by Brad Stone
Dave Clark grew up in the small town of Dalton, Georgia, the self-proclaimed “carpet capital of the world” for its high concentration of rug factories. His father was a tinkerer and itinerant entrepreneur, according to Clark, who worked on radio technology and built nine-hole golf courses as well as several houses and often conscripted his only child to dig the footings for the foundation walls. When he was nine years old, his parents piled carpet into a fifty-three-foot moving truck and moved to a suburb of Jacksonville, Florida, to open a rug store.
Clark’s mother fought a losing battle with cancer when he was in high school, and to “get out of their hair a little bit,” he got a job as a bag boy at a Publix supermarket, and later at the defunct chain Service Merchandise—good training for when Clark took oversight of another physical retailer, Whole Foods Market. He paid his way through Auburn University as the equipment manager for the music department, and after graduating with a degree in music education, he directed the beginner’s marching band at his former junior high school for a year. “Teaching 250 seventh graders who have never played an instrument before prepares you for a lot of challenges in life,” he later told me.
While Clark attended business school at the University of Tennessee in Knoxville, he met Jimmy Wright, a charismatic former Walmart executive whom Jeff Bezos employed briefly in the late 1990s to try to build a new class of Amazon distribution centers. At Wright’s prompting, Clark and several classmates went to Seattle to interview, even though others at the company back then considered Amazon a haven for engineers, not MBAs. “We know why you’re here,” a recruiter told Clark as he waited in the lobby. “We don’t like it, so don’t expect to have a great day.”
Clark nevertheless got an entry-level analyst job in the operations division after graduation. One of his first tasks was studying compensation rates for hourly employees; then he was sent to Tokyo, to help set up Amazon’s first warehouse there. He had to get his very first passport for the trip. After that, Clark was deployed to a fulfillment center in Campbellsville, Kentucky, which would have an even bigger impact on him. The web of relationships he formed there would end up shaping both his personal life and the future of Amazon’s operations.
The facility’s general manager was Arthur Valdez, whose mother had traveled to the U.S. from Cuba in the same mass migration, Operation Pedro Pan, as Bezos’s father, Mike Bezos. Growing up in Colorado Springs, he had been steeped in the world of logistics; both of his parents drove for UPS and the family ran a pharmaceutical delivery business on the side.
But none of that prepared Valdez for the deluge of orders and insanity that inundated Amazon’s warehouses every holiday season. Valdez recalled having so much trouble even paying the temp agencies that were supplying Amazon with seasonal labor that Bezos had to wire money into his personal account so he could write them checks. Whenever the FC was late to ship orders, he had to email Bezos and Wilke, explaining what happened and how he would fix it. At one point, Valdez was so inundated that his message to Seattle contained a single world of capitulation in the subject line: “uncle.”
In response, Wilke sent reinforcements. Dave Clark oversaw the flow of packages out of the Campbellsville FC. To manage the inbound flow from suppliers, Wilke also transferred Mike Roth, a German logistics executive from Amazon’s subsidiary in Leipzig. Both reported to Valdez.
Together, the trio navigated daunting challenges. In 2000, Amazon bolstered its fragile balance sheet by agreeing to handle online sales for the retail chain Toys “R” Us, with all merchandise sent to Campbellsville. The following year, it struck the same arrangement with Target. The excess inventory overwhelmed the 770,000-square-foot building. To keep up, Valdez, Clark, and Roth leased some six hundred tractor trailers, stocked them with overflow, and parked them around the tiny town (population: nine thousand). “It was pure survival,” Valdez said.
In 2002, a snowstorm hit the Midwest during the crucial days before Christmas. Amazon had contracted with a line-haul trucking company to transport orders from the FC to the UPS hub in Louisville, ninety miles away. With the storm moving in, the anxious driver departed early, leaving scores of boxes behind. Amazon workers loaded the remaining boxes into a rented Ryder van; Clark drove, navigating the icy roads, while Valdez sat in the passenger’s seat. Along the way, they stopped at a Burger King drive-thru.
In Louisville, they encountered a closed gate at the UPS facility. The building was run by the International Brotherhood of Teamsters, and only union members were permitted to unload packages. Amazon was anti-union, maintaining that they interceded between the company and its workers and made it more difficult to serve the hallowed customer. Valdez, whose only goal was to off-load those packages in time for Christmas delivery, got the facility manager on the phone and convinced him to let them in.
But the manager warned the Amazon execs they better move quickly. Clark backed the Ryder van into the loading dock, and nonunion UPS managers off-loaded the boxes while the Teamsters sprinted over, incensed. They jumped onto the van, pounding on the windows and hood, yelling at Clark and Valdez to leave. Clark would later recount that story to employees; it was an example of Amazon’s “customer obsession,” he said, but it also happened to convey one of the reasons for Amazon’s deep antipathy to organized labor: union workers often seemed reflexively opposed to the many improvised adjustments that were necessary for Amazon to fulfill its promises to customers.
Overall, the Campbellsville FC experience was a formative one for Valdez, Clark, and Roth. They spent considerable time with Bezos and Wilke, who visited each fall as part of their old whistle-stop tour of all Amazon’s warehouses. They introduced Bezos to cigars and bourbon on one visit. Clark also met his future wife, Leigh Anne, in town; she was the daughter of the family that owned the restaurant at the local golf club.
After their stint in Campbellsville, Valdez, Clark, and Roth each circulated through a series of increasingly prominent positions at Amazon. Their development into senior leaders was the story of Amazon operations itself—a human one, full of ingenious solutions to hard problems, as well as petty grudges and deeply held orthodoxies that would have consequences for the company and society. At its heart was a friendship that would last for fifteen years. When Clark and Leigh Anne got married at the Fairmont Olympic Hotel in downtown Seattle in May 2008, Mike Roth was an usher, and Arthur Valdez was his best man.
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After their tour of duty in Campbellsville, Roth transferred to the UK to address problems with the fulfillment network there, while Valdez moved to Dallas to oversee the network of non-sortable FCs, which stored and shipped big and bulky items like furniture and flat-screen TVs. With a hearty endorsement from Valdez, Dave Clark was promoted to general manager of a fulfillment center in New Castle, Delaware, about forty-five minutes south of Philadelphia.
Colleagues said that Clark had raw management skills and a temper that flared when employees didn’t carefully follow his instructions. He earned a nickname, “the Sniper,” for his proclivity to lurk quietly on the sidelines and identify and fire slacking underlings. He could also be cavalier toward his employees. At all-hands meetings, he would invariably brush aside questions by answering, “I’ll get back to you on that,” but rarely would. Finally, at one meeting, fed-up workers packed the first few rows wearing T-shirts that read, “I’ll get back to you on that.” Clark later insisted that he appreciated the feedback and even kept one of the shirts.
Still, results from the Delaware FC were good, and Clark was impressing the only person who mattered at the time: operations chief Jeff Wilke. “He proved to me that with authentic leadership, he could get a large group of people, including a very tenured and opinionated workforce, to follow him,” Wilke said.
Clark’s purview over Amazon’s East Coast operations gradually expanded over the next few years, until he was promoted to Seattle in 2008 to take a job as director of a program called ACES or the Amazon Customer Excellence System. It required him to a
dvocate for the principles of Lean manufacturing, a methodology popularized by Toyota in its factories that called for minimizing waste, maximizing productivity, and empowering employees. The role gave him a front-row seat to a philosophical debate that would end up shaping life inside Amazon’s rapidly growing fulfillment network.
Clark’s new boss and the primary evangelist for the Lean method was Marc Onetto, a boisterous French executive from General Electric who took over for Jeff Wilke as head of operations when Bezos promoted Wilke to run all of domestic retail. Onetto was a Lean fanatic. He introduced roles like the “water spider,” a helper in the fulfillment centers who brought workers anything they needed, like extra packing tape; and he pushed the concept of “poka-yoke,” or designs that prevent human errors, such as a cafeteria trash can whose opening is too small for a meal tray to be carelessly discarded.
One of Onetto’s goals was to promote empathy and teamwork in Amazon’s operations, which Seattle managers worried had grown heartless and punitive. At the time, the company was measuring worker productivity in every way possible and aggressively “stack ranking,” or firing the lowest performing percentile of workers every year. Toyota’s Lean method, on the other hand, modeled a lifetime of work for the same company. But Jeff Bezos vehemently disagreed with that approach, and his and Onetto’s marked differences in philosophy and style led to a series of significant clashes.
In 2009, Onetto’s human resources deputy, David Niekerk, wrote a paper titled “Respect for People,” and presented it at an S-team meeting. 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 called Niekerk the following morning to continue the browbeating. 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 to 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 Niekerk and Onetto to focus on ensuring that FC workers who weren’t advancing within Amazon stayed for a maximum of three years.
Amazon then made several changes in its warehouses to ward off this danger. Where previously workers had been eligible for small raises in their hourly wage every six months for five years, now raises were cut off after three years, unless an employee was promoted or the compensation plan for their entire facility was adjusted upward. Amazon also instituted a program called Pay to Quit, inspired by a similar one at Zappos, which it had recently acquired, that offered several thousand dollars to workers who were no longer engaged in their jobs and wanted to leave the company.
Bezos expressed this stern paternalism in other ways as well. When Onetto and Niekerk proposed a broad employee education program that would furnish FC workers with up to $5,500 per year in tuition assistance toward a four-year college degree, Bezos replied, “I don’t understand why you are so determined to set up our employees for failure.” He then explained that for a vast majority of Americans, a standard college degree with majors in subjects like art and literature won’t lead directly to better opportunities with higher pay outside the warehouses. The resulting program, Career Choice, offered on-site classes and tuition reimbursement tied specifically to in-demand professions like IT, healthcare, and transportation.
After these battles, Marc Onetto’s tenure at Amazon grew increasingly turbulent. In S-team gatherings, he liked to talk about his time at GE working for famed CEO Jack Welch. But the leadership meetings were supposed to be all about checking your past experiences and ego at the door. Eventually, Onetto’s standing with Bezos became so poor that his teams would ask him to remain silent or not even attend when they were presenting.
Among the final straws for Onetto was a September 2011 story in the Morning Call newspaper in Allentown, Pennsylvania. The paper reported that the company’s warehouse in the Lehigh Valley had gotten so swelteringly hot that summer that workers were passing out and being transported to nearby hospitals by ambulances that Amazon had waiting outside. An ER doctor even called federal regulators to report an unsafe work environment.
It was a disaster that should have been avoided. Before the incident, Onetto had presented a white paper to the S-team that included a few paragraphs proposing to install rooftop air-conditioning units in Amazon’s facilities. But according to Niekerk, Bezos bluntly dismissed the request, citing the cost. After the Morning Call article drew widespread condemnation, Bezos approved the $52 million expense, establishing a pattern of making changes only after he read criticism in the media. But he also criticized Onetto for not anticipating the crisis.
Fuming, Onetto 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 Onetto was recommending. As other S-team 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.
Years later, Onetto, unfailingly polite, was generous in his recollections of the tensions with Bezos and expressed pride in his time at Amazon. “When you run operations, there are always tough moments because you are a cost center and you are always the one who screwed up,” said Onetto, who announced his intention to retire in 2012. “There were instances where I would pitch something to Bezos and let’s say in a nice way that he was not happy. But I don’t want to be critical. Many times, he was right.”
By that point, Dave Clark had been promoted to vice president overseeing all the North American fulfillment centers and was about to make a bet that would position him as Onetto’s successor while inexorably altering the nature of work inside Amazon warehouses.
* * *
Bezos didn’t want another empathetic business philosopher to replace Onetto as the head of Amazon’s operations; he sought an uncompromising operator who could gain operating leverage by slowing down the growth of costs in the FCs relative to Amazon’s skyrocketing sales. Fulfillment expenses had jumped by 58 percent in 2011 and 40 percent in 2012. Amazon hired fifty thousand temporary workers in its domestic FCs over the 2012 holidays alone; those numbers would keep going up and up and up to meet anticipated increases in sales. The new operations leader would have to take a hard-nosed run at the entire supply chain and figure out how to use technology to get more efficient.
Clark was a leading contender for the job. A major part of his candidacy was his bid to acquire the North Reading, Massachusetts–based robotics startup, Kiva Systems, which made the Roomba-like mobile robots. Instead of pickers walking a dozen miles a day to select items from shelves spread out over giant warehouses, Kiva robots maneuvered portable containers of merchandise around the building, an orchestral symphony conducted by the invisible hand of software.
The idea behind Kiva was born from the same disaster that had inspired Doug Herrington to propose Amazon Fresh. After Webvan went bankrupt, one of its executives, Mick Mountz, realized that e-commerce companies were essentially paying people to spend two-thirds of their time walking. He conceived of a robotics system that would instead transport shelves of merchandise to workers, increasing their productivity and eliminating potential bottlenecks in warehouse aisles. A few years later, his startup, Disrobot Systems, changed its name to Kiva, a Hopi word relating to ant colonies.
Over the next few years, Mountz and his colleagues developed prototypes, raised venture capital, and sold their robots to companies like Staples, Dell, and Walgreens. They pitched Amazon unsuccessfully a few times and even conducted a pilot f
or Herrington and Amazon Fresh. Amazon then acquired two of Kiva’s customers, Zappos and Quidsi in 2009 and 2010 respectively, but afterward mothballed their robots. Mountz believed Amazon was trying to incite skepticism about the startup in the tech industry. Then Amazon made a low-ball offer to buy Kiva over the spring of 2011. Mountz rejected the proposal.
At the same time, Amazon began quietly evaluating other robotics companies and asking them to build a mobile warehouse robot. The effort failed though, and Amazon increased its offer for Kiva. An investment banker who represented Kiva said that the subsequent talks “were the most painful negotiations I’ve ever been through,” with Amazon characteristically arguing every point. After the $775 million deal closed in early 2012, Kiva execs visited Seattle and saw one of Amazon’s unsuccessful robot prototypes parked in a conference room.
The deal to acquire Kiva Systems was Dave Clark’s baby—he implicitly understood its potential to remake the FCs and turn Amazon’s surging variable labor costs into a more predictable fixed investment in robotics and software. In a meeting to discuss the acquisition, according to a Bloomberg profile of Clark years later, he pushed an imaginary pile of chips on the conference room table and said, “I only know one way to play poker—that’s all-in.”
Before the deal with Amazon closed, Mountz was adamant about continuing to grow Kiva’s business of selling robots to other retailers. Clark said he was fine with that. “I don’t care if you sell to Walmart.com if you want to, they can fund our growth,” he told Mountz. Mountz relayed those reassurances to Kiva’s customers, but he didn’t get Clark’s promise in writing. Two years after the acquisition, Clark and Wilke decided the tactical advantage conferred by the robots was too valuable and, one by one, turned off the supply of Kiva robots to other companies.
