History tells us that most people who have come up with fascinating new ideas have failed. Why? Because they remained primarily as dreamers themselves, and lacked the solid grip on execution required to convert their dreams into reality as builders do.
Bezos is rare among visionaries, for in addition to having 20-20 insight into what will transpire, he is also a builder and also a man of his words. His relentless commitment to excellent execution enables him to cut through all factors on the surface and get straight into the single most important factor accountable for success: the right people.
That’s why back in 1994, before informing his colleagues at D. E. Shaw and Co. of his decision to leave his lucrative job on Wall Street to start his own company, Bezos made a special trip from New York to California to conduct his first round of interviews for experienced programmers. Luckily he lured Shel Kaphan, a startup veteran and a technical genius, to be the first employee of Amazon. Since then he has consistently filled the talent pipeline with individuals who have provided immeasurable value to the company.
It’s also why if you ask Bezos what the most important decision is at Amazon, his answer will be and has always been from the very beginning: hiring the right talent.
Many Amazon people will recall Bezos repeatedly telling them so. In fact, Bezos has gone so far as to say that “It’s better to let the perfect person go than to hire the wrong person and to deal with the ramifications.”1
Why? Because Bezos believes that your people are your company.
The wrong person not only cannot deliver his due duties by the required standards, but also has negative impacts on others around him or her. While keeping a wrong person clearly hurts performance and team morale, correcting a hiring mistake could be even more costly, time-consuming, and emotionally wrenching. Such a dilemma, by itself, is an excruciating drill familiar to many leaders.
Bezos is not alone on this.
We (Ram and Julia) strongly agree with this belief. As Ram frequently puts it, nothing overcomes the wrong person. If you have the wrong person on a job, no matter how much coaching, training or developing you pour into him or her, the return on the enormous time, money, and efforts will most likely be minimal—if not negative.
Tony Hsieh, Zappos CEO, also shares this view. He has even quantified the cost of hiring mistakes at a staggering price tag of $100M; and is probably the reason why he invented a surprisingly unorthodox but effective policy, in which Zappos will pay new hires $2,000 to quit.
Bezos, an eager learner, saw huge value in this ingenious approach and implemented a “Pay to Quit” program at Amazon fulfillment centers. In his 2013 Shareholder Letter, he explained how it works.
“It was invented by the clever people at Zappos, and the Amazon fulfillment centers have been iterating on it. Pay to Quit is pretty simple. Once a year, we offer to pay our associates to quit. The first year the offer is made, it’s for $2,000. Then it goes up one thousand dollars a year until it reaches $5,000. The headline on the offer is ‘Please Don’t Take This Offer.’ We hope they don’t take the offer; we want them to stay. Why do we make this offer? The goal is to encourage folks to take a moment and think about what they really want. In the long run, an employee staying somewhere they don’t want to be isn’t healthy for the employee or the company.”
Bezos deeply understands the importance of talent. Dating back to 1997, the last (but not the least) point within the famous 9-point management and decision-making approach stated in his first Shareholder Letter is on talent:
“We will continue to focus on hiring and retaining versatile and talented employees, and continue to weight their compensation to stock options rather than cash. We know our success will be largely affected by our ability to attract and retain a motivated employee base, each of whom must think like, and therefore must actually be, an owner.”
So what has Amazon done to make sure that they only attract and retain the right talent? In the first place, what is “right” by Amazon’s standards?
Depending on the context, the company, and the specific situation, the definition of the “right talent” can vary widely. Despite all these essential differences, in order to truly compete on talent in a fundamental way, defining the right talent must be done in a manner that is clear, specific and consistent, so that the entire organization is able to follow the same criteria and fight against inevitable deviation along the way.
On this front, Bezos has been clear and consistent from the very beginning. He looks for builders who can make things happen, who can think and behave like owners—the type of people who display a sense of “true ownership.”
On multiple occasions over the years, Bezos has described the profile of the “builders.” The most recent version is in his 2018 Shareholder Letter:
“Builders are people who are curious, explorers. They like to invent. Even when they’re experts, they are ‘fresh’ with a beginner’s mind. They see the way we do things as just the way we do things now. A builder’s mentality helps us approach big, hard-to-solve opportunities with a humble conviction that success can come through iteration: invent, launch, reinvent, relaunch, start over, rinse, repeat, again and again. They know the path to success is anything but straight.”(Our emphasis).
In an interview with Charlie Rose in 2012, Bezos said that he considers himself as a builder, and stated with overt pride and joy that there are “a lot of builders at Amazon.”
As a man who chooses his words carefully, Bezos is sharing a powerful message here. Read his definition carefully, at least twice, and then take a minute to imagine what a lot of builders would do and could achieve together.
In these builders lie the powerful engine, the resilient spirit and the unwavering determination of Amazon’s customer-obsessed business model, continuous ground-breaking invention machine, high-quality, and high-velocity decision-making and forever-Day-1 vitality.
Among the 14 Leadership Principles at Amazon, right after the number one principle, Customer Obsession, comes Ownership. Leaders are owners. They think long-term and don’t sacrifice long-term value for short-term results. They act on behalf of the entire company, beyond just their own team. They never say, “that’s not my job.”2
How important is true ownership for Amazon and for Bezos? This value is embodied in two quotes from his Shareholder Letters: “it’s all about the long term” in 1997, and “long-term thinking is both a requirement and an outcome of true ownership” in 2003.3
Regrettably, some executives in traditional companies behave like tenants: they fail to act on behalf of the entire company, not even of their own team, and pursue their own personal interests instead. For them, it is not only unreasonable, but also utterly insane to do the following:
• Hire and develop the best. They probably ask themselves: what if those people outshine themselves and become more of a threat than an asset to them?
• Frugality: why bother to control expenses? It is not their money. Also even if they do not squander the money, someone else is bound to.
• Dive deep: why use so much personal time and energy to stay connected to the details? If something goes wrong, it’s someone else’s problem.
• Have backbone; disagree and commit: why seek the trouble to challenge others or even the boss? It is uncomfortable and exhausting, and more importantly, detrimental to personal relationships and career advancement.
• Deliver results: why should they always rise to the occasion and never settle despite all setbacks? Isn’t that the boss’ job? Why do bosses get higher pay and better benefits? That’s exactly the time they should put their necks in the noose.
By the logic of tenants, these behaviors are indeed insane. These observable behaviors are the test of true ownership. That’s what Amazon stated in the Leadership Principles, number six (hire and develop the best), ten (frugality), twelve (dive deep), thirteen (have backbone; disagree and commit), and fourteen (deliver results) respectively.
Without a true sense of ownership, none of these behaviors mentioned above would happen. Now you probably understand why Bezos would repeatedly elaborate the concept of “owners” at all kinds of venues, especially in all-hands meetings at Amazon.
While certain required qualities may not be explicitly called for as job prerequisites, it is clear that to become a builder with true ownership by Bezos’ standards, and to survive and thrive at Amazon, you must have an enormous amount of mental toughness.
Without mental toughness, why would someone choose a hard-to-solve problem (or in Bezos’ term “opportunity”) when there is an easy way out? How could they face failure, numerous times, and still choose to “reinvent, relaunch, start over, rinse, and repeat, again and again”?
Without mental toughness, how could they survive the uncomfortable and sometimes exhausting process of being questioned, challenged and even ranted at? How could they, despite all the setbacks, still rise to the occasion and never settle?
As former Amazon executive John Rossman put it:4
“If you want to succeed in Jeff’s relentless and fiercely competitive world, you cannot:
• Feel sorry for yourself
• Give away your power
• Shy away from change
• Waste energy on things you cannot control
• Worry about pleasing others
• Fear taking calculated risks
• Dwell on the past
• Make the same mistakes over and over
• Resent others’ success
• Give up after failure
• Feel the world owes you anything; or
• Expect immediate results
The most successful are those who can excel in the pressure cooker, week in and week out, shaking off the occasional failure and the subsequent tongue-lashing, put their heads down, and keep on driving.”
Bezos has persistently demonstrated tremendous mental toughness himself. But not everyone worth employing can reach that standard. The examples are countless, including his decision to pursue Prime “almost alone,”5 his decision to pursue the crazy hardware idea which later became Kindle despite overwhelming resistance, and stretching all the way back to the beginning when he took 60 meetings to raise the first $1 million.
While defining the right talent is a key first step, how does Amazon follow through by recruiting the people systematically?
Chip Bayer’s 1999 Wired magazine article revealed an early look into Bezos’ unique and rigorous approach of recruiting.
“He (Bezos) also turned hiring staff into a Socratic test. ‘Jeff was very, very picky,’ says Nicholas Lovejoy, who joined Amazon.com as its fifth employee in June 1995. In endless hiring meetings, Bezos, after interviewing the candidate himself, would grill every other interviewer, occasionally constructing elaborate charts on a whiteboard detailing the job seeker’s qualifications. If he ferreted out the slightest doubt, rejection usually followed. ‘One of his mottos was that every time we hired someone, he or she should raise the bar for the next hire, so that the overall talent pool was always improving,’ Lovejoy says.”
Bezos strongly believes in the importance of recruiting the right talent for business success. “Setting the bar high in our approach to hiring has been, and will continue to be, the single most important element of Amazon.com’s success.”6 (Our emphasis).
When Amazon was in its early days, it was still possible for Bezos to do recruiting personally. No longer. Amazon is now a burgeoning 750,000-people organization, so how to reinforce such rigor and maintain such a high bar — not only across the globe but also down to each new hire?
Bar raisers are indeed a unique feature of Amazon’s recruiting practices. Without exception, there will be a bar raiser among all interviewers whom a candidate will meet during the recruiting process.
Bar raisers are carefully selected individuals who are meticulously trained to be the stewards of Amazon’s leadership principles. Their mission is to ensure that the bar is never lowered due to pressing business urgency, to make the final and right hiring decisions and to strive for continuous rising of the bar. In many ways, they act on behalf of the Amazon leadership team as the final line of defense in recruiting.
No doubt it is a big honor to be a named bar raiser at Amazon. To qualify, individuals must be builders with true ownership themselves, and must have demonstrated a strong historical track record in terms of successful recruiting and retention.
Bar raisers are usually assigned to recruiting outside their own businesses, so that they could stay independent from urgent business need.
They have three tasks at hand. The first is to evaluate, using Amazon’s Leadership Principles as the yardstick, whether candidates have long-term potential at Amazon and whether they can raise the bar.
The second is to conduct the post-interview drilling with each interviewer, as Bezos did before, so that all observations, assessments, considerations, and doubts can be fully explored and thoroughly examined to arrive at a correct decision.
The third is to help hiring managers and other interviewers prepare for interviews, to ensure consistency in the high bar and, most importantly, to provide written feedback.
Giving that recruiting the right talent is regarded as the most important decision at Amazon, the company has made huge investment in terms of team’s time and energy into getting this right.
At Amazon, in addition to conducting the interview, each interviewer is required to document all key interview findings, detailed assessments, and judgment calls (a vote on whether to hire or not) into the system. Interviewers for the next round are required to review all the previous findings before their own interviews, so that they can adjust their line of questioning accordingly.
After the interview, the work is far from done. The post-interview drilling with the bar raiser or sometimes Bezos himself can be as intensive and time-consuming as—if not more than—the interview itself. What questions were asked, and why? What answers were given? How did the assessment and judgment get formed? No stone will be left unturned. All details will be explored, examined and extensively documented.
Once all the interviews are done, the hiring manager and the bar raiser review all the notes and the votes. If there is a need for a collective briefing, all the interviewers are required to attend. Despite strong advocacy from the business side on the grounds of urgency and/or necessity, the bar raiser retains veto power to reject a candidate. As mentioned above, the bar raiser has the obligation to provide written feedback to all.
After the final decision is made, and the new hire gets on board, the interviewers and the bar raiser are still not off the hook. The follow-through of new hires begins immediately: how well each new hire performs, how long each stays at Amazon, and how accurate the judgment of each interviewer is are all tracked, well documented and made known to the relevant parties.
This impressive set of practices supporting the rigorous recruiting process demonstrates that Amazon has indeed invested enormous efforts in recruiting. So what’s the return on this particular investment? Is it worthwhile?
For Bezos, the answer is yes, unequivocally. In fact this is a deliberately designed self-reinforcing mechanism to ensure rigorous enforcement of consistent standards and continuous bar-rising in both talent pool and institutional recruiting capabilities.
A contrast with how recruiting is normally done in most traditional companies can help you, in a big way, put Amazon’s unique, effective, and methodical approach into perspective and appreciate the mastermind behind it
In most companies, recruiting requests are generated by various departments or businesses, and so a lack of consistency in setting the bar company-wide creeps in from the starting point. Since everyone conducts their own interviews, some urgent hiring requests are processed in haste. Personal preferences and immediate needs tend to dictate how the hiring process takes place, leading to little or no consideration of the candidate’s actual fit or long-term prospects within the company. Thus the bar, even if high in the beginning, could be compromised or bent by short-term necessity.
As a result, unlike the continuous bar-raising at Amazon, which happens intentionally and by design, the hiring standards at most companies (assuming they even have them) will eventually erode.
Moreover, at most companies, job interviews are rarely documented, and when they are, done so poor or so generic that they are almost useless. People find it difficult to trace back how the interviews were conducted, how the candidates were assessed, and how the final decisions were made.
Once the new hires come on board, the responsibility shifts from recruiting to training, and then to performance management. No matter how poor the performances of new hires are, no one would be able to figure out who was actually involved in the hiring process, explore what factors had been missed, or examine how to improve next time, even if they bothered to do so.
Since there is no feedback to recruiters and interviewers, they cannot improve their skills or practices.
Amazon aspires to make its hiring as frustration-free to job seekers as its shopping experience to its customers. That’s why Amazon has posted helpful guides on the company websites, sharing tips including the following:
Tip 1: Leadership Principles. “The best way a candidate can prepare for an interview is to consider how they’ve applied the Leadership Principles during their previous professional experience.”
Tip 2: Failures. “We encourage all candidates to have specific examples of times when they have taken risks, failed or made mistakes, and grown or succeeded as a result.” Why so much emphasis on failure? Because failure is an integral part of innovation and invention.
Tip 3: Writing. “For some roles, we may ask a candidate to complete a writing sample.” Why? Because PowerPoint has long been banned at Amazon and they use narrative-style memos instead.
While tips such as these are considerate and helpful to the candidates, they are also carefully designed to benefit Amazon: the subtle beauty is that they are designed to weed out the non-fit from the very beginning. Those people who have studied Amazon’s Leadership Principles and thought through past failures and prepared writing samples will inevitably end up assessing their own personalities, preferences, and competencies during the process and seriously evaluate whether they are the right fit for Amazon. In short, Amazon’s transparency about its talent criteria has transformed recruiting into a “self-selecting” exercise.
Beyond creating a process to maximize “fit,” Amazon also designed its compensation scheme along the same line of thought. The objective is to seek out the real builders with true ownership and long-term thinking.
Amazon is notoriously famous for its frugality. The generous perks offered by other digital giants, such as Google and Facebook, are apparently out of the question at Amazon. Amazon employees are even required to pay partially for their own parking at work.
In lieu of high salaries, compensation has been titled towards stock options rather than cash—which Bezos pointed out in his initial 1997 Shareholder Letter. The salaries of Jeff Wilke, CEO of Worldwide Consumer, and Andy Jassy, CEO of AWS were only $175,000. In addition, Amazon deliberately avoids giving bonus as Bezos believes that it is not good for internal collaboration. Executive bonuses were terminated in 2010.7
At Amazon, the majority of compensation is instead stock based. The vesting period is also heavily tilted towards the long term: 5% for the first year, 15% for the second year, and 20% each for the next four half-year periods. This is very different from the usual vesting schedule of 25% for each year during the four-year period for most high-tech companies.
For anyone who takes his or her career seriously and thus spends some time on learning about Amazon, including what kind of people the company is looking for, and what kind of compensation package the company is offering, the conclusion is clear: Amazon is probably the last place to go for those who seek short-term cash, generous or even luxurious benefits, and comfortable low-challenge day-to-day work.
Bingo! This is exactly the conclusion that Amazon would like those job applicants to draw by themselves, because they are the wrong people by Amazon’s standards. This is what Bezos means by “self-selecting.”
Given that Amazon’s bar is so high and continuously rising, and the short-term cash compensation is not so lucrative, how can Amazon motivate and retain the real builders with true ownership and mental toughness on a long-term basis?
The answer lies in two aspects: what they love, and what they hate.
What do builders hate most? Bureaucracy. It is slow; it is suffocating; and in many cases it prevents them from making things happen in the way they like.
For Bezos, the abhorrence of bureaucracy is personal. It goes all the way back to his childhood. Bezos’ grandpa, Lawrence Preston “Pop” Gise, a real builder, strongly held the same view. During World War II, Gise was a lieutenant commander in the U.S. Navy, and then worked at DARPA in the late 1950s. At the height of his career, he managed a staff of 26,000 people at the Atomic Energy Commission. “In 1968, at the age of fifty-three, Pop Gise resigned from the U.S. Atomic Energy Commission over a bureaucratic squabble with his bosses in Washington.”8 It is not hard to imagine, even today, the seething anger that let him to quit on the spot.
Gise was a towering figure in Bezos’ life. He was probably the first and foremost mentor to Bezos. “He instilled in Bezos the values of self-reliance and resourcefulness, as well as a visceral distaste for inefficiency.”9
A bureaucratic organization is filled with complacency. Everything seems to move in slow motion, from decision-making to execution of ideas. Everything becomes blurry, especially regarding results, performance, accountability, and action items. Everything needs to follow a Standard Operating Procedure (SOP) with little or no room to deviate or innovate, or go through a complicated process and lengthy approval chain.
Such an atmosphere is anathema to builders, who love to invent, and to try unconventional ways. They have little patience and want to jump in and make things happen.
Above all, builders love challenges. The problems that appear to be hard-to-solve or even impossible for many people represent something entirely different to the real builders. They see these problems as exciting opportunities, the best thrillers and the most fun part of the job.
When approached by Amazon back in 1999, Jeff Wilke was a vice president at Allied Signal, reporting directly to the legendary CEO, Larry Bossidy (who co-authored with Ram, the global bestseller Execution). What got Wilke excited about joining Amazon was “the chance of building a unique distribution network and define a nascent industry, an opportunity that simply didn’t exist at Allied Signal.”10 What’s unique? Something that was then non-existent. This daunting challenge may scare away many, but it is precisely what attracts the real builders.
When Steve Kessel was abruptly called by Bezos one day in 2004 and asked to take over the company’s fledgling digital efforts and build brand new things, which later became Kindle, he immediately “got excited by the challenge.”11 Unlike today, Amazon had zero experience in devices at the time.
Andy Jassy shared his thoughts on this in 2013:
“I can’t think of another place . . . . that thinks long-term rather than optically for a quarter, or that looks at an area of business (or customer experience) and doesn’t let itself get blocked by existing convention, or that gives people who deliver a chance to try any new entrepreneurial venture that makes sense regardless of their experience level in that area, or that hires builders who are unleashed to go change the world, or has such a sharp, inventive, big-thinking, high bias for action, collegial, hungry, and delivery oriented culture. It’s why I’m still here 16 years later . . . . Amazon is a builder’s dream, and if you want a chance to change the world in a pervasive way, there is no better place.” (Our emphasis)
Andy Jassy is still with Amazon today, 22 years later. Jeff Wilke and Steve Kessel are still with Amazon today after 20 years. In fact, among the entire 18-member S-team (Amazon’s core executive team, including Bezos, and his direct reports and selective two-level-down executives), half have been with the company for 20 years or longer, including Jeff Wilke (1999), Andy Jassy (1997), Jeff Blackburn (1998), David Zapolsky (1999), Russ Grandinetti (1998), Steve Kessel (1999), Charlie Bell (1998), Paul Kotas (1999), and Peter DeSantis (1998).
For a company with only a 25-year history, this is beyond amazing.
For those young and ambitious souls who are committed to accelerating personal growth and eager for an entrepreneurial experience, Amazon is their paradise.
At Amazon, new hires are pleasantly surprised at how much ownership they can have from the start. When they are assigned to a project team, they will be exposed to and engaged in all functions involved, and make decisions and build products that could potentially impact millions of customers.
In his 2014 Shareholder Letter, Bezos wrote about Prime Now, the new one-hour delivery service, with noticeable pride:
“Prime Now . . . . was launched only 111 days after it was dreamed up. In that time, a small team built a customer-facing app, secured a location for an urban warehouse, determined which 25,000 items to sell, got those items stocked, recruited and on-boarded new staff, tested, iterated, designed new software for internal use – both a warehouse management system and a driver-facing app – and launched in time for the holidays.”
If you were lucky enough to be on that team from the beginning, your personal learning curve and increasing versatility would have gone far beyond your wildest imagination. Such an experience is what attracts and retains the young and ambitious.
Of course, such accelerated learning and unparalleled versatility may not suit everyone. Some former employees at Amazon have complained that they “let engineers do so many things.”
Again, this is how the game is designed. “Self-selecting”, remember?
Other than such an accelerated learning experience, high standards have also played an important role. “Insist on the Highest Standards” is the number seven Leadership Principle at Amazon. It reads:
“Leaders have relentlessly high standards—many people may think these standards are unreasonably high. Leaders are continually raising the bar and driving their teams to deliver high-quality products, services, and processes. Leaders ensure that defects do not get sent down the line and that problems are fixed so they stay fixed.”
Why the high, or even highest, standards? Because Bezos believes that “people are drawn to high standards – they help with recruiting and retention.”12
Indeed, for the young and ambitious, what could be a better way to help them grow than setting the unreasonably high or the highest standards?
Bezos understands that a superb job in defining, recruiting, motivating and retaining the right talent is indeed very precious, but not sufficient. Beyond this, Amazon needs to continuously and proactively seek and fight for the top talent.
The unique challenge of attracting top talents lies in an interesting paradox: on the one hand, they are usually not the active job seekers, thus technically off the market; on the other hand, they are always closely coveted and quietly but heatedly chased by many.
Fighting for the top talent is a CEO job that cannot and should not be completely delegated to HR. For those top talents, direct interactions with the CEO, the founder, chairman, and the top executives could play a decisive role in their final decisions.
Take the courting of Rick Dalzell, a former Walmart executive, for example. During his 10-year tenure at Amazon, Dalzell was Bezos’ long-term right-hand man. Besides his CIO job, he also played a pivotal role in developing people and organizations. He brought in the right talent at the right time and developed many more people along the way. Andy Jassy, the current CEO of AWS, is among the many Dalzell coached.
It actually took Bezos more than half a year to win over Dalzell. Bezos and Joy Covey, Amazon’s then-CFO, started their courtship of Dalzell in early 1997. At that time, he was a senior executive at Walmart. Several initial attempts were futile as Dalzell turned them down, repeatedly.
When their first meeting finally took place, it seemed to be particularly cursed, marked by Dalzell’s double misfortune of luggage lost by the airline and coffee spilled on him by Bezos.
Yet Bezos is not a man who would give up easily. He continued to push ahead with his own brand of intensity and relentlessness.
He asked Covey to call Dalzell’s wife every few weeks. He lined up the acclaimed venture capitalist John Doerr to meet with Dalzell. He even flew to Bentonville, where Walmart headquarters and Dalzell’s family were located, with Covey on a surprise trip to invite Dalzell out for dinner.
All these efforts eventually paid off. Dalzell agreed to join Amazon after that dinner. But the joy of victory was short-lived, as Dalzell later changed his mind due to the seemingly impossible drudgery of moving his entire family from Bentonville to Seattle.
Despite this major setback, Bezos actually succeeded in planting the seed of Amazon in Dalzell’s heart. As time went by, the seed started to grow and flourish.
Eventually Dalzell’s wife, who was in fact part of the Amazon recruiting team by then, convinced him to pull the trigger. Dalzell joined Amazon as CIO in August 1997.
This anecdote illustrates that fighting for these top talents is never an easy task. In addition to you, the top players will constantly get calls from other potential employers, while at the same time their existing employer will also charm them, incentivize them or even coerce them to stay. You need to be as tenacious, relentless and resourceful as Bezos was in the case of fighting for Dalzell.
All your efforts on people will be well spent. Just as Bezos said, at the end of the day, your people are you company.
********
Among the six building blocks of the Amazon Management System, there are two foundational ones. Without these two, all others will crumble and the entire system will collapse.
So what are the two? The Continuous Bar-Raising Talent Pool (Building Block 2) elaborated in this chapter is one, and the other is the AI-Powered Data and Metrics System (Building Block 3).
It is of pivotal importance to running the day-to-day at Amazon for operational excellence, and to freeing up more organizational energy for continuous improvement, innovation and invention.
What is an AI-powered data and metrics system, and how does it work? Let’s explore in the next chapter.