Piranha-ville

The marketing moguls tell us all press is good press, but I never quite believe them. For instance, the recent dispatches on Amazon couldn't have been too good for the company's image, despite the sudden high volume of attention. In the news was the New York Times exposé, which described the company as a "bruising" environment, where management goes well beyond just asking employees to work hard [1]. The report describes a culture of long hours and conflict, in which employees inform on one another anonymously and workers with health problems are summarily marginalized.

Jeff Bezos responded in a letter to his employees [2], assuring them that Amazon isn't supposed to be the way it is depicted in the NY Times article and encouraging them to report to him directly with any stories of management misbehavior. In truth, he really might not know about this kind of behavior going on in his company. (Who would take the risk of telling him?) Still, corporate culture is vastly complicated, and one memo from the boss can't change it any more than one newspaper article can define it. What is Amazon? It's a high-tech company, but it's also the modern-day Sears catalog. How would one operate such an empire?

In fact, Amazon has enshrined a bit of its philosophy in a document called "Our Leadership Principles," which is available online [3]. The principles are much like the nuggets of new age wisdom one encounters in other corporate personnel handbooks, with no hint of the barbarism depicted in the Times article, save for a few ever-so-slightly menacing flourishes in the commentary (e.g., "Leaders do not believe their team's body odor smells of perfume").

My guess is the story will stay big for a few days, then Amazon will announce some changes to their policies, and the whole thing will just fade out of headlines. Amazon certainly isn't the first high-tech company to force employees to work long hours. A tradition of 80-hour work weeks goes back to the early grad student roots of computer science and was a part of the culture at IBM, as well as the early Microsoft/Apple era. In recent years, some tech firms have reformed their ways, realizing that one way to attract better employees is to provide a better work environment. So maybe they cap the work week at 60 hours instead of 80? And perks like free shuttle buses and free lunches cooked by a chef make the staff feel like management is paying attention.

Amazon can do a lot to address its public relations issues by learning to respect medical exigencies, de-emphasizing sniping, and generally freshening up its toolkit of HR metaphors. But will this controversy cause Amazon to start handing out free lunches and adding more employees to its payroll so the employees they have now can work less? Probably not. Why not? Because they can't afford it, and that's actually the most interesting part of the story.

Amazon might look like Google to Wall Street, but up close, it is a little more like Walmart – tooled for a huge volume of business at a relatively low net margin. They don't just dole out ads and track clicks through a web interface. They sell things that take up space. They lick envelopes, schedule deliveries, and manage call centers. The company is famous for not making a profit and still impressing investors. To be fair, one could say the same about much of the high-tech industry, where the emphasis is on building market share first, then figuring out later how to make money with it. But Amazon is now 20 years old. They continue to grow and transform at a furious pace, but at least some analysts are starting to ask when the real profits are going to start.

As it would happen, Amazon is coming off one of its best quarters ever, with earnings and profits up – largely due to the highly successful cloud computing business. That should put everyone on the management team in a good mood  – but don't expect a free lunch anytime soon, and watch that body odor.