the voy russ that was used to attack the iranian centrifuges is a huge wakeup call. Most people have computer viruses in their heads, they think of computer viruses as something that might mess with their data. They dont think of computer viruses as something that can destroy physical infrastructure. But in fact, almost all, you know, modern pieces of Capital Equipment take a electric Power Generation station, big turbines, natural gas powered turbine. Theyre driven by software. Theyre driven by software and to be efficient you have to take that big turbine and spin it at very high speeds. And to be really efficient you want to spin it right up to its structural limit its and no further. So you can use the software if you take control of that software to overspin the turbine and it will fly apart. It can destroy it. And so theres a lot of i think people are rightly awakening to this issue. An its a very, very troubling. Because you know, there are people all over the world, different governments that have very sophisticated cyberwarfare capabilities and then there are probably, you also could worry about individuals in that regard. And other kinds of organizations that would keep awake at night. Rose for a long time it was assumed that the United States was at the cutting edge and was leading the expansion in terms of science and technology. Yes. And we got lots of nobel prizes to sert few that. Is that going to be the future . Might we lose the lead in Computer Science, Electrical Engineering and all the things that dictate what has brought us here . Well, i think first of all i still think in many ways the u. S. Is a very dynamic society. In part because of not just because we have a good College Education system. Best universities in the world. Best u