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.
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.
John Reeves owns shares of Amazon.com and Google. The Motley Fool recommends Amazon.com, Google, and Twitter. The Motley Fool owns shares of Amazon.com and Google. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.