Amazon's Jeff Bezos on profits, failure, succession, big bets
uk.businessinsider.com
uk.businessinsider.com
Yes, yes it does. At least it does for me. I haven't read as much and bought as many books in decades. A considerable part of my media consumption time has shifted away from series, movies and internet back to books. Mostly because it's so damn easy to get the next book. And the next. Etc.
Since then, I read way more than before (about 25 books per year, fiction and non-fiction, sometimes 2-3 in a week, sometimes nothing for a month). I also feel like I read faster.
I mostly read in English, although my native language is German, because translation is so damn easy (just point your cursor in front of a word), because English books are often way cheaper on the Kindle and there's simply a bigger selection, and because I enjoy reading English books in their original language.
Fun fact: a fully loaded kindle weighs more than an empty kindle, by about 10^-18 grams. So, at a maximum of 50mb per book, each book would come in below 12.5 zeptograms (normally below 0.25 zeptograms).
http://blog.liberwriter.com/2014/06/04/review-the-everything...
In some ways, Amazon is the most unusual of the big tech companies; at least it seems that way to me. Microsoft, Apple, Google, and even newer companies like Facebook seem to have a lot more in common with one another than with Amazon.
I believe Amazon is the only company which includes the CEO's message from its first annual report(1997) where Bezos says that its all about the long term.
"As a private company, we have concentrated on the long term, and this has served us well. As a public company, we will do the same."
What really matters is, companies that don’t continue to experiment, companies that don’t embrace failure, they eventually get in a desperate position where the only thing they can do is a Hail Mary bet at the very end of their corporate existence.
I've seen that first hand. It's ugly, especially because the best people leave companies where they don't get to innovate and own new things, so you're doing that "Hail Mary pass" with a lot of deadwood in your ranks.
That said, I'm having a hard time reconciling his pro-innovation stance with Amazon's use of stack-ranking, which causes divisions to ossify and halts innovation. It seems hard, after a point, to innovate if you don't trust your own people. You'll have a core in-crowd that will toss you ideas for a while, but eventually they run out and lose the ability to keep pace.
That's the question that I would want to see asked: how do you reconcile your ideals (which are admirable) with the reality of a company known to use stack ranking?
Stack ranking is not a well defined term. It can mean any of
1. The result of the review process is that people in a team are ranked, the top X% are rewarded and bottom Y% are punished.
2. Reviewers are asked to rank people they review (possibly not all in the same team) and this information is part of the input to the review process.
3. When making decisions, all the people in consideration (possibly not in the same team) are ranked.
Case 1. is a problem because we can't expect the law of large numbers to hold within a small team, and because it gives people bad incentives.
Case 2. is less of a problem for incentives because people being compared can be from different teams. This also provides comparisons across teams that let people be judged relative to the company rather than their teams, and so the law of large numbers does hold.
Case 3. is not really relevant to anything, since when deciding the outcomes for N people, you obviously want the best outcomes to go to the best people. Stack ranking is just an aide to turning subjective impressions into numbers. I've seen it used in essay grading, and also assigning final grades in classes (ranks are based on individual test scores and not altered, then cutoffs for letter grades are determined).
Those yearly reviews will factor somehow into my pay, bonuses, etc, but I only see the final result of it. Was I stack ranked?
That doesn't mean that you or your manager are necessarily doing a great job though, or that other people aren't being hurt by the system.
You can guess which one I prefer.
This same manager also later became notorious for angrily declaring that "<productName> has no technical debt!" in a meeting, despite the product being unable to meet any reasonable SLA for years (bad architecture, bad code quality, >100% annual turnover). Not sure I'd use him as an example of management there, but pockets like this certainly exist.
First of all, it makes individual workers have their eyes on the scoreboard (reviews) rather than the game, because there's no escaping mediocre reviews; if you get smacked, you're stuck on a team forever. (And, sometimes you have good workers who get shitty reviews to prevent flight.) Second, it slows internal mobility to a crawl, because people getting lousy reviews can't move and people getting good reviews don't want to move, lest they risk getting mediocre scores and showing "negative trend" (making promotion nearly impossible). So, collaboration stops (due to the impossibility of lateral or diagnoal movement) and departmental position becomes permanent and tribal, and you get the "warring departments" dynamic. Even if you don't agree that departmental rivalry is a bad thing, what it tends to mean is that, due to the unpredictable sabotage events, whole sectors of the company become unreliable and upper management finds itself duplicating effort and running "bake-offs", but talented people avoid bake-off projects like the plague, so you get a "Dead Sea Effect".
Usually, when people talk about stack-ranking, they're also talking about Enron-style performance reviews (that is, performance reviews that are part of the transfer packet). You can theoretically have one and not the other, but they tend to go together.
Make no mistake, Amazon is not a great place to work. Ok place to work maybe. Good if you have managed to fit in. But even after that, they underpay. Friends with literally a decade of time out in are making relatively low considering their wide areas of responsibility.
I think this myth really continues both because people tend to only pay attention to base salary and don't consider cost of living/state taxes, and due to the fact that Amazon does underpay warehouse workers, as evidenced by the current strike in Germany.
I can't speak for higher level positions though. But Amazon tends to strongly favor giving out more stock over more cash, which goes back to the same issue of not comparing total compensation.
Stock always comes with a vesting schedule and a forfeit clause, which means that if you accept more stock as a substitute for a better salary, you are implicitly agreeing to let them retroactively underpay you for the last couple years of your tenure, whenever you move on to the next thing.
Don't kid yourself that you're going to stay at the same company long enough that it won't matter, either; the raise you get by switching jobs always dwarfs the raise you get by sticking around and jumping through the perf hoops and trying to get a promotion. So the only way to make the stock pay out is to screw yourself on salary over the long term.
What's more, keeping a large portion of your net worth in your employer's stock is a terrible diversification strategy, so you will probably end up flipping it and investing in something else as soon as it vests. So.... what was gained by accepting compensation in stock, again? I'd rather they just pay me cash money and let me invest it however I want.
[1]: http://www.glassdoor.com/Salary/Amazon-com-Salaries-E6036.ht...
So, the question is: how does one get into the "trusted core in-crowd"? Is this something that one can pre-select in the hiring process? I wouldn't work for Amazon unless I were fast-tracked into that set and I imagine that the odds are very long.
The high turnover is not a bug, it's a feature.
We need a third case between "bug" and "feature" for "that which works as designed, but does a harmful thing". In the short term, the "Real <X>" phenomenon (i.e. "Real Amazoners" get to work on the cool stuff and innovate, and the peasants do the shit work and burn out after a year) motivates people. In the long term, it's bad on both sides of the divide. The losers hate it (that's obvious) and begin to underperform and sabotage the organization, to the point where you get an unreliable "Swiss cheese" organization. However, it also leads the winners toward complacency and entitlement, as well as obsession over relative status, which leaves the company ill-equipped to compete on absolute terms and keep relevant. These degeneracies can be slowed down to the point of happening over 15 years instead of 6 months, but they are inevitable.
At most companies it's based on playing the political game well and building alliances with the right people. I've never worked at Amazon but I doubt they are different in this regard. It's just how humans work in the general case.
We need a third case between "bug" and "feature" for "that which works as designed, but does a harmful thing".
I call that sort of thing a "misfeature."
In any event, I think it's a very interesting company and one I wish I knew more about.
Unless you work in a warehouse.
I'm not sure in what scenario that would happen. Amazon is funding its other growth with cash from its core business, which continues to expand. Your scenario would require that Amazon's core retail business die.