What challenges face Amazon without Bezos at the helm?
Amazon Prime Day 2021  Monday and Tuesday of this week  will be the last one for Jeff Bezos as CEO. The founder is preparing to transition to executive chairman and take a small step away from the global retail, media and technology juggernaut. In many ways, Amazon was shaped directly by Bezos personal dedication to innovation and obsession with preventing stagnation at the company. That influenced many of the companys successful projects but also its failures and its problematic workplace culture, which has drawn public criticism in recent years. Marketplace Morning Report host Sabri Ben-Achour put those questions and more to Brad Stone, author of the new book Amazon Unbound: Jeff Bezos and the Invention of a Global Empire. The following is an edited transcript of their conversation. Sabri Ben-Achour: Youve been writing about Amazon for decades now. Brad Stone: You know what, Sabri, the most surprising thing might have been, and this is something I maybe understood on some level, but it was just shocking as I went into it, how much surface area there is to this company and to the vast empire that Jeff Bezos has assembled. And only when youre trying to really present it in a comprehensive and understandable form, do you realize how many dimensions there are to it. I mean, its a global company. Its not just e-commerce, but cloud computing, devices, and then Bezos personal holdings, The Washington Post and Blue Origin. It was just how much story there was and how quickly all of these things, often in concert with each other, developed, grew and became so unimaginably big and dominant in our economy right now. Amazons failures and how Bezos handled them  Ben-Achour: Yeah, you know, one thing I was really struck by in this book is just how much Amazons path to success has been littered with failures. You know, failed smartphone, failed holographic projector, Amazon Go, the store with no cashiers. A lot of things didnt work out. And Im just wondering how unique that makes Amazon. I mean, Bezos was almost proud at how Amazon belly-flopped with the first Fire Phone. And of course, the Fire Phone helped lead in part to Alexa. Prime Day is another great example. The first Prime Day, in 2015, was kind of a disaster for Amazon. If you remember, people on Twitter were complaining about the poor quality of the deals, a lot of the press was negative and its just this sort of bullheaded stubbornness that allows him to continue and push forward. If they dont get it right today, theyre going to try again tomorrow. And of course, Amazon has so many advantages in terms of resources and wealth, and just its sheer dominance, that it allows it to go and make mistakes and then recover. Ben-Achour: Bezos didnt seem to punish failure. He punished failure to innovate or be imaginative is what Im drawing. But he also didnt seem to listen very well, is what I gather. Stone: Well, I dont want to overstate his patience or tolerance for failure. The Fire Phone was his idea for a smartphone. There are so many examples. I talked about a single cowburger inside Amazon that he drove and made part of its grocery service. And that really didnt take off. HQ2 [Amazons corporate offices in Virginia] is a great example and what I think of as a conspicuous failure because of how much negative press they got, and of course, the ignominious withdrawal from New York City. And that was a Bezos idea and he pushed that. So theres tolerance for failure, but oftentimes its because hes driving an idea. But you know, he is impatient with employees who arent living up to his standards. I write in the book about him tearing up documents and walking out of rooms. And so obviously, lets not overstate how patient or tolerant a place that it is. Amazon is difficult, precisely because he wants it to be a very high-achievement culture. What its like working in management at Amazon  Ben-Achour: You weave into your book Amazons 14 leadership principles, these, like, aphorisms that Jeff Bezos came up with  frugality or thinking big and then, like, this sacred text for Amazon management. Stone: Well, first of all, we should probably concede that there are hundreds of thousands of employees who are now working in Amazons offices to distinguish it from its warehouses. And the experiences differ widely. But it is an unusual place. You mentioned the leadership principles. Employees are required to know them well. Theyre recruited, theyre promoted, they make decisions based on those principles. But its a place where, you know, if you dont achieve, youre pushed out. Youre required to meet certain goals and benchmarks. There are performance-improvement plans. Its probably a more intense version of the corporate environments a lot of people know. But yeah, youre required to bring new things to the table and constantly innovate and work hard. Stone: And one unusual aspect of the Amazon corporate culture, which people might be familiar about, is how its a writing culture and how they make their major decisions, even questions of hiring and promotions, based on documents, these six-page documents that employees are often required to work on in their own time, which are meticulously revised and edited. And that makes it sort of idiosyncratic, so some people say its the most productive work environment theyve ever had, and other people kind of get one taste of the corporate culture and flee. There are a variety of experiences. Amazons workplace turnover  Ben-Achour: A recent New York Times investigation found the turnover rate of Amazon warehouse workers was 150% per year, and that this was kind of in a way encouraged out of fear of the workforce becoming stagnant. Some people read avoiding stagnation as meaning avoiding unionization. You have written about Jeff Bezos compulsion to keep Amazon dynamic as a company. Stone: Well, I mean, I draw these conclusions in the book. And I talked to a human resources executive early on who said that Jeff Bezos was making, you know, very particular decisions about raises in the warehouses and how to measure employees performance because he didnt want tenured employees who would be around for a long time and might get disgruntled and might be prey for unions. He was looking around and looking at U.S. manufacturers and the U.S. automakers and judging that collective bargaining and an organized workforce had really limited their flexibility and the companies versatility and ability to innovate and allowed them to be overtaken by foreign companies. And so it was very much tied to keeping the workforce nonunion, keeping a kind of high velocity and very transactional workforce that didnt get tenured. And yeah, I do think that. And I think that more recently, Amazon is starting to realize, and Bezos has started to realize that this hurts the companys image, its going to hurt his legacy and its going to really hurt the companys ability, as it now gets to over a million employees, to keep hiring, particularly in an environment of very low unemployment and in parts of the country where maybe a lot of folks in different communities have already worked for Amazon. So I think theyre hitting upon the upper limit of that model right now. Ben-Achour: Yeah. As you write about, Amazons image has changed over the years and not just in the U.S.  globally, even. The glow of innovation has given over to criticism over worker treatment, over impacts on small businesses. Stone: They used to have this notion that they could just continue to innovate. And if they kept introducing magical new products, that that would dilute some of the negative impacts of being a large, distant retailer that was often seen at odds with small, mom and pop companies. In my first book, The Everything Store, I have a memo from Bezos thats delineating exactly that strategy. And I think over the years, as weve seen things like the Kindle and Alexa and AWS, Amazons cloud division, that in part they are trying to kind of polish the halo of innovation and being a tech company more than a retailer. And as youre mentioning here, that is really no longer working. And I think what weve seen recently is Amazon pivot and address its status as a large employer in all of its messaging. And well see it in the messaging around Prime Day, when they release their annual report on it, theyre going to highlight the impact that the discount days had to small businesses. And so theyre really trying to, you know, hold up the impact that they have on other companies, the benefits that they have as an employer. In Bezos last shareholder letter, that was all about the value that Amazon is adding to the economy, it being seen as a creator of value, not an extractor of value. So I think theyre trying to do their best to change their image. But theyve got a [long] ways to go. And fundamentally, I think its going to be changing the contract that they have with their employees, making that relationship and the warehouses less transactional and being seen as a more benevolent employer. And so far, theyve really failed to do that. Amazon at the international level  Ben-Achour: One of my favorite parts of your book was the discussion of Amazons international ventures, in particular China, India and Mexico. Amazon tried to enter China in the early 2000s and failed. Stone: There were a couple of lessons. One was they had really exported their domestic U.S. model to China. That, you know, was all about charging large upfront listing fees to third-party sellers, a sort of orderly, well-designed website of the kind they have in the U.S., and they realized that the e-commerce landscape was just different there. Alibaba, in particular, was a disruptive presence, it was allowing sellers to list for free, the website was kind of chaotic. And so I think the large lesson was you needed to kind of customize your business in every country. But the other lesson was, they kind of were just a little too feeble in China. Of course, in the context of Amazon in the 2000s, that made sense. It was still a very unprofitable company. But what they learned was you really needed to go big or go home, and that is what we have seen in India. They have spent tens of billions of dollars trying to duel with a local player called Flipkart thats now owned by Walmart and some of the other local national players in India. And theres really been no limit to the size of the investment that Amazon is willing to make to dominate this market. And they learned a lot from China. In fact, Prime Day is itself exported from an Alibaba holiday, manufactured holiday called Singles Day. But the lesson was, go big and localize as much as you can. Ben-Achour: You give a lot of really interesting examples of Jeff Bezos pushing his teams to innovate hard, to go big or go home. He had his finger in everything, it seems, at Amazon. Hes stepping back from a lot of his responsibilities. Stone: Its going to be hugely impactful. But lets make one distinction. The story of Jeff Bezos at Amazon over the last decade is kind of a two-track story. With the larger businesses, retail and Amazon Web Services, hes really been stepping back and allowing deputies to run those divisions, somewhat independently. Even Amazon logistics and the fulfillment centers and the transportation network has been run by deputies, and Bezos has dipped in and hes audited it every so often and he sends emails when he is told of problems. But its the new projects  Alexa and the satellite constellation Amazon hopes to build called Project Kuiper, and the health care stuff and probably new things that we dont yet know about  where hes been really active. He says hes going to continue to do that. So I think in some ways, this is a little bit of a formality. Its institutionalizing something thats been going on pretty gradually over the past few years as Bezos has so many other responsibilities. Hes going to space. Hes building, as I reported in the book, this massive luxury yacht. Hes going to take a step back from Amazon, I think hell continue to do the new stuff. He fashions himself as an inventor, but hes going to let Andy Jassy, his longtime deputy, be the face of the company, which I think probably is apt as Amazon now enters in the age of enhanced antitrust scrutiny and criticism. Jassy simply presents a more humbler, I think, face for Amazon. When Bezos is sitting in that congressional testimony seat, hes sitting there not only as the CEO of Amazon, but as the richest guy in the world. And thats a somewhat impossible position for him, I think. So I think hes happy to let Andy Jassy take over that part of the job. Ben-Achour: Amazon has had spectacular growth, and that has demanded a lot from its employees. Stone: I think from the very earliest days of Amazon, Bezos relentlessness, his drive to expand, to move beyond just bookselling into selling everything, into becoming a full-fledged technology company, has impacted the culture. I mean, you had a band of bookselling idealists in the 1990s who thought they were, you know, joining a books company who basically get pushed out in the early years because they realize that this guy is out to build something much different. Hes out to build an empire. And I think you carry it right through to today that, you know, Bezos has attracted basically a set of like-minded people who are there to build a company that endures and a technology company thats inventive at its heart. And also a company thats basically so performance-oriented that youre either working full out or youre going home. So yeah, I think Bezos relentlessness is kind of key to the culture.