by Brad Stone
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But Bezos intended to keep trying. He had two additional ideas for how to forge a connection with grocery shoppers and solve the quandary of CRaP. They remain among the strangest projects in Amazon’s history and provide an additional glimpse into its odd corporate rituals.
The first, which Bezos proposed in a free-flowing brainstorm session in 2014, started as a notion he called “the steak truck.” Imagined as “an ice cream truck for adults,” the original suggestion was to stock a van or truck with steaks, drive into neighborhoods with lights flashing and horn blaring, and sell them to residents, as Doug Herrington remembered it. It would be convenient and a great deal for customers, since the meat was being sold in bulk. Eventually, the company might even predict demand and eliminate the inefficiencies and wasted food of supermarkets.
The idea was perhaps just kooky enough that an executive was assigned to write a PR FAQ, the Amazon memo that kicks off the development of a new project by imagining its press release. The document gave the idea an official name: Treasure Truck. Bubble machines and digital displays would convey a carnival-like atmosphere while the truck sent out text alerts to the smartphones of nearby customers, announcing the item on sale that day.
Herrington assembled a two-pizza team to develop the project over the fall of 2014, alongside Prime Now and the private-label push. Though the idea itself was whimsical, the technical problems behind it were challenging, such as how the truck would announce its presence only to customers in the vicinity and keep meat and seafood properly chilled.
By the spring of 2015, the team had applied for two patents, but the project still hadn’t launched. Employees started working long days and nights. They designed and purchased a prototype truck from a custom-vehicle maker in Chicago; it looked like a giant cardboard box that unfurled like a Transformer robot to reveal giant screens, blinking lights, and a spinning wheel bedecked with plastic salmon. Employees who worked on the project said the prototype cost about a quarter of a million dollars. They hid it in a South Lake Union parking garage and prepared to introduce the service that June with something far less perishable than steaks: a $99 deal for stand-up paddleboards.
Then the night before, after the press had been alerted to the unveiling, internal testing revealed a software bug that might erroneously inform customers who purchased the product that it was sold out. The launch was delayed, and beleaguered project members had to come in on a Saturday to analyze the issue. Amazon also sent in the “principal engineers”: an elite squad of about a dozen technical wizards at the company who parachute into troubled projects to diagnose problems.
The principal engineers interrogated Treasure Truck employees for two weeks and authored the “correction of error” or COE report, the top-secret document prepared inside Amazon when something goes awry. In the middle of this painful self-examination, disaster struck again: a junior employee accidentally triggered the release of text messages to all the customers who had signed up for Treasure Truck, incorrectly announcing the imminent sale, and the $99 paddleboards. The Seattle tech blog GeekWire, which had vigorously covered the entire saga, declared that the project was “quickly reaching the status of the most-bungled product launch in Amazon history.”
Seven months later, with the old project managers swept out and new ones installed, the Treasure Truck finally started rolling over the hills of Seattle, hawking GoPro cameras at a 64 percent discount. Over the next few months, the truck would sell Shigoku oysters, wild king salmon, Thanksgiving turkeys, new models of the Amazon Echo, and Harry Potter and the Cursed Child. The team commissioned new trucks, not as garish or pricey as the original, and expanded to twenty-five major U.S. cities.
But the service was never as ubiquitous or as endearing as Jeff Bezos and Doug Herrington had hoped. Internet critics were baffled by the project and sneered at some of the more inexplicable deals (“bidet sprayers for $19.99, 33% off!”). One empty Treasure Truck burst into flames in a West Philadelphia parking lot at 1:30 a.m. Bezos briefly touted the initiative in his 2017 shareholder letter, but an executive on the finance team told me that it never performed particularly well or was close to profitable. If Amazon wanted to arouse excitement and loyalty for its fledgling grocery services, it needed something else entirely—like a unique product that customers were passionate about.
Well, Bezos had an idea for that as well and it was just as bizarre. In August 2015, the Washington Post published an unappetizing article about how a single hamburger might contain the meat of up to a hundred cows. Sourcing a burger from just a single cow could theoretically produce a superior-tasting patty but that “would be hard and expensive,” a meat distributor told the paper.
That caught Bezos’s attention. He seemed to have increasingly adventurous tastes, later sampling an iguana, for example, at a meeting of New York City’s Explorers Club. In another brainstorming meeting with Herrington, he suggested they find a ranch to produce a “single cow burger” and make it a unique item that customers could only buy from Amazon. “I really think you should try this,” Bezos told Herrington, who recalled thinking at first it was a joke. “How hard can it be?”
The project was assigned to a new culinary innovations team inside Amazon Fresh and immediately established as an S-team goal—a high-priority benchmark monitored closely by Bezos and the leadership council. A product manager named Megan Rosseter was then charged with finding a way to actually produce it. The meat vendors she initially contacted told her that such a thing was totally impractical and would in fact be disruptive to their operations. “I felt like I was always getting crazy daunting goals that seemed almost impossible,” she said.
Somehow, Rosseter and her colleagues found a ranch in San Diego County, near the Mexican border, that could produce the burger. They worked with the ranch that spring, devising ways to freeze the meat for transport and designing packaging that wouldn’t leak when it was defrosted. In June 2016, Amazon splashed Single Cow Burger promotions on the Fresh website and smartphone app, advertising half-pound Wagyu beef burgers with 80 percent lean meat and 20 percent fat. The company also prepped Alexa with an answer should anyone ever ask it for a definition: “Single cow burger: a beef burger made with meat from just a single cow.”
The initial feedback from customers was promising. “These burgers are HUGE, JUICY and DELICIOUS!!!” wrote a reviewer on the Amazon website. But a few months later, Bezos sent an email to Fresh executives. He felt that the packaging was too difficult to open and complained that the burger was so fatty that dripping fat had caused his grill to flame up.
Rosseter believed that premium Wagyu beef should be cooked in a cast iron skillet and not on a grill. But she was not about to give unsolicited cooking advice to her CEO. She was also astonished that Bezos seemed to care so much. “It was definitely one of those ‘I can’t believe this is actually happening moments’ in my life,” she said.
So Rosseter went back to her supplier, who subcontracted the work to another ranch in Georgia that could produce Heritage Aberdeen Angus beef burgers with 91 percent lean meat and only 9 percent fat. After repeated trips to taste-test variations, Rosseter had a second single cow burger, with easy-to-peel packaging, ready to go by January 2017. The Fresh team sent a sample to Bezos’s office, and word came back a few days later that he was satisfied.
The project once again represented a different style of innovation within Amazon. Employees didn’t “work backwards” from their idealized customers, who had never asked for such a creation. They worked backwards from Bezos’s intuition and were catering to his sometimes eclectic tastes (literally). Bezos was right a lot, particularly when it came to cutting-edge technology. But in the end, the single cow burger and other culinary innovations introduced within Amazon Fresh generated little buzz or increased business.
Rosseter stuck it out for a few months but felt her efforts were not being recognized. She called the work environment “stressful and unhappy.” So she prepared to leave Amazon Fr
esh, right as a bomb was dropped on top of it.
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On April 21, 2017, Matt Yale, the head of regulatory affairs at Tusk Ventures, one of the firms advising Whole Foods amid the assault from activist investors, called Jay Carney, an acquaintance from the Obama administration. Would Amazon be interested in meeting with the organic grocer to discuss a strategic transaction? Carney referred the contact to Bezos and Jeff Wilke, who passed it along to Peter Krawiec, Amazon’s vice president of worldwide corporate development. On April 27, the two companies started negotiating under the veil of a strict nondisclosure agreement.
Amazon did not appear to equivocate much when deciding to respond favorably to the outreach. The company had expanded: Prime Now was in thirty-three U.S. cities and a handful overseas; Amazon Fresh in fourteen metro regions, as well as London and Germany. But they remained unprofitable and were achieving neither leverage nor scale. Prices were high and product selection was unremarkable. While the private-label efforts inside Amazon’s electronics and fashion divisions had taken off, thanks in part to the unique and controversial search and data tools employees used, the strangely named brands from the consumables group had not. Few customers were clamoring for Wickedly Prime fiery mango trail mix. Treasure Trucks and single cow burgers weren’t making much of an impact either.
Another rising competitor to worry about had also emerged, in addition to Instacart and Google Express. In 2016, Walmart acquired the e-commerce startup Jet.com for $3.3 billion. Its founder Marc Lore was now running Walmart’s domestic e-commerce efforts and still held a grudge over the way Amazon had outmaneuvered and acquired his previous company, Quidsi, which operated the website Diapers.com. He was smartly focusing on the online grocery opportunity, using the retail giant’s forty-five-hundred-plus U.S. stores as delivery hubs and pickup points and making real headway where Amazon had not.
So on Sunday, April 30, 2017, John Mackey and three deputies flew from Austin to Seattle to meet Bezos, Krawiec, Steve Kessel, and Doug Herrington in the boathouse of Bezos’s home on Lake Washington. Mackey recounted the long, proud history of Whole Foods Market, noting that the grocer had almost single-handedly popularized the consumption of kale. But now there were rapacious activist investors at his door. “I love this company. I want to stay independent, but it doesn’t look like that’s going to happen,” Mackey said, according to Doug Herrington’s recollection. “If I have to be acquired, there’s one company that I have respect and admiration for, and that is Amazon.”
Mackey would later describe the conversation “like falling in love…. We were finishing each other’s sentences before the first meeting was over.” Bezos, of course, had a fondness for entrepreneurs. He and Mackey were a lot alike in some ways: detail-oriented, stubborn about their visions, and pugnacious in response to public criticism. But Mackey didn’t have the same mastery of technology or talent for constant reinvention as Bezos. Whole Foods stores hadn’t changed much in decades, and as a result, his brand of corporate consistency and idealism was endangered.
Throughout May, as it continued to indulge proposals from Albertsons, Whole Foods negotiated in secret with Amazon, responding to a constant stream of requests for more information. On May 23, Amazon offered to buy the company for $41 dollars a share, nearly a 27 percent premium over its share price. Amazon added that it wouldn’t negotiate further and threatened to withdraw the offer if it leaked. Whole Foods responded by asking for $45; Amazon upped the amount, barely, to $42 per share, and said that was its final offer.
The companies announced the $13.7 billion deal on June 16, 2017, shocking the world. The most famous e-commerce company was buying one of the most iconic grocery chains. Jeff Wilke flew to Austin that morning, where he joined Whole Foods’ executives at an all-hands meeting in the company auditorium. Mackey triumphantly announced that he would remain as CEO under the marriage with Amazon—“until death do us part.” He also mocked Wilke mercilessly for appearing to refer to quinoa as a vegetable.
In a remarkable sign of Wall Street’s confidence in Bezos’s every move, the deal sent shares of Amazon skyrocketing that day and added $15.6 billion to its market cap, pushing it past $475 billion. (It also temporarily sent the stocks of rival grocers spiraling downward and was a boon for Instacart, which was quickly the beneficiary of their panicked scramble to move online and counter the Amazon threat.) Charles Kantor, managing director of Neuberger Berman, who had arguably started the entire chain of events with his letter-writing campaign, told Reuters that because of the stock appreciation, “there’s the argument that Amazon acquired Whole Foods for free.”
But there would be a price to pay, although it remained largely invisible to outsiders. Amazon now had to reconcile a decade of overlapping grocery initiatives and combine them with 465 physical stores and their accompanying supply chain and antiquated technology systems. When the next discussion between Bezos and Wilke turned to which executive should take charge of the herculean effort and oversee Mackey and his team, they gave it to Steve Kessel, who ran Amazon Go and the bookstores, and had the smallest organization.
The Federal Trade Commission approved the merger in August, judging that the companies were not significant rivals and that the acquisition did not substantially lessen competition. Afterward, Kessel implemented some quick changes. Discounts for Prime members, Amazon Lockers, and Kindle and Alexa devices all arrived at Whole Foods stores. On Amazon’s website and smartphone apps, the struggling private brands were quickly complemented by Whole Foods’ much larger selection of 365 Everyday Value products. The grocery chain also got credit for lowering its prices—John Mackey’s perpetual bugaboo—for perhaps the first time ever. And Amazon introduced uniform standards and stricter financial terms to Whole Foods suppliers.
One thing Amazon didn’t do was turn over the Whole Foods management team. The activist investors had darkly joked about how many days it would take Bezos to fire John Mackey. But Bezos often allowed acquired companies and their eccentric CEOs to operate autonomously, as he had years before with the late Tony Hsieh and Zappos. He preferred to learn from their experience and harvest the data and business lessons that emerged.
Now Bezos had to find alignment among Amazon’s divergent approaches in the trickiest product category it had ever encountered. So he also gave Steve Kessel authority over Prime Now and Amazon Fresh. Over the next few years, Kessel would combine the two services into a curious hybrid: the website, smartphone app, and brand name of Amazon Fresh largely supplanted Prime Now (though the Prime Now app was preserved for its fans). The new Fresh experience was then overlaid on Prime Now’s supply chain of centrally located urban warehouses and flexible fleet of contract drivers. And the products in Whole Foods stores and warehouses were added to the selection—which had been Amazon’s goal years before, with the Copperfield effort, proving once again that acquisitions, rather than partnerships, were the more viable path for a company of Amazon’s size and forbidding reputation. Kessel also unified the disparate, often warring grocery teams behind a single manager—Stephenie Landry, who had successfully rolled out Prime Now.
Back in 2012, Doug Herrington had predicted that Amazon’s future was in the low-price and barely profitable items that people bought every day. “We can’t reach our $400 billion aspirations with today’s business model, and there’s good reason to fear we won’t make the necessary transformation,” he had warned solemnly in his memo. But it turned out the fear was unfounded; five years later, Amazon sold an enormous assortment of CRaP. That left the truly hard work: storing it and getting it to customers’ doorsteps, via one of the largest armies of low-wage workers and drivers that the world has ever seen.
CHAPTER 9 The Last Mile
To understand how Amazon came to operate one of the largest and most sophisticated logistics and transportation networks anywhere, we must again go back, even further this time, to the company’s life-or-death struggle during the dot-com boom and bust. When a bespectacled twenty-six-year-old
former middle-school band teacher named Dave Clark joined Amazon in 1999, the company operated only seven warehouses in the U.S. and three in Europe, which were barely able to handle the frenetic holiday sales peak. By the time he took over as head of global operations in 2012, Amazon ran around forty fulfillment centers in the U.S. and another two dozen overseas. But the massive buildings were mostly located in remote areas, a strategy to minimize Amazon’s labor expenses and tax burden, not to best serve customers. They also relied on lower-wage employees walking an average of twelve miles a day to find and pick the right items from shelves.
By August 2017, after it had agreed to collect sales taxes in most U.S. states and completed its acquisition of Whole Foods Market, Amazon’s supply chain looked dramatically different. It was comprised of around 140 FCs in the U.S. and another few dozen abroad, many of them in urban areas and crowded with squat orange robots zooming to and from employees, carrying yellow stacks of shelves crammed with merchandise. Amazon also had hundreds of new smaller buildings: sortation centers that organized packages by zip codes, Prime Now centers for groceries, delivery stations where contract drivers picked up packages for transport to customers’ homes, and airport hubs for a new fleet of gleaming white cargo jets with “Prime Air” written in blue font on the side.
Along with the booming growth in the number of its facilities, Amazon’s treatment of its warehouse workers had also become the subject of increasing scrutiny. Media accounts portrayed Amazon as a callous employer that prioritized profit over safety and evaded responsibility for the injuries and even deaths caused by its delivery operations. Clark, by then one of the few executives on the S-team who bantered with Amazon’s critics and challenged criticisms online, responded aggressively to every charge, proclaiming that safety was Amazon’s top priority. “Senator, you have been misinformed,” Clark tweeted at Connecticut senator Richard Blumenthal in September 2019, after he accused the company of taking a “heartless” and “morally bankrupt” approach toward public safety.