The World According to Jeff Bezos

EXCLUSIVE On April 11, Amazon.com CEO Jeff Bezos sat down with Industry Standard senior writer Miguel Helft to discuss a broad range of topics. This is an edited transcript of that conversation.

Q:Why is the deal with Borders important to Amazon shareholders if it will not meaningfully impact the bottom line?

Bezos:At the time when we announced the Toy 'R' Us deal we also did not reset [earnings] guidance. Obviously, we wouldn't have entered into a deal if we didn't think it was beneficial to Amazon.com and beneficial for Amazon.com shareholders. We are not disclosing the economic terms of the deal, but I do think that this is a financially beneficial deal for Amazon, a financially beneficial deal for Borders and a great deal for customers. We are going to be giving Borders customers everywhere access to the Amazon.com online experience.

Q:Is the Toys 'R' Us deal positive on the bottom line?

Bezos:We haven't broken out Toys 'R' Us specifically, and we will continue not do to so. But yes, we are obviously very pleased with that deal both from a strategic point of view and from a financial point of view. And I know for a fact that Toys 'R' Us would say the same thing. The basic point here is that we have built over the last six years a platform that not only allows us to serve our customers extremely well, but allows us to serve the customers of other leading companies well also. Over time, we think that is a significant opportunity. We just don't want people to get carried away in the short term. We think that's really important.

Q:Is one deal better than the other?

Bezos:I wouldn't want to rank them. These are wonderful examples of the flexibility of our platform. In the Toys 'R' Us case there is one Web site. In the case of Borders there are two Web sites. There are Amazon.com books, music and video stores, which will stay the same as they always were. And then there is the new re-launched Borders.com, which will be co-branded but will be its own site. It will have store location information, event information at Borders stores. That will be branded and largely identified with Borders and is designed for the Borders customer. The other thing that is different [is that] in the Toys 'R' Us deal, Toys 'R' Us owns the inventory. With Borders, Amazon owns the inventory.

Q:As you look to do more deals, which type of deal will you favor?

Bezos:I suspect that at this stage these kinds of deals will continue to be highly customized. I would guess that the third deal would be different yet again. That's just the sort of thing where we have a platform that consists of a lot of different assets. There is the Web site technology, there is the fulfillment technology, there is the distribution centers, the customer service centers. We can bring customers to the table. There are a lot of different things that we can do. And it really depends what we are trying to get out of the deal and what the partner is trying to get out of the deal.

Q:You have said for some time that you are interested in doing more of these alliances, and you have talked with companies such as Wal-Mart and Best Buy. Why didn't those talks work out?

Bezos:First of all, we would never comment on any specific conversations with any prospective partners. What I would say in general is that these are very complicated arrangements and they take time, in all cases, to work out.

Q:Many analysts say that when you did the alliance with Toys 'R' Us, you were in a position of strength. It was struggling with a difficult turnaround and was desperate to get its online store ready for the holidays. Similarly, Borders has been struggling with an unsuccessful, money-losing operation. What do you say to critics who believe