My latest Rational Alternative column for the Financial Mail provided the opportunity for some navel gazing. That’s not terribly comfortable when you’re in an industry experiencing the sharp end of economist Joseph Schumpeter’s theory of Creative Destruction. But in every collapse, opportunities do emerge. So those of us in the mire seek inspiration from creative thinkers wherever they may emerge. The column focuses on Amazon.com’s founder Jeff Bezos who, on October 1, took control of the venerable Washington Post. A newspaper bought out of bankruptcy in 1933 by one-time US Fed Governor Eugene Meyer, the sale to Bezos ends a long-running family affair. Meyer handed over to his brilliant but deranged son-in-law Phil Graham who ran the business well for 17 years before putting a loaded shotgun in his mouth. It was his widow Katharine, helped by her close friend Warren Buffett, who turned The Post into a great newspaper – the only one with the grit to run with the story of President Richard Nixon’s Watergate shenanigans. Her passing saw the baton move to her son Donald and the publisher’s role to niece Katharine Weymouth – both of whom admit they have run out of ideas how to bale out the sinking newspaper. Enter the compulsive experimenter, customer-centric Bezos. A man now burdened with the hopes not only of The Post, but an entire industry. – AH Â Â
By Alec Hogg*Â
The media industry is at a watershed. This was one of its most important weeks. On Tuesday, entrepreneurial genius Jeff Bezos took control of his $250m acquisition, the Washington Post newspaper. If ever there was a man able to find an exit to the news business’s crisis, it’s the founder of Amazon.com. That, at least, is what the print media industry is hoping.
Speculation has been buzzing since early August when the interest became public. It’s Bezos’s own money and even though less than 1% of his net worth, those who write it off as a “toy” are foolish.
A newspaper may be a wealthy super-nerd’s alternative to a sports club. But Bezos doesn’t do whimsical. He is among the planet’s most rational beings. One who has maintained a laser-like focus on customers. Not competitors.
He possesses a rare ability to see the big picture while embracing the detail. A quality found only in the best entrepreneurs. A skill he has applied since 1994 when turning his Seattle home’s garage into the headquarters for what became a $145bn online retailing giant.
His thinking mirrors that of another rational being, Warren E Buffett. They share other obsessions as well. Like the need to “relentlessly” remind staff, shareholders and the world at large about what’s really important.
Berkshire Hathaway’s made-for-shareholders video that’s played for the 30 000 AGM attendees always includes a clip from Buffett’s 1991 testimony to the US Congress. The repeated section focuses on Buffett explaining he is “relentless in protecting the company’s reputation.” It’s at the core of his approach to business.
Bezos’s equivalent is his 1997 letter to shareholders that’s included with every annual update. In it Amazon.com’s founder lays out the founding principle of putting the customer at the centre of everything. Continuously impressing customers has become an internal driver that forces everyone to keep improving the experience so “we invent before we have to….and will continue to focus relentlessly on our customers.”
Now that he’s in the newspaper business, the new owner of the Washington Post isn’t about to change a winning formula.
He visited the paper’s offices last month, spending an hour and a half in a staff-only “town hall” meeting. According to video postings on The Post’s website, Bezos spoke a lot about his nostalgia for newspapers. He also said news organisations could display their wares far better on tablets, like Amazon’s Kindle which holds 20% of the US market. Just as predictably, he retreated from specific questions about additional investments, cut-backs or expansion. Bezos is far too savvy to paint himself into commitments he might not be able to keep.
But there is enough for Bezos-watchers to catch his drift. Most critically, the way he has identified the business’s customers as its readers. Not advertisers.
That’s hardly a universal view.
Advertisers deliver the bulk of a media business’s revenues. So profit-minded managers traditionally put them at the centre. Sometimes excessively so.
During my time at Primedia, for instance, everyone knew the company’s mission was “delivering prospects to advertisers”. Ditto in newspapers where many publishers openly joke about content being the stuff that fills space between adverts.
That’s just the way it is. Not for Bezos, though. He is clearly going to make the business totally reader-centric. It surely won’t be the only change he makes.
The over-riding Bezos approach was expressed in an interview a couple years back where he cautioned against chasing trends: “You need to position yourself and wait for the wave. The way to do this is to pick something you’re passionate about.”
Bezos has the obvious passion, the time (he’s 49) and the money (he’s worth $27bn) to follow his own advice. Nobody in media yet knows what that wave will look like. And, if Amazon’s founder is right, it shall reward those exercising patience.
* Alec Hogg is a writer and broadcaster. He founded Moneyweb and now runs biznewz.com
