Why Jeff Bezos Let Ezra Klein Leave The Washington Post

Upon learning the news that The Washington Post allowed its "wunderkind" columnist Ezra Klein to leave, Paul Krugman said to The Post: "You idiots!"

He wasn't the only person who was critical of the decision. Business Insider executive editor Joe Weisenthal feared that without Klein, The Post might become "just a bunch of angry old columnists that people laugh at." And a lot of observers felt the newspaper was repeating its earlier mistake of letting two star journalists leave after they had proposed a new venture. Those two stars went on to launch Politico.

I'm sympathetic to these criticisms. Klein, who ran The Post's Wonkblog, is a remarkable talent who has the rare ability to be both prolific and consistently excellent. When Jeff Bezos took over as owner of The Post, he said his number one rule would be, "Don't be boring." Ezra Klein never is.

Politico initially reported that Klein proposed "the creation of an independent, explanatory journalism website – with more than three dozen staffers and a multiyear budget north of $10 million." Bezos reportedly said no without "offering an alternative figure."

We now know that Klein is headed to Vox Media where he intends to "create a site that's as good at explaining the world as it is at reporting on it." He'll be joined by former Post colleagues Dylan Matthews and Melissa Bell in addition to former Slate blogger Matt Yglesias.

Ezra Klein

So why would America's finest business leader, who is trying to turn around a struggling newspaper, let one of his most valuable assets go out the door? Is the Bezos-led Washington Post just a big "nothingburger" – as was suggested by Steven Brill at Columbia Journalism Review?

I don't think so. Even though Bezos hasn't discussed his thinking on this issue, we have learned a lot about the way he has run Amazon.com (NASDAQ: AMZN  ) over the years. Here are three specific things we know about Bezos that helps us better understand the decision and what it means for The Washington Post in the future.

1. Jeff Bezos is a bold investor.
The belief that the Ezra Klein decision is just another example of The Washington Post's old-media, risk-averse business approach doesn't jibe with Jeff's Bezos' track record as an investor. When Paul Krugman says, "I wonder – based on nothing at all – whether there wasn't some hostility to Wonkblog among older-line journalists at the Post," he's completely misreading the situation.

In the first letter to Amazon shareholders in 1997, Bezos wrote, "We will make bold rather than timid investment decisions where we see a sufficient probability of gaining market leadership advantages." With a current market cap of $180 billion, it's safe to say he delivered on that promise at Amazon.

In Brad Stone's The Everything Store, we also learn that Bezos aggressively sought an opportunity to invest in Google (NASDAQ: GOOGL  ) in 1998, after having met the company's co-founders over breakfast. That investment might now be worth over $1 billion.

Currently, Bezos' personal venture capital firm is invested in Twitter (NYSE: TWTR  ) , Uber, Business Insider, and Rethink Robotics in addition to his ownership of The Washington Post. According to the founder of Rethink Robotics, as quoted by Stone, Bezos "invests in things where information technology can disrupt existing models." In the media space, Business Insider appears to be a company he's particularly bullish on at the moment.

Additionally, the notion that Bezos might not be engaged in his ownership role at The Post doesn't appear to be supported by the evidence. When he took over the paper, he said, "it would be a disservice to this organization for my motivations to be just a business curiosity." By all accounts, Bezos is a hands-on guy when it comes to things he cares about. Stone quotes a partner of a Bezos venture who notes, "he's hell on the details and in the thick of the design and very strict on where costs are going."

Bezos' track record suggests he's a very engaged boss who's willing to place big bets on projects he thinks will be successful. In this case, of course, he decided to pass on Klein's vision for creating a new site that will help better explain the news. That leads us to the next thing we know about Bezos.

2. Bezos uses metrics to make decisions.
So far, we don't have a lot of precise details about Klein's business plan. According to Politico, the venture required an investment north of eight figures and an editorial staff of over 30 people. As for the prospective value of the new enterprise, we can extrapolate from Wonkblog, which currently delivers over 4 million page views per month. The New Yorker's John Cassidy estimates that those numbers might be able to deliver $1.2 million in ad revenue per year. Even if that's on the low side – and it probably is -- Cassidy argues that the "economics of stand-alone news websites are forbidding."

I think it's reasonable to say that Bezos understands this. In fact, he probably has a better sense of what can and cannot be accomplished online than anyone in business nowadays.

From reading Stone, it's very clear that Bezos is obsessed with data, and he relies on metrics to make key decisions. In the first shareholder letter, he wrote, "we measure ourselves in terms of the metrics most indicative of our market leadership..." When deciding in 2001 and 2002 between his editorial staff and the personalization team for customer recommendations, Bezos patiently waited to see what the numbers revealed. The personalization group – which used algorithms and analytics for recommendations -- worked much better. The editors and writers were either reassigned or laid off.

I think it's safe to say that Klein's proposal was evaluated in a rational way using the most relevant numbers. Bezos either felt the numbers would never match up or believed this wasn't the right move for The Post at this time. The third thing we know about Bezos might provide additional insights here.

3. Everything is evaluated from the perspective of the customer.
The first of Amazon's five core values is "customer obsession." One constant for Bezos has always been putting the customer first before every other stakeholder.

In early remarks to Washington Post staffers, Bezos said, "the center of our universe should be the reader." And he believes "job one is to figure out the daily habit" of readers. Once he knows that, then The Post will be able to create a compelling bundle of content that readers will pay for.

Did Klein's proposed venture align with Bezos' broader goal? In a recent post announcing his move to Vox Media, Klein wrote that he "really wanted to build something from the ground up that helps people understand the news better." He noted that he wasn't just trying to scale Wonkblog, and that he wanted to "improve the technology of news."

Is this vision consistent with Bezos' "job one" of figuring out the reader's daily habit? It might have been, but it also could have been a big distraction. Right now, Bezos is trying to transform the economics of the newspaper industry by enticing readers to pay for a bundle of content. And it's very likely that he didn't see sufficient evidence to show that readers wanted a well-meaning explanatory news site as part of that bundle. Given what we know about Bezos, without data to show that this is something customers really wanted, it may have been an easy decision for him to say no.

As much as I like Klein's work, I think Bezos' decision to say no is actually a very encouraging sign for The Washington Post's future. Steve Jobs once clearly explained why saying no is so important for a company,

People think focus means saying yes to the thing you've got to focus on. But that's not what it means at all. It means saying no to the hundred other good ideas that there are. You have to pick carefully. I'm actually as proud of the things we haven't done as the things I have done. Innovation is saying no to 1,000 things.

Klein is an extremely talented individual, and I'm confident his new venture will be a critical success. It's difficult, however, to imagine how his plan would have solved the serious challenges facing The Post's business model at the moment. For that reason, Bezos was right to say no. 

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Read/Post Comments (20) | Recommend This Article (32)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On January 27, 2014, at 12:44 PM, TXObjectivist75 wrote:

    Could it be the fact that Klein is consistently wrong, and is probably laughed at more outside the Beltway than any aging columnists they have?

  • Report this Comment On January 27, 2014, at 5:23 PM, katinga wrote:

    Also, the widely respected libertarian legal blog Volokh.com was recently absorbed into the WAPO fold. That implies a significant shift in editorial policy away from Klein.

  • Report this Comment On January 27, 2014, at 6:16 PM, mulqueeney wrote:

    Reading Ezra Klein for News context is like"

    Sniffing flatulence to recall a culinary recipe"! PMM

  • Report this Comment On January 27, 2014, at 7:18 PM, katinga wrote:

    Ezra Klein likes to "fix the news". See http://www.theverge.com/2014/1/26/5348212/ezra-klein-vox-is-.... This is otherwise known as propagandizing. Bezos wants to run a newspaper, not a propaganda organ.

  • Report this Comment On January 27, 2014, at 7:46 PM, duuude1 wrote:

    TMFBane, nice analysis - I'm curious to see how WAPO turns out under Bezo's leadership.

  • Report this Comment On January 27, 2014, at 7:58 PM, stevews99 wrote:

    My respect for Jeff B just increased exponentially! On the other hand I continue to be amazed that the Motley Fool apparently does not have a contributor that lives in the real world. The next article your organization (or Ezra Klein) writes about our catastrophic debt and the progressive "economic" theories that are destroying our country will be the first.

    FYI: Anyone that Paul "mini-mouse" Krugman recommends is about 4 standard deviations from the mean.

    Be well...

  • Report this Comment On January 28, 2014, at 2:19 AM, ashleyjames389 wrote:

    Jeff Bezos is a genius, his decisions are backed by very strong backing

    http://bit.ly/PerfectGPA

  • Report this Comment On January 28, 2014, at 9:48 AM, TMFBane wrote:

    Thanks for the comments, everyone! I just came across an interesting Q&A with Ezra Klein where he cryptically refers to his conversations with The Post. When asked why the Post said no, he replied:

    "Honestly, I have the deepest respect and gratitude to The Post for my years there. They supported me to build Wonkblog, which was a big risk then. Our talks were super friendly and helpful, but beyond that, I don't think it's proper to speak for them."

    http://www.buzzfeed.com/charliewarzel/qa-ezra-klein-promises...

    It'll be interesting to hear Bezos' thoughts on those talks someday!

    Foolishly,

    John Reeves

  • Report this Comment On January 28, 2014, at 11:16 AM, FinanceBuzz wrote:

    The Washington Post is so radically liberal it makes the New York Times look centrist (which in itself is a laugh). Anything they can do to give some balance to that rag is a good thing. Good riddance to a hard left mouthpiece like Ezra Klein.

  • Report this Comment On January 29, 2014, at 10:32 AM, mjc84 wrote:

    I always find it funny to read peoples delight at the removal of one who sits at the opposite side of your comfort zone. When you want to only read the opinions of those who you agree with then you have stopped learning. Common problem in American politics and society I'm afraid.

  • Report this Comment On January 29, 2014, at 11:47 AM, TMFHousel wrote:

    Great comment, mjc84.

  • Report this Comment On January 29, 2014, at 11:47 AM, longshotlouie wrote:

    This is a very disappointing article. Ezra Klein is a socialist who incessantly campaigns for Obama and the democrats. No sane business person wants to support his nonsense.

  • Report this Comment On January 29, 2014, at 12:11 PM, TMFBoomer wrote:

    @mjc84. Agreed. Confirmation bias can build a blockade around new information, which can be devastating for investors.

    Also, Klein's departure follows shortly after Nate Silver's from the Times. Seems to be a trend in a newspaper industry lacking deep pockets right now. For more insight into Silver's departure and the periodical business as a whole, I highly recommend this podcast on BS Report.

    http://grantland.com/the-triangle/b-s-report-nate-silver-and...

    Nate Silver, Malcolm Gladwell, and Bill Simmons riff on an industry they've been part of for decades.

    Great article, John!

    Isaac

    @TMFBoomer

  • Report this Comment On January 29, 2014, at 12:15 PM, njn81 wrote:

    Elitists and biased should not have any place in the news. We need wise not one sided intellects.

  • Report this Comment On January 29, 2014, at 12:45 PM, adasand wrote:

    I highly doubt Bezos bought the post to promote journalism. His future plans require a lot of political "buyouts" and manipulation what better way to do it than the post.

  • Report this Comment On January 31, 2014, at 3:36 PM, cmalek wrote:

    @njn81:

    "We need wise not one sided intellects."

    And how do you define a "wise intelect?" One who shares your point of view?

  • Report this Comment On January 31, 2014, at 6:36 PM, whyaduck1128 wrote:

    Bezos probably ran the numbers and concluded that Klein is as full of it as a businessman as he is as a columnist.

    What Klein and his fellow Way Left types (and their equally odious Way Right colleagues) forget is that the average reader does NOT need him or anyone like him to "explain the news" if the news organ does a good enough job of reporting it in the first place. Condescending "we the great and glorious pundits of the Loony Left [or Rabid Right] know that you as mere mortals cannot possibly understand these things, so here are our of-course-purely-objective views of what you MUST believe" are an insult to the very people Klein (and his puppet masters at the White House) claim they are trying to help.

    As an example of HOW to write, the WaPo is virtually without peer. As an example of WHAT is written, it is virtually beyond the fringe. Props to Bezos for refusing to indulge one of the spoiled children populating the paper.

  • Report this Comment On February 02, 2014, at 12:36 AM, VictorErimita wrote:

    I find the consistently conventional-left tropes purveyed by the Fool Watch Weekly useful in interpreting (and discounting) the advice offered throughout the MF universe. I'm a One member and have found much valuable advice in the MF services. But the lefty groupthink exemplified by this piece's silly extolling of the nonexistent virtues of a clueless ideological hack like Ezra Klein is a useful warning against ideologically-driven blind-spots in the MF worldview. It helps me sift out what appear to me to be weaknesses in the otherwise superlative analysis of the MF family.

    John, my friend, if you truly think Ezra Klein is great. mind, you need to become more aware of the differences between ideological manifesto and reporting of reality.

  • Report this Comment On February 02, 2014, at 2:59 PM, TurboJohn wrote:

    Why does Motley Fool post any writings sympathetic to Ezra Klein? His writings do not bear out with reality in the business world. His articles might be called socialistic, communistic, or controversial just for the purpose of drawing attention to himself, but certainly not enlightening to Motley Fool followers that want to understand real world economics.

    Ezra Klein's nonsense was one of several reasons I cancelled my Post subscription in November 2013, after a quarter century of reading it.

    Fire Eugene Robinson (Stuck in 1959), E.J. Dionne, and a few other writers that are out of touch, race baiters, or socialists and I might even restart my subscription. Fool on!

  • Report this Comment On April 03, 2014, at 2:15 AM, thidmark wrote:

    "I always find it funny to read peoples delight at the removal of one who sits at the opposite side of your comfort zone. When you want to only read the opinions of those who you agree with then you have stopped learning. Common problem in American politics and society I'm afraid."

    People want diversity and balance. And they don't get it from the Post, which is why it is getting its a$$ handed to it.

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