by Brad Stone
Rupp and Wulff and their team had turned a Seattle conference room in Amazon’s Arizona building into their designated war room. They spent two days and nights monitoring the traffic and promoting whatever deals they could. Wulff recalled going home to sleep for a few hours and then returning. In the middle of the chaos, Jeff Wilke stopped by and gave a pep talk. The event was ultimately the biggest shopping day in Amazon’s history, but considering her struggles to bring Amazon’s merchandisers on board that first year, Wulff was not surprised by the negative reaction on social media.
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!’ ”
Berman and a PR colleague, Julie Law, started poring through the sales numbers and releasing as much data as they could find on what products were being discounted and how quickly they were selling out. It didn’t satisfy the social media mob, but press accounts of the first Prime Day were more balanced. “To Jeff’s credit,” Berman said, “you only get one chance to make a first impression. He was personally vested.”
A few days later, the Prime Day team gathered in their office kitchen in the Arizona building to acknowledge the end of their exhausting journey and took turns whacking a real piñata. But there was little time for celebration. Rupp and Wulff were asked to write a six-page narrative summarizing the day’s mixed results: 34.4 million items purchased, including twenty-four thousand Instant Pot 7-in-1 Programmable Pressure Cookers, and 1.2 million new Prime accounts started worldwide, according to an internal document. It also highlighted that a “subset of our members and the press were quite vocal, particularly in the U.S., claiming the deals were random, the experience was clunky, and that the event was a disappointment.”
Years later, Wulff reflected on that wistfully and considered it an illustration of the Amazon leadership principle that stipulates leaders must be “vocally self-critical.” “That’s when I learned a lesson that regardless of whether you just delivered the biggest revenue day in Amazon’s history, your first sentence is, ‘We fucked up.’ ”
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After the Prime Day review, Chris Rupp was exhausted. She took time off for an overdue sabbatical and while on leave, she accepted an offer to join Microsoft’s Xbox unit. Of that first Prime Day, she said, “It was hard, hard, hard.”
In the wake of her globe-trotting stint as a single-threaded leader, Meghan Wulff was just as tired. “I was totally depleted, emotionally and physically, and took a few weeks off to recover and reflect,” she said. As Greg Greeley and the Prime team got to work on next year’s event, Wulff declined to lead it again and sought another job inside the company. Over the next few years, she would take a variety of roles at Amazon, including serving as technical advisor for the new senior vice president of human resources, Beth Galetti.
In 2019, Wulff took a sabbatical from the company and went to visit family in North Carolina. She had grown up with four older brothers, in a family with financial hardships. In an unguarded moment, she used some of that Amazon-style critical feedback on her adored mother, who responded quietly, “Please stop using the leadership principles in our relationship.”
As if a heavy fog had suddenly lifted, Wulff started to think about her time at Amazon in a new light. She was grateful for the experience but conflicted about it. She loved the “beautiful collaboration machine,” how she had learned about operational discipline and made lasting friendships. At the same time, she also felt like she had “given more than I got back” and didn’t like who she was becoming as a leader or a person.
Wulff started to ask herself: Was the overall impact of Amazon’s customer obsession on local businesses, the climate, and warehouse workers worth it? Why weren’t there more women and underrepresented minorities on the S-team? Why was the work environment so punishing, and why was she perpetuating it? As an Amazonian, she had to earn the trust of her colleagues and superiors every day she had worked at Amazon. Had Jeff Bezos, she wondered, earned her trust?
Now Wulff joined the ranks of a crowded club: she was a disillusioned former Amazon employee. “At some point along the way it moved from an admirable mission to an uncomfortable awareness that, for me, Jeff Bezos too often didn’t make admirable choices,” she said. “He continues to amass an obscene amount of money and do very little with it for the good of society.”
She even questioned the annual spree of discounts that she had helped create. When an article in Fast Company suggested that Prime Day cynically manipulated shoppers into buying things they didn’t need, it resonated with her. “It was a shopping holiday,” Wulff said flatly. “We were convincing people to buy Instapots and join a loyalty program geared at having them spend more at Amazon.”
Wulff left the company in 2019 and joined the Seattle online real estate company Zillow. She canceled her Prime membership shortly after, recycled her Amazon Echos, and closed her Amazon account permanently.
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Only a week after the first Prime Day, Amazon announced its second consecutive gangbuster earnings report on July 23, 2015, recording another profit and capitalizing on its AWS-fueled momentum. The stock surged 18 percent overnight and yielded a momentous realignment of the business universe. For the first time, Amazon’s market capitalization surpassed Walmart’s; it was now the most valuable retailer on the planet. To celebrate both the official twentieth anniversary of the company’s first sale, but also undoubtedly their new success, employees flooded into Seattle’s CenturyLink Field the day after earnings to enjoy a private concert by the local hip-hop duo Macklemore and Ryan Lewis.
But the revelry would be fleeting. If the emergence of AWS and the rapid execution of Prime Day were testaments to Amazon’s fleet-footed and inventive culture, negative effects were on display as well—namely, the relentless pace and self-criticism that unmoored many employees and contributed to the company’s robust turnover rate. That August, those discontents burst into the open when the New York Times published a 5,800-word gut punch of an article, titled “Inside Amazon: Wrestling Big Ideas in a Bruising Workplace.”
The reporters, Jodi Kantor and David Streitfeld, described an environment of combative meetings, unreasonably high standards, eighty-hour workweeks, and employees who regularly wept at their desks. They reported that some workers who suffered from critical illnesses, miscarriages, or other personal crises were penalized professionally. And they described the practice of “stack ranking,” or regularly dismissing the least-productive workers, amounting to “purposeful Darwinism” that created an environment of fear.
In response to the piece, Amazon’s combative new senior vice president of policy and communications, Jay Carney, broke with the company’s aversion to battling publicly with critics and penned a Medium post charging that the story “misrepresented Amazon.” A high-profile hire earlier that year, Carney was the former White House press secretary to President Barack Obama and director of communications for then Vice President Joe Biden. He claimed the reporters violated journalistic standards and attacked a primary source with private details of his Amazon employment record, alleging he was fired for impropriety and had an axe to grind with the company. From that point forward, Amazon would become far more outspoken and confrontational when it came to defending itself in the press. Executives were no longer comfortable simply telling themselves that they were “misunderstood.”
Carney’s post had followed an internal email that Jeff Bezos sent to all of its 220,000 or so full-time employees, encouraging them to read the article but asserting that it “doesn’t describe the Amazon I know or the caring Amazonians I work with every day.” Bezos asked employees to send any similar stories of callous management behavior to the human resources department or directly to him
at his well-known email address, [email protected]. A few hundred of them would, and those responses would get directed to one of Amazon’s longest serving human resources executives, David Niekerk.
A West Point graduate and U.S. army veteran with combat stories that he was not at liberty to discuss, Niekerk was in Brazil when the Times article hit, preparing for Amazon’s launch in the country. He had the same protective reaction as many other Amazon employees: the article, he felt, was sensationalized and used negative anecdotes to reach unfair conclusions. “Working at Amazon is like being in an Olympic training camp,” Niekerk told me a few years later. “There are very high standards and a push to get everything done, all the time.” At the same time, he had seen plenty of examples of bad management and could admit that there was something familiar in the Times account.
Bezos himself was the architect of Amazon’s culture and skeptical of the unoriginal way that human resources was run at many companies. Other Silicon Valley CEOs had varying levels of disinterest in getting involved in the muck of HR and culture building. Steve Jobs, for example, upon returning full-time to Apple in 1997, had addressed an audience of the company’s human resources employees in Cupertino and bluntly told them, “It seems to me you are all just a bunch of barnacles.”
Bezos, on the other hand, dove into the tedious details of HR and tried to formulate mechanisms that would substitute for good intentions. He was a student of organizations, culture, and innovation. Early on, he always wanted to hire the smartest people over the best leaders and told HR execs like Niekerk that it was their responsibility to train them to be good managers.
Bezos also advocated for the practice of stack ranking, where employees were rated by their managers on the basis of job performance, with the lowest performers pushed out the door. Niekerk recalled that Bezos had absorbed that practice from Topgrading, by Bradford Smart, who had helped legendary CEO Jack Welch set up a hiring system at General Electric that classified job candidates as A Players, B Players, and C Players. Bezos wanted to apply those principles, not just in recruiting, but inside the company as well.
“The greatest pain any leader will feel are the open jobs in their organization,” he once told Niekerk. “That means leaders will be very hesitant to let anyone go.” Bezos suspected that managers couldn’t be counted on to voluntarily embrace the hassle of additional hiring and feared that a tolerance for mediocre performers would spread through the company and erode the “Day 1 mentality.” Stack ranking would force managers to upgrade the talent on their teams. “People thought it was a mean-spirited process and to a certain extent it was,” Niekerk said. “But in the big picture, it kept Amazon fresh and innovative.”
But as Amazon expanded, booting the poor performers wasn’t enough. Bezos appeared to believe that an overly comfortable or exceedingly wealthy workforce might also doom Amazon. Did employees still have passion for their jobs? Or were they hanging on for ever-larger compensation rewards, draining the company of energy while awaiting riches and retirement? Bezos eschewed any financial hooks, like steadily increasing stock grants, that might keep people at the company even if they were no longer engaged in their work.
The typical compensation package at Amazon reflected these priorities. It featured a standard base salary of around $150,000, a signing bonus, and a grant of stock that vested in 5, 15, 20, and 40 percent portions over each of four years; the combination of salary and stock vesting then comprised an employee’s total compensation target.
If employees couldn’t cut it at Amazon and lost their jobs in the first few years, they didn’t get their entire stock grant and wouldn’t receive the remaining portion of their prorated signing bonus. And if Amazon’s share price increased more than 15 percent in a year, the employee’s total annual compensation then exceeded their target, and their annual performance stock grants would reflect that and be correspondingly lower, vest farther out into the future, or could even disappear altogether.
That meant that after years of Amazon’s stock price increasing well beyond 15 percent, many employees encountered what they called a total compensation “cliff.” They were making well in excess of their target and saw their stock grants drop precipitously. This was another reason why valued, experienced Amazon executives like Chris Rupp left the company for opportunities elsewhere. (Bezos himself made just under $82,000 a year and received no additional stock-based compensation beyond his large initial ownership stake; his wealth was generated purely by Amazon’s steadily increasing stock price.)
Bezos understood that in some quarters, all this might make Amazon an unpopular place to work. But he also felt that the perks factored into those high-profile media surveys of workplace desirability—like lavish compensation, unlimited vacation time, and free meals and massages—had little to do with the passion and purpose employees brought to their jobs. “He once told me, ‘If we ever appear in the “100 best places to work in America,” you’ve screwed this place up,’ ” Niekerk said. (Alas, Amazon would soon become a mainstay of those lists.)
Despite the fact that Niekerk was preparing to retire in 2015, Amazon had one more mission for the old soldier. When some 250 Amazon employees sent their horror stories directly to the CEO and to HR after the Times article and Bezos’s email to the company, they were then all forwarded to Niekerk. Over the following four months, he consolidated and reviewed the stories and pulled together a paper, offering ten courses of action the company might take to address the issues that had emerged. For example, he suggested that every leader should be required to take a course called “As Life Happens,” to learn how to sensitively manage an employee whose personal life might be interfering with their work obligations.
Niekerk recalled that colleagues who read his paper said that it was among the best analyses they had seen of the cultural challenges that were so obviously plaguing the company at its twentieth anniversary.
But before the paper got any further, Amazon’s lawyers killed it. The stories that employees had volunteered and submitted at Bezos’s urging, they asserted, were one-sided and unverified. The recommendations, the lawyers said, were thus “fruit from a poisoned tree.” Niekerk retired from Amazon soon after and his report never made it to the S-team.
Nevertheless, after the Times story, Amazon made several changes to its culture that it said (somewhat dubiously) were already underway before the article was published. Even as Bezos was publicly defensive, he seemed to acknowledge privately there were valuable aspects to the critique and that a culture forged to support the maniacal pace of a startup needed to evolve alongside a maturing company with 230,000 employees.
For example, the practice of stack ranking, or setting attrition targets for each team, was largely discarded; managers were no longer forced into contentious sessions over whom to fire. Employees were offered the chance to change jobs anytime they wanted, even if they had recently joined the company, so that they could always escape a bad manager. This forced managers to be extra solicitous to their employees. Amazon also instituted an internal appeal process to adjudicate cases when employees were put on performance improvement plans or faced termination. The company added a unique parental leave program that allowed employees to divide their time off into different intervals within a twelve-month period, or to share it with a spouse whose job didn’t offer such a benefit. It also instituted smaller changes, such as allowing new mothers to expense Milk Stork, a service that let them send refrigerated breast milk home when they were traveling for business. After the Times article, one female executive said, “We got a lot more latitude to make human decisions.”
The biggest change may have been to Amazon’s decade-old performance review system. The former system had required all of a worker’s peers to write lengthy appraisals and send them to the worker’s direct manager, who then wrapped them all into a single evaluation for a one-on-one conversation with the employee, which tended to culminate in a contentious tangle over the worker’s shortcomings. “We found that whe
n we surveyed Amazonians, 90 percent were more demotivated after their review than before, even if they were the best employees,” said HR chief Beth Galetti, who was asked to “radically simplify” the review process after she took over as head of HR a few months after the Times article was published.
In this revamped performance review system, peers and managers were asked to write sixty words describing an employee’s “superpower,” and another sixty to describe a “growth idea” for the year ahead. “It was all about looking forward and being motivational,” Galetti said.
Bezos also conceded that the old process had grown too negative, explaining his sudden appreciation for its flaws to a group of large Amazon investors at a private meeting: “Imagine if you sit down with your wife once a year. You tell her all these great things that you love about her, but then at the end you say, ‘Also, you’re just a little bit fat.’ That’s the only thing that’s going to stick with her from that entire conversation!”
As Bezos delivered the punch line, he burst into laughter, according to an investor who was at the meeting: “We want to have a performance review system that doesn’t tell our employees that they’re fat.”
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By the end of 2015, there was little doubt left about Amazon’s ascendance. The company posted its third consecutive quarterly profit, along with 69 percent growth in sales at Andy Jassy’s booming AWS division. Amazon’s market capitalization had doubled in the span of a year and stood at $315 billion. For Steve Ballmer and the other skeptics, it was a year for eating crow. At the same time, Amazon became the fastest company in history to surpass $100 billion in annual sales, meeting a long-standing goal of Bezos and the S-team.
