TechFlash: Seattle's Technology News

Shortly after Amazon.com announced last week that it was acquiring online shoe retailer Zappos, an Amazon employee posted a message on Twitter that captured some of the company’s hopes for the deal.

“Dear Tony: Please teach Amazon about Twitter,” read the message, addressing Zappos CEO Tony Hsieh. “And if you could help us get an 800 number on the home page that would be awesome.”

The tweet went to the heart of Amazon’s $900 million-plus gamble on Zappos — the largest acquisition in its history. Seattle-based Amazon.com Inc. is getting not only a category leader in online shoe sales, but an innovative company known for its quirky culture, well-developed customer service, and heavy use of social-networking sites like Twitter and Facebook for marketing and brand development.

This could be the ultimate excuse for missing a homework assignment. A Michigan high school student named Justin Gawronski is suing Amazon.com -- claiming that when the online retailer recently deleted the George Orwell novel "1984" from his Kindle reader, it also caused his "copious notes" to be "rendered useless." The lawsuit, filed Thursday in U.S. District Court in Seattle (pdf, 18 pages), seeks class action status and unspecified damages.

Zappos CEO Tony Hsieh is still riding high from his big acquisition deal with Amazon.com. Hsieh just tweeted about giving Zappos staffers a "big bonus" and said he and Zappos CFO Alfred Lin are "personally buying a Kindle for every employee."

According to recent Twitter updates, Hsieh and Lin were visiting a Zappos fulfillment center in Kentucky, where they held a company all-hands meeting. I have a call in to a Zappos spokeswoman for more details on the bonus and Kindle give-away. Zappos on its website says it has over 1,400 employees -- that's a lot of Kindles.

Sony is tapping into Google's massive book-scanning project as it battles with Amazon.com over the emerging digital book market. Sony, which has an electronic reader that competes with Amazon's Kindle, said today it's now offering more than a million free public domain books from Google. Barnes & Noble has also teamed with Google on e-books. Will Amazon join forces with the search giant? For now, at least, it doesn't seem likely.

Amazon.com last month cut off its affiliates in Hawaii as part of an escalating battle with states over sales tax collection. But now that an effort to force Amazon to collect sales tax died in the Hawaii state legislature, the online retail giant is inviting its affiliates there back. In a message posted on its Associates blog, Amazon thanks Hawaii affiliates for their patience and says it hopes they will re-enroll in the program.

There have been many product reviews of Amazon's Kindle, though none have described the buzz around the electronic reader as "an alpenhorn blast of post-Gutenbergian revalorization." That's just one of the gems in novelist Nicholson Baker's lengthy essay on the device in the New Yorker.

Amazon.com in a regulatory filing today pulled back the curtain on its deal to acquire online shoe retailer Zappos -- giving a timeline of contacts between the two companies and showing who stands to benefit from the massive transaction. Turns out the two companies explored a possible deal as far back as 2005, with a meeting in Las Vegas involving Amazon CEO Jeff Bezos, Zappos CEO Tony Hsieh, Sequoia Capital partner Michael Moritz, and others.

(Click for larger version of Meet The Boss map.)

Amazon.com last week announced plans for the largest acquisition in its history -- snapping up online shoe retailer Zappos in a deal currently valued at about $880 million. Now the folks at Meet the Boss have come out with a cool map that shows the Zappos deal is part of a larger Amazon shopping spree in recent years.

What a difference a day makes. After releasing grim quarterly earnings yesterday, the region's two tech giants, Amazon.com and Microsoft, took a beating on Wall Street today -- and saw big chunks of market value evaporate.

Amazon.com's announcement that it will acquire online shoe retailer Zappos was quickly followed by reports of tension between Zappos investor Sequoia Capital and Zappos CEO Tony Hsieh over the fate of the company -- with Sequoia reportedly pushing for a sale and Hsieh wanting to keep the company independent. Now Hsieh has put out a statement calling those reports false, saying, "Nobody was forced to sell to Amazon."

Photo via: Barnes & Noble

Amazon got a blast of bad PR last week after news broke that the company had removed George Orwell's "1984" and "Animal Farm" from the Kindle electronic book reader as part of a dust-up with a publisher. Now Amazon CEO Jeff Bezos is making a personal apology, writing in a Kindle discussion board that the company was "stupid, thoughtless, and painfully out of line with our principles."

A day after announcing plans to snap up shoe retailer Zappos, online retail giant Amazon.com said second quarter profit dropped 10 percent in the second quarter to $142 million, or 32 cents a share. Sales increased 14 percent to $4.65 billion, but fell just short of analyst expectations.

Amazon shares were down nearly 7 percent in after-hours trading.

With Amazon's shares soaring today, the value of its just-announced deal to acquire online shoe retailer Zappos appears to nearing the $1 billion mark. Amazon is acquiring all of Zappos' shares for 10 million of its own stock. With Amazon shares today at more than $94 a share, that equals $940 million. As part of the Zappos deal, Amazon is also paying the company's employees $40 million in cash and restricted stock. So the total value is now hovering around $980 million.

Amazon.com's $920 million purchase of online shoe retailer Zappos marks yet another win for Sequoia Capital, the venerable Silicon Valley venture capital firm that's rung up big payouts over the years with Google, PayPal and YouTube.

But just how much did Sequoia -- which reportedly held 10 percent of Zappos -- and the other investors make? Well, that's a tad difficult to calculate without knowing the exact terms of the venture deals. Zappos reportedly raised about $45 million over the past decade -- including a $15 million round four years ago.

That means the company sold for 20 times the money invested -- a very good outcome by most measures.

Electronic books took another step into the mainstream today as USA Today, the nation's top-selling daily newspaper, said it would begin including Amazon Kindle book titles in its much-read bestselling book list.

“With the addition of sales figures from Kindle, we have created a more robust list which reflects the new platforms consumers and readers are using to purchase books," said Susan Weiss, managing editor of USA Today's Life section, in a statement.