How Bezos takes control of Amazon again

When you are the richest man in the world, you no longer need to work hard. In late February, Amazon founder Jeff Bezos and his girlfriend Laura Sanchez were in Paris. They visited the Eiffel Tower, dined at receptions by President Emmanuel Macron in the Champs Elysees, participated in a fashion week with designer Diana von Furstenberg. And a few days later, just when Bezos’s condition fell by $ 11.9 billion amid concerns about the coronavirus, the paparazzi filmed happy couple on vacation in one of the most expensive restaurants in New York.

But in early March, when the coronavirus began its journey across the United States, Bezos for the first time in many years put off his rest and set to work. Instead of meeting with presidents and celebrities – to routine everyday work, with meetings, boards of directors, making decisions about the company’s behavior in a crisis. And it starts to produce results.

By the end of March, Jeff Bezos had settled on his gigantic ranch in east Texas, where his Blue Origin rockets were launched. From there, mainly through video calls, he contacts top managers and even small warehouse managers to monitor what is happening now.

For more than 15 years, he gradually moved away from direct management of the company, entrusting executive duties to his trusted people. For example, his right hand is Jeff Wilke, who is now engaged in everything related to the online store. And to Jeff Blackburn, a decision maker about video services and advertising. They had been with the company from the very first days, for more than twenty-five years, and helped to develop it to the trillion level that it is now.

A little later, in 1999, came Greg Greely, who now runs Prime, and Dave Clark, who is engaged in retail, like Whole Foods. Andy Jassi, who founded AWS within the company in 2003 and now manages the entire cloud, has become very important now.

Bezos with his girlfriend Laura Sanchez and designer Diana von Furstenberg in Paris before the pandemic

In total, under Jeff Bezos – more than 30 of various CEO and SVP, which he leads in his 56 years. Moreover, in recent years he has been engaged in longer-term projects, like his own rockets, in which he invests $ 1- $ 2 billion a year, planning to send tourists into space and build a base on the moon. Or the construction of watches that should work 10,000 years.

But now that all attention has been paid to Amazon, when the company has become indispensable for the survival of self-isolated people throughout the United States, and the number of scandals has exceeded all conceivable limits, he took all the executive duties into his own hands. And instead of long-term solutions, he focused on short-term ones.

How to deal in a crisis

Now Bezos is solving issues regarding inventory of warehouses, testing of workers, equipment of enterprises for the fight against coronavirus. And also about how and when, up to a minute, Amazon responds to public criticism. He speaks with mayors and governors to understand which institutions should be kept open. And in April for the first time in many years publicly visited one of Amazon’s warehouses, amidst the panic that being in warehouses can be dangerous for workers.

In a letter to shareholders last week, Bezos wrote:

Now my time and my thoughts are devoted to Covid-19 and how and whom Amazon can help while we are in this situation.

Earlier, in the “fat time”, Bezos looked only far ahead, thinking about strategy, and not about tactics. He talks about this in interview Forbes in 2018:

I play for a long time; no matter who has a momentary profit, you need to look globally. In our industry, it is important to think ahead. They can rarely pull me in today.

Therefore, within the framework of Amazon, a billionaire delved only into matters that could lead the company in a new strategic direction or carry a strong risk to the business. For example, he held several meetings a week to track the development of Alexa’s voice assistant. As a result, products with Alex are now in more than half of American homes. Now more than 150 million devices have been sold with it, and the development team has expanded to 10,000 people.

Bezos also personally monitored the development of supermarkets without Amazon Go cash registers. The company now has 26 such supermarkets in four US cities, and it intends to sell the technology to other networks in the form of a franchise, projecting billions of dollars in profit.

But in a pandemic, such a pleasure – living with global plans – has become a luxury. In early March, Bezos went underground, and his social media accounts were empty. He stopped traveling, and on March 4, he told all Seattle headquarters staff to work from home, which he himself began to do. The meeting of directors, which was supposed to be held in the office that week, was rescheduled online.

Amazon employees protests over fears of coronavirus

Subsequently, meetings with chief executives of the areas became not weekly, but daily, including on weekends. Decide on each specific situation – how best to respond to the problem. Which warehouses to close, what products to make paramount, how many workers to hire, how to ensure the safety of current ones. All meetings are conducted by Bezos himself, he asks questions and makes major decisions. Those recently in the company are surprised at this – for example, Jay Carney, vice president of corporate affairs, talked about this in interview March 31. He has been with Amazon since 2015, is used to quiet development, and before Bezos in such an intensive mode did not see.

Bill George, a Harvard Business School leadership trainer, said such changes in management style are common to successful leaders in a potentially dangerous situation. And this is what distinguishes a good leader, the ability to recognize moments when you need to be completely at the helm.

What you analyze, plan, delegate, appoint responsible – all these good tricks fly out the window. A leader, regardless of the size of his company, should become a decision-making center during a crisis. This will reduce friction and increase the speed of maneuvering the ship.

The coronavirus spread throughout the country, and eventually came to Amazon warehouses, to the company’s workers. Buyers were not particularly afraid of this, but many supply chains were broken. People wanted more and more goods, especially essentials, but fewer employees wanted to go on their shifts. Many took unpaid sick leave. Or they even started organizing strikes, demanding to protect them from the virus and raise their salaries.

Bezos approved a plan to stop receiving less important goods to warehouses, and expanded the boundaries of urgent delivery with Prime, so that things that are not urgently needed could be delivered in a few days (sometimes, in our practice, even up to a week ) This allowed us to focus on things that were vital for customers: masks, soap, sanitizers, diapers and so on.

Jeff Bezos also personally determined which features to remove from the Amazon website so people start buying less often and stores can figure out the flow of orders. Such a decision – to specifically reduce the popularity of his store – he alone was entitled to make. The billionaire also postponed the Prime Day discount holiday, which Amazon used to spend annually in July. This year, if the situation does not settle down, he should not wait.

What to do with the virus

Workers and senators called for more serious safeguards in warehouses. Still, now these are the largest open enterprises in the USA so far. And they have a great risk of becoming carriers of the coronavirus: one out of hundreds is enough to start infecting the rest. Even if customers are safe, becoming a hotbed of infection is a disaster for any company. On March 21, Bezos wrote a rare letter to all Amazon employees, which the company immediately re-posted on my blog. He promised to look for all the possibilities for protection, announced the purchase of tens of millions of masks and sanitizers for workers (although their manufacture and delivery subsequently took another week).

The virus came to Seattle quite early, and the situation was not easy. State Senator Jay Insley said in an interview that he and Bezos talked about what can be done to protect the city. Amazon’s chief executive insisted on mass tests in state and country: “How do we achieve tests everywhere? With results available as quickly as possible. ” This would allow Amazon and other employers to locate potential outbreaks and quickly isolate them.

At a video meeting with other Amazon executives on April 1 (whose receipt was from the New York Times), Bezos discussed collaboration with medical organizations to test employees in warehouses, the more often the better. This was to include, among other things, “building the company’s immunity against criticism, which we are not doing enough to protect workers.”

Amazon later announced plans to build its own laboratory. In a letter to shareholders, Bezos said that he was not sure about the timing, and maybe she would be ready only in two months, when the situation (there is hope) would not be so critical. But it’s still worth a try.

Discussions at a meeting in secret received Vicе also dealt with how to stop the protests of employees in warehouses, to whom to distribute masks (they also decided to distribute 1000 pieces to each police station in the country), and what to do with those who became ill. Amazon now gives each employee with COVID-19 2 weeks of paid leave, in addition to all the other benefits.

On April 8, when the virus spread to over fifty Amazon sites, Bezos made an unexpected visit to the Whole Foods supermarket and warehouse near Dallas, checking security measures. By the way, a few days after a visit to this warehouse, the patient was diagnosed with a coronavirus.

What are the results

Now Amazon – one of the few companies that have received financial benefits from the crisis. The site even had to hire 175,000 new employees to try to clear orders. These were mainly employees laid off by other companies, or temporarily allowed on unpaid leave. Among them, there was even a special advertising company describing the benefits of working for their online store.

Now Americans see Amazon as an increasingly important and indispensable company. Its capitalization rose to $ 1.23 trillion. This despite the fact that the last quarter was not the most pleasant in terms of benefits. Amazon sold $ 75.5 billion worth of goods, up 26% from the same period in 2019, but revenue fell 29% to $ 2.5 billion, even worse than expected. Because profit is now not a priority for the company, and the goods it sells often come with minimal profit.

In this case, Bezos says, you need to wait for further profit to fall even more:

If you are an owner of Amazon shares, sit down, because we continue to think broadly.

According to Bezos, in the next quarter his company expects to receive about $ 4 billion in operating profit. But instead, they will spend all these $ 4 billion, and even more, on the fight against COVID-19 and various expenses related to the safety of employees and the delivery of products to customers during the epidemic.

The money will go to increase salaries by $ 2 per hour and pay temporary employees (in total this will require an additional $ 700 million). Part will cover the costs of social distance practiced in warehouses, which greatly reduces their effectiveness. About $ 300 million will go to test employees. And more than $ 800 million is going to spend for various protective measures against the virus (100 million masks, 34 million gloves, 2300 additional hand washing stations, 31 thousand thermometers, 93 million sanitizers, an additional 6 thousand cleaners for warehouses, and so on).

Bezos’s personal fortune since the beginning of March, when he took control of the company, has grown by $ 25 billion. He now has almost the same amount of money as before the divorce from Mackenzie Bezos in 2019 (this most expensive divorce in history cost Bezos a 4% stake in Amazon , about $ 35 billion).

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