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- [00:00]
Oracle Representative
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- [00:45]
Oracle Salesperson
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- [01:01]
American Express Representative
You worked hard to lay the foundation for your contracting business, and when you're with Amex Business Platinum, you can keep building it up with a flexible spending limit that adapts with your business. And since you earn 5 times Membership Rewards points on flights and prepaid hotels booked on amextravel.com, you get even more from on site overseeing. That's the powerful backing of American Express. Not all purchases will be approved. Terms apply. Learn more@americanexpress.com AmExBusiness you probably see them.
- [01:31]
Narrator
In your neighborhoods, those grayish blue vans delivering the stuff that you and your neighbors recently bought on Amazon.com climbing in and out of those vans are delivery drivers wearing Amazon uniforms. But they aren't Amazon employees. They work for what Amazon calls Delivery Service Partners, or DSPs for short. Over the last few years, Amazon has been on a hiring spree, looking for entrepreneurs who are willing to sign up as delivery company owners.
- [02:02]
Ted Johnson
Somebody from HR from Chicago calls me and gives me the congratulations. You have been chosen to be a DSP owner. And I was like, oh wow, now this is serious.
- [02:13]
Narrator
That's Ted Johnson. He was a veteran who ran a small consulting business in Illinois. He stumbled onto an online ad looking for delivery partners. Interviewed with an Amazon recruiter, and a few weeks later, Ted got a phone call.
- [02:27]
Ted Johnson
Where am I going to work out of? And she gives me 10 locations. Oakland, Los Angeles, San Diego, Brooklyn, Long Island, Pennsylvania. We'd never been to New England. We did a lot of research and we Said, let's pack up.
- [02:43]
Narrator
Ted and his wife Karen were optimistic. It seemed like an opportunity to prove themselves. Amazon was opening a brand new delivery station and they'd be helping to build it from scratch.
- [02:54]
Ted Johnson
I was pretty excited. I'm going to be straight up with you. I've run a small business, me and Karen, and what they had told us during our training on how many packages we'd be delivering, how much money we'd be making, and it was a quality of life changer. It would be more money that I could make in any other job in my life.
- [03:15]
Narrator
Amazon said the delivery partners could earn up to $300,000 in profits each year. But there were a lot of costs associated with making Amazon deliveries that Ted would learn about the hard way.
- [03:28]
Ted Johnson
I've done a lot of big projects and everything and this thing was overwhelming. How are we going to do liability insurance? How are we going to do workman's comp insurance? You know, how we're going to do a payroll system and oh, by the way, you may not get vans, so go out on the market and look to get white vans. So it was kind of a shoot from the hip show. And I thought, well, you, you know, Amazon, they're this big tech company and maybe the reason they're shooting from the hip is because the station is new.
- [03:54]
Narrator
From the start, the experience felt rushed and disorganized. And on top of that, Amazon had aggressive expectations for how fast they could deliver a package. So drivers were rushing to make these delivery targets. Minutes and seconds mattered, which led to injuries.
- [04:12]
Ted Johnson
Yeah, a lot of drivers slip and fall's probably our biggest. And then the next one, believe it or not, up here were dog bites.
- [04:22]
Narrator
Dog bites are a big problem, actually.
- [04:25]
Ted Johnson
It's horrible. We had them getting bit on the hand, we've had them getting bit on the calf, on the butt. We get them to the doctor as soon as possible, you know, but Amazon says, remember, it's the customer, it's the package that's important, so be smart about it. And, oh, by the way, you're the business owner, so it's your decision and it ain't ours.
- [04:48]
Narrator
Ted tried to be a responsible employer to his injured employees. His insurance paid for it. But it wasn't lost on him that he was doing all of this for Amazon. That in a way, a big part of his role was to absorb responsibility and liability for his drivers.
- [05:06]
Ted Johnson
I would have never thought I would assume so much liability and so much headache as I did to serve this company that could give a rat's ass about people. And that's the truth.
- [05:22]
Narrator
You're listening to Foundering. I'm your host, Brad Stone. We'll get back to Ted Johnson's story in a bit, but first we're going to tell the story of Amazon Logistics, the transportation division of a company that fulfills the promise of delivery in one or two days, but at a hidden cost. It's a story that begins with Amazon being blamed for ruining Christmas, leading to the fury of Jeff Bezos. And it ends with the formation of one of the world's largest delivery fleets. There are also thousands of people like Ted Johnson stuck in an unhappy co dependence with one of the largest companies in the world. We'll tell you that story after the break.
- [06:11]
American Express Representative
You worked hard to lay the foundation for your contracting business. And when you're with AMEG's Business Platinum, you can keep building it up with a flexible spending limit that adapts with your business. And since you earn 5 times Membership Rewards points on flights and prepaid hotels booked on amextravel.com, you get even more from on site overseeing. That's the powerful backing of American Express. Not all purchases will be approved. Terms apply. Learn more@americanexpress.com AmExBusiness this show is sponsored by BetterHelp.
- [06:43]
Ted Johnson
BetterHelp has been revolutionary in connecting people to mental health services.
- [06:47]
BetterHelp Representative
Using BetterHelp can be as easy as opening your laptop or your phone and.
- [06:52]
Narrator
Clicking a button, and the session begins.
- [06:54]
Ted Johnson
Clients are able to choose in what way they would like to communicate with me, whether video or on the phone or chat texting.
- [07:02]
Narrator
BetterHelp is there when you need it, and that's what makes all the difference.
- [07:07]
BetterHelp Representative
Visit betterhelp.com podbusiness to get 10% off your first month. Therapists were compensated.
- [07:14]
Narrator
We start during the holiday shopping season, 2013. Amazon was a much smaller business then. It had about 1/10 as many employees as it does today. Even though sales were growing, it barely eked out a profit that year. So the holiday season was crucial for Amazon. Back then, Amazon didn't have a delivery arm. It's relying on large carriers like UPS, a 100-year-old company with a unionized fleet of drivers.
- [07:43]
Dave Glick
It's an existential crisis every Christmas in every peak season that they may not have enough capacity to deliver packages to their customers. And you know, if Amazon fails, if UPS fails, like the whole country locks up, right? There's no Christmas, some kid's gonna be unhappy.
- [08:03]
Narrator
That's Dave Glick, a former logistics vice president at Amazon. He said that back then Amazon sales were growing at more than 20% a year, but UPS was growing their capacity at about 2%. It wasn't a problem in Amazon's early days.
- [08:21]
Dave Glick
And so back in 1999, UPS was fine, right? We were dropping the bucket. They had effectively infinite capacity. But as Amazon grew much, much faster than UPS and the other carriers, they started to use a material portion of that capacity.
- [08:38]
Narrator
By 2013, Amazon was becoming a burden on UPS. The companies were mismatched because think about it, UPS gives its drivers Sundays and holidays off. Meanwhile, the Amazon website is always available. It's kicking out packages seven days a week, 24 hours a day. So the backlog of Amazon packages was growing like water pushing against a dam. And then over the holidays in 2013, there was bad weather and for UPS, the dam was breached.
- [09:11]
Dave Glick
They just got a little over their skis. Yeah, you know, you sprinkle some snow in there and that makes everything just that much worse. And these, you know, if you're running your plant, whether it's fulfillment, sortation, chemical, whatever, if you're running your plant at full out capacity and you lose a day or you lose two days because of weather event, you can't catch up.
- [09:30]
BetterHelp Representative
Bad weather is being blamed for ruining some Christmas mornings. UPS admits it failed to deliver a lot of packages despite guarantees from online stores like Amazon. UPS and Amazon will offer refunds to.
- [09:42]
Narrator
Customers whose packages did not make it in time for Christmas.
- [09:45]
BetterHelp Representative
Some people are still waiting to get the gifts they ordered in the first place. Some of them guaranteed huge delays this year for some FedEx and UPS shipments. You know, we had one mom talk about how do you explain to your kid that Santa didn't show up?
- [10:03]
Narrator
Holiday gifts were stranded on the tarmac. Amazon had to issue $20 gift cards in attempt to make amends. And the great E Commerce Christmas meltdown made national headlines.
- [10:17]
Dave Glick
I think we were all appalled. And this is like the worst possible customer experience for Amazon. And nobody knows, oh, it's UPS's fault. They bought a package from Amazon, they bought a product from Amazon and Amazon needs to deliver it.
- [10:31]
Narrator
Jeff Bezos was apoplectic. In his universe, this was just about the worst thing that could happen. And Bezos directed his anger at a guy named Dave Clark. He is known as the driving force behind the growth of Amazon's warehouses and delivery network. Here he is in 2015.
- [10:50]
BetterHelp Representative
Talk to us about that fulfillment center. I don't see too many humans. Help us understand the amount of robots you have versus the amount of people you employ.
- [11:00]
Narrator
Well, our focus is about combining Software with automation through robotics and human performance and process development. We continue to focus on automation for cost reduction and speed improvement for delivery. And we're excited about the results. When Dave took over Amazon operations in 2012, there were about a dozen warehouses. By 2020, there were almost 200. He's known as a drill sergeant. He keeps things marching forward. He also has a reputation as kind of a ruthless guy. Some of his underlings called him the sniper because in his early years as an east coast regional manager, he was quick to see who was slacking off on the shop floor and fire them. But in 2013, Dave Clark was the one on the chopping block. Bezos made it clear he would fire Clark if another Christmas meltdown happened. To save the company and himself, he would have to reshape a major part of Amazon.
- [12:00]
Mike Indrosano
Dave had a very keen interest in all things transportation. Brilliant, brilliant, brilliant man.
- [12:07]
Narrator
That's Mike Indrosano, another former logistics executive at Amazon. So here's what happened. After the Christmas fiasco, Dave decided Amazon could no longer rely so heavily on UPS and FedEx. So Amazon turned to the US Post Office because UPS was out of capacity. But the post office was seeing the volume of regular mail decline. They had excess capacity and they were already going to practically every house in the country six days a week. Now, while the post office is great at mail delivery, they're actually not all that fast at mail sorting. And that's where Amazon stepped in. They would build out sortation centers where packages get organized by zip code and then they'd hand those off to the mailman. Here's Mike.
- [12:57]
Mike Indrosano
I got a phone call. I think it was December 26th, and it was Dave Clark. And, and then he asked me, he said, so you know, how many sort centers do you have in the plan? And I said, well, we have 16 queued up to launch over the next couple years. And he simply said, launch them all. And I said, okay.
- [13:22]
Narrator
Gulp.
- [13:24]
Mike Indrosano
And we did. I mean, it was amazing. I've never seen anything like that in my 30 years in transportation.
- [13:32]
Narrator
They raced to build all 16 sortation centers in just a year. And they had a loose formula. Put the sortation centers near a major interstate, near big cities, near colleges that provided a part time workforce. It was a huge operation inside the company. They called it the sweet 16. The next step to Amazon, reducing their reliance on UPS and FedEx was acquiring planes. Here's Mike.
- [14:00]
Mike Indrosano
I remember getting a phone call from Dave saying, I need you to get an airplane. I'm like, I need to get an airplane. Yeah, can you, you know, do you know, have any contacts? Can you get us an airplane? And I'm like, what for?
- [14:14]
Narrator
The planes come in to shuffle inventory around, particularly when Amazon needs to meet its prime delivery promise. They'll fly an item across the country if it's out of stock at the local warehouse. And the first thing they wanted to rush out was a batch of Kindles. In December 2015, when they had sold out in Seattle once again, UPS and FedEx said they were out of capacity. They couldn't help Amazon at its most critical time of year. So Dave asked Mike to charter some cargo jets. It worked out. Naturally. Jeff Bezos and Dave Clark immediately wanted to double down.
- [14:51]
Mike Indrosano
Right after it was, how many planes can we get? And hey, if we can fly one plane, you know, how many should we be flying?
- [14:58]
Narrator
This was the start of Amazon Air. In 2016, Amazon leased 40767 freighters from two airlines. It also started to develop a cargo hub at Cincinnati Regional Airport. Amazon was learning that it could mold a transportation network to its own needs, control costs, and most of all, keep up with its growth. Bezos, of course, watched this build out carefully.
- [15:25]
Mike Indrosano
Jeff was very concerned and stayed close.
- [15:29]
Narrator
Bezos email address is public jeffmazon.com Whenever he got an email from customers about a botched delivery, he'd forward it on with a single piece of punctuation, the question mark throughout.
- [15:45]
Mike Indrosano
14. I got a lot of emails from Jeff with question marks and oh, what a powerful tool.
- [15:53]
Narrator
Mike says that executives would have to craft detailed solutions to these emails and fix the core problems or else you.
- [16:02]
Mike Indrosano
Cannot reply with a surface answer. In fact, one response to Jeff could take three or four weeks and could have 20 people involved. Jeff was not looking for an answer to his question. He was looking for a solution to the underlying problem.
- [16:21]
Narrator
At the time, there was no bigger question at Amazon than how to deliver packages reliably and fast. Dave Clark wasn't happy relying on the post office either. To keep up with its rapid growth, the company was going to have to start delivering packages itself, kicking off another wave of very public problems. We'll tell that story next. First they built sortation centers, then they leased planes. They also added long haul trucks. This speaks to Amazon's strength. When they find something is working, they they throw money and technology at it and rapidly expand. They do not equivocate. And the last piece of the puzzle? Amazon wanted to deliver their own packages to customer doorsteps. In transportation, they call this the last mile. There were a number of false starts in countries like the UK and India and in grocery delivery. But these early efforts were costly and slow. Inside the company, there was a feeling like they really hadn't figured out how to navigate home delivery. Here's Mike again.
- [17:34]
Mike Indrosano
There was a lot of discontentment at times. I think the belief was speed wasn't happening fast enough. Why couldn't we go faster? Why couldn't we get to a lower cost?
- [17:44]
Narrator
To get that lower cost and to move more quickly, Dave Clark introduced a service called Amazon Flex that let gig workers take delivery jobs just like they might sign up for Uber or Lyft. It was Amazon's first major attempt to get delivery drivers without hiring them as employees. Amazon didn't actually want to employ drivers, just as it didn't employ pilots or truckers. They wanted a hands off relationship, which is a model that's also used by FedEx and DHL. One big reason trucking tends to be heavily unionized and Amazon absolutely avoided unions at all costs. Jeff Bezos explains his mindset in an OnStage interview in 2018 with Business Insider.
- [18:32]
Ted Johnson
When you are doing something in a new way and if customers embrace the new way, what's going to happen is incumbents who are practicing the older way are not going to like you. In our view. We have workers councils, of course, and we have very good communications with our employees. We don't believe that we need a union to be an intermediary between us and our employees. But of course, at the end of the day, it's always the employee's choice.
- [19:02]
Narrator
So Bezos says it's always the employee's choice. But as we've seen in union elections at Amazon warehouses, like the high profile one in Bessemer, Alabama in 2021, Amazon fights tooth and nail to persuade employees to vote against unionizing. And transportation is a heavily unionized industry more than warehouses even. After all, this is the turf of the famous hard bargaining Teamsters union. Amazon wanted no part in it, which is one reason why they brought in independent contractors. Here's Mike.
- [19:35]
Mike Indrosano
You know, when I look to the industry, I certainly would say that the independent contractor models tend to be non union and the employee models tend to be union.
- [19:49]
Narrator
In Bezos world, unions are a deal killer because unions agitate for higher wages, lower quotas and fewer hours.
- [19:57]
Mike Indrosano
There's one thing that I'll say about Amazonians is, you know, they like to control for a lot of reasons. I mean, you know, customer experience is paramount. It is the number one thing. And so sometimes, you know, ceding control or giving up control is perceived as is not doing all that you can do for the customer.
- [20:19]
Narrator
By 2018, Dave Clark had an ingenious plan. Amazon could have its cake and eat it too by contracting middlemen to come in to employ the Amazon drivers. That June, Dave gathers members of the tech press at the Waterfront in Seattle to announce that Amazon was recruiting ordinary people to start independent delivery franchises. This program is really a very different program. It's about building your own business. Amazon would provide uniforms, van leases, fuel and access to insurance. It would set quotas and control these companies with software while having none of the headaches of employing actual drivers. In this environment, our entrepreneurs don't have to fight for customers and they don't have to fight for sales. They get the opportunity with our demand to have a good consistent volume and to grow with Amazon. As we grow, Amazon starts to advertise for entrepreneurs who can start and run these delivery companies. Here's one narrated by a successful DSP owner, Sebastian Festa, who's originally from Haiti.
- [21:26]
Mike Indrosano
Linda, thank you. Drive safe.
- [21:30]
Narrator
Starting the delivery service partner business wasn't easy. I didn't have a logistics background at all. Amazon provides me with the expertise. They guide me, counsel me, they provide me with the tools that I need to be successful. The rest is up to me. Within months, tens of thousands of people applied. Amazon was throwing open the gates for small business owners. Come build a business delivering packages for the world's largest online store. But Amazon ran this business in a very Amazon like way, with software and algorithms running everything instead of human managers, just like how it operates the global marketplace. This goes back to Bezos, because automation allows for faster growth, higher revenue and lower costs. That allows him to fund his pet projects like Alexa and Amazon Studios. That was the recipe that had made Amazon one of the largest companies on the planet and Bezos one of the richest people in the world. So in Dave Clark's new transportation business, instead of human dispatchers handing out routes and calculating payments, it was algorithms and software. And a lot of it was new. For entrepreneurs like Ted Johnson, who we heard from at the beginning of the episode. The drawbacks of Amazon's approach started to grate soon after he moved to New England.
- [22:53]
Ted Johnson
I'd always say, you know, how can a company, I think at the time a million and a trillion and a half value added company, the richest man in the world, the biggest employer in the world, they gotta have their stuff together. But I'm gonna be honest with you, they were half baked and they were winging it.
- [23:09]
Narrator
Ted says his drivers were overloaded with packages. The software seemed to set quotas based on how many packages needed to be delivered. It didn't take into account what was realistic or safe, particularly in bad weather. The estimated delivery times were as low as three minutes.
- [23:27]
Ted Johnson
He Here in rural New Hampshire, every house is five acres apart and each driveway's 6, 700ft. It's icy, so you're not gonna do a delivery in three minutes.
- [23:39]
Narrator
Ted said the Amazon software pressured business owners to make deliveries in hazardous weather, like snowstorms. They'd say it was up to him, but if he didn't make the deliveries, then he would get a bad report card. Amazon's tracking systems issued weekly scorecards for the drivers and for Ted, the company was measuring their performance for things like wearing a seatbelt, speeding, hard stops, and abrupt turns. Sometimes the software made mistakes and wrongly dinged drivers. And the stakes were high. Ted could lose a package or routes if he was deemed to be unreliable. His drivers quit in droves.
- [24:19]
Ted Johnson
They were wearing my drivers out. About 33% of my initial workforce that I recruited from day one had quit on me. If you had a driver that was kicking butt for some reason, the algorithm would track that driver and would add more and more and more onto their routes to where it would just break them. And I had my, you know, people that were my day one guys, that I thought these guys would be with me for three years, said, I'm done.
- [24:48]
Narrator
Ted was frustrated by the working conditions of the drivers. He says some things just didn't sit right with him.
- [24:54]
Ted Johnson
I'm gonna tell you straight up. Our employees urinated in bottles and they wore diapers and they shit in bags, and it was awful. And that redlined me. That pissed me off.
- [25:05]
Narrator
Ted got started at a tough time. The pandemic was raging. Stores were closing. People depended on Amazon, and Amazon's algorithms closely tracked how fast and efficiently Ted's people were working. What looked like an amazing business opportunity turned into a punishing experience.
- [25:24]
Ted Johnson
And for the first time in my life, I had major anxiety. There were nights where I would curl up in the corner and sleep with my dog, just scared to death. How am I going to go in and tell these people that we're going to make it another day?
- [25:42]
Narrator
By the beginning of 2021, Ted and Karen, like many other delivery company owners, were struggling. He was about to crack. That's next.
- [25:59]
American Express Representative
You worked hard to lay the foundation for your contracting business. And when you're with Ameg's business Platinum, you can keep building it up with a flexible schedule spending limit that adapts with your business. And since you earn 5 times Membership Rewards points on flights and prepaid hotels booked on amextravel.com, you get even more from on site overseeing. That's the powerful backing of American Express. Not all purchases will be approved terms apply. Learn more@americanexpress.com AmExBusiness.
- [26:29]
BetterHelp Representative
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- [27:28]
Narrator
So Ted and his wife Karen moved from Illinois to Hooksett, New Hampshire to help build Amazon's new transportation arm. He thought he would be working for one of the world's great companies, but his boss wasn't Jeff Bezos, Dave Clark or any one of Amazon's very smart executives. In reality, their boss was Amazon's Frankensteinian creation. Its impossibly demanding systems.
- [27:53]
Ted Johnson
It was relentless. Up at six, down at probably 11, 12, seven days a week. If you cared about your drivers, you didn't quit until they got everybody got home, you'd go to sleep and your mind would still spin. You're always on, you know what I mean?
- [28:11]
Narrator
Then In February of 2021, with all these problems proliferating, Ted got a call from a regional executive from Amazon.
- [28:19]
Ted Johnson
He calls and there's a lawyer on the phone and he starts reading from a script. Your contract is effectively up on the 3rd of February and we are not renewing. Yep, we're not renewing. I said, well, what did I do? They said, we don't, we're not going to get. We're not going to tell you why and we're not obligated to tell you why. And I tell you what, at that point I was so pissed. However, after a couple deep breaths, me and Karen looked at each other and you know what? We said, thank God the pain is over.
- [28:56]
Narrator
Ted estimates he lost more than $100,000 delivering Amazon packages, largely due to damages he had to pay for leased vans. He regrets that he even went into business with Amazon.
- [29:08]
Ted Johnson
If we knew what we know now and somebody would have been out there telling, we wouldn't have done this thing.
- [29:14]
Narrator
There are about 2,500 of these small delivery companies like Ted's. Most have less than 100 employees each. In 2021, they allowed Amazon to deliver about two thirds of its own packages. They basically saved Amazon from the infamous supply chain disruptions of the pandemic. The program has been extraordinarily successful for Amazon, even though many of the delivery company owners shared Ted's complaints. My colleague Spencer talked to 15 delivery partners. They also brought up unrealistic delivery expectations, buggy software, and Amazon's dismissive attitude towards their concerns. Amazon says that about 90% of their delivery drivers complete their routes within the designated time. They gave us a. As we grow, we don't always get it right. And we are committed to seeking feedback to continue improving the DSP and driver experience. This year we made more investments than ever before in new technology, process improvements and rate increases. End quote. There is another class of worker who has even less leverage than guys like Ted. That's drivers and their helpers just looking.
- [30:26]
Oracle Salesperson
For anything to start making some money. But I came across just an ad on, I think it was indeed that said it was an Amazon driving job. And I said, this sounds easy enough, might as well just do it to make a few quick bucks and get out of there. And it was a swift process. You, if you could pass a drug test, you're in.
- [30:44]
Narrator
Avery Barnard was 25. He had just moved to a town outside Virginia beach and he was looking for any work he could find. The pandemic didn't leave many options. A week after he applied, Avery was on the road in a truck. He showed up for work expecting to drive a van.
- [31:02]
Oracle Salesperson
To my surprise, on the first day that I showed up to the meetings were these large box trucks and two men teams and a lot of things I wasn't expecting.
- [31:13]
Narrator
So he learned that the job was to deliver large items like trampolines, inflatable pools, furniture, gym equipment, and anything else you can find on Amazon that weighs more than 50 pounds. Avery said he got $15 an hour to start and after a year got a dollar raise. He says that the days were long and they were often running behind.
- [31:35]
Oracle Salesperson
You go into the customer's home, you bring this heavy thing up, usually a couple flights of stairs, and you place it where they specifically decided that they wanted and assembly, which is where you do all that stuff of the room of choice and then you build a piece of furniture and they usually gave you about three to five minutes to do that.
- [31:57]
Narrator
Amazon disputes Avery's claim that they only gave three to five minutes for assembly. They say they gave close to an hour. Still, furniture assembly is relatively new. Amazon just started the program in 2021. So once again, all its software was new and the workers had very little preparation.
- [32:17]
Oracle Salesperson
But we have never seen these things in our life before. So just to get there and read the instructions for this thing, when you're sweating your ass off because you've been out for six hours that day in the heat and you're walking into this person's house and like getting on their carpet and you're just like pouring sweat into their living room trying to read these instructions, putting it together. It's taken us hour, two hours.
- [32:43]
Narrator
Having any sort of furniture assembly would throw them off schedule. Traffic could throw them off schedule. Looking for parking could throw them off schedule. It was really difficult to keep on Amazon's estimated timeline.
- [32:55]
Oracle Salesperson
If one thing goes wrong, everything's going to go wrong and then you're screwed. And that happens a lot more often than you might think. So on paper, Amazon sees it and it looks all totally doable. But if you run into one thing which happens all the time, you're gonna be behind and then you're behind for your scheduled deliveries and you might have to skip around and come back to stuff, which adds on even more time, and it just snowballs into this huge catastrophe.
- [33:24]
Narrator
At the same time, Amazon and its delivery companies went on a hiring spree through the pandemic. They don't even test for marijuana anymore.
- [33:33]
Oracle Salesperson
There's always a desperation for people. As time went on, it basically I've, I've seen countless people shuffle through our warehouse, stay for maybe a week and two or before they're gone. And most people dropped off in like the first couple months.
- [33:49]
Narrator
He says that most people didn't last.
- [33:51]
Oracle Salesperson
Long because, okay, it's a, it's a shit job, it's horrible. I mean, in the end it's menial labor that doesn't provide much. I mean, 50, 60 hour weeks is pretty usual.
- [34:11]
Narrator
He says that minor incidents were common, like hitting parked cars or scuffing the walls of people's homes. But eventually he had a major incident.
- [34:21]
Oracle Salesperson
Traveling down to a Hoskie, North Carolina on these back roll roads that are real tiny. And it was just, you know, one tiny slip onto the edge of the grass that ended up, you know, overcorrecting into a ditch and flipping over and all that stuff.
- [34:37]
Narrator
Thankfully, Avery and the driver weren't hurt.
- [34:40]
Oracle Salesperson
You know, it's kind of slow in the moment and then you're flipped over and everything. You know, my, my door was on the, the ground so I couldn't open it. The Dr. I mean the driver, I don't want to put him on blaster. He was definitely panicking quite a bit and reasonably so. But in the moment it was just kind of like, this is dumb. Why the fuck am I in a turned over truck in the middle of a hoskie North Carolina with one stop left to deliver somebody's fucking nightstand.
- [35:08]
Narrator
But the crash wasn't enough to get him to quit. For Avery, the breaking point came with Jeff Bezos rocket launch. Afterward, Bezos thanked Amazon customers and employees for helping him to pay for it.
- [35:21]
Ted Johnson
I also want to thank every Amazon employee and every Amazon customer because you guys paid for all of this.
- [35:32]
Oracle Salesperson
So basically he just rode the world's biggest roller coaster on my dimension and boy it sure accomplished nothing. So that's great. And to fucking come out after you land and be like, thanks Amazon employees, you paid for this. Yeah, I fucking quit very shortly after. So I don't know man, that was insulting. That was pretty personally insulting.
- [36:02]
Narrator
Still, by the end of 2021, Amazon vans crawled most American cities and suburbs. Amazon trucks were all over the highways and its cargo planes were at major airports. Amazon logistics would grow so rapidly that it eclipsed FedEx and came close to surpassing UPS's share of the US delivery market. Dave Clark had freed Amazon from relying on other delivery companies to keep up with its growth. It's one reason why Amazon's market value surpassed 1 trillion and why Jeff Bezos personal wealth increased so dramatically over the past few years. Here's former Amazon exec Dave Glick again.
- [36:42]
Dave Glick
Well, if you think about like in 2013, we delivered effectively zero packages via Amazon Logistics. And you know, I think in 2019 they delivered 3.5 billion packages in 2019. And so we went from zero to 3.5 billion in like five years. And now every single other company is trying to chase Amazon to two day shipping and home delivery.
- [37:09]
Narrator
But Amazon's huge success as the leader in home delivery also displaced significant costs onto the public. It didn't provide healthcare coverage for its contract drivers or maintain the congested roads to and from its warehouses. Some personal injury lawyers have gone so far as to say that the intense time pressure Amazon places on its drivers amounts to a safety threat. Take the story of Ans Rana, who's 23, he was in the backseat of his brother's Tesla when they got rear ended by an Amazon Mercedes Sprinter van. It was traveling nearly 70 miles per hour on an Atlanta interstate.
- [37:48]
Ahn Rana
So my brother was the one to tell me about what happened. We were going and then there was a car like I would say 100ft from us had stopped.
- [38:01]
Narrator
Ahn says his brother tried to change lanes, but there were vehicles on both sides. So he stopped and put his own blinkers on.
- [38:09]
Ahn Rana
And then all of a sudden he told me that I looked back and I said, oh my God. And then splinter van just crashed into us like it was just a mess from there.
- [38:23]
Narrator
Amazon told us they're not responsible for the accident because the driver was not an Amazon employee. He works for a delivery service partner called Harper Logistics. Ahns and his lawyers disagree. And as of this podcast recording, they have a lawsuit pending against Amazon. It's a murky legal area because the driver's work primarily benefits Amazon, even though he's employed by the delivery company. And Amazon is facing more lawsuits like this as it puts more vans on the road and more people get hurt in crashes. A week after the accident, Anz opened his eyes. After two or three weeks, he was responsive. He's now quadriplegic. He lives with his sister and uses a motorized wheelchair.
- [39:08]
Ahn Rana
I have lost my legs, which, you know, I wouldn't wish that on my worst enemy. Like, I don't know if I'm able to get movement back. It's just a lot to deal with mentally. I can't enjoy the, like, the simple things that a 20, like a 20 year old wants, like playing video games, playing sports, even like watching tv. I can't change the channel. Like, there's just a lot.
- [39:40]
Narrator
Amazon gave us a statement. We are committed to the safety of drivers in the communities where we deliver. We work closely with delivery service partners to set realistic expectations that do not place undue pressure on them or their delivery associates as they complete their shifts. Many of Amazon's critics feel that the company is hiding behind their independent delivery companies. These are small businesses with no assets. Usually they don't even own their own vans. While Amazon has a market value of more than $1.7 trillion, this imbalance, as well as other controversies involving warehouse workers and small businesses, have reinforced the impression that Amazon and Jeff Bezos are ruthless capitalists. The iconic entrepreneur, once lauded for his ingenuity for inventing products like the Kindle and Alexa, came to be seen in some quarters as a villain. And Amazon as a business that was hurting society instead of helping it. And all of this would come to a dramatic head when Jeff Bezos personal life exploded into the headlines. That's coming up in the next chapter of the Amazon Foundering is hosted by me, Brad Stone, Shawn Wend is our executive producer. Spencer Soper contributed reporting to this episode. Ray Mondo is our audio engineer. Molly Nugent is our associate producer. Mark Million, Ann Vanderme, Robin Nigello and Molly Schutz are our story editors. Francesca Levy is the head of Bloomberg Podcasts. Be sure to subscribe and if you like our show, leave a review. Most importantly, tell your friends. See you next time.
- [41:31]
BetterHelp Representative
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- [42:02]
Narrator
Prime membership is required to access Spend Visibility.
- [42:05]
BetterHelp Representative
This podcast is supported by BetterHelp, offering licensed therapists you can connect with via video phone or chat. Here's BetterHelp head of clinical operations Hesu Jo discussing who can benefit from therapy.
- [42:20]
J
I think a lot of people think that you're supposed to be going to therapy once you're like having panic attacks every day. But before you get to that point, I think once you start even noticing that you feel a little bit off and you can't maintain this harmony that you once had in relationships, that could be a sign that maybe you want to go talk to somebody. There's always a benefit in talking to someone because we can all benefit from improved insight about ourselves and who we are and how we behave with other people. So if you're human, that's like a good indicator that you could benefit from talking to somebody.
- [42:55]
BetterHelp Representative
Find out if therapy is right for you. Visit betterhelp.com today. That's betterhelp.com.