Behind the Bastards - Part Two: Jeff Bezos and the Birth of Amazon

Episode Date: December 19, 2021

Robert is joined again by Jake Hanrahan to continue to discuss Amazon founder, Jeff Bezos.For more about Jeff Bezos and Amazon, check out Megacorp. Learn more about your ad-choices at https://www.iheartpodcastnetwork.comSee omnystudio.com/listener for privacy information.

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Listen to The Last Soviet on the iHeart Radio app, Apple Podcast, or wherever you get your podcasts. Hey everybody, Robert Evans here again. As I stated last time, this episode ran very well. As I stated last time, this episode ran very long, so we split it into two parts. I'm going to just dive in to the episode with Jake and I right now, so thanks for listening, watching, if you can see sound. In any case, here's more Bezos. Jeff had been a demanding taskmaster to his employees up to this point,

but he also sounds like he was a reasonably well-liked boss. The complaints you hear later about him, he's very strict, he's very dedicated, he wants a lot of work out of you. I haven't heard anything like allegations that he was abusive at this point, and that's because I think he's not really in charge. He's not running the company. He's got people above him, and I think that tempers some of what will later become his worst attributes as a boss.

For some time, Jeff had been talking out different business ideas with his mentor, David Shaw. Many of these ideas were financed focused, but one of the ideas they would talk about was what they called the everything store. Now, the internet was young back then, and it was still very small, but both men were enough future-focused to understand its potential, and the fact that an online company that could sell products directly from manufacturer to consumer could save a fortune on store space and, among other things, an undercut retail chains. This was not a revolutionary idea.

I'm sure a number of people realized this was going to happen at some point, but Jeff and David are talking about it very early on, and Jeff did come up with one innovative plan for how this store would work. His idea was that it should be driven by customer reviews. Any customer should be able to leave a review, and all of those reviews should be collected, and people buying should be shown products based on which stuff is best reviewed. Now, this had never been done on a large scale.

It's how the whole internet works now, and Jeff is really like kind of the first person who commits to doing this anywhere in internet commerce. And that's really when you're looking at kind of what set Amazon initially apart from other attempts. That was a big part of it. For a while, the everything store was a fun thought experiment for Shaw, but Bezos grew obsessed with it. In his free time, he would read analyses of the growth of the early internet, and in 1994, he came across information that web activity had surged by 230,000% in the last year.

So, he thought quite accurately that someone could make a shitload of money on the internet with a growth percentage like that. So, he decides to quit his high-paying job, because he's already very successful. He could have stayed at D.E. Shaw for the rest of his career, and almost certainly would have been a multi-millionaire, you know? Would have been a very successful career, but he wants more than that. So, he quits his job, kind of baffles his mentor,

and he and his new wife, McKinsey Flight of Texas, grab a shit-car from some family members and drive to California. McKinsey drives while Jeff spends the whole time, like putting together spreadsheets and reading different sort of business laws and figuring out how he's going to make this company he wants to form work. One of the things he finds out on his drive is that due to a 1992 Supreme Court case, merchants did not have to collect sales tax in states they didn't operate in. And this is kind of the loophole that makes early Amazon.com possible.

The fact that, like, again, because a big part of it is that they can really undercut prices. Part of that is we're not paying for a brick-and-mortar store, so we don't have to pay for, like, employees to stock shit. We don't have to pay for storage space. We can sell direct from the manufacturer. But part of it is due that is because if you're an online retailer in this period, you don't have to collect sales tax from any state but the one you're in. So if people who live in the state that your business is operated in buy from you,

they have to pay sales tax, but nobody else does, which, again, means you can undercut everybody else. So Jeff had initially picked California as the place to launch Amazon.com, but when he learns about this law, he moves to Washington state instead. And he picks Washington because, number one, no income tax in Washington. I think that has an impact on it. Number two, and I think the main reason he picks it, is because it has really good infrastructure.

Microsoft is based near Seattle, so it has the kind of infrastructure you need to create a tech company, but almost no one lives in Washington. The whole Pacific Northwest is very, like, sparsely populated, so it meant that, like, the least number of customers possible would have to pay sales tax for Amazon products, and no one in the other 49 states has to pay. The initial plan was to sell books, because virtually all books

came from one or two distribution companies who already had good distribution infrastructure, and because books are comparatively simple to ship and store. The plan from the beginning, but from Jeff, was to make money selling a single product online, and then branch out, eventually to selling everything. The first name for what would be called Amazon was very stupid. Jeff wanted to call it Cadabra Incorporated.

Like, Abracadabra? Yeah, that was his... He was really married to this name for a while, which is terrible, and a lot of his friends tell him it's a bad name. There's kind of this, like, early journey where everyone around Jeff is being like, hey, how about this is a name? How about this is a name? Like, one of his friends suggests, why don't we just call it MakeItSo.com based on, like, Captain Picard,

whose TNG is on the air at the point, and that's, like, Jeff's favorite Star Trek character. I think they decide not to do that, because it would be copyright infringement. So they stick with Cadabra, even though everyone's trying to talk him out of it. He and McKinsey get to Seattle. They rent a three-bedroom home,

which is their first headquarters. They operate it out of the garage, and they immediately set to work starting a business. Their first lawyer, the first lawyer for what becomes Amazon, is the one who finally talks Jeff out of Cadabra Incorporated as a name, and he does so by pointing out that over the phone, it sounds like saying, Cadabra. And he's like, people, that's not going to do good for you.

That's a good point. Yeah, that's not a bad point. Sitting together in their living room, McKinsey and Jeff Bezos registered a number of domains with potential names. Awake.com, Browse.com, Bookmall.com. The name they kept coming back to was Relentless.com. They really like this name. Jeff loves that name.

I think he prefers it to Amazon. I believe it is still his favorite possible name for his company. Relentless. Relentless. That's what he thinks is the best possible name for Amazon, I think. Nah, that's rubbish, man. I think it's shit. I think Amazon's a fine name for a company.

Yeah, it's fine. Yeah, Relentless is a bad name. But Jeff never is able to really let this go. He buys the Relentless.com domain in 1994. He really tries to make this happen. Again, his friends kind of come together, friends and early employees, and eventually they're like, it's creepy, Jeff.

It's a creepy name for your store. People are not going, it's not going to be good for us. And Amazon, he finally gets convinced to pick Amazon. The reason they decide on it is that it kind of speaks to his, how grand his goal is, because the Amazon's the biggest river in the world, right? But it also is, it's a placid name. It's not a name that scares anybody.

But Jeff never gives up on Relentless.com entirely. And in fact, Jake, if you open a browser right now and you type in Relentless.com, it'll take you to Amazon. Relentless.com. Jesus Christ, it does as well. Right, yeah. What is wrong with this guy? It couldn't even give it to the drinks company, just like nope.

Yeah, and it's one of those things, it's what we've been kind of coming back to and back to. He's never really changed as a person. Like, everything about him today is the same as when he was in fucking sixth grade pretty much. And obviously, he wanted Relentless.com to be the name. I don't think he ever gets over that. Yeah, Relentless. It's relentlessenergy.com.

That's so long, man. Surely he could sell it to them. Another one of Amazon's victims, that energy drink company. You know who else is a victim of Amazon, Jeff? Well, not Jeff, Jake. The products and services that support this podcast. Lovely. Yeah, actually, I'm sure a number of them sell products on Amazon,

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Listen to CSI on trial on the iHeart Radio app, Apple Podcast, or wherever you get your podcasts. We are back. So the same month that Jeff bought the relentless.com domain, he drove down to Portland, Oregon to take a four day course on bookselling sponsored by the American Booksellers Association. He learned the ropes of the business and soon they were off selling books at a slow pace at first. And Jeff and his first couple of employees are like physically, because the way it works is they're buying books from one of the two distributors who sells books to all the bookstores. Like they get an order, they order the book from the distributor and then the distributor ships the book to them and then they mail the book to the customer, right? They don't have a warehouse, they have a garage, so like they're getting books as they're ordered and they're painstakingly mailing out each book themselves. And Jeff is, to his credit, involved in all of the shit work from the start, like he's putting stuff in packages, he's picking up deliveries, he's mailing them off.

And so is McKinsey and so are they, like they're all kind of doing everything, right? All of the early employees are doing every part of running the business. There's no, there's no like, there's no warehouse staff, right? Like Jeff is the warehouse and so is McKinsey, like everyone is everything in early Amazon. That said, when it came to funding Amazon, other people did most of the heavy lifting. Amazon did start with $10,000 that Jeff Bezos had saved up himself and another $84,000 in what are generally referred to as interest free loans. Now, a lot of this company, this money actually came from his first employees. He would basically, when he was bringing, he would, he was hiring people he'd met elsewhere in business and saying like, look, you come to this company, take a pay cut.

You pay, I'll let you buy stock now, right? And like that's a big part of how he found the early company. So for example, his first employee is a guy named Shell Kaplan, who many consider the co-founder of the company and who Jeff later kind of betrays. Shell was Jeff's good friend and he joins Amazon because he believes in the vision of the company so much that he takes a 50% pay cut and he pays $5,000 to buy stock when he joins in order to help fund the company. Oh, he must be fucking loaded now. Oh, yeah. I mean, he's, yes, he did very, very well. And in fact, he considered buying more but didn't want to gamble that much. And it's like, I mean, it worked out well for him. Jeff's parents were the first angel investors he had dumping $100,000 of their oil money into the venture in early 1995.

Jeff told his parents there was a 70% chance they'd lose it all, explaining, I want you to know what the risks are because I still want to come home for Thanksgiving if this doesn't work. Which is at least respectable. From the beginning, Amazon's promise to customers was a bookstore that was always in stock. Now, they were really just letting regular people order books the same way that bookstores did, straight from the people who actually kept them in a warehouse and charging a premium for the privilege. The book distributors had a rule where they'd only ship a book if you ordered 10 at a time. But Amazon wasn't selling enough books to order 10 books at a time generally. The company developed a sneaky strategy of ordering the book they needed and like nine copies of an out of print book. If the books were out of stock or out of print, the order would get auto canceled by the ordering software. And the one book that Amazon needed would get shipped their way.

And so that's how they got over this limit was kind of like fucking with the system and hurting this company's profitability that they were utterly reliant on. At this stage, it's not really a big enough business that anyone notices what they're doing. In its first year of operation, Amazon required another cash infusion from Jeff's parents. This one of $145,000. So fucking hell. He gets, I mean, he's kind of funded by ExxonMobil, you know, like his dad gets rich from ExxonMobil and that's what allows Amazon to survive its first year or two. And get is why did he need those big lumps of money from his parents? You know, you already had like a really good job. I know he quit, but did he not like save anything? You know what I mean?

I don't know. You know, it's 1982, I think 10 grand, which is what he invested in it is more money. I don't, I don't, he wasn't, I don't know if it's that he made his parents put most of the investment in or if he just like legitimately that was kind of what you made in FinTech at that point. I really don't know what his actual net worth was. But yeah, I mean, it's, it is kind of worth noting as a number of people will always point out that like, again, he's, he's, he's very reliant on his, his family money in order to, you know, a couple hundred grand. Yeah, it's not an insignificant investment. The thing that all these guys have in common. That said, Bezos and his early employees knew that like, mom and dad's money ain't going to keep going forever and they have to pound the pavement to find investors. It was not an easy sell at first. Amazon, the year his mom and dad put 145 grand into the business, the company lost $300,000. Amazon is a loss leader for a while. Jeff told every potential investor that the company had a 70% chance of failing, but he projected net sales of $74 million by the year 2000.

So he's like, yeah, we're losing money now, but we'll be making tens of millions of dollars by the year 2000. And it's one of those things I think at the time most people would have probably rightly been like, well, that is an is nonsense. Like you're just, you're just pulling a number out of your ass. He was actually pessimistic with that estimate because actual net sales for Amazon in the year 2000 were $1.64 billion. Now, Amazon still loses money in the year 2000 up until like 2015, I think they're losing money constantly. But their income grows and that's why people keep investing in them and then they keep like reinvesting their profits back into expanding the business. So the investment money starts to come in 1996 venture capitalists pour tens of millions of dollars into Amazon and things begin moving very fast for Jeff. Amazon's first company motto was get big fast, which is also the motto for a significant portion of steroid Twitter.

And I guess we could make a comment about all the testosterone Jeff appears to be taking these days. Yeah, he got a lot of it now. Yeah, he got big fast. That's for sure. Yeah, the company had its IPO in 1997. It succeeded in winning a stupid legal fight with Barnes & Noble who are like desperate to try to kill Amazon but not quite smart enough to figure out how. And it expands from books to CDs, DVDs, toys and electronics. In his first letter to shareholders, Jeff Bezos and some of his early employees wrote, this is day one for the Internet and if we execute well day one for Amazon.com.

Now that is important because it's become kind of like a religion within Amazon corporate culture. You will hear day one constantly. There's a day one posters everywhere. Jeff regularly emphasizes the need for day one thinking, treating what they're doing like it's the first time anybody's done it. Again, not a bad way to obviously this is a part of the company success. That's not a bad way to look at things if you're trying to innovate them. For its first few years, Amazon grew meteorically. Bezos was person of the year in 1999, which actually causes some problems for him because the article itself and all the attention generated by this fawning piece helps to send a flood of customers to Amazon for holiday season 1999.

And this is the first time Amazon has a huge holiday season. They've recently expanded to products other than books and they get all this media attention and people start flooding there to like buy Christmas presents and Hanukkah presents and stuff from them. And Bezos had put millions in investment capital into expanding Amazon for this moment. This had been his goal and was part of the strategy, but they kind of fuck it up because actually keeping number one, keeping the most popular toys in stock proved to be kind of impossible. They were selling too fast, but a bunch of other stuff they bought didn't sell. And so like their warehouses are filled with unsold inventory while people can't get the products that they actually want. It's enough of like a cluster fuck and largely caused by issues with the warehouse, right? Like he hadn't scaled up distribution enough in order to actually handle the demand.

They've only got like five warehouses at this point. So this causes enough of a calamity that it results in this like flood of bad press journalists start writing articles about how Amazon stock is overvalued and like the company is about to come to a crashing end. And it's actually really kind of an existential threat for Amazon. And in order to kind of meet the threat, Bezos institutes what he calls a save Santa operation. He forces his like all of his employees, like the guys who are like coding, the people who are like doing marketing, the people who are like all of his like actual staff employees. He forces to take two weeks each, leave their families and spend two weeks of the holidays, staffing customer service lines or working distribution in like isolated warehouses. To save money, workers were kept two to a hotel room. And I'm going to quote from the everything store here to talk about this first big Amazon holiday season.

Infernly, some employees stayed at the Golden Nugget in Reno. And after they worked at the graveyard shift, they met for beers at the casino bar at 6 a.m. Later, a few swore they had been working alongside furloughed prisoners from a nearby jail, though that is difficult to prove. Early employee Tom Schoenhoff was among the group that went to Delaware where the facility was having problems with the quality of the temporary labor pool. There were a lot of temp workers that looked like the rehab center had pushed them out the back door, he says. He watched one worker get fired for intoxication and then wet himself while he tried to protest. So yeah, we're starting to see the beginnings right of like the Jeff we know today. It was enough of a debacle that some executives and it's kind of a mix of how badly the Christmas season goes and how in like how

infuriated they are by this time article where he like is fluffing himself and that leads to a lot of this rush on Amazon. Some executives try to push him out of his company. They call him impetuous and controlling. And this sparks a fight with the board and alleged fight with the board. Some board members deny it happened. There are other people who are executives at the time who say it happened. There's this fight to try to oust Jeff. And this is not that long after Steve Jobs had been ousted from Apple, right? There's this period where Jobs gets forced out of Apple. He creates a computer company. He creates Pixar. Jeff manages to avoid this happening because he keeps the majority of Amazon stock. But the early years are rough. And you know, there's a lot of people saying Amazon is dead in the like 2000, 2001.

People saying the company's never going to survive another couple of years. Bezos actually gets investigated for insider trading in 2001 because of like how bad some of the financial decisions he makes are. And the company is just bleeding money through its early years. Like their profits are increasing rapidly, but they are just like pissing cash into a fucking trash fire. That said, by the early aughts, things had started to stabilize and the company began to grow like exponentially its profitability. And again, they're still losing money, but they're growing profits by so much that investors are willing to keep pumping money into the company because they're like, well, if we stop reinvesting in the company, eventually there will be dividends and shit for us. It's just, yeah, you know, that's kind of like how he sells this to them.

And you know, the broad strokes of the rest of the story, Jake, everybody does because we've all lived through it, right? Amazon expands steadily and despite losing to Apple in the digital music race because Jeff Bezos doesn't understand music, the company rises to become the globe-striding colossus we all know today. To close us out then, I think the best thing I could do rather than sort of like, oh, let's talk about how they started Amazon Web Services or let's talk about how they expanded in the television, right? I think the best way I could actually close us out today is to hone in on the first stirrings of two problems that are kind of the main things Amazon gets criticized for today. Number one would be its relentless obsessive and unhealthy work culture

and number two would be the callous disregard for human warehouse workers in its distribution centers or fulfillment centers, as they call it. The first major publication to report on Amazon's corporate culture in a really critical way was the New York Times in 2015. Here's how it opened. They are told to forget the poor habits they learned at previous jobs, one employee recalled. When they hit the wall from unrelenting pace, there is only one solution. Climb the wall, others reported. To be the best Amazonians they can be, they should be guided by the leadership principles. 14 rules inscribed on handy laminated cards.

When quizzed days later, those with perfect scores earn a virtual award proclaiming, I'm peculiar, the company's proud phrase for overturning workplace conventions. One of the things that really separates Amazon from the other big dot-com startups like Google, they don't go to any real efforts to make it comfortable or to give perks to employees. You get money and you'll get stock and you can get rich working at Amazon, but there's no massage rooms, there's no game rooms for chilling out in, like Google gets famous for, like Amazon's whole thing. Stupid fucking slide at Google.

Yeah, you are going to work like yourself to the bone at Amazon. That's the promise we make you. The Times cites employees like Bo Olson, a bookmarketer who said his main memory of Amazon was seeing people weep at their desks. You walk out of a conference room and you'll see a grown man covering his face. Nearly every person I worked with, I saw cry at their desk. Much of the harshness and irrational workaholism was justified by the near-sanctified 14 rules Bezos had for his employees. Quote,

According to early executives and employees, Mr. Bezos was determined almost from the moment he founded Amazon in 1994 to resist the forces he thought sapped businesses over time. Bureaucracy, profligate spending, lack of rigor. As the company grew, he wanted to codify his ideas about the workplace, some of them proudly counterintuitive, onto instructions simple enough for a new worker to understand, general enough to apply to the nearly limitless number of businesses he wanted to enter, and stringent enough to stave off the mediocrity he feared. The result was the leadership principles, the articles of faith that describe the way Amazonians should act.

In contrast to companies where declarations about their philosophy amount to vague platitudes, Amazon has rules that are part of its daily language and rituals, used in hiring, cited at meetings, and quoted in food truck lines at lunchtime. Some Amazonians say they teach them to their children. The guidelines conjure an empire of elite workers. Principle number five, hire and develop the best, who hold one another to towering expectations and are liberated from the forces, red tape, office politics, that keep them from developing their utmost. Employees are to exhibit ownership number two, or mastery, of every element of their businesses,

and dive deep number twelve, or find the underlying ideas that can fix problems, or identify new services before shoppers even ask for them. And the indoctrination that goes on in Amazon to get people kind of roped into this idea, the overwork that comes with it, is also consuming that employees take to calling themselves amobots with a mix of pride and resignation. There's an element of pride that we're like robots for Jeff's big vision. Being the ultimate data guy, Jeff takes full advantage of the fact that Amazon's online nature gives him like a wider variety of metrics than any other bosses ever had

to analyze and judge how the human beings in his company are working. Employee evaluations are often 50 to 60 pages long, filled with numbers like on people's performance that employees are expected to memorize, and then they'll get cold-called by their managers, and if they haven't memorized all the different numbers about their metrics and aren't able to like explain or justify them, they get in trouble. Quote from The Times. Explanations like, we're not totally sure or I'll get back to you are not acceptable, many employees said. Some managers sometimes dismissed such responses as stupid

or told their workers to just stop it. And in this, Amazon is very much taking after its founder. And I'm going to quote here from the everything story to talk about how Jeff actually refers, like speaks directly to the people who work for him. Bezos was prone to melodramatic temper tantrums that some Amazon employees called privately nutters. A colleague failing to meet Bezos' exacting standards would predictably set off another. 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' 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, are, sorry, did I take my stupid pills today? 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 going to have to kill myself. Does it surprise you that you don't know the answer to that question? And why are you ruining my life? Some of them were pretty funny. I mean, it's pretty bad, but I wouldn't say that. It's not like abusive.

You can see with that both how someone could be really fucked up by that, especially if you devote your whole life to this company, and then your boss just dismissively said you're ruining it. But you can also see how people would find that intoxicating and would draw into a guy like that, and would be desperate to please him and get positive. When it's paired with all that 14 rules, it's very cult-like. Yeah, exactly.

So you can see both why people would find it off-putting, but also why that would inspire people to work even harder, you know? In 2013, Amazon hired Elizabeth Willett, a former army captain who'd served in Iraq. After some time, she had a child, and she arranged with her boss to come to work earlier and leave earlier so that she could pick up her baby, and then she would get on her laptop and work from home.

Her boss told her this was fine, but her colleagues thought she was skipping work because she was leaving early and they didn't know she was coming in early, and they informed on her to the boss who she'd gotten approval from to do this. That boss then attacked her, saying, I can't stand here and defend you if your peers are saying you're not doing your work. And this is kind of emblematic of a dark, trended Amazon,

which is that a lot of these 14 principles and the system of coworker evaluations, often based on the principles, wind up being used uncommonly often to attack specific groups of employees. And one of the things that women who work there will note is that one of these 14 principles is you have to be honest, and one of the pieces of criticism that female employees get from their coworkers at Amazon is that they're all dishonest. That's a part of why there are very few women in high management,

and one of the claims they'll make is that, well, these principles are used as a justification to attack us and just say that, well, you're not following the principles, when in reality it's just like people kind of being shitty towards women in the way that they often are. It's an allegation. It's very, very cold like that shit. You know what I mean? That's actually, and it's like mind games.

That's like abusive type shit. He gave her the permission and then he's having to go for something that, you know, essentially he should have told the colleagues, it's none of your business, like stop informing. But no, it's like now that person's in trouble. That's fucking weird. That's not right. Well, and it's again, because Jeff isn't directly involved in that story, but the system he's built is, and part of why that boss is doing that

is that that boss is going to get evaluated by all of their employees. And so the boss, even though he gave her permission to do this, even though she's been doing a great job, he can't defend her because then his subordinates will criticize him. And so he throws her under the bus to protect his own career. And that is how the system Jeff built works, right? That's it working as intended, which is kind of fucked up, I would argue. And it gets fucked up at her because again,

that story is one of the less unsettling ones. A woman who had thyroid cancer was given a low performance rating after she returned from treatment. She says her manager explained that while she was out, her peers were accomplishing a great deal. Another employee who miscarried twins left for a business trip the day after she had surgery. I'm sorry, the work is still going to need to get done,

she said her boss told her. From where you are in life, try to start a family. I don't know if this is the right place for you. A woman who had breast cancer was told that she was being put on a performance improvement plan, Amazon code for you're in danger of being fired because difficulties in her personal life had interfered with her fulfilling her work goals. Their accounts echoed others from workers who had suffered health crises

and felt they had also been judged harshly instead of being given time to recover. And that's not unique at Amazon. It's just, again, it's part of the system that Jeff has built. Now, when this report, this New York Times article drops, Amazon makes statements about like, we're going to investigate a lot of these claims, like this is not us. Jeff Bezos sends out a letter saying like,

what's described in this New York Times article isn't the Amazon that I know or that our employees know. Yeah, it's the standard kind of PR flag response to this shit. There are some changes made to the employee self-review process, but fundamentally nothing changes about the way the company treats its own people. Because again, to Jeff, the human beings that work for Amazon are both like robots that are there to execute his ideas, but they're also there to be targets for his anger when things go wrong.

And a good example of this comes from the first Prime Day, which is Amazon's big sales day. And the very first Prime Day occurs in 2015. Amazon programmers and other staff work 24-hour days in order to prepare the site to host its first massive sales event, which went on to be the biggest sales day in company history. So this is a huge success by any kind of financial metric, right? They announced this thing, they roll out this big day of sales,

and it's the best they've ever done, right? But the rollout of the software that organized the deals was imperfect. So like they're kind of algorithmically picking which stuff to put on sale, some of the products that they're relying on to be big sellers sell out and so people can't get them. Other like weird products like there's like discounts on pop tarts and shit and people are like, I can't get these electronics that obviously I want, but you're trying to get me to buy these discounted pop tarts.

It doesn't hurt, again, it's the best sales that the company's ever had. It doesn't hurt them financially. But there's a bunch of people on like Twitter making fun of Amazon because of some like technical glitches. And this to Jeff Bezos completely wipes out the fact that they've made the most money they've ever made. People are making fun of Amazon and so he's furious at the people who have just executed his dream to do Prime Day, right? I think a reasonable person would be like, yes, of course some weird shit went wrong on the edges.

We made the most money ever, this is worth celebrating. Jeff is furious. Shit, my whole website crashed. Yeah, but like, oh well, going to buy 10 houses. Yeah, but Jeff gets really fucking angry and I'm going to quote here from the book Amazon Unbound. Behind the scenes, Jeff lost his mind over the negative online reaction, said Craig Berman, a senior PR vice president

who was at his son's swim meet in Oregon when all hell broke loose. He was screaming at me and my team that we needed to be clear that these aren't shitty deals. He was being maniacal saying, get this fixed, you've got to show this is a success. And yeah, it's, you know, it's the kind of like poisoned internet brain a lot of big wealthy people have where it's like, I mean, by any measure of the word success, this is a success, but people are angry at you on Twitter. So you're like, you're broken about it. I, you know, I really can't get my head around that.

I mean, you know, I'm one for Twitter and that it's fine, like it's decent. But if you had all the money in the world, why? Like, oh, I'll argue with this person on Twitter. You can go and do anything. I'd be on a quad bike, like just doing something. You know what I mean? Like, oh, someone's mad on Twitter. Bye.

Like it's just, you're right. It's like a poison. You know what I mean? But I think it comes comes with ego, you know, and everything you built. Yep. I think so. It's because this company is like fundamentally extremely personal to him. Yeah, exactly.

It is the core of his identity. Yep. Cool shit. There is probably no better example of how uncaring and actively harmful Jeff can be towards his employees than the story of Amazon's fulfillment centers. We've all seen articles that dropped early this year about people pissing in bottles to make the inhuman metrics for cargo moved or packages delivered. You have a show, you know, Megacorp is largely about this.

There's a big part of Megacorp is like Amazon fulfillment center workers and how they're treated. And so at the end of this episode, I'd like to talk about how that system started, right? Like the very early days of what led to this people pissing in bottles and like passing out and stuff on the work floor and RV cities setting up outside of FCs in order to keep them like all that shit. So the man who largely built Amazon's fulfillment center system was Dave Clark. He was a former middle school band teacher who got hired in 1999 when the company had

only seven warehouses in the U.S. By 2012, when he becomes head of global operations, Amazon has 40 warehouses in the U.S. and 24 other warehouses worldwide. But these were located mostly in the middle of nowhere. So at this point, 2012, Amazon has a bunch of warehouses like 60, 70 in the world, but they're all in like really inconvenient places. And the reason why they're inconvenient places is those are generally the places with the cheapest labor and also the most advantageous for tax purposes.

So he'll set up like the warehouses will be in some bumfuck town in the middle of nowhere because that town gives them a tax break and because it's cheap to hire workers around there, right? And that makes sense for a company that isn't trying to do what Amazon starts trying to do, right? That can work great if you're just trying to sell products online, minimize your costs. But if you're obsessed with the idea that like there should be two day or one day shipping, you can't do that.

You have to have a fat, you have to have a fulfillment center in every major city if you're going to do that kind of business, right? So Dave Clark is the guy who kind of oversees the pivot from, we have our warehouse system set up in order to maximize the amount of stuff that we can hold and ship out and minimize the costs to, we don't care about minimizing the costs anymore. We care about getting as many fulfillment centers started as possible so that we can get products to people in a day or two, right? And that's because again, it's become such of like Amazon's two day shipping has become

such a part of just like life now that it's not until like right around when the Trump years start that like they actually get this really off the ground, you know, it's fairly recent that this has been an aspect of modern life that you could expect two day shipping on your Amazon products. It's just kind of taken over everything because it's offer such close to instant gratification. Yeah, sometimes like same day. Yeah, I've had shit arrive like same day that I didn't even like try to order same day. Yeah.

Yeah, yeah, same. It just happened. Yeah. Yeah. What would you do if a secret cabal of the most powerful folks in the United States told you, Hey, let's start a coup. Back in the 1930s, a Marine named Smedley Butler was all that stood between the US and fascism. I'm Ben Bullitt and I'm Alex French.

In our newest show, we take a darkly comedic and occasionally ridiculous deep dive into a story that has been buried for nearly a century. We've tracked down exclusive historical records. We've interviewed the world's foremost experts. We're also bringing you cinematic historical recreations of moments left out of your history books. I'm Smedley Butler and I got a lot to say for one, my personal history is raw, inspiring and mind blowing.

And for another, do we get the mattresses after we do the ads or do we just have to do the ads from my heart podcast and school of humans? This is let's start a coup. Listen to let's start a coup on the iHeart Radio app, Apple podcast or wherever you find your favorite shows. I'm Lance Bass and you may know me from a little band called NSYNC. What you may not know is that when I was 23, I traveled to Moscow to train to become the youngest person to go to space.

And when I was there, as you can imagine, I heard some pretty wild stories. But there was this one that really stuck with me about a Soviet astronaut who found himself stuck in space with no country to bring him down. It's 1991 and that man Sergei Krekalev is floating in orbit when he gets a message that down on earth, his beloved country, the Soviet Union, is falling apart. And now he's left defending the Union's last outpost. This is the crazy story of the 313 days he spent in space. 313 days that changed the world.

Listen to the last Soviet on the iHeart Radio app, Apple podcast or wherever you get your podcasts. What if I told you that much of the forensic science you see on shows like CSI isn't based on actual science? The problem with forensic science in the criminal legal system today is that it's an awful lot of forensic and not an awful lot of science. And the wrongly convicted pay a horrific price. Two death sentences and a life without parole. My youngest, I was incarcerated two days after her first birthday.

I'm Molly Herman. Join me as we put forensic science on trial to discover what happens when a match isn't a match and when there's no science in CSI. How many people have to be wrongly convicted before they realize that this stuff's all bogus. It's all made up. Listen to CSI on trial on the iHeart Radio app, Apple podcast or wherever you get your podcasts. Now, over the next five years, Amazon adds 100 fulfillment centers worldwide. And this is where most of their gargantuan like huge warehouses and like that are in every city kind of, or at least on the outskirts of every city, this is where all that comes from.

So Dave Clark's the guy who's like expanding massively the fulfillment center system so that they can do this. Now, at the same time, Amazon, they realize they can't rely on like UPS or USPS. So they get their own like fleet of planes. But they don't. So one of the things Amazon does with its warehouses and with everything is they never want to interface with unions in any way, shape or form ever. They never want to like in any way deal with them. This is a problem with getting your own planes because pilots are unionized, right? So Amazon basically leases planes from a company that actually runs everything and hires the pilots

so that they don't have to deal directly with unionized pilots. And they structure their distribution network very carefully to avoid any unionized warehouse workers. This also allows them to avoid scrutiny over the hours worked or miles driven by people in distribution. When this starts killing people because drivers are involved in crashes, they run people down on the side with people like are dying in the warehouses. You can find a bunch of stories about this. And when those stories start to come out that there's like drivers crashing and killing people trying to make Amazons like metrics, there's backlash, you know, both from the media, from public outcry,

and from some people inside of Amazon itself. One of these people is Mark Oneto. Mark was head of operations in the mid aughts and he introduced a number of innovations to try and make fulfillment centers run more smoothly. He was also very concerned with the treatment of employees in these fulfillment centers and he tried to force empathy for employees on to Jeffrey Bezos quote from Amazon on bound. In 2009, Oneto's human resources deputy David Niekirk wrote a paper titled Respect for People and presented it at an S-Team meeting.

The S-Team is like Jeff and his like trusted advisors, right? Like it's the top of the Amazon empire. The S-Team. Yeah, the S-Team. The paper drew from Toyota's proven lean ideology and argued for treating people fairly, building mutual trust between managers and associates and empowering leaders to inspire employees rather than act as disciplinarians. Bezos hated it.

He not only railed against it in the meeting but he called Niekirk the following morning to continue the brow beating. Amazon should never imply that it didn't have respect for people embedded in the very fabric of how it operated, he said. Bezos also solemnly declared that one of the biggest threats of the company was a disgruntled and entrenched hourly workforce, like the unionized workers that impaired U.S. automakers with strikes and onerous contract negotiations. Amazon later denied that Bezos said this. He encouraged Niekirk and Oneto to focus on ensuring that FC workers who weren't advancing with an Amazon stayed for a maximum of three years.

He let cancels, bonuses, makes it impossible for people to get raises past a certain point. Like rather than we shouldn't be enabling the self-respect of our fulfillment center workers, we should make sure there's as much turnover as possible so that nobody's there very long, so that no kind of culture can form, so that people don't get to identify themselves as part of a community of laborers and unionized. So, Oneto is pushing against this. Bezos pushes back and Oneto's end at the company comes in 2011 when a local Pennsylvania paper reports that an Amazon warehouse near Allentown

had gotten so hot during the summer that workers had passed out and been taken to hospitals and Amazon had been so aware of the danger that they had ambulances just waiting outside for when people passed out, right? That this was like, yeah, of course, X number of employees are going to pass out in our un-air conditioned warehouses in the dead of summer and we'll just keep ambulances on site. In my research, I actually spoke to someone that spoke to the workers there and they were saying that in the offices when people went in to complain,

they had the air con on full blast in the office, but in the warehouse, they had nothing. It's so grim. And here's the thing, Oneto had seen this coming and in fact, months earlier, he'd presented a white paper to Bezos and other top brass about rooftop air conditioners and FC facilities and said that they would cost like $52 million, but he was like, we need to do this.

It's going to be necessary both for maintaining productivity and taking care of our people. Bezos himself shut down the request to put in air conditioners. Now, when the story goes viral that workers are passing out, he immediately approves air conditioners for the FCs. Like, right, it's this kind of thing where he's like, no, we're not going to spend that money. Oh, now people are yelling at us. Now it's bad PR. We'll do it now.

And then after he's forced to like put in air conditioners, he attacks Oneto for not stopping the disaster. The guy who'd been like, we have to do this. And Jeff had said, no, Jeff goes after him and blames him for the fact that there's bad PR. And I'm going to quote from Amazon Unbound and like how he does this. Fuming, Oneto prepared to remind Bezos of his original proposal. Colleagues begged him to let it go, but he couldn't.

As they anticipated, the meeting did not go well. Bezos said that as a matter of fact, he did remember the paper and that it was so poorly written and ambiguous that no one had understood what course of action Oneto was recommending. As other ST members cringed, Bezos declared that the entire incident was evidence of what happens when Amazon puts people in top jobs who can't articulate their ideas clearly and support them with data.

And I think it's because the actual data, like Jeff was willing to accept, oh, we'll lose X productivity in order to save this amount of money by not air conditioning our factory or FCs. It's worth it. Oneto was saying like, it's bad to do this to people. And the thing that Jeff's data didn't account for is that like, well, it may not have cost you money, but it did cost you bad PR when it came out

that you were doing this to your workers and that hurt your bottom line. But no data that Oneto could have presented whatever have made that case, right? There was no like white paper saying this is how much money we'll lose when the New York Times writes a story about this, you know? Yeah. I still don't think he's fully grasped that.

It's like, you know, he's made more money than he's ever made throughout the COVID and union workers, you know, doing the most efforts right now to unionize and he's still just spending millions and millions trying to stop them. You know what I mean? Rather than just being like, yeah, you know what? We made loads and loads of money. Okay, let's put it back in. Let's actually fix this.

No, he's just not having it. Yeah, it's kind of like you split 1% of Amazon profits among FC workers and suddenly you've got a work force that's like a lot more moat. You would have much more career people. You'd have less turnover, whatever, I know. I'm not a businessman. It would also be at least less unethical. So the guy who Oneto leaves after this, like he quits, I think, the very next year

and the guy who takes over from Oneto spearheads a bid to acquire a company called Kiva. Kiva is a robotics startup. They make machines that can transport merchandise containers around warehouses and streamline the whole process. Before Kiva, Amazon pickers had walked upwards of 12 miles a day to grab products and take them to shipping. Kiva bots are able to kind of like move all of the shipping containers in these warehouses around in order to make things more efficient so that workers have to walk less

and can pack more per like hour. And these robots really start to hit their stride in warehouses around 2014. They increase the amount of products per square foot at an Amazon FC by 50% because it's just so much more efficient. But they come with downsides too, primarily for the human workers. Quote, The robots also transformed labor that was physically exhausting, characterized by endless walking into work that was instead mentally straining with employees standing in place monotonously

repeating the same movements over and over. A 2020 report in the Center for Investigative Reportings reveal magazine cited an OSHA letter to Amazon that said the robots exposed employees to ergonomic risk factors, including stress from repeated movements and standing up for 10 hours a day. Just as the tyrannical invisible force of software guided the robot swarms, it also monitored worker performance, flagging any quantifiable decrease in productivity and subjecting employees to performance improvement plans and possible termination. And that, at this point, we're where we are when Megacorp starts.

Jake, this is kind of what feeds into all that. It all makes sense, right? None of it is a surprise. It makes a lot more sense. Yeah, the data thing is just like this obsession with data above just humanity, basically, is kind of the stage that all of this is kind of dancing on. You know what I mean? And it's almost like unintentional horrors.

It's just like, yeah, just not even caring. You know what I mean? It's like, yeah, whatever, whatever, the data doesn't show this. It's just like, mate, these are human beings with families and lives. They've got to eat, but the data doesn't show that level of kind of context. It's just kind of sad, you know what I mean? Yeah, yeah, it is kind of sad. But that's the podcast. That's the episode. Yeah. Thanks for going over it all.

It's very jolly. Yeah, it's fun, everybody. So, you know, consider this part one and consider listening to Megacorp to get the full story. Now, you know who Jeff Bezos is. It's time to learn in detail every fucked up thing his company's done. Yeah, definitely. And, you know, I would say it's not exactly... A lot of people have been like, oh, it's not exactly the most uplifting podcast.

It's like, well, no, what did you think was going to happen? This is about scandals. You know, one of the arguably the biggest kind of company on earth in a way. So, yeah, no, it's not. But like I said in the intro to the thing, you know, if you have ever bought anything from Amazon, I think you should at least have to be aware of the way they operate. It's not just about the workers. We're going to be going into, like, the surveillance, the deals they did with MI6 and the CIA.

Like, there's so many layers to it. Absolutely. And, yeah, check out Megacorp. Jake, do you have anything else you want to plug? Yeah, but I mean, if anyone wants to just check out my work, just go to jakehanrahan.com and you just see all my links and whatever. Yeah, all right. Check out Jake Hanrahan.

Check out Popular Front. Check out Megacorp and check out of the Internet now and go do something offline. You've spent enough time online today. Agree. Yeah. All right. Bam. Alphabet Boys is a new podcast series that goes inside undercover investigations. In the first season, we're diving into an FBI investigation of the 2020 protests.

It involves a cigar-smoking mystery man who drives a silver hearse. And inside his hearse we're like a lot of guns. But are federal agents catching bad guys or creating them? He was just waiting for me to set the date, the time, and then for sure he was trying to get it to happen. Listen to Alphabet Boys on the iHeart Radio app, Apple Podcasts, or wherever you get your podcasts. Listen to CSI on trial on the iHeart Radio app, Apple Podcasts, or wherever you get your podcasts.

Listen to CSI on trial on the iHeart Radio app, Apple Podcasts, or wherever you get your podcasts.