Abstract
In his article on Amazon founder Jeff Bezos buying The Washington Post, the Facebook co-founder Chris Hughes captured the general mood of the buyout: “It turns out Silicon Valley does give a damn about Washington.” He was referring to the popular perception that Silicon Valley is on a mission to override the fusty regulation and “tradition” that are housed symbolically in Washington DC. The beating heart of America's tech industry is generally accused of naive libertarianism and idealistic capitalism. So when one of its figureheads, the founder of a company worth $140 billion, buys a newspaper, people wonder why.
The quick answer is: because he can. Bezos is worth more than $25 billion, accumulated during his 19-year career within Amazon. Buying the Post for $250 million was not, in relative terms, a big deal. That's not to say this was an impulse buy, though as discussions between the sellers, the Graham family, and Bezos began only in March of this year. Nor was it a drawn-out affair.
Bezos didn't approach the Post, it approached him. Donald Graham, chairman of the newspaper company, hired an independent agency to search out a buyer. This was a response to the fact that the Post was now in its seventh year of declining revenues – a 44 per cent decline in total – with no sign of upside. As Graham said, it “could have survived, but we wanted to do more than survive”. So this was not a power-hungry grab by Bezos.
Was it, then, an ego trip? This is the man who spent $42 million building a “10,000 year clock” inside an extinct Texan volcano. The clocks has a “century hand” that moves once every 100 years, and a cuckoo will emerge at the 10,000 year mark. If we can believe his reasons for building the clock are to do with creating a monument to thinking in the long term, why not believe he has similar reasons for buying the Post?
There are other reasons to be optimistic. Firstly, let's look at Bezos as a businessman. Amazon is an unusual and notable company. It has wreaked havoc on traditional industries – what ambitious Silicon start-ups call “disruption” – with an easy-to-use model offering huge choice and highly competitive prices. It has an extremely low operating margin – currently 0.63 per cent according to Wikinvest – but this is largely the result of Bezos taking the company's income and investing it back into the business.
His conception of things has always been for the long term. Two decades is a long time in internet years, and yet Amazon is still loved by both the public and by financial overseers. He hasn't played it safe, but neither has he dashed ahead. If Amazon has been perceived as a play-it-safe organisation compared with the ever-shifting interface of Facebook or product developments of Google, it has benefited from being a very stable one.
This focus on the long-term, low profit margins in exchange for investiture and stability make Bezos a prime buyer for the Post. He has never shown any interest in building a cash cow, so it is unlikely he will be seeking to make the newspaper into such a creature. And he has shown through Amazon to be concerned with the user first, which journalists must hope will be translated to the traditional ends of The Washington Post – the reader first, an emphasis on content and good reporting.
Bezos has said he will not be taking over management of the newspaper and that he's “very happy with his day job”. There have been no layoffs of current staff. But he has warned that “the future” will be an “experiment”. Free Washington Post subscriptions for Kindle users? New political clout for Amazon/Bezos? Here is a businessman whose single professional connection to journalism has been investment in the online mag Business Insider (which, even by digital standards, is geared toward hit-garnering) buying, for Silicon Valley pocket change, a journalistic institution. There are feelings of conquest and subjugation; that money will rule the tide of news, not justice. That Bezos, stone-heartedly, will use the struggling Post as a mouthpiece for the thus-far mute Amazon.com.
The optimist might think of Bezos as a liberator crashing into a stagnating newspaper. He's a long-term thinker, a builder and possible visionary. But then his career has seen some spectacular failures (Pets.com, Kozmo.com – big losses, and a failed attempt to compete with EBay at online auctioning).
It is of course too early to say. The Washington Post is a very different organism from Amazon.com. In fact, there aren't many less related businesses out there. Mapping Bezo's career within Amazon will not lend any practical understanding to how he will treat the Post. While we can afford to be optimistic that a waning business is now in the hands of an extraordinarily successful man, we are going to have to face the risk implicit in all “experiments”.