Diatribes of Jay

This is a blog of essays on public policy. It shuns ideology and applies facts, logic and math to economic, social and political problems. It has a subject-matter index, a list of recent posts, and permalinks at the ends of posts. Comments are moderated and may take time to appear. Note: Profile updated 4/7/12

06 August 2013

Jeff Bezos and the Pope


Gay rights and humility
Accepting criticism
Honest product reviews and their larger meaning
The neglected value of knowledge and experience
The Fourth Estate

Gay rights and humility

Jeff Bezos was raised a Texan, by a grandfather who was a scientist turned rancher. Yet he has at least two things in common with Pope Francis.

First, like the Pope with his humble, probing question, “Who am I to judge?” Bezos has recognized the humanity of gays. Last year he personally gave $2.5 million to help pass a referendum on gay marriage in his present home state of Washington.

Second, like the Pope—and despite running a huge corporate empire that rivals the Vatican’s in size—Bezos has his share of humility. He didn’t make that contribution out of ego-driven religious or ideological conviction. He made it because an employee asked him to. Two days after receiving her e-mail, he wrote back, “[T]his is right for so many reasons. We’re in for $2.5 million.”

Accepting criticism

Bezos is one of the hardest-charging CEO’s in American business. He has had to be in the low-margin business of selling books and records, where Amazon.com got its start. Like the late Steve Jobs, he focuses ruthlessly on improving the customer experience.

Yet Bezos is amenable to criticism. He doesn’t just pretend to listen. He changes his ways.

When employees and observers complained that temperatures in his firm’s warehouses reached 100 degrees, he allotted money for air conditioning. When he began to hear criticism of Amazon’s membership in the American Legislative Executive Council (ALEC), a right-wing business lobbying group, he quit. He did so later than other major firms, perhaps because ALEC supported the so-called “Amazon exemption” from sales taxes on Internet sales—a vital advantage in Amazon’s low-margin sales business. But he did it.

The most amusing example of Bezos’ capacity for change came during his firm’s early start-up days. Employees were still packing books for shipment on the floor; yet sales were increasing exponentially. So were employees’ hours, including Bezos’. Everyone was so focused on increasing production that Bezos suggested getting knee pads to do the packing. Then an employee suggested the obvious: getting tables. Bezos said later that he “thought it was the most brilliant idea I had ever heard in my life.”

Honest product reviews and their larger meaning

But Bezos’ most important example of humility and capacity for change had nothing to do with employee relations or politics. It’s the foundation and cornerstone of Amazon’s business success: letting customers criticize the very products that Amazon sells.

Well-meaning, self-appointed advisors warned Bezos not to do it. How can you sell things if you point out their bad features, as well as the good?

Allowing negative product reviews goes against every canon of salesmanship from time immemorial. Praise the product to the skies. Sell sex, excitement and fun, not the product. Let the buyer discover its defects and disadvantages for herself, if she can, usually after purchase. Once buyer’s remorse sets in, you’ve got your money. Take it and run.

That philosophy is older than ancient Rome. We have it in Latin: “caveat emptor,” or “let the buyer beware.”

Bezos challenged this bit of ancient wisdom and won big. Now virtually every online vendor, from Lowe’s and Home Depot to Best Buy, offers unedited customer reviews, both negative and positive, online. But none of them has Amazon.com’s software or huge database of reviews. Bezos’ humble vision gave his firm a commanding lead.

It’s hard to understand why this fundamental innovation in salesmanship has gotten so little comment. Today many of us take it for granted. But it’s a radical change in the culture of salesmanship and self-promotion that made America what it is today.

It’s also an exercise in honesty, humility and trusting the wisdom of the crowd, the common person. Isn’t that what democracy is supposed to be like?

My own experience verifies what a powerful tool of business honest negative reviews can be. I never paid much attention to Amazon.com, the bookseller. I don’t buy that many books, and I’m old enough to have accumulated my collection of CD’s in stores. So I missed the chance to invest in Amazon when its stock’s price-earnings ratio was less than astronomical.

But when Amazon started selling electronic equipment, small appliances and hardware—things that work (or don’t)—I began to pay attention. Reading the online reviews, I could accomplish in mere hours the equivalent of days of in-person shopping, coping with “out of stock” and having to deal with ignorant and ill-informed salespeople.

I could get my product advice straight from the horse’s mouth: people who had bought the product and liked it or didn’t. I could avoid my own buyer’s remorse by reading the complaints of people who had felt it themselves. And, with a little help from Google and the Internet, I could compare products as if shopping a major city like New York, all without ever leaving my desk.

Now I do nearly all my shopping on line, and I start with Amazon.

All these benefits, to me and to Amazon’s exploding business, arose out of two admirable human qualities: humility and honesty. So when I heard the Pope’s wonderfully human question about gays (“Who am I to judge?”), I thought of Amazon and Bezos.

The neglected value of knowledge and experience

Yet another ingredient of Amazon’s reviews is as important as the reviewers’ honesty and Bezos’ humility in letting them pan his products. It’s experience and real knowledge.

The product reviews on Amazon’s Website are useful for one reason only. The people who write them have bought and used the products. The most useful reviews are those of writers who wait until they’ve used the product for months, or until it fails in some way.

Two things enforce this discipline of practical knowledge and experience. First, Amazon does what it can with its software to allow only actual purchasers to write reviews. Second, the crowd itself enforces the rules. Commenters flame, blame and shame people who use Amazon’s Webite to complain (or to praise) in the abstract, or to lambaste Amazon’s own services or damage in transit. And rightly so.

Would it were so in politics! The average online comment on political stories is an exercise in abstract and groundless opinion, usually without a single fact. When called on this, some commenters reveal an inability to distinguish facts from opinions and abstractions.

And the ignorance in cyberspace is boundless. I have seen online comments expressing surprise and disbelief that Cuba was ever a US colony. I have read numerous comments insisting, or strongly implying, that the engineers who design solar-energy arrays don’t know the sun doesn’t shine at night. Is there a way to limit comments to writers who actually have relevant knowledge or experience?

The Fourth Estate

And so we come to Jeff Bezos’ recent personal purchase of The Washington Post.

Why The Washington Post? Bezos now lives and built his empire in Washington State, not Washington, D.C. Surely he knows the difference.

Once upon a time, we Yanks had three national newspapers of international repute: The Washington Post, the New York Times, and the Wall Street Journal. Now we have only one that actually deserves that status.

Only one of the three relentlessly (and sometimes ruthlessly) finds fault in high places and speaks truth to power. Only one of the three ever brought down a sitting US president through sheer investigative reporting (on the Watergate Scandal). Only one (before Bezos’ purchase) was still owned by a family imbued with the true zeal and mission of the Fourth Estate.

The New York Times’ soul escaped to heaven when Arthur Ochs Sulzberger died. Actually, it fled a bit earlier, when Sulzberger, in apparent senility, appointed an advertising executive to run a news business.

In contrast, The Washington Post’s Graham family lived the Fourth Estate’s values. Its legendary publisher, Katharine Graham, personally made all the hard decisions to proceed with the reporting on the Watergate Scandal that brought down Richard Nixon for gross abuse of power. And she made them under intense and relentless pressure from a rogue Chief Executive and his minions.

The New York Times and Wall Street Journal are sycophants and ass-lickers in comparison. Both were located at the epicenter of the Crash of 2008. But neither has done serious, hard hitting investigative reporting on its causes to this date.

If Richard Nixon had been Wall Street and had ruled from Manhattan, he might still be in office, like Robert Mugabe. Despite a pretense to journalism, the two newspapers that live on Manhattan refuse to bite the hand that feeds them and most of the Island.

The Wall Street Journal is even worse. Its current owner (indirectly) is Rupert Murdoch, who (if there really is such a thing) closely resembles the Antichrist. Antichrist ownership of a newspaper ostensibly devoted to serving the public is not a happy combination, whether for grammar, organization, or “balance” in reporting.

So The Washington Post is not just the best example of a real newspaper among our national rags. It is the only one.

The Washington Post also differs from the other two in another respect. It’s the only one that has not gone to a subscription model. So it’s not only the sole remaining guardian of the public interest. It’s the only one whose hard-hitting reporting people anywhere can read for free.

Don’t get me wrong. I understand the financial pressures the Internet has put on newspapers. And I can easily afford the subscription fees. After all, I subscribe to Consumer Reports and Morningstar, among others. I even let them charge my credit card annually.

But these are very specialized services. They are not the Fourth Estate. There is something fundamentally incongruous about putting news behind a pay wall.

In the old days, when news came on dead trees, the newsboy would shout the headlines on the streets of major cities. And you could read them, and most of the major stories, at newsstands or through the glass windows in newspaper vending machines. If a particular story interested you, you could read it all by paying a quarter (or in the really old days, a dime) for that particular issue. News was not free, but important news was damn close.

Today, you have to commit yourself to a single publisher by paying a hundred or so dollars a year for a subscription. At that price, most ordinary working folks are not going to buy more than one subscription. So news readers become “locked into” a single source of news, and news becomes a monopoly.

Right now the New York Times and the Wall Street Journal are competing to become national monopolists in online paid news. Their “markets” are a bit different: the Times is a more general newspaper, while the WSJ focuses more on business, finance and commerce. But both cover politics and government, especially on their editorial pages.

In contrast, The Washington Post has kept faith with the ideals of the Fourth Estate. Anyone, anywhere, worldwide can read its hard-hitting reporting, for free, online. It’s no accident that the legendary Graham family continued with this model, despite the growing red ink. It’s what journalism is all about: informing the public.

The post you are reading is a good example of the enormous benefits of free news. Although I admired him, I knew next to nothing about Jeff Bezos, the man, before sitting down to write. In a half-hour, with a single Google search, I was able to uncover and read in-depth articles about him from Time/Business, Business Insider, The Nation, and the Wall Street Journalall for free.

That’s the kind of access to information that the Internet promises. And that’s what newspapers like the New York Times and the Wall Street Journal undermine with their subscription models, even if they confine the pay wall to “fresh” news. They are balkanizing the Internet. Their financial survival comes at the risk of the Fourth Estate’s demise.

Enter Jeff Bezos. Two obvious goals underlie his acquisition of The Washington Post with his personal fortune. First, he wants to insure the survival and independence of the sole remaining truly independent (and hard hitting) national newspaper in our democracy. (I hope he also means to continue the Graham family’s inestimable tradition of fierce independence, if not its actual editorial control.)

Second, with his humility, willingness to respond to criticism, and long Internet experience, maybe he can square the circle. Maybe he can solve the riddle of “monetizing” news without putting it behind a pay wall, thus creating mini-monopolies incompatible with the Fourth Estate and accelerating the already frightening trend of people relying on a single source for all their news.

Maybe Bezos can also find some way to make online reader comments on news as interesting and useful as the product reviews on Amazon.com. Maybe he can impose some requirement—analogous to the actual-purchase requirement for product reviews—that commenters have some discernible knowledge or experience on the topics on which they write. Maybe he and his programmers can create an algorithm to insure that each online comment contains a least one, single, solitary verifiable fact.

Maybe, in so doing, he can save our democracy and our nation’s collective ability to think. Imagine that: computers imposing intellectual discipline on a lazy populace raised to “express itself,” no matter how inane or baseless its opinions. Godspeed.

Footnote: I’m not sure why the Wall Street Journal article on Bezos was available without subscription. WSJ editorials are generally free, in order to “spread the gospel” of muscular capitalism. Maybe the Bezos biography fell into that category. The article was almost two years old when I accessed it, so maybe it fell into a category of “old” news outside the pay wall.

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