Last week when Jeff Bezos bought the Washington Post for a "mere" $250 million, he gave new meaning to the phrase "going postal."
Newspaper acquisitions have become increasingly popular as of late. Billionaire investor Warren Buffet has purchased newspapers in smaller locales with distinct market niches over the past few years. Billionaire John Henry, owner of the Boston Red Sox, bought the Boston Globe for $70 million in early July. Billionaire real estate investor and hotelier Doug Manchester acquired the San Diego Union Tribune in November 2011. The billionaire industrialists and staunch conservative Republican Koch brothers, Charles and David, are reported to be interested in buying the Tribune Company which owns the Chicago Tribune and the Los Angeles Times.
In spite of this "feeding frenzy" in the print journalism waters, the sale of The Washington Post stands alone because of the status and reputation of that newspaper. The announcement of the sale was a "shock" to most and drew a variety of reactions from those in the industry and at the Post.
Understandably, for those at the Post this was a personal matter. Kathleen Parker, Post opinion writer, wrote the announcement "...wasn't just a news shock. It was a gut punch of familial disruption. Children of divorce are familiar with the feeling." Post opinion writer, David Ignatius commented, "As with any death in the family, there were stages of grief: shock, denial, a little rage maybe, and then acceptance."
From a distance, Andrew Ross Sorkin in the business section of the New York Times observed that "If it wasn't clear that newspapers have become trophies for the wealthy with an interest in journalism or power -- or a combination of both -- it should be now." Sorkin went on quote Ken Doctor, an analyst at Outsell, a research and consulting firm for the publishing industry, as saying "These deals don't make financial sense."
Others such as Rana Foroohar of Time magazine were more optimistic about the potential of the "deal". In her blog for business.time.com titled "Four Reasons Why Jeff Bezos and The Washington Post Will Be a Good Match," Ms. Foroohar declared, "Yesterday's announcement that Amazon billionaire Jeff Bezos would buy the Washington Post... is actually reason to cheer, since it may mean that better days are ahead, both journalistically and economically, for the paper."
We agree with Ms. Foroohar's perspective but not because of her four reasons -- although we don't disagree with them. We share her viewpoint because we see Mr. Bezos as a model builder -- a model builder with the vision, patience and persistence to stay the course against strong odds.
Bezos has already proven that he excels in building two types of models: business models and customer value models. With his purchase and successful transitioning of the Washington Post, Bezos will be able to add a third type to his model-building repertoire: the public trust model. Let's look at each of these models in turn.
Building the Business Model
Bezos has been characterized by some as a "disruptor" or a practitioner of "creative destruction." We believe this depiction is inaccurate because it focuses on what Bezos has done to an industry or to his competition rather than on the models that he has built.
Building successful business models requires enormous creativity and break-through insights. Based upon the information that we have reviewed, this is what Bezos brings to the table.
Mark Leibovich who wrote a book in 2002, The New Imperialists, which included a profile on Bezos, puts it this way, "He approaches things very much as an innovator. I see his world view as being much less political and much less partisan than it is sort of logic-based, explorer-based."
Most of the talk about new business models for The Post focuses on the increased use of technology and digital resources. Given Bezos' track record, we think that's just the low hanging fruit. We don't know what the Post's new business model will be. We do know, however, that we should expect the unexpected and that the unexpected will be completely customer-centric.
Building the Customer Value Model
That's because a key to Amazon's success has been an obsession with the customer. It has built its products and services from the customer in rather than from the company out. That focus comes from Bezos.
As Forbes reported in a 2012 article, "Early on Bezos brought an empty chair into meetings so lieutenants would be forced to think about the crucial participant who wasn't in the room: the customer." The result of that "magnificent obsession" and assiduous adherence to a set of customer-driven metrics is that Amazon has consistently scored among the top 10 out of 225 large companies on the American Customer Satisfaction Index survey conducted by the University of Michigan.
We also don't know what the Post's future Customer Value Model will be. But, there's early evidence from an August 10 article by Peter Whoriskey of The Post that building the right one will be at the top of Bezos' priority list.
At the end of his article, Whoriskey cites an example from Katharine Weymouth, The Post publisher, who recounts that a man wrote to Bezos saying "Thank god you're getting involved you understand customer service." According to Weymouth, Bezos responded within "two seconds" stating "Thanks for your input. Keep your ideas coming!"
Building the Public Trust Model
Perhaps the right verb here should be "protecting" or "restoring". Whatever -- the challenge and the new opportunity of Bezos is to ensure that the Post maintains its stellar position as one of the few remaining beacons of integrity, independence and investigative reporting in a journalistic world that has become increasingly partisan, political and pandering.
The importance of keeping this bight light shining and even glowing more brightly cannot be overstated. As Peter Whoriskey noted in his article, "A newspaper represents not just a business but a 'public trust,' Washington Post Co. chairman and chief executive Donald E. Graham has said that more than once. In other words, the values that matter in owning a newspaper go beyond profit and loss."
Our American democracy does not exist because of the media, but it could not exist without it. The free press has been a cornerstone of American democracy from the outset.
Consider that the First Amendment to the Constitution states, "Congress shall make no law abridging freedom of speech or of the press." Reflect on Thomas Jefferson's words from 1787, "The basis of our government being the opinion of the people, the very first object should be to keep that right; and were it left to me to decide whether we should have a government without newspapers or newspapers without a government, I should say I would not hesitate a moment to prefer the latter."
Remember the salutary work and pivotal role of the Washington Post and its reporters and leadership during the Watergate era. Imagine America and democracy without that intervention.
The public trust model matters. A vital newspaper matters. Again, we don't know how the public trust model will evolve at the Post under Bezos. But we have reason to believe that he understands his responsibilities both to the paper and the American people.
In his letter to Post employees regarding the purchase, Bezos said, "The values of the Post do not need changing. The paper's duty will remain to its readers and not to the private interests of its owners. We will continue to follow the truth wherever it leads and we'll work hard not to make mistakes. When we do, we will own up to them quickly and completely."
Does Bezos, a fabulously successful entrepreneur, business person with deep pockets but with no experience in the newspaper industry or journalism have the "right stuff" to lead the transformation of the Washington Post?
In that regard, we defer to Donald Graham, the company's CEO who in an interview with Gwen Ifill on the PBS Newshour remarked, "Jeff had fully as much to do with journalism in his previous career as Eugene Meyer, my grandfather who bought the Post in 1933, having never worked a day on a newspaper and never having owned a business."
During that same interview Graham indicated that he has known Jeff for 15 years and commented that he is "known to be an extremely decent man." Graham also noted that "The Post's great friend Warren Buffet has called Jeff the best CEO in America."
In other words, Graham felt comfortable "going postal" by bringing Bezos into the family. He knew that what the family and the nation needed at this point in time and for the future was a model builder.
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