
Jeff Bezos’ Annual Letter - djyaz1200
https://www.sec.gov/Archives/edgar/data/1018724/000119312517120198/d373368dex991.htm
======
x2f10
I might be shunned for beating the dead horse, but while he talks about 'True
Customer Obsession', he allows counterfeit goods erode his customer's trust in
Amazon. I'd argue Amazon's 'process as proxy' in dealing with counterfeits is
the careless return process. 'Oh, it's counterfeit? We're sorry! Here's your
money back!' does not solve the issue. Sure, thanks for the $10 back, but now
I must think twice (or thrice!) before ordering from Amazon. Once my Prime
membership lapses, I will not renew.

The 'process' for dealing with counterfeits is broken. When the customer has
to think about "the chances of counterfeit" or dealing with the return of
counterfeit products, it's NOT customer obsession.

I respect Jeff, TONS, but come on. You're talking the talk, but you're not
walking the walk.

~~~
plandis
You're 1.) implying that Amazon isn't actively trying to fix it (otherwise
they would be "walking the walk") and 2.) that it's a widespread issue (all
I've heard about counterfeit products are from a few HNers)

~~~
oneshot908
TRX workout sets are notoriously counterfeit on Amazon.

Example: [https://www.amazon.com/TRX-PRO-Suspension-Training-
Kit/produ...](https://www.amazon.com/TRX-PRO-Suspension-Training-Kit/product-
reviews/B00A5ICP32)

More recently, I got a counterfeit fitbit charger that flat out didn't work.
It got replaced, but it's still annoying.

~~~
cmdrfred
At $199 for what looks like some elastic and metal I imagine they do pretty
well on that one.

~~~
baddox
Not even any elastic. The TRX I've seen is just some nylon lashing straps,
cambuckles for length adjustment, and two plastic and foam handles.

------
AndrewKemendo
You have to admire the grit and tenacity it takes to maintain that kind of
ethos for 23 years straight.

What Jeff is basically saying here in this letter is that the pedal is to the
metal, forever: We can't have process as the foundation because it ossifies
the organization! Be nimble to the rules of the game.

When translated however, that means you are either empowering your
organization to change and make new processes at scale and speed, or you have
whatever the default process of solving problems from scratch each time. It's
the anarchist's dilemma. That is a tough organization to live under if you
aren't built for that, and one that only a certain type of people can thrive
in.

I mean the majority of people, leaders even, when they get to some level of
success will put the brakes on and coast, doing exactly the things Jeff
describes: building processes to take the cognitive load off of decision
making and making life just slightly easier. They build processes for
"efficiency", so that they don't have to go back and do all the hard work of
understanding the problem from scratch each time. The problem though, as Jeff
points out is that "The process" becomes an 80% solution to 80% of the
problems it's applied to (leading to 36% failure rate).

So just think about how you could - for 23 straight years - recruit, retain
and develop a cadre of managers, engineers, interns, staffers etc... that in
the majority of cases fall into the mindset of constantly sprinting -
basically an Olympic marathoner running a 5 min mile marathon. As a leader I
admire that ability.

~~~
devopsproject
By almost every account, Amazon is terrible place to work:
[https://www.nytimes.com/2015/08/16/technology/inside-
amazon-...](https://www.nytimes.com/2015/08/16/technology/inside-amazon-
wrestling-big-ideas-in-a-bruising-workplace.html?smid=tw-share&_r=1)

This isn't the type of leader you want to be.

~~~
ChicagoBoy11
Yet by every account that mattters it doesn't, right? I understand that people
who are there can certainly wish that the place and culture were different in
some significant way, but the only barometer that should have some weight is
the ease or difficulty that Amazon has in attracting and retaining top talent
-- and that to the extent that it is harming their ability to deliver results.
Which, from the outside, it certainly doesn't seem to be limiting.

The counterargument is that of course the things which makes Amazon's work
culture toxic to people are orthogonal to their success and not a cause of it.
My former boss was very well aware that she could sometimes be downright mean
and nasty to our staff, and I cringed every time she justified it by citing
what people thought the same of Steve Jobs: While true, we can't avoid the
fundamental problem of causal inference, and there is no saying that had Jeff
been actively striving to make a more welcoming culture, or if Steve or my
former boss were nice people, that they wouldn't have experienced even greater
success.

~~~
devopsproject
> but the only barometer that should have some weight is the ease or
> difficulty that Amazon has in attracting and retaining top talent

They have terrible retention. One of the worst and in many years the absolute
worst.

A few years back workers were passing out from working in 100 degree temps.
They were disciplined for performance and instead of installing air
conditioning, they lined up ambulances and paramedics to take falling bodies
to the hospital. [https://bits.blogs.nytimes.com/2011/09/19/inside-amazons-
ver...](https://bits.blogs.nytimes.com/2011/09/19/inside-amazons-very-hot-
warehouse/)

This is grotesque.

~~~
AndrewKemendo
To be clear their retention is only bad in the fulfillment centers. Those are
generally low skill, low pay, seasonal employees meant for short term stints -
of which there is a near infinite supply.

For their core engineering, BD etc... teams in Seattle, retention is great.

~~~
devopsproject
If you are going to make those claims, please provide a source.

This is pretty good rant from the technical\engineering side:
[https://plus.google.com/+RipRowan/posts/eVeouesvaVX](https://plus.google.com/+RipRowan/posts/eVeouesvaVX)

There is no need to fetishize amazon and if amazon is your model I feel sorry
for your employees.

~~~
ronlaflange
Not sure how relevant this rant is; the last time Steve Yegge worked at Amazon
was in mid-2005. For reference, this was even before AWS launched publicly.

~~~
devopsproject
2015 - [https://www.nytimes.com/2015/08/16/technology/inside-
amazon-...](https://www.nytimes.com/2015/08/16/technology/inside-amazon-
wrestling-big-ideas-in-a-bruising-workplace.html?_r=1)

------
joshaidan
I encountered "process as proxy" today dealing with Cisco. We were requesting
a replacement for a defective part, they asked us for our serial number, which
we provided, but then responded to us that our serial number was invalid.
Likely because it wasn't registered. We were told that we had to contact our
sales manager, or open a TAC with a different department because they
department only deals with technical issues.

Could they not have done something to help us, maybe forwarding the ticket to
the department that could register the serial number, to help us rather than
just leaving us stranded? It's as though they want to follow process rather
than helping the customer.

~~~
rconti
One of my most memorable customer service examples was memorable merely
because it didn't go poorly.

The vibrate function on my Ericsson T39 cell phone failed. I was dreading
calling support, because I knew they'd tell me to piss off. It was a grey-
market phone. I bought it on eBay unlocked, shipped to my home in the US. I
wasn't the first owner, for that reason. It came with a UK charger. They
didn't even sell the phone in the US.

When I called support, they asked me for the serial #, plus a code next to the
serial (turns out to be the production date.. Week/year).. and my address.
Almost immediately shipped me a replacement with a box to RMA the old phone.

They didn't care how I obtained it. They didn't care that it wasn't sold in my
country. They didn't care that I didn't have a receipt. They CARED because I
was a customer who paid money for their product, it failed, and they wanted to
make it right. It was so refreshing.

~~~
Denzel
I had a similar experience with Sony back when I was younger. Although, I did
purchase the PS2 legitimately.

Something went wrong with the disc reader after a year or so. Sony told me to
send it in. Then they sent me a replacement PS2 to keep... and a couple weeks
later I received my old PS2, with the disc reader fixed. All free of charge.

I've been loyal to Sony ever since that fantastic experience.

------
mstank
"A common example is process as proxy. Good process serves you so you can
serve customers. But if you’re not watchful, the process can become the thing.
This can happen very easily in large organizations. The process becomes the
proxy for the result you want. You stop looking at outcomes and just make sure
you’re doing the process right. Gulp."

Seems like this is exactly the kind of issue companies like United Airlines
suffer from.

~~~
fbonetti
This is a surprisingly common trap to fall into. I worked at a startup in
which the CTO criticized my dev team for not having a perfectly linear burn
down chart. Every week in our retro we had the same discussion about how to
improve the shape of our burn down chart; we tried putting higher valued
stories at the front of the queue, involving QA earlier in the sprint, and
cranking out 1 pointers mid week to tweak the graph. We rarely achieved the
perfect shape. On top of this we also had one week sprints, which made it
difficult to plan for the future or work on spikes, so we ended up doing very
little high-level, architectural planning.

I remember one week my team cranked through their allotted stories so fast
that we ran out of work two or three days into the sprint. We decided to take
on a couple extra easy stories that we knew we could finish before the end of
the week. Rather than being praised for doing extra work, we were criticized
for "introducing volatility into the sprint". In other words, we messed up the
shape of the burn down chart.

I'm currently working at a place that has virtually no process, which has it's
own challenges, but I'm happy that I'm not arguing about burn down charts
anymore :)

~~~
wjamesg
Burn down chart?

~~~
fbonetti
It's a common metric used in the Scrum methodology. You start off the "sprint"
with a set number of "story points" (say, 30 points), and end the sprint with
zero points. When you graph the team's progress over the course of the sprint,
it should ideally form a linear, downward slope.

[https://en.wikipedia.org/wiki/Burn_down_chart](https://en.wikipedia.org/wiki/Burn_down_chart)

~~~
lubesGordi
This kind of thing makes sense if you were doing something like digging a
trench, where the progress can be linear because the task A is the same as
task A - 1. Why would anyone think that given a variety of tasks that each
would take the same amount of time?

~~~
fbonetti
I agree. Being on the receiving end of Scrum feels like being an assembly line
worker. I totally empathize with the business people who need some
transparency into what the developers are working on week to week. Software is
pretty abstract. I get that. But obsessing over burn down charts is the wrong
way to go about it.

------
OoTheNigerian
This paragraph from his first letter to shareholders best illustrates how far
Amazon has come.

 _" We established long-term relationships elationships with many important
strategic partners, including America Online, Yahoo!, Excite, Netscape,
GeoCities, AltaVista, @Home, and Prodigy."_

------
ChuckMcM
I wrote an email to Jeff suggesting that Day 2 might be started by losing
control over what is sold in his shop.

I really respect the way he thinks about the company and I have bought stock
in it as a reflection of that respect. My hope is that he will be able to
match 'focus on the customer' with 'don't sell the customer counterfeit or
shoddy crap'. With their investment in Machine Learning one would hope they
could train that engine to predict where crappy product is going to come from
and reject it before it gets into the pipeline.

~~~
TheRealDunkirk
There's a lot of talk about counterfeit goods in this discussion, but my
problem is the amount of sellers selling the same thing, and using bad search
terms to get their listing to the top, and generally making everything harder
to find. Have you ever tried to search on something that doesn't have, like 3
or 4 really, really obvious market-leading options? And then sort by anything
other than the default? It's impossible! God go with you if you ever sort by
price, ascending!

I've been a Prime member for several years, but the site has become so much
less useful for me that I'm about to just let it lapse. I think it's creating
opportunities for more-focused competitors, like Wayfair. I used to use NewEgg
for electronics, but now they've started going the same route. I have to study
every listing to make sure I'm getting it from a US warehouse, and not via a
slow boat from China.

I just ran into this today with a big-name monitor, even. I added 2 very-
similar models to my cart, and went with the one that had free 2-day shipping.
Why did the other one have free shipping, but took 5 days? I don't know! There
was nothing about the listing that would have tipped me off that it was a non-
Amazon retailer. I'm getting tired of playing this game.

~~~
ChuckMcM
I agree completely and in my opinion this is not a 'customer focused' way of
doing business because the customer's are getting tired of fighting these
fights. That was why in my email I called him out on this, and specifically
said, "If you believe your highest priority is to focus on the customer, and
losing sight of the customer is a precursor to Day 2, then you _must_ address
the quality of the shopping experience."

I too have been a Prime customer for years, but 2 day shipping doesn't mean as
much if its 2 days to delivery, then a trip to the post office to return it,
and another 2 days to get the replacement, and then another week before your
account is credited with the returned one. As an egregious example I bought a
replacement cable modem and the one I got had a 'property of time-warner
cable' sticker on it! And yet advertised as new. They replaced it quickly but
really? Why should I have to be the person to sort the crap? And if that
responsibility does fall to me, _the customer_ , then Amazon is not sticking
to their policy of putting the customer first.

And I agree with Jeff in his letter, if he gets into Day 2, the company can
ride it for a very long time into the sunset (just look at Sears!).

------
bambax
From then 1997 letter:

> _We established long-term relationships with many important strategic
> partners, including America Online, Yahoo!, Excite, Netscape, GeoCities,
> AltaVista, @Home, and Prodigy._

Every single one of those partners either folded or fell into utter
irrelevance. The only one surviving is Amazon itself.

Don't know what to make of it, though.

------
Gormisdomai
Reposting this thought from the other discussion[0]:

 _> Third, use the phrase “disagree and commit.” This phrase will save a lot
of time. If you have conviction on a particular direction even though there’s
no consensus, it’s helpful to say, “Look, I know we disagree on this but will
you gamble with me on it? Disagree and commit?” By the time you’re at this
point, no one can know the answer for sure, and you’ll probably get a quick
yes._

This sounds really powerful but also like it might be open to abuse (for
example degenerating into passive agressiveness/half commitment). Does anyone
use something similar in their own workplace? Does it work?

[0]:
[https://news.ycombinator.com/item?id=14103818](https://news.ycombinator.com/item?id=14103818)

~~~
peripitea
I worked at Amazon for almost five years. Like every leadership principle,
this one was easily perverted. Many people I worked with took this to heart,
and among peers there was often an honorable sense of "OK, I will disagree and
commit on this one".

But I also spent a few years in an org where I don't think I ever saw someone
more senior disagree and commit to the opinion of someone more junior. At each
level of the hierarchy it was used as a way to excuse "you will do what I
say". That's fine if it happens once or twice, but laughable if it's always
flowing in one direction.

The other leadership principles were perverted in similar ways. You wouldn't
believe the range of things I saw justified as "customer obsession".

~~~
foobarqux
> You wouldn't believe the range of things I saw justified as "customer
> obsession".

I would like to hear some of them if you have the time and inclination.

~~~
peripitea
Sure. Realizing as I go through them that all of these were from my peers in
middle management; ICs tended to be much more genuine in their communication.
Such is the nature of politics.

Things justified based on "customer obsession":

-Forced weekends and extra on-call assignments. This was bad managers making up for their poor planning and trying to use company values as a stick for their employees.

-Delaying the launch of a feature beta testers were raving about for six months to meet an operational metric that would clearly be made irrelevant by the launch, but for which the complainant had a goal in his commitments.

-So many similar things related to goals that someone needed to hit. Managers would say to other managers, in only slightly more words, "you are not helping my team, therefore you are not customer-obsessed". There was no consideration given as to what other impacts might fall out of the demanded action and how those might affect the customer.

-One that happened to me: I disagreed with the (clearly faulty) analysis of a dataset made by a higher-up manager. He was about to make a decision with his analysis that was going to affect several engineer-years worth of commitments, so I did a reply-all to his analysis respectfully explaining his mistake. He emailed my boss's boss (his peer) to complain that I lacked customer obsessions and to question whether I was a good fit for the team.

Essentially you can pervert anything to be about customer obsession (or any
company value) if you want to. There's a fantastic book called Moral Mazes
that does an excellent job of illustrating and explaining this phenomenon. It
puts all of my examples above to shame.

------
sb8244
I often say that we don't need to agree, just commit together. I particularly
like disagree and commit better. It seems like it would shorten time to
decision as long as no one takes it personally.

~~~
Qworg
I really like "disagree and commit" but I'm worried how well it would work in
most corporations. I think it requires incredible alignment amongst the
decision makers about the goals of the project - something that is in short
supply.

~~~
hinkley
I had a boss who thought he liked that idea but every meeting turned into an
extra fifteen minutes of him badgering me for agreeing to disagree with plans
that often blew up later. Sitting through the what went wrong meetings was an
exercise in patience that I often lost.

I have no doubt at all that he would label me as a toxic employee, and was not
surprised at all to be in the first round of layoffs (worked out for me, I got
27 paychecks that year and a three week vacation), but most of that would be
him projecting his issues onto me.

He wanted to be a good manager but was so emotionally challenged by estimates
not actually being blood oaths that it twisted every planning meeting into
something ugly.

------
skrtskrt223
As an employee of the amazon returns facility a lot of the issue is because of
employee error, which is the lack of opening the box and making sure it is the
right item being returned, part of the process is sending ot to liquidation to
where it is sold at discount prices, warehouse deals sellable to where it
becomes a sale although it has cosmetic issues, brand new sellable, and
destroy. If they check the box and it is caught as being the wrong item, it is
investigated on amazons part to see if it was a item sent back by mistake, an
item that was sent out by mistake, or if the costumer is trying to pull a fast
one. If it is the wrong item it is an easy fix as long as amazon sells the
item that was returned.

------
curiousDog
Day 1, no processes, pedal to the metal are great for the business owner but
suck for the proletariat. Contrast this to Google where for the most part
Software engineers are happy to work.

~~~
plandis
I'm a software engineer at Amazon and enjoy my job.

------
zeteo
Conspicuously missing are a couple of other ingredients of Amazon's success.
There are plenty of companies out there with "customer obsession" and a "day
1" mentality. There are few others with such good investor relations that
money keeps pouring in after two decades of paltry or negative earnings [1].
With this kind of "infinite runway" you can sometimes afford to lose $100
million over three months to drive a competitor out of the market [2]. You can
also afford to negotiate sweetheart deals with UPS and FedEx that will offer
you delivery rates and speeds available to few other companies [3].

[1]
[http://www.slate.com/blogs/moneybox/2013/01/29/amazon_q4_pro...](http://www.slate.com/blogs/moneybox/2013/01/29/amazon_q4_profits_fall_45_percent.html)

[2]
[http://www.slate.com/blogs/future_tense/2013/10/10/amazon_bo...](http://www.slate.com/blogs/future_tense/2013/10/10/amazon_book_how_jeff_bezos_went_thermonuclear_on_diapers_com.html)

[3] [https://sellerengine.com/should-you-use-amazon-discounted-
up...](https://sellerengine.com/should-you-use-amazon-discounted-ups-
shipping/)

~~~
dkural
He didn't start out with that kind of size. He built it from nothing, with
strong competitors like Walmart who had more volume for physical goods that
could negotiate better deals with UPS and FedEx for years.

AWS is beating Google, Microsoft, etc. Those companies had as much free cash
flow and more engineering resources.

He has good investor relations because he produces great returns.

So, yes, your facts are correct, but you are wrong in an essential way:
Investor goodwill and the market position is built by Day 1 mentality and
customer obsession, not the other way around. A few bad moves will quickly
erode both. Look at Blackberry, Dell, HP, Nokia, Westinghouse, Samsung etc.
All these companies had massive market positions and investor confidence, with
stock prices to match.

~~~
zeteo
And how do you account for survivor bias? I don't think the CEOs of Blackberry
or Nokia would have agreed that they cared less about the customer than Jeff
Bezos. "Customer obsession" is not actual, actionable advice because it's not
even measurable. It's nice rhetoric, but other companies were judged on hard
metrics of profits and dividends.

~~~
lowbloodsugar
Huh? Nokia and especially Blackberry failed to address "Customer obsession"
and just stood in slack jawed denial while an innovative company ate their
lunch. e.g. [1]

[1] [http://www.businessinsider.com/rim-ceo-
quotes-2011-9](http://www.businessinsider.com/rim-ceo-quotes-2011-9)

------
dirtyaura
Earlier thread about the letter
[https://news.ycombinator.com/item?id=14103818](https://news.ycombinator.com/item?id=14103818)

------
jtraffic
Does this come across as oddly inconsistent to anyone else?

"These big trends are not that hard to spot (they get talked and written about
a lot), but they can be strangely hard for large organizations to embrace.
We’re in the middle of an obvious one right now: machine learning and
artificial intelligence."

"Another example: market research and customer surveys can become proxies for
customers – something that’s especially dangerous when you’re inventing and
designing products. 'Fifty-five percent of beta testers report being satisfied
with this feature. That is up from 47% in the first survey.' That’s hard to
interpret and could unintentionally mislead."

What about ML as a proxy for customers?

~~~
meow_mix
Depends on how ML is used. ML is much more than gaging customer satisfaction

------
smaddali
I particularly like the concept of 'Day 1'. No matter what stage you are in as
a business or individual, it is still day 1 for rest of your life. Taking long
term view , keeping where you want to go in focus is really important.

~~~
chrismealy
I always thought "it's day one" sounded like something a man says to his wife
after he's been caught having an affair.

~~~
degenerate
No, that is called _judgement day_

------
kirykl
Exactly. The purpose of process is to stabilize things enough to see where
systemic improvements need to be made. Not to follow it blindly as a path to
success.

------
avar
Odd to see Bezos cite number of Oscars & Emmies as a measure of competence, as
opposed to revenue. A lot of movies that win awards aren't particularly good
investments.

~~~
arikr
I imagine it's a marketing tactic to accelerate the flywheel he cares about:
more awards -> more talent that wants to write/sell to Amazon Studios -> more
exclusive shows -> more customers -> more awards

------
plcancel
With Easter just around the corner, I thought he would've at least mentioned
Day 3.

------
perseusprime11
United can learn a thing or two from Jeff Bezos's annual letter about customer
obsession. Trust your customers rather than treating them like idiots and with
suspicion.

------
m3kw9
All the counterfeit talk, what is out there that is less counterfeit and as
convenient? Lets hear some fine alternatives

