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Originally published November 3, 2012 at 8:00 PM | Page modified November 5, 2012 at 2:33 PM

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Corrected version

The Amazon mystique

Amazon.com has its hands on a bit of everything, and ambitions for more, but leaves investors in the dark.

Special to The Seattle Times

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When my first novel was published in 2001, I was thrilled when it showed up on Amazon.com. In some ways, it was as satisfying as being published by a major New York house. Amazon was sexy. Amazon was the future.

Pretty soon I learned one of Amazon’s consequences: the death of many fine local bookstores and the wounding of civic culture that went with it.

Now, after five years in Seattle, I see Amazon in 50 shades of gray.

For better or worse, this headquarters city is strapped to the Amazon.com rocket ship. It will either continue to fundamentally change business and keep bringing prosperity here. Or we’re witnessing an Amazon bubble that, when popped, would carry profound consequences for the Puget Sound region.

Let me explain.

Smart readers may correct me, but I can’t think of a company in modern history similar to Amazon.

Long beyond being an e-bookstore and survivor of the dot-com bust, Amazon is the world’s largest online retailer. Want groceries? Amazon can deliver. How about shoes? Office supplies or car tires? It has redefined the supply chain at its fulfillment centers and provides a platform for hundreds of thousands of third-party merchants to sell products and get a cut of revenue.

Not that Amazon has forgotten the reading public — the company now operates its own publishing house. Or other media. Amazon Studios recently optioned its first sci-fi novel to work on a screenplay.

Amazon is also a technology company that produces consumer electronics such as the Kindle. It operates software- development centers on four continents. With Amazon Web Services, it enables other companies to outsource their cloud-based computing.

Boeing carried Seattle’s name across the world before decamping its headquarters for Chicago. Microsoft was the next icon to come out of the rainy city, famously minting millionaires out of secretaries. Both are big local employers and what each does is clear: airplanes and software and a few electronic products.

Amazon, on the other hand, has its hands on a bit of everything, and ambitions for more.

In the robber-baron era, Andrew Carnegie wanted to monopolize steel, John D. Rockefeller oil, and Jay Gould, among others, railroads. Amazon Chief Executive Jeff Bezos would seem bored by such narrow pursuits. And he faces no Theodore Roosevelt to block his way to quasi-monopolies.

Nor is Amazon comparable to the conglomerate fad of the 1960s when, for example, steel companies foolishly branched out into such areas as insurance. Every step Amazon has taken in its march to dominance has been built logically off a previous achievement.

This onetime adorable startup moves national policy. According to the disclosure site Open Secrets, Amazon spent $1.3 million on lobbying this year and $2.2 million in 2011, the top issues being taxes, consumer-product safety and copyright issues.

Apple claims Amazon was behind a Justice Department lawsuit filed against it and five book publishers, alleging price fixing on e-books. Apple also sued Amazon for having an “app store” on grounds of trademark infringement. Amazon has asked for the suit to be thrown out.

It is a substantial force in politics, contributing $324,000 to candidates this year. Before controversy forced it to withdraw, Amazon was a member of the American Legislative Exchange Council (ALEC), the lobbying group responsible for such bills as the ‘’stand your ground” gun laws. Twelve members of Congress are shareholders.

Amazon attracts outsized criticism, too: for poor working conditions in its warehouses, the sweatshop labor making Kindles in China, anti-union efforts and attempts to dodge collecting sales taxes while driving rivals that do collect taxes out of business.

It is a nearly invisible corporate citizen in Seattle, a city where stewardship is prized and responsible for much of the city’s appeal. Rarely has a large, public company been more secretive.

For example, it buys companies without disclosing when or how much it paid for them. Analysts struggle to understand the company’s true free cash flow. It refuses to reveal basic sales volume information for its Kindles.

Amazon has suffered setbacks, too. Its attempt to become a book publisher prompted Barnes and Noble to boycott its titles, at least slowing Amazon’s move to lure big-time authors. Wal-Mart and Target, seeing Amazon as a rival, dropped the Kindle from their shelves.

Last month, an Amazon data center in northern Virginia suffered yet another embarrassing crash, taking down the sites of such clients as Netflix, the Daily Beast, Pinterest, Reddit, Flipboard and Fast Company.

Amazon doesn’t appear fearful of Wall Street, beneath whose “what have you done for me lately” boot other companies tremble. Earnings are mediocre. In the third quarter, it posted a loss. Shares took a slight hit but have largely recovered.

Bezos’ insolence toward the Wall Street Boyz is tonic for anyone who has watched the market’s short-term fetish destroy companies and hamper American competitiveness for 30 years. Amazon is actually investing in its future.

And it provides real products and services, not financial hustles.

Yet he can get away with it partly because Amazon keeps growing fast. Its $13.8 billion in third-quarter revenue compares favorably to Microsoft’s $16 billion. Beyond spending to grow, Amazon is frugal. It makes desks out of doors. If there’s a $2,000 trash can in Bezos’ office, as with Tyco International’s infamous Dennis Kozlowski, I would eat one of those door desks.

And Amazon has a hold on investors’ imagination, resulting in an astronomical price-to-earnings ratio compared with mere mortal companies. I was struck by the deferential tone of securities analysts asking questions in the quarterly earnings call.

Writing in Slate, Matthew Yglesias said this should terrify Amazon’s many and growing list of competitors:

”Wall Street treats it like a brand new startup that just needs to think about growth and can find a viable business model later. Which means that if they come after you, you have no recourse. Your profits are going to shrink, and your investors are going to punish you for it but Amazon’s profits don’t necessarily need to grow proportionally. They just need to show they can poach your market share.”

Whatever Amazon’s mixed results for most places, it has been very good for Seattle.

Major headquarters draw talent and investment. They are the secular temples from which worldwide capital deployment decisions are made.

With some 10,000 well-paid headquarters jobs, Amazon is the backbone of the revitalization of South Lake Union and is playing a big role in the center city boom. The outfit that likes operating in near anonymity plans three towers in the Denny Triangle.

By sheer head count and traditional measures of influence, Amazon is no Microsoft or Boeing.

But it is the biggest innovation success to come out of here in a long time, and it keeps investing in experimentation in numerous areas. This makes it an economic cluster on its own.

In 2008, Bezos told BusinessWeek, “My view is there’s no bad time to innovate. You should be doing it when times are good and when times are tough — and you want to be doing it around things that your customers care about. For us, it’s such a deep-seated belief, I’m not sure we have a choice.”

Shareholders do have a choice, but for now they’re on board. The destination? I’m not sure even Bezos knows.

You may reach Jon Talton at jtalton@seattletimes.com

This story, which was originally published Nov. 3, 2012, and corrected Nov. 5, 2012, contained a graphic that incorrectly placed dollar signs in front of price-earning ratio numbers.

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