The Union Forever

The Union Forever
You know, Mr. Bernstein, if I hadn’t been very rich, I might have been a really great man. — Charles Foster Kane

Citizen Kane is one of those movies almost everyone has seen, but almost nobody really remembers, at least not in the way they remember The Princess Bride or Goodfellas or Star Wars. (“It's the greatest curse that's ever been inflicted on the human race,” says Jed Leland: “memory.”) For instance, everyone remembers that Citizen Kane is about a sled, when it’s really not about a sled at all; it’s about two marriages, a blackmail plot, and a tycoon who turns an empire built in one century, based on commodity goods, into a new empire for a new century, based on information.

I’ve compared Jeff Bezos to Charles Foster Kane before, in a story for Nieman Lab in 2013, when he bought the Washington Post. That comparison was a little more pat, based largely on the famous line from Kane, “I think it would be fun to run a newspaper.” I argued at the time that in buying the Post, Bezos was looking to build a legacy for his close-knit family. But even then, I observed: “Citizen Kane is Jeff Bezos’ cautionary tale.” And behold: some of the tragic side of the Kane story, at least, has come to pass.

That close-knit family has been split apart because of Jeff Bezos’s affair with Lauren Sanchez. Texts sent between Bezos and Sanchez were published by the National Enquirer, seemingly obtained by Sanchez’s brother. And (Bezos and his investigators say), the Enquirer’s parent company AMI attempted to blackmail Bezos by threatening to publish even more texts and lewd photos if Bezos did not call off his investigation of the Enquirer and publicly deny that all of this is part of a political plot to discredit Bezos for the Washington Post’s continued criticism of US President Donald Trump and Saudi Crown Prince Mohammed bin Salman for his alleged role in the murder of Post reporter Jamal Khashoggi.

Much of this was revealed in a remarkable blog post by Jeff Bezos titled “No thank you, Mr. Pecker,” where Bezos published emails he said were sent by AMI in an attempt to silence him. Bezos instead went the other way, raising the stakes in a public confrontation with AMI and arguably, defusing the threat of blackmail by making the fact of the texts and pictures (yet, thankfully, not the texts and pictures themselves) public, in his own forum and on his own terms.

Let’s cut back to Citizen Kane. Because—get this!—this exact thing happens to Charles Foster Kane in the movie. Kane grows estranged from his wife, whose wealth and connections have helped build his business and with whom he’s built a family, and has an affair with a younger woman whose vibrancy, mixed with a certain nostalgia, charms him. His political opponents find out about the affair and threaten to expose it to the world.

And then Kane does something truly remarkable. He chooses his budding relationship with the young Susan Alexander over his marriage to Emily Monroe Norton. In a blend of courage with a healthy dose of pride (bordering on egomania), he dares his political opponent Jim Gettys to publish his information on their affair. (Unlike Bezos, Kane doesn’t publish the details on the affair himself; that moment comes later in the movie, when he finishes and publishes his friend Jed Leland’s negative review of Alexander’s opera debut in his own newspaper.)

It’s maybe the most heroic thing Charles Foster Kane does. And it ruins him.

Not right away, of course. Great wealth provides a great cushion. First, he loses his race for governor, ending his political ambitions. Then, his ex-wife and son die in a motor accident. The Great Depression devastates his newspaper, radio, and grocery business, forcing him to sell it off into receivership. (Ironically, Kane’s newspapers are all named the “Inquirer,” with an I.)

Eventually he walls himself off from the world in a remote palace called Xanadu, where he collects the wealth of the world, along tokens of his youth and hundreds of jigsaw puzzles. His second marriage ends even more dramatically than his first, with him angrily destroying all the trinkets he’s collected, until he finally fixates on a snow globe, and “Rosebud.”

It’s not a movie about a sled. It’s a movie about the perils of wealth, how collecting priceless antiquities and bric-a-brac collapses the distinction between art and trash. It’s about a man whose great wealth and personal flaws compromise his ostensibly noble-minded pursuit of truth in journalism and fights for reform. It’s about how treating every relationship as transactional, whether between husband and wife or between a newspaper magnate and his public, eventually decays and degrades those relationships. It’s about how all things end, how Kane’s newspaper business gets disrupted and displaced by the very magazine and newsreel producers who devote themselves to solving the mystery of his final words. It’s a movie about the vanity at the root of all things, and how too often, we only confront that vanity when we’ve destroyed everything that meant anything to us, everything that might have held it at bay.

Citizen Kane is a cautionary tale. And nobody should know that more than Jeff Bezos.

Nearly all the commentary about Bezos’s blog post has been praise. Bezos took on the extortion attempt and political pressure on his own terms. (“A toast, Jedediah, to love on my terms,” says Kane. “Those are the only terms anybody ever knows—his own.”) He defused the public sting. But I think it’s important to recognize that Bezos’s success or failure, Whole Foods’ success or failure, The Washington Post’s success or failure, or Amazon’s success or failure is not a function of Jeff Bezos’s will to succeed. All of these ventures are bound up in factors that are completely outside of his control. And if and when Amazon stumbles, after the economy turns, after commodity prices go up, after shipping and warehouse economics change, it’s going to be all too easy to point to this blog post, this event, these photographs, as the moment when everything began to go wrong.

We’ll be as wrong then as we are wrong now to assume that Bezos is in charge of his own destiny again. It won’t stop us. It won’t even slow us down.

This is not, technically, a Citizen Kane or Jeff Bezos newsletter, much as I sometimes wish it were. It’s a weekly review and roundup of all things Amazon. It’s growing at the rate of about 500 subscribers a week (currently 4,617 total), and 426 paying members make it all possible. When I hit 500 paying members, I’m going to add a feature story each week in addition to the roundup. If you’ve come to this post via the web and would like to sign up, or would like to upgrade your free subscription to a paid one, you can do that right here:

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More Things to Read

Bezos Watch

There was a lot of important Amazon news this week, but Jeff Bezos was the big story. My favorite early post about it was Robinson Meyer’s at The Atlantic, “Jeff Bezos Blogs on Medium Now,” that gets at just how strange Bezos’s missive was/is. It was unmediated, seemingly unedited; an honest-to-goodness blog post from a CEO (arguably the CEO) in 2019! Ben Zimmer explored whether “complexifier” is, in fact, a word. Another good take on the surrealism of it all was Dan Sinker’s in Esquire, “It’s Really Weird That We’re All Rooting for Jeff Bezos, The World’s Richest Man.”

Jeff Bezos sends nudes. I don’t want to know this. But this is where we are. And so now, when I look at the book I got from Amazon at half off cover price, I have to think about them. That smile printed on the box that held a new grill you got delivered in two days means something else now.

Since my working logo for this site is a purple version of that smile/swoosh, I’ve had to confront this new reality quite directly.

Other people took the matter much more seriously. “The National Inquirer Picked the Wrong Man to Bully,” wrote Bloomberg’s Timothy L. O’Brien. Kara Swisher, the doyenne of tech reporters, wrote a thoughtful (and funny) post wondering about the relative power men like Bezos hold to use digital platforms for their own purposes. The Washington Post’s Craig Timberg tried to square Bezos’s famous reputation for guarding his own privacy with this sudden public revelation. And The Intercept’s Glenn Greenwald blew that dichotomy apart with “Jeff Bezos Protests the Invasion of His Privacy, as Amazon Builds a Sprawling Surveillance State for Everyone Else.”

Saudi Arabia quickly denied that it had anything to do with the interception of Bezos’s texts or any extortion attempts by AMI. Lachlan Markay at The Daily Beast seems to have pretty firm sourcing that the leak came from Michael Sanchez, Lauren Sanchez’s brother, and that his motives were largely political.

Documents reviewed by The Daily Beast show that Michael Sanchez believed the Enquirer pursued its story about Bezos with “President Trump's knowledge and appreciation”—a chase encouraged, in Sanchez’s estimation, by Republican operatives “who THINK Jeff gets up every morning and has a WaPo meeting to plot its next diabolical attack on President Trump.”

Gavin de Becker, Bezos’s security lead on the investigation, who also appears to have advised him on standing up to AMI’s emails, got a profile. So did Jon Fine, an ex-Amazon lawyer and noteworthy booster of the Kindle in its early days, who now represents AMI. Harry Litman at the Washington Post explored how AMI’s emails could have broken the law, a charge AMI’s lawyers deny.

Brad Stone, who wrote a terrific book about Bezos and Amazon, gave an interview where he documented Bezos’s changing relationship with the press and public relations:

Amazon was solicitous of the media over the first five or six years. And then, probably from 2000 to 2007, when the first Kindle was introduced, they did very little, very little. Then, when they had devices to market—the Kindle and the tablet and then the phones, and then the Echo—they have done more. But he is someone who has personally been very private and has been guarded with his time, in terms of talking to the press, and would always go into press interactions very strategically, with a message to convey, and was very disciplined about what he said. Until he bought the Post, you wouldn’t have thought of him as a great fan, even, of the press. But clearly, through his ownership of the Post, that has changed.

In the financial press, you were equally likely to see stories that Wall Street was unbothered by Bezos’s personal troubles as you were that stockholders were deeply troubled by them. Jon Swartz at Barron’s, meanwhile, speculated as to who might be Bezos’s successor as Amazon’s CEO, and whether or not the company needed to name one. Yale’s Jeffrey Sonnenfeld identified two candidates: Worldwide Consumer CEO Jeff Wilke, and Andrew Jassy, CEO of Amazon Web Services.

It’s definitely interesting to think about what a post-Bezos Amazon might look like, but I doubt we’re going to see one anytime soon. For him to retreat after picking a very public fight would be both out of character and a strategic mistake that could hurt the company he’s spent his adult life building. Besides, Amazon’s stock is rebounding now; everyone will calm down. (At least until we actually see his dick.)

Your Must-Reads

I actually have three must-reads for you this week, which maybe violates the principle of a “must-read,” but they’re all worthwhile. The first is kind of a 101 piece, but I think even veterans will find things in here they didn’t know: Quartz Obsession did an edition on “The cloud,” with a special focus on Amazon Web Services. It has a terrific lede: “Last year, Amazon Web Services brought in more revenue than McDonald’s.” And it continues on from there.

The second is by Alexis Madrigal for The Atlantic, titled “How Big Is Amazon?” It’s about the sheer amount of square footage Amazon has accumulated as it’s grown from a book retailer to one of the largest conglomerates in the world.

According to its latest annual report, Amazon now has 288 million square feet of warehouses, offices, retail stores, and data centers. In 2017—the biggest growth year for the company’s properties—alone, it added more square feet of building (74.6 million) than the company had total in 2012 (73.1 million), when it was already the largest online retailer in the world. Amazon has added more building space from 2016 to 2018 than it did in all the rest of its history. Go back a little further in time, and the growth is even more astounding: Amazon has 48times the square footage it did in 2004.

An empire upon an empire, as the newsreel says in Citizen Kane.

The third piece is by Rachel Siegel from The Washington Post, titled “Flesh and blood robots for Amazon.” It’s about retail arbitrage: ordinary people who buy up goods offline and resell them, mostly on Amazon, for a profit. These businesses can get very big, and they play an important role in the Amazon retail ecosystem.

One day last month, Rezendes had more than 100 pairs of Nike shoes in his garage that he planned to ship to Amazon. He was working on a YouTube video breaking down how he bought 100 Nerf guns from and flipped them for $1,500. Rezendes, who lives in Santa Cruz, Calif., said retail arbitrage has kept him from having to work a 9-to-5 desk job. But he also knows online resellers and small-business owners like him are crucial to Amazon’s model. Amazon “needs people like me to fill all the holes in the marketplace,” he said.

Amazon acquires mesh router startup eero

(yes, it’s lowercase apparently)

Amazon announced this deal Monday afternoon. I’m biased, because these are former colleagues, but Chris Welch at The Verge did the nicest news write-up on this, and Dieter Bohn (also at The Verge) wrote the best analysis, “Why Amazon buying Eero feels so disappointing.” From the latter:

We all feel trapped—or maybe captured—by the various ecosystems we live in. We all use excellent products every day made by behemoth companies, but increasingly only made by those companies. iPhone or Android, Chrome or Safari, Surface or Mac, Windows or Chrome OS, and even Facebook or Twitter: all, in one way or another, come from one of the big guys. Eero was different. It was a tiny little company that made a great little product. Something simple, elegant, and reliable. Would it have been too much to ask that it stay independent? Perhaps, but we don’t know Eero’s financial situation. But it’s getting harder to find independent hardware startups that can scale up to something big without getting bought.

Amazon’s already shown with Echo and Alexa that it has no problem asking device makers to send continuous streams of data updates to Amazon’s cloud, essentially tracking all of your activities in the house. eero assured its customers that it has never and would not begin tracking their WiFi data, and that it would largely stay independent after the acquisition. But folks are understandably nervous.

“One entity might own all the devices in your home. It can form a very complete profile of you as a person in both the physical and digital world, and this is extremely concerning from a personal privacy perspective,” said Sydney Li, staff technologist at the Electronic Frontier Foundation (EFF).

I’m going to be slightly contrarian on this. First, I doubt we’re going to see tightly coupled uses of eero and Echo products right away; it’ll take some time for the product teams to blend and/or borrow from one another. Amazon isn’t Apple, with a grand architecture for how all of its products work together. It’s 200 startups in a big market tent, all jostling and hustling for resources and space to do their thing.

Second, I think, if anything, eero products will see a boost from their new association with Amazon, especially if and when they begin carrying the Amazon brand name. This isn’t just because Amazon has the retail power to push their products onto people, although they do. It’s also because Amazon is an extremely popular and well-trusted company among consumers. I wrote this the other day on Twitter:

One study last year showed that Amazon was the second most trusted institution in American life, behind only the military. If you only poll Democrats? Amazon is number one. People love Amazon. Most of them don’t know about and have never thought they needed a mesh router for their house. But they will now.

HQ2 drama, redefined

Speaking of “people love Amazon”… A Siena poll with a smallish sample size found that folks in New York City and New York State (and especially the New York suburbs) support the deal to bring Amazon’s HQ2 to Long Island City in Queens.

The poll found New Yorkers back the deal, 56 percent to 32 percent. Among New York City voters, support for the plan stood at 58 percent to 35 percent. In suburban communities, voters there backed the deal 66 percent to 25 percent. Upstate voters were split over the proposal at 46 percentage points oppose and support.

The anti-HQ2 team has always been an odd coalition of people opposed to the gentrification of LIC, people opposed to Amazon’s anti-union history, and people opposed to the huge subsidies New York State is paying Amazon to get them to come to Queens. If you look at what local politicians are trying to get from Amazon, it’s really more a renegotiation of the terms of the deal than an outright renege on it altogether. (Folks are also frustrated because they don’t know what’s going on.) What those terms ultimately turn out to be will affect how happy each part of that coalition will be when all is said and done.

Amazon, however, tilted over the apple cart by leaking that they weren’t happy with any opposition to their plans in LIC and were willing to renege on the whole thing, take their HQ2 ball and go elsewhere. This immediately caused panic among real estate speculators in New York, and extreme thirstiness by politicians in other parts of the greater New York City area and nationwide.

Amazon opponents, however, think it’s all bullshit; just posturing to get local politicians to fall in line. This certainly would fit the program they’ve followed in Seattle:

Remember when they halted construction on their buildings downtown because they objected to the head-tax proposal at City Hall? Nice economy you’ve got there, Seattle. Shame if something happened to it. Seattle City Councilmember Teresa Mosqueda recounted that power play last month to an audience of labor organizers in New York City, and suggested it came from on high. “The day they (Amazon) were supposed to come in and meet with us, to negotiate, the headline read ‘Amazon’s going to stop building in the city,’” she said. “So when they got there, I held up that newspaper and asked them: ‘Why are you here, if you’re going to negotiate like this, in the press?’ “And they said: ‘Oh, that decision was made outside and above my paycheck.’”

Amazon plays hardball. Bezos didn’t just wake up quoting The Godfather because a tabloid waved a few dick pics in his face. The company doesn’t pay a penny or make a concession unless it absolutely has to. And it will use the press to get what it wants.

Don’t miss these

  • Amazon cut a deal in India, as predicted. This limits some of what the company can do, synergy-wise, but keeps their access to an important market.
  • Amazon’s all-plastic packaging isn’t recyclable. That seems like a problem as the company is putting pressure on brands to make them conform with their own packaging guidelines, ostensibly to improve eco-friendliness.
  • Amazon invested in Aurora, a self-driving car company, and is looking hard at electric truck maker Rivian. Weren’t we just talking about how Amazon could do more investing in other tech companies? HMMMM.
  • Food prices are going up, including at Whole Foods. The Amazon discount was never going to last forever. But this is also an economic bellwether; food costs rising as employment and broader spending is contracting is bad news all around, and maybe especially for Whole Foods.
  • KUOW’s always excellent podcast Primed has an episode on grocery delivery drones. We’re not there yet, but it’s still fun to think about.
  • Some Thoughts on Facial Recognition Legislation” could turn out to be an important document, but it feels largely vague and defensive to me, and less forward-thinking than its reputation suggests.

Okay! That’s everything for this week. And what a week it was. If you’ve written or recorded something good about Amazon and want to see it in the newsletter, please, by all means, tip me on Twitter at @tcarmody or @amazonchron. I am always looking for new sources, new feeds to follow, and new kinds of stories to tell.

You can also just respond to this email; I see them all, and respond to as many as I can.

Until next week,

Tim Carmody