1 00:00:00,080 --> 00:00:03,040 Speaker 1: You probably see them in your neighborhoods, those grayish blue 2 00:00:03,120 --> 00:00:05,840 Speaker 1: vans delivering the stuff that you and your neighbor has 3 00:00:05,880 --> 00:00:09,799 Speaker 1: recently bought on Amazon dot Com. Climbing in and out 4 00:00:09,840 --> 00:00:13,440 Speaker 1: of those vans are delivery drivers wearing Amazon uniforms. But 5 00:00:13,520 --> 00:00:17,600 Speaker 1: they aren't Amazon employees. They work for what Amazon calls 6 00:00:17,800 --> 00:00:23,160 Speaker 1: Delivery service Partners or DSPs for short. Over the last 7 00:00:23,239 --> 00:00:26,920 Speaker 1: few years, Amazon has been on a hiring spree looking 8 00:00:26,960 --> 00:00:29,920 Speaker 1: for entrepreneurs who are willing to sign up as delivery 9 00:00:29,920 --> 00:00:34,120 Speaker 1: company owners. Somebody from HR from Chicago calls me and 10 00:00:34,120 --> 00:00:37,800 Speaker 1: gives me the congratulations you are you have been chosen 11 00:00:37,800 --> 00:00:41,040 Speaker 1: to be a dsp oh and I was like, oh wow, 12 00:00:41,120 --> 00:00:44,440 Speaker 1: now this is serious. That's Ted Johnson. He was a 13 00:00:44,520 --> 00:00:48,000 Speaker 1: veteran who ran a small consulting business in Illinois. He 14 00:00:48,120 --> 00:00:52,000 Speaker 1: stumbled onto an online ad looking for delivery partners, interviewed 15 00:00:52,000 --> 00:00:55,240 Speaker 1: with an Amazon recruiter, and a few weeks later, Ted 16 00:00:55,320 --> 00:00:57,400 Speaker 1: got a phone call Where am I going to work 17 00:00:57,400 --> 00:01:02,320 Speaker 1: out of? And she gives me ten locations Oakland, Los Angeles, 18 00:01:02,840 --> 00:01:07,959 Speaker 1: San Diego, Brooklyn, Long Island, Pennsylvania. We've never been to 19 00:01:08,000 --> 00:01:10,360 Speaker 1: New England. We did a lot of research and we said, 20 00:01:10,440 --> 00:01:13,679 Speaker 1: let's uh, let's pack up. Ted and his wife Karen 21 00:01:13,720 --> 00:01:17,720 Speaker 1: were optimistic. It seemed like an opportunity to prove themselves. 22 00:01:18,240 --> 00:01:21,480 Speaker 1: Amazon was opening a brand new delivery station and they'd 23 00:01:21,520 --> 00:01:24,480 Speaker 1: be helping to build it from scratch. I was pretty excited. 24 00:01:24,480 --> 00:01:26,720 Speaker 1: I'm gonna be straight up with you. Um, I've run 25 00:01:26,840 --> 00:01:30,080 Speaker 1: a small business, uh, me and Karen and what they 26 00:01:30,080 --> 00:01:34,240 Speaker 1: had told us during our training on how many packages 27 00:01:34,319 --> 00:01:37,959 Speaker 1: we'd be delivering, how much money we'd be making, and uh, 28 00:01:38,120 --> 00:01:41,240 Speaker 1: it was a quality of life changing. It would be 29 00:01:41,280 --> 00:01:44,240 Speaker 1: more money that I could make in any other job 30 00:01:44,400 --> 00:01:47,400 Speaker 1: in my life. Amazon said the delivery partners could earn 31 00:01:47,480 --> 00:01:50,720 Speaker 1: up to three hundred thousand dollars and profits each year. 32 00:01:51,320 --> 00:01:54,160 Speaker 1: But there were a lot of costs associated with making 33 00:01:54,200 --> 00:01:57,600 Speaker 1: Amazon deliveries that Ted would learn about the hard way. 34 00:01:57,960 --> 00:02:00,160 Speaker 1: I've done a lot of big projects and everything, and 35 00:02:00,320 --> 00:02:04,080 Speaker 1: this thing was overwhelming. How are we gonna do liability insurance? 36 00:02:04,080 --> 00:02:06,640 Speaker 1: How are we gonna do workman's comp insurance? You know, 37 00:02:06,680 --> 00:02:08,680 Speaker 1: we're how we're going to do a payroll system? And oh, 38 00:02:08,720 --> 00:02:10,360 Speaker 1: by the way, you may not get vans, so go 39 00:02:10,400 --> 00:02:12,320 Speaker 1: out and on the market and look to get white 40 00:02:12,320 --> 00:02:14,679 Speaker 1: Man's So it was kind of a shoot from the 41 00:02:14,760 --> 00:02:18,040 Speaker 1: hip show, and I thought, well, you know Amazon, you know, 42 00:02:18,080 --> 00:02:21,160 Speaker 1: there's this big tech company. Uh, and maybe the reason 43 00:02:21,240 --> 00:02:23,640 Speaker 1: they're shooting from the hip is because the station is new. 44 00:02:24,320 --> 00:02:28,480 Speaker 1: From the start, the experience felt rushed and disorganized. And 45 00:02:28,560 --> 00:02:32,880 Speaker 1: on top of that, Amazon had aggressive expectations for how 46 00:02:33,040 --> 00:02:36,799 Speaker 1: fast they could deliver a package, so drivers were rushing 47 00:02:36,840 --> 00:02:40,680 Speaker 1: to make these delivery targets. Minutes and seconds mattered, which 48 00:02:40,720 --> 00:02:44,440 Speaker 1: led to injuries. Yeah, a lot of drivers um slip 49 00:02:44,440 --> 00:02:48,679 Speaker 1: and falls probably our biggest. And then the next one, 50 00:02:49,520 --> 00:02:52,720 Speaker 1: believe it or not, up here were dog bites. Dog 51 00:02:52,800 --> 00:02:57,360 Speaker 1: bites are a big problem. Actually, it's horrible. We had 52 00:02:57,400 --> 00:02:59,280 Speaker 1: them getting bit on the hand. We've had them getting 53 00:02:59,320 --> 00:03:02,280 Speaker 1: bit on the the calf, on the butt. We get 54 00:03:02,360 --> 00:03:05,480 Speaker 1: him to the doctor as soon as possible, you know. 55 00:03:05,639 --> 00:03:09,320 Speaker 1: But Amazon's remember, uh, it's it's the customer. It's the 56 00:03:09,320 --> 00:03:12,919 Speaker 1: package that's important, So be smart about it. And oh, 57 00:03:12,960 --> 00:03:15,560 Speaker 1: by the way, you're the business owner, so it's your 58 00:03:15,600 --> 00:03:18,520 Speaker 1: decision and it ain't ours. Ted tried to be a 59 00:03:18,520 --> 00:03:23,040 Speaker 1: responsible employer to his injured employees. His insurance paid for it, 60 00:03:23,639 --> 00:03:25,880 Speaker 1: but it wasn't lost on him that he was doing 61 00:03:25,919 --> 00:03:29,920 Speaker 1: all of this for Amazon, that in a way, a 62 00:03:30,000 --> 00:03:33,360 Speaker 1: big part of his role was to absorb responsibility and 63 00:03:33,480 --> 00:03:36,880 Speaker 1: liability for his driver's I would have never thought I 64 00:03:36,920 --> 00:03:41,360 Speaker 1: would assume so much liability and so much headache as 65 00:03:41,480 --> 00:03:46,680 Speaker 1: as I did, UH to serve uh this company that 66 00:03:47,000 --> 00:03:50,360 Speaker 1: could give her rat's ass about people. And that's that's 67 00:03:50,400 --> 00:03:54,400 Speaker 1: that's the truth. You're listening to Foundering. I'm your host, 68 00:03:54,480 --> 00:03:57,560 Speaker 1: brad Stone. We'll get back to Ted Johnson's story in 69 00:03:57,600 --> 00:04:00,600 Speaker 1: a bit, but first we're going to tell the story 70 00:04:00,640 --> 00:04:04,760 Speaker 1: of Amazon Logistics, the transportation division of a company that 71 00:04:04,840 --> 00:04:08,120 Speaker 1: fulfills the promise of delivery in one or two days, 72 00:04:08,600 --> 00:04:11,960 Speaker 1: but at a hidden cost. It's a story that begins 73 00:04:11,960 --> 00:04:15,840 Speaker 1: with Amazon being blamed for ruining Christmas, leading to the 74 00:04:15,840 --> 00:04:19,480 Speaker 1: fury of Jeff Bezos, and it ends with the formation 75 00:04:19,560 --> 00:04:23,039 Speaker 1: of one of the world's largest delivery fleets. There are 76 00:04:23,080 --> 00:04:26,000 Speaker 1: also thousands of people like Ted Johnson, stuck in an 77 00:04:26,040 --> 00:04:29,599 Speaker 1: unhappy codependence with one of the largest companies in the world. 78 00:04:30,400 --> 00:04:40,839 Speaker 1: We'll tell you that story after the break. We start 79 00:04:40,920 --> 00:04:45,080 Speaker 1: during the holiday shopping season two thousand thirteen. Amazon was 80 00:04:45,120 --> 00:04:48,120 Speaker 1: a much smaller business then. It had about one tenth 81 00:04:48,160 --> 00:04:51,200 Speaker 1: as many employees as it does today. Even though sales 82 00:04:51,240 --> 00:04:54,080 Speaker 1: were growing, it barely eked out a profit that year, 83 00:04:54,600 --> 00:04:58,479 Speaker 1: So the holiday season was crucial for Amazon. Back then, 84 00:04:58,839 --> 00:05:02,000 Speaker 1: Amazon didn't have of a delivery arm. It's relying on 85 00:05:02,080 --> 00:05:06,159 Speaker 1: large carriers like UPS, a one hundred year old company 86 00:05:06,440 --> 00:05:10,640 Speaker 1: with a unionized fleet of drivers. It's an existential crisis 87 00:05:10,680 --> 00:05:14,080 Speaker 1: every Christmas, in every peak season that they may not 88 00:05:14,200 --> 00:05:18,920 Speaker 1: have enough capacity to deliver packages to their customers. And 89 00:05:19,279 --> 00:05:23,719 Speaker 1: you know, if Amazon fails, if UPS fails, like the 90 00:05:23,720 --> 00:05:27,720 Speaker 1: whole country locks up. Right, Chris, there's no Christmas. Uh, 91 00:05:27,800 --> 00:05:30,719 Speaker 1: some kids going to be unhappy. That's Dave Click, a 92 00:05:30,760 --> 00:05:34,719 Speaker 1: former logistics vice president at Amazon. He said that back 93 00:05:34,760 --> 00:05:38,680 Speaker 1: then Amazon sales were growing at more than twenty a year, 94 00:05:39,400 --> 00:05:44,039 Speaker 1: but UPS was growing their capacity at about two. It 95 00:05:44,200 --> 00:05:47,440 Speaker 1: wasn't a problem in Amazon's early days. And so back 96 00:05:47,480 --> 00:05:52,720 Speaker 1: in UH, UPS was fine, right, we were dropping the bucket. Uh. 97 00:05:52,760 --> 00:05:56,640 Speaker 1: They had effectively infinite capacity. But as Amazon grew much 98 00:05:56,720 --> 00:06:00,000 Speaker 1: much faster than UPS and the other carriers, UH, they 99 00:06:00,279 --> 00:06:05,800 Speaker 1: to uh to use a material portion of that capacity. 100 00:06:06,000 --> 00:06:09,680 Speaker 1: Amazon was becoming a burden on UPS. The companies were 101 00:06:09,720 --> 00:06:14,359 Speaker 1: mismatched because think about it, UPS gives its driver Sundays 102 00:06:14,400 --> 00:06:18,839 Speaker 1: and holidays off. Meanwhile, the Amazon website is always available. 103 00:06:19,440 --> 00:06:22,760 Speaker 1: It's kicking out packages seventais a week, twenty four hours 104 00:06:22,760 --> 00:06:26,479 Speaker 1: a day. So the backlog of Amazon packages was growing 105 00:06:27,120 --> 00:06:30,960 Speaker 1: like water pushing against a dam. And then over the 106 00:06:31,000 --> 00:06:35,200 Speaker 1: holidays and there was bad weather, and for UPS the 107 00:06:35,320 --> 00:06:38,920 Speaker 1: dam was breached. They just got a little over their skis. Yeah, 108 00:06:38,960 --> 00:06:40,839 Speaker 1: you know, you sprinkle some snow in there, and that 109 00:06:40,880 --> 00:06:44,280 Speaker 1: makes everything just that much worse. And and these you know, 110 00:06:44,320 --> 00:06:48,520 Speaker 1: if you're running your plant, whether it's fulfillment, sortation, chemical 111 00:06:48,600 --> 00:06:50,360 Speaker 1: or whatever, if you're running your plante at full out 112 00:06:50,400 --> 00:06:53,200 Speaker 1: capacity and you lose a day or you lose it 113 00:06:53,279 --> 00:06:55,960 Speaker 1: two days because of weather event, you can't catch up. 114 00:06:56,320 --> 00:06:59,480 Speaker 1: Bad weather is being blamed for ruining some Christmas mornings. 115 00:06:59,640 --> 00:07:02,000 Speaker 1: Up us admits it failed to deliver a lot of 116 00:07:02,040 --> 00:07:06,400 Speaker 1: packages despite guarantees from online stores like Amazon. UPS and 117 00:07:06,440 --> 00:07:09,479 Speaker 1: Amazon will offer refunds to customers whose packages did not 118 00:07:09,560 --> 00:07:11,920 Speaker 1: make it in time for Christmas. Some people are still 119 00:07:12,000 --> 00:07:14,280 Speaker 1: waiting to get the gifts they ordered in the first place. 120 00:07:14,680 --> 00:07:17,480 Speaker 1: Some of them guaranteed huge delays this year for some 121 00:07:17,640 --> 00:07:20,880 Speaker 1: FedEx and UPS shipments. You know, we had one mom 122 00:07:20,920 --> 00:07:22,240 Speaker 1: talked about how do you explain to your kid that 123 00:07:22,320 --> 00:07:31,920 Speaker 1: Sannah didn't show up? Holiday gifts were stranded on the tarmac. 124 00:07:32,480 --> 00:07:35,679 Speaker 1: Amazon had to issue twenty dollar gift cards and attempt 125 00:07:35,760 --> 00:07:39,800 Speaker 1: to make amends, and the Great e Commerce Christmas Meltdown 126 00:07:40,160 --> 00:07:45,400 Speaker 1: made national headlines. I think we were all appalled, and 127 00:07:45,480 --> 00:07:50,760 Speaker 1: this is like the worst possible customer experience for Amazon, 128 00:07:50,840 --> 00:07:53,400 Speaker 1: and nobody knows. Oh, it's ups is fault. They bought 129 00:07:53,400 --> 00:07:55,560 Speaker 1: a package from Amazon. They bought a product from Amazon, 130 00:07:55,920 --> 00:07:59,520 Speaker 1: and Amazon needs to deliver it. Jeff Bezos was apoplectic 131 00:08:00,120 --> 00:08:03,240 Speaker 1: in his universe. This was just about the worst thing 132 00:08:03,280 --> 00:08:07,040 Speaker 1: that could happen, and Bezos directed his anger at a 133 00:08:07,040 --> 00:08:10,520 Speaker 1: guy named Dave Clark. He's known as the driving force 134 00:08:10,640 --> 00:08:14,280 Speaker 1: behind the growth of Amazon's warehouses and delivery network. Here 135 00:08:14,280 --> 00:08:18,280 Speaker 1: he is in talk to us about that fulfillment center. 136 00:08:18,360 --> 00:08:22,160 Speaker 1: I don't see too many humans. Help us understand the 137 00:08:22,200 --> 00:08:24,840 Speaker 1: amount of robots you have versus the amount of people 138 00:08:24,920 --> 00:08:28,800 Speaker 1: you employ. Well, our focus is about combining software with 139 00:08:28,960 --> 00:08:33,160 Speaker 1: automation through robotics and the human performance and process development. 140 00:08:33,280 --> 00:08:36,000 Speaker 1: And we continue to focus on automation for cost reduction 141 00:08:36,160 --> 00:08:40,240 Speaker 1: and speed improvement for delivery. And we're excited about the results. 142 00:08:40,760 --> 00:08:44,640 Speaker 1: When Dave took over Amazon operations in there were about 143 00:08:44,640 --> 00:08:50,240 Speaker 1: a dozen warehouses, there were almost two hundred. He's known 144 00:08:50,320 --> 00:08:54,480 Speaker 1: as a drill sergeant. He keeps things marching forward. He 145 00:08:54,559 --> 00:08:57,600 Speaker 1: also has a reputation as kind of a ruthless guy. 146 00:08:57,920 --> 00:09:01,560 Speaker 1: Some of his underlings called him the niper because in 147 00:09:01,600 --> 00:09:04,920 Speaker 1: his early years as an East Coast regional manager he 148 00:09:05,000 --> 00:09:07,040 Speaker 1: was quick to see who was slacking off from the 149 00:09:07,040 --> 00:09:12,280 Speaker 1: shop floor and fire them. But in Dave Clark was 150 00:09:12,320 --> 00:09:15,439 Speaker 1: the one on the chopping block. Bezos made it clear 151 00:09:15,679 --> 00:09:20,120 Speaker 1: he would fire Clark if another Christmas meltdown happened. To 152 00:09:20,240 --> 00:09:24,079 Speaker 1: save the company and himself, he would have to reshape 153 00:09:24,080 --> 00:09:27,320 Speaker 1: a major part of Amazon. Dave had a very keen 154 00:09:27,440 --> 00:09:33,600 Speaker 1: interest in all things transportation. Brilliant, brilliant, brilliant man. That's 155 00:09:33,640 --> 00:09:38,600 Speaker 1: Mike Indrasano, another former logistics executive at Amazon. So here's 156 00:09:38,600 --> 00:09:43,080 Speaker 1: what happened. After the Christmas fiasco. Dave decided Amazon could 157 00:09:43,160 --> 00:09:46,960 Speaker 1: no longer rely so heavily on UPS and FedEx. So 158 00:09:47,080 --> 00:09:51,200 Speaker 1: Amazon turned to the US Post Office because UPS was 159 00:09:51,240 --> 00:09:54,559 Speaker 1: out of capacity, but the Post Office was seeing the 160 00:09:54,640 --> 00:09:58,840 Speaker 1: volume of regular mail decline. They had excess capacity and 161 00:09:58,880 --> 00:10:01,680 Speaker 1: they were already o to practically every house in the 162 00:10:01,720 --> 00:10:05,720 Speaker 1: country six days a week. Now, while the Post Office 163 00:10:05,760 --> 00:10:08,640 Speaker 1: is great at mail delivery, they're actually not all that 164 00:10:08,720 --> 00:10:12,480 Speaker 1: fast and mail sorting. And that's where Amazon stepped in. 165 00:10:13,080 --> 00:10:17,000 Speaker 1: They would build out sortation centers where packages get organized 166 00:10:17,040 --> 00:10:20,560 Speaker 1: by zip code, and then they'd hand those off to 167 00:10:20,640 --> 00:10:24,200 Speaker 1: the mailman. Here's Mike. I got a phone call I 168 00:10:24,200 --> 00:10:28,440 Speaker 1: think it was Deer six and it was Dave Clark 169 00:10:28,640 --> 00:10:31,400 Speaker 1: and and then he asked me, he said, so, you know, 170 00:10:31,440 --> 00:10:34,439 Speaker 1: how many sort centers do you have in the plan? 171 00:10:34,720 --> 00:10:37,600 Speaker 1: And I said, well, we had. We have sixteen queued 172 00:10:37,679 --> 00:10:40,760 Speaker 1: up to launch over the next couple of years. And 173 00:10:40,920 --> 00:10:48,400 Speaker 1: he simply said, launched them all. And I said, okay, 174 00:10:48,720 --> 00:10:53,480 Speaker 1: gulp um, and we did. I mean, it was amazing. 175 00:10:53,800 --> 00:10:56,320 Speaker 1: I've never seen anything like that in my thirty years 176 00:10:56,320 --> 00:11:01,040 Speaker 1: in transportation. They raced to build all six sortation centers 177 00:11:01,040 --> 00:11:03,720 Speaker 1: in just a year, and they had a loose formula. 178 00:11:04,600 --> 00:11:08,560 Speaker 1: Put the sortation centers near a major interstate, near big cities, 179 00:11:09,240 --> 00:11:12,920 Speaker 1: near colleges that provided a hard time workforce. It was 180 00:11:12,960 --> 00:11:17,120 Speaker 1: a huge operation inside the company. They called it the 181 00:11:17,200 --> 00:11:21,680 Speaker 1: Sweet sixteen. The next step to Amazon reducing their reliance 182 00:11:21,720 --> 00:11:26,080 Speaker 1: on UPS and FedEx was acquiring planes. Here's Mike. I 183 00:11:26,160 --> 00:11:30,200 Speaker 1: remember getting a phone call from day saying I need 184 00:11:30,280 --> 00:11:32,760 Speaker 1: you to get an airplane. I'm like, I need to 185 00:11:32,760 --> 00:11:35,320 Speaker 1: get an airplane. Get can you you know, do you 186 00:11:35,360 --> 00:11:38,000 Speaker 1: know how any contacts? Can you get us an airplane? 187 00:11:38,080 --> 00:11:41,760 Speaker 1: And I'm like, what for? The planes come in to 188 00:11:41,840 --> 00:11:45,520 Speaker 1: shuffle inventory around, particularly when Amazon needs to meet its 189 00:11:45,559 --> 00:11:49,120 Speaker 1: prime delivery promise. They'll fly an item across the country 190 00:11:49,320 --> 00:11:51,960 Speaker 1: if it's out of stock at the local warehouse. And 191 00:11:52,040 --> 00:11:54,200 Speaker 1: the first thing they wanted to rush out was a 192 00:11:54,200 --> 00:11:57,800 Speaker 1: batch of kindles in December, when they had sold out 193 00:11:57,840 --> 00:12:01,959 Speaker 1: in Seattle once again, UPS and FedEx said they were 194 00:12:01,960 --> 00:12:05,720 Speaker 1: out of capacity. They couldn't help Amazon at its most 195 00:12:05,760 --> 00:12:09,600 Speaker 1: critical time of year, so Dave asked Mike to charter 196 00:12:09,760 --> 00:12:14,599 Speaker 1: some cargo jets. It worked out naturally. Jeff Bezos and 197 00:12:14,679 --> 00:12:18,320 Speaker 1: Dave Clark immediately wanted to double down right after it 198 00:12:18,440 --> 00:12:20,440 Speaker 1: was how many planes can we get? And hey, if 199 00:12:20,440 --> 00:12:22,679 Speaker 1: we can fly one plane, you know how many should 200 00:12:22,679 --> 00:12:25,960 Speaker 1: we be flying. This was the start of Amazon Air 201 00:12:26,640 --> 00:12:32,080 Speaker 1: in Amazon least forty seven sixty seven freighters from two airlines. 202 00:12:32,880 --> 00:12:35,959 Speaker 1: It also started to develop a cargo hub at Cincinnati 203 00:12:36,080 --> 00:12:40,080 Speaker 1: Regional Airport. Amazon was learning that it could mold a 204 00:12:40,120 --> 00:12:44,760 Speaker 1: transportation network to its own needs, control costs, and most 205 00:12:44,800 --> 00:12:48,600 Speaker 1: of all, keep up with its growth. Bezos, of course, 206 00:12:48,679 --> 00:12:54,280 Speaker 1: watch this build out carefully. Jeff was very concerned and 207 00:12:54,520 --> 00:13:00,000 Speaker 1: stayed closed Beazos's email addresses public Jeff at Amazon dot com. 208 00:13:00,120 --> 00:13:03,679 Speaker 1: Whenever he got an email from customers about a botch delivery, 209 00:13:03,960 --> 00:13:07,040 Speaker 1: he'd forward it on with a single piece of punctuation, 210 00:13:07,800 --> 00:13:13,400 Speaker 1: the question mark. Throughout fourteen I got a lot of 211 00:13:13,559 --> 00:13:18,240 Speaker 1: emails from Jeff with question marks, and oh what a 212 00:13:18,240 --> 00:13:21,520 Speaker 1: powerful tool. Mike says that executives would have to craft 213 00:13:21,600 --> 00:13:25,720 Speaker 1: detailed solutions to these emails and fix the core problems, 214 00:13:26,360 --> 00:13:31,400 Speaker 1: or else you cannot reply with a surface answer. In fact, 215 00:13:32,120 --> 00:13:36,360 Speaker 1: one response to Jeff could take three or four weeks 216 00:13:36,440 --> 00:13:41,120 Speaker 1: and could have twenty people involved. Jeff was not looking 217 00:13:41,240 --> 00:13:44,640 Speaker 1: for an answer to his question. He was looking for 218 00:13:44,720 --> 00:13:48,280 Speaker 1: a solution to the underlying problem. At the time, there 219 00:13:48,360 --> 00:13:51,640 Speaker 1: was no bigger question at Amazon than how to deliver 220 00:13:51,720 --> 00:13:56,280 Speaker 1: packages reliably and fast. Dave Clark wasn't happy relying on 221 00:13:56,320 --> 00:13:59,520 Speaker 1: the Post office either to keep up with its rapid growth. 222 00:13:59,800 --> 00:14:03,079 Speaker 1: The company was going to have to start delivering packages itself, 223 00:14:03,559 --> 00:14:07,680 Speaker 1: kicking off another wave of very public problems. Will tell 224 00:14:07,720 --> 00:14:20,240 Speaker 1: that story next. First they built sortation centers, then they 225 00:14:20,320 --> 00:14:25,080 Speaker 1: leased planes. They also added long haul trucks. This speaks 226 00:14:25,120 --> 00:14:28,920 Speaker 1: to Amazon's strength. When they find something is working, they 227 00:14:29,000 --> 00:14:32,880 Speaker 1: throw money and technology at it and rapidly expand. They 228 00:14:32,960 --> 00:14:36,320 Speaker 1: do not equivocate. And the last piece of the puzzle, 229 00:14:36,840 --> 00:14:40,560 Speaker 1: Amazon wanted to deliver their own packages to customer doorsteps 230 00:14:41,000 --> 00:14:45,360 Speaker 1: in transportation. They call this the last mile. There were 231 00:14:45,400 --> 00:14:47,720 Speaker 1: a number of false starts in countries like the UK 232 00:14:48,000 --> 00:14:51,600 Speaker 1: and India, and a grocery delivery, but these early efforts 233 00:14:51,640 --> 00:14:55,160 Speaker 1: were costly and slow. Inside the company, there was a 234 00:14:55,200 --> 00:14:57,720 Speaker 1: feeling like they really hadn't figured out how to navigate 235 00:14:57,760 --> 00:15:01,080 Speaker 1: home delivery. Here's Mike again. There was a lot of 236 00:15:01,160 --> 00:15:04,760 Speaker 1: discontentment at times. I think the belief was speed wasn't 237 00:15:04,840 --> 00:15:08,480 Speaker 1: happening fast enough. Why couldn't we go faster, Why couldn't 238 00:15:08,480 --> 00:15:11,160 Speaker 1: we get to a lower cost. To get that lower 239 00:15:11,200 --> 00:15:14,360 Speaker 1: cost and to move more quickly, Dave Clark introduced a 240 00:15:14,440 --> 00:15:19,160 Speaker 1: service called Amazon Flex that let gig workers take delivery jobs, 241 00:15:19,200 --> 00:15:21,360 Speaker 1: just like they might sign up for Uber or Lift. 242 00:15:22,440 --> 00:15:25,920 Speaker 1: It was Amazon's first major attempt to get delivery drivers 243 00:15:26,120 --> 00:15:30,400 Speaker 1: without hiring them as employees. Amazon didn't actually want to 244 00:15:30,480 --> 00:15:34,440 Speaker 1: employ drivers, just as it didn't employ pilots or truckers. 245 00:15:35,440 --> 00:15:38,680 Speaker 1: They wanted a hands off relationship, which is a model 246 00:15:38,720 --> 00:15:42,480 Speaker 1: that's also used by FedEx and d h L. One 247 00:15:42,480 --> 00:15:47,160 Speaker 1: big reason trucking tends to be heavily unionized, and Amazon 248 00:15:47,360 --> 00:15:52,720 Speaker 1: absolutely avoided unions at all costs. Jeff Bejos explains his 249 00:15:52,880 --> 00:15:58,200 Speaker 1: mindset in an on stage interview with Business Insider. When 250 00:15:58,280 --> 00:16:01,440 Speaker 1: you are just in a new way, and if customers 251 00:16:01,480 --> 00:16:06,080 Speaker 1: embrace the new way, what's going to happen is incumbents 252 00:16:06,240 --> 00:16:09,560 Speaker 1: who are practicing the older way are not going to 253 00:16:09,680 --> 00:16:12,400 Speaker 1: like you. You know, in our view, you know, we 254 00:16:12,480 --> 00:16:15,560 Speaker 1: have very we have we have workers councils, of course, 255 00:16:15,640 --> 00:16:19,200 Speaker 1: and we have very good communications with our employees. We 256 00:16:19,800 --> 00:16:22,280 Speaker 1: don't believe that we need a union to be an 257 00:16:22,280 --> 00:16:25,720 Speaker 1: intermediary between us and our employees. But of course, at 258 00:16:25,720 --> 00:16:27,720 Speaker 1: the end of the day, it's always the employee's choice, 259 00:16:28,520 --> 00:16:31,880 Speaker 1: So Basio says, it's always the employees choice. But as 260 00:16:31,920 --> 00:16:35,120 Speaker 1: we've seen in union elections at Amazon warehouses, like the 261 00:16:35,200 --> 00:16:40,000 Speaker 1: high profile one in Bessemer, Alabama, Amazon fights tooth and 262 00:16:40,080 --> 00:16:45,000 Speaker 1: nail to persuade employees to vote against unionizing, and transportation 263 00:16:45,120 --> 00:16:50,360 Speaker 1: is a heavily unionized industry, more than warehouses. Even after all, 264 00:16:50,600 --> 00:16:54,000 Speaker 1: this is the turf of the famous hard bargaining Teamsters union, 265 00:16:54,680 --> 00:16:57,880 Speaker 1: Amazon wanted no part in it, which is one reason 266 00:16:57,920 --> 00:17:01,840 Speaker 1: why they brought an independent contractor. Here's Mike. You know, 267 00:17:01,880 --> 00:17:06,520 Speaker 1: when I look to the industry, I certainly would say 268 00:17:06,560 --> 00:17:10,920 Speaker 1: that the independent contractor models tend to be non union 269 00:17:12,160 --> 00:17:15,640 Speaker 1: and the employee models tend to be union. In bazos 270 00:17:15,720 --> 00:17:19,480 Speaker 1: this world, unions are a deal killer because unions agitate 271 00:17:19,520 --> 00:17:23,760 Speaker 1: for higher wages, lower quotas, and fewer hours. There's one 272 00:17:23,800 --> 00:17:27,680 Speaker 1: thing that I'll say about Amazonians is you know they 273 00:17:27,720 --> 00:17:31,880 Speaker 1: like to control um for a lot of reasons. I mean, 274 00:17:32,200 --> 00:17:35,680 Speaker 1: you know, customer experiences paramount. It is the number one thing, 275 00:17:35,800 --> 00:17:39,800 Speaker 1: and so sometimes, you know, seating control or giving up 276 00:17:39,840 --> 00:17:42,960 Speaker 1: control is perceived as is not doing all that you 277 00:17:43,040 --> 00:17:48,520 Speaker 1: can do for the customer. Dave Clark had an ingenius plan. 278 00:17:49,359 --> 00:17:52,960 Speaker 1: Amazon could have its cake and eat it too by 279 00:17:53,000 --> 00:17:56,920 Speaker 1: contracting middlemen to come in to employ the Amazon drivers 280 00:17:57,920 --> 00:18:00,919 Speaker 1: that June Dave gathers members the tech press at the 281 00:18:00,960 --> 00:18:05,000 Speaker 1: Waterfront and Seattle to announce that Amazon was recruiting ordinary 282 00:18:05,080 --> 00:18:10,080 Speaker 1: people to start independent delivery franchises. This program is really 283 00:18:10,119 --> 00:18:12,600 Speaker 1: a very different program. It's about building your own business. 284 00:18:12,960 --> 00:18:18,080 Speaker 1: Amazon would provide uniforms, van leases, fuel, and access to insurance. 285 00:18:18,800 --> 00:18:22,240 Speaker 1: It would set quotas and control these companies with software 286 00:18:22,480 --> 00:18:25,800 Speaker 1: while having none of the headaches of employing actual drivers. 287 00:18:26,520 --> 00:18:29,679 Speaker 1: And this environment, our entrepreneurs don't have to fight for 288 00:18:29,720 --> 00:18:32,000 Speaker 1: customers and they don't have to fight for sales. They 289 00:18:32,040 --> 00:18:35,280 Speaker 1: get the opportunity with our demand to have a good 290 00:18:35,320 --> 00:18:38,480 Speaker 1: consistent volume and to grow with Amazon. As we grow, 291 00:18:38,920 --> 00:18:42,720 Speaker 1: Amazon starts to advertise for entrepreneurs who can start and 292 00:18:42,800 --> 00:18:47,000 Speaker 1: run these delivery companies. Here's one narrated by a successful 293 00:18:47,080 --> 00:18:52,879 Speaker 1: DSP owner, Sebastian Festa, who's originally from Haiti. THENDA thank 294 00:18:52,880 --> 00:18:59,960 Speaker 1: you say starting the delivery service partner business wasn't easy 295 00:19:00,119 --> 00:19:02,879 Speaker 1: have a logistics background at all. Amazon provised me with 296 00:19:02,880 --> 00:19:06,479 Speaker 1: the expertise, They guide me, counsel me, They provide me 297 00:19:06,640 --> 00:19:09,159 Speaker 1: with the tools that I need to be successful. The 298 00:19:09,240 --> 00:19:12,880 Speaker 1: rest is up to me. Within months, tens of thousands 299 00:19:12,880 --> 00:19:16,320 Speaker 1: of people applied. Amazon was throwing open the gates for 300 00:19:16,400 --> 00:19:20,960 Speaker 1: small business owners come build a business delivering packages for 301 00:19:21,040 --> 00:19:26,000 Speaker 1: the world's largest online store. But Amazon ran this business 302 00:19:26,000 --> 00:19:29,680 Speaker 1: in a very Amazon like way, with software and algorithms 303 00:19:29,760 --> 00:19:33,800 Speaker 1: running everything instead of human managers, just like how it 304 00:19:33,840 --> 00:19:39,080 Speaker 1: operates the global marketplace. This goes back to Bezos because 305 00:19:39,359 --> 00:19:43,840 Speaker 1: automation allows for faster growth, higher revenue, and lower costs 306 00:19:44,440 --> 00:19:47,320 Speaker 1: that allows him to fund his pet projects like Alexa 307 00:19:47,400 --> 00:19:51,040 Speaker 1: and Amazon Studios. That was the recipe that had made 308 00:19:51,080 --> 00:19:53,760 Speaker 1: Amazon one of the largest companies on the planet and 309 00:19:53,880 --> 00:19:57,320 Speaker 1: Bezos one of the richest people in the world. So 310 00:19:57,560 --> 00:20:01,600 Speaker 1: in Dave Clark's new transportation business, instead of human dispatchers 311 00:20:01,680 --> 00:20:06,200 Speaker 1: handing out routes and calculating payments, it was algorithms and software, 312 00:20:06,720 --> 00:20:10,040 Speaker 1: and a lot of it was new For entrepreneurs like 313 00:20:10,080 --> 00:20:12,480 Speaker 1: Ted Johnson, who we heard from at the beginning of 314 00:20:12,520 --> 00:20:16,320 Speaker 1: the episode. The drawbacks of Amazon's approach started a great 315 00:20:16,680 --> 00:20:19,600 Speaker 1: soon after he moved to New England. I'd always say, 316 00:20:19,640 --> 00:20:21,639 Speaker 1: you know, how can a company I think at the 317 00:20:21,680 --> 00:20:25,080 Speaker 1: time a million and a trillion and a half evaluated company, 318 00:20:25,520 --> 00:20:28,320 Speaker 1: the richest man in the world, the biggest employer in 319 00:20:28,359 --> 00:20:31,239 Speaker 1: the world. They gotta have their stuff together. But I'm 320 00:20:31,280 --> 00:20:33,359 Speaker 1: gonna be honest with you. They were half baked and 321 00:20:33,400 --> 00:20:36,960 Speaker 1: they were winging it. Ted says his drivers were overloaded 322 00:20:37,000 --> 00:20:40,800 Speaker 1: with packages. The software seemed to set quotas based on 323 00:20:40,880 --> 00:20:44,400 Speaker 1: how many packages needed to be delivered. It didn't take 324 00:20:44,440 --> 00:20:48,560 Speaker 1: into account what was realistic or safe, particularly in bad weather. 325 00:20:49,200 --> 00:20:52,240 Speaker 1: The estimated delivery times were as low as three minutes. 326 00:20:52,800 --> 00:20:55,399 Speaker 1: Here in real New Hampshire. You know, every house is 327 00:20:55,480 --> 00:21:01,600 Speaker 1: five acres apart and each driveways feet. It's icy, so 328 00:21:02,119 --> 00:21:04,119 Speaker 1: you're not gonna You're not gonna do a delivery in 329 00:21:04,160 --> 00:21:08,280 Speaker 1: three minutes. Ted said. The Amazon software pressured business owners 330 00:21:08,480 --> 00:21:12,680 Speaker 1: to make deliveries in hazardous weather like snowstorms. They'd say 331 00:21:12,720 --> 00:21:14,680 Speaker 1: it was up to him, but if he didn't make 332 00:21:14,680 --> 00:21:17,240 Speaker 1: the deliveries, then he would get a bad report card. 333 00:21:18,080 --> 00:21:22,120 Speaker 1: Amazon's tracking systems issued weekly score cards for the drivers 334 00:21:22,200 --> 00:21:25,960 Speaker 1: and for Ted. The company was measuring their performance for 335 00:21:26,040 --> 00:21:31,679 Speaker 1: things like wearing a seatbelt, speeding, hard stops, and abrupt turns. 336 00:21:31,720 --> 00:21:36,359 Speaker 1: Sometimes the software made mistakes and wrongly ding drivers, and 337 00:21:36,400 --> 00:21:40,199 Speaker 1: the stakes were high. Ted could lose a package or routes. 338 00:21:40,240 --> 00:21:43,640 Speaker 1: If he was deemed to be unreliable. His drivers quit 339 00:21:43,720 --> 00:21:48,280 Speaker 1: in droves. They were wearing my driver's out. About thirty 340 00:21:48,320 --> 00:21:51,320 Speaker 1: three of my initial workforce that I recruited from day 341 00:21:51,359 --> 00:21:54,160 Speaker 1: one had quit on me. If you had a driver 342 00:21:54,320 --> 00:21:57,560 Speaker 1: that was kicking butt for some reason, the algorithm would 343 00:21:57,560 --> 00:22:02,359 Speaker 1: train track that dry ever and would add more and 344 00:22:02,440 --> 00:22:05,760 Speaker 1: more and more onto their routes to or just break them. 345 00:22:05,920 --> 00:22:08,520 Speaker 1: And I had I had my you know, people that 346 00:22:08,600 --> 00:22:10,560 Speaker 1: were my day one guys that I thought these guys 347 00:22:10,560 --> 00:22:13,320 Speaker 1: would be with me for three years. I said, I'm done. 348 00:22:13,800 --> 00:22:17,280 Speaker 1: Ted was frustrated by the working conditions of the drivers. 349 00:22:17,320 --> 00:22:20,040 Speaker 1: He says, some things just didn't sit right with him. 350 00:22:20,119 --> 00:22:23,960 Speaker 1: I'm gonna tell you straight up. Our employee urinating bottles, 351 00:22:24,040 --> 00:22:27,280 Speaker 1: and they wore diapers, and they ship in bags and 352 00:22:27,400 --> 00:22:30,800 Speaker 1: it was awful, and that redlined me. That pissed me off. 353 00:22:31,440 --> 00:22:35,320 Speaker 1: Ted got started at a tough time. The pandemic was raging, 354 00:22:35,760 --> 00:22:41,160 Speaker 1: stores were closing. People depended on Amazon, and Amazon's algorithms 355 00:22:41,200 --> 00:22:44,800 Speaker 1: closely tracked how fast and efficiently Ted's people were working. 356 00:22:45,359 --> 00:22:48,520 Speaker 1: What looked like an amazing business opportunity turned into a 357 00:22:48,640 --> 00:22:53,280 Speaker 1: punishing experience, and um for the first time in my life, 358 00:22:53,359 --> 00:22:56,560 Speaker 1: I had major anxiety. There were nights where I would 359 00:22:56,600 --> 00:23:00,840 Speaker 1: curl up in the corner and sleep with my dog. Uh, 360 00:23:01,040 --> 00:23:03,280 Speaker 1: just scared to death that how am I going to 361 00:23:03,359 --> 00:23:06,359 Speaker 1: go in and and tell these people that we're gonna 362 00:23:06,359 --> 00:23:10,639 Speaker 1: make it another day. By the beginning of Ted and Karen, 363 00:23:11,080 --> 00:23:15,119 Speaker 1: like many other delivery company owners, were struggling. He was 364 00:23:15,160 --> 00:23:27,000 Speaker 1: about to crack. That's next. So Ted and as wife 365 00:23:27,040 --> 00:23:29,919 Speaker 1: Karen moved from Illinois to hooks At New Hampshire to 366 00:23:30,040 --> 00:23:34,600 Speaker 1: help build Amazon's new transportation arm. He thought he would 367 00:23:34,600 --> 00:23:37,399 Speaker 1: be working for one of the world's grade companies, but 368 00:23:37,480 --> 00:23:41,400 Speaker 1: as boss wasn't Jeff Bezos, Dave Clark, or any one 369 00:23:41,560 --> 00:23:45,960 Speaker 1: of Amazon's very smart executives. In reality, their boss was 370 00:23:46,040 --> 00:23:52,320 Speaker 1: Amazon's Frankenstinian creation. It's impossibly demanding systems. It was relentless 371 00:23:52,560 --> 00:23:57,480 Speaker 1: up at six down at probably seven days a week. 372 00:23:58,240 --> 00:24:01,000 Speaker 1: If you cared about your drivers, you didn't quit until 373 00:24:01,000 --> 00:24:04,199 Speaker 1: they got everybody got home, You go to sleep, and 374 00:24:04,280 --> 00:24:07,720 Speaker 1: your mind would still spend. You're always on, you know 375 00:24:07,760 --> 00:24:13,000 Speaker 1: what I mean. Then in February, with all these problems proliferating, 376 00:24:13,320 --> 00:24:16,080 Speaker 1: Ted got a call from a regional executive from Amazon. 377 00:24:16,560 --> 00:24:20,480 Speaker 1: He calls and there's a lawyer on the phone, and uh, 378 00:24:20,680 --> 00:24:25,400 Speaker 1: he starts reading from a script. Your contract is effectively 379 00:24:25,520 --> 00:24:31,280 Speaker 1: up on the third of February, and we are not renewing. Yep, 380 00:24:31,400 --> 00:24:33,200 Speaker 1: we're not renewing. I said, well, what did I do? 381 00:24:33,880 --> 00:24:35,639 Speaker 1: They said, we don't, we're not gonna get we're not 382 00:24:35,680 --> 00:24:38,560 Speaker 1: gonna tell you why, and we're not obligated to tell 383 00:24:38,600 --> 00:24:40,800 Speaker 1: you why. And I tell you what. At that point, 384 00:24:41,160 --> 00:24:45,840 Speaker 1: I was so pissed. However, Um, after UM, a couple 385 00:24:45,840 --> 00:24:48,600 Speaker 1: of deep breaths, ME and Karen looked at each other, 386 00:24:48,640 --> 00:24:52,240 Speaker 1: and you know what, we said, Thank God, the pain 387 00:24:52,359 --> 00:24:55,520 Speaker 1: is over. Ted estimates he lost more than one hundred 388 00:24:55,560 --> 00:25:00,199 Speaker 1: thousand dollars delivering Amazon packages, largely due to damage is 389 00:25:00,280 --> 00:25:03,240 Speaker 1: he had to pay for least vans. He regrets that 390 00:25:03,320 --> 00:25:06,200 Speaker 1: he even went into business with Amazon. If we knew 391 00:25:06,240 --> 00:25:08,720 Speaker 1: what we know now and somebody would have been out 392 00:25:08,720 --> 00:25:11,600 Speaker 1: there telling we wouldn't have done this thing. There are 393 00:25:11,640 --> 00:25:16,480 Speaker 1: about these small delivery companies like Ted's. Most have less 394 00:25:16,520 --> 00:25:20,160 Speaker 1: than one hundred employees each. In two thousand twenty one, 395 00:25:20,440 --> 00:25:23,320 Speaker 1: they allowed Amazon to deliver about two thirds of its 396 00:25:23,359 --> 00:25:27,960 Speaker 1: own packages. They basically saved Amazon from the infamous supply 397 00:25:28,080 --> 00:25:32,880 Speaker 1: chain disruptions of the pandemic. The program has been extraordinarily 398 00:25:32,960 --> 00:25:36,439 Speaker 1: successful for Amazon, even though many of the delivery company 399 00:25:36,440 --> 00:25:41,600 Speaker 1: owners shared Ted's complaints, My colleague Spencer talked to fifteen 400 00:25:41,600 --> 00:25:47,439 Speaker 1: delivery partners. They also brought up unrealistic delivery expectations, buggy software, 401 00:25:47,680 --> 00:25:52,600 Speaker 1: and Amazon's dismissive attitude towards their concerns. Amazon says that 402 00:25:52,640 --> 00:25:56,399 Speaker 1: about of their delivery drivers complete their routes within the 403 00:25:56,440 --> 00:26:00,520 Speaker 1: designated time. They gave us a statement, as we grow, 404 00:26:00,840 --> 00:26:03,520 Speaker 1: we don't always get it right, and we are committed 405 00:26:03,520 --> 00:26:07,640 Speaker 1: to seeking feedback to continue improving the DSP and driver experience. 406 00:26:08,200 --> 00:26:10,879 Speaker 1: This year, we made more investments than ever before in 407 00:26:10,960 --> 00:26:16,960 Speaker 1: new technology, process improvements, and rate increases. End quote. There's 408 00:26:17,000 --> 00:26:19,600 Speaker 1: another class of worker who has even less leverage than 409 00:26:19,640 --> 00:26:23,760 Speaker 1: guys like Ted. That's drivers and their helpers just looking 410 00:26:23,800 --> 00:26:26,680 Speaker 1: for anything to start making some money. But it came 411 00:26:26,720 --> 00:26:29,560 Speaker 1: across just an add on. I think it was Indeed 412 00:26:29,760 --> 00:26:32,520 Speaker 1: that said it was an Amazon driving job, and I said, 413 00:26:32,560 --> 00:26:34,639 Speaker 1: this sounds easy enough. Might as well just do it 414 00:26:34,680 --> 00:26:36,560 Speaker 1: to make a few quick bucks and get out of there. 415 00:26:36,640 --> 00:26:39,640 Speaker 1: And it was a swift process. You if you could 416 00:26:39,640 --> 00:26:43,399 Speaker 1: pass a drug test, you're in avery. Bernard was twenty five. 417 00:26:43,960 --> 00:26:46,840 Speaker 1: He had just moved to a town outside Virginia Beach 418 00:26:47,200 --> 00:26:49,280 Speaker 1: and he was looking for any work he could find. 419 00:26:49,880 --> 00:26:54,400 Speaker 1: The pandemic didn't leave many options. A week after he applied, 420 00:26:54,680 --> 00:26:57,440 Speaker 1: Avery was on the road in a truck. He showed 421 00:26:57,520 --> 00:27:00,680 Speaker 1: up for work expecting to drive a van. To my surprise, 422 00:27:00,960 --> 00:27:02,600 Speaker 1: on the first day that I showed up to the 423 00:27:02,600 --> 00:27:07,919 Speaker 1: meetings were these large box trucks and a two man 424 00:27:08,080 --> 00:27:10,600 Speaker 1: teams and a lot of things I wasn't expecting. So 425 00:27:11,040 --> 00:27:13,520 Speaker 1: he learned that the job was to deliver large items 426 00:27:13,520 --> 00:27:18,920 Speaker 1: like trampolines, inflatable pools, furniture, gym equipment, and anything else 427 00:27:18,920 --> 00:27:22,440 Speaker 1: you can find on Amazon that weighs more than fifty pounds. Ever, 428 00:27:22,520 --> 00:27:25,040 Speaker 1: he said he got fifteen dollars an hour to start, 429 00:27:25,440 --> 00:27:28,920 Speaker 1: and after a year got a dollar raise. He says 430 00:27:29,000 --> 00:27:31,959 Speaker 1: that the days were long and they were often running behind. 431 00:27:32,440 --> 00:27:36,240 Speaker 1: You go into the customers home, you bring this heavy 432 00:27:36,280 --> 00:27:39,320 Speaker 1: thing up, usually a couple of flights of stairs, and 433 00:27:39,560 --> 00:27:42,600 Speaker 1: you place it where they specifically decided that they wanted, 434 00:27:43,080 --> 00:27:45,159 Speaker 1: and the assembly which is where you do all that 435 00:27:45,200 --> 00:27:48,280 Speaker 1: stuff of the rumor choice, and then you build a 436 00:27:48,320 --> 00:27:52,440 Speaker 1: piece of furniture. And they usually gave you about three 437 00:27:52,480 --> 00:27:56,240 Speaker 1: to five minutes to do that. Amazon disputes Every's claim 438 00:27:56,280 --> 00:27:58,800 Speaker 1: that they only gave three to five minutes for assembly. 439 00:27:59,400 --> 00:28:03,160 Speaker 1: They say they gave close to an hour. Still, furniture 440 00:28:03,200 --> 00:28:08,520 Speaker 1: assembly is relatively new. Amazon just started the program, so 441 00:28:08,600 --> 00:28:12,160 Speaker 1: once again, all its software was new, and the workers 442 00:28:12,160 --> 00:28:16,160 Speaker 1: had very little preparation. But we have never seen these 443 00:28:16,200 --> 00:28:19,480 Speaker 1: things in our life before. So just to get there 444 00:28:19,520 --> 00:28:22,679 Speaker 1: and read the instructions for this thing when you're sweating 445 00:28:23,320 --> 00:28:25,920 Speaker 1: your ass off because you've been out for six hours 446 00:28:25,920 --> 00:28:28,080 Speaker 1: that day in the heat, and you're walking into this 447 00:28:28,119 --> 00:28:30,200 Speaker 1: person's house and like getting on their carpet and you're 448 00:28:30,240 --> 00:28:33,800 Speaker 1: just like pouring sweat into their living room. Trying to 449 00:28:33,840 --> 00:28:38,840 Speaker 1: read these instructions putting it together, It's taken us hour 450 00:28:39,360 --> 00:28:43,239 Speaker 1: two hours. Having any sort of furniture assembly would throw 451 00:28:43,280 --> 00:28:46,480 Speaker 1: him off schedule. Traffic could throw them off schedule. Looking 452 00:28:46,480 --> 00:28:49,200 Speaker 1: for parking could throw him off schedule. It was really 453 00:28:49,240 --> 00:28:53,000 Speaker 1: difficult to keep on Amazon's estimated timeline. If one thing 454 00:28:53,160 --> 00:28:56,880 Speaker 1: goes wrong, everything's gonna go wrong, and then you're screwed. 455 00:28:57,760 --> 00:28:59,920 Speaker 1: And that happens a lot more often than you might think. 456 00:29:00,440 --> 00:29:03,760 Speaker 1: So on paper, Amazon sees it and it looks all 457 00:29:03,920 --> 00:29:07,880 Speaker 1: totally doable, But if you run into one thing which 458 00:29:08,280 --> 00:29:11,160 Speaker 1: happens all the time. You're gonna be behind, and then 459 00:29:11,480 --> 00:29:13,959 Speaker 1: you're behind for your scheduled deliveries, and you might have 460 00:29:14,040 --> 00:29:16,840 Speaker 1: to skip around and come back to stuff, which adds 461 00:29:16,880 --> 00:29:19,560 Speaker 1: on even more time, and it just snowballs into this 462 00:29:19,680 --> 00:29:24,680 Speaker 1: huge catastrophe. At the same time, Amazon and its delivery 463 00:29:24,680 --> 00:29:28,000 Speaker 1: companies went on a hiring spread through the pandemic. They 464 00:29:28,040 --> 00:29:31,680 Speaker 1: don't even test for marijuana anymore. There's always a desperation 465 00:29:31,720 --> 00:29:36,200 Speaker 1: for people. As time went on. It basically, I've I've 466 00:29:36,280 --> 00:29:40,160 Speaker 1: seen countless people shuffle through our warehouse, stay for maybe 467 00:29:40,160 --> 00:29:44,320 Speaker 1: a week and two or before they're gone, and and 468 00:29:44,400 --> 00:29:46,600 Speaker 1: most people dropped off in like the first couple of months. 469 00:29:46,920 --> 00:29:51,840 Speaker 1: He says that most people didn't last long because okay, 470 00:29:51,880 --> 00:29:58,080 Speaker 1: it's a it's a ship job. It's horrible. I mean, 471 00:29:58,840 --> 00:30:04,120 Speaker 1: in the end, it's menial labor that doesn't provide much. 472 00:30:04,280 --> 00:30:08,960 Speaker 1: I mean, fifty sixty hour weeks there's pretty usual. He 473 00:30:09,000 --> 00:30:12,480 Speaker 1: says that minor incidents were common, like hitting parked cars 474 00:30:12,800 --> 00:30:16,720 Speaker 1: or scuffing the walls of people's homes, but eventually he 475 00:30:16,840 --> 00:30:20,400 Speaker 1: had a major incident traveling down to a hotsky North 476 00:30:20,440 --> 00:30:23,760 Speaker 1: Carolina on these back roll roads that are real tiny, 477 00:30:23,880 --> 00:30:26,360 Speaker 1: and it was just, you know, one tiny slip onto 478 00:30:26,400 --> 00:30:30,400 Speaker 1: the edge of the grass that ended up um, you know, 479 00:30:30,840 --> 00:30:34,880 Speaker 1: overcorrecting into a ditch and flipping over and all that stuff. Thankfully, 480 00:30:35,200 --> 00:30:37,760 Speaker 1: Avery and the driver weren't hurt. You know, it's kind 481 00:30:37,760 --> 00:30:40,560 Speaker 1: of slow in the moment, and then you're flipped over 482 00:30:40,600 --> 00:30:44,560 Speaker 1: and everything. You know, My my door was on the ground, 483 00:30:44,560 --> 00:30:46,920 Speaker 1: so I couldn't open it. The d I mean, the driver, 484 00:30:47,000 --> 00:30:48,640 Speaker 1: I don't want to put him on blast that. He 485 00:30:48,640 --> 00:30:51,680 Speaker 1: was definitely panicking quite a bit, and reasonably so. But 486 00:30:52,400 --> 00:30:55,360 Speaker 1: in the moment, it was just kind of like, this 487 00:30:55,440 --> 00:30:57,600 Speaker 1: is dumb. Why the funk am I in a turnedover 488 00:30:57,640 --> 00:31:01,040 Speaker 1: truck in the middle of a hotsky North Carolina with 489 00:31:01,160 --> 00:31:06,200 Speaker 1: one stop left to deliver somebody's fucking nightstand. But the 490 00:31:06,240 --> 00:31:09,360 Speaker 1: crash wasn't enough to get him to quit. For Avery, 491 00:31:09,480 --> 00:31:13,760 Speaker 1: the breaking point came with Jeff Bezos's rocket launch. Afterward, 492 00:31:14,160 --> 00:31:18,040 Speaker 1: Bezos thanked Amazon customers and employees for helping him to 493 00:31:18,040 --> 00:31:22,280 Speaker 1: pay for it. I also I want to thank uh, 494 00:31:22,440 --> 00:31:27,400 Speaker 1: every Amazon employee and every Amazon customer because you guys 495 00:31:27,440 --> 00:31:30,880 Speaker 1: paid for all of this. So so basically he just 496 00:31:30,960 --> 00:31:35,640 Speaker 1: rode the world's biggest roller coaster on my dime. Um, 497 00:31:35,680 --> 00:31:40,880 Speaker 1: and boy it sure accomplished nothing. Uh so that's great. 498 00:31:41,480 --> 00:31:45,680 Speaker 1: And to fucking come out after you land and be like, 499 00:31:46,240 --> 00:31:50,520 Speaker 1: thanks Amazon employees, you paid for this. Yeah, I fucking 500 00:31:50,600 --> 00:31:55,680 Speaker 1: quit um very shortly after. So I don't know, man, 501 00:31:55,760 --> 00:32:00,680 Speaker 1: that was insulting. That was pretty personally insulting. Still, by 502 00:32:00,680 --> 00:32:04,680 Speaker 1: the end of one Amazon vans called most American cities 503 00:32:04,680 --> 00:32:08,480 Speaker 1: and suburbs. Amazon trucks were all over the highways, and 504 00:32:08,560 --> 00:32:13,000 Speaker 1: its cargo planes were at major airports. Amazon Logistics would 505 00:32:13,000 --> 00:32:16,640 Speaker 1: grow so rapidly that it eclipsed FedEx and came close 506 00:32:16,720 --> 00:32:21,320 Speaker 1: to surpassing UPS's share of the US delivery market. Dave 507 00:32:21,360 --> 00:32:24,800 Speaker 1: Clark had freed Amazon for relying on other delivery companies 508 00:32:24,840 --> 00:32:27,840 Speaker 1: to keep up with its growth. It's one reason why 509 00:32:27,920 --> 00:32:32,280 Speaker 1: Amazon's market value surpassed one trillion and why Jeff Bezos' 510 00:32:32,400 --> 00:32:35,920 Speaker 1: personal wealth increased so dramatically over the past few years. 511 00:32:36,720 --> 00:32:39,840 Speaker 1: Here's former Amazon exact Dave click again. Well, if you 512 00:32:39,880 --> 00:32:43,880 Speaker 1: think about like, in two thousand thirteen, we delivered effectively 513 00:32:43,960 --> 00:32:49,120 Speaker 1: zero packages via Amazon Logistics, and you know, I think 514 00:32:49,120 --> 00:32:52,440 Speaker 1: in two thousand nineteen they delivered three point five billion 515 00:32:52,520 --> 00:32:56,480 Speaker 1: packages in uh in two thousand nineteen, and so we 516 00:32:56,520 --> 00:32:59,200 Speaker 1: went from zero to three point five billion in like 517 00:32:59,280 --> 00:33:03,040 Speaker 1: five years. And now every single other company is trying 518 00:33:03,080 --> 00:33:06,840 Speaker 1: to chase Amazon to two day shipping and home delivery. 519 00:33:06,960 --> 00:33:10,480 Speaker 1: But Amazon's huge success as the leader and home delivery 520 00:33:10,920 --> 00:33:15,040 Speaker 1: also display significant costs onto the public. It didn't provide 521 00:33:15,040 --> 00:33:19,280 Speaker 1: healthcare coverage for its contract drivers or maintained the congested 522 00:33:19,360 --> 00:33:23,479 Speaker 1: roads to and from its warehouses. Some personal injury lawyers 523 00:33:23,480 --> 00:33:25,960 Speaker 1: have done so far as to say that the intense 524 00:33:26,040 --> 00:33:29,440 Speaker 1: time pressure Amazon places on its drivers amounts to a 525 00:33:29,520 --> 00:33:34,040 Speaker 1: safety threat. Take the story of Ons Rana, who's twenty three. 526 00:33:34,560 --> 00:33:37,120 Speaker 1: He was in the backseat of his brother's Tesla when 527 00:33:37,160 --> 00:33:40,160 Speaker 1: they got rear ended by an Amazon Mercedes sprinter van. 528 00:33:40,920 --> 00:33:43,800 Speaker 1: It was traveling nearly seventy miles per hour on an 529 00:33:43,840 --> 00:33:48,640 Speaker 1: Atlanta interstate, so my brother was the one to tell 530 00:33:48,680 --> 00:33:53,000 Speaker 1: me about what happened. We were going and then there 531 00:33:53,080 --> 00:33:56,920 Speaker 1: was a car like I would say feed from US 532 00:33:57,240 --> 00:34:00,760 Speaker 1: had stopped on says his brother tried to change lanes, 533 00:34:00,920 --> 00:34:04,120 Speaker 1: but there were vehicles on both sides, so he stopped 534 00:34:04,280 --> 00:34:07,080 Speaker 1: and put his own blinkers on, and then all of 535 00:34:07,080 --> 00:34:10,359 Speaker 1: a sudden he told me that I looked back and 536 00:34:10,400 --> 00:34:14,799 Speaker 1: I said, oh my god, and then a splinter van 537 00:34:15,280 --> 00:34:19,640 Speaker 1: just crashed into us, like it's just a mess. From there. 538 00:34:20,280 --> 00:34:23,640 Speaker 1: Amazon told us they're not responsible for the accident because 539 00:34:23,640 --> 00:34:26,880 Speaker 1: the driver was not an Amazon employee. He works for 540 00:34:26,920 --> 00:34:32,080 Speaker 1: a delivery service partner called Harbor Logistics. Anson his lawyers disagree, 541 00:34:32,360 --> 00:34:35,680 Speaker 1: and as of this podcast recording, they have a lawsuit 542 00:34:35,760 --> 00:34:40,080 Speaker 1: pending against Amazon. It's a murky legal area because the 543 00:34:40,160 --> 00:34:44,279 Speaker 1: driver's work primarily benefits Amazon even though he's employed by 544 00:34:44,320 --> 00:34:48,200 Speaker 1: the delivery company, and Amazon is facing more lawsuits like 545 00:34:48,280 --> 00:34:50,880 Speaker 1: this as it puts more events on the road and 546 00:34:50,960 --> 00:34:55,120 Speaker 1: more people get hurt and crashes. A week after the accident, 547 00:34:55,400 --> 00:34:58,879 Speaker 1: Ons opened his eyes. After two or three weeks he 548 00:34:58,960 --> 00:35:03,200 Speaker 1: was responsive. He's now quadriplegic. He lived with his sister 549 00:35:03,480 --> 00:35:08,120 Speaker 1: and uses a motorized wheelchair. I lost my legs, which 550 00:35:08,200 --> 00:35:12,239 Speaker 1: you know, I wouldn't wish that on my worst enemy. Like, 551 00:35:12,880 --> 00:35:15,439 Speaker 1: I don't know if I'm able got able to get 552 00:35:15,920 --> 00:35:20,000 Speaker 1: movement back. It's just a lot to deal with. Mentally, 553 00:35:21,120 --> 00:35:24,759 Speaker 1: I can't enjoy the like the simple things that a 554 00:35:24,880 --> 00:35:28,920 Speaker 1: twenty like twenty year old once, like playing video games, 555 00:35:29,280 --> 00:35:34,560 Speaker 1: playing sports, even like watching TV. I can't change the 556 00:35:34,719 --> 00:35:38,960 Speaker 1: channel like there's just a lot. Amazon gave us a statement, 557 00:35:39,520 --> 00:35:42,200 Speaker 1: We're committed to the safety of drivers in the communities 558 00:35:42,239 --> 00:35:46,000 Speaker 1: where we deliver. We work closely with delivery service partners 559 00:35:46,280 --> 00:35:50,320 Speaker 1: to set realistic expectations that do not place undue pressure 560 00:35:50,320 --> 00:35:54,120 Speaker 1: on them for their delivery associates as they complete their shifts. 561 00:35:55,280 --> 00:35:58,240 Speaker 1: Many of Amazon's critics feel that the company is hiding 562 00:35:58,320 --> 00:36:02,000 Speaker 1: behind their independent delivery company. These These are small businesses 563 00:36:02,000 --> 00:36:05,360 Speaker 1: with no assets. Usually they don't even own their own bands, 564 00:36:05,880 --> 00:36:08,520 Speaker 1: while Amazon is a market value of more than one 565 00:36:08,560 --> 00:36:12,719 Speaker 1: point seven trillion dollars. This imbalance, as well as other 566 00:36:12,760 --> 00:36:17,360 Speaker 1: controversies involving warehouse workers and small businesses, have reinforced the 567 00:36:17,400 --> 00:36:22,600 Speaker 1: impression that Amazon and Jeff Bezos are ruthless capitalists. The 568 00:36:22,800 --> 00:36:27,880 Speaker 1: iconic entrepreneur, once lauded for his ingenuity for inventing products 569 00:36:27,880 --> 00:36:30,960 Speaker 1: like the Kindle and Alexa, came to be seen in 570 00:36:31,040 --> 00:36:34,480 Speaker 1: some quarters as a villain and Amazon as a business 571 00:36:34,520 --> 00:36:38,319 Speaker 1: that was hurting society instead of helping it. And all 572 00:36:38,360 --> 00:36:41,759 Speaker 1: of this would come to a dramatic head when Jeff Bezos' 573 00:36:41,880 --> 00:36:45,960 Speaker 1: personal life exploded into the headlines that's coming up in 574 00:36:46,000 --> 00:36:58,320 Speaker 1: the next chapter of Foundering, The Amazon story. Foundering is 575 00:36:58,360 --> 00:37:02,600 Speaker 1: hosted by me brad Stone Sean when Is our executive producer. 576 00:37:03,000 --> 00:37:07,040 Speaker 1: Spencer Soaper contributed reporting to this episode. Raymondo as our 577 00:37:07,080 --> 00:37:11,760 Speaker 1: audio engineer, Molly Nugent as our associate producer, Mark Million 578 00:37:11,880 --> 00:37:16,280 Speaker 1: and vandermay Robin Agello and Molly Shutz are our story editors. 579 00:37:16,800 --> 00:37:20,399 Speaker 1: Francesca Levi is the head of Bloomberg Podcasts. Be sure 580 00:37:20,440 --> 00:37:23,600 Speaker 1: to subscribe and if you like our show, leave a review. 581 00:37:24,120 --> 00:37:27,520 Speaker 1: Most importantly, tell your friends see you next time.