The Everything Store: Jeff Bezos and the Age of Amazon (25 page)

The other change was also peculiar and perhaps unique in corporate history. Up until that time, Amazon employees had been using Microsoft’s PowerPoint and Excel spreadsheet software to present their ideas in meetings. Bezos believed that method concealed lazy thinking. “PowerPoint is a very imprecise communication mechanism,” says Jeff Holden, Bezos’s former D. E. Shaw colleague, who by that point had joined the S Team. “It is fantastically easy to hide between bullet points. You are never forced to express your thoughts completely.”

Bezos announced that employees could no longer use such corporate crutches and would have to write their presentations in prose, in what he called narratives. The S Team debated with him over the wisdom of scrapping PowerPoint but Bezos insisted. He wanted people thinking deeply and taking the time to express their thoughts cogently. “I don’t want this place to become a country club,” he was fond of saying as he pushed employees harder. “What we do is hard. This is not where people go to retire.”

There was a period of grumbling adjustment. Meetings no longer started with someone standing up and commanding the floor as they had previously at Amazon and everywhere else throughout the corporate land. Instead, the narratives were passed out and everyone sat quietly reading the document for fifteen minutes—or longer. At the beginning, there was no page limit, an omission that Diego Piacentini recalled as “painful” and that led to several weeks of employees churning out papers as long as sixty pages. Quickly there was a supplemental decree: a six-page limit on narratives, with additional room for footnotes.

Not everyone embraced the new format. Many employees felt the
system was rigged to reward good writers but not necessarily efficient operators or innovative thinkers. Engineers in particular were unhappy to suddenly find themselves crafting essays as if they had been hurled back through time into ninth-grade English. “Putting everything into a narrative ended up sort of being like describing a spreadsheet,” says Lyn Blake, a vice president in charge of the company’s relationships with manufacturers at the time. Blake herself suspected the whole thing was a phase. (It wasn’t.)

Bezos refined the formula even further. Every time a new feature or product was proposed, he decreed that the narrative should take the shape of a mock press release. The goal was to get employees to distill a pitch into its purest essence, to start from something the customer might see—the public announcement—and work backward. Bezos didn’t believe anyone could make a good decision about a feature or a product without knowing precisely how it would be communicated to the world—and what the hallowed customer would make of it.

Steve Jobs was known for the clarity of his insights about what customers wanted, but he was also known for his volatility with coworkers. Apple’s founder reportedly fired employees in the elevator and screamed at underperforming executives. Perhaps there is something endemic in the fast-paced technology business that causes this behavior, because such intensity is not exactly rare among its CEOs. Bill Gates used to throw epic tantrums. Steve Ballmer, his successor at Microsoft, had a propensity for throwing chairs. Andy Grove, the longtime CEO of Intel, was known to be so harsh and intimidating that a subordinate once fainted during a performance review.

Jeff Bezos fit comfortably into this mold. His manic drive and boldness trumped other conventional leadership ideals, such as building consensus and promoting civility. While he was charming and capable of great humor in public, in private, Bezos could bite an employee’s head right off.

Bezos was prone to melodramatic temper tantrums that some Amazon employees called, privately, nutters. A colleague failing to meet Bezos’s exacting standards would predictably set off a nutter.
If an employee did not have the right answers, or tried to bluff the right answer, or took credit for someone else’s work, or exhibited a whiff of internal politics, or showed any kind of uncertainty or frailty in the heat of battle, the vessel in Bezos’s forehead popped out and his filter fell away. He was capable of both hyperbole and cruelty in these moments, and over the years he delivered some devastating rebukes to employees. Among his greatest hits, collected and relayed by Amazon veterans:

“If that’s our plan, I don’t like our plan.”

“I’m sorry, did I take my stupid pills today?”

“Do I need to go down and get the certificate that says I’m CEO of the company to get you to stop challenging me on this?”

“Are you trying to take credit for something you had nothing to do with?”

“Are you lazy or just incompetent?”

“I trust you to run world-class operations and this is another example of how you are letting me down.”

“If I hear that idea again, I’m gonna have to kill myself.”

“Does it surprise you that you don’t know the answer to that question?”

“Why are you ruining my life?”

[After someone presented a proposal.] “We need to apply some human intelligence to this problem.”

[After reviewing the annual plan from the supply-chain team.] “I guess supply chain isn’t doing anything interesting next year.”

[After reading a narrative.] “This document was clearly written by the B team. Can someone get me the A team document? I don’t want to waste my time with the B team document.”

Some Amazon employees currently advance the theory that Bezos, like Steve Jobs, Bill Gates, and Larry Ellison, lacks a certain degree of empathy and that as a result he treats workers like expendable resources without taking into account their contributions to the company. That in turn allows him to coldly allocate capital and
manpower and make hyperrational business decisions while another executive might let emotion and personal relationships intrude. But they also acknowledge that Bezos is primarily consumed with improving the company’s performance and customer service, and that personnel issues are secondary. “This is not somebody who takes pleasure at tearing someone a new asshole. He is not that kind of person,” says Kim Rachmeler. “Jeff doesn’t tolerate stupidity, even accidental stupidity.”

Right or wrong, Bezos’s behavior was often easier to accept because he was so frequently on target with his criticisms, to the amazement and often irritation of employees. Bruce Jones, the former Amazon vice president, describes leading a five-engineer team working to create algorithms to optimize pickers’ movements in the fulfillment centers while the company was trying to solve the problem of batches. The group spent nine months on the task, then presented their work to Bezos and the S Team. “We had beautiful documents and everyone was really prepared,” Jones says. Bezos read the paper, said, “You’re all wrong,” stood up, and started writing on the whiteboard.

“He had no background in control theory, no background in operating systems,” Jones says. “He only had minimum experience in the distribution centers and never spent weeks and months out on the line.” But Bezos laid out his argument on the whiteboard and “every stinking thing he put down was correct and true,” Jones says. “It would be easier to stomach if we could prove he was wrong but we couldn’t. That was a typical interaction with Jeff. He had this unbelievable ability to be incredibly intelligent about things he had nothing to do with, and he was totally ruthless about communicating it.”

In 2002 Amazon changed the way it accounted for inventory, from a system called last-in first-out, or LIFO, to one called first-in first-out, or FIFO. The change allowed Amazon to better distinguish between its products and the products that were owned and stored in the FCs by partners like Toys “R” Us and Target.

Jones’s supply-chain team was in charge of this complicated effort, and its software, ridden by bugs, created a few difficult days during which Amazon’s systems were unable to formally recognize
any revenue. On the third day, Jones was updating the S Team on the transition when Bezos tore into him. “He called me a ‘complete fucking idiot’ and said he had no idea why he hired idiots like me at the company, and said, ‘I need you to clean up your organization,’ ” Jones recalls, years later. “It was brutal. I almost quit. I was a resource of his that failed. An hour later he would have been the same guy as always and it would have been different. He can compartmentalize like no one I’ve ever seen.”

As Jones left the FIFO meeting, Jeff Wilke’s administrative assistant approached him with a telephone. Wilke was calling from vacation in Arizona, where he’d already heard about the confrontation. “He said, ‘Bruce, I want you to know I’m behind you one hundred percent. I’m completely confident in you. If you need anything, I’m on a golf course, and I’ll do whatever I can to help.’ ”

Jeff Wilke wasn’t always the softer counterbalance to Bezos. The pair visited each fulfillment center every fall in an annual ritual they called the whistle-stop tour. They spent a week on the road, one day in each FC, and used their commanding presence to focus attention on eliminating errors and improving processes. General managers, their palms sweaty and their pulses elevated, would present to the pair, laying out their emergency scenarios and the ways in which they had once again managed to wrangle thousands of temporary workers for the holidays. Wilke and Bezos dug into the details, asking their inhumanly prescient questions. It was both inspiring and terrifying. “Those guys could be brutal,” says Mark Mastandrea. “You had to be comfortable saying, ‘I don’t know; I’ll get back to you in a couple of hours,’ and then doing it. You could not ever bullshit or make stuff up. That would be the end.”

T. E. Mullane worked in Amazon’s logistics network for years, helping to open and manage new fulfillment centers. He opened a new FC in Chambersburg, Pennsylvania, and hosted Wilke on his first visit to the facility. Wilke, Mullane says, started the tour by quietly walking the inside perimeter of the building. In a corner of the building near the inbound docks, he encountered a disorganized pile
of nonconveyable products—too heavy to move on the conveyor belts. For one reason or another, workers had not been able to match the merchandise with order slips and so had left them in a heap.

After the walk, Wilke looked at Mullane and initiated a typical exchange. “T.E., do you know why I walked the perimeter? Tell me why.”

“To look for errors,” Mullane said.

“So why do the operators leave piles?”

“Because the process isn’t correct right now. It’s not precise and predictable.”

“Right. So you are going to take care of this?”

“Yes.”

The whistle-stop visits usually occurred midway through the fourth quarter of the year, just as the holiday season was ramping up but before the big shopping days known as Black Friday and Cyber Monday. During the big push itself, Wilke would return to Seattle but stay in touch with subordinates via his grueling daily conference calls.

The pressure during the holidays could get so intense that Wilke instituted a new ritual as a form of therapeutic release: primal screams. When a logistics executive or his team accomplished something significant, Wilke would allow the person or even the entire group to lean back, close their eyes, and yell into the phone at the tops of their lungs. “It was clearly a great release but the first time it almost blew my phone speaker,” Wilke says.

After the big push was over and the last box had shipped, typically on December 23, “you got to enjoy Christmas Day more than anybody else on the planet, because you had worked so hard to get there,” says Bert Wegner. Then planning would begin all over again.

In 2002, Jeff Wilke led the first significant effort to use Amazon’s now impressive size to exact concessions from a major business partner: the United Parcel Service. That year, Amazon’s contract with UPS was up for renewal, and the package-delivery giant, embroiled in a separate standoff with the Teamsters Union, did not appear to
be in the mood to grant more-favorable terms to the online upstart. Amazon wasn’t using Federal Express in any significant way at the time, and the primary alternative to UPS, the federally managed U.S. Postal Service, was not permitted to negotiate its rates. Amazon, it seemed, had no leverage.

But early that year, sensing an opportunity, Wilke approached Bruce Jones in Operations and asked him to begin cultivating FedEx. Over the course of six months, Jones and a team traveled frequently to FedEx’s headquarters in Memphis, integrating their systems and quietly ratcheting up the volume of packages. Amazon also increased its shipment injections with the U.S. Postal Service: company employees drove Amazon’s trucks to the post office and inserted packages directly into the flow of federal mail.

Wilke started his negotiations with UPS that summer in Louisville, ahead of a September 1 contract deadline. When UPS was predictably obstinate about deviating from its standard rate card, Wilke threatened to walk. UPS officials thought he was bluffing. Wilke called Jones in Seattle and said, “Bruce, turn them off.”

“In twelve hours, they went from millions of pieces [from Amazon] a day to a couple a day,” says Jones, who flew to Fernley to watch the fallout. The standoff lasted seventy-two hours and went unnoticed by customers and other outsiders. In Fernley, UPS representatives told Jones they knew Amazon couldn’t keep it up and predicted that FedEx would be overwhelmed. They were likely right. But before it came to that, UPS execs caved and gave Amazon discounted rates.

“Yes, we could have operated mostly without them,” Wilke says. “But it would have been very hard, very painful. They knew that. I didn’t want to leave them, I just wanted a fair price.” In the end, he got one, bringing home one of Amazon’s first bulk discounts and teaching the company an enduring lesson about the power of scale and the reality of Darwinian survival in the world of big business.

In 2003, Jeff Bezos came up with yet another way to frame his concept of Amazon. This time, it was for a group of buyers who were
leading the company’s charge into the new hard-lines categories, a group of products that included hardware, sporting goods, and electronics. Amazon, Bezos said, was the unstore.

At the time, Bezos had selected jewelry as the company’s next big opportunity. It was a tempting target: the products were small, the prices were high, and shipping was relatively cheap. He tapped retail managers Eric Broussard and Randy Miller to lead the effort. As usual, the executives Bezos chose to head the product’s sales had no prior experience selling that product.