Pivot - Amazon CEO Andy Jassy at Code 2022

Episode Date: September 21, 2022

Amazon CEO Andy Jassy speaks with Kara Swisher at Code 2022. Kara and Andy discuss his thoughts on unionization, returning to the office, higher wages, and tech legislation. Recorded on September 7th in Los Angeles. Learn more about your ad choices. Visit podcastchoices.com/adchoices

Support for Pivot comes from Virgin Atlantic. Too many of us are so focused on getting to our destination that we forgot to embrace the journey. Well, when you fly Virgin Atlantic, that memorable trip begins right from the moment you check in. On board, you'll find everything you need to relax, recharge, or carry on working. Buy flat, private suites, fast Wi-Fi, hours of entertainment, delicious dining, and warm, welcoming service that's designed around you. delicious dining and warm, welcoming service that's designed around you. Check out virginatlantic.com for your next trip to London and beyond, and see for yourself how traveling for business can always be a pleasure. And today we've got a bonus episode for you. It's my conversation with Amazon CEO Andy Jassy taped during this year's Code Conference.

If you like this interview, which you obviously will, then I've got good news. I've got a new interview show out. It's called On with Kara Swisher and it launches in late September. Go wherever you get your podcasts, search for On with Kara Swisher and hit follow. Enjoy. I want to talk a little bit. It's interesting because I've been to Bill Gates a lot of times and I interviewed Satya Nadella. Talk a little bit about, so it reminds me of that kind of transition, though both of you had been at companies since a very young age and

had been brought up in those companies. Talk about how you look at your CEO ship so far. It's been how long? A year. A year, Exactly. Yeah. So talk about how you think about it, because it's hard to come out of the shadow of a well-known entrepreneur. Well, I've been at the company for 25 years. You have. I really kind of grew up there, and so it wasn't a brand new place to go into. And it's been a very interesting, adventurous last couple years for the company and in the world. And so I think that if you look at what happened during the pandemic, we really prioritized trying to do right by customers and trying to make sure that we could serve customers. And, you know, I think whatever importance Amazon had before the pandemic, once the pandemic happened and everything shut down, the level

of importance Amazon played was even more magnified. And we, you know, we, with the amount of demand, if you think about 2020, we grew 39% year over year on a $245 billion base. It was unprecedented growth. And to do so, we had to double the size of our fulfillment network that we'd built the first 25 years and do it in 24 months. And then we also built a brand new transportation network to do whatever packages that we expected to build over six to 10 years that we built in two years. So it was a very challenging, interesting time where we made a number of investments that really shaded on the side

of making sure we could serve customers. And how would you characterize your leadership now? You know, again, Tim Cook is coming. He came after Steve Jobs. How do you think about coming out of a shadow of a well-known entrepreneur like DeBasos? Well, you know, I don't really think of it that way. You know, as I said, I've been at the company a long time. I think we share a lot of similarities, Jeff and I, in that... You couldn't be less like Jeff Bezos. Well, actually... And that's a compliment.

No, I... I think the world of Jeff. And, you know, I think where we're really similar is that we both care about customers first and foremost. I think that we both have a real long-term orientation. We're trying to build a company that lasts all of us here. I also think that we both like to invent. Very high standards is something that I grew up with parents who had very high standards.

I have siblings who have very high standards. Everywhere I've worked, that's been the case. So, you know, that's, and I think that's really important where it's so easy for people to have a lot of choices as they have today. You know, I would say that

I believe that the best leaders are those that are both strategic and are willing to roll up their sleeves and get into the details. So it's really where the rubber meets the road in customer experience, the details. I would say that I'm a truth seeker. You know, I want to know what's real.

I don't want people to obfuscate the truth from me. I'd rather know what it is and know what customers care about and what they don't like and what we want to improve and then work on it. You know, and then I would say that maybe of the strengths that I have, learning is probably my best strength. You know, I'm a very avid learner. I think the second that you believe you know what there is to know, you're starting to unwind as a professional.

I just think every three months I learn so much. And I'm really eager to learn more and to get better. So one of the things you did was build AWS, which you didn't know that much about. And you moved in and created the most important business at Amazon, giving you, probably putting you in position to be the CEO. When you think about that idea of learning and understanding, talk a little bit what you think is critical. Andy Jassy's Amazon. What do you think is the most important things going forward when you're thinking about it? Well, again, it's not my Amazon.

I know. I understand. Anything hard you do with a group of people, no different here. But I think that we exist to make customers' lives better and easier every day and to relentlessly invent to make it so. And I think, you know, we have a pretty big business today, and I think we have very compelling customer experiences, but they're a shadow of what they're going to be 10 years from now. And that's what we're going to focus on. Some of them are existing businesses. I think, you know, the experiences will get much better and some will be new. So some existing ones, you know, in our retail business,

I think you fast forward 10 years, you're going to be able to get any item you can imagine. You can order online, you can order, you can get it in a store, you can order online and pick up in a store, any of those combinations. There won't be any lines in physical stores. You'll be able to use, you know, our Just Walk Out technology or the Amazon Palm identification technology. And while today most Prime customers get their items in a couple days, that will increasingly become one day and then within a day. And then with our Droid and the Amazon Air, the initiative that we're working on, it'll be within a couple hours.

These are drones. Yeah, drones. So I think that's how I see retail evolving. I think in our technology, in our AWS business, where we enable startups and enterprises and governments to be able to build technology applications much faster and much more quickly, you know, 90 to 95 percent of the global IT spend today is on-premises. That's going to flip, in my opinion. And we have what I think is the best customer experience and the broadest functionality, but it's still a fraction of what it's going to be, a fraction of the geographies they're going to be in. I think you look at something like Alexa, which today has a lot of traction, but it's going to be a much

more broadly useful personal assistant that will do more than entertainment but you know control your you know help you with your home audio and home automation it'll do calendaring and communication I think streaming you know the people won't be talking about cord cutting they will just be cut virtually everything will be streaming and you know we're focused not just on the best quality but the broadest selection but then there's new things if you look at there are 300 to 400 million people in this world who basically don't have connectivity in the internet and our low earth orbit satellite initiative in Kuiper is going to solve that and you know even in health care you know we're going to get to that it's um I think if there's ever a customer experience that needs reinvention particularly in the U.S. it's it's health health care and so that's part of part we're trying to solve with the one medical acquisition we're doing and then transportation you bought zoops and then transportation as well i think

the consumption of automobiles are going to be very different moving forward and you know the autonomous driving ride hailing initiative that we're pursuing in zoops i think is a chance to make a real difference so you know those are the ones we know about today. We have a lot of other ideas, but the common thread running through everything we do at Amazon is we're always trying to find ways to make customers' lives better and easier every day. All right. So you've entered in some rougher times recently because of record inflation. You grew rather largely during the pandemic and you, too many, many, many Wall Street think it's too much. You had to deal with COVID-19. You've got unionization issues and safety investigations. Supply chains has been a problem for everybody, not just Amazon. Obviously,

Ukraine is another issue, gas prices and things like that. And then there's the Justice Department and Amy Klobuchar. She seemed intent yesterday. She had some thoughts about Amazon and others. What do you, right in the now, you're talking about the future, what are you most consumed by as a CEO of all these many things? Or we could take them on like the economy itself. How are you looking at it? Well, you know, the number one thing, truthfully, that we're focused on, it's true all the time, it's true today, is just how can we keep making the customer experience better? And then you've got to look at it business by business. We're pretty decentralized, and each of the businesses are different.

And so, you know, if you look at the today, you know, we've got an unusual inflation situation. Today, we've got an unusual inflation situation. And so today, compared to a couple of years ago, the cost of line haul and trucking and ocean and air and fuel itself are much, much larger than they were before. And some of them show signs maybe attenuating earlier than others, but I think it's going to take a while. And so we, and as I was mentioning earlier, we grew our fulfillment footprint. You know, we doubled it in 24 months. We built a transportation network.

So when you do that that quickly, it's such a scramble just to get it up and running, but there's always things that you need to clean up and make more efficient. You said it was five or six years, and it was in a year. Did you overgrow? Do you feel, or? years, and it was in a year. Did you overgrow? Do you feel...

No, there are different issues. So in the five, six years, we were increasingly having trouble with third-party logistics providers in wanting to handle the volume that we needed to scale and the cost structure we needed to provide low prices. And so we anticipated that we were going to have to build a transportation network, a significant one that was that last mile, in probably about six to ten years is what we thought. But then when all that demand came in 2020, we had to grow so quickly, the third-party logistics providers just didn't want to or couldn't provide that capacity. So we took an effort that we thought would take us six to ten years to build that transportation network and built it in a couple years.

that we thought would take us six to 10 years to build that transportation network and built it in a couple of years. The, you know, on the fulfillment center side, we, you know, it takes typically about 18 months to build a fulfillment center. In the pandemic, it was taking a couple of years. So when we, you know, fast, you know, reverse to 2020 where we're growing 39%,

you have to make decisions on what your capacity is going to be in 2022. We weren't sure what was going to happen in 21, let alone 22. And so we made the decision, which I think was a good decision at the time, that we would err on the side of building more because we didn't want to constrain consumers because we wanted to serve the straits people were in at that time. We also didn't want to constrain sellers.

And so we knew that if we guessed wrong high or if we were higher than we needed, that we'd eventually grow into that footprint. And so I think virtually always you will see us optimizing for our partners and for our consumers. And that's what we did there. I think it was the right call. So the other thing is growing your employee base enormously. You doubled it, right? We grew a lot. Do you feel you have to do a pullback on that now,

for the short term at least? Well, I think that where a lot of the growth came was in our fulfillment network. And I think that we have done a lot of the work that we needed to over the last several months to kind of get our employee base to be the size that fits where the business is right now. So I don't think that you'll see us hiring at the same rates that we did the last couple few years, but we'll be hiring. You'll be hiring, not laying off.

Yeah, that's my anticipation. So one of the issues is obviously unionization efforts. You've talked a lot about it. We talked about it before. You've had a view that employees are better off without a union. You talk about it as ultimately the choice of users. I'd love to get a sense from you why you oppose unionization so vehemently, if you believe the workers should choose. Well, I wouldn't say that we oppose it so vehemently. And to your point, it's not our choice. At the end of the day, our employees will decide. We think, and we've been pretty clear about this, that we think employees are better off in the structure

they're in right now, in part because we hire builders. And I think there are a lot of times you see things that you could do better for customers on the line or better for employees where in our current structure they can go meet with a few people and change it whereas if if you're working through a union it's slow and it's bureaucratic it's very hard to change anything I also think it's really useful when you're in a company together to have a direct relationship with your manager and for us to be able to hear your voice as opposed to it all being filtered through one union representative. But if you want to have the structure we've got today, you have to have really compelling benefits. And that's what we've spent the last number of years trying to do. I mean, we pioneered the $15 minimum wage. Today, the starting average salary is $18 an hour., get full insurance benefits and 401k

and 20 weeks of parental leave. And we also, for our fulfillment center employees who want to get a college education, we'll pay for their college education through a program we have called Clear Choice. So you think you can provide better benefits? I think that set of benefits is very unusual. How do they address grievances?

I mean, there were always those stories about drivers and going to the bathroom and this and that. How do they address grievances? I mean, there were always those stories about drivers and going to the bathroom and this and that. How do they then get to address grievances if you're the one handing out the bennies to them, essentially? Well, I mean, that's true in any company. I mean, if you're going to have a place where people are productive and happy and want to be there, you have to have a...

We have a lot of mechanisms where employees can tell us what they don't like or what they think is going wrong. And we have mechanisms that we can do it on a daily basis. It shows up on all the screens, managers look at it every day. And so we've made all sorts of changes really from direct employee feedback, but you have to have mechanisms for where they can give you the feedback. What about mechanisms of power, though? Because a suggestion box is different than a union which can hold you up. Again, I think employee, I mean, if we didn't act on a lot of the requests from employees, you know, I think we'd have a different situation than we have today. You know, we get a ton of feedback. We've made so many changes in so many areas. And so,

you know, like anything, you have to prove it over a period of time. I think employees have to decide at the end of the day in our fulfillment centers, do they prefer to have the compelling set of benefits they have today with us and work directly with us and have, you know, a voice and input? Or do they want the union structure where they'll pay some sort of meaningful fee to the union? And it's unclear what benefits they'll get, whether it'll be as good as what they have now or not. But employees will get to make that choice. Would you be surprised that they won in Staten Island? Well, I think if you look at that, we only have one facility right now that has voted for a union, the one in Staten Island you mentioned.

We were surprised at that time. There are a lot of irregularities in that vote, which is why we filed the objections that we have. Again, I think one of the reasons why we've had the structure as long as we've had and employees have been willing to continue to work in that structure is because I think the benefits are compelling and I think they're really good jobs. That's going to be your argument. The benefits are compelling. You now pay $15. We average $18 an hour in starting salary. Why not just say $25 minimum wage? Well, again, remember the federal minimum wage is about $7.25. He sort of swallowed

when I said that. Well, you know, I'm trying to be respectful here. But, you know, the federal minimum wage is $7.25. It would be a great place to start for the federal government to bring it up to $15. That would be great. Yeah, as I mentioned, we're at about $18 now. You know, I think the other thing to remember in all these businesses is that you have to build a business that has sustainable economics. And the retail space, and we're not different, is a mid-single-digit operating income business. So there's only, you know, if you think about, we have a million plus employees in our fulfillment center, there is a limit to the economics you can pay and have a business that can be profitable. You know, so yeah, that's what you got to always look at. You got to have

economics that you believe can make the business work over a long period of time. And that you also feel like are competitive in that space. And I think our benefits and our compensation is quite competitive in that space. We'll be back in a moment with more from Andy Jassy at Code. Fox Creative. This is advertiser content from Zelle. When you picture an online scammer, what do you see? For the longest time, we have these images of somebody sitting crouched over their computer with a hoodie on, just kind of typing away in the middle of the night. And honestly, that's not what it is anymore.

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protect each other. Learn more about how to protect yourself at vox.com slash Zelle. And when using digital payment platforms, remember to only send money to people you know and trust. We're back. Now, more from Code. Okay. On that same genre of work, what does it look like now of the staff employees at headquarters? You built that strange thing in Seattle, the bubble. What do you call it? The spheres? The spheres. Whatever. It's strange.

The bubble? Whatever. I don't like it. I don't like it. In any case, it's fine. I don't like a lot of things. give you a tour it's pretty i'm excited i will i will do it um sound excited i'll probably be the only person i'll probably be the only person there how are you thinking about remote work right now because you know i'm going to ask this of tim cook later but there's a there's a huge sea change in terms of people are staying home getting stuff delivered by amazon including desks and things like that. And you have an employee base

that also doesn't want to come into work, the headquarters staff. You know, I think that it's an evolving work in progress is what I think. You know, we decided about a year ago that while people had different opinions on what they thought they were going to want to do coming out of the pandemic, when you really spoke in depth with folks, nobody really knew how they

were going to feel, but what they did want was some level of control over how they came back to work. And so we decided about a year ago that we would allow directors of teams to make the decision for their own teams. And for, you know, teams that work on hardware or some of the creative areas, they tend to be in the office most of the time. There are other teams who tend to work largely remotely, particularly engineering teams when they're in the coding process. And most teams come in with some mix between in office and out. teams come in with some mix between in office and out.

You know, do I, I don't really believe that we're gonna end up coming back to the office, not just we, meaning collectively, we're gonna end up coming back to the office quite the same way we did before. I think there was a lot more of remote working than people realized before. Right, right. And so I continue to think there will be

a significant amount of remote work. Do I think that we have the balance right today? I don't know. We're doing a lot of experimenting. Are you trying to require people? Some companies, like banks are doing that. Yeah, I know. The Washington Post is doing that.

Yeah, we haven't at this point. You know, we're doing a lot of experimenting. Last year we did a lot of experimenting. All sorts of teams are trying different ways. And we're trying to look at what, at the end of the day, we have to deliver the right results for customers. And people understand whether they work remotely or in the office, that that has to be the number one priority.

And so we're trying lots of experiments and we'll see over the next year. We don't have a plan to require people to come back. You don't. We don't right now. But we're going to proceed adaptively as we learn. And you imagine you're not going to make them? I don't. We don't right now. But we're going to proceed adaptively as we learn. And you imagine you're not going to make them? I don't know.

I mean, I... Is there any benefit for having them? Creativity? I think that... I do think there are some things that are harder to do remotely. You know, I think... I think it's a little harder to invent remotely.

You know, if you have conversations, it's so much easier to riff with one another when you're in person. Whereas, you know, if you have conversations, it's so much easier to riff with one another when you're in person, whereas, you know, you're on video, everyone's so respectful, you wait till everyone finishes. Not everybody, but yeah, it's respectful. You know, I think it's also a little bit easier

to have a connection with people and to get the culture. You know, you have a, we have a culture that's very direct. So you have a meeting, you have a lot of people questioning the presenter. It's easy after, it's much easier after those meetings

when you're in person to say, hey, Kara, like that's a tough topic. Like it's not surprising it's going to take two or three times. Next time, come in and focus on those first two things. Like those types of things that just much harder to do remotely and they're things that bond people together

and make people feel more part of a team. And so I think that even if we end up in a scenario that largely looks like where we are today, we're going to want to be really intentional about having people come back and see each other once in a while. So I do want to get to products and other things you're making,

but it's hard not to having Senator Klobuchar here with the bill, the antitrust bill, which you've been very active. Jeff did not go to Washington as much as you do. I hear about you all the time, and you haven't called me, but that's okay. But you're in Washington a lot. And this bill, you and all of tech have put a lot of money against it. At the same time, there's investigations from the FTC, I think, and the Justice Department

of all the companies, including you. How are you looking at regulation at this moment? And what is wrong with this antitrust bill from your perspective? Well, I think that the antitrust bill, the Klobuchar-Grassley bill, it's just so broad and overreaching and vague. And I think part of the problem is that when you're going, when you're explicitly targeting five companies and they're all a little bit different from each other, Meta's different from Apple's, different from Facebook, from Google's different from Amazon's different from Microsoft. The only way you can build legislation that addresses all those issues is to have it be very broad and pretty vague. And so I think as written today, it's got a few big problems.

I think first, it forces us to allow any third party logistics provider to fulfill prime. We've spent $100 billion plus over the last 10 years building a very large fulfillment center network and sort centers in the middle and delivery stations and vans and all kinds of software machinery inside, it's really difficult to take an order and to be able to get it to someone's door in two days and increasingly one day. And we've used third-party logistics providers to fulfill Prime for before,

and they just can't consistently deliver it in the same timeframe that we do. And we have 200 million plus Prime members who like Prime in significant part because they get their shipments in a couple days. And so I think that that has a real chance to significantly degrade the quality of Prime and potentially eradicate it if we can't deliver

the shipments in a couple few days. That's the first thing. The second thing is that we have 500,000 small, medium-sized sellers who sell on Amazon. And they don't sell on Amazon because they had e-commerce software. That's easy and inexpensive to get. They do it because they get access to a few hundred million customers. And it's completely changed the size and the capabilities of their business.

If you look at the self-preferencing language as written today, it's very broad and very vague. So we can't order our search results by prime eligible, which is how our 200 million plus prime members want it, or use best sellers or personalized lists if we have a private label product that comes above maybe a similar third party product. And so you take that kind of broad

self-preferencing language, you layer on top of it that the penalties, if you make a mistake are so Extraordinary there are tens of billions of dollars with the way they've set them up Would wipe out all the profits that we have each year and then you layer on top of that an adjudication Process where the FTC which has a leader in Lena Kahn who's not the most objective as it comes to Amazon You know, she made her career on a paper. law school. I believe that's why they picked her, but go ahead. It's probably right.

But she's, you know, she made her career on saying break up Amazon. You know, where they can file a complaint and we get to try to prove why we're innocent as opposed to the other way around. So when you have that broad self-preferencing with the crazy high penalties and then not the fairest adjudication process, we have to look at, as a leadership team, how many items can we let third parties sell against without creating too much risk, which would really be very negative for half a million sellers. The broader issue of being too big of a size. One of the things you've been investigated for is being a marketplace and a seller. Is there a point where companies like yourselves are too big? I've heard, I would say a dozen different companies that's, you know, and I've seen it on

Amazon, away luggage, suddenly you have a version of it. Suddenly you have a version of it. Suddenly you have a lot of information. I know Jeff has talked about in Congress about the, sometimes the lines get blurred. Should you have an ability to have a marketplace and sell? Should there be some rules in place? Same thing for Apple, the App Store, et cetera. Look, what you're really talking about is private label. And we didn't invent private label. Private label is a 120-year-old practice.

You have more power than a giant food. Actually, I mean, if you look at Walmart, look at Target, look at Kroger's, look at CVS, I mean, lots of companies do private label. And so my point of view on this, Cara, is that if we've decided that we want to relook at how private label works, I think that's a completely reasonable stance. Let's have that conversation. But let's have that conversation holistically. Instead of the way it's being done is this legislation you're talking about only targets companies who have $550 billion in market cap or higher, which conveniently leaves out the Senator's hometown company of Target.

It leaves out Walmart, who's bigger than Amazon in the US. It leaves out all the other companies I mentioned. If you want to relook at private label, let's relook at it. Let's relook at it online. Let's relook at it offline where it happens in a very broad way. But today, that's not really what we're doing.

And I also think, I know one of the things you talked about when we talked about my coming and speaking was that you're looking for solutions. To me, there is such a crazy us versus them mentality in this country right now everywhere, including in how government is thinking about some of these larger companies. You know, there aren't many, if any, big issues that have ever been solved by scapegoating or demonizing a group of people. And that's kind of what's happening right now. And I actually think that we have a much better chance of solving an issue that

we may want to regulate and in a way that doesn't unintentionally hurt consumers or small and medium-sized businesses if the private and public sector work together and collaborate on that. And that has not been something that groups have been willing to do so far. The tech industry has put $95 million in ads. I've seen so many ads that Amy Klobuchar is breaking the Internet. I don't believe she's breaking the Internet. You all play tough, too, if they're playing tough on the same way. Look, we've been very clear for many months,

and we've shared this with everybody, including the senator, that let's figure out what we want to regulate if you want to actually stop century censorship of data write a bill about that if you want to change the way data privacy is conducted write a bill about that if you want to actually you know you could argue about the retail business which is wildly competitive and we have 1% worldwide market segment share. But you dominate online. Yeah, but 85% of retail care is physical. That's who we compete with. For now.

Well, I mean, okay. You do dominate in the future. 85%. That's who we compete with for share. And so you can decide if you need to regulate retail, but if you are, be specific. If you want to change private label, let's have that conversation, but let's have it together. We have a better chance of solving the problem together than, you know, than really kind of trying to go get people and demonize people the way it's being done today.

There has been no legislation for Internet companies ever. I mean, there's been no regulation. Every other industry has this happen to them. I don't know if it's demonizing or it's just it's your time to be regulated. I mean, you've probably seen a lot of the press and a lot of the speaking and a lot of the comments. It's not just, hey, it's time to find some sensible regulations for some of these larger technology companies. It's not how it's being posited. And then if you really cared about doing it the right way, it would be you would really get that input and you'd work together on solving it. And that's just not what's happened so far.

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Need to hire? You need Indeed. We're back. Now, more from my conversation with Amazon CEO, Andy Jassy. And so you being able to sell and buy on a marketplace, that's the Amazon issue primarily that they're looking at in Washington. With Apple, it's the App Store. Google, it's the search market. What is the sensible solution from your perspective to that?

If we're looking forward, which I want to do, like what is of these brands that are worried about, there's so many brands that are worried about being on Amazon. They don't know what you're going to do because you could do anything because you have such power in the online space. Well, again, I mean, I'm trying, I'm deciding whether I should take that bait or not. Okay. Yeah. I think you should. I'm asking for a solution. Eddie, I just want a solution so we can all get along. Yeah. Yeah, I would disagree with you about the power comment. And I think that, you know, when you've got 2 million sellers and a half million in the U.S. who are making a very different living because of their access to a few hundred million customers, I think, you know, you can always find certain sellers who will tell you things that we need to do better. And by the way, there are a lot of things we need to do better.

We have a long list ourselves, but the overwhelming majority of sellers and feedback we get is very positive. But to your solutions question, it's what I said earlier. We should pick what we want to solve. Instead of like, this bill, I don't know how much you've looked at this bill. I've looked very carefully at this bill. It is so broad and so vague and so overreaching that it's going to do a lot of unintended harm. And so if we want to, look, I think there's a real argument to talk about some of the things you want to do with respect to privacy. I think that if people want to actually try and solve or change private label and address it a different way, we're very open to that conversation. Let's do it. Is there too big for many of these companies? Because it does feel, during the pandemic, it certainly felt like tech companies and your

stocks reflected that, owned the world. I think you have to look at it case by case. So in our retail business, we have 1% of worldwide market segment share in retail. In our AWS business, 90 to 95% of the global IT spend is on-premises. You know, just because we've had successful customer experiences in business in multiple areas that in combination make us a larger company doesn't mean that we have market power or some sort of monopoly in each of the areas in which we operate people don't have to choose Amazon you may not remember we launched a phone and not a lot of people ended up using our yeah so you know the reason that we have significant businesses in

various areas is that we've done a lot of inventing and tried to build really compelling customer experiences. And I think we've done so. But we still have relatively small market segments here in all those areas. You're so small, Andy. It's so sad how small. It's because you started there. It's not a disease of Silicon Valley. But a lot of people, whether it's Apple or Google, we're just small potatoes here.

And I'm like, you're a billionaire. Like I often, I'm sure you are, but I don't have any idea. But they do, there is this idea that you're still, you know, nimble and young and fresh and stuff like that. When you may be a little frightening to people. You know, I think it's a really interesting thing. You don't have to take that bait. So one of the things that you and I did discuss last time, and I do want to talk about next generation things,

was a spinoff of AWS. Many think it would be a more valuable stock. There was talk of breakup. I think that's going nowhere probably in general. This is not an AT&T time. You've made the case for keeping it together. Do you see you spinning off any of your divisions at all? We don't have a plan to do so. It's kind of the same thing we talked about last time. Not at all. Not at all. We don't have a plan to do so. Not a

plan to do so. When you're thinking, let's talk a little bit about the future. You talked about the things you've been doing. You've had bookstores. You've got all kinds of things. Jeff said prime marketplace and AWS were the three pillars of Amazon. What do you imagine the fourth is? Or do you need another pillar?

Those are pretty good pillars. It's a good question. We're working hard on trying to find, you know, additional businesses that could be pillars. So one medical.

I think there's a number of potential answers. You know, it could end up being streaming entertainment. It could end up being Alexa. It could end up being transportation with what we're doing with Zoox. It could end up being the low earth orbital satellite that we're building with Kuiper. And it could could end up being health care i mean those are all possibilities talk about your health care purchase of one medical what what is the thinking about now we talked yesterday someone said well if you just even replace amazon's own medical needs it pays for itself like if you can save some money how do you look at what you're doing well i i often find that my kids roll their eyes when I tell them I didn't grow up with the internet, the same way we rolled our eyes when our parents said there was no color TV.

And I think if you fast forward 10 years from now and you tell people that the way to get a primary care appointment was that you had to call, wait three to four weeks, drive yourself 20 minutes to the doctor, park the car, wait in the waiting room for 15 minutes, get called into an exam room, wait 15 minutes for a doctor, they come in for five minutes, prescribe you something, drive 20 minutes to the pharmacy. People are going to think you're out of your mind. But that has been the primary care experience for the last many decades. And I think that's going to be radically different. And I think that, you know, you're going to, you're going to be able to have an app that has, you know, the relevant medical information for you there. You'll be able to ask quick questions via chat. You'll be

able to have video appointments. If you need to see someone in person, you know, you'll have an omni-channel solution where you can go in and get an appointment same day or next day. The doctors, you know, at a place like One Medical, the doctors spend 30 to 60 minutes with patients. I've been there. Oh, good. And, you know, and then they're going to prescribe medicine that shows up at your door. That's a very, very different experience. And if there's one area that really needs to be reinvented, very obviously it's health care in our country.

And I think we have an opportunity. So doing it through services is the way you want to do it. And then you can deliver drugs or whatever they need. You know a lot about me. I use Amazon have an opportunity. So doing it through services is the way you want to do it. And then you can deliver drugs or whatever they need. You know a lot about me. I use Amazon all the time. I don't know a lot. You don't know about me. I know.

I hope you're not doing that. That would be creepy and illegal. Not happening. But you know a lot about the customer, right? You know a lot about what they want. One of the things I've been thinking about is these enveloping relationships you have with certain companies. Amazon, I definitely have one that's a very, I'm not going to say intimate, but it is. I use it a lot. Apple's another one. Disney,

I have small children, more small children now. Disney is a relationship I have. Is healthcare that idea of creating this soup to nuts company that surrounds the customer of fulfillment is that how you look at it no i i mean it comes back to what i mentioned earlier which is you know we decide to make investments in areas if we we ask ourselves a few questions a little different from maybe how other people do it we we don't pay much attention to pro forma P&Ls. We do them, but what we really ask is, if we invest in it and it was successful, could it be big and move the needle for customers? Such as healthcare. Such as healthcare. Is it being well served today? Do we have some sort of differentiated approach? And do we have competence there? And if not, can we acquire

it quickly? And if we like the answers to those questions, then we'll pursue an area. And the goal in pursuing that area is to change the customer experience and make customers' lives better and easier. And so when we look at health care, you know, really at the center of your experience is your primary health care experience. It's when you need to go see the doctor or there's something wrong and you want to know. And that experience is in dire need of being reinvented. We think One Medical has built something really remarkable there. You know, and then we believe that in combination with them that we can provide a really,

an additionally compelling experience. So you're going to need prescriptions. And we have a pharmacy that we're building. And you might need nutritional information, health information. Those are things that, you know, we have books and food and things of that sort that we think we can be useful over time. Ah, I see you have an ulcer. Would you like this book on meditation? You know, again, we'll be very thoughtful. You know, I think we've been very thoughtful stewards of data over time and we will be thoughtful here too but you know to me data is useful to customers if you use it to make

their customer experience better and their lives better and so you know go all the way back to retail think about how many items many of us have found through amazon looking what you've bought before and recommending items we think you might like based on similar aggregated folks who've bought things of the same ilk. And so it makes your life better when you can do that. And we're going to try and improve that customer experience. We think that experience is going to be radically different. It really needs to be reinvented.

And we're excited about being a part of that. Are you expecting pushback from Lina Khan, who doesn't like you? I don't know. Do you think? You must have discussed it at a meeting. We might have. Yeah. I don't know.

It's hard for me to tell. But, you know, we feel that's a very, very large space of which one medical is a very, very small share. Yeah. It's interesting because when I interviewed her, one of the things she asked me afterwards is, what did I think of the MGM? I'm like, it's so competitive in Hollywood. You're not going to win that case. I'm not a lawyer, but whatever. MGM is 1% of the film. Thank you. But I didn't, if it was something else, I'm like, yeah, definitely sue them. But in this case, I didn't think so. Lastly, I want to finish up, and then we'll get some questions, is you just released Lord of the Rings, the new Lord of the Rings.

You've seen a lot of change in the entertainment space. It's very competitive right now. There's a real contraction in streaming, or there's a real competition, really, in streaming. Netflix is sort of on the ropes a little bit, although they still provide a great service as far as I'm concerned. What is your, in 2019, you won 15 Emmys.

You got smaller this year. How do you look at this business? I don't quite still know what your theory is in it. How serious are you about the entertainment business? Serious. You know, we're in it for the long haul. And we're very, we're really excited about it. And we're really committed to it. And, you know, I think that, as I was mentioning earlier, I think most media is going to be streaming, you know, TV, film, you know, audio, music, and, you know, it's even, I think, over time, gaming.

You know, I think most entertainment is going to be streaming, and we've invested a lot of resource and time building what I think is the very best viewing experience in streaming, the quality of streaming, which is why so many third-party media companies have Amazon channels, and we've, so many third-party media companies have Amazon channels. And we're also very committed and focused on building the best selection of streaming items that people can consume. And so it's a, you know, today... You don't have IP, just you're in the same situation

as Netflix, Apple's in the same situation. I mean, Disney and others have, Warner does. Do you see yourself buying a big studio to get that? Well... MGM, you did. We did buy MGM. We have Amazon Studios, which I think is building a pretty significant amount of great content. We have MGM, which is really an amazing catalog and team. And, but I, I think that, you know, our streaming collection will be a combination of our original content as well as third-party media companies having channels um you know and you see that with discovery plus you see it with

paramount plus and you know there's a number of companies have channels on prime video that allow people to see much broader selection uh and that also allow them to build a subscription business. So I think in the earliest days, our Prime video efforts and our entertainment business, it makes our Prime subscription even more compelling. I think it's an incredible value at the current price right now, if you look at everything that's in there. But it makes it a very significant value proposition for customers. It makes it a very significant value proposition for customers. And a lot of people who, you know, we have an increasing number of people who sign up for Prime because of the entertainment offering.

And it turns out that a lot of them end up buying e-commerce items for us as well. So it pushes consumers by a way. I think over time, our entertainment business has an opportunity to be a successful business and to its own right you know independent of what it pushes down is it profitable now we don't disclose that no it's not um but are you worried about the what's what do you think is going to happen in the streaming business there's consolidation or there's so many players now and i just got a notice from hulu they're adding higher prices yeah you guys charge little more. I think one of the big questions that's unknown is how many subscriptions will people have? You know, over time, when people aren't tethered to cable or DirecTV, how many subscriptions will people have? How much are people willing to pay per year for them?

Which ones? Will people subscribe to certain ones? which ones will people subscribe to certain ones how many will they subscribe to all year versus just for a series that they want to watch and kind of jump in and out of that subscription i think it's all tbd tbd so last question and then we'll get to questions in the audience what is the the most the biggest challenge you think both this country and tech and business faces right now and what are you what are you most excited about that's a very easy question that's not an easy question yeah well um you know some of the challenges are different maybe than some of the things i'm most excited about i mean i i really as i mentioned earlier i think we're at a point in this country it's true around the world but in this country true too right now i

mean leaving out of course the obvious the economy is a very serious challenge for everybody. You know, but I feel like we don't talk with one another today in this country. We just kind of talk at people, and people seem very unwilling to listen to one another. They seem very intolerant if you have a different view from the other person. And they just quickly turn them off. And I think the country was founded on people arguing and debating with one another,

but getting to a reasonable compromise. Because when you have as many people as we have in this country, they're not all one. They don't have all one belief system. And we've got to remember that we have to govern and we have to to remember that we have to we have to govern and we have to you know

build communities and build businesses that that work for the broad number of people we have here and so i i am worried about that i'm also quite worried about education where you know i think if you look in this country the numbers are way down we are now 35th of 50 developed countries in the world in education and if we don't think that's going to have an impact on our kids and our kids' kids and on our competitiveness as a country over time, we are kidding ourselves. We've got to change that. You know, I think we want to try and participate in all the challenges that we see, including the ones I mentioned. I think there are so many unsolved problems and customer experiences. You know, a lot of times people say to us, gosh, it seems like you're pursuing a lot of different businesses.

You know, is that prudent? And for us, we have a different way of looking at it than other people. But where we ask those four questions I mentioned earlier, and we believe that there's a compelling answer to go pursue it, we're going to solve it. And there are so many, I mean, those are the customer experiences that we're going after today that we believe we can really change people's lives for the better. But there are a lot more, some of which we're pursuing that we can't talk about yet, and others of which we haven't even imagined or learned about. But there are quite a few challenges and we believe we can bring customer focus and invention to those and we're excited about going after trying to make it better we didn't get to talk about stores i have some thoughts about your stores okay well anytime

you just come age assy to amazon.com i will i will. It's called merchandising. But anyway, let's go. Questions from the audience. Ah, great. Hi there. As a primary care physician, I'm quite excited about Amazon and big tech trying to disrupt healthcare, create a better experience for patients. But thinking about the healthcare worker side,

given the high rate of burnout among nurses and doctors, if Amazon was to become a new healthcare overlord, looking at the reports of Amazon warehouse workers being clocked for every minute of productivity and time in the bathroom, there's concern about what that looks like for healthcare workers. So my question to you is,

what is your argument for why doctors and nurses should come work for Amazon Health? Well, I'd say a few things. You know, first of all, you know, as you know, we acquired one medical and they have, I think, a customer experience and a physician experience that's quite good. And we didn't acquire them to change what they were doing. We, you know, especially, and we paid a lot of money for that. We have a lot of admiration and respect for what they do. And I think that if you look at their customer satisfaction scores, if you look at their retention scores, if you listen to what physicians say about working at One Medical, it's very positive and very compelling.

I don't think doctors like the habit trail that they're on so often. You know, the experience I mentioned, which is the typical experience today where you go through all that and you spend five minutes rushing through an opinion with a customer, I don't think doctors like that either. I think doctors want to, you know, you get in that profession to help people. And I think that they want to help people. So the fact that we have, that one medical has appointments that, you know, customers choose whether they want a 30-minute appointment or a 60-minute appointment, and physicians get to spend the requisite time to talk to patients and to tell them what's happening and to talk about solutions and to

answer questions, I think is very compelling. And we don't have any intention of changing that. That's interesting habit trail is a good word. So thank you for being here had a question for you around gaming and a what role will gaming have going forward for Amazon and b what do you plan to do differently to get there? Well, we have, it's hard to build good games. I think people know that. And we have certainly learned over the last number of years that it's difficult. And, you know, we've had some better successes over the last year or so, but, you know,

it's hard to do it well. It requires, you know, really extraordinary talent. It requires a lot of creativity. It takes a long time. You know, it's not like you churn out a new game in a year. It takes several years. And, you know, it's a highly creative process. And increasingly, I think it's a highly technical endeavor with the way you're able to use compute to change what those customer experiences are like and so we're you know we're excited about the the games that we're building we have a number of studios that we've built over the last few years they're all working on games that you know will take a few years to build any purchases electronic arts apparently is out there

i can't believe everything you read, Kara. I can, some of it. But we're committed to it, and we think we have an opportunity to build great games, and I think we have, you know, most significant game developers use AWS to build their games, and we have people internally who understand how to use AWS as well to create new experiences, and that's what we're going to do. Great.

I do believe everything I read, and especially the Washington Post is where I read that. But go ahead. Hey, Andy. I do not work for the Washington Post. I'm Jason Del Rey. I write about Amazon for Recode. Two quick questions. One on healthcare.

I recently spoke to a nurse who worked at Amazon Care and loved the fact that she could spend time with patients, unlike her experience, especially in COVID, in emergency rooms. So I'm curious, you announced one medical at the same time you're going to shut down Amazon Care, which was an experiment to provide telehealth and in-home. Is there a future for in-home care at Amazon in the future, even with the Amazon Care closing? And then I have one clarification question on a private label. Well, you know, we decided, we learned a lot doing Amazon Care, and customers really liked the offering.

But as we got further along doing Amazon Care, and customers really liked the offering. But as we got further along in Amazon Care, we realized that the business model we were pursuing was not going to scale well. And it was, you know, it was more of a business-to-business offering, as opposed to a business-to-consumer offering, or they could do do both and so we had decided before the one medical acquisition that we were going to wind down amazon care you know i i do think the piece of amazon care that's unique differentiated where i do think there's some future for it you have to find the right business model is the in-person care it's it's's hard to find the right economic model, have people come to people's houses and, you know, to be able to charge enough to pay for that. So we're still working on that, but that could be something that we continue to work on over time. Okay, we can't go to second.

I got to get, I know Luther, just a minute. I don't, we don't have a lot of time, but here, I want to do people who haven't asked questions before, go right here. All right, thanks, Hara. And thanks, Andy. I appreciate all that you do with the customer focus. I have a lot of time, but here, I want to do people who haven't asked questions before. Go right here. All right, thanks, Hara. And thanks, Andy. I appreciate all that you do with your customer focus. I have a package arriving at my home in a few minutes from Amazon, so thank you. One thing that surprises me is that you talk about,

really readily, about your opposition to Staten Island. And the employees there found a valid proposition. Employees across Amazon are finding a valid proposition to unionization. So first question is, what's your budget, your 2023 budget for union busting? And more seriously, what are some of the countermeasures that you're thinking about to maybe prevent, avert the sentiment that these employees have? Well, what I would tell you is that we have one facility out of the thousands that we have that have voted for a union at this point.

And I think if you look at the details that vote, there are a lot of very disturbing irregularities. If you haven't read the objections that we wrote, it's worth reading. And I think that's going to take a long time to play out, because I think it's unlikely the NLR that's going to take a long time to play out because I think it's unlikely the NLRB is going to find against themselves so you know I think we haven't had it hasn't been a huge broad union issue so you know but but look it's it's really what I said earlier at the end of the day we have to provide a really compelling set of benefits and experience

for fulfillment center employees and they'll make the choice whether that's more compelling than whatever risk there is in paying a union fee and seeing what they get in comparison. All right, we have one more question. Luther, I'm sorry, but you've asked a question, so I'd love people who haven't. So you get the last question right here. Oh, hi, Glazier. How are you doing? Sorry. This guy.

Thank you. Hi, Andy. Barry Fry. I actually live in your old neighborhood. Great work you've done. I also run the global out-of-home trade organization. There's a big trend afoot in retail and with brands to put advertising in stores, Walmart, Target, screens, etc. You are planning more retail growth. You've also got a plethora of vans all around the world that could have screens on it do you ever consider those screens in stores screens to a b an advertising vehicle as well as b to promote your video series on television. And also, Amazon's having a very significant advertising business now. Yeah.

So, I mean, the short answer to that is yes. I think that we're exploring all sorts of ways that we can provide value added to the customer advertising. You know, our advertising business today, we have most of the team are machine learning experts who spend you know all their time most their time trying to make sure they're surfacing relevant items for people and i think if you look in physical stores there's a real opportunity for to do that as well it's it's screens as part of it but even you know even if you think about the idea of what digital couponing could be over time i but even, you know, even if you think about the idea of what digital

couponing could be over time, I think that's a real opportunity where if you know what people like to buy, you can provide them coupons that are relevant to what they tend to buy, as opposed to just, you know, random items, and so, you know, we are experimenting a little bit with our vans. You may have seen here in LA the rings of power images that we have on some of our delivery vans. And so we're exploring that. And like everything, we're experimenting and learning what works and then trying to roll out things that do. Okay, Rob, very short. Very short.

Well, good seeing you, Andy. I have a question about Fire TV and third-party apps. There's a company that we spun out called Senior that makes an app that does video co-watching and search. We submitted it to the store. We were told, please do it for the next version. We did it for the next version of Fire TV. And then we were told very politely but very firmly by the folks in question, no, we don't want that to be a third-party app. We want to control that feature ourselves.

So my two-part question is what goes into the thinking around that for why Amazon wouldn't want to have an open platform? And then if that really is the thinking, isn't Senator Klobuchar more right than wrong? Well, without the details of what you're talking about, it's a very hard question to answer. I would encourage, I'm just AJS, cdamazon.com. You should feel free to write me and give me the details. But I would disagree with you about the notion that we don't have or want an open platform. If you look at the amount of third-party content that you can find on Fire TV, it's broader than you'll find anywhere else. And I think that, as I mentioned earlier, if you look at what our strategy is and what the customer experience that we want in our streaming business, it's really to have the broadest item of streaming selection, broadest selection of

streaming items anywhere. And so I don't know in that particular case what the programming was or why the team didn't want it. But if you send it to me, I'll run it through the team. I was surprised. I'll get you the feature, sure. Okay. Andy, you're very thoughtful. I really appreciate it. Great seeing you, Carol.

Thank you. We'll have more conversations from Code in the Speed. Stay tuned.