November 8, 2017 • 40 mins
We all know Amazon.com started as a bookseller, that’s now a grocery store and personal assistant and online streaming service. But how did this Seattle start-up outlast the hundreds of other online stores that started at the same time? Will and Mango take a look under the hood to explore the secret ways Amazon hopes to dominate the future.
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Episode Transcript
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Speaker 1 (00:00):
Guess what, Mango? What's that? Will? Did you know that
the early days of Amazon dot Com they actually had
this bell installed and they would ring it every time
a book was sold. The employees we then rush over
to see if they knew the name of the customer
who had made the purchase. I mean, that's crazy. I mean,
especially considering they now sell more than six items per
second on their biggest days. I'm guessing they don't ring
(00:21):
that bell anymore. Probably not, but actually it feels like
they should do this as a symbol, like maybe get
some intern that give them a bell and just be like,
just just do your best every time in order comes in?
All right, that that might be a little bit mean,
but it is crazy to think just how much Amazon
has grown in the past couple of decades, and how
many industries they're involved in, and and the crazy things
they may be up to next. So that's what today's
(00:42):
episode is all about. Let's get started, either podcast listeners,
(01:03):
Welcome to Part Time Genius. I'm Will Pearson and as
always I'm joined by my good friend Man guesh Ticketter
and the man on the other side of the sound
proof glass. What did he do? He checking his stocks
in the news anyway, whatever he's doing, that's our friend
and producer Tristan McNeil. That's that's been so long since
people check their stocks that way. But all right, well,
(01:23):
today we're talking about Amazon dot Com, the company that,
in twenty two short years has gone from this tiny
garage based startup in Washington to the largest and most
successful online purveyor of well, I mean, pretty much everything,
and likely it feels like every week brings this fresh
announcement from Amazon about some new product or venture that
the company's launching, or some milestone has reached on its
(01:46):
journey to total global domination. Right, and with all that
recent news in mind, we thought it might be interesting
to take a deep dive into Amazon's history and trying
to get a sense of how it got so big
and how much growing it could still do in the
years ahead. And along the way, of course, we'll get
a couple of PTG listeners on the line for a quiz.
All right, So let's start from the beginning on this one,
which which for Amazon was the your nineteen and that's
(02:08):
when the founder and CEO of the company, Jeff Bezos,
decided to quit his job at an investment firm and
take a gamble by starting his own internet company, which
is so risky. I mean this is remember the Internet
was a new phenomena for most people, and buying something
online was just about the shadiest, riskiest thing you could
think of. Yeah, and Bezos saw the potential though, and
(02:28):
when when he noticed the early rumblings of the impending
Internet revolution while working on Wall Street. And according to him, quote,
the wake up call was finding this startling statistic that
web usage in the spring of was growing at a year.
You know, things just don't grow that fast. It's highly unusual.
And that started me about thinking what kind of business
(02:51):
plan would make sense in the context of that growth. Well,
apparently the kind that involves starting an online bookstore out
of your garage, because that's what Jeff wound up doing
when he founded Amazon just a year later. And you know,
he wasn't sure what to name his company. The front
runner name I found was actually Cadabra, which is a
crib from that word abra cadabra, but that idea was
scrapped when jeffs lawyer pointed out that it sounded a
(03:13):
little too close to cadaver. That's kind of I could
see how that might be an issue cadaver. So the
name went from magician lingo to corpse, then to a river.
So how exactly did that progression happened? Well, supposedly went
with the river name for two reasons. The first was
that the Amazon River is one of the largest and
longest in the world, so the name has this built
in connotation of scale. Uh and and the second reason
(03:36):
was a bit more practical, like website listings for businesses
were usually alphabetical back then, and Jeff wanted a place
at the top of the list. So I love the
idea of the alphabetical listings like that. That that happened
at some point. Yeah, these have those directories, remember directory
of websites. But but by the way, another name Bezos
kicked around was Relentless, and while he eventually decided against it,
(03:57):
if you type relentless dot com and your search bar,
you actually get taken to Amazon. Cool. Yeah, all right, Well,
well back to the company's founding. In the whole venture
was Jeff's idea, but he definitely didn't get it off
the ground by himself, and the initial capital for the
site actually came from his parents and admittedly, they didn't
really understand what their money was going toward. In fact,
(04:20):
the very first question Jeff's dad asked after hearing the
pitch for this web based bookstore was what's the internet?
You know. Nonetheless, jeff parents ponied up a large portion
of their life savings. I mean, this was hundreds of
thousands of dollars all for their son's crazy dream of
opening this invisible bookstores. They saw it. Yeah, that's so serious,
unconditional love. But thankfully, Mom Potizos have done pretty well
(04:43):
on their investment. Uh. And that's to put it mildly.
I mean the site was a success from the start,
and that was with zero press promotion. I mean Amazon
sold books to customers in all fifty states and forty
five different countries within its first month of operation. It's
pretty incredible. Yeah, but it's second on. The site was
making more than twenty dollars in sales per week, and
(05:04):
that was way more than Jeff and his tiny startup
team ever anticipated. Yeah. You know, I still laugh thinking
about them ringing a bell with every sale in those
early days. Yeah, and especially thinking about that stat we
discussed earlier where peak times Amazon's annual prime day. For instance,
the company sells over six items per second. Never stopped ringing. Yeah,
I would be a total nightmare. Speaking of which, did
(05:26):
you hear about that early Amazon software bug? It basically
handed out free money to customers? Oh I did, I'm
sorry I missed out on this. What happened a fairly
There was a glitch in the program that allowed users
to order a negative quality of books, and the site
would end up crediting the cost of the books to
the customer's credit card. I mean, Amazon's team caught onto
it pretty quickly, but but it's still kind of amazing. Yeah,
(05:47):
you know. And Amazon has always been good about identifying
these hiccups in its service and quickly getting solutions in place.
And one great example of this is the decision to
branch out from book sales just three years after the
company's launch. And don't get me wrong, I mean, books
were a smart choice to start out with because they're sturdy,
they're fairly uniform in shape, and all of that makes
them easy to store and ship and bulk. But focusing
(06:09):
on just one product, you know, no matter how popular
or convenient it is, it puts a cap on the
company's growth potential. And it left a lot of money
on the table, as they saw it, and and that's
ultimately why Amazon started selling other forms of media. They
moved into CDs and DVDs, and they then moved into
things like clothing and toys and electronics, and since then
(06:29):
it's just about anything else. I Mean, what's baffling to
me is that Amazon's like one of the few expanding
e commerce sites that actually managed to survive that whole
dot bomb bust, you know that are the one in
the late nineties and early two thousands, and and I
don't know if you remember, but like, there are so many,
I think there are hundreds of online retail startups. I mean,
we remember things like pets dot com and Cosmo dot com.
(06:51):
But there was just so much hype. Yeah, and there's
been all this excitement about the burgeoning online market, and
investors were quick to back these fledgling companies that really
had no long term plan or business model really and
and then once the huge losses started mounting, they all
that funding dried up and the dot com bubble burst,
of course, So I'm curious how did Amazon manage to
come through all of that unscathed. Well, for one thing,
(07:14):
and this was something I really didn't know, but just
looking into this that Amazon was a lot more frugal
than some of the cash happy startups that were spending
so much money on things like lavish office space and
all these wild parties that you read about. And you know,
for example, Amazon's offices used to have these makeshift what
they called door desks for workers to use. According to
former employee Greg Lindon, the company would quote buy a
(07:37):
wooden door, preferably a hollow core wooden door with no
whole free drilled saw, a couple of four by four
by six pillars in half, bolt them to the door
with a couple of scary looking angle brackets, put them
in front of a programmer, and doordesk. That's what it is.
But I mean, there's no way Amazon survived just by
pitching pennies on a few door dusks. No, I mean,
(07:58):
but it's not like Amazon was completely she folded from
the dot com crisis either. The at one point in
two thousand one, the company's stock plummeted from a high
of about a hundred dollars per share to a low
of just six bucks. You know, Bezos was said to
have taken all of this in stride, though, I mean,
he said he preferred to focus on the ever increasing
cash flow that Amazon had to play with. He felt
(08:18):
the long term opportunities afforded by this capital would secure
the company's future, even if that meant profits would stay
at or you know, even below zero for the time being. Yeah.
Doing the research for this episode really highlighted how much
more Amazon values revenue over net income. But since most
of us tend to use those terms interchangeably, I just
want to give a quick note about the distinction between
(08:39):
the two. So, in a financial context, revenue is the
total amount of money generated through everything the company sells, right,
and net income refers to just the company's profits. So
that's the amount of money that it stays after you
take away you know, the company's operating costs and and
all their other expenses. Yeah. So for two thousand and sixteen,
just looking at the number here, Amazon earned about a
(09:01):
hundred and thirty six billion in revenue, but it only
reported two point three billion as actual profit only only time.
And how depressing would that be if our business only
generated two point three billion and actual profit. But you know,
sometimes you'll see reports that Amazon never turns a profit
despite being this huge sales juggernaut, but that's not really
(09:22):
the case at this point. Yeah. I mean, it's true
that the company didn't report a profit until six years
after it launched, and even today Amazon fluctuates between losses
and gains and breaking even all on a quarterly basis.
But the thing to remember is that those sometimes less
in stellar profit margins are all part of visas plan.
Like Amazon makes a ton of money, it's just that
(09:43):
most of that money is immediately reinvested in the company's
growth and diversification, rather than being divvied up amongst its
employees and shareholders or set aside for a rainy day. Well,
and that's how we ended up with things like Prime
Shipping and the Kindle Alexa and all these other services
and gadgets that the company has developed and rolled out
over the years in lieu of banking these sky high profits.
(10:05):
So Bezos convinced the company to set aside short term
income really more in favor of long term expansion, And
just like the early move beyond books, the decision has
definitely paid off in a huge way. Yeah, and they're
all kinds of examples of that payoff. But I think
Amazon's Web services division, the a WS, is probably the
best one. That's the cloud computing business that Amazon started
(10:26):
in two thousand two, right after the dot com crash,
and it's really prescient these days. A WS is actually
the most profitable part of the company. And if you
look at it, like last year when Amazon reported the
two point three billion dollars in income that you mentioned
the profits from their web services that represented more than
half of that take. Yeah, so so really the company's
(10:47):
biggest money maker has nothing to do with selling or
shipping physical products at all, which is just amazing to
think of more than half of the company's profits coming
from a part of the company that most people really
don't even know exists or understanding exactly what it is.
And so for our listeners who might be going a
little cross side at the mention of web services and
cloud computing, you know, here's a little bit of an explanation.
(11:08):
So to just think about these companies that maybe startups
or even bigger companies, and they know that as they grow,
they're going to need new servers, they're going to need
to equipment all to be able to manage the you know,
a bigger online business. But it's hard to predict exactly
how quickly you're going to grow, and if you were
having to buy these servers in every piece of equipment
to predict that each time, it can get extraordinarily expensive.
(11:31):
And so to be able to just use Amazon Services
and Amazon servers saves them a ton of money and
allows them to grow at exactly the rate they need
to grow. Yeah, but what's interesting that isn't just like
small companies and startups that are taking advantage of this arrangement,
like big companies actually use it too. And if you
look at the client list, it's like Netflix, Instagram, Spotify, Airbnb.
(11:53):
They all rely on a w S servers for their power,
and even the government's partnered with a WS like did
you know the cia A uses them? I mean they
owe much of its computing power to a customize cloud
on the AWS servers that most of the division's one
million plus customers represent for profit businesses, but there are
also about eighteen thousand nonprofits, five thousand schools, and close
(12:14):
to two thousand government agencies to wow, and you know,
all that attention and profitability has caught the attention of
these other mammoth companies who now want in on this
cloud computing industry. You've got place like IBM and Microsoft
and Google. They've all started investing tons of money into
growing their competing services. Of course, a WS has poised
to make a record setting sixteen billion dollars in revenue
(12:37):
this year. The other guys have a long way to
go if they have any chance at trying to catch
up with Amazon, which is exactly how Amazon likes that,
I'm sure. I mean, they've made a habit of getting
out in front of the competition when it comes to
emerging tech and infrastructure, and that's to the chagrin of
all these rival companies and traditional brick and mortar stores. Yeah,
why don't we talk a little bit about some of
the other innovations that have given Amazon a leg up
(12:58):
over the years, and including a few on the horizon
that do raise some serious questions about things like consumer privacy. Yeah, definitely,
But why don't we get a listener on the line
for a quiz first? All right, so Ango, we've got
a brilliant listener on the line right now, and I
(13:20):
know we're going to be doing today's quiz about Amazon
because of the episode today. But the reason we've actually
got today's guest on the phone is because he called
into our Fact hotline with a terrific story related to
our Sugary Serials episode. So, Jeffrey Nichols, welcome to Part
Time Genius. Well, thank you for having me. All right, So, Jeffrey,
we we really need you to share with our listeners
(13:41):
what you told us and your voicemail. So it turns
out that you actually won a grand prize from a
box of wheaties almost thirty years ago. Is this right?
That that is correct? I had forgotten about it until
you got to the end of the Sugary Cerial episode
when you were discussing the prizes and how they had
(14:03):
to start putting. They couldn't put them in the actual
bag of cereal, and it was in the bag between
that and the box. And then I stopped in my
tracks while I was walking my dog and realized I
won one of those. And so, needless to say, I
had the Facebook you guys instantly and then lo and
behold you guys enjoyed by doing that and had me
(14:24):
leave the message on the fact. Yeah, but you got
you gotta tell everyone what you want because it's crazy. Um,
So there was there was a box of Walter Payton Wheatie's,
which I imagine was probably procured in the fall, because
that's that's when they're playing football, and Walter Payton was
(14:45):
still a demigogue at that time. And I months and
months later, I the box of cereal was still there.
I poured it in in this plastic envelope, her plunked
in the bowl and you know, we've all had that
happened a million times. But for whatever reason, I opened
(15:06):
it up and it said you won, and I uh.
I was still living at home because I was a teenager,
and I and I yelled up to my mom and
you're never gonna believe this, but we won the grand prize,
which turned out to be a thousand dollars cash and
a week in Aspen slash Snowmac with the Phil and
(15:27):
Steve Mayer, who were the greatest Olympic American skiers of
all time at that point. And so it just it
was happening. It was falling at the end of what
was my spring break of I guess would have been
the spring of eighty nine, my senior year, And so
my mom flew and I flew up to Colorado and
(15:52):
the most bizarre aspect of this whole uh contest was
that I was the only person who won the contest
by accident. And what do you mean? Well, I didn't
realize that, because why would I I was only teen
and a half years old. But there's a whole subculture
in America apparently who everything that they eat and consume
(16:17):
and where and do is because of no purchase necessary. Um.
They have these big ledgers filled um from front to
back and top to bottom with every contest that they
are currently uh entered in, and and that's how they live.
(16:37):
It was the bizarre I mean, of all of the winners,
they were all looking at each other's ledgers to see
where they were in proximity to everybody else's occupations. But
so I was the only person who skied, and so
Phil Mere and I just skied all day every day
and ask them because all of the other Grand Prize
players they were all back in their hotel room working.
(17:01):
I do love that you actually one of the Grand Prize.
That sort of restores some faith in these serial prizes
for me, because you know, you always see these massive
prizes and you don't think anyone's actually winning them. So
I'm glad to know you want it. Yeah, it was,
I mean it was. It was very cool and in
just so look, I mean it was as cool to
have one as it was to find out that there
is a subculture. Um he was to say it was funny.
(17:24):
When the topic of the thousand dollars cash came up,
my mother quickly reminded me as to who bought the cereal,
So that's who was also pocketing the thousand dollars cads. Well,
that is a great story and actually gives us an
idea for a future episode on that subculture. But for
today's episode, since we're focused on Amazon, we're going to
(17:46):
have a related quiz. Now, angle what what quiz are
we having Jeffrey play today? So we're playing a game
called one star movie Reviews and this all comes from
the great Twitter account Amazon movie Reviews, which is which
is hilarious. And so there's actually a review on there
for Tooth Fairy Too that I was looking at starring
Larry the Cable Guy, I think, and so the review says,
(18:07):
I have kids, they wanted to watch it. Sometimes I
wish I didn't have kids. One star my favorite on
there's actually this five star review on the site. It's
for boss Baby, and it just reads, quote, this movie
saved my marriage five stars. That's pretty incredible. All right, So, Jeffrey,
we're going to read you some reviews from the site there,
(18:28):
and all you have to do is tell us what
movie they're referring to you. Ready to play? Alright? Review
number one, there were no wolves in this movie? One star.
So what two thousand thirteen movie featuring Leonardo DiCaprio are
we talking about. I would have to say The Wolf
of Wall Street. Yeah, that's right. So they're actually a
(18:50):
similar one star reviews for The Accountant, which says not
enough accounting in this movie, and Cars, which simply says,
I see enough cars in real life. All right, all right,
you're one for one, Jeffrey, here we go. Number two.
What Nickelodeon cartoon about an intrepid Mexican girl who loves
to travel got the following review? Hate it? Who lets
(19:12):
their three year old go on adventures with just a
monkey for supervision? I would have to say Dora the Explorer.
Absolutely your two for two? All right too for two?
Question number three, This classic Judy Garland movie features some
monkey talk as well. There's a one star review that reads,
(19:33):
flying monkeys, that's too far fetched. I would certainly hope
they were referring to the Yeah, of course, and I
love that, like evil witches and a tin man and
a talking line are all within the realm of possibility.
But somehow flying monkeys are a step too far. Alright.
Question number four, You're doing great so far. This review
(19:54):
starts quote, I've never seen penguins dance. This propaganda film
is meant to deprive of us of tuna. What movie
about dancing penguins which shares its name with an old
cab callaway song? Are we talking about? That would be
happy feats? Yeah, you're right, a four for four. Nice job.
Let's see if you can bring it home with the
(20:15):
last one and go five for five. Question number five,
This review disappointedly sums up the movie quote one star,
the boat sinks. What movie are we talking about? That
would be tight hand? That's amazing, Jeffrey. So you went
five for five, which gets you an official part Time
Genius Certificate of Genius along with the part Time Genius
(20:37):
t shirts. So congratulations, thank you. You're listening to part
Time Genius and we're talking about the innovative thinking and
breakthrough technologies that have made Amazon one of the fastest
(21:00):
growing and most ubiquitous companies in history. And just how
prevalent is Amazon exactly? According to a report out earlier
this year from Walker Sands Communication, an astounding eighty four
percent of US consumers have bought something from Amazon in
the past. Unbelievable and as far as consumer basis go,
that's just about as good as you could possibly get.
(21:21):
It's pretty much everyone. Yeah, And and part of the
reasons so many people buy from Amazon is that the
company has gotten so good at selling what you want,
I mean sometimes even before you know it. Yeah, it's true.
And they've really set the bar in terms of predictive
analytics and targeted marketing. For example, they have this super
comprehensive filtering engine that can analyze everything from what you've
purchased in the past to what's currently in your online
(21:44):
shopping car to things like which items you've searched for
the most. And your information then gets cross reference with
that of other users. And as we've talked about, this
is eighty four percent of America, so it's a ton
of people. So the company can recommend products that other
people have bought when shot upping for the same things
that you have. And just like with impulse buys near
registers at grocery stores, that power of suggestion goes a
(22:07):
long way toward making you spend more on Amazon, especially
when it's customized to this degree. Investipdia reports that Amazon's
personalized recommendation system snags the company as much as an
extra thirty percent and revenue every single year. Oh man,
we're such cheap, but but you kind of have to
admire how much thought and effort goes into the design
(22:27):
of the platform. I mean, even if it is optimized
to suck every dollar out of your wallet. Like you
know that one click ordering button that Amazon has. Not
only is that this in house invention meant to increase
impulse buys and limit the lag between purchases and shipments,
but it's also a patented feature that Amazon licenses to
other companies. So you know, for for instance, anytime you
(22:48):
buy a song or movie or whatever on iTunes with
one click ordering, not only does Apple make money, but
Amazon sharing in that profit too. Yeah, it really is
amazing to think about this. And of course they're cloud
computing business that we talked about, where you know, another
company's ability to function and and even make money, it
becomes dependent on giving Amazon a cut of these profits.
(23:09):
It's really clever how they've worked out all of these
ways of making money from other companies sales. Yeah, and
Amazon's not shy about capitalizing on another company's money making
schemes either. Just last month, Walmart announced I would start
testing a delivery service in which it's workers would enter
customers homes by way of a smartlock, and then they
drop off the packages or even unload grocery items directly
(23:30):
into the fridge or freezer. And now just a few
weeks later, Amazon's one up them by launching their own
in home delivery service in thirties seven cities. I mean,
should should we actually feel bad for Walmart year for once?
I don't know if I'm going to go that far
with I mean, it's the one time they were actually
ahead of the curve, even if by only a month.
And then along comes Amazon and one ups though. But yeah,
(23:53):
not that I'm really rooting for either of them in
this case. That there's something about granting a giant company
this unfettered access to my home that I'm not sure
I'm ready to buy into. Just yet I totally get that,
and to be fair, it's not a meritless idea. So
this company called August Home, Inc. Did a study last
year and found that approximately eleven million Americans had packages
stolen off their doorsteps in two thousand and sixteen. But
(24:15):
you're right, this new kind of delivery service has already
raised a lot of eyebrows due to privacy concerns, even
with the promise of cameras that livestream the whole delivery process.
I mean, the service isn't guaranteed to take off for
either company, but I'd say Amazon has a better chance
of making it all work. Yeah, and this seems especially
true here. I mean, Amazon could theoretically take the idea
beyond simple delivery of packages. I mean, they already have
(24:38):
this home and business services section of the site and
it kind of works like task Grabbit, except all the
services you can buy and schedule are handled by real professionals.
You know, things like house cleaning and lawn care or
even furniture assembly can all be arranged through Amazon. So
with this new smart log program, you know, that kind
of stuff could be set up through Amazon without you
(24:59):
needing to be there. The service is performed. I do
have to men, it's all a little bit creepy and
still a little too new for me to get behind
this completely. But but you're right, if anyone can sell
the concept to the public, it would definitely be Amazon. Yeah,
and they managed to float some pretty off putting ideas
so far, but just look at what they've managed with
Alexa and Amazon Echo. Right twenty years ago, when the
(25:20):
company came on the scene, it would have been this
unthinkable prospect that people would live within ever present virtual
assistant that kept this constant thread of like what you
were listening to and every word you said. But now
about three million different people use the voice control of
Alexa service every month, and that numbers only set to
rise as the company expands the Echo line. Yeah, and
(25:41):
as you remember that that Alexa was originally this standalone
company that did web analysis and web analytics, if you
remember that, and Amazon bought it for two d and
fifty million dollars back in and they ended up sitting
on this software for about sixteen years, not knowing exactly
what they were going to do about it, and then
they finally rolled it out as this very different than
(26:02):
this home assistant and entertainment center. That's so crazy. I
actually forgotten that that Alexa was where you go to
UM to check other websites and what traffic they were getting.
But but you know, as cool and sci fi concept
as like this AI assistant is, it's actually got nothing
on the actual robots that Amazon uses. And that's why
I have to mention another Amazon acquisition that's only recently
(26:24):
started to pay off for the company. In two twelve,
Amazon bought a robotics company called Kiva for three quarters
of a billion dollars, and today the Kiva robots are
a big part of the picking and packing process that
goes on at Amazon's enormous fulfillment centers. So these robots, like,
what what do they do? Exactly? Well, the way it
usually works is that whenever an order comes through an
(26:45):
Amazon a human worker called a picker has to navigate
those endless aisles of merchandise to find the specific bins
that contain the ordered items. And now, of course, the
computer tells the picker which aisles and bins to check.
But with so many orders coming in each day and
so many different items to choose from, filling orders can
still be this tiring, time consuming task. In fact, most
(27:06):
pickers walk as many as like fifteen miles during a
single shift. Wow. Yeah, I know. Those Amazon warehouses are
just huge. I remember seeing this fact that you know,
if you if you added up all the square footage
of these Amazon warehouses, it makes up something like seventeen
New Hampshires Orthoning. Imagine how many delawares. That is, so
many delawares. But but all right, so I just want
(27:27):
to make sure I understand this. So they so, actually
they have robots that are dexperous enough to pick the
items out of bins. That seems remarkable. No they don't.
So that so the Kiva robots don't even have arms.
So pictures something more like an enormous roomba that scoots
around really close to the ground at about five miles
per hour. So, rather than sending human pickers on this
like massive route through these labyrinthine warehouses, a kiva root
(27:51):
brings all the needed items right to them. But the
kivas don't carry the items individually. Instead, they rolled beneath
these vertical columns that hold merchandise spins and then extend
themselves upwards using hydraulics like keebas can actually towed up
to seven pounds on their backs. So once they've located
the column that contains the correct item, they just simply
carry it back to the human worker, who can then
(28:14):
pick out the item needed to fill the order. Wow
like that you keep saying human worker anyway? You know? Actually,
as a as a side note, speaking of human workers,
there was one program totally unrelated to this, but I
read about this program called camper Force. Have you heard
about this before? The Amazon uses it to staff its
warehouses during the holiday season because it's so much busier
(28:36):
during that time, they just need temporary workers. And so basically,
the company invites these nomadic r V e rs to
set up shop near their facilities and come work as
seasonal hires there. The program has its own logo, which
is a silhouette of an RV speeding along with amazon
smile logo on its side. I kind of love that
it's it's it's a little strange, but yeah, it's kind
of an interesting model. So I thought we could take
(28:59):
a look at where Amazon is headed next and how
they might convince us to let them wedge a little
deeper into our personal lives. Okay, so what's on the
horizon for Amazon. Well, in the immediate future, there's the
new second headquarters that the company has been talking about
(29:21):
building somewhere outside of its home base of Seattle. And
while we could talk about what the five billion dollar
investment could mean for the company or what the jobs
will do for the local economy, I think it would
be way more fun to talk about some of the
ridiculous things cities have done to get Amazon to look
their way. Yeah. I do love thinking about these kinds
of things. In fact, one of the silliest promotional tactics
(29:42):
I've read about, or maybe least effective, Okay, from my
own hometown of Birmingham, and apparently part of what was
dubbed this bring a to b campaign, and the city
set up two giant replicas of Amazon's dash buttons. Those
are those, you know, doorbell looking gadgets that let you
reorder a certain produ with a single press of the button,
except in this case, whenever residents pressed the big prop
(30:04):
buttons instead of ordering more detergent or whatever, it would
send one of six hundred different pregenerated tweets to Amazon's Twitter.
So what kind of stuff were they're tweeting Amazon? Well,
some of the messages were just little factoys about the
city's quality of life, and others had bits of trivia,
you know, like how Michael Jordan briefly played for the
Birmingham Barons during his stint as a baseball player, And
(30:27):
I don't know. Most of them were these corny, kind
of flirty messages, like one of them says, um, Amazon,
we got a hundred percent match on bumble, want to
go on a date? Or I'd retreat that. Or here's
one that I actually find kind of offensive. It says, uh,
we are Chipotle and those other cities are Taco Bell Amazon. Yeah,
I don't like that one thing. All right. Well, I'm
(30:50):
not sure why the city thought bombarding Amazon with annoying
tweets would be the way to lock them down, but
either way, it's my hometown. So I'm pulling for you, Birmingham. Well,
with two d thirty eight cities and regions across both
the US and Canada vying for the chance to be
Amazon's new hometown, I mean, there's some steep competition. So
so one of the things Calgary is doing and I
(31:12):
didn't even realize Calgary was up for this, but they've
hung this two under foot banner outside Amazon's current Seattle headquarters.
That says, quote, hey, Amazon, not saying we'd fight a
bear for you, but we totally would. That's actually kind
of awesome. All Right, I'm changing the team Calgary here,
but you know, Mago, I thought we could switch gears
and and talk for a minute about Whole Foods. Obviously,
(31:33):
this was a big, big acquisition for them recently, and
and particularly because Amazon now has the ability to do
something that they didn't have before, and that was to
access this brick and mortar world. Yeah, and and where
a few months past Amazon's thirteen point seven billion dollar buyout.
But there's still a lot of unanswered questions about what
shape the new partnership will take. I mean, prime Member
(31:56):
is now going to discount a Whole Foods and some
of the stores have a stack of Amazon at goes
for sale by the entrance. But obviously there's potential there
for something much more interesting, right, And there's been all
kinds of speculation about whether Amazon will just gut the
stores and use them as these urban or suburban distribution hubs,
or maybe force Whole Foods to adopt the model of
the Amazon Go prototype grocery stores. These are the ones
(32:18):
where you know the company has been testing out the
possibility of minimizing human contact in their stores, and sensors
just keep track of the items that you grab and
automatically charge the total. It goes directly to your Amazon
account once you head for the exits there. Yeah, and
that could definitely happen down the line. But I'm looking
forward to pressing a button at my desk, watching a
(32:38):
drone pick up an avocado for me, marring it on
my phone, and then having a helicopter up to my
office where I can reach out the window and plug
it from the sky. I'm sure that's going to happen
one day. Actually, I did come across this thought experiment
from a Texas design firm called Argo Design, and some
of the concepts weren't too far off from what you
just describe. So they try to imagine what a potential
Amazon Foods might look like when paired with new and
(33:01):
emerging technology. So one of the ideas was that these
new echo fridges could be built with these exterior facing
doors that a delivery driver or maybe a flying drone
like you dreamed of, could access from the outside. And
the idea was that one side of the fridge would
belong to the consumer and would store all of his
or her food products, while the other side would house
(33:21):
a rotating assortment of suggested products that Amazon swaps out
once or twice a day. So if you wanted to
buy that bag of grapes or those heirloom tomatoes, all
you'd have to do is slide them over to your
side of the fridge and they'd be purchased automatically, And
if there was nothing on sale that you wanted, you
just leave it all being Amazon would haul it over
to your neighbor or something to see if he was
(33:43):
That sounds equal parts amazing and horrifying, And it's almost
like the mini bar you don't want. It's tear tempting,
and the communians is obviously great, but getting the jar
of all is that my neighbors have rejected. That kind
of turns me off just a little bit. Yeah, well,
it is a little unsettling to think about. But with
drones and in home deliveries already on the table, you know,
(34:04):
sharing a fridge with Amazon may not be outside the
realm of reason. There was actually one idea from Argo
Design that I really thought was very very interesting, and
you know, it's kind of their take on the sharing
economy model that's been popularized by companies like Uber and Airbnb.
And so basically, talented home cooks could prepare meals to
sell in their community. So how does Amazon play a
(34:26):
role here? So they would provide them with some high
tech tupperware containers to pack the food in, and then
each of these special containers would include this mass spectrometer
to do things like detecting allergens and pathogens and the
prepared meals. And this way Amazon and the aspiring chefs
could sidestep the f d A and the whole packaged
food industry, yeah, while still ensuring that their home cooked
(34:47):
meals were safety eat. I mean, that's an awesome idea,
but that one actually might be outside the realm of reason.
That's true, I mean, at least at this point. But
I do appreciate the positivity behind it. And you know,
sometimes if it was, like all the tech that's aimed
at convenience does make us feel a little more isolated again,
So there was something about this that was just nice
to see an application that would encourage people to eat
(35:09):
locally and also maybe meet their neighbors. I thought the
founder of the design firm, expressed it pretty well. And
a quote that he said, it says, maybe, rather than
keeping us away from each other, stronger data systems could
help us get closer to each other over time. Well,
I like that heartwarming sentiment. But you know what else
brings us all together, a good old fashioned fact off,
(35:30):
let's do it all right, I'll start us off here.
So you want to know a good way to get
a building named after you on the Amazon campus be
the first person to have purchased a book from Amazon.
It sounds it's hard to do that again, Yeah, it
(35:54):
sounds like a riveting book too. It was purchased by
software engineer John Waynewright, and the name of the book
was flew with concepts and creative analogies and I'm not
done with the title and then goes on computer models
of the fundamental mechanisms of thought and uh so after
buying that years later, Jeff Bezos decided to name a
building after him, And that title just feels like clickbait. Yes,
(36:15):
speaking of Jeff Bezos, did you know that if you
call the Amazon service desk you might actually get Ahold
of Visos himself. So every Amazon employees required to spend
a couple of days every two years answering customer calls,
and apparently he really enjoys it. It kind of reminds
you of Steve Jobs answering customer email, That's what I
was gonna say. It reminded me of that as well.
I remember seeing seeing that story about that. Well, another
(36:36):
Visos fact here. You know, he's got this problem of
trying to figure out what to do with his billions
and billions of dollars. Poor guy, I mean, trying to
figure this out. Well, he is finding some interesting ways
to spend some of his money, and one of those
ways is building this ten thousand year clock. So the
clock apparently ticks once a year, and the century hand
moves ahead once every one hundred years. And because you
(36:59):
know every cool hawk needs a cuckoo, that that happens
every thousand years, and apparently the clock is supposed to
be like a symbol of long term thinking. I guess
I like that. I mean, I hope it's just not
a like traditional tiny cuckoo, but something spectacular. Um, did
you know that a book about Lin apparently helped keep
Amazon in business in the early days, So, as we
(37:21):
both know, from our e commerce herees. But when you're
a bookseller, you buy books from distributors and you typically
can't buy a single copy. You have to buy them
in bulk, like ten or so books at a time.
But in the earliest days, Amazon didn't need ten copies
of every book. So Amazon figured out a loophole. When
they needed a book, they'd order one copy of the
book that they wanted to have on hand, and then
nine copies of this really obscure book on liking that
(37:43):
was always out of thoughts, pretty hilarious. So I do
wish they had realized that and be like, there's such
demand for this liking book, we need to bring it back.
That's awesome. Well that, you know, that may have prevented
them from losing a lot of money at that point,
But many years later, in two thousand thirteen, Amazon showed
just how much money it could lose in less than
an hour. When the Amazon dot Com site went down
(38:05):
for only forty minutes. The company apparently lost close to
five million dollars in that brief period. That's about a
hundred and twenty thousand dollars each minute. That's insane. So,
as you know, there have been stories over the years
of Amazon employees and fulfillment centers not always being the happiest.
And there are actually some funny stories about how various
employees have decided to protest or communicate their unhappiness. So
(38:27):
one funny one involves an employee back in two thousand
and six in the Kansas fulfillment Center. So he'd arrived
every day for work, but then wasn't clocked as doing
any work. It turns out he'd kind of built himself
this fourt in the middle of a bunch of empty palates.
He was then able to use products that were for
sale to make himself right at home, so he made
himself bed, He tore out pictures from books to decorate
(38:47):
the walls he'd built around him, and he had food
to snack on. And get this, when they figured out
what the guy was doing, can you believe they fired him?
What shocking? All right, well, I have to admit of
fact that is that of heard is probably worthy of
today's trophy. So I'm going to give it to you. Congratulations, Mango,
Thank you so much, and thank you all for listening.
Don't forget if you have any great facts about Amazon
(39:09):
that we missed. Let us know at one eight four
four pt Genius or emails at part Time Genius at
how stuff works dot com. Thanks so much for listening, Kay,
(39:29):
thanks again for listening. Part Time Genius is a production
of How Stuff Works and wouldn't be possible without several
brilliant people who do the important things we couldn't even
begin to understand. Tristan McNeil does the editing thing. Noel
Brown made the theme song and does the MIXI mixy
sound thing. Jerry Rowland does the exact producer thing. Gay
Bluesier is our lead researcher, with support from the Research
Army including Austin Thompson, Nolan Brown and Lucas Adams and
(39:52):
Eve Jeff Cook gets the show to your ears. Good job, Eves.
If you like what you heard, we hope you'll subscribe,
And if you really really like what you've heard, maybe
you could leave a good review for us. Did we did?
We forget Jason Jason who
Guess what, Mango? What's that? Will? Did you know that
the early days of Amazon dot Com they actually had
this bell installed and they would ring it every time
a book was sold. The employees we then rush over
to see if they knew the name of the customer
who had made the purchase. I mean, that's crazy. I mean,
especially considering they now sell more than six items per
second on their biggest days. I'm guessing they don't ring
(00:21):
that bell anymore. Probably not, but actually it feels like
they should do this as a symbol, like maybe get
some intern that give them a bell and just be like,
just just do your best every time in order comes in?
All right, that that might be a little bit mean,
but it is crazy to think just how much Amazon
has grown in the past couple of decades, and how
many industries they're involved in, and and the crazy things
they may be up to next. So that's what today's
(00:42):
episode is all about. Let's get started, either podcast listeners,
(01:03):
Welcome to Part Time Genius. I'm Will Pearson and as
always I'm joined by my good friend Man guesh Ticketter
and the man on the other side of the sound
proof glass. What did he do? He checking his stocks
in the news anyway, whatever he's doing, that's our friend
and producer Tristan McNeil. That's that's been so long since
people check their stocks that way. But all right, well,
(01:23):
today we're talking about Amazon dot Com, the company that,
in twenty two short years has gone from this tiny
garage based startup in Washington to the largest and most
successful online purveyor of well, I mean, pretty much everything,
and likely it feels like every week brings this fresh
announcement from Amazon about some new product or venture that
the company's launching, or some milestone has reached on its
(01:46):
journey to total global domination. Right, and with all that
recent news in mind, we thought it might be interesting
to take a deep dive into Amazon's history and trying
to get a sense of how it got so big
and how much growing it could still do in the
years ahead. And along the way, of course, we'll get
a couple of PTG listeners on the line for a quiz.
All right, So let's start from the beginning on this one,
which which for Amazon was the your nineteen and that's
(02:08):
when the founder and CEO of the company, Jeff Bezos,
decided to quit his job at an investment firm and
take a gamble by starting his own internet company, which
is so risky. I mean this is remember the Internet
was a new phenomena for most people, and buying something
online was just about the shadiest, riskiest thing you could
think of. Yeah, and Bezos saw the potential though, and
(02:28):
when when he noticed the early rumblings of the impending
Internet revolution while working on Wall Street. And according to him, quote,
the wake up call was finding this startling statistic that
web usage in the spring of was growing at a year.
You know, things just don't grow that fast. It's highly unusual.
And that started me about thinking what kind of business
(02:51):
plan would make sense in the context of that growth. Well,
apparently the kind that involves starting an online bookstore out
of your garage, because that's what Jeff wound up doing
when he founded Amazon just a year later. And you know,
he wasn't sure what to name his company. The front
runner name I found was actually Cadabra, which is a
crib from that word abra cadabra, but that idea was
scrapped when jeffs lawyer pointed out that it sounded a
(03:13):
little too close to cadaver. That's kind of I could
see how that might be an issue cadaver. So the
name went from magician lingo to corpse, then to a river.
So how exactly did that progression happened? Well, supposedly went
with the river name for two reasons. The first was
that the Amazon River is one of the largest and
longest in the world, so the name has this built
in connotation of scale. Uh and and the second reason
(03:36):
was a bit more practical, like website listings for businesses
were usually alphabetical back then, and Jeff wanted a place
at the top of the list. So I love the
idea of the alphabetical listings like that. That that happened
at some point. Yeah, these have those directories, remember directory
of websites. But but by the way, another name Bezos
kicked around was Relentless, and while he eventually decided against it,
(03:57):
if you type relentless dot com and your search bar,
you actually get taken to Amazon. Cool. Yeah, all right, Well,
well back to the company's founding. In the whole venture
was Jeff's idea, but he definitely didn't get it off
the ground by himself, and the initial capital for the
site actually came from his parents and admittedly, they didn't
really understand what their money was going toward. In fact,
(04:20):
the very first question Jeff's dad asked after hearing the
pitch for this web based bookstore was what's the internet?
You know. Nonetheless, jeff parents ponied up a large portion
of their life savings. I mean, this was hundreds of
thousands of dollars all for their son's crazy dream of
opening this invisible bookstores. They saw it. Yeah, that's so serious,
unconditional love. But thankfully, Mom Potizos have done pretty well
(04:43):
on their investment. Uh. And that's to put it mildly.
I mean the site was a success from the start,
and that was with zero press promotion. I mean Amazon
sold books to customers in all fifty states and forty
five different countries within its first month of operation. It's
pretty incredible. Yeah, but it's second on. The site was
making more than twenty dollars in sales per week, and
(05:04):
that was way more than Jeff and his tiny startup
team ever anticipated. Yeah. You know, I still laugh thinking
about them ringing a bell with every sale in those
early days. Yeah, and especially thinking about that stat we
discussed earlier where peak times Amazon's annual prime day. For instance,
the company sells over six items per second. Never stopped ringing. Yeah,
I would be a total nightmare. Speaking of which, did
(05:26):
you hear about that early Amazon software bug? It basically
handed out free money to customers? Oh I did, I'm
sorry I missed out on this. What happened a fairly
There was a glitch in the program that allowed users
to order a negative quality of books, and the site
would end up crediting the cost of the books to
the customer's credit card. I mean, Amazon's team caught onto
it pretty quickly, but but it's still kind of amazing. Yeah,
(05:47):
you know. And Amazon has always been good about identifying
these hiccups in its service and quickly getting solutions in place.
And one great example of this is the decision to
branch out from book sales just three years after the
company's launch. And don't get me wrong, I mean, books
were a smart choice to start out with because they're sturdy,
they're fairly uniform in shape, and all of that makes
them easy to store and ship and bulk. But focusing
(06:09):
on just one product, you know, no matter how popular
or convenient it is, it puts a cap on the
company's growth potential. And it left a lot of money
on the table, as they saw it, and and that's
ultimately why Amazon started selling other forms of media. They
moved into CDs and DVDs, and they then moved into
things like clothing and toys and electronics, and since then
(06:29):
it's just about anything else. I Mean, what's baffling to
me is that Amazon's like one of the few expanding
e commerce sites that actually managed to survive that whole
dot bomb bust, you know that are the one in
the late nineties and early two thousands, and and I
don't know if you remember, but like, there are so many,
I think there are hundreds of online retail startups. I mean,
we remember things like pets dot com and Cosmo dot com.
(06:51):
But there was just so much hype. Yeah, and there's
been all this excitement about the burgeoning online market, and
investors were quick to back these fledgling companies that really
had no long term plan or business model really and
and then once the huge losses started mounting, they all
that funding dried up and the dot com bubble burst,
of course, So I'm curious how did Amazon manage to
come through all of that unscathed. Well, for one thing,
(07:14):
and this was something I really didn't know, but just
looking into this that Amazon was a lot more frugal
than some of the cash happy startups that were spending
so much money on things like lavish office space and
all these wild parties that you read about. And you know,
for example, Amazon's offices used to have these makeshift what
they called door desks for workers to use. According to
former employee Greg Lindon, the company would quote buy a
(07:37):
wooden door, preferably a hollow core wooden door with no
whole free drilled saw, a couple of four by four
by six pillars in half, bolt them to the door
with a couple of scary looking angle brackets, put them
in front of a programmer, and doordesk. That's what it is.
But I mean, there's no way Amazon survived just by
pitching pennies on a few door dusks. No, I mean,
(07:58):
but it's not like Amazon was completely she folded from
the dot com crisis either. The at one point in
two thousand one, the company's stock plummeted from a high
of about a hundred dollars per share to a low
of just six bucks. You know, Bezos was said to
have taken all of this in stride, though, I mean,
he said he preferred to focus on the ever increasing
cash flow that Amazon had to play with. He felt
(08:18):
the long term opportunities afforded by this capital would secure
the company's future, even if that meant profits would stay
at or you know, even below zero for the time being. Yeah.
Doing the research for this episode really highlighted how much
more Amazon values revenue over net income. But since most
of us tend to use those terms interchangeably, I just
want to give a quick note about the distinction between
(08:39):
the two. So, in a financial context, revenue is the
total amount of money generated through everything the company sells, right,
and net income refers to just the company's profits. So
that's the amount of money that it stays after you
take away you know, the company's operating costs and and
all their other expenses. Yeah. So for two thousand and sixteen,
just looking at the number here, Amazon earned about a
(09:01):
hundred and thirty six billion in revenue, but it only
reported two point three billion as actual profit only only time.
And how depressing would that be if our business only
generated two point three billion and actual profit. But you know,
sometimes you'll see reports that Amazon never turns a profit
despite being this huge sales juggernaut, but that's not really
(09:22):
the case at this point. Yeah. I mean, it's true
that the company didn't report a profit until six years
after it launched, and even today Amazon fluctuates between losses
and gains and breaking even all on a quarterly basis.
But the thing to remember is that those sometimes less
in stellar profit margins are all part of visas plan.
Like Amazon makes a ton of money, it's just that
(09:43):
most of that money is immediately reinvested in the company's
growth and diversification, rather than being divvied up amongst its
employees and shareholders or set aside for a rainy day. Well,
and that's how we ended up with things like Prime
Shipping and the Kindle Alexa and all these other services
and gadgets that the company has developed and rolled out
over the years in lieu of banking these sky high profits.
(10:05):
So Bezos convinced the company to set aside short term
income really more in favor of long term expansion, And
just like the early move beyond books, the decision has
definitely paid off in a huge way. Yeah, and they're
all kinds of examples of that payoff. But I think
Amazon's Web services division, the a WS, is probably the
best one. That's the cloud computing business that Amazon started
(10:26):
in two thousand two, right after the dot com crash,
and it's really prescient these days. A WS is actually
the most profitable part of the company. And if you
look at it, like last year when Amazon reported the
two point three billion dollars in income that you mentioned
the profits from their web services that represented more than
half of that take. Yeah, so so really the company's
(10:47):
biggest money maker has nothing to do with selling or
shipping physical products at all, which is just amazing to
think of more than half of the company's profits coming
from a part of the company that most people really
don't even know exists or understanding exactly what it is.
And so for our listeners who might be going a
little cross side at the mention of web services and
cloud computing, you know, here's a little bit of an explanation.
(11:08):
So to just think about these companies that maybe startups
or even bigger companies, and they know that as they grow,
they're going to need new servers, they're going to need
to equipment all to be able to manage the you know,
a bigger online business. But it's hard to predict exactly
how quickly you're going to grow, and if you were
having to buy these servers in every piece of equipment
to predict that each time, it can get extraordinarily expensive.
(11:31):
And so to be able to just use Amazon Services
and Amazon servers saves them a ton of money and
allows them to grow at exactly the rate they need
to grow. Yeah, but what's interesting that isn't just like
small companies and startups that are taking advantage of this arrangement,
like big companies actually use it too. And if you
look at the client list, it's like Netflix, Instagram, Spotify, Airbnb.
(11:53):
They all rely on a w S servers for their power,
and even the government's partnered with a WS like did
you know the cia A uses them? I mean they
owe much of its computing power to a customize cloud
on the AWS servers that most of the division's one
million plus customers represent for profit businesses, but there are
also about eighteen thousand nonprofits, five thousand schools, and close
(12:14):
to two thousand government agencies to wow, and you know,
all that attention and profitability has caught the attention of
these other mammoth companies who now want in on this
cloud computing industry. You've got place like IBM and Microsoft
and Google. They've all started investing tons of money into
growing their competing services. Of course, a WS has poised
to make a record setting sixteen billion dollars in revenue
(12:37):
this year. The other guys have a long way to
go if they have any chance at trying to catch
up with Amazon, which is exactly how Amazon likes that,
I'm sure. I mean, they've made a habit of getting
out in front of the competition when it comes to
emerging tech and infrastructure, and that's to the chagrin of
all these rival companies and traditional brick and mortar stores. Yeah,
why don't we talk a little bit about some of
the other innovations that have given Amazon a leg up
(12:58):
over the years, and including a few on the horizon
that do raise some serious questions about things like consumer privacy. Yeah, definitely,
But why don't we get a listener on the line
for a quiz first? All right, so Ango, we've got
a brilliant listener on the line right now, and I
(13:20):
know we're going to be doing today's quiz about Amazon
because of the episode today. But the reason we've actually
got today's guest on the phone is because he called
into our Fact hotline with a terrific story related to
our Sugary Serials episode. So, Jeffrey Nichols, welcome to Part
Time Genius. Well, thank you for having me. All right, So, Jeffrey,
we we really need you to share with our listeners
(13:41):
what you told us and your voicemail. So it turns
out that you actually won a grand prize from a
box of wheaties almost thirty years ago. Is this right?
That that is correct? I had forgotten about it until
you got to the end of the Sugary Cerial episode
when you were discussing the prizes and how they had
(14:03):
to start putting. They couldn't put them in the actual
bag of cereal, and it was in the bag between
that and the box. And then I stopped in my
tracks while I was walking my dog and realized I
won one of those. And so, needless to say, I
had the Facebook you guys instantly and then lo and
behold you guys enjoyed by doing that and had me
(14:24):
leave the message on the fact. Yeah, but you got
you gotta tell everyone what you want because it's crazy. Um,
So there was there was a box of Walter Payton Wheatie's,
which I imagine was probably procured in the fall, because
that's that's when they're playing football, and Walter Payton was
(14:45):
still a demigogue at that time. And I months and
months later, I the box of cereal was still there.
I poured it in in this plastic envelope, her plunked
in the bowl and you know, we've all had that
happened a million times. But for whatever reason, I opened
(15:06):
it up and it said you won, and I uh.
I was still living at home because I was a teenager,
and I and I yelled up to my mom and
you're never gonna believe this, but we won the grand prize,
which turned out to be a thousand dollars cash and
a week in Aspen slash Snowmac with the Phil and
(15:27):
Steve Mayer, who were the greatest Olympic American skiers of
all time at that point. And so it just it
was happening. It was falling at the end of what
was my spring break of I guess would have been
the spring of eighty nine, my senior year, And so
my mom flew and I flew up to Colorado and
(15:52):
the most bizarre aspect of this whole uh contest was
that I was the only person who won the contest
by accident. And what do you mean? Well, I didn't
realize that, because why would I I was only teen
and a half years old. But there's a whole subculture
in America apparently who everything that they eat and consume
(16:17):
and where and do is because of no purchase necessary. Um.
They have these big ledgers filled um from front to
back and top to bottom with every contest that they
are currently uh entered in, and and that's how they live.
(16:37):
It was the bizarre I mean, of all of the winners,
they were all looking at each other's ledgers to see
where they were in proximity to everybody else's occupations. But
so I was the only person who skied, and so
Phil Mere and I just skied all day every day
and ask them because all of the other Grand Prize
players they were all back in their hotel room working.
(17:01):
I do love that you actually one of the Grand Prize.
That sort of restores some faith in these serial prizes
for me, because you know, you always see these massive
prizes and you don't think anyone's actually winning them. So
I'm glad to know you want it. Yeah, it was,
I mean it was. It was very cool and in
just so look, I mean it was as cool to
have one as it was to find out that there
is a subculture. Um he was to say it was funny.
(17:24):
When the topic of the thousand dollars cash came up,
my mother quickly reminded me as to who bought the cereal,
So that's who was also pocketing the thousand dollars cads. Well,
that is a great story and actually gives us an
idea for a future episode on that subculture. But for
today's episode, since we're focused on Amazon, we're going to
(17:46):
have a related quiz. Now, angle what what quiz are
we having Jeffrey play today? So we're playing a game
called one star movie Reviews and this all comes from
the great Twitter account Amazon movie Reviews, which is which
is hilarious. And so there's actually a review on there
for Tooth Fairy Too that I was looking at starring
Larry the Cable Guy, I think, and so the review says,
(18:07):
I have kids, they wanted to watch it. Sometimes I
wish I didn't have kids. One star my favorite on
there's actually this five star review on the site. It's
for boss Baby, and it just reads, quote, this movie
saved my marriage five stars. That's pretty incredible. All right, So, Jeffrey,
we're going to read you some reviews from the site there,
(18:28):
and all you have to do is tell us what
movie they're referring to you. Ready to play? Alright? Review
number one, there were no wolves in this movie? One star.
So what two thousand thirteen movie featuring Leonardo DiCaprio are
we talking about. I would have to say The Wolf
of Wall Street. Yeah, that's right. So they're actually a
(18:50):
similar one star reviews for The Accountant, which says not
enough accounting in this movie, and Cars, which simply says,
I see enough cars in real life. All right, all right,
you're one for one, Jeffrey, here we go. Number two.
What Nickelodeon cartoon about an intrepid Mexican girl who loves
to travel got the following review? Hate it? Who lets
(19:12):
their three year old go on adventures with just a
monkey for supervision? I would have to say Dora the Explorer.
Absolutely your two for two? All right too for two?
Question number three, This classic Judy Garland movie features some
monkey talk as well. There's a one star review that reads,
(19:33):
flying monkeys, that's too far fetched. I would certainly hope
they were referring to the Yeah, of course, and I
love that, like evil witches and a tin man and
a talking line are all within the realm of possibility.
But somehow flying monkeys are a step too far. Alright.
Question number four, You're doing great so far. This review
(19:54):
starts quote, I've never seen penguins dance. This propaganda film
is meant to deprive of us of tuna. What movie
about dancing penguins which shares its name with an old
cab callaway song? Are we talking about? That would be
happy feats? Yeah, you're right, a four for four. Nice job.
Let's see if you can bring it home with the
(20:15):
last one and go five for five. Question number five,
This review disappointedly sums up the movie quote one star,
the boat sinks. What movie are we talking about? That
would be tight hand? That's amazing, Jeffrey. So you went
five for five, which gets you an official part Time
Genius Certificate of Genius along with the part Time Genius
(20:37):
t shirts. So congratulations, thank you. You're listening to part
Time Genius and we're talking about the innovative thinking and
breakthrough technologies that have made Amazon one of the fastest
(21:00):
growing and most ubiquitous companies in history. And just how
prevalent is Amazon exactly? According to a report out earlier
this year from Walker Sands Communication, an astounding eighty four
percent of US consumers have bought something from Amazon in
the past. Unbelievable and as far as consumer basis go,
that's just about as good as you could possibly get.
(21:21):
It's pretty much everyone. Yeah, And and part of the
reasons so many people buy from Amazon is that the
company has gotten so good at selling what you want,
I mean sometimes even before you know it. Yeah, it's true.
And they've really set the bar in terms of predictive
analytics and targeted marketing. For example, they have this super
comprehensive filtering engine that can analyze everything from what you've
purchased in the past to what's currently in your online
(21:44):
shopping car to things like which items you've searched for
the most. And your information then gets cross reference with
that of other users. And as we've talked about, this
is eighty four percent of America, so it's a ton
of people. So the company can recommend products that other
people have bought when shot upping for the same things
that you have. And just like with impulse buys near
registers at grocery stores, that power of suggestion goes a
(22:07):
long way toward making you spend more on Amazon, especially
when it's customized to this degree. Investipdia reports that Amazon's
personalized recommendation system snags the company as much as an
extra thirty percent and revenue every single year. Oh man,
we're such cheap, but but you kind of have to
admire how much thought and effort goes into the design
(22:27):
of the platform. I mean, even if it is optimized
to suck every dollar out of your wallet. Like you
know that one click ordering button that Amazon has. Not
only is that this in house invention meant to increase
impulse buys and limit the lag between purchases and shipments,
but it's also a patented feature that Amazon licenses to
other companies. So you know, for for instance, anytime you
(22:48):
buy a song or movie or whatever on iTunes with
one click ordering, not only does Apple make money, but
Amazon sharing in that profit too. Yeah, it really is
amazing to think about this. And of course they're cloud
computing business that we talked about, where you know, another
company's ability to function and and even make money, it
becomes dependent on giving Amazon a cut of these profits.
(23:09):
It's really clever how they've worked out all of these
ways of making money from other companies sales. Yeah, and
Amazon's not shy about capitalizing on another company's money making
schemes either. Just last month, Walmart announced I would start
testing a delivery service in which it's workers would enter
customers homes by way of a smartlock, and then they
drop off the packages or even unload grocery items directly
(23:30):
into the fridge or freezer. And now just a few
weeks later, Amazon's one up them by launching their own
in home delivery service in thirties seven cities. I mean,
should should we actually feel bad for Walmart year for once?
I don't know if I'm going to go that far
with I mean, it's the one time they were actually
ahead of the curve, even if by only a month.
And then along comes Amazon and one ups though. But yeah,
(23:53):
not that I'm really rooting for either of them in
this case. That there's something about granting a giant company
this unfettered access to my home that I'm not sure
I'm ready to buy into. Just yet I totally get that,
and to be fair, it's not a meritless idea. So
this company called August Home, Inc. Did a study last
year and found that approximately eleven million Americans had packages
stolen off their doorsteps in two thousand and sixteen. But
(24:15):
you're right, this new kind of delivery service has already
raised a lot of eyebrows due to privacy concerns, even
with the promise of cameras that livestream the whole delivery process.
I mean, the service isn't guaranteed to take off for
either company, but I'd say Amazon has a better chance
of making it all work. Yeah, and this seems especially
true here. I mean, Amazon could theoretically take the idea
beyond simple delivery of packages. I mean, they already have
(24:38):
this home and business services section of the site and
it kind of works like task Grabbit, except all the
services you can buy and schedule are handled by real professionals.
You know, things like house cleaning and lawn care or
even furniture assembly can all be arranged through Amazon. So
with this new smart log program, you know, that kind
of stuff could be set up through Amazon without you
(24:59):
needing to be there. The service is performed. I do
have to men, it's all a little bit creepy and
still a little too new for me to get behind
this completely. But but you're right, if anyone can sell
the concept to the public, it would definitely be Amazon. Yeah,
and they managed to float some pretty off putting ideas
so far, but just look at what they've managed with
Alexa and Amazon Echo. Right twenty years ago, when the
(25:20):
company came on the scene, it would have been this
unthinkable prospect that people would live within ever present virtual
assistant that kept this constant thread of like what you
were listening to and every word you said. But now
about three million different people use the voice control of
Alexa service every month, and that numbers only set to
rise as the company expands the Echo line. Yeah, and
(25:41):
as you remember that that Alexa was originally this standalone
company that did web analysis and web analytics, if you
remember that, and Amazon bought it for two d and
fifty million dollars back in and they ended up sitting
on this software for about sixteen years, not knowing exactly
what they were going to do about it, and then
they finally rolled it out as this very different than
(26:02):
this home assistant and entertainment center. That's so crazy. I
actually forgotten that that Alexa was where you go to
UM to check other websites and what traffic they were getting.
But but you know, as cool and sci fi concept
as like this AI assistant is, it's actually got nothing
on the actual robots that Amazon uses. And that's why
I have to mention another Amazon acquisition that's only recently
(26:24):
started to pay off for the company. In two twelve,
Amazon bought a robotics company called Kiva for three quarters
of a billion dollars, and today the Kiva robots are
a big part of the picking and packing process that
goes on at Amazon's enormous fulfillment centers. So these robots, like,
what what do they do? Exactly? Well, the way it
usually works is that whenever an order comes through an
(26:45):
Amazon a human worker called a picker has to navigate
those endless aisles of merchandise to find the specific bins
that contain the ordered items. And now, of course, the
computer tells the picker which aisles and bins to check.
But with so many orders coming in each day and
so many different items to choose from, filling orders can
still be this tiring, time consuming task. In fact, most
(27:06):
pickers walk as many as like fifteen miles during a
single shift. Wow. Yeah, I know. Those Amazon warehouses are
just huge. I remember seeing this fact that you know,
if you if you added up all the square footage
of these Amazon warehouses, it makes up something like seventeen
New Hampshires Orthoning. Imagine how many delawares. That is, so
many delawares. But but all right, so I just want
(27:27):
to make sure I understand this. So they so, actually
they have robots that are dexperous enough to pick the
items out of bins. That seems remarkable. No they don't.
So that so the Kiva robots don't even have arms.
So pictures something more like an enormous roomba that scoots
around really close to the ground at about five miles
per hour. So, rather than sending human pickers on this
like massive route through these labyrinthine warehouses, a kiva root
(27:51):
brings all the needed items right to them. But the
kivas don't carry the items individually. Instead, they rolled beneath
these vertical columns that hold merchandise spins and then extend
themselves upwards using hydraulics like keebas can actually towed up
to seven pounds on their backs. So once they've located
the column that contains the correct item, they just simply
carry it back to the human worker, who can then
(28:14):
pick out the item needed to fill the order. Wow
like that you keep saying human worker anyway? You know? Actually,
as a as a side note, speaking of human workers,
there was one program totally unrelated to this, but I
read about this program called camper Force. Have you heard
about this before? The Amazon uses it to staff its
warehouses during the holiday season because it's so much busier
(28:36):
during that time, they just need temporary workers. And so basically,
the company invites these nomadic r V e rs to
set up shop near their facilities and come work as
seasonal hires there. The program has its own logo, which
is a silhouette of an RV speeding along with amazon
smile logo on its side. I kind of love that
it's it's it's a little strange, but yeah, it's kind
of an interesting model. So I thought we could take
(28:59):
a look at where Amazon is headed next and how
they might convince us to let them wedge a little
deeper into our personal lives. Okay, so what's on the
horizon for Amazon. Well, in the immediate future, there's the
new second headquarters that the company has been talking about
(29:21):
building somewhere outside of its home base of Seattle. And
while we could talk about what the five billion dollar
investment could mean for the company or what the jobs
will do for the local economy, I think it would
be way more fun to talk about some of the
ridiculous things cities have done to get Amazon to look
their way. Yeah. I do love thinking about these kinds
of things. In fact, one of the silliest promotional tactics
(29:42):
I've read about, or maybe least effective, Okay, from my
own hometown of Birmingham, and apparently part of what was
dubbed this bring a to b campaign, and the city
set up two giant replicas of Amazon's dash buttons. Those
are those, you know, doorbell looking gadgets that let you
reorder a certain produ with a single press of the button,
except in this case, whenever residents pressed the big prop
(30:04):
buttons instead of ordering more detergent or whatever, it would
send one of six hundred different pregenerated tweets to Amazon's Twitter.
So what kind of stuff were they're tweeting Amazon? Well,
some of the messages were just little factoys about the
city's quality of life, and others had bits of trivia,
you know, like how Michael Jordan briefly played for the
Birmingham Barons during his stint as a baseball player, And
(30:27):
I don't know. Most of them were these corny, kind
of flirty messages, like one of them says, um, Amazon,
we got a hundred percent match on bumble, want to
go on a date? Or I'd retreat that. Or here's
one that I actually find kind of offensive. It says, uh,
we are Chipotle and those other cities are Taco Bell Amazon. Yeah,
I don't like that one thing. All right. Well, I'm
(30:50):
not sure why the city thought bombarding Amazon with annoying
tweets would be the way to lock them down, but
either way, it's my hometown. So I'm pulling for you, Birmingham. Well,
with two d thirty eight cities and regions across both
the US and Canada vying for the chance to be
Amazon's new hometown, I mean, there's some steep competition. So
so one of the things Calgary is doing and I
(31:12):
didn't even realize Calgary was up for this, but they've
hung this two under foot banner outside Amazon's current Seattle headquarters.
That says, quote, hey, Amazon, not saying we'd fight a
bear for you, but we totally would. That's actually kind
of awesome. All Right, I'm changing the team Calgary here,
but you know, Mago, I thought we could switch gears
and and talk for a minute about Whole Foods. Obviously,
(31:33):
this was a big, big acquisition for them recently, and
and particularly because Amazon now has the ability to do
something that they didn't have before, and that was to
access this brick and mortar world. Yeah, and and where
a few months past Amazon's thirteen point seven billion dollar buyout.
But there's still a lot of unanswered questions about what
shape the new partnership will take. I mean, prime Member
(31:56):
is now going to discount a Whole Foods and some
of the stores have a stack of Amazon at goes
for sale by the entrance. But obviously there's potential there
for something much more interesting, right, And there's been all
kinds of speculation about whether Amazon will just gut the
stores and use them as these urban or suburban distribution hubs,
or maybe force Whole Foods to adopt the model of
the Amazon Go prototype grocery stores. These are the ones
(32:18):
where you know the company has been testing out the
possibility of minimizing human contact in their stores, and sensors
just keep track of the items that you grab and
automatically charge the total. It goes directly to your Amazon
account once you head for the exits there. Yeah, and
that could definitely happen down the line. But I'm looking
forward to pressing a button at my desk, watching a
(32:38):
drone pick up an avocado for me, marring it on
my phone, and then having a helicopter up to my
office where I can reach out the window and plug
it from the sky. I'm sure that's going to happen
one day. Actually, I did come across this thought experiment
from a Texas design firm called Argo Design, and some
of the concepts weren't too far off from what you
just describe. So they try to imagine what a potential
Amazon Foods might look like when paired with new and
(33:01):
emerging technology. So one of the ideas was that these
new echo fridges could be built with these exterior facing
doors that a delivery driver or maybe a flying drone
like you dreamed of, could access from the outside. And
the idea was that one side of the fridge would
belong to the consumer and would store all of his
or her food products, while the other side would house
(33:21):
a rotating assortment of suggested products that Amazon swaps out
once or twice a day. So if you wanted to
buy that bag of grapes or those heirloom tomatoes, all
you'd have to do is slide them over to your
side of the fridge and they'd be purchased automatically, And
if there was nothing on sale that you wanted, you
just leave it all being Amazon would haul it over
to your neighbor or something to see if he was
(33:43):
That sounds equal parts amazing and horrifying, And it's almost
like the mini bar you don't want. It's tear tempting,
and the communians is obviously great, but getting the jar
of all is that my neighbors have rejected. That kind
of turns me off just a little bit. Yeah, well,
it is a little unsettling to think about. But with
drones and in home deliveries already on the table, you know,
(34:04):
sharing a fridge with Amazon may not be outside the
realm of reason. There was actually one idea from Argo
Design that I really thought was very very interesting, and
you know, it's kind of their take on the sharing
economy model that's been popularized by companies like Uber and Airbnb.
And so basically, talented home cooks could prepare meals to
sell in their community. So how does Amazon play a
(34:26):
role here? So they would provide them with some high
tech tupperware containers to pack the food in, and then
each of these special containers would include this mass spectrometer
to do things like detecting allergens and pathogens and the
prepared meals. And this way Amazon and the aspiring chefs
could sidestep the f d A and the whole packaged
food industry, yeah, while still ensuring that their home cooked
(34:47):
meals were safety eat. I mean, that's an awesome idea,
but that one actually might be outside the realm of reason.
That's true, I mean, at least at this point. But
I do appreciate the positivity behind it. And you know,
sometimes if it was, like all the tech that's aimed
at convenience does make us feel a little more isolated again,
So there was something about this that was just nice
to see an application that would encourage people to eat
(35:09):
locally and also maybe meet their neighbors. I thought the
founder of the design firm, expressed it pretty well. And
a quote that he said, it says, maybe, rather than
keeping us away from each other, stronger data systems could
help us get closer to each other over time. Well,
I like that heartwarming sentiment. But you know what else
brings us all together, a good old fashioned fact off,
(35:30):
let's do it all right, I'll start us off here.
So you want to know a good way to get
a building named after you on the Amazon campus be
the first person to have purchased a book from Amazon.
It sounds it's hard to do that again, Yeah, it
(35:54):
sounds like a riveting book too. It was purchased by
software engineer John Waynewright, and the name of the book
was flew with concepts and creative analogies and I'm not
done with the title and then goes on computer models
of the fundamental mechanisms of thought and uh so after
buying that years later, Jeff Bezos decided to name a
building after him, And that title just feels like clickbait. Yes,
(36:15):
speaking of Jeff Bezos, did you know that if you
call the Amazon service desk you might actually get Ahold
of Visos himself. So every Amazon employees required to spend
a couple of days every two years answering customer calls,
and apparently he really enjoys it. It kind of reminds
you of Steve Jobs answering customer email, That's what I
was gonna say. It reminded me of that as well.
I remember seeing seeing that story about that. Well, another
(36:36):
Visos fact here. You know, he's got this problem of
trying to figure out what to do with his billions
and billions of dollars. Poor guy, I mean, trying to
figure this out. Well, he is finding some interesting ways
to spend some of his money, and one of those
ways is building this ten thousand year clock. So the
clock apparently ticks once a year, and the century hand
moves ahead once every one hundred years. And because you
(36:59):
know every cool hawk needs a cuckoo, that that happens
every thousand years, and apparently the clock is supposed to
be like a symbol of long term thinking. I guess
I like that. I mean, I hope it's just not
a like traditional tiny cuckoo, but something spectacular. Um, did
you know that a book about Lin apparently helped keep
Amazon in business in the early days, So, as we
(37:21):
both know, from our e commerce herees. But when you're
a bookseller, you buy books from distributors and you typically
can't buy a single copy. You have to buy them
in bulk, like ten or so books at a time.
But in the earliest days, Amazon didn't need ten copies
of every book. So Amazon figured out a loophole. When
they needed a book, they'd order one copy of the
book that they wanted to have on hand, and then
nine copies of this really obscure book on liking that
(37:43):
was always out of thoughts, pretty hilarious. So I do
wish they had realized that and be like, there's such
demand for this liking book, we need to bring it back.
That's awesome. Well that, you know, that may have prevented
them from losing a lot of money at that point,
But many years later, in two thousand thirteen, Amazon showed
just how much money it could lose in less than
an hour. When the Amazon dot Com site went down
(38:05):
for only forty minutes. The company apparently lost close to
five million dollars in that brief period. That's about a
hundred and twenty thousand dollars each minute. That's insane. So,
as you know, there have been stories over the years
of Amazon employees and fulfillment centers not always being the happiest.
And there are actually some funny stories about how various
employees have decided to protest or communicate their unhappiness. So
(38:27):
one funny one involves an employee back in two thousand
and six in the Kansas fulfillment Center. So he'd arrived
every day for work, but then wasn't clocked as doing
any work. It turns out he'd kind of built himself
this fourt in the middle of a bunch of empty palates.
He was then able to use products that were for
sale to make himself right at home, so he made
himself bed, He tore out pictures from books to decorate
(38:47):
the walls he'd built around him, and he had food
to snack on. And get this, when they figured out
what the guy was doing, can you believe they fired him?
What shocking? All right, well, I have to admit of
fact that is that of heard is probably worthy of
today's trophy. So I'm going to give it to you. Congratulations, Mango,
Thank you so much, and thank you all for listening.
Don't forget if you have any great facts about Amazon
(39:09):
that we missed. Let us know at one eight four
four pt Genius or emails at part Time Genius at
how stuff works dot com. Thanks so much for listening, Kay,
(39:29):
thanks again for listening. Part Time Genius is a production
of How Stuff Works and wouldn't be possible without several
brilliant people who do the important things we couldn't even
begin to understand. Tristan McNeil does the editing thing. Noel
Brown made the theme song and does the MIXI mixy
sound thing. Jerry Rowland does the exact producer thing. Gay
Bluesier is our lead researcher, with support from the Research
Army including Austin Thompson, Nolan Brown and Lucas Adams and
(39:52):
Eve Jeff Cook gets the show to your ears. Good job, Eves.
If you like what you heard, we hope you'll subscribe,
And if you really really like what you've heard, maybe
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