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Shopping with Jeff Bezos

The Amazon.com CEO talks about his company's acquisition of three Internet firms yesterday, just the latest in the e-commerce giant's buying spree.

Amazon.com's customers aren't the only buyers. Jeff Bezos, chief executive of the e-commerce company, is also on a shopping spree.

Armed with valuable stock and $1.25 billion in capital raised through a convertible debt offering last February, Bezos has made a number of multimillion-dollar acquisitions and investments over the last several months as his company expands beyond books, music, and videos. In addition, Amazon will ask its shareholders for authority to increase its number of outstanding shares by 1.5 billion, up from the 300 million stockholders have already authorized.

Amazon acquired a 46 percent stake in online pharmacy Drugstore.com last February and followed that with a 50 percent stake in the largest Internet-only pet supply company, Pets.com.

Earlier this month, the company announced its acquisition of LiveBid.com to grow its recently created auction business.

And just yesterday, Amazon announced it was snapping up three Internet companies for $645 million in separate stock deals. Among the companies acquired were rare book and music title finder Exchange.com, Web database technology provider Alexa Internet, and e-commerce transaction technology start-up Accept.com. Accept.com is backed by venture firm Kleiner Perkins Caufield & Byers, which backed Amazon, and Benchmark Capital, an early investor in eBay.

Bezos sat down yesterday for a chat with CNET News.com's Dawn Kawamoto and John Borland.

CNET News.com: What is the connection between Alexa Internet, Exchange.com, and Accept.com in terms of your strategy?
Jeff Bezos: None other than that they were all announced yesterday. The common thread is that they all came together on the same day.

Can Amazon quickly absorb all the companies it has acquired of late?
The biggest risk for Amazon is the risk of executing well. And it's not just about the acquisitions. We have to execute well in delivering a high level of customer service, new geographies, and new products. And that's hard to do while rapidly growing. I'm worried about that and want to do it well. But the way to manage execution risk is to have everyone on the same page.

How will you meld these acquisitions with Amazon? Will they operate as separate units?
It depends on the company. But they will mostly stay together as teams. They will retain a great deal of cohesion.

Will any of the executives be integrated into Amazon upper management?
Yes, some of the executives will be involved in upper management. But the way we operate, we don't attach much importance to titles. We're not very hierarchical. Customers care more about what kind of service they're getting than about what kinds of titles people have.

Exchange.com is based in Cambridge, Alexa Internet is in San Francisco, and Accept.com is in Redwood City, California. Will all three companies move to Seattle?
Alexa will stay in San Francisco. The rest will come to Seattle.

When will customers notice the integration of these acquisitions?
You know how software development can go. Historically, we have not announced anything until there is something to announce. With Alexa and Accept.com, there may not be anything tomorrow, but this a long-term strategy.

Accept.com is about one year old. Is it the youngest company Amazon has acquired so far?
I think it's the only company we've acquired so far without a product. But in every case where we've acquired a company, the primary focus is the people.

Did venture firm Kleiner Perkins Caufield & Byers introduce your company to Accept.com, given KPCB was a backer of Drugstore.com, in which you took an earlier investment stake?
I don't remember how we were introduced or when. I wasn't involved in the process early on. I had other people who were talking to Accept and only came in later.

In acquiring these companies, you used a purchase accounting method, instead of a pooling of interests. Was it because the SEC is getting tougher on pooling-of-interests transactions or because you didn't qualify for that accounting method?
We used a purchase accounting method where it is appropriate.