Last week John Coates, the Harvard academic who is acting director of the Securities and Exchange Commission’s division of corporate finance, caused a kerfuffle in the world of SPACs.
In a highly readable (really!) treatise on blank-check companies, as special-purpose acquisition companies are also known, Coates issued a warning to the investment bankers, lawyers, entrepreneurs, part-time board members, and other charlatans exploiting the trend. Plenty could go wrong, he said, when those who raise SPAC funds then buy a company. He ticked off a list of concerns from conflicts of interest to celebrity involvement to the potential ordinary investors being lured by “baseless hype.”
Coates focused on the use of financial projections in SPAC deals. Because a SPAC buying a target technically is a merger, not an IPO, most have assumed it’s okay to ignore IPO rules, which prohibit financial projections that could be used to bamboozle investors. Coates cautioned SPAC sponsors against becoming too comfortable with this loophole-and suggested the SEC might make rules to clarify matters.
The SEC official didn’t give specific examples of “baseless hype,” but he might have mentioned the way companies describe the market opportunity in front of them. SPAC after SPAC, in presentations to investors, describe the “total addressable market” they are attacking. The implication is that even if they have little or no business today their potential is huge.
Like the financial projections that worry the SEC, these market-size estimates – nearly always rosy and often far out into the future – ought to give pause to investors. SPACs tend to buy unproven companies, like flying car manufacturers and space “infrastructure” companies. (If they were proven, the companies likely would go the more respectable IPO route.) Because investors can’t possibly know what these startups might become, the potential market size estimates are important for making an investment decision.
Flying car companies are particularly good at this cheerful prognostication. Three have announced plans to become SPACs so far. Two, Archer Aviation and Lilium, say their market could be as big as $3 trillion by 2040. Both based their guesstimate on the same 2018 Morgan Stanley research report by analyst Adam Jonas. The far-into-the-future estimate applies a kitchen-sink approach to market sizing by including revenue projections for several industries, including airlines, cargo, ride-hailing, and “key accelerants” like batteries, communications equipment, and software.
I asked Morgan Stanley for a copy of the Dec., 2018, Jonas report, “Flying Cars: Investment Implications of Autonomous Urban Air Mobility,” so I could dig into the assumptions Archer and Lilium are relying on. A Morgan Stanley spokeswoman said “we decline at this time, due to this report being outdated.” Good point, though one wonders why it’s good enough for companies about to include average investors as their shareholders.
Joby Aviation, another flying car company has a more modest, but also aggressive estimate of its potential market. It told investors it saw a $500 billion addressable market in the US alone and a global market of “north of $1 trillion.” Joby didn’t cite a date by which this market will appear. But it did source its estimate to another 2018 study, this one by tech consultant Booz, Allen, Hamilton.
That study, prepared for NASA, is available online. A summary notes that the US prognostication is “for a fully unconstrained scenario” and that factors like weather, certification, regulatory hurdles, and public perception could reduce its near-term estimate to 0.5% of the total, or $2.5 billion. As it happens, the BoozAllen consultant who wrote the report, Rohit Goyal, now works in “product intelligence” for Joby, according to his LinkedIn profile. Investors might do well to ask him about the report’s assumptions.
Let’s be clear about something: Making a guess at the total size of a potential market is a valuable exercise for investors. The late Don Valentine, a founder of Sequoia Capital, was famous for paying attention to the size of the market opportunity to the exclusion of all else. But he was making risky venture-capital bets. Lise Buyer, an advisor to companies that go public, and a fund manager, research analyst and VC at various stages of her career, told me it’s “totally legit for investors to ask what’s the biggest the market could be if everything goes right. But I think they will roll their eyes when the numbers get too big.”
There are plenty of good books about the opioid scourge, including Beth Macy’s “Dopesick” and the just-out and rapturously reviewed Sackler family takedown “Empires of Pain” by Patrick Radden Keefe. Eyre’s book focuses on the role of the big drug distributors – Cardinal Health, McKesson, and AmerisourceBergen – in pushing pills for years that led to an overdose epidemic. Each of these companies is locked in multi-state litigation to resolve the type of allegations Eyre details. CEOs of each, for what it’s worth, signed the Business Roundtable’s 2019 statement of purpose, which, among other things, promises to “respect the people in our communities and protect the environment by embracing sustainable practices across our businesses.” After reading this book you’ll be hard pressed to judge their actions respectful or sustainable.
I planned to write an entire column on hollow corporate statements and how they relate to the current climate of corporate activism and political awareness. But the lead editorial in the current issue of The Economist published a perfect distillation of what I wanted to say. So instead, I’ll link to it here.
Adam Lashinsky is a Business Insider contributor and former executive editor at Fortune magazine, where he spent 19 years. He is the author of two books: “Inside Apple” (about Apple) and “Wild Ride” (about Uber).
As a result, if you’re planning a spontaneous vacation that will require a rental car, be prepared to pay more for your vehicle than your flight or accommodations, especially if you’re looking to visit popular destinations like Hawaii, Florida, Phoenix, Arizona, and Puerto Rico.
“People are quickly realizing that they need to take the cost of the rental car into account because it’s no longer just an add-on,” Jonathan Weinberg, the founder and CEO of AutoSlash, told Insider. “It literally could be the majority cost of your trip, so folks who are planning things last minute are unpleasantly surprised by it.”
Rental car company Hertz is already expecting “strong demand” through the summer, which could cause decreased availability in certain markets, according to an email statement sent to Insider. Enterprise echoed this in its email statement sent to Insider, adding that it has been working to grow its fleet size to address this increasing demand.
If you’re wondering how to avoid these issues ahead of your summer vacation, consider planning ahead, although you could still see prices that are double or triple the typical costs. But if you’d rather book a last-minute trip to a hotspot like Florida, be prepared to see rental car prices about five to 10 times the average.
Rental vehicles in Hawaii averaged at about $50 a day two to three years ago. Now, some are going for $500 a day, according to Weinberg. And in extreme cases, prices have even hit $700 a day, Chris Woronka, a senior hotel-and-leisure analyst at Deutsche Bank, told Insider.
This week: Goodbye Bezos, Hello Armstrong – the billionaire life cycle
On Thursday, Amazon founder Jeff Bezos penned his final letter as CEO of the retail giant he launched 27 years ago. Bezos’ letters are an annual tradition, and his farewell address is full of insight about his views on the business and current events, with warnings about threats to democracy and the environment, and the need for all us to proactively take action.
Stock pops – whether of the first day of IPOs or direct listings – aren’t forever.
Sure, no one wants to work in an office where employees are distracted and riven by cable TV-like partisan shouting matches. But that doesn’t mean businesses are entitled to check out and look the other way on important issues that affect the lives of their customers.
On the same day of Coinbase’s Nasdaq debut, 100 other companies made headlines for speaking out against effforts to limit voting rights. Among the signatories: Google, Goldman Sachs, Target, and Amazon – businesses that have managed to do pretty well over the years.
It’s still just a design, but if the Earth 300 ever makes it into open waters it could change the way we think of boat travel.
The 300 meter-long yacht will be nuclear powered, using a molten-salt reactor based on technology from the Bill Gates-funded TerraPower company. The giant, 13-story dark glass sphere near the ship’s stern will apparently house a “science city” where a crew of researchers will work. But the ship will also have room for VIPs and tourists (and given the projected fare of $3 million per ticket, perhaps even a few stowaways).
Building this ship is expected to cost between $500 million and $700 million, with a target launch date of 2025 (though it could take several more years for the atomic engine to get regulatory clearance). That gives you plenty of time to compile your “yacht rock” playlist, atomic-edition.
In Jeff Bezos’ final letter to shareholders as the chief executive of Amazon, he thanked and praised his successor Andy Jassy.
Jassy, the former head of Amazon Web Services, is taking over the top job so that Bezos can step back from day-to-day responsibilities. Amazon announced the change in February, and the transition goes into effect in the third quarter of this year. Bezos will move to the role of executive chairman.
In Bezos’ letter, he outlined his ethos for the company and closed by praising Jassy, saying that he “won’t let the universe make us typical.”
“I want to especially thank Andy Jassy for agreeing to take on the CEO role,” he said. “It’s a hard job with a lot of responsibility. Andy is brilliant and has the highest of high standards. I guarantee you that Andy won’t let the universe make us typical. He will muster the energy needed to keep alive in us what makes us special. That won’t be easy, but it is critical. I also predict it will be satisfying and oftentimes fun. Thank you, Andy.”
Jassy will be taking over as Amazon transitions from focusing on meeting pandemic-era needs to a new daily life amid a wider vaccine rollout. Bezos made the announcement to depart the top role as business was booming – Amazon’s revenue grew 44% in the fourth quarter as people shopped from home. But Jassy will also be tasked with guiding the company through a time of increased scrutiny from lawmakers. The company currently faces multiple antitrust-related investigations from lawmakers in the US and the EU.
In Amazon’s 1997 letter to shareholders, our first, I talked about our hope to create an “enduring franchise,” one that would reinvent what it means to serve customers by unlocking the internet’s power. I noted that Amazon had grown from having 158 employees to 614, and that we had surpassed 1.5 million customer accounts. We had just gone public at a split-adjusted stock price of $1.50 per share. I wrote that it was Day 1.
We’ve come a long way since then, and we are working harder than ever to serve and delight customers. Last year, we hired 500,000 employees and now directly employ 1.3 million people around the world. We have more than 200 million Prime members worldwide. More than 1.9 million small and medium-sized businesses sell in our store, and they make up close to 60% of our retail sales. Customers have connected more than 100 million smart home devices to Alexa. Amazon Web Services serves millions of customers and ended 2020 with a $50 billion annualized run rate. In 1997, we hadn’t invented Prime, Marketplace, Alexa, or AWS. They weren’t even ideas then, and none was preordained. We took great risk with each one and put sweat and ingenuity into each one.
Along the way, we’ve created $1.6 trillion of wealth for shareowners. Who are they? Your Chair is one, and my Amazon shares have made me wealthy. But more than 7/8ths of the shares, representing $1.4 trillion of wealth creation, are owned by others. Who are they? They’re pension funds, universities, and 401(k)s, and they’re Mary and Larry, who sent me this note out of the blue just as I was sitting down to write this shareholder letter:
I am approached with similar stories all the time. I know people who’ve used their Amazon money for college, for emergencies, for houses, for vacations, to start their own business, for charity – and the list goes on. I’m proud of the wealth we’ve created for shareowners. It’s significant, and it improves their lives. But I also know something else: it’s not the largest part of the value we’ve created.
Create More Than You Consume
If you want to be successful in business (in life, actually), you have to create more than you consume. Your goal should be to create value for everyone you interact with. Any business that doesn’t create value for those it touches, even if it appears successful on the surface, isn’t long for this world. It’s on the way out.
Remember that stock prices are not about the past. They are a prediction of future cash flows discounted back to the present. The stock market anticipates. I’m going to switch gears for a moment and talk about the past. How much value did we create for shareowners in 2020? This is a relatively easy question to answer because accounting systems are set up to answer it. Our net income in 2020 was $21.3 billion. If, instead of being a publicly traded company with thousands of owners, Amazon were a sole proprietorship with a single owner, that’s how much the owner would have earned in 2020.
How about employees? This is also a reasonably easy value creation question to answer because we can look at compensation expense. What is an expense for a company is income for employees. In 2020, employees earned $80 billion, plus another $11 billion to include benefits and various payroll taxes, for a total of $91 billion.
How about third-party sellers? We have an internal team (the Selling Partner Services team) that works to answer that question. They estimate that, in 2020, third-party seller profits from selling on Amazon were between $25 billion and $39 billion, and to be conservative here I’ll go with $25 billion.
For customers, we have to break it down into consumer customers and AWS customers.
We’ll do consumers first. We offer low prices, vast selection, and fast delivery, but imagine we ignore all of that for the purpose of this estimate and value only one thing: we save customers time.
Customers complete 28% of purchases on Amazon in three minutes or less, and half of all purchases are finished in less than 15 minutes. Compare that to the typical shopping trip to a physical store – driving, parking, searching store aisles, waiting in the checkout line, finding your car, and driving home. Research suggests the typical physical store trip takes about an hour. If you assume that a typical Amazon purchase takes 15 minutes and that it saves you a couple of trips to a physical store a week, that’s more than 75 hours a year saved. That’s important. We’re all busy in the early 21st century.
So that we can get a dollar figure, let’s value the time savings at $10 per hour, which is conservative. Seventy-five hours multiplied by $10 an hour and subtracting the cost of Prime gives you value creation for each Prime member of about $630. We have 200 million Prime members, for a total in 2020 of $126 billion of value creation.
AWS is challenging to estimate because each customer’s workload is so different, but we’ll do it anyway, acknowledging up front that the error bars are high. Direct cost improvements from operating in the cloud versus on premises vary, but a reasonable estimate is 30%. Across AWS’s entire 2020 revenue of $45 billion, that 30% would imply customer value creation of $19 billion (what would have cost them $64 billion on their own cost $45 billion from AWS). The difficult part of this estimation exercise is that the direct cost reduction is the smallest portion of the customer benefit of moving to the cloud. The bigger benefit is the increased speed of software development – something that can significantly improve the customer’s competitiveness and top line. We have no reasonable way of estimating that portion of customer value except to say that it’s almost certainly larger than the direct cost savings. To be conservative here (and remembering we’re really only trying to get ballpark estimates), I’ll say it’s the same and call AWS customer value creation $38 billion in 2020.
Adding AWS and consumer together gives us total customer value creation in 2020 of $164 billion.
If each group had an income statement representing their interactions with Amazon, the numbers above would be the “bottom lines” from those income statements. These numbers are part of the reason why people work for us, why sellers sell through us, and why customers buy from us. We create value for them. And this value creation is not a zero-sum game. It is not just moving money from one pocket to another. Draw the box big around all of society, and you’ll find that invention is the root of all real value creation. And value created is best thought of as a metric for innovation.
Of course, our relationship with these constituencies and the value we create isn’t exclusively dollars and cents. Money doesn’t tell the whole story. Our relationship with shareholders, for example, is relatively simple. They invest and hold shares for a duration of their choosing. We provide direction to shareowners infrequently on matters such as annual meetings and the right process to vote their shares. And even then they can ignore those directions and just skip voting.
Our relationship with employees is a very different example. We have processes they follow and standards they meet. We require training and various certifications. Employees have to show up at appointed times. Our interactions with employees are many, and they’re fine-grained. It’s not just about the pay and the benefits. It’s about all the other detailed aspects of the relationship too.
Does your Chair take comfort in the outcome of the recent union vote in Bessemer? No, he doesn’t. I think we need to do a better job for our employees. While the voting results were lopsided and our direct relationship with employees is strong, it’s clear to me that we need a better vision for how we create value for employees – a vision for their success.
If you read some of the news reports, you might think we have no care for employees. In those reports, our employees are sometimes accused of being desperate souls and treated as robots. That’s not accurate. They’re sophisticated and thoughtful people who have options for where to work. When we survey fulfillment center employees, 94% say they would recommend Amazon to a friend as a place to work.
Employees are able to take informal breaks throughout their shifts to stretch, get water, use the rest room, or talk to a manager, all without impacting their performance. These informal work breaks are in addition to the 30-minute lunch and 30-minute break built into their normal schedule.
We don’t set unreasonable performance goals. We set achievable performance goals that take into account tenure and actual employee performance data. Performance is evaluated over a long period of time as we know that a variety of things can impact performance in any given week, day, or hour. If employees are on track to miss a performance target over a period of time, their manager talks with them and provides coaching.
Coaching is also extended to employees who are excelling and in line for increased responsibilities. In fact, 82% of coaching is positive, provided to employees who are meeting or exceeding expectations. We terminate the employment of less than 2.6% of employees due to their inability to perform their jobs (and that number was even lower in 2020 because of operational impacts of COVID-19).
Earth’s Best Employer and Earth’s Safest Place to Work
The fact is, the large team of thousands of people who lead operations at Amazon have always cared deeply for our hourly employees, and we’re proud of the work environment we’ve created. We’re also proud of the fact that Amazon is a company that does more than just create jobs for computer scientists and people with advanced degrees. We create jobs for people who never got that advantage.
Despite what we’ve accomplished, it’s clear to me that we need a better vision for our employees’ success. We have always wanted to be Earth’s Most Customer-Centric Company. We won’t change that. It’s what got us here. But I am committing us to an addition. We are going to be Earth’s Best Employer and Earth’s Safest Place to Work.
In my upcoming role as Executive Chair, I’m going to focus on new initiatives. I’m an inventor. It’s what I enjoy the most and what I do best. It’s where I create the most value. I’m excited to work alongside the large team of passionate people we have in Ops and help invent in this arena of Earth’s Best Employer and Earth’s Safest Place to Work. On the details, we at Amazon are always flexible, but on matters of vision we are stubborn and relentless. We have never failed when we set our minds to something, and we’re not going to fail at this either.
We dive deep into safety issues. For example, about 40% of work-related injuries at Amazon are related to musculoskeletal disorders (MSDs), things like sprains or strains that can be caused by repetitive motions. MSDs are common in the type of work that we do and are more likely to occur during an employee’s first six months. We need to invent solutions to reduce MSDs for new employees, many of whom might be working in a physical role for the first time.
One such program is WorkingWell – which we launched to 859,000 employees at 350 sites across North America and Europe in 2020 – where we coach small groups of employees on body mechanics, proactive wellness, and safety. In addition to reducing workplace injuries, these concepts have a positive impact on regular day-to-day activities outside work.
We’re developing new automated staffing schedules that use sophisticated algorithms to rotate employees among jobs that use different muscle-tendon groups to decrease repetitive motion and help protect employees from MSD risks. This new technology is central to a job rotation program that we’re rolling out throughout 2021.
Our increased attention to early MSD prevention is already achieving results. From 2019 to 2020, overall MSDs decreased by 32%, and MSDs resulting in time away from work decreased by more than half.
We employ 6,200 safety professionals at Amazon. They use the science of safety to solve complex problems and establish new industry best practices. In 2021, we’ll invest more than $300 million into safety projects, including an initial $66 million to create technology that will help prevent collisions of forklifts and other types of industrial vehicles.
When we lead, others follow. Two and a half years ago, when we set a $15 minimum wage for our hourly employees, we did so because we wanted to lead on wages – not just run with the pack – and because we believed it was the right thing to do. A recent paper by economists at the University of California-Berkeley and Brandeis University analyzed the impact of our decision to raise our minimum starting pay to $15 per hour. Their assessment reflects what we’ve heard from employees, their families, and the communities they live in.
Our increase in starting wage boosted local economies across the country by benefiting not only our own employees but also other workers in the same community. The study showed that our pay raise resulted in a 4.7% increase in the average hourly wage among other employers in the same labor market.
And we’re not done leading. If we want to be Earth’s Best Employer, we shouldn’t settle for 94% of employees saying they would recommend Amazon to a friend as a place to work. We have to aim for 100%. And we’ll do that by continuing to lead on wages, on benefits, on upskilling opportunities, and in other ways that we will figure out over time.
If any shareowners are concerned that Earth’s Best Employer and Earth’s Safest Place to Work might dilute our focus on Earth’s Most Customer-Centric Company, let me set your mind at ease. Think of it this way. If we can operate two businesses as different as consumer ecommerce and AWS, and do both at the highest level, we can certainly do the same with these two vision statements. In fact, I’m confident they will reinforce each other.
The Climate Pledge
In an earlier draft of this letter, I started this section with arguments and examples designed to demonstrate that human-induced climate change is real. But, bluntly, I think we can stop saying that now. You don’t have to say that photosynthesis is real, or make the case that gravity is real, or that water boils at 100 degrees Celsius at sea level. These things are simply true, as is the reality of climate change.
Not long ago, most people believed that it would be good to address climate change, but they also thought it would cost a lot and would threaten jobs, competitiveness, and economic growth. We now know better. Smart action on climate change will not only stop bad things from happening, it will also make our economy more efficient, help drive technological change, and reduce risks. Combined, these can lead to more and better jobs, healthier and happier children, more productive workers, and a more prosperous future. This doesn’t mean it will be easy. It won’t be. The coming decade will be decisive. The economy in 2030 will need to be vastly different from what it is today, and Amazon plans to be at the heart of the change. We launched The Climate Pledge together with Global Optimism in September 2019 because we wanted to help drive this positive revolution. We need to be part of a growing team of corporations that understand the imperatives and the opportunities of the 21st century.
Now, less than two years later, 53 companies representing almost every sector of the economy have signed The Climate Pledge. Signatories such as Best Buy, IBM, Infosys, Mercedes-Benz, Microsoft, Siemens, and Verizon have committed to achieve net-zero carbon in their worldwide businesses by 2040, 10 years ahead of the Paris Agreement. The Pledge also requires them to measure and report greenhouse gas emissions on a regular basis; implement decarbonization strategies through real business changes and innovations; and neutralize any remaining emissions with additional, quantifiable, real, permanent, and socially beneficial offsets. Credible, quality offsets are precious, and we should reserve them to compensate for economic activities where low-carbon alternatives don’t exist.
The Climate Pledge signatories are making meaningful, tangible, and ambitious commitments. Uber has a goal of operating as a zero-emission platform in Canada, Europe, and the U.S. by 2030, and Henkel plans to source 100% of the electricity it uses for production from renewable sources. Amazon is making progress toward our own goal of 100% renewable energy by 2025, five years ahead of our initial 2030 target. Amazon is the largest corporate buyer of renewable energy in the world. We have 62 utility-scale wind and solar projects and 125 solar rooftops on fulfillment and sort centers around the globe. These projects have the capacity to generate over 6.9 gigawatts and deliver more than 20 million megawatt-hours of energy annually.
Transportation is a major component of Amazon’s business operations and the toughest part of our plan to meet net-zero carbon by 2040. To help rapidly accelerate the market for electric vehicle technology, and to help all companies transition to greener technologies, we invested more than $1 billion in Rivian – and ordered 100,000 electric delivery vans from the company. We’ve also partnered with Mahindra in India and Mercedes-Benz in Europe. These custom electric delivery vehicles from Rivian are already operational, and they first hit the road in Los Angeles this past February. Ten thousand new vehicles will be on the road as early as next year, and all 100,000 vehicles will be on the road by 2030 – saving millions of metric tons of carbon. A big reason we want companies to join The Climate Pledge is to signal to the marketplace that businesses should start inventing and developing new technologies that signatories need to make good on the Pledge. Our purchase of 100,000 Rivian electric vans is a perfect example.
To further accelerate investment in new technologies needed to build a zero-carbon economy, we introduced the Climate Pledge Fund last June. The investment program started with $2 billion to invest in visionary companies that aim to facilitate the transition to a low-carbon economy. Amazon has already announced investments in CarbonCure Technologies, Pachama, Redwood Materials, Rivian, Turntide Technologies, ZeroAvia, and Infinium – and these are just some of the innovative companies we hope will build the zero-carbon economy of the future.
I have also personally allocated $10 billion to provide grants to help catalyze the systemic change we will need in the coming decade. We’ll be supporting leading scientists, activists, NGOs, environmental justice organizations, and others working to fight climate change and protect the natural world. Late last year, I made my first round of grants to 16 organizations working on innovative and needle-moving solutions. It’s going to take collective action from big companies, small companies, nation states, global organizations, and individuals, and I’m excited to be part of this journey and optimistic that humanity can come together to solve this challenge.
Differentiation is Survival and the Universe Wants You to be Typical This is my last annual shareholder letter as the CEO of Amazon, and I have one last thing of utmost importance I feel compelled to teach. I hope all Amazonians take it to heart.
Here is a passage from Richard Dawkins’ (extraordinary) book The Blind Watchmaker. It’s about a basic fact of biology.
“Staving off death is a thing that you have to work at. Left to itself – and that is what it is when it dies – the body tends to revert to a state of equilibrium with its environment. If you measure some quantity such as the temperature, the acidity, the water content or the electrical potential in a living body, you will typically find that it is markedly different from the corresponding measure in the surroundings. Our bodies, for instance, are usually hotter than our surroundings, and in cold climates they have to work hard to maintain the differential. When we die the work stops, the temperature differential starts to disappear, and we end up the same temperature as our surroundings. Not all animals work so hard to avoid coming into equilibrium with their surrounding temperature, but all animals do some comparable work. For instance, in a dry country, animals and plants work to maintain the fluid content of their cells, work against a natural tendency for water to flow from them into the dry outside world. If they fail they die. More generally, if living things didn’t work actively to prevent it, they would eventually merge into their surroundings, and cease to exist as autonomous beings. That is what happens when they die.”
While the passage is not intended as a metaphor, it’s nevertheless a fantastic one, and very relevant to Amazon. I would argue that it’s relevant to all companies and all institutions and to each of our individual lives too. In what ways does the world pull at you in an attempt to make you normal? How much work does it take to maintain your distinctiveness? To keep alive the thing or things that make you special?
I know a happily married couple who have a running joke in their relationship. Not infrequently, the husband looks at the wife with faux distress and says to her, “Can’t you just be normal?” They both smile and laugh, and of course the deep truth is that her distinctiveness is something he loves about her. But, at the same time, it’s also true that things would often be easier – take less energy – if we were a little more normal.
This phenomenon happens at all scale levels. Democracies are not normal. Tyranny is the historical norm. If we stopped doing all of the continuous hard work that is needed to maintain our distinctiveness in that regard, we would quickly come into equilibrium with tyranny.
We all know that distinctiveness – originality – is valuable. We are all taught to “be yourself.” What I’m really asking you to do is to embrace and be realistic about how much energy it takes to maintain that distinctiveness. The world wants you to be typical – in a thousand ways, it pulls at you. Don’t let it happen.
You have to pay a price for your distinctiveness, and it’s worth it. The fairy tale version of “be yourself” is that all the pain stops as soon as you allow your distinctiveness to shine. That version is misleading. Being yourself is worth it, but don’t expect it to be easy or free. You’ll have to put energy into it continuously.
The world will always try to make Amazon more typical – to bring us into equilibrium with our environment. It will take continuous effort, but we can and must be better than that.
* * *
As always, I attach our 1997 shareholder letter. It concluded with this: “We at Amazon.com are grateful to our customers for their business and trust, to each other for our hard work, and to our shareholders for their support and encouragement.” That hasn’t changed a bit. I want to especially thank Andy Jassy for agreeing to take on the CEO role. It’s a hard job with a lot of responsibility. Andy is brilliant and has the highest of high standards. I guarantee you that Andy won’t let the universe make us typical. He will muster the energy needed to keep alive in us what makes us special. That won’t be easy, but it is critical. I also predict it will be satisfying and oftentimes fun. Thank you, Andy.
To all of you: be kind, be original, create more than you consume, and never, never, never let the universe smooth you into your surroundings. It remains Day 1.
Jeffrey P. Bezos Founder and Chief Executive Officer Amazon.com, Inc.
Europe’s leading privacy regulator is investigating whether Facebook broke the law in its handling of a leak of over 533 million people’s phone numbers and personal data.
Ireland’s Data Protection Commission, the body charged with overseeing Facebook’s privacy compliance in the European Union, announced it had opened an investigation into the social media giant on Wednesday. If Facebook is found to have violated the EU’s data rules, it could face a monetary fine of up to 4% of its $86 billion global revenue.
In a statement, the DPC said it believes EU data rules “may have been, and/or are being, infringed in relation to Facebook Users’ personal data.”
The personal data of over 533 million Facebook users were dumped online for free in a hacking forum earlier this month, Insider first reported. The data included phone numbers that users didn’t make public on their Facebook profiles, which were scraped by cybercriminals in violation of Facebook’s terms of service.
A Facebook spokesperson said in a statement to Insider that the company is “cooperating fully” with the investigation, adding that the DPC is probing a now-patched vulnerability in a Facebook tool that made it possible to gather information about a Facebook user by entering their phone number.
“We are cooperating fully with the IDPC in its enquiry, which relates to features that make it easier for people to find and connect with friends on our services. These features are common to many apps and we look forward to explaining them and the protections we have put in place,” the spokesperson said.
Facebook also said it does not plan to notify the hundreds of millions affected by the data breach because it’s not confident that it has full knowledge of which users are affected, and because users can’t take steps to fix the issue given that the data has already been published online.
The DPC investigation comes on the heels of pressure from the European Commission. Justice commissioner Didier Reynders said on Monday that he had met with the DPC head Helen Dixon regarding the Facebook leak.
The EU investigation will probe whether Facebook had a legal obligation to notify users and European regulators when it found and fixed the vulnerability. The EU’s data privacy rules, known as GDPR, require such disclosures – but the GDPR only applies to data processed after 2018, and it’s not yet clear if the leaked Facebook data was scraped before the GDPR went into effect.
The DPC said that it has already started questioning Facebook about the data leak and that Facebook has “furnished a number of responses.”
Amazon recently installed AI-powered surveillance cameras in its delivery trucks that monitor drivers’ behavior in what the company says is an effort to reduce risky driving behaviors and collisions.
Whether the cameras ultimately accomplish that goal may depend on how much productivity Amazon is willing to sacrifice in order to keep drivers safe, according to a transportation expert who studies AI-powered safety systems.
Amazon’s cameras, which are made by a startup called Netradyne, record 100% of the time that the vehicle’s ignition is on, tracking workers’ hand movements and even facial expressions and audibly alerting them in real-time when the AI detects what it suspects is distracted or risky driving.
Almost immediately, drivers pushed back – and one even resigned, according to the Thomson Reuters Foundation – citing concerns about the cameras eliminating virtually any privacy they once had, as well as potentially making them less productive.
Several drivers told Insider’s Avery Hartmans and Kate Taylor they’re worried about Amazon penalizing them for using their phones on the job, even though they need the devices for navigation. Others said the additional safety precautions they’re taking to avoid committing infractions, like stopping twice at an intersection or driving slower, are making it hard to keep up with the company’s notoriously demanding delivery quotas, which can run as high 300 packages per day.
But that’s exactly the trade-off Amazon may be forced to make, Matt Camden, a senior research associate at the Virginia Tech Transportation Institute, told Insider.
“If a fleet wants to reduce risky driving behaviors, it’s critical to look at why the drivers are doing that in the first place, and usually, it’s because there’s other consequences that are driving that behavior,” such as “unrealistic delivery times,” Camden said.
“They want to keep their job. If they miss their delivery time, that’s going to look bad – they could be fired, they could lose their livelihood,” he said. “And if [the delivery time] is unrealistic, then they have to find a way to get it done.”
Instead, Camden said, companies like Amazon need to approach technology-based safety systems “from a more positive standpoint, from a training standpoint and say: ‘We’re not going to nitpick you. We just want you to be safe.'”
“Netradyne cameras are used to help keep drivers and the communities where we deliver safe,” Amazon spokesperson Alexandra Miller told Insider in a statement.
“Don’t believe the self-interested critics who claim these cameras are intended for anything other than safety,” she added.
Netradyne could not be reached for comment.
Miller told Insider in Amazon’s pilot test of the Netradyne cameras from April to October 2020, accidents decreased 48%, stop-sign violations decreased 20%, driving without a seatbelt decreased 60%, and distracted driving decreased 45%.
However, independent research on the Netradyne “Driveri” camera system Amazon uses, and AI camera systems generally, is more sparse.
In an informational video for its camera rollout, Amazon claimed “the camera systems” can “reduce collisions by 1/3 through in-cab warnings,” citing studies by an investment bank called First Analysis as well as VTTI, where Camden works. (First Analysis could not be reached for comment).
Amazon didn’t respond to questions about which studies it was referring to in the video.
Camden said VTTI hasn’t looked at Netradyne’s cameras specifically, but that a study it conducted in 2010 found “video-based monitoring systems” without real-time alerts or AI prevented between 38.1% and 52.2% of “safety-related events” when tested on two different company’s delivery fleets.
But those safety benefits were a result of funneling data from the cameras to safety managers, who could then give feedback to drivers to help them drive safer.
“We can’t say that these AI-powered cameras would reduce 10%, 20%, 30%, 50% [of safety incidents],” Camden said. “We can’t get that specific number yet because we haven’t done the research, but it makes sense that in-vehicle alerts do work to address risky driving,'” Camden said.
Similar technologies do show promise, he said, citing VTTI research that showed real-time lane-departure warnings reducing crashes by more than 45%.
But Camden also said when VTTI did a study last year looking at why some delivery fleets are safer than others, it ultimately came down to which ones had a strong “safety culture” and were “prioritizing and valuing safety, at least on the equal level as productivity, if not higher.”
“The safest ones typically said: ‘If you’re tired, we don’t care if you miss your delivery, we want you to stop. We want you to take a break. If you have to go to the bathroom, we want you to stop and go to the bathroom. We don’t want you to feel pressured to keep going.'”
Camden said those fleets made it clear that drivers could reject unrealistic delivery times and wouldn’t be penalized if the route took longer because of traffic or construction.
“It’s easier said than done, of course, because productivity is driving the business. They have to make money, they have to keep their customers happy,” he said.
“But really, it comes down to creating the policies and the programs to support safety, support the driver, because we don’t want them speeding. We don’t want the drivers cutting corners to try to make a delivery.”
Maybe it’s because of all the hoopla over the new “Godzilla vs. Kong” movie, but I’m noticing a lot of news about clashes between the titans of the tech industry lately.
The decade-long courtroom battle between Google and Oracle came to a close this week when the US Supreme Court declared Google the victor, absolving it of any allegations that it stole Oracle’s code by using Java APIs in the Android operating system.
Apple CEO Tim Cook threw a little fuel on the fire this week by calling Facebook’s concerns about the impact on its ad business a “flimsy argument,” during an interview with the New York Times’ Kara Swisher.
Each company has carved out a lucrative role helping business customers analyze data in the cloud. But, as one industry analyst notes in the story, the two companies’ interests are starting to converge, putting them “on a collision course.”
Throw in a pugnacious CEO (Snowflake’s Frank Slootman) who likens himself to WWII’s General George S. Patton, and a rival CEO (Databrick’s Ali Ghodsi) skilled at forming alliances with deep-pocketed partners and at raising cash, and you have the makings for a great rivalry.
Covid-wear reached a new pinnacle this week with the release of the Xubermask, a wild-looking internet-connected face mask that’s the result of a collaboration between musician-cum-entrepreneur Will.i.am, electronics company Honeywell, and Jose Fernandez, a designer whose credits include the SpaceX flight suit.
The mask is made of mesh and silicone, and comes with built-in noise-cancelling headphones, dual three-speed fans and LED lights. It’ll cost you $300, but you’ll be protected from germs and smog, and you’ll look like a cyber-warrior.
After one of the most high-profile union – and anti-union – campaigns in recent history, Amazon employees in Bessemer, Alabama, voted overwhelmingly against unionizing, with the National Labor Relations Board confirming Friday that 71% of eligible ballots were cast in opposition.
But eight labor experts told Insider that focusing on the vote tally misses the bigger takeaway from this saga: that American workers are demanding better workplaces and a voice on the job, and America’s current labor laws simply aren’t designed to help them accomplish that goal.
Still, they said, Bessemer put a spotlight on how stacked the deck is against workers, and that the broad, diverse public support for the union drive showed the US labor movement is gaining more steam than it has in decades.
Amazon, which had aggressively opposed the union effort, undoubtedly won a significant battle this week (pending likely legal challenges from the Retail, Wholesale and Department Store Union). But it may have put a target on its back that could prove costly in what’s likely to be an ongoing war over how companies treat their workers, the experts said.
The fight was never going to be fair
Amazon responded to the vote Friday by saying its “employees made the choice to vote against joining a union” and that it was glad their “collective voices were finally heard.”
But experts said that misrepresents what has happened since November, when Bessemer employees officially asked the NLRB to hold a union election.
“The result reflects the imbalance in current US labor law, rather than any genuine expression of whether workers would like to have more of a voice in their workplace,” Rebecca Givan, an associate labor and employment professor at Rutgers University, told Insider.
“This demonstrates just how hard it is for workers to gain a voice on the job when the employer has unlimited resources, full access to workers all day long, and very few legal constraints on what it can do or say,” she said.
In Bessemer, workers had a much tougher road to travel.
“Unions lose in 90% of the cases when management opposes the organizing effort,” which Amazon’s management did, Tom Kochan, a professor of management at MIT, told Insider.
That’s depite a surge in pro-union sentiment in the US in recent years. Kochan’s research in 2017 found that around 48% of non-union workers would join one if they had the opportunity, while a Gallup poll from August found that 65% of Americans approve of unions – the highest percentage in nearly 20 years.
But under US labor law, companies have lots of tools at their disposal to try to prevent employees from unionizing, from forcing them to listen to anti-union messaging in “captive-audience” meetings, to having a significant say over which employees are eligible to unionize in the first place. Even when companies violate those laws, the NLRB, which oversees union elections, lacks the power to issue fines, which experts said gives companies little incentive to play fair.
“The most important story is not the fact that the union didn’t win. Rather, it’s that they got as close to winning as they did,” Erin Hatton, an associate professor of sociology at the University of Buffalo whose research focuses on work and labor movements, told Insider.
“Through legal coercion and illegal tactics, employers spend a great deal of money to keep unions out and it usually works. So this outcome isn’t all that surprising. And yet the workers were incredibly successful in so many ways,” she said.
Anti-union tactics in the spotlight
One of those successes, experts said, was bringing attention to Amazon’s industry-standard, but still aggressively anti-union tactics.
“Amazon’s tactics during the campaign and voting process were successful for them but now are being questioned legally and in the public view,” Lynne Vincent, an assistant professor of management at Syracuse University, told Insider.
Once employees took their union drive public, Amazon enlisted expensive “union avoidance” consultants to help kick its union-busting tactics into overdrive. Amazon pushed its anti-union message through websites, t-shirts, frequent texts to employees, and midnight “education” meetings, which labor experts told Insider were fairly typically in union campaigns like this.
But the company also sought to shape the voting process itself.
The NLRB has allowed mail-in voting in union elections since March 2020 due to the pandemic, but Amazon (twice, unsuccessfully) tried to get the NLRB to hold an in-person election. When that failed, it reportedly pressed the United States Postal Service to install a mailbox outside the Bessemer warehouse.
An Amazon spokesperson previously told Insider that the USPS installed the mailbox “for the convenience of our employees.”
But the Retail, Wholesale and Department Store Union – under which Amazon’s Bessemer employees would have unionized if the vote had passed – accused Amazon of using the mailbox to intimidate workers and plans to file unfair labor practices charges with the NLRB that, if serious enough, could cause the NLRB to throw out the election result.
John Logan, a labor and employment professor at San Francisco State University who specializes in companies’ union avoidance strategies, told Insider that the mailbox’s placement likely gave employees an impression that “Amazon was playing some kind of direct role in monitoring and even perhaps in counting the votes, which clearly creates an atmosphere of pressure and potentially unlawful intimidation.”
Vincent said that companies who use a similar anti-union playbook to Amazon “may see validation in the effectiveness of the tactics,” but that the Bessemer campaign may also cause politicians to reexamine and ultimately outlaw some of those tactics.
What’s next for American workers?
Kochan said the Bessemer union drive was “another clear indication that [US] labor law is broken, perhaps in its current form, beyond repair.”
But many of the experts who spoke to Insider said the massive amount of attention and public support it generated suggest there may finally be an appetite to begin those repairs.
Under the Trump administration, the NLRB “systematically rolled back workers’ rights,” according to an analysis by the left-leaning Economic Policy Institute. President Joe Biden has already signaled he intends to be much more pro-worker than his predecessor, releasing a video in support of unionization efforts and against corporate “anti-union propaganda” – as Amazon employees were voting.
“Given the pro union sentiment in many areas, as well as the clear backing of the current administration, it would still not be surprising to see successful efforts to unionize businesses in other areas, and eventually, even at Amazon itself,” Joseph Seiner, a labor and employment law professor at the University of South Carolina, told Insider.
Veena Dubal, a law professor at UC Hastings who researches how technology impacts workers’ lives, said that the Bessemer vote may push regulators to look more closely at how giant tech firms like Amazon exert power over workers.
“A lot of regulatory focus has hinged on anti-trust regulation-the need to break up Amazon because of its significant market power-but the truth is, Amazon also exerts monopsony power in labor markets. In areas where Amazon warehouses exist, wages go down, not up,” Dubal said.
The COVID-19 pandemic and racial justice protests following George Floyd’s death last May have also forced Americans to reckon with how race plays a role in the workplace. That became a focus in Bessemer, where the RWDSU estimated that 85% of Amazon’s employees are Black, according to The New York Times.
“The core issue in the campaign was not about specific concessions but worker power. And in this case, it can’t be distinguished from the struggle for racial equity,” Premilla Nadasen, an associate professor of history at Barnard College who researches alternative labor movements, told Insider. “Black people are being disenfranchised electorally and subject to systemic violence. So, the struggle for economic control over matters more.”
“Official union membership figures aside,” she said, “more and more working-class Americans are recognizing the need to have a collective voice.”
Workers have long coveted jobs in the tech industry because companies promise things like good pay, prestige, luxurious perks, and innovative cultures.
But Emi Nietfeld, a Google engineer from 2015 to 2019, wrote in an op-ed for The New York Times on Wednesday that she left her tech job because Google’s supposed reputation as a great place to work masked the reality that – just like other companies – it ultimately looks out for itself.
Nietfeld said in the op-ed that one her male managers sexually harassed for more than a year, calling her “beautiful,” “gorgeous,” and “my queen” – and that Google’s reputation made it that much harder to speak up.
“Saying anything about his behavior meant challenging the story we told ourselves about Google being so special,” Nietfeld wrote, adding: “Google was the Garden of Eden; I lived in fear of being cast out.”
Google did not respond to a request for comment on this story.
When she eventually filed a formal HR complaint, Nietfeld wrote: “Google went from being a great workplace to being any other company.”
Google ignored Nietfeld’s concerns about having to sit next to her harasser during and after its three-month-long investigation, even after concluding that he violated the company’s harassment policy, she said, while suggesting that Nietfeld seek counseling, work remotely, or take a leave of absence.
It’s not the first time Google has come under fire over similar cultural and equity issues.
Nietfeld said Google didn’t appear to do much in the way of reprimanding her harasser, and after suffering through weeks of bad sleep and emotional distress at work, she took three months of paid leave. But Nietfeld said she returned only to face retaliation from another manager, get passed over for promotion, have her pay cut, and have Google make a “meager counteroffer” when two competing job offers came up.
“After I quit, I promised myself to never love a job again. Not in the way I loved Google. Not with the devotion businesses wish to inspire when they provide for employees’ most basic needs like food and health care and belonging. No publicly traded company is a family. I fell for the fantasy that it could be,” Nietfeld wrote.
Spring is here, arms are getting jabbed across the country, and in Silicon Valley the mood is feverish.
Every day brings news of big-ticket startup funding deals, eye-popping valuations, and fresh stock listings. It’s not as if Silicon Valley was struggling to attract capital before. But with the tech business having proven surprisingly impervious to the pandemic, an emboldened industry now seems convinced that the re-opening will bring only more good times.
As Becky Peterson reports: “When a startup raises a smaller round at a lower valuation, whether it’s out of necessity or just a strategic choice, fast moving investors can interpret that decision as a sign of weakness.”
And because the funding frenzy means such a big range in the quality of startups and investors, Insider has embarked on a big project to separate the wheat from the chaff. The result is the Seed 100, in which Insider’s VC/startups team worked with Tribe Capital to analyze data on 1,000 seed-stage investors to identify the 100 VCs who have mastered the art of early stage investing.
The Putin bundle: Russian smartphone users will now have the privilege of using software produced by their comrades. A new law stipulates that phones, TVs and laptops sold in the country must come pre-installed with a selection of Russian-made apps alongside foreign apps. Some locals have apparently taken to calling it the “law against Apple.”
Hold the confetti:Stock trading app Robinhood has been criticized for the animated on-screen confetti explosions that occur after users make a trade, with critics saying it turns investing into a gambling-like game. Robinhood strenuously disagrees, but says it will indulge the critics by replacing the confetti with “new, dynamic visual experiences that cheer on customers through the milestones in their financial journeys.
Virgin Galactic unveiled a shiny new spacecraft on Tuesday. The VSS Imagine is the latest version of a spacecraft that will eventually carry tourists into suborbital space. Virgin Galactic said it will begin ground testing and glide flights this summer.
Hundreds of people have already paid Virgin Galactic between $200,000 and $250,000 for tickets to suborbital space, though the company recently pushed back the expected departure date for these trips to “early 2022.” Virgin’s first spacecraft, the VSS Enterprise, was destroyed in a fatal crash in 2014.