Speaker 1: You probably see them in your neighborhoods, those grayish blue
Speaker 1: vans delivering the stuff that you and your neighbor has
Speaker 1: recently bought on Amazon dot Com. Climbing in and out
Speaker 1: of those vans are delivery drivers wearing Amazon uniforms. But
Speaker 1: they aren't Amazon employees. They work for what Amazon calls
Speaker 1: Delivery service Partners or DSPs for short. Over the last
Speaker 1: few years, Amazon has been on a hiring spree looking
Speaker 1: for entrepreneurs who are willing to sign up as delivery
Speaker 1: company owners. Somebody from HR from Chicago calls me and
Speaker 1: gives me the congratulations you are you have been chosen
Speaker 1: to be a dsp oh and I was like, oh wow,
Speaker 1: now this is serious. That's Ted Johnson. He was a
Speaker 1: veteran who ran a small consulting business in Illinois. He
Speaker 1: stumbled onto an online ad looking for delivery partners, interviewed
Speaker 1: with an Amazon recruiter, and a few weeks later, Ted
Speaker 1: got a phone call Where am I going to work
Speaker 1: out of? And she gives me ten locations Oakland, Los Angeles,
Speaker 1: San Diego, Brooklyn, Long Island, Pennsylvania. We've never been to
Speaker 1: New England. We did a lot of research and we said,
Speaker 1: let's uh, let's pack up. Ted and his wife Karen
Speaker 1: were optimistic. It seemed like an opportunity to prove themselves.
Speaker 1: Amazon was opening a brand new delivery station and they'd
Speaker 1: be helping to build it from scratch. I was pretty excited.
Speaker 1: I'm gonna be straight up with you. Um, I've run
Speaker 1: a small business, uh, me and Karen and what they
Speaker 1: had told us during our training on how many packages
Speaker 1: we'd be delivering, how much money we'd be making, and uh,
Speaker 1: it was a quality of life changing. It would be
Speaker 1: more money that I could make in any other job
Speaker 1: in my life. Amazon said the delivery partners could earn
Speaker 1: up to three hundred thousand dollars and profits each year.
Speaker 1: But there were a lot of costs associated with making
Speaker 1: Amazon deliveries that Ted would learn about the hard way.
Speaker 1: I've done a lot of big projects and everything, and
Speaker 1: this thing was overwhelming. How are we gonna do liability insurance?
Speaker 1: How are we gonna do workman's comp insurance? You know,
Speaker 1: we're how we're going to do a payroll system? And oh,
Speaker 1: by the way, you may not get vans, so go
Speaker 1: out and on the market and look to get white
Speaker 1: Man's So it was kind of a shoot from the
Speaker 1: hip show, and I thought, well, you know Amazon, you know,
Speaker 1: there's this big tech company. Uh, and maybe the reason
Speaker 1: they're shooting from the hip is because the station is new.
Speaker 1: From the start, the experience felt rushed and disorganized. And
Speaker 1: on top of that, Amazon had aggressive expectations for how
Speaker 1: fast they could deliver a package, so drivers were rushing
Speaker 1: to make these delivery targets. Minutes and seconds mattered, which
Speaker 1: led to injuries. Yeah, a lot of drivers um slip
Speaker 1: and falls probably our biggest. And then the next one,
Speaker 1: believe it or not, up here were dog bites. Dog
Speaker 1: bites are a big problem. Actually, it's horrible. We had
Speaker 1: them getting bit on the hand. We've had them getting
Speaker 1: bit on the the calf, on the butt. We get
Speaker 1: him to the doctor as soon as possible, you know.
Speaker 1: But Amazon's remember, uh, it's it's the customer. It's the
Speaker 1: package that's important, So be smart about it. And oh,
Speaker 1: by the way, you're the business owner, so it's your
Speaker 1: decision and it ain't ours. Ted tried to be a
Speaker 1: responsible employer to his injured employees. His insurance paid for it,
Speaker 1: but it wasn't lost on him that he was doing
Speaker 1: all of this for Amazon, that in a way, a
Speaker 1: big part of his role was to absorb responsibility and
Speaker 1: liability for his driver's I would have never thought I
Speaker 1: would assume so much liability and so much headache as
Speaker 1: as I did, UH to serve uh this company that
Speaker 1: could give her rat's ass about people. And that's that's
Speaker 1: that's the truth. You're listening to Foundering. I'm your host,
Speaker 1: brad Stone. We'll get back to Ted Johnson's story in
Speaker 1: a bit, but first we're going to tell the story
Speaker 1: of Amazon Logistics, the transportation division of a company that
Speaker 1: fulfills the promise of delivery in one or two days,
Speaker 1: but at a hidden cost. It's a story that begins
Speaker 1: with Amazon being blamed for ruining Christmas, leading to the
Speaker 1: fury of Jeff Bezos, and it ends with the formation
Speaker 1: of one of the world's largest delivery fleets. There are
Speaker 1: also thousands of people like Ted Johnson, stuck in an
Speaker 1: unhappy codependence with one of the largest companies in the world.
Speaker 1: We'll tell you that story after the break. We start
Speaker 1: during the holiday shopping season two thousand thirteen. Amazon was
Speaker 1: a much smaller business then. It had about one tenth
Speaker 1: as many employees as it does today. Even though sales
Speaker 1: were growing, it barely eked out a profit that year,
Speaker 1: So the holiday season was crucial for Amazon. Back then,
Speaker 1: Amazon didn't have of a delivery arm. It's relying on
Speaker 1: large carriers like UPS, a one hundred year old company
Speaker 1: with a unionized fleet of drivers. It's an existential crisis
Speaker 1: every Christmas, in every peak season that they may not
Speaker 1: have enough capacity to deliver packages to their customers. And
Speaker 1: you know, if Amazon fails, if UPS fails, like the
Speaker 1: whole country locks up. Right, Chris, there's no Christmas. Uh,
Speaker 1: some kids going to be unhappy. That's Dave Click, a
Speaker 1: former logistics vice president at Amazon. He said that back
Speaker 1: then Amazon sales were growing at more than twenty a year,
Speaker 1: but UPS was growing their capacity at about two. It
Speaker 1: wasn't a problem in Amazon's early days. And so back
Speaker 1: in UH, UPS was fine, right, we were dropping the bucket. Uh.
Speaker 1: They had effectively infinite capacity. But as Amazon grew much
Speaker 1: much faster than UPS and the other carriers, UH, they
Speaker 1: to uh to use a material portion of that capacity.
Speaker 1: Amazon was becoming a burden on UPS. The companies were
Speaker 1: mismatched because think about it, UPS gives its driver Sundays
Speaker 1: and holidays off. Meanwhile, the Amazon website is always available.
Speaker 1: It's kicking out packages seventais a week, twenty four hours
Speaker 1: a day. So the backlog of Amazon packages was growing
Speaker 1: like water pushing against a dam. And then over the
Speaker 1: holidays and there was bad weather, and for UPS the
Speaker 1: dam was breached. They just got a little over their skis. Yeah,
Speaker 1: you know, you sprinkle some snow in there, and that
Speaker 1: makes everything just that much worse. And and these you know,
Speaker 1: if you're running your plant, whether it's fulfillment, sortation, chemical
Speaker 1: or whatever, if you're running your plante at full out
Speaker 1: capacity and you lose a day or you lose it
Speaker 1: two days because of weather event, you can't catch up.
Speaker 1: Bad weather is being blamed for ruining some Christmas mornings.
Speaker 1: Up us admits it failed to deliver a lot of
Speaker 1: packages despite guarantees from online stores like Amazon. UPS and
Speaker 1: Amazon will offer refunds to customers whose packages did not
Speaker 1: make it in time for Christmas. Some people are still
Speaker 1: waiting to get the gifts they ordered in the first place.
Speaker 1: Some of them guaranteed huge delays this year for some
Speaker 1: FedEx and UPS shipments. You know, we had one mom
Speaker 1: talked about how do you explain to your kid that
Speaker 1: Sannah didn't show up? Holiday gifts were stranded on the tarmac.
Speaker 1: Amazon had to issue twenty dollar gift cards and attempt
Speaker 1: to make amends, and the Great e Commerce Christmas Meltdown
Speaker 1: made national headlines. I think we were all appalled, and
Speaker 1: this is like the worst possible customer experience for Amazon,
Speaker 1: and nobody knows. Oh, it's ups is fault. They bought
Speaker 1: a package from Amazon. They bought a product from Amazon,
Speaker 1: and Amazon needs to deliver it. Jeff Bezos was apoplectic
Speaker 1: in his universe. This was just about the worst thing
Speaker 1: that could happen, and Bezos directed his anger at a
Speaker 1: guy named Dave Clark. He's known as the driving force
Speaker 1: behind the growth of Amazon's warehouses and delivery network. Here
Speaker 1: he is in talk to us about that fulfillment center.
Speaker 1: I don't see too many humans. Help us understand the
Speaker 1: amount of robots you have versus the amount of people
Speaker 1: you employ. Well, our focus is about combining software with
Speaker 1: automation through robotics and the human performance and process development.
Speaker 1: And we continue to focus on automation for cost reduction
Speaker 1: and speed improvement for delivery. And we're excited about the results.
Speaker 1: When Dave took over Amazon operations in there were about
Speaker 1: a dozen warehouses, there were almost two hundred. He's known
Speaker 1: as a drill sergeant. He keeps things marching forward. He
Speaker 1: also has a reputation as kind of a ruthless guy.
Speaker 1: Some of his underlings called him the niper because in
Speaker 1: his early years as an East Coast regional manager he
Speaker 1: was quick to see who was slacking off from the
Speaker 1: shop floor and fire them. But in Dave Clark was
Speaker 1: the one on the chopping block. Bezos made it clear
Speaker 1: he would fire Clark if another Christmas meltdown happened. To
Speaker 1: save the company and himself, he would have to reshape
Speaker 1: a major part of Amazon. Dave had a very keen
Speaker 1: interest in all things transportation. Brilliant, brilliant, brilliant man. That's
Speaker 1: Mike Indrasano, another former logistics executive at Amazon. So here's
Speaker 1: what happened. After the Christmas fiasco. Dave decided Amazon could
Speaker 1: no longer rely so heavily on UPS and FedEx. So
Speaker 1: Amazon turned to the US Post Office because UPS was
Speaker 1: out of capacity, but the Post Office was seeing the
Speaker 1: volume of regular mail decline. They had excess capacity and
Speaker 1: they were already o to practically every house in the
Speaker 1: country six days a week. Now, while the Post Office
Speaker 1: is great at mail delivery, they're actually not all that
Speaker 1: fast and mail sorting. And that's where Amazon stepped in.
Speaker 1: They would build out sortation centers where packages get organized
Speaker 1: by zip code, and then they'd hand those off to
Speaker 1: the mailman. Here's Mike. I got a phone call I
Speaker 1: think it was Deer six and it was Dave Clark
Speaker 1: and and then he asked me, he said, so, you know,
Speaker 1: how many sort centers do you have in the plan?
Speaker 1: And I said, well, we had. We have sixteen queued
Speaker 1: up to launch over the next couple of years. And
Speaker 1: he simply said, launched them all. And I said, okay,
Speaker 1: gulp um, and we did. I mean, it was amazing.
Speaker 1: I've never seen anything like that in my thirty years
Speaker 1: in transportation. They raced to build all six sortation centers
Speaker 1: in just a year, and they had a loose formula.
Speaker 1: Put the sortation centers near a major interstate, near big cities,
Speaker 1: near colleges that provided a hard time workforce. It was
Speaker 1: a huge operation inside the company. They called it the
Speaker 1: Sweet sixteen. The next step to Amazon reducing their reliance
Speaker 1: on UPS and FedEx was acquiring planes. Here's Mike. I
Speaker 1: remember getting a phone call from day saying I need
Speaker 1: you to get an airplane. I'm like, I need to
Speaker 1: get an airplane. Get can you you know, do you
Speaker 1: know how any contacts? Can you get us an airplane?
Speaker 1: And I'm like, what for? The planes come in to
Speaker 1: shuffle inventory around, particularly when Amazon needs to meet its
Speaker 1: prime delivery promise. They'll fly an item across the country
Speaker 1: if it's out of stock at the local warehouse. And
Speaker 1: the first thing they wanted to rush out was a
Speaker 1: batch of kindles in December, when they had sold out
Speaker 1: in Seattle once again, UPS and FedEx said they were
Speaker 1: out of capacity. They couldn't help Amazon at its most
Speaker 1: critical time of year, so Dave asked Mike to charter
Speaker 1: some cargo jets. It worked out naturally. Jeff Bezos and
Speaker 1: Dave Clark immediately wanted to double down right after it
Speaker 1: was how many planes can we get? And hey, if
Speaker 1: we can fly one plane, you know how many should
Speaker 1: we be flying. This was the start of Amazon Air
Speaker 1: in Amazon least forty seven sixty seven freighters from two airlines.
Speaker 1: It also started to develop a cargo hub at Cincinnati
Speaker 1: Regional Airport. Amazon was learning that it could mold a
Speaker 1: transportation network to its own needs, control costs, and most
Speaker 1: of all, keep up with its growth. Bezos, of course,
Speaker 1: watch this build out carefully. Jeff was very concerned and
Speaker 1: stayed closed Beazos's email addresses public Jeff at Amazon dot com.
Speaker 1: Whenever he got an email from customers about a botch delivery,
Speaker 1: he'd forward it on with a single piece of punctuation,
Speaker 1: the question mark. Throughout fourteen I got a lot of
Speaker 1: emails from Jeff with question marks, and oh what a
Speaker 1: powerful tool. Mike says that executives would have to craft
Speaker 1: detailed solutions to these emails and fix the core problems,
Speaker 1: or else you cannot reply with a surface answer. In fact,
Speaker 1: one response to Jeff could take three or four weeks
Speaker 1: and could have twenty people involved. Jeff was not looking
Speaker 1: for an answer to his question. He was looking for
Speaker 1: a solution to the underlying problem. At the time, there
Speaker 1: was no bigger question at Amazon than how to deliver
Speaker 1: packages reliably and fast. Dave Clark wasn't happy relying on
Speaker 1: the Post office either to keep up with its rapid growth.
Speaker 1: The company was going to have to start delivering packages itself,
Speaker 1: kicking off another wave of very public problems. Will tell
Speaker 1: that story next. First they built sortation centers, then they
Speaker 1: leased planes. They also added long haul trucks. This speaks
Speaker 1: to Amazon's strength. When they find something is working, they
Speaker 1: throw money and technology at it and rapidly expand. They
Speaker 1: do not equivocate. And the last piece of the puzzle,
Speaker 1: Amazon wanted to deliver their own packages to customer doorsteps
Speaker 1: in transportation. They call this the last mile. There were
Speaker 1: a number of false starts in countries like the UK
Speaker 1: and India, and a grocery delivery, but these early efforts
Speaker 1: were costly and slow. Inside the company, there was a
Speaker 1: feeling like they really hadn't figured out how to navigate
Speaker 1: home delivery. Here's Mike again. There was a lot of
Speaker 1: discontentment at times. I think the belief was speed wasn't
Speaker 1: happening fast enough. Why couldn't we go faster, Why couldn't
Speaker 1: we get to a lower cost. To get that lower
Speaker 1: cost and to move more quickly, Dave Clark introduced a
Speaker 1: service called Amazon Flex that let gig workers take delivery jobs,
Speaker 1: just like they might sign up for Uber or Lift.
Speaker 1: It was Amazon's first major attempt to get delivery drivers
Speaker 1: without hiring them as employees. Amazon didn't actually want to
Speaker 1: employ drivers, just as it didn't employ pilots or truckers.
Speaker 1: They wanted a hands off relationship, which is a model
Speaker 1: that's also used by FedEx and d h L. One
Speaker 1: big reason trucking tends to be heavily unionized, and Amazon
Speaker 1: absolutely avoided unions at all costs. Jeff Bejos explains his
Speaker 1: mindset in an on stage interview with Business Insider. When
Speaker 1: you are just in a new way, and if customers
Speaker 1: embrace the new way, what's going to happen is incumbents
Speaker 1: who are practicing the older way are not going to
Speaker 1: like you. You know, in our view, you know, we
Speaker 1: have very we have we have workers councils, of course,
Speaker 1: and we have very good communications with our employees. We
Speaker 1: don't believe that we need a union to be an
Speaker 1: intermediary between us and our employees. But of course, at
Speaker 1: the end of the day, it's always the employee's choice,
Speaker 1: So Basio says, it's always the employees choice. But as
Speaker 1: we've seen in union elections at Amazon warehouses, like the
Speaker 1: high profile one in Bessemer, Alabama, Amazon fights tooth and
Speaker 1: nail to persuade employees to vote against unionizing, and transportation
Speaker 1: is a heavily unionized industry, more than warehouses. Even after all,
Speaker 1: this is the turf of the famous hard bargaining Teamsters union,
Speaker 1: Amazon wanted no part in it, which is one reason
Speaker 1: why they brought an independent contractor. Here's Mike. You know,
Speaker 1: when I look to the industry, I certainly would say
Speaker 1: that the independent contractor models tend to be non union
Speaker 1: and the employee models tend to be union. In bazos
Speaker 1: this world, unions are a deal killer because unions agitate
Speaker 1: for higher wages, lower quotas, and fewer hours. There's one
Speaker 1: thing that I'll say about Amazonians is you know they
Speaker 1: like to control um for a lot of reasons. I mean,
Speaker 1: you know, customer experiences paramount. It is the number one thing,
Speaker 1: and so sometimes, you know, seating control or giving up
Speaker 1: control is perceived as is not doing all that you
Speaker 1: can do for the customer. Dave Clark had an ingenius plan.
Speaker 1: Amazon could have its cake and eat it too by
Speaker 1: contracting middlemen to come in to employ the Amazon drivers
Speaker 1: that June Dave gathers members the tech press at the
Speaker 1: Waterfront and Seattle to announce that Amazon was recruiting ordinary
Speaker 1: people to start independent delivery franchises. This program is really
Speaker 1: a very different program. It's about building your own business.
Speaker 1: Amazon would provide uniforms, van leases, fuel, and access to insurance.
Speaker 1: It would set quotas and control these companies with software
Speaker 1: while having none of the headaches of employing actual drivers.
Speaker 1: And this environment, our entrepreneurs don't have to fight for
Speaker 1: customers and they don't have to fight for sales. They
Speaker 1: get the opportunity with our demand to have a good
Speaker 1: consistent volume and to grow with Amazon. As we grow,
Speaker 1: Amazon starts to advertise for entrepreneurs who can start and
Speaker 1: run these delivery companies. Here's one narrated by a successful
Speaker 1: DSP owner, Sebastian Festa, who's originally from Haiti. THENDA thank
Speaker 1: you say starting the delivery service partner business wasn't easy
Speaker 1: have a logistics background at all. Amazon provised me with
Speaker 1: the expertise, They guide me, counsel me, They provide me
Speaker 1: with the tools that I need to be successful. The
Speaker 1: rest is up to me. Within months, tens of thousands
Speaker 1: of people applied. Amazon was throwing open the gates for
Speaker 1: small business owners come build a business delivering packages for
Speaker 1: the world's largest online store. But Amazon ran this business
Speaker 1: in a very Amazon like way, with software and algorithms
Speaker 1: running everything instead of human managers, just like how it
Speaker 1: operates the global marketplace. This goes back to Bezos because
Speaker 1: automation allows for faster growth, higher revenue, and lower costs
Speaker 1: that allows him to fund his pet projects like Alexa
Speaker 1: and Amazon Studios. That was the recipe that had made
Speaker 1: Amazon one of the largest companies on the planet and
Speaker 1: Bezos one of the richest people in the world. So
Speaker 1: in Dave Clark's new transportation business, instead of human dispatchers
Speaker 1: handing out routes and calculating payments, it was algorithms and software,
Speaker 1: and a lot of it was new For entrepreneurs like
Speaker 1: Ted Johnson, who we heard from at the beginning of
Speaker 1: the episode. The drawbacks of Amazon's approach started a great
Speaker 1: soon after he moved to New England. I'd always say,
Speaker 1: you know, how can a company I think at the
Speaker 1: time a million and a trillion and a half evaluated company,
Speaker 1: the richest man in the world, the biggest employer in
Speaker 1: the world. They gotta have their stuff together. But I'm
Speaker 1: gonna be honest with you. They were half baked and
Speaker 1: they were winging it. Ted says his drivers were overloaded
Speaker 1: with packages. The software seemed to set quotas based on
Speaker 1: how many packages needed to be delivered. It didn't take
Speaker 1: into account what was realistic or safe, particularly in bad weather.
Speaker 1: The estimated delivery times were as low as three minutes.
Speaker 1: Here in real New Hampshire. You know, every house is
Speaker 1: five acres apart and each driveways feet. It's icy, so
Speaker 1: you're not gonna You're not gonna do a delivery in
Speaker 1: three minutes. Ted said. The Amazon software pressured business owners
Speaker 1: to make deliveries in hazardous weather like snowstorms. They'd say
Speaker 1: it was up to him, but if he didn't make
Speaker 1: the deliveries, then he would get a bad report card.
Speaker 1: Amazon's tracking systems issued weekly score cards for the drivers
Speaker 1: and for Ted. The company was measuring their performance for
Speaker 1: things like wearing a seatbelt, speeding, hard stops, and abrupt turns.
Speaker 1: Sometimes the software made mistakes and wrongly ding drivers, and
Speaker 1: the stakes were high. Ted could lose a package or routes.
Speaker 1: If he was deemed to be unreliable. His drivers quit
Speaker 1: in droves. They were wearing my driver's out. About thirty
Speaker 1: three of my initial workforce that I recruited from day
Speaker 1: one had quit on me. If you had a driver
Speaker 1: that was kicking butt for some reason, the algorithm would
Speaker 1: train track that dry ever and would add more and
Speaker 1: more and more onto their routes to or just break them.
Speaker 1: And I had I had my you know, people that
Speaker 1: were my day one guys that I thought these guys
Speaker 1: would be with me for three years. I said, I'm done.
Speaker 1: Ted was frustrated by the working conditions of the drivers.
Speaker 1: He says, some things just didn't sit right with him.
Speaker 1: I'm gonna tell you straight up. Our employee urinating bottles,
Speaker 1: and they wore diapers, and they ship in bags and
Speaker 1: it was awful, and that redlined me. That pissed me off.
Speaker 1: Ted got started at a tough time. The pandemic was raging,
Speaker 1: stores were closing. People depended on Amazon, and Amazon's algorithms
Speaker 1: closely tracked how fast and efficiently Ted's people were working.
Speaker 1: What looked like an amazing business opportunity turned into a
Speaker 1: punishing experience, and um for the first time in my life,
Speaker 1: I had major anxiety. There were nights where I would
Speaker 1: curl up in the corner and sleep with my dog. Uh,
Speaker 1: just scared to death that how am I going to
Speaker 1: go in and and tell these people that we're gonna
Speaker 1: make it another day. By the beginning of Ted and Karen,
Speaker 1: like many other delivery company owners, were struggling. He was
Speaker 1: about to crack. That's next. So Ted and as wife
Speaker 1: Karen moved from Illinois to hooks At New Hampshire to
Speaker 1: help build Amazon's new transportation arm. He thought he would
Speaker 1: be working for one of the world's grade companies, but
Speaker 1: as boss wasn't Jeff Bezos, Dave Clark, or any one
Speaker 1: of Amazon's very smart executives. In reality, their boss was
Speaker 1: Amazon's Frankenstinian creation. It's impossibly demanding systems. It was relentless
Speaker 1: up at six down at probably seven days a week.
Speaker 1: If you cared about your drivers, you didn't quit until
Speaker 1: they got everybody got home, You go to sleep, and
Speaker 1: your mind would still spend. You're always on, you know
Speaker 1: what I mean. Then in February, with all these problems proliferating,
Speaker 1: Ted got a call from a regional executive from Amazon.
Speaker 1: He calls and there's a lawyer on the phone, and uh,
Speaker 1: he starts reading from a script. Your contract is effectively
Speaker 1: up on the third of February, and we are not renewing. Yep,
Speaker 1: we're not renewing. I said, well, what did I do?
Speaker 1: They said, we don't, we're not gonna get we're not
Speaker 1: gonna tell you why, and we're not obligated to tell
Speaker 1: you why. And I tell you what. At that point,
Speaker 1: I was so pissed. However, Um, after UM, a couple
Speaker 1: of deep breaths, ME and Karen looked at each other,
Speaker 1: and you know what, we said, Thank God, the pain
Speaker 1: is over. Ted estimates he lost more than one hundred
Speaker 1: thousand dollars delivering Amazon packages, largely due to damage is
Speaker 1: he had to pay for least vans. He regrets that
Speaker 1: he even went into business with Amazon. If we knew
Speaker 1: what we know now and somebody would have been out
Speaker 1: there telling we wouldn't have done this thing. There are
Speaker 1: about these small delivery companies like Ted's. Most have less
Speaker 1: than one hundred employees each. In two thousand twenty one,
Speaker 1: they allowed Amazon to deliver about two thirds of its
Speaker 1: own packages. They basically saved Amazon from the infamous supply
Speaker 1: chain disruptions of the pandemic. The program has been extraordinarily
Speaker 1: successful for Amazon, even though many of the delivery company
Speaker 1: owners shared Ted's complaints, My colleague Spencer talked to fifteen
Speaker 1: delivery partners. They also brought up unrealistic delivery expectations, buggy software,
Speaker 1: and Amazon's dismissive attitude towards their concerns. Amazon says that
Speaker 1: about of their delivery drivers complete their routes within the
Speaker 1: designated time. They gave us a statement, as we grow,
Speaker 1: we don't always get it right, and we are committed
Speaker 1: to seeking feedback to continue improving the DSP and driver experience.
Speaker 1: This year, we made more investments than ever before in
Speaker 1: new technology, process improvements, and rate increases. End quote. There's
Speaker 1: another class of worker who has even less leverage than
Speaker 1: guys like Ted. That's drivers and their helpers just looking
Speaker 1: for anything to start making some money. But it came
Speaker 1: across just an add on. I think it was Indeed
Speaker 1: that said it was an Amazon driving job, and I said,
Speaker 1: this sounds easy enough. Might as well just do it
Speaker 1: to make a few quick bucks and get out of there.
Speaker 1: And it was a swift process. You if you could
Speaker 1: pass a drug test, you're in avery. Bernard was twenty five.
Speaker 1: He had just moved to a town outside Virginia Beach
Speaker 1: and he was looking for any work he could find.
Speaker 1: The pandemic didn't leave many options. A week after he applied,
Speaker 1: Avery was on the road in a truck. He showed
Speaker 1: up for work expecting to drive a van. To my surprise,
Speaker 1: on the first day that I showed up to the
Speaker 1: meetings were these large box trucks and a two man
Speaker 1: teams and a lot of things I wasn't expecting. So
Speaker 1: he learned that the job was to deliver large items
Speaker 1: like trampolines, inflatable pools, furniture, gym equipment, and anything else
Speaker 1: you can find on Amazon that weighs more than fifty pounds. Ever,
Speaker 1: he said he got fifteen dollars an hour to start,
Speaker 1: and after a year got a dollar raise. He says
Speaker 1: that the days were long and they were often running behind.
Speaker 1: You go into the customers home, you bring this heavy
Speaker 1: thing up, usually a couple of flights of stairs, and
Speaker 1: you place it where they specifically decided that they wanted,
Speaker 1: and the assembly which is where you do all that
Speaker 1: stuff of the rumor choice, and then you build a
Speaker 1: piece of furniture. And they usually gave you about three
Speaker 1: to five minutes to do that. Amazon disputes Every's claim
Speaker 1: that they only gave three to five minutes for assembly.
Speaker 1: They say they gave close to an hour. Still, furniture
Speaker 1: assembly is relatively new. Amazon just started the program, so
Speaker 1: once again, all its software was new, and the workers
Speaker 1: had very little preparation. But we have never seen these
Speaker 1: things in our life before. So just to get there
Speaker 1: and read the instructions for this thing when you're sweating
Speaker 1: your ass off because you've been out for six hours
Speaker 1: that day in the heat, and you're walking into this
Speaker 1: person's house and like getting on their carpet and you're
Speaker 1: just like pouring sweat into their living room. Trying to
Speaker 1: read these instructions putting it together, It's taken us hour
Speaker 1: two hours. Having any sort of furniture assembly would throw
Speaker 1: him off schedule. Traffic could throw them off schedule. Looking
Speaker 1: for parking could throw him off schedule. It was really
Speaker 1: difficult to keep on Amazon's estimated timeline. If one thing
Speaker 1: goes wrong, everything's gonna go wrong, and then you're screwed.
Speaker 1: And that happens a lot more often than you might think.
Speaker 1: So on paper, Amazon sees it and it looks all
Speaker 1: totally doable, But if you run into one thing which
Speaker 1: happens all the time. You're gonna be behind, and then
Speaker 1: you're behind for your scheduled deliveries, and you might have
Speaker 1: to skip around and come back to stuff, which adds
Speaker 1: on even more time, and it just snowballs into this
Speaker 1: huge catastrophe. At the same time, Amazon and its delivery
Speaker 1: companies went on a hiring spread through the pandemic. They
Speaker 1: don't even test for marijuana anymore. There's always a desperation
Speaker 1: for people. As time went on. It basically, I've I've
Speaker 1: seen countless people shuffle through our warehouse, stay for maybe
Speaker 1: a week and two or before they're gone, and and
Speaker 1: most people dropped off in like the first couple of months.
Speaker 1: He says that most people didn't last long because okay,
Speaker 1: it's a it's a ship job. It's horrible. I mean,
Speaker 1: in the end, it's menial labor that doesn't provide much.
Speaker 1: I mean, fifty sixty hour weeks there's pretty usual. He
Speaker 1: says that minor incidents were common, like hitting parked cars
Speaker 1: or scuffing the walls of people's homes, but eventually he
Speaker 1: had a major incident traveling down to a hotsky North
Speaker 1: Carolina on these back roll roads that are real tiny,
Speaker 1: and it was just, you know, one tiny slip onto
Speaker 1: the edge of the grass that ended up um, you know,
Speaker 1: overcorrecting into a ditch and flipping over and all that stuff. Thankfully,
Speaker 1: Avery and the driver weren't hurt. You know, it's kind
Speaker 1: of slow in the moment, and then you're flipped over
Speaker 1: and everything. You know, My my door was on the ground,
Speaker 1: so I couldn't open it. The d I mean, the driver,
Speaker 1: I don't want to put him on blast that. He
Speaker 1: was definitely panicking quite a bit, and reasonably so. But
Speaker 1: in the moment, it was just kind of like, this
Speaker 1: is dumb. Why the funk am I in a turnedover
Speaker 1: truck in the middle of a hotsky North Carolina with
Speaker 1: one stop left to deliver somebody's fucking nightstand. But the
Speaker 1: crash wasn't enough to get him to quit. For Avery,
Speaker 1: the breaking point came with Jeff Bezos's rocket launch. Afterward,
Speaker 1: Bezos thanked Amazon customers and employees for helping him to
Speaker 1: pay for it. I also I want to thank uh,
Speaker 1: every Amazon employee and every Amazon customer because you guys
Speaker 1: paid for all of this. So so basically he just
Speaker 1: rode the world's biggest roller coaster on my dime. Um,
Speaker 1: and boy it sure accomplished nothing. Uh so that's great.
Speaker 1: And to fucking come out after you land and be like,
Speaker 1: thanks Amazon employees, you paid for this. Yeah, I fucking
Speaker 1: quit um very shortly after. So I don't know, man,
Speaker 1: that was insulting. That was pretty personally insulting. Still, by
Speaker 1: the end of one Amazon vans called most American cities
Speaker 1: and suburbs. Amazon trucks were all over the highways, and
Speaker 1: its cargo planes were at major airports. Amazon Logistics would
Speaker 1: grow so rapidly that it eclipsed FedEx and came close
Speaker 1: to surpassing UPS's share of the US delivery market. Dave
Speaker 1: Clark had freed Amazon for relying on other delivery companies
Speaker 1: to keep up with its growth. It's one reason why
Speaker 1: Amazon's market value surpassed one trillion and why Jeff Bezos'
Speaker 1: personal wealth increased so dramatically over the past few years.
Speaker 1: Here's former Amazon exact Dave click again. Well, if you
Speaker 1: think about like, in two thousand thirteen, we delivered effectively
Speaker 1: zero packages via Amazon Logistics, and you know, I think
Speaker 1: in two thousand nineteen they delivered three point five billion
Speaker 1: packages in uh in two thousand nineteen, and so we
Speaker 1: went from zero to three point five billion in like
Speaker 1: five years. And now every single other company is trying
Speaker 1: to chase Amazon to two day shipping and home delivery.
Speaker 1: But Amazon's huge success as the leader and home delivery
Speaker 1: also display significant costs onto the public. It didn't provide
Speaker 1: healthcare coverage for its contract drivers or maintained the congested
Speaker 1: roads to and from its warehouses. Some personal injury lawyers
Speaker 1: have done so far as to say that the intense
Speaker 1: time pressure Amazon places on its drivers amounts to a
Speaker 1: safety threat. Take the story of Ons Rana, who's twenty three.
Speaker 1: He was in the backseat of his brother's Tesla when
Speaker 1: they got rear ended by an Amazon Mercedes sprinter van.
Speaker 1: It was traveling nearly seventy miles per hour on an
Speaker 1: Atlanta interstate, so my brother was the one to tell
Speaker 1: me about what happened. We were going and then there
Speaker 1: was a car like I would say feed from US
Speaker 1: had stopped on says his brother tried to change lanes,
Speaker 1: but there were vehicles on both sides, so he stopped
Speaker 1: and put his own blinkers on, and then all of
Speaker 1: a sudden he told me that I looked back and
Speaker 1: I said, oh my god, and then a splinter van
Speaker 1: just crashed into us, like it's just a mess. From there.
Speaker 1: Amazon told us they're not responsible for the accident because
Speaker 1: the driver was not an Amazon employee. He works for
Speaker 1: a delivery service partner called Harbor Logistics. Anson his lawyers disagree,
Speaker 1: and as of this podcast recording, they have a lawsuit
Speaker 1: pending against Amazon. It's a murky legal area because the
Speaker 1: driver's work primarily benefits Amazon even though he's employed by
Speaker 1: the delivery company, and Amazon is facing more lawsuits like
Speaker 1: this as it puts more events on the road and
Speaker 1: more people get hurt and crashes. A week after the accident,
Speaker 1: Ons opened his eyes. After two or three weeks he
Speaker 1: was responsive. He's now quadriplegic. He lived with his sister
Speaker 1: and uses a motorized wheelchair. I lost my legs, which
Speaker 1: you know, I wouldn't wish that on my worst enemy. Like,
Speaker 1: I don't know if I'm able got able to get
Speaker 1: movement back. It's just a lot to deal with. Mentally,
Speaker 1: I can't enjoy the like the simple things that a
Speaker 1: twenty like twenty year old once, like playing video games,
Speaker 1: playing sports, even like watching TV. I can't change the
Speaker 1: channel like there's just a lot. Amazon gave us a statement,
Speaker 1: We're committed to the safety of drivers in the communities
Speaker 1: where we deliver. We work closely with delivery service partners
Speaker 1: to set realistic expectations that do not place undue pressure
Speaker 1: on them for their delivery associates as they complete their shifts.
Speaker 1: Many of Amazon's critics feel that the company is hiding
Speaker 1: behind their independent delivery company. These These are small businesses
Speaker 1: with no assets. Usually they don't even own their own bands,
Speaker 1: while Amazon is a market value of more than one
Speaker 1: point seven trillion dollars. This imbalance, as well as other
Speaker 1: controversies involving warehouse workers and small businesses, have reinforced the
Speaker 1: impression that Amazon and Jeff Bezos are ruthless capitalists. The
Speaker 1: iconic entrepreneur, once lauded for his ingenuity for inventing products
Speaker 1: like the Kindle and Alexa, came to be seen in
Speaker 1: some quarters as a villain and Amazon as a business
Speaker 1: that was hurting society instead of helping it. And all
Speaker 1: of this would come to a dramatic head when Jeff Bezos'
Speaker 1: personal life exploded into the headlines that's coming up in
Speaker 1: the next chapter of Foundering, The Amazon story. Foundering is
Speaker 1: hosted by me brad Stone Sean when Is our executive producer.
Speaker 1: Spencer Soaper contributed reporting to this episode. Raymondo as our
Speaker 1: audio engineer, Molly Nugent as our associate producer, Mark Million
Speaker 1: and vandermay Robin Agello and Molly Shutz are our story editors.
Speaker 1: Francesca Levi is the head of Bloomberg Podcasts. Be sure
Speaker 1: to subscribe and if you like our show, leave a review.
Speaker 1: Most importantly, tell your friends see you next time.