I think before we really see those Science Fiction, well begin to see more mass awion of movie thing or entertainment thing. Rose technology and entrepreneurship for the hour, next. Rose funding for charlie rose has been provided by the following and by bloomberg, a provider of multimedia news and Information Services worldwide. Captioning sponsored by Rose Communications from our studios in new york city, this is charlie rose. Rose jeff bezos founded amazon in 994 out of his barrage as a online book seller. It is as monk the worlds most valuable company, the most richest person second only to bill gates. Amazons ambition is to sell everybody to everybody. Amazon reached fans well beyond its roots. The web services is leading company in the cloud. In january, amazon became the First Digital streaming service who won a golden globe for best tv series. Jeff bezos had many passions. He founded the Aerospace Company blue origin to lower the cost of space travel and increase the safety. In 2013 he purchased the Washington Post. I met with him earlier today at the Economic Club here in new york. Here is that conversation. What is it that amazon wants to be . Well, a couple answers to tt is. The single way to answer that question the thing that connects everything amazon does the number one conviction and idea and philosophy and principle which is Customer Obsession as opposed to competitor obsession. And so were always focused on the customer working backwards from the customers needs, developing new skills internally so that we can satisfy wh w perceive to be future customer needs. We have a whole working backwards process that starts with the customer needs and works backwards. So that is really, if you look at, it seems like were in a bunch of different bezos so we have amazon register, which is completely different from our amazon prime business or Amazon Marketplace or Amazon Studios and so on. But really, the way that those businesses are run is very very similar. And it all starts with its just not Customer Obsession, thats the number one one but we have a very invincive culture so we like to pioneer events. There are other business strategies. Pioneering is not the only effective Business Strategy and in fact some people would argue its not the most effective one. Close following can be a very good Business Strategy and worked many times if you look at the history. It just isnt who we are. Willingness to think long term. I think thats another Common Thread that runs through every single thing we do. We are very happy to invest in new initiatives that are very risky for five to seven years which in most Companies Wont do that. Companies will invest for very long periods of time and they should in those cases where the outcomes are more certain. Its the combination of the risk taking and the long term outlook that makes amazon not unique but special in a smaller crowd. Then finally, taking real pride in operational excellence. So just doing things well. Finding defects and working backwards. Thats all the incremental improvements that most Successful Companies are good at this one. If youre not good at finding the root cause of the defects, fixing that root cause, every one of those defects flows down stream. Thats a key part of doing a good job in any business in my opinion. Rose you have said three pillows, the mush place, amazon prime and Amazon Web Services. Thats right. Rose lets go in reverse order. Amazon web services is the largest business in revenue. Not revenue, its a big contributor to process. Our Retail Business by the way is in our established countries. Its also very profitable. We keep investing in video, original content with Amazon Studios and so o but Amazon Web Services is, it follows all those principles i laid out at the beginning. One of the unusual thing that happened with Amazon Web Services is the amount of runway we got as a gift before we faced likeminded competition. We had, it appears to me just empirically that its a new way of doing something. Typically if youre lucky, you get about two years of runway before competitors copy your idea. Two years is actually a pretty long time in the industry so thats a big head start. For whatever reason and i have a hypotheses is what the reason is. For whatever reason, Amazon Web Services got seven years of runway before we faced likeminded competition. There were other people doing similar kinds of things but not the same way and not with the same approach and the same mind set. In my experience thats unheard of to get so much runway. I think the reason that happened is because the incumbents in for enterprises, technology for enter prices thought what we were doing was so damn weird that it could never work. So we just kept very quiet about it and we knew it was working and we would read news stories that would say things like do you really think anybodys going to buy Mission Critical enterprise infrastructure from an online book seller and we would look at that and certain people were opining on that and we would read those articles and we would look at our business statement. We got very lucky. That was a gift. What that allowed us to do was build a gigantic advantage in terms of the feature set and the Service Offering and the cost structure and Everything Else that you just cant wave a magic wand and do that quickly. It takes years and years. Now were not stopping so that team is, you know, every year, 500, 600, 700, 800 new features and services. They keep pushing on that. That team is just doing an amazing job. Rose the other thing, amazon prime, the second pillar, amazon prime, 65 million members of amazon prime. I dont reveal that. Rose why is that, why is it so crucial for your future prime. Well, prime is, what we want prime to be, what weve developed it into over time is its the best of amazon. So you can get, basically if you join prime, we want to have our core service be outstanding and anybody who wants to use amazon and not be a prime member should have a great experience. And people who are not prime members for example can still get Free Shipping. It has to buy a certain number of products or you have to get above a certain shipping or certain products kind of ordered basket i think its 49. If you get above that 49 hurdle, then they can get Free Shipping. And so what we did with prime is say, look, you know, you can get Free Shipping without joining prme but if you want fast Free Shipping, our best service, then you need to join prime. Rose its 99 a year. 99 a year. We started adding other benefits to it that we know people like. So we added prime video which has been a very successful new benefit for prime. Years ago we added this ten or 10,000 shows and they were all licensed and they were all reruns. Things like gilligans island. Youre a prime member. Heres the went fit. We know its not the most important tv show in the world but it also isnt costing you anything extra. So it grew. And now were doing, you know, Emmy Award Winning and golden globe winning content. You get access to at no Additional Charge just being a prime member. Rose getting into the creative part of the entertainment business what was the motivation behind that. There are two different ways to think about that. We always start with the customer centric point of view. If were going to make original content which amazon feels its do how can it be better or different from so much content thats on the there that you could license already and not have to make yourself. And the fact of the matter is that the over the top stream of services with a subscription model can have, can in fact make different kinds of conten. So a show like transparent which is Golden Globes and emmys, its not a show that could be successfully done on broadcast tv because broadcast tv, its much bigger audience for that. Transparent we want to make shows that are somebodys favorite show. On broadcast tv, you can be very happy if you have a big show that is, you know, 20 million peoples third favorite show. And you can actually think about the Creative Process a little differently. You can attract different story tellers. You can go for stories that are narrower but incredibly powerful and well told. Mozart in the jungle, and these other, i dont see how it could be successful on broadcast tv either. You can ge, we attract a different kind of storyteller telling a different kind of story. Also there are tail winds in this business that are happening because of hbo and netflix and others that ten years ago you couldnt get an a list talent to do tv. They perceived it as stigmatizing. Today its completely different. Today they want to do serialized tv because the quality of storytelling is so high its completely flipped on its end. Rose ive listed three pillars. What might be the fourth pillar. We dont know yet is the real answer. I think its very hard to identify. We do a lot of Different Things and the fourth will rise and extinguish itself. Im optimistic about things like Amazon Studios, the original contact could become a fourth pillar. I think what were doing with natural language understanding and echo and alexa. Rose everybody talks about Artificial Intelligence, everybody. Yes and rightly so. Rose what does it add this is the real thing. Rose enlarge on that and also on the idea what echo is and how it may very well be the beginning and the edge, the wedge into Artificial Intelligence that benefits everybody. Echo is a small black cylinder. It has seven microphones on the top and it has a speaker inside and a digital processor and some other computes inside and its wifi connected to the cloud. And alexa, the agent, the artificial agent that lives in the cloud talks to you through alexa, i mean through echo. One of the interesting things about echo the device is it uses those seven microphones to do something called bean forming. So basically it can hear you very well even in a very loud kitchen environment, for example. The dishwasher running and you have the sink and somebody is make the television in another room but awe little awe can still hear you because of that digital processing. You can say alexa what time is it, what is the weather today, alexa. In natural language. Alexa, play a certain song, etcetera etcetera. And people, this has been a big hit, we launched it a few years ago. It has exceeded our expectation in terms of volume. We have literally thousands of people working on it. Rose and google wants to be in that business and everybody else wants to be in that business. Everybody wants to be in that business. So here weve got the kind of standard, you know, two, two andahalf year head start. Rose let me talk about the Washington Post. Yes. Rose you bought the Washington Post without any Due Diligence. You were so impress ode i didnt do Due Diligence because i knew don graham for 1 5 years. If any of you know don graham hes possibly the most honest person in the world. He laid out all the warts for me and all of the gray things great things for it and i dont think it could have gotten more clarity than talking to don for several hours. Rose why did you buy it. I 3w5u9 it because its important. I would never buy an upside down salty food snack company. That doesnt make any sense to me but the Washington Post is important so it makes sense to me to take Something Like that. Al, so im optimistic and i thought there were some ways to make it, i want it to be a self sustaining profitable enterprise. That would be healthy for the most and i think it could be done. Our approach is actually very very simple. Its hard to execute on and its going to take time but approach is simple. We need to go from making relatively large amount of money per reader on a relatively small number of readers. Thats the historic model of the post. Two the model will make a relatively small amount of money per reader on a very large number of readers. Thats the new model. Rose thats your Business Model to isnt it. Thats a better Business Model for the entertain era and the post is unusual and this is one of the things from a business point of view why im so optimistic about the post, its been a local paper, a very good local paper but it happens to be a local paper situated in the capital city of the United States of america. And so it has, its kind of geographic location is superb for converting it from a local paper to a National Even global pup case. Thats the gift the internet brings. To do national and global publication in the days of print, super expensive. You have to figure out to have Printing Presses and physical distribution which are very challenging, today that piece is easy. To get Global Distribution in digital form rose because its an important newspaper the nations capitol the most powerful country in the world, did you want it also because it would give you political influence. No. And i think one of the reasons that don graham liked me as an owner is because he didnt think i would politicize it. And so you know i think because its in the capitol city of the United States of america, it should not be, you know, you take the british model of newspapers, you know or kind of left wing paper or right wing paper. And there are certain people who if they had bought the Washington Post would have converted it in one of those directions. I dont the that would be healthy for the post or healthy for the country. And plus im also, in that respect im also a good owner because im so damn busy. Rose you and i sat last night with a former at not. This was fun, scott kelly. Rose scott kelly who was there at the International Space station for i dont know how many days. What is it that you hope to accomplish in space. Well, this is first of all lets back up. This is a childhood dream. I fell in love with the idea of space and Space Exploration and space travel when i was five years old when i watched Neil Armstrong step on to the moon. You dont choose your passions, your passions chose you. So im infected with this idea. I couldnt ever stop thinking about space. Thinking about it ever since then. And so again, you know, i did not, when i started blue origin which is the name of this space company, i did not make a list of all the businesses in the world where i thought i might get the highest return on investment capital. And it was driven by passion and curiosity and the need to explore the things that i care about. And so we have over time still a Brilliant Team now over 800 people at blue origin. We have several little tourism vehicle called blue shepherd that like a regular rocket that launches and lands on its tail like a buck rogers rocket. We used the same vehicle five times. Rose thats key to the business of going into space. Thats the absolute key. If you look at, if you ask the question why is space travel so expensive, there is one reason and its because we throw the hardware away ever time after using it, all expendable. Even in the past when weve done things through a sort of semi usable, there wasnt an opoperae reusability because they were disassembled and put back together. You imagine air travel after your hawaii vacation you get to hawaii and well they throw the 747 away its going to be really expensive its going to be super expensive when you get to hawaii they disassemble the whole thing, inspect every part and do it all together before youre allowed to fly again. That was the problem with the space shuttle. And so its really important that you design the vehicle from the beginning for highly operable use usability. People dont know this about rockets but a big rocket, lets say has a million mounds of propellent on board, two thirds of that may be liquid oxygen weighing 6,000 pounds over so of liquid oxygen. Do you know how much that costs, 60 a pound. Thats 60,000 worth. Youre still talking about a few hundred thousand dollars of propellent cost. In the launch costs on the order of 60, 70, 150. So how do you get from a hundred Million Dollars to 300,000 of propellent. Its simple, youre throwing the hardware away. So the engineering challenge involved in building the highly operable reusable vehicle is gigantic but if you can do that, its a game changer. You change everything. Now why, to your original question, i believe its incredibly important that we humans go out into space and the primary reason we need to preserve the earth. Im not one of the plan b guys. Theres kind of a conventional wisdom thats quite common that one of the reasons we need to go into space and settle another planet as a kind of back up for humanity. If earth gets destroyed at least we have this other place. And i dont like t