Twenty years after Amazon.com’s initial public stock offering, the once-shaky company has locked in its role as one of the technology world’s dominant giants. The impacts have transformed everything from local streets to the national economy.
Amazon went public 20 years ago this past week, priced at $18 a share.
Jeff Bezos, who had established what he first called Cadabra.com in a Bellevue rental house in 1994 and then moved to a shared building in Sodo, became worth $290 million the first day of trading.
If you’d been connected enough to get in on the initial public offering, your $10,000 bet would be worth nearly $5 million today.
I will leave the acclaim to Andrew Ross Sorkin, New York Times business reporter and notorious flatterer of the rich and powerful:
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“Skeptics of Jeff Bezos, the company’s founder, have spent the better part of the past two decades second-guessing and vilifying him: He has been described as ‘a monopolist,’ ‘literary enemy No. 1,’ ‘a notorious international tax dodger,’ impossible, a ruthless boss and — more than once — ‘Lex Luthor.’ His company used to routinely be described as Amazon.con.
“But you know what?
“Here we are, 20 years later, and Mr. Bezos has an authentic, legitimate claim on having changed the way we live.”
Plenty of evil people have the same authentic, legitimate claim of having changed the way we live. Bezos isn’t one of these — if anything, the republic owes him undying gratitude for saving The Washington Post and supporting its serious, essential journalism.
Bezos’ willingness to defy Wall Street’s short-term looter mentality is also commendable.
But changing the way we live has come at a price, not least in Amazon’s headquarters city of Seattle. This anniversary is a good time to attempt an assessment.
Amazon would have had a much harder time surviving and growing if it had faced the same costs as bricks-and-mortar competitors. They had to pay sales taxes. Amazon, for much of its existence, largely did not. (The reader should know Amazon and traditional bookstores both carry my mystery and thriller novels).
The lost tax revenue hurt communities and states already suffering the effects of tax-cut mania. They were injured further as these local bookstores closed, taking with them a civic leadership role, jobs and the kind of authenticity that most Americans now travel to a few spots such as Seattle to savor.
Amazon never would have become the multifaceted giant it is today if it had faced the checks and balances that existed in mid-20th century America. Things such as rigorous fair-trade enforcement, antitrust, unions and high tax rates.
And without the internet, created by the U.S. government and funded by taxes, Amazon never would have had its virtual storefront. Taxpayer-funded science was also essential to the computer revolution that spits out the algorithms upon which so much of Amazon depends.
No one doubts that Bezos is brilliant, driven and visionary. His demanding nature is legendary, including tantrums employees call “nutters,” according to the Harvard Business Review and others. Still, Bezos’ success can’t be separated from his peculiar moment in history.
That moment was also partly carved out by Wal-Mart, which showed how size — unhindered by checks and balances for the common good — and cheap prices translated into unbeatable market power. Among the beaten: Main Street merchants ruined by the Beast of Bentonville and American workers downwardly mobile, thanks to the widely copied Wal-Mart business model.
Now Amazon has Wal-Mart on the run.
To be fair, as Amazon has grown it has created jobs, including at its many warehouses worldwide (“fulfillment centers” in the creepy corporatespeak). It had 341,000 employees at the end of last year, not including temps or contractors. Yes, we have reached the point where companies must be praised for employing people (although Amazon is using robots, too).
But the online shopping revolution that the company embodies has cost department stores 303,000 jobs since 2012. Another 88,000 have been lost in specialty clothing stores. Many suburban malls across the country are dead or dying.
As Amazon went from cute online bookstore to dominant e-commerce company, pioneer of cloud computing and one of the most consequential technology companies on the planet, its relationship with Seattle changed.
The most obvious symbol is the massive headquarters complex in South Lake Union and downtown. Amazon employs about 25,000 here, perhaps teary and stressed but very well paid. It is building space for 50,000.
As I’ve written before, this headquarters and the innovation district it anchors are crown jewels for which other cities would give anything. But much of old Seattle, inbred and resistant to change after its fashion (and I write that fondly), hasn’t completely welcomed it.
I don’t mind the growth, having lived in troubled cities. I can lay at Amazon’s feet the loss of many distinctive and beloved Seattle shops that simply couldn’t compete with the giant’s market power.
Amazon’s new prominence also came alongside the triumph of populist-left politics in the city. Never mind that the taxes and fees generated by Amazon help pay for social services (and the company welcomed a shelter to its campus) — that his critics want. Bezos is The Man. Or a convenient straw man, as the planet’s second-richest person after Bill Gates. Some seem to imply that Amazon is to blame for the city’s homeless population.
Back to reality: Seattle is vulnerable to an Amazon shock. In 2001, during the dot-com crash, Amazon laid off 1,300. That was 15 percent of its workforce.
Another shock might come in the form of the Trump administration attempting an antitrust investigation against the company led by the owner of the hated Washington Post. Or an attempt to cancel valuable government cloud-computing contracts. During the campaign, Trump said Bezos had “a huge antitrust problem.”
The president has bigger problems now. As for Amazon, happy 20th anniversary.
U.S. companies are getting older and more entrenched. It would be more challenging to even start an Amazon today.
So Amazon at age 30, 40, controlling even more of the economy? Don’t bet against it. The company is just hitting its prime.