- Amazon held its biannual all-hands staff meeting last month.
- Amazon CEO Jeff Bezos and his top executive team answered tough questions from employees during the event, according to a recording of the event obtained by Business Insider.
- To provide more context, Business Insider is publishing the full transcript of their answers to some of the key questions asked.
- Click here to read more BI Prime stories
As previously reported, Business Insider gained access to Amazon’s biannual all-hands staff meeting that took place last month.
The meeting, held only twice a year, is a valuable window into Amazon’s thinking, as CEO Jeff Bezos and his top executive team, known as the S-team, rarely speak in public.
During the meeting, Bezos and the S-team answered tough questions from employees about the challenges facing the company. The questions covered everything from malicious sellers on Amazon’s marketplace to the increasingly hostile political environment and the JEDI cloud contract Amazon lost to Microsoft.
Amazon’s representative declined to comment.
To provide more context around the meeting, we’ve decided to publish the full transcript of some of the most important questions discussed during the event (certain parts bolded by BI for emphasis):
On bad actors on Amazon’s marketplace
Q: Are you concerned that Amazon’s reputation is at risk due to bad actors selling goods on the marketplace?
Doug Herrington, SVP of North America Consumer: First, I would say that our reputation is built on customer trust and we have to earn that every single day. And anytime we have a bad experience or a customer or seller, like a late delivery or a fake review or a counterfeit product, it has the potential to damage our customers, damage our sellers and damage our reputation. That’s why we spend a lot of resources to combat this. In 2018 alone, we spent over $400 million and we dedicated more than 5,000 team members to prevent fraud and abuse in our store. And to give you a sense of the scale of how successful they’ve been — in 2018, we stopped more than a million potential bad actors from successfully opening Amazon selling accounts. And we blocked more than 3 billion potential bad listings from getting published to our store. And we also ensured that 99.9% of all pages viewed by our customers were to products that had never received a counterfeit notice of infringement.
We’ve got a bunch of programs in place that’s yielding these great results. A big exciting one that we launched last year was called Project Zero. That allows our brands to work with us to reduce counterfeits to zero. We take our automated technologies and we take their know-how of their own intellectual property and how to identify counterfeits. One of the coolest aspects of this is a self-service counterfeit removal tool that we give to those brands so that when they identify one on the site, they don’t have to talk to us, they can take it down themselves. It allows us to react very quickly and even more importantly, that information feeds our machine learning models and then we proactively can block anything that looks like that going forward into the future. We’ve got another great program called Transparency that we’ve been rolling out globally and this is a service that allows brands to put unique serial codes on their products and we scan every one of their products in inbound and outbound and ensure that only authentic products get in to customers.
We’ve got over 6,000 brands signed up for this. We stopped 300,000 counterfeit items from getting to our customer last year using this program. And what’s super exciting to me is that we haven’t received a single counterfeit notice of infringement from the brands on any of the products that are using the Transparency service. These are some of the things we are doing. Of course these bad actors are going to continue to try to do what they do to disrupt our shopping experience and our selling experience. And so our job is going to be the same — we’ve got to stay ahead of them and we’ve got to prevent fraud and abuse before it happens on our store. And we’re going to invest whatever it takes to protect our store and protect our reputation.
On brands ditching Amazon to sell directly to consumers
Q: Some of Amazon’s largest retail vendors are thinking about or testing their own direct-to-consumer strategies. Should Amazon be worried about what this looks like in 10 years? Specifically, is there a risk that retail vendors might pull selection off Amazon that isn’t profitable and fulfill orders themselves as their direct-to-consumer capabilities improve?
Herrington: I would say direct to consumer is not a new trend. It’s been around for a while and in fact, all of our biggest brands and biggest vendors are used to selling their products in many different stores online and offline, including their own stores and their direct to consumer stores. And the reason that they do this is because they’re trying to reach as many customers as possible. And so for almost all of them, the direct to consumer businesses that they set up are not about replacing their traditional retail partners as much as augmenting them. That said, we’ve got to still deliver a lot of value to brands and we do that like we always have by focusing on our customers and we obsess over our customers to build a fantastic shopping experience with low prices and fast free shipping so that our customers make Amazon their preferred shopping destination. And as long as our customers choose to shop with us, those brands will continue to want to sell with us.
Bezos: Yeah, and I would say, just to add to that, the brands that could go direct, will continue to use us as long as we’re actually adding value to the whole process. So as long as we are doing a great job of customer services, as long as we’re aggregating orders, it’s obviously way more efficient if you can get a few items in a box and transport that than it is if you have a single item in a box. So there are a bunch of reasons why aggregation is very helpful, not only to consumers but also to the brands that manufacture the products that they want in the hands of consumers. So that’s going to continue to be true. And there will be cases where brands for whatever reason, have a strategy of going direct to their consumers, and that’s going to be okay too — we’re part of the mix.
On user privacy and the spread of misinformation on Amazon Advertising
Q: As Amazon Advertising mushrooms in size and scale, and given the backlash against Google and Facebook in regards to data privacy and the spread of misinformation, what are our plans to combat similar circumstances within Amazon Advertising?
On losing the $10 billion JEDI contract to Microsoft
Q: Microsoft apparently won the joint enterprise defense infrastructure contract, JEDI, for cloud services. How does this affect AWS, our growth prospects and plans?
Andy Jassy, CEO of AWS: The JEDI award won’t impact AWS’s long-term growth prospects or plans. I think it’s important just to remember for perspective that AWS has a $36 billion revenue run rate business and JEDI, if and when it actually reaches its maximum, is about a billion dollars a year.
We feel pretty strongly that it was not adjudicated fairly. I think that if you do any thorough apples-to-apples, objective comparison of AWS versus Microsoft, you don’t come out deciding that they’re comparable platforms. Most of our customers will tell us that we’re about 24 months ahead of Microsoft in functionality and maturity. And I also think there was very significant political interference in the process. I think when you have a sitting president who’s willing to publicly show his disdain for a company and the leader of the company, it’s very difficult for government agencies, including the DOD to make an objective decision without fear of reprisal. So we’re going to protest the decision and push the government to shine a light on what really happened. All that said, I would say we have a pretty significant business with the DOD today and the DOD spends many tens of billions of dollars on, on technology and no matter who wins JEDI, they’re going to use multiple cloud providers and we expect that we’ll be one of them and we’ll have a significant business moving forward.
On the future of Amazon’s logistics
Q: What is the next generation tech you’d like to see enrolled in worldwide ops and fulfillment centers in the next three to five years?
Dave Clark, SVP of North America Operations: There’s a lot of stuff going on in ops right now. We’ve talked over the years about what’s happening in our fulfillment centers with all the robotics and innovation that’s being deployed there and the Kiva fields and the other automation taking place. But I really think the next three to five years is all about what’s going to happen in our transportation businesses. And we’re starting to see our first implementations of robotic sort centers, package sortation centers, air hubs, delivery stations starting to deploy this year. And it will begin to scale in 2020 and 2021. And so I think by the time you look out three to five years, the way our transportation infrastructure operates is going to be pretty radically different than the way traditional transportation infrastructure works, and largely driven by both software and mechanical hardware, and automation introduction.
And we’re also doing a ton of work in our freight businesses with just technology programs for freight providers and freight businesses. In fact, the team just yesterday won an award that’s given out by carriers, transportation providers in the US for the best technology teams. And our group won that second year in a row. And now we’re really starting to take more of a leadership position in the technology provided for transportation in the US and around the world. And I think it’s a fun space to be in for the next few years.
On not responding to public criticism from politicians
Q: Why is Amazon not publicly correcting or countering presidential candidates’ incorrect or misleading public statements about Amazon?
Jay Carney, SVP of Global Corporate Affairs: The fact is we do, and you may have noticed that. We don’t always correct statements from politicians, candidates, or incumbents. And there are several reasons for that. It could be that the statement is so blatantly obviously untrue that journalists and other outside validators do their job, and we don’t have to enter the fray.
We also are careful not to take the bait when it’s clear that a candidate just wants us to respond so that he or she can get more attention. Obviously in this political environment, you know, a fight gets covered and that can run down to the benefit of a candidate and not necessarily to us. I would note that we judge these case by case. Earlier this year, somebody I admire greatly and I used to work for, Vice President Biden took a shot at us over our tax liability and I felt it was very important that we put out a statement making clear that his challenge or issue is not with us because we follow the law. It’s with Congress who writes the law and if he wants a tax liability to be different for companies like us, then he’s got to get Congress to write a new tax code because we just go by the law.
On how AWS is subsidizing its less profitable retail business
Q: Why should AWS profits be shared with other business lines of Amazon rather than sharing internally? We should invest all that money into further growth of AWS.
Brian Olsavsky, CFO: I think a lot of times some of our retail competitors say, you know, we’re using AWS to fund retail. But I think if you look at our actual financials, you’ll see that so far this year AWS has earned $7 billion of operating income. North America’s, which is most of the consumer business and devices and video and everything else, earn $5 billion, and international lost a billion. So, you know, at any point in time, we’re investing in a lot of areas. So to say one area where we have profits is funding directly another is kind of an abstract concept for us here. We’re essentially — we have one checkbook or one Amazon and we’ve consistently over our history used the profits from profitable businesses to fund things that are going to be the big businesses in the future. So, rest assured we’re not under-investing in AWS. I think like half of our headcount growth last year, nearly half, was in the AWS area. So we see great opportunity there and we’re continuing to invest very heavily, not only in people, but infrastructure and geographic expansion. So it’s a good question, but don’t let others outside the company kind of trick you into that line of thought.
Bezos: And just to be super clear, there’s no sense in which AWS is subsidizing retail because retail is profitable in its own right and perfectly capable of funding its own growth initiatives. And it’s funding tremendous growth initiatives inside retail, just as AWS is funding inside AWS.
On Amazon’s PAC donating to officials with conflicting views
Q: Amazon recently released our positions that are an attempt to clarify our views on certain issues. The Amazon political action committee consistently donates to politicians who actively oppose every single Amazon views you listed. How do you reconcile this behavior discrepancy? Should we believe the words or the money?
Carney: So I think it’s important that people understand if they choose to contribute to our PAC, that the PAC is bipartisan, that we donate to candidates, or rather candidates, or elected officials based on the positions they take that are good for our customers, are good for our employees, good for our businesses. It doesn’t mean we agree individually or as a company with every position of each politician who receives a donation. We think it’s important to have this PAC because it helps us engage with elected officials. But there are certainly other opportunities for all of you as citizens to put your money where you think it’s best placed on behalf of a candidate. So you’re welcome to do that. But don’t stop giving to the PAC.
Bezos: I would just add to what Jay said that, when you look at, when you’re working with people in general and you know, we have 600,000 people in this company, there’s no two people in this company who are going to share the same identical set of views on every issue. You have to be able to work with people who don’t agree with you on everything. And at the same time I would say when you look at candidates, and who you’re funding, there are certain issues that are extreme enough that they would be disqualifying and you would say, ‘No, I’m not going to support somebody who has that issue because that’s so, in my view, so disqualifying that even though they agree with me on this issue, I’m still not going to support them.’
But outside of those extreme cases, you have to be able to work with people who don’t agree with you on everything. And that is one of the, I think in our current political climate, the people, that’s getting more difficult to do because people take, you know, they kind of have these litmus tests for everything. But it’s not right. The right thing to do within reason, again, outside of those disqualifying issues is to acknowledge that in the way it works in the world and life and in democracies is that we don’t agree with everybody on everything and that’s okay. It has to be.
Towards the end of the event, Bezos lightened up the mood by answering more personal questions. And with that, the 30 minute Q&A session came to an end.
Q: If you had a time machine and could go back to the actual first day at Amazon, what would you do differently? What was that first day like?
Bezos: I wouldn’t do anything differently. It worked out so well (laughs), I would be afraid to change anything I did. I’d eat the same burrito for lunch. I’m telling you.
Q: Do you think that your original inspiration for starting Amazon is still the inspiration that Amazon embodies today?
Bezos: 100%. The kind of founding idea behind Amazon is Earth’s most customer centric company. Customer obsession hasn’t changed. It is still our most deeply held principle. Long-term thinking hasn’t changed. Willingness to invent, eagerness to invent, willingness to fail, operational excellence, those kinds of things, they have not changed. And they are what, if we stick to those principles and ideals and values, we will continue to do amazing things. Start with the customer, work backwards. Nothing’s really changed there.
Q: What’s your number one best piece of advice for new hires?
Bezos: Be customer obsessed. It’s not a difficult question to answer.
Q: Does Jeff wash his head with shampoo or soap?
Bezos: I’m not sure what this question asker is trying to say, but the answer is soap. (laughs)