Amazon Part 7: The Final Frontier

Published Apr 14, 2022, 4:00 AM

It was the end of an era. Jeff Bezos announced he was leaving the CEO role at Amazon and becoming executive chairman. But as one epic business story was ending, another was beginning. His handpicked successor, Andy Jassy, would have to defuse the company’s mounting confrontations with regulators and employees, including a rising labor union at a Staten Island warehouse.

Reporter Brad Stone chronicles what happened when Jeff Bezos’s feet left the ground – literally. One of the world’s wealthiest people wanted to spend more time on space travel, philanthropy, and a life of peripatetic indulgence with his new partner, Lauren Sanchez. But with pressing problems facing his company – and the planet – how serious is Bezos about deploying his vast resources and keen intellect to solving real problems? And 30 years after he started Amazon in a Seattle area garage, what will be Bezos and Amazon’s lasting legacy?

How do you conclude a legendary business story, the story of a company that started in a garage more than twenty seven years ago and every single day expands further into our neighborhoods, onto our screens, and throughout our lives. How do you wrap up the story of an iconic entrepreneur like Jeff Bezos who continues to dominate news headlines and stir controversy. As I was pondering this question, a funny thing happened. Jeff Bezos gave us an ending before most people expected, and some bombshell news this evening from Amazon. Jeff Bezos says he's stepping down as CEO. And this is one of those announcements that when it came through today, everyone went, oh, my gosh, what's happening. He's leading, He's leaving the company. As far as day to day operation, Jeff Bezos has announced that the quarter it was February second, two thousand twenty one, and an earnings press release, Amazon shocked the world it announced that its iconic founder was leaving the CEO role. That summer, he would become executive chairman and as protege. A guy named Andy Jassey who ran Amazon Web Services would step into the top spot. Beazo said he would remain actively involved in new projects at the company, but he also spoke of other priorities. He sent a memo to all Amazon employees. I asked my colleague to read a selection from it. Being a CEO of Amazon is a deep responsibility, and it is consuming. When you have a responsibility like that, it is hard to put attention on anything else. As executive chair, I will stay engaged in important Amazon initiatives, but also have the time and energy I need to focus on the Day One Fund, the Bezos Earth Fund, Blue Origin, the Washington Post, and my other passions. At the time, Basos seemingly at a high point. He was the richest person in the world. Amazon had surpassed to one trillion dollar market cap, he had moved past the infamous pr battles with the National Enquirer, and he even seemed to have gotten over any public embarrassment over his divorce. But now Bazos was talking about his interests in philanthropy and its pursuit of space exploration with this private company, Blue Origin. Things that Amazon were getting to be a lot less fun for Bazos, as we covered in previous episodes, Sellers in Amazon's marketplace were complaining bitterly about fraud and unfair competition from overseas companies. Delivery service providers which employed Amazon drivers were grumbling about how the company pressured them to work at unsafe speeds. Amazon had so many vocal critics in organized labor and on Capitol Hill, and they were weaponizing the exorbitant wealth of the tech giants against them. Here's Rhode Island Congressman David Cicillini concluding the Congressional hearings on big Tech and antitrust. When these laws were written in monopolists were men named Rockefeller and Carnegie. The names have changed, but the story is the same today that the men are named Zuckerberg, Cook, Chai, and Bezos. Their controls and marketplace allowed them to do whatever it took to crush independent businesses and expand their own power. This must end. Bezos had become an object of ire, even scorn, for his wealth, his power, and his life of extraordinary leisure. His successor, Andy Jassey, would at the very least present a humbler target for Amazon's critics. A handover made sense. So what was next for Amazon without its iconic leader, and what was next for Jeff Bezos now that he was free from the daily responsibility of running the company. He seemed to be in the midst of a profound midlife crisis. It involved space travel, a mega yacht, and going head to head with his ex wife in the realm of philanthropic giving. You're listening to Foundering, I'm your host, brad Stone. To begin the final act of our story. We started early with the COVID nineteen pandemic, with stores closing and people quarantining at home. Amazon sales sword. Many people depended on Amazon at this time when they were afraid to leave their homes, which put a terrible strain on its warehouses, endangered the lives of its workers, and kicked off a fresh and critical examination of Amazon's labor practices. We'll tell you that story after the break. Okay, Well, we hardly need to relive the early days of COVID. It's still burned into most of our memories. Out of growing concerns about the deadly coronavirus, a Washington State resident fell ill after returning from Huhan, China, where the outbreak began. Officials now the first confirmed COVID case in the US was actually in Seattle, Amazon's backyard. In early March, the majority of the workforce headed home for what would be a brutal extended quarantine. The human told during this period was horrific, of course, but so was the financial one. The International Monetary Fund estimated that COVID will cost the global economy over twelve point five trillion dollars. That's a staggering number, comparable to the impact of the Great Depression. But at Amazon, exactly the opposite happened. While engineers and other white color employees went home, workers in the fulfillment centers had to stay at their posts. Here's Derrick Palmer, a packer at a warehouse in Staten Island. You go home, all you see is coronavirus dis coronavirus that stay safe. When I get to Amazon, there was no talk about coronavirus at all. It was almost as like Amazon didn't know what to do, so they didn't address it at all, you know, which was very alarming, because when I'm working a lot of people will come to me and say, what are we gonna do about this virus? Like they already coming to me looking for a solution because they didn't have any trust in Amazon, and I myself was lost. I didn't I didn't know soon COVID wasn't only something that Derek saw on the news. His colleagues at Staten Island called out sick, and others showed up to work with symptoms. Derek worked with a guy named Chris Smalls, who would soon become the face of worker dissatisfaction with Amazon. Here's Chris, the colleague that I work hand in hand with um. She was sick, her eyes were bloodshot, read, she was walking around sluggish. She already been there for a number of days, for ten hours shifts, so I know she's been around hundreds of people already. That was the red flag. I said, you need to go home immediately until your results come back. So Chris tells his bosses that he thinks COVID is in the building, and he was surprised when management told him someone had already tested positive two weeks prior. They told me not to tell anybody that somebody was already positive. They didn't want to cause a panic. It didn't make any sense to me. You're telling me that somebody has been positive in the building two weeks prior. We had no idea. We don't know where they got it from, where it came from, how long it's been in the building. Chris comes out of the meeting and tells Derek what just happened. Derek said he was surprised. I just I got I was shocked. I was like, wait, they don't want workers they know, like, why wouldn't they want us to know about the first coronavirus case? And he was just like, look, man, I don't know. This is this is scary. Amazon was initially secretive about the cases in their warehouses because they wanted to avoid employee panic. A lot of big employers of frontline workers were in the same position, but this would blow back on Amazon in a big way. Late that March, Chris and Derek organized an employee walk out. So then the company told Chris to stay at home because he had possibly been in contact with an infected colleague, but he returned to the building anyway and he got fired. What happened next would turned Staten Island into the epicenter of controversy over Amazon's COVID response, and it would give hope to organize labor, which had been trying unsuccessfully to organize Amazon workers for years. While all this is happening, Jeff Bezos' leadership group had a meeting about the situation, and a transcript was leaked to Vice News. In it, Amazon's chief council David Zapolski, suggested that the company should focus attention on Chris Small's because he wasn't quote smart or articulate. I should note that Chris is black, and many critics saw the comment as racially charged. Here's Chris again. I'd never forget that moment. Now. Of course, the definitely upset me saying these racist remarks. You know, call it what it is. It's definitely a stigment of black community calling us not smart, articulate. The leaked transcript was a huge story. It gave people a rare look inside Amazon's leadership team, where the focus appeared to be on stopping a fledgling union movement rather than listening to the safety concerns of workers. Later, sapul Sky, the chief attorney, apologized for his comments. He said he hadn't known Chris was black. He told me, quote, I shouldn't have used that characterization for any Amazon employee. It was incredibly regrettable. As for Chris, he threw himself into union organizing. Ironically, Uh, they said to make me the face of the whole unionizing efforts against Amazon, And from that moment forward, that's when I really started to get involved in organizing on a larger scale nationwide. And now I'm trying to make them eat those words. As of this recording. In April, Chris and Derek led Amazon employees to victory in the union election in New York City. It marks organized labor's first ever foothold in Amazon in the US, historic wind that will now lead to an epic challenge negotiating a contract with the company to improve the lives of its workers. Almost two years to the day after he was fired by Amazon, Chris stood in front of a group of supporters and pop champagne history. Do you have a method for Jeff Beziness. Oh, we want to thank that basis were going to space because when he was up there Amazon. He's thanking Bezos for going to space because while the former CEO was distracted, Chris was building a union. This could mean big changes for Amazon unless they somehow get it overturned in court. The implication are huge unions can make it harder for Amazon to dictate things like the length of breaks and when employees are compelled to work extra time. This is the kind of flexibility that Amazon depends on to meet those unexpected surges and lulls and online shopping. It's a significant challenge to their business model. But back in Chris Small's also succeeded in drawing lots of attention to Amazon's pandemic response. Sixty minutes dispatched a crew to check it out, which is never a good sign. The journalist Leslie Stall interviewed Chris as well as Dave Clark, the executive who built the Amazon transportation network and now ran the entire retail part of the company. So, how many positive cases have you discovered at Amazon? The actual sort of total number case isn't particularly useful because it's relative to the size of the building and then the overall community infection rates. So you you don't know, or you're just not going to tell us how many cases have been discovered. I don't have I mean, we know, I don't have the number right on me at this moment because it's not a particularly useful number. It wasn't a good look people wanted to know what was going on inside Amazon's warehouses. Finally, the company did reveal its COVID numbers later that year. About twenty of its one point four million workers had gotten sick by the fall, and that number didn't include the drivers, who are contractors not employees. Amazon argued this was lower than the infection right and surrounding communities, and that many of these employees could have gotten ill at home instead of work. In August, and Amazon spokesperson gave us this statement, quote, we are monitoring the situation closely, and we'll continue to follow local government guidance and work closely with leading medical healthcare professionals. Now, I spent a lot of time reporting on Amazon's pandemic response from my book, and I think the problem was they had to competing interests serving customers and protecting workers. They did institute safety precautions in the warehouses, like social distancing and COVID testing, but it was really impossible to do both, particularly in the early days of the pandemic, and because serving customers has always been Amazon's guiding principle. Again, it came first. I remember feeling surprised by how engaged Jeff Bezos was from his ranch in West Texas. He led weekly meetings devoted to COVID and employee safety. Amazon hired epidemiologists to guide them through the crisis. Bezos wanted to convey the image of a CEO in control and sympathetic to the plight of employees. In April, he visited an Amazon warehouse and a Whole Foods market in Dallas, his first public visit to the online in years. Nice to be decided out, thank you, But this was a pre battle that Amazon really couldn't win. Amazon sales jumped during the crisis. Amazon's market capitalization increased by about seven hundred billion dollars, and Jeff bezos personal net worth rose by about seventy five billion. So at a time when people in businesses were suffering and employees were panicking, Amazon and Bezos were thriving, it felt unsettling that the very thing that was shutting down the world was filling the company's coffers. Navigating this pr maelstrom was one of the biggest challenges Bezos had ever faced, and just eight months later he decided to step down from the CEO job. I don't think the pandemic is necessarily the reason he left, but certainly it was another illustration that running the company was getting to be a lot less fun, and Bezos did want to have fun. He wanted to have adventures. He wanted to embrace the kind of risk that might scare the shareholders of a big, publicly traded company like Amazon. He wanted to go to space. Will visit Van Horn, Texas for Jeff Bezos is highly controversial trip to space Next. In July, my colleague Spencer Soper, and I traveled to Van Horn, Texas. It's a small town of about two thousand people. When you drive around, you see trailer parks and roadside motels. Bezos owns a massive ranch about forty minutes away. It's one thousand acres of mountains and brush that resembles his grandfather's Texas ranch where he spent idyllic summers as a child. He secretly scouted this land back in two thousand three, and then later announced his plan to a local newspaper. He wanted to build a launch site on the property for his private space company, Blue Origin. Spencer and I were in Van Horn to witness something pretty wild yep. Just a few weeks after he formally departed the CEO job at Amazon. Bezos was leaving Earth. Here's Spencer, who brought along a microphone to document this unusual event. Just getting checked into Van Horn, Texas. And uh, folks in town, you know, some are pretty stoked about it, and some, you know, man not so much. You know, so say they'd rather have have rain than a than than a spaceship because they've been dealing with some drought for a while. Many of the townspeople seemed completely unaware of this billionaire space project. Spencer met Barbara while he was pumping gas. Bezos people know much about him down here. Um, I'm not really in not that I'm aware of. Do you do you shop on Amazon? Yes? I do? So he runs that company, he founded it. Yeah, really, Yeah, that's that's the guy going to space. He's the guy who found it, that clown and okay, well sharing how much I know that's how he made his money. Wow. Spencer also caught up with local sheriff Arvin West the night before the launch at a small canteena outside Van Horn. The sheriff, who had other things on his mind, was not impressed. Yeah, I don't know, it did never blew my scard up. So one never no big deal to me. Well, the billionaires are going to space, maybe they'll stay there. There's actually a petition say don't let him back one thing about it. We don't have to worry about him checking their green card coming in. They only even do that for the border. Well that's one guy's opinion. Anyway, we were not alone in van Horn that week. Reporters and satellite TV trucks descended on the scene rocket to make for pretty compelling television. And there was always the possibility that Bezos sent his colleagues might die in a fiery crash. Here's a pretty dark confession. I actually had to pre write his obituary just in case. Here's Spencer again. So Jeff Bezos will be fulfilling his boyhood drained today. Uh, he's fifty seven now. He said he's been dreaming about space travel since he was five years old, and this is basically an expedition he can take due to his wealth created from founding Amazon dot Com, which is now the world's largest retailer. Today's rocket won't go into orbit. It will it will go into a suborbital space, letting the astronauts experience a few minutes of weightlessness. At two in the morning, Spencer and I met up with the other journalists at the local community center. Rental car headlights glowed in the parking lot. Blue Origin had been working on the New Shepherd rocket for about fifteen years and conducted fifteen unmanned flights. This was the first one with people on board. Bezos was a guinea pig of sorts, along with three others, his younger brother Mark, an astronaut trainee in her eighties, and an eighteen year old July actually turned out to be a frenzied month for the space tourism industry. Bezos's launch was nine days after Richard Branson had his launch with Virgin Galactic. A key goal of space pioneers like Bezos, Brandson, and Elon Musk is creating spaceships that can be reused like airplanes. Rather than plunging into the ocean, the rocket booster lands upright and can be flown over and over again. This lowers the cost of space travel and makes the commercialization and exploration of space more feasible. New Shepherd took off in a little after eight am, Texas time. Watching it watching any rocket launch is a pretty profound experience. You think of human potential, incredible scientific achievement, and of course the safety of the people on board. I just have to add the new Shepherd is extraordinarily phallic looking. Five four command engines start to one. Of course, Basos and his crew landed safely. After the launch, we got on busses again to go to another facility for the post trip press conference. A Country Western soundtrack was playing on a loop, and I remember thinking how choreographed the entire day was, Like Bezos wanted to conjure images of Clint Eastward and John Wayne. Bezos showed up in a cowboy hat. Reporters crammed onto folded chairs on one side of the root and the astronauts family sat on the other side, and how it felt. Oh my god, My expectations were high and they were dramatically exceeded. But when you get up above the atmosphere, what you see is it's actually incredibly thin. It's this tiny, little, tragile thing, and as we move about the planet, we're damaging it. That's a very profound It's one thing to recognize that intellectually, it's another thing to actually see with your own eyes. This was the most excited I've ever seen Bass. He was almost like a kid. But he made one comment that ruffled some feathers. He was trying to make a joke while conveying gratitude toward the people who facilitated Amazon's rise, which created his fortune. I also, I want to thank every Amazon employee and every Amazon customer, because you guys paid for all this. This is what Christmas was talking about after his union win. We played this tape in a previous episode. Remember an Amazon delivery person said he quit when he heard it because Azos said this just months after the controversies around Amazon's pandemic response and the dangerous to warehouse workers. It went over very poorly. Afterwards, we had a chance to go to the launch site and snap more photos. Then Bezos made a surprise appearance. He was on a convoy of electric trucks made by Ribban, a startup that Amazon invested in and ordered one hundred thousand electric delivery trucks from. This was a victory lap and he was clearly relishing the attention. Reporters shouted questions at Bezos, so Bezos just showed up with the other three astronauts and they're walking onto the landing pad. How soon do you want to go back? It looks like it's I'm just gonna cost me. In the middle of the scrum, Spencer blessed him, took his shot. See little guys, thank you. What a great day. Hey, give us an update on the billion in stock you got itself to bankroll it. We heard that one the last four years ago. He looked at me, got into the car, shut the door, and drove off. You know, I think there was a slim pickens on questions today. Bezos was driving away from the press, but he wasn't leaving the public stage. This was his future, not conducting company meetings in Seattle conference rooms. In fact, I thought the most revealing thing he said at the press conference was when he was asked how he was now going to focus as time. Yes, so I'm gonna split my time between Blue Origin and the Bezos Earth Fund, those two things, and there's gonna be a third thing, um and maybe a fourth thing, but I don't know what those are yet. I'm not very good at doing one thing. Did you notice he didn't mention Amazon? I think to surprise some people back in Seattle. Bezos's feet were leaving the earth literally and kind of figuratively too. He now belonged to a different orbit of space dreams, celebrity global travel with his girlfriend and their life of extraordinary wealth. As for Amazon, well, it was now Andy Jassy's company. The deputy would have to find his own way. We'll tell that story next. So Jeff Bezos announced he was stepping down from the CEO role, and I remember a lot of commentators assuming he's going to stay involved. Of course, Bezos was a famous micromanager. It just seemed impossible that he would change a style and be hands off at the company he nurtured for two decades. But after the space launch, Bezos devoted himself to his charity. He also went on vacation and popped up in places like Hawaii, Greece, Bora, Bora, and Mexico. It became pretty clear, for the first time ever, Amazon was going to have to make its way without its founder. Andy Jassey was the new guy in charge. I've known Jasse for years and followed his career. He's an impressive executive. He built a WS into the most profitable and fastest growing part of Amazon, and he learned directly from Bezos, in part by following him around everywhere during Amazon's early days as his chief of staff. But as Amazon made its way through the COVID crisis, it became apparent that the company needed something more, someone who could mend its relationship with employees and fix its reputation among regulators, the press, and customers. Jesse has tried to thread this needle. A few days before he took over Amazon, the company added two new entries to its list of leadership principles. These are the codes that govern all decisions like who gets hired and promoted. The new principles were strive to be Earth's best employer, and success and scale, bring broad responsibility. These are some pretty lofty goals. In other words, Amazon was finally acknowledging its critics for its first twenty seven years. Satisfying the almighty customer had been the company's first and only north star. Now it was admitting that workers were another crucial constituency. Here's Jasse speaking at an internal Amazon event called Deep Dive in July. So, if I start with um strive to be or It's best employer, I think that we always felt like it was self evident that we cared about employees, and that we cared about building the best place to work, and we cared about our culture. Uh but you know, as we step back, we we kind of thought it made sense to be a little bit more intentional here at this point and to make it clearer to employees um that this was something we were going to focus on. But keeping all those workers happy and motivated, particularly amid the Great Resignation, was going to be costly. In the span of a few months, the company raised a starting hourly wage for new hires to an average eighteen dollars an hour. It also doubled base pay for new office and tech workers. As a result, Amazon's expenses went way up, and as the pandemic faded, shopper started to return to stores. So Amazon stock price started to stagnate. Yeah, Amazon shares sliding. Of course, online sales not that great, weakest growth since the start of the pandemic, so huge boost that they got starting to fade. Another challenge is continuing to invent new products. Remember Alexa, the Kindle, and Aws pretty much sprang from Jeff Bezos's head. It remains to be seen if Jaz sees as an inventor at anywhere near the same level. It's the Amazon Astro, kind of like an Alexa on wheels that can follow you around the house. Early in Jesse's tenure, Amazon announced a one dollar rolling home robot that uses Alexa called Astro, but strangely, as of this recording, Amazon really hasn't started selling it yet. Another thing to watch is whether Jasse pushes Amazon further into the healthcare industry. The global healthcare market is huge and estimated twelve trillion dollars. It's also pretty technologically backwards, so it's a big opportunity. But that's still really hypothetical. So can Jasse pull it off, impress Amazon investors once again and right the next chapter of this epic business story. If he does, it probably won't be due to guidance from his mentor. By the beginning of it really felt like Bezos had moved on. He was fifty eight after the rocket launch. He bought a massive vacation property on Maui for seventy eight million. He built one of the largest yachts in the world, which cost an estimated five hundred million. He also sent TV personality Michael Strahan and Captain Kirk himself William Shatner on the same Blue Origin rocket to the edge of space. The most profound experience. I'm so filled with emotion about what just happened. I I just it's extraordinary. Shatner clearly enjoyed the ride, but there was a lot of mockery of these launches, particularly from late night comedians who couldn't get over the rockets conspicuously phallic shape. Captain, it's a giantistical Meanwhile, basis trying to improve his image by drawing attention to his increased philanthropic activities. Here he is in the fall at the when Climate conference. Nature provides, it gives us life. It is beautiful, but it is also fragile. I was reminded of this when I went into space with Blue Origin. Bezos earmarked ten billion dollars to fighting climate change. He was the sixteenth biggest philanthropist according to Forbes. Now, whatever you think of that ranking, it was significantly overshadowed by the person at number five, his ex wife, Mackenzie. She changed her last name from Bezos to Scott after the divorce. Mackenzie said she wanted to give her money away as fast as possible, and alongside her donations, she published thoughtful online essays where she almost seemed to be trolling her ex husband. Here's my colleague reading a particularly pointed passage. We are all attempting to give away a fortune that was enabled by systems in need of change. In this effort, we are governed by a humbling belief that it would be better if disproportionate wealth we're not concentrated in a small number of hands, and that the solutions are best designed and implemented by others. It's actually quite savage. She's implying that her sixty billion dollar fortune and divorce money came from a rigged system rather than Bezos's ingenuity and inventiveness, and that the uber wealthy are the wrong people to fix the world's problems. She almost seemed to be citing with her ex husband's fiercest critics. It's funny. Back in the day, Beazos always praised Mackenzie's intelligence. He'd like to say she was smart enough to get him out of a third world jail. Now Here, she was effectively relegating him to a new sort of prison, one built on a critique that his fortune was earned in an unfair system. If Bezos cared about this, he never showed it. He became prolific on Instagram documenting a new life. He was frolicking in Hawaii with Lauren Sanchez, right in luxury yachts, partying with other celebrities like Leonardo DiCaprio and The Rock and in the stance of the super Bowl. He looked like he was having a great time. To a long time Bezos watcher, I have to say this was just so surprising. Bezos had started his technology career as a focused, kind of nerdy business leader. He was disciplined, he stayed out of the limelight, and he evangelized long term thinking, not living in the moment. Remember way back when Bezos explained his regret minimization framework, it was all about looking back with pride and your accomplishments when you're eighty. And he said he didn't believe in carpe d M, making the most of the present day with a little thought of the future. It was not carpe d M. It was not wine women in song. No, no, no no, I don't go in for carpet d M. I go in for regret minimization framework. Absolutely well, Bezo seemed to have him race Carbadum, he ended up as an entirely different person. I guess in some ways it's fitting. The Amazon story is, after all, the story of dramatic change, how one company transformed the way we all shop, read, and even the character of our communities, So it makes sense that this is also the story of how one person, Jeff Bezos, was also changed. It's interesting that so many people are disappointed by this current incarnation of Bezos. I feel a little at down at times. Two. I think that those of us who admired him for his inventiveness or his business acumen feel that he's kind of wasting his talent. His extreme wealth almost amounts to having a superpower, and I think we want to see our superheroes use their powers to save the world, not to fly around to vacation spots or to retreat to a mega yacht. Maybe Bezos will recommit to Amazon one day, maybe Andy Jassey won't need his help, or maybe Bezos will apply his keen intellect and deep resources to not only go into space, but to really getting into the trenches in the fight against climate change with the same success as he's had building Amazon. Whatever you think of Jeff Bezos and his greatest creation, we should probably all be rooting for him to float back down to Earth. This season of Foundering was hosted by me brad Stone. Sean When is our executive producer. Spencer Sober contributed reporting to this episode. Ray Mondo is our audio engineer. Molly Nugent is our associate producer, Mark Million and vandermay Robin Agello and Molly Shoots our story editors. Special thanks to Mark Bergen, Eileena Pang, and Brodie Ford France. Jsica Levi is the head of Bloomberg Podcasts. Be sure to subscribe and if you like our show Leaver review. Most importantly, tell your friends see you next season.

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