The Everything Store: Jeff Bezos and the Age of Amazon (46 page)

Eventually, they compromised. E-mail marketing for certain categories such as health and personal care was terminated altogether. The company also decided to build a central filtering tool to ensure that category managers could no longer promote sensitive products, so matters of etiquette were not subject to personal taste. E-mail marketing lived to fight another day.

The story highlighted one of the contradictions of life inside
Amazon. Long past the era of using the editorial judgment of employees to drive changes to the website, the company relies on metrics to make almost every important decision, such as what features to introduce or kill. Yet random customer anecdotes, the opposite of cold, hard data, also carry tremendous weight and can change Amazon policy. If one customer has a bad experience, Bezos often assumes it reflects a larger problem and escalates the resolution of the matter inside his company with a question mark.

Many Amazon employees are all too familiar with these fire drills and find them disruptive. “Why are entire teams required to drop everything on a dime to respond to a question mark escalation?” an employee once asked at one of the company’s all-hands meetings, which by 2011 were being held in Seattle’s KeyArena, a basketball coliseum with more than seventeen thousand seats.

“Every anecdote from a customer matters,” Jeff Wilke answered. “We research each of them because they tell us something about our metrics and processes. It’s an audit that is done for us by our customers. We treat them as precious sources of information.”

Amazon styles itself as highly decentralized and promises that new employees can make decisions independently. But Bezos is capable of stopping any process dead in its tracks if it creates a problem for even a single customer. In the twelve months after the lube crisis, Bezos made it his personal mission to clean up the e-mail channel. Employees of that department suddenly found themselves in the hottest possible spot at Amazon: under the withering eye of the founder himself.

Despite the scars and occasional bouts of post-traumatic stress disorder, former Amazon employees often consider their time at the company the most productive of their careers. Their colleagues were smart, the work was challenging, and frequent lateral movement between departments offered constant opportunities for learning. “Everybody knows how hard it is and chooses to be there,” says Faisal Masud, who spent five years in the retail business. “You are learning constantly and the pace of innovation is thrilling. I filed
patents; I innovated. There is a fierce competitiveness in everything you do.”

But some also express anguish about their experience. Bezos says the company attracts a certain kind of person who likes to pioneer and invent, but former employees frequently complain that Amazon has the bureaucracy of a big company with the infrastructure and pace of a startup, with lots of duplicate efforts and poor communication that makes it difficult to get things done. The people who do well at Amazon are often those who thrive in an adversarial atmosphere with almost constant friction. Bezos abhors what he calls “social cohesion,” the natural impulse to seek consensus. He’d rather his minions battled it out in arguments backed by numbers and passion, and he has codified this approach in one of Amazon’s fourteen leadership principles—the company’s highly prized values that are often discussed and inculcated into new hires.
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Have Backbone; Disagree and Commit

Leaders are obligated to respectfully challenge decisions when they disagree, even when doing so is uncomfortable or exhausting. Leaders have conviction and are tenacious. They do not compromise for the sake of social cohesion. Once a decision is determined, they commit wholly.

Some employees love this confrontational culture and find they can’t work effectively anywhere else. The professional networking site LinkedIn is full of executives who left Amazon and then returned. Inside the company, this is referred to as a boomerang.

But other escapees call Amazon’s internal environment a “gladiator culture” and wouldn’t think of returning. There are many who last less than two years. “It’s a weird mix of a startup that is trying to be super corporate and a corporation that is trying hard to still be a startup,” says Jenny Dibble, who spent five months there as a marketing manager in 2011, trying, ineffectively, to get the company to use more social-media tools. She found her bosses were not particularly receptive to her ideas and that the long hours were
incompatible with raising a family. “It was not a friendly environment,” she says.

Even leaving Amazon can be a combative process—the company is not above sending letters threatening legal action if an employee takes a similar job at a competitor. It’s more evidence of that “fierce competitiveness” mentioned by Faisal Masud, who left Amazon for eBay in 2010 and received such a legal threat (eBay settled the matter privately). This perpetual exodus of employees hardly seems to hurt Amazon, though. The company, aided by the appeal of its steadily increasing stock price, has become an accomplished recruiter of new talent. In 2012 alone, Amazon’s ranks swelled to 88,400 full-time and part-time time employees, up 57 percent from the year before.

The compensation packages at Amazon are designed to minimize the cost to the company and maximize the chances that employees will stick around through the predictable adversity that comes with joining the firm. New hires are given an industry-average base salary, a signing bonus spread over two years, and a grant of restricted stock units over four years. But unlike other technology companies, such as Google and Microsoft, which spread out their stock grants evenly, Amazon backloads the grant toward the end of the four-year period. Employees typically get 5 percent of their shares at the end of their first year, 15 percent their second year, and then 20 percent every six months over the final two years. Ensuing grants vest over two years and are also backloaded, to ensure that employees keep working hard and are never inclined to coast.

Managers in departments of fifty people or more are required to “top-grade” their subordinates along a curve and must dismiss the least effective performers. As a result of this ongoing examination, many Amazon employees live in perpetual fear. A common experience among Amazon workers is a feeling of genuine surprise when one receives a good performance review. Managers are so parsimonious with compliments that underlings tend to spend their days anticipating their termination.

There is little in the way of perks or unexpected performance
bonuses at Amazon, though it has come along since the 1990s, when Bezos refused that early suggestion to give employees bus passes because he didn’t want them to feel pressure to leave at a reasonable hour. Employees now get ORCA cards that entitle them to free rides on Seattle’s regional transit system. Parking at the company’s offices in South Lake Union costs $220 a month and Amazon reimburses employees—for $180.

Still, evidence of the company’s constitutional frugality is everywhere. Conference-room tables are a collection of blond-wood door-desks shoved together side by side. The vending machines take credit cards, and food in the company cafeterias is not subsidized. When a new hire joins the company, he gets a backpack with a power adapter, a laptop dock, and some orientation materials. When someone resigns, he is asked to hand in all that equipment—including the backpack. The company is constantly searching for ways to reduce costs and pass on those savings to customers in the form of lower prices. This also is embedded in the sacrosanct leadership principles:

Frugality

We try not to spend money on things that don’t matter to customers. Frugality breeds resourcefulness, self-sufficiency and invention. There are no extra points for headcount, budget size or fixed expense.

All of this comes from Bezos himself. Amazon’s values are his business principles, molded through two decades of surviving in the thin atmosphere of low profit margins and fierce skepticism from the outside world. In a way, the entire company is scaffolding built around his brain—an amplification machine meant to disseminate his ingenuity and drive across the greatest possible radius. “It’s scaffolding to magnify the thinking embodied by Jeff, to the greatest extent possible,” says Jeff Wilke when I bounce that theory off him. “Jeff was learning as he went along. He learned things from each of us who had expertise and incorporated the best pieces into his
mental model. Now everyone is expected to think as much as they can like Jeff.”

Bezos’s top executives are always modeling Bezos-like behavior. In the fall of 2012, I had dinner with Diego Piacentini at La Spiga, his favorite Italian restaurant in Seattle’s Capitol Hill neighborhood. He graciously insisted on picking up the tab, and after paying, he almost theatrically tore up the receipt. “The company is not paying for this,” he said.

The rhythms of Amazon are the rhythms of Bezos, and its customs are closely tuned to how he prefers to process information and maximize his time. He personally runs the biannual operating review periods for the entire company, dubbed OP1 (done over the summer) and OP2 (done after the holiday season). Teams work intensely for months preparing for these sessions, drawing up six-page documents that spell out their plans for the year ahead. A few years ago, the company refined this process further to make the narratives more easily digestible for Bezos and other S Team members, who cycle through many topics during these reviews. Now every document includes at the top of the page a list of a few rules, called tenets, the principles for each group that guide the hard decisions and allow them all to move fast, without constant supervision.

Bezos is like a chess master playing countless games simultaneously, with the boards organized in such a way that he can efficiently tend to each match.

Some of these chess games get more attention than others. Bezos spends more time on Amazon’s newer businesses, such as Amazon Web Services, the company’s streaming-video initiative, and, in particular, the Kindle and Kindle Fire efforts. (“I don’t think you can even fart in the Kindle building without Jeff’s approval,” quipped one longtime executive.) In these divisions, stress levels are high and any semblance of balance between work and home falls by the wayside.

Once a week, usually on Tuesday, various departments at Amazon meet with their managers to review long spreadsheets of the data important to their business. Customer anecdotes have no place
at these meetings. The numbers alone are a proxy for what is working and what is broken, how customers are behaving, and, ultimately, how well the company overall is performing.

The meetings can be intense and intimidating. “This is what, for employees, is so absolutely scary and impressive about the executive team. They force you to look at the numbers and answer every single question about why specific things happened,” says Dave Cotter, who spent four years at Amazon as a general manager in various divisions. “Because Amazon has so much volume, it’s a way to make very quick decisions and not get into subjective debates. The data doesn’t lie.”

The metrics meetings culminate with the weekly business review every Wednesday, one of the most important rituals at Amazon, run by Wilke. Sixty managers in the retail business gather in one room to review their departments, share data about defects and inventory turns, and talk about forecasts and the complex interactions among different parts of the company.

Bezos does not attend these meetings. But he can always make his presence felt anywhere in the company. After the lubricant crisis, for example, e-mail marketing fell squarely under his purview. He carefully monitored efforts to filter the kinds of messages that could be sent to customers and he tried to think about the challenge of e-mail outreach in fresh ways. Then, in late 2011, he had what he considered to be a significant new idea.

Bezos is a fan of e-mail newsletters such as VSL.com, a daily assortment of cultural tidbits from the Web, and Cool Tools, a compendium of technology tips and product reviews written by Kevin Kelly, a founding editor of
Wired.
Both e-mails are short, well written, and informative. Perhaps, Bezos reasoned, Amazon should be sending a single well-crafted e-mail every week—a short digital magazine—instead of a succession of bland, algorithm-generated marketing pitches. He asked marketing vice president Steve Shure to explore the idea.

Shure formed a team and they spent two months coming up with trial concepts. Bezos gave them little direction, but their broad
mandate was to create an entirely new type of e-mail for customers—the kind of personal voice that Amazon had lost more than ten years ago, when it downsized its editorial division after the acrimonious intramural competition with P13N and Amabot.

From late 2011 through early 2012, Shure’s group presented a variety of concepts to Bezos, including one that revolved around celebrity Q and As and another that highlighted interesting historical facts about products on the site. The project never progressed—it fared poorly in tests with customers—but several participants remember the process as being particularly excruciating. In one meeting, Bezos quietly thumbed through the mockups, styled in the customary Amazon format of a press release, as everyone waited in tense, edge-of-the-seat silence. Then he tore the documents apart. “Here’s the problem with this, I’m already bored,” he said. He seemed to like the last concept the most, which suggested profiling a selection of products on the site that were suddenly hot, like Guy Fawkes masks and CDs by the Grammy-winning British singer Adele. “But the headlines need to be punchier,” he told the group, which included the writers of the material. “And some of this is just bad writing. If you were doing this as a blogger, you would starve.”

Finally he turned his attention to Shure, the marketing vice president, who, like so many other marketing vice presidents throughout the company’s history, was a frequent target.

“Steve, why haven’t I seen anything on this in three months?”

“Well, I had to find an editor and work through mockups.”