What if you actually ran a company for the benefit of the shareholders? (Amazon.com)

“Inside Amazon: Wrestling Big Ideas in a Bruising Workplace” is a New York Times exposé about Amazon.com. Investors have been grappling with the principal-agent problem for centuries: fund a corporation, hire managers, and then sit back while they feather their own nests, e.g., by donating shareholder funds to local charities, hiring friends, etc. Perhaps because Amazon is still managed by its largest shareholder, Jeff Bezos, if we believe the nytimes the company’s main interest in employees is getting the maximum productivity out of each worker. I.e., not a year of parental leave like Netflix, no celebration of the “whole person” behind the desk. Instead of celebrating this rare example of Econ 101 in practice, the journalists are enraged by this behavior and so are most of the commenting readers.

What do readers think? We keep hearing about how Millennials won’t get off their asses and work. Is it credible that Amazon has found tens of thousands of American Millennials who are so passionate about their jobs? Or did the journalists find a biased sample to interview?

[Separately, just looking back at the last week… I want to thank the Amazon staff for delivering my tennis headbands one day after ordering (promised for two-day delivery). Also thanks for letting me find the right balance bike for the 20-month old. Thanks for enabling a one-click replacement for the sound puzzle destroyed by Mindy the Crippler. And thanks for saving me a trip to Target to find 18M-size swim trunks (had purchased 2T size at Target previously but they were too big).  And thanks for the Kindle system! So… even if you have to suffer some harsh words at work, our family does appreciate everything that you do.]

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10 Comments

  1. alter.nat

    August 16, 2015 @ 1:47 pm

    1

    Robert Reich has an article on Alternet called
    “Colleges, Churches and Non-Profits Doing the Wealthy’s Dirty Work”

    Idea that Corporations or their managers are benefitting poor is laughable or stealing from the rich. Billionaires giving all their money to foundation to be used
    in perpetuity is not charity.

    Also the idea that Amazon is not creation of wallstreet hedge funds.
    Mr. Bezos is former employee of D. E. Shaw.
    Amazon has benefited their supported immensely.

    Millennials are getting bad rap just like the previous gen and 60s generation before them. This all Corporate propaganda on how can they be manipulated to be mindless consumers. Most of their parents are in debt should give a clue whether
    they are hard workers or not.

  2. Fazal Majid

    August 16, 2015 @ 2:05 pm

    2

    Having a big shareholder running the company is no guarantee of alignment. Jerry Yang rejected Microsoft’s grossly overpriced bid for Yahoo, because of his even more inflated ego, to the consternation of Yahoo shareholders, but the relief of Microsoft shareholders. Steve Ballmer was one of the largest shareholders of Microsoft at the time, BTW.

  3. Fazal Majid

    August 16, 2015 @ 2:09 pm

    3

    @alter.nat

    I think Phil’s point is that managers use the corporation (i.e. the shareholders’) money to buy social capital for themselves by making well-publicized donations where the manager’s name features prominently.

  4. mill.en.nial

    August 16, 2015 @ 2:38 pm

    4

    Marketing Survey conclusion:

    1. Millennials don’t watch TV. we have to tax Youtube.
    2. Millennials don’t want to pay for Cable. Better increase the fee of internet.
    3. Millennials are getting their free music from youtube. we better get Apple to train them for pay for music or else.
    4. Millennials are saving too much. Our schools haven’t brain wash them enough to be in debt.

    5. Millennials aren’t social. They only want to speak to other humans thru their iphones.
    6. Millennials don’t even text anymore. Apple has corrupted them beyond repair.

  5. scott

    August 16, 2015 @ 3:08 pm

    5

    So you have no problem with the issues the nytimes article pointed out such as:
    Most employees lasting 1 year or less
    Mothers being discriminated against or put on probation for dealing with personal medical issues
    Mothers being told if they want a family amazon is not for them
    The woman who was forced to travel for business the day after miscarriage and surgery.
    The people who were greeted with probation and bad reviews after returning from cancer treatment, tending to a dying parent, etc?

    I find your self satisfied assessment that amazon runs like a company that understands econ 101 when that translates to a large company run like a slave ship by a CEO who has profited personally much more than the company has- look at Jeff Bezos’ personal wealth vs. the amount of profit amazon has produced in over 20 years and you may be surprised.

    Enjoy your convenience but I wont be giving sociopath companies like amazon a dime.

  6. scott

    August 16, 2015 @ 3:15 pm

    6

    https://mobile.twitter.com/zacharye/status/493825483319287808

    Amazon’s net profit in 20 years – 2.2B
    Jeff Bezos’ net worth in 2014 – 30B

    Slow clap for Jeff. Insane valuation making he and stockholders wealthy off of a company with a profit margin over 20 years of half of 1%.

    America!

  7. jack crossfire

    August 16, 2015 @ 8:04 pm

    7

    Besides the web services division, which still is their only source of profits, amazon.com is still just another walmart, with walmart products & walmart margins. Those on the traditional store side are basically walmart employees who can’t expect any more than the traditional blue collar treatment. Suspect the web services employees have it more like the typical multibillion dollar app startup.

  8. AmznDev

    August 17, 2015 @ 4:59 am

    8

    Hey Phil,

    I’ve been reading your blog for over 10 years now. My room-mate in college had your book “Philip & Alex’s Guide to Web Publishing”.

    Anyway, I’ve been working as a developer at Amazon for four years now. My experience is that it’s as bad if not worse of a work environment as described in the article. I’ve been promoted a few times but I don’t feel any more secure about keeping my position. The expectations are set at a standard that is impossible to meet(unless perhaps you outsource your work to a team of a dozen or so developers in a third-world country). I have permanent health-related issues now due to the stressful environment. Same thing has happened to some of my coworkers as well.

    The high-turnover rate and constant demotions(frequently managers are fired or demoted to individual contributor roles) is demoralizing. I’ve even seen a manager demoted and in his last hours as manager scrambling to file paperwork to try to fire one of his employees. The culture is one of backstabbing.

    Related to the high turn-over rate, it seems that one’s competency is inversely proportional to the time they stay employed here. The best devs don’t even stick around for a year before going to Google.

    An Amazon Dev

  9. Robert

    August 17, 2015 @ 9:04 am

    9

    @AmznDev
    It’s very surprising to me that Amazon would do this to developers and still function ok. A developer that stays for 1-2 years wouldn’t really get a chance to contribute much useful code given the time it takes to learn the system and be trusted to touch mission critical areas. Also, if 1-2 years is the expected tenure, then the mentality becomes “this algorithm or database doesn’t need to be good, as long as it holds together for 18 months, it’ll be someone else’s problem to fix it”…

    How does Amazon attract and retain talent? Assuming they do not significantly over pay on salary, do they rely heavily on stock option/restricted stock? Comp that’s overly tied to stock works great on the way up but can be disaster on the way down, making death spiral much more difficult to overcome. The flip side of treating workers like commodity is workers treat jobs like commodity. Not necessarily a bad thing, it’s just a two way street.

  10. Jay

    August 17, 2015 @ 11:24 am

    10

    Seattle tech employee here, plenty of Amazon and former Amazon friends, but I’ve never worked there…

    Amazon is pulling some sort of legal employment arbitrage funded by restricted stock units and the magical 2 year cliff. Each week it’s a new apartment tower going up and a new plane full of hires from around the world + the dust belt of America, excited about the salary, unaware of the salary cap, unaware of the lack of parental paid leave, and super excited about RSUs.

    I always wish new hires the best of luck and have heard some good work stories, but often we’re standing by to hire these folks once their wives and families have that hard conversation about life or work.

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