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Deploying ‘Godfather’ tactics

Melville House, a New York-based boutique book publisher, found itself in the crosshairs of Bezos in 2004. According to a report in The New Yorker, Amazon wanted the book publisher to make a payment, yet wouldn’t disclose sales data for Melville’s books on the platform.

The Melville team described the meeting as having “dinner with the Godfather.”

Similarly, Bonnier Media Group, a major publisher based in Germany, claimed Amazon started delaying the delivery of its books as a negotiation tactic to push for a bigger cut of the profits from book sales, according to the Financial Review.

These Godfather-like tactics must have worked because Amazon is now the biggest book distributor in several major markets.

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Winning price wars

“Your margin is my opportunity,” Bezos once said. This philosophy has helped Amazon capture significant market share in several industries by repeatedly winning price wars.

Global e-commerce analytics company Profitero found that Amazon was generally the lowest-cost online retailer in categories ranging from beauty to electronics.

In the video games category, Amazon’s prices were nearly 9% lower than its closest competitor, according to the report.

This aggressive pricing strategy makes it difficult for other retailers to compete with Amazon, cementing its position as a market leader.

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Creating an adversarial culture

While some companies pursue a collegial and agreeable work environment, Bezos may have cultivated an adversarial one within Amazon. “The people who do well at Amazon are often those who thrive in an adversarial atmosphere with almost constant friction,” Stone wrote in The Everything Store.

In a letter sent to shareholders in 2016, Bezos described the “disagree and commit” strategy that defined Amazon’s corporate culture. Co-workers were encouraged to express their opinion and ensure everyone was heard, but disagreements were not a barrier to progress. The company would routinely make decisions even if everyone wasn’t onboard.

Malcolm Gladwell’s research has led him to believe that innovative entrepreneurs are often disagreeable. Businesses and society may have a lot to gain from individuals who “change up the status quo and introduce an element of friction,” he says. A disagreeable personality — which Gladwell defines as someone who follows through even in the face of social approval — has some merits, according to his theory.

It certainly seemed to have worked for Bezos. Although Elon Musk and Steve Jobs were known to be disagreeable, too.

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Vishesh Raisinghani Freelance Writer

Vishesh Raisinghani is a freelance contributor at MoneyWise. He has been writing about financial markets and economics since 2014 - having covered family offices, private equity, real estate, cryptocurrencies, and tech stocks over that period. His work has appeared in Seeking Alpha, Motley Fool Canada, Motley Fool UK, Mergers & Acquisitions, National Post, Financial Post, and Yahoo Canada.

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