Amazon Unbound

by Brad Stone

  As Blue Origin’s scope expanded, Bezos became a more prominent evangelist for its mission, and for his own vision for human space travel. Gone entirely was his old conviction that Blue should discuss its goals in public only after it had accomplished them. That August, at the EAA AirVenture show in Oshkosh, Wisconsin, an annual gathering for aviation and space enthusiasts, he showed off the finished New Shepard capsule. It had six reclining chairs, each perched before a large forty-three-inch-high shatterproof window to better take in the curvature of the planet and the vastness of space. “Space changes people,” Bezos said to the assembled crowd, as the surviving Apollo astronauts toured the capsule. “Every time you talk to… somebody who has been to space, they will tell you that when you look back at the Earth and see how beautiful it is, and how fragile it is, with that thin limb of the Earth’s atmosphere, it makes you really appreciate home.”

  A company executive told the assembled crowd they planned to start sending paying customers up in the next year or two. Blue Origin would fail to meet that timeline as well.

  To pursue these parallel objectives, Blue’s headcount soared past a thousand people in 2017 and doubled in 2018. A portion of those employees came from Musk’s company, and the damning refrain in the industry—that “Blue was the country club you go to after toiling at SpaceX”—would have infuriated Bezos if he heard it. Blue Origin also broke ground on rocket production facilities in Cape Canaveral and Huntsville, Alabama. It would fall to new CEO Bob Smith to digest all this growth and professionalize the company.

  Smith hired veteran executives from Raytheon, the aerospace division of Rolls-Royce, Boeing, Lockheed Martin, Northrop Grumman, and other legacy companies. SpaceX executives were openly contemptuous of such firms, viewing them as complicit in decades of stagnation in space innovation. But no such compunction existed at the new Blue Origin, which needed “to do things that all businesses need to do, which is have good financials, a good HR process, and [leaders] that know how to lead and develop and have large teams,” said Bob Smith. “All those things were necessary steps we needed to take to make the routine flying of people possible.”

  With the influx of professional managers, many of the longtime employees who had strolled in the secret garden and celebrated their triumphs at Parpie’s Bar in Texas felt displaced and left Blue Origin. Rob Meyerson remained, nominally in charge of “advanced development programs,” but without authority or direct reports. As Bezos transferred his attention to Smith and withdrew once again from regular appearances at the company, Meyerson felt sidelined. He left Blue Origin in late 2018, reasoning that the new CEO no longer wanted him there.

  * * *

  In the Welcome Letter, Bezos had predicted that Blue Origin would eventually create a return on his massive investment. “I do expect that over a very long-term horizon, perhaps even decades from now, Blue will be self-sustaining, operationally profitable and will yield returns,” he wrote. “It will just take an unusually long time.”

  But as he continued to evangelize in public for Blue Origin, Bezos began to frame the operation less as a hobby or business pursuit and more as a kind of long-term philanthropy. “I get increasing conviction with every passing year that Blue Origin, the space company, is the most important work that I’m doing,” he said in a May 2018 onstage interview with Mathias Döpfner, CEO of media giant Axel Springer. “I’m pursuing this work, because I believe if we don’t, we will eventually end up with a civilization of stasis, which I find very demoralizing. I don’t want my great-grandchildren’s great-grandchildren to live in a civilization of stasis.”

  His generation’s destiny, he explained, was to lower the cost of access to space and unleash the same forces of creativity that had unlocked the golden age of innovation on the internet. The goal was a trillion humans one day living and working throughout the solar system on space stations that operated on the plentiful power of the sun.

  This soaring objective was inspired by one of Bezos’s favorite space theorists, the late physicist Gerard K. O’Neill. It was also a useful one for the world’s wealthiest person, whose charitable contributions were now the subject of constant scrutiny and criticism. Instead of an e-commerce kingpin with an expensive hobby, Bezos was a great industrialist making a grand gift to humanity.

  The philanthropic message was a new one to many of his longtime colleagues at Blue Origin. It also helped to obscure the more evident reality that Blue was still struggling twenty years into its existence. By the spring of 2021, it still hadn’t brought a tourist past the Kármán line or ever flown to orbit. These were inconvenient facts that Bezos’s rival, Elon Musk, who also framed his efforts in space as a way to inspire humanity and potentially save it from extinction, took every opportunity to point out.

  “I have a lot of respect for anyone who has flown a rocket to orbit,” Musk said at the unveiling of SpaceX’s next generation rocket prototype, the fifty-meter-tall Starship, in September 2019, taking a subtle dig at Blue. At an interview at a financial conference a few weeks later, Gwynne Shotwell was more explicit. “They’re two years older than us, and they have yet to reach orbit,” she said. “They have a billion dollars of free money every year.”

  On its website, Blue Origin insisted, “We are not in a race, and there will be many players in this human endeavor to go to space to benefit Earth.” Yet the contrast between the two companies was never starker. In 2020, SpaceX would fly its one hundredth mission, bring humans to the International Space Station, and establish itself as the world’s dominant rocket company. Musk, who vaulted temporarily past Bezos to become the world’s richest person during the run-up of Tesla’s stock price in 2021, was industrializing space first and didn’t shy away from viewing it as a contest. “Competition I think is a good thing not a bad thing,” he told me. “The Olympics would be pretty boring if everyone just linked arms and crossed the finish line.”

  Blue remained secretive, struggling with the dysfunction encoded into its genetic makeup by Bezos, who had otherwise succeeded in nearly everything else he had created. Still, the entertaining exchange of barbs between the tycoons continued—about their plans for the moon, for Mars, whether Amazon was copying SpaceX with its plans to launch a constellation of low Earth satellites in space, and over Amazon’s purchase of Zoox, an autonomous vehicle company that might one day compete with Tesla.

  Musk and Bezos were a lot alike—relentless, competitive, and absorbed with their self-images. But Musk eagerly sought the spotlight and cultivated a kind of cultlike adoration at his companies and among his fans, preening on stage at Tesla events and extemporaneously (and often recklessly) riffing on Twitter. He also seemed entirely comfortable sharing the salacious details of his personal life, like his relationship with the musician Grimes.

  Bezos, on the other hand, was more guarded. He always followed a meticulous and well-rehearsed script in public and endeavored to put systems and values at the center of Blue Origin, instead of the heavily regulated resources of his own time and reputation. And he was far more circumspect than Musk with the details of his private life.

  But those details were going to prove difficult to suppress for much longer. In July 2018, Blue Origin conducted the ninth test flight of New Shepard on Bezos’s ranch in Texas. After the successful launch, New Shepard managers had to contend with an additional expense on their budget—charges for the services of a company called Black Ops Aviation, which Bezos had hired to record aerial footage for an uncharacteristic promotional stunt: a Super Bowl commercial for Blue Origin.

  The founder of Black Ops was by Bezos’s side at the launch: an attractive former TV anchor named Lauren Sanchez. It was another unfathomable shift to contemplate because, as they all knew, Jeff Bezos hated helicopters.

  PART III INVINCIBILITY

  Amazon, December 31, 2018

  Annual net sales:

  $232.89 billion

  Full- and part-time employees:

  647,500

  End-of-year market
capitalization:

  $734.41 billion

  * * *

  Jeff Bezos end-of-year net worth:

  $124.93 billion

  CHAPTER 12 License to Operate

  By the start of 2018, the disparate threads from Jeff Bezos’s private pursuits and Amazon’s business triumphs were finally converging to create the picture of a company and its founder in brilliant ascent. Millions of people around the world owned an Amazon Echo, moving Amazon from their doorstep into their homes with the virtual assistant Alexa promising to usher in an age of seamless voice computing. The cashierless Amazon Go store had finally opened to the public in Seattle and would soon start appearing in major cities around the U.S. In the costly race for e-commerce supremacy in India, the company was dueling on equal footing with the Walmart-owned Flipkart. In Hollywood, hits like The Marvelous Mrs. Maisel and Fleabag had established the company as part of a disruptive new wave, and streaming video as another doorway into the prosperous Prime ecosystem.

  In its original e-commerce business, Amazon had harnessed the chaotic force of Chinese capitalism to boost its third-party marketplace, completed its acquisition of Whole Foods Market, and developed a last-mile transportation network that supported its growth and mitigated its dependency on package delivery companies and national postal services. AWS remained the company’s primary engine of cash flow and profit, but Amazon had also developed a secondary source: a lucrative online advertising business.

  Even with an employee base nearing six hundred thousand—with almost two-thirds of its workers in the FCs—Amazon in early 2018 remained inventive and demonstrated considerable leverage over its fixed costs. For that unique combination, and for seemingly being unbound from the laws of organizational gravity that inhibited most large enterprises, investors that June awarded it with a market capitalization that surpassed $800 billion for the first time. And the stock price continued heading up.

  Bezos let all those plates spin on their own, returning to them only occasionally and usually without warning to generate provocative new ideas, clamp down on costs, and whack at the gathering bureaucracy. On his own time, he tinkered with the business and technology of the Washington Post, supervised the new management at Blue Origin, and exulted in launching test flights of the New Shepard rocket from his ranch in West Texas. He also considered plans for charitable work in the wake of public pressure to give away a fortune that had surpassed $100 billion. And as always, he contemplated Amazon’s long-term future—not just the dramatic new things it could do, but where it would do them.

  On January 29, 2018, Bezos hosted journalists, political luminaries like Washington governor Jay Inslee, and other guests on Amazon’s corporate campus in downtown Seattle for the opening of the Spheres, three interlinked glass-and-steel conservatories that housed a lush profusion of tropical plants, artificial creeks, and aquariums. It marked the culmination of an eight-year-long journey, starting when Amazon leased eleven low-rise buildings in the South Lake Union neighborhood from Microsoft cofounder Paul Allen’s Vulcan Inc. in the belief that they would accommodate its growth for the foreseeable future. Bezos felt that a dynamic urban campus could help Amazon attract and maintain coveted young technical employees. But headcount, expected to increase gradually, started to grow between 30 to 60 percent annually, along with the brisk expansion of Amazon’s business, and the six-story buildings in South Lake Union bulged with people.

  In 2012, Amazon bought the entire campus from Vulcan, along with an additional three-block site nearby, and started planning a high-rise office complex. In October of that year, Bezos happened to tour the Ferrari headquarters in Maranello, Italy. Always a collector of other companies’ quirks and customs, he may have been inspired by the indoor gardens that lined the luxury carmaker’s tranquil factory floor and soon after had a radical idea for Amazon’s new headquarters.

  “Alexa, open the Spheres,” Bezos said at the unveiling, standing at a podium facing the assembled crowd. “Okay, Jeff,” responded the disembodied voice of Alexa, Boulder singer Nina Rolle, as a circular ring affixed to the domed ceiling illuminated with blue light and misters began to spray water onto thousands of exotic plants and trees. Employees and guests applauded, while Bezos reared back with his inimitable, barking laugh.

  But not everybody was celebrating. By the opening of the Spheres that January in 2018, forty-five thousand Amazon employees worked in Seattle, and the company occupied about a fifth of all the premium office space in the city. New hotels, restaurants, and construction sprouted in an already dense downtown core. Amazon had altered the quirky character of its hometown, once known as an industrial city and as the source of alternative trends like grunge music and fashion.

  All of the downsides of twenty-first-century urbanism had accompanied these rapid changes. Historic neighborhoods with rich cultural histories, like the largely Black Central District three miles east of Amazon’s offices, had gentrified at an alarming rate. The average rent for a one-bedroom apartment in Seattle increased by 67 percent between the years of 2013 and 2017, according to the National Low Income Housing Coalition. Traffic on the I-5 freeway into the city, and over the bridges to West Seattle and to the eastern suburbs, crawled to a standstill during rush hour. With restrictive land use regulations and neighborhood opposition limiting the construction of new housing, low-income families were displaced and homelessness on Seattle streets became sickeningly ubiquitous.

  Most public officials agree that the city was unprepared for these changes and didn’t move swiftly enough to counter them. “What was surprising to us in government was the depth and breadth and acceleration of Amazon’s growth,” said Tim Burgess, a city councilman who was briefly Seattle’s mayor in 2017. “In many ways, the city wasn’t ready for it.” Maud Daudon, the former CEO of the Seattle Metropolitan Chamber of Commerce, said that Seattle was “inevitably caught a bit flat-footed as a community” by Amazon’s rise. “It was just so transformational.”

  The same dynamic was playing out eight hundred miles south in Silicon Valley, where the recoil from longtime residents to the changes wrought by companies like Google and Facebook came to be known colloquially as the “techlash.” In Seattle, it was very specifically an “Amazonlash.”

  Absorbed with the mechanics of its relentless growth, Amazon executives and employees were easy to vilify. Unlike its older peers Microsoft and Boeing, the company donated almost nothing to local philanthropies like the county chapter of the United Way, and didn’t even match the charitable contributions of its workers. (Amazon disputed this characterization and said it “has long supported local Seattle initiatives.”) Bezos appeared to prefer to funnel every available nickel into new product lines or reducing prices for customers. Communication between Amazon and its hometown amounted to genteel emails between John Schoettler, Amazon’s longtime real estate chief, and city planning officials. Unlike other local luminaries such as Bill and Melinda Gates or Pearl Jam front man Eddie Vedder, Jeff Bezos was largely invisible and a relative cipher in the community.

  Sensitive to criticism from the Seattle Times and other local media that it was absent in hometown philanthropy, the company began to look for ways to contribute in 2016. Schoettler spearheaded the donation of a former Travelodge Hotel on company property to a local nonprofit called Mary’s Place, which served homeless women and children. When the hotel was demolished, Amazon moved the shelter to a nearby Days Inn, then reserved eight floors for it in one of its new office buildings. That year, Amazon also backed a coalition that proposed a successful $54 billion ballot initiative to expand light rail and other public transit in the region.

  Bezos was aware of these initiatives, said Amazon employees who worked on them. He supported them, several felt, because they boosted Amazon’s image and required a relatively minor investment of dollars and his own time. He was characteristically focused on the business and largely transactional when discussing community involvement. Internal documents at the company advocated that Amazon do
enough to maintain its “social license to operate”—the business concept that refers to the public’s acceptance of a company, its employees, and business practices.

  For decades, that long-standing contract between companies and their communities had remained relatively stable. A business could create jobs, pay its taxes, and perform a modicum of public service, then quietly go about its way. But in the twenty-first century, the relationship between cities and the sprawling global conglomerates in their midst was the subject of probing questions. What was the public cost when cities enticed corporations with tax breaks and property giveaways? How could companies become good faith partners with their communities? And as governments failed to solve the intractable problems of income disparity and poverty, what responsibility did corporations have to step in and confront them?

  In Seattle, the corporate responsibility movement was embodied by the election of Kshama Sawant, a self-styled Marxist socialist who joined Seattle’s city council in 2014. Sawant and her allies proposed a litany of additional taxes aimed at forcing Amazon to pay for the negative effects of its growth. Former mayor Tim Burgess says, “Her election was seminal in terms of changing the mood and the quality of public discourse.”

  In June 2017, Sawant cosponsored a bill proposing a 2.25 percent increase on income tax for individuals making more than $250,000 a year. Amazon employees said the measure, which passed the council unanimously but was successfully challenged in court and never implemented, caught the attention of Bezos, who paid little attention to local politics. Later that year, Sawant also floated a “head tax” that would impose a new tariff on companies based on their number of local employees. The idea was defeated but would return again and again over the coming years. As a result, Amazon executives came to feel unappreciated by a city that was long beset by boom and bust cycles, a condition neatly summarized by a famous 1970s billboard: “Will the last person leaving SEATTLE—Turn out the lights.”