Amazon Unbound

by Brad Stone

  Amazon was caught flat-footed. The company had opted for secrecy instead of on-the-ground preparation and for autonomy over hiring experienced public affairs and lobbying firms to counter any negative reaction. Newcomers to New York’s bare-knuckle style of politics, Amazon executives had incorrectly calculated that support from Cuomo, de Blasio, and other allies would carry the day. “New York was lost from the moment they announced it,” said Tom Stringer, head of site selection for the business consulting firm BDO.

  After the initial shock, Amazon scrambled to develop a ground game. It hired the political consulting and communications firm SKDK, as well as lobbyist Mark Weprin, a former city councilman representing Queens. They had a perfectly optimistic message to convey—that Amazon would bring up to forty thousand jobs to a previously blighted area of the waterfront over the course of fifteen years; that the tax incentives were merely rebates on the public revenues that Amazon would generate; and that many of those incentives were in fact required under a city program meant to encourage commercial development in the outer boroughs.

  But those were rational arguments, and the battle for New York was shaping up to be an emotional one—pitting a populace that felt like their city and its housing and transportation networks were already bursting at the seams, and who were exasperated by the growing wealth gap, against the specter of a distant monopoly and the world’s richest person.

  Amazon would get its first chance to face its critics at a city council hearing that December. At least one consultant wanted Jay Carney to testify, figuring that as a former member of the Obama administration, he’d be appealing to local Democrats. But Amazon rejected that, determining that it would amplify the spectacle. Instead, VP of public policy Brian Huseman would appear, along with Holly Sullivan.

  The pair prepared for the hearing from Amazon’s office in D.C. Sullivan was dynamic and fast on her feet, but the consultants worried that Huseman sounded cagey and arrogant. He insisted on writing his own opening remarks, which included the well-worn Amazon phrase: “We are proud to be Earth’s most customer-centric company.” The consultants begged him to strike it—the city council wanted to know what Amazon was going to do for the neighborhood, not the planet. But he insisted.

  The hearing on December 12, 2018, was a catastrophe. Over the course of three hours, city council members took turns grilling the pair over everything from why the wealthy tech giant needed tax incentives, to AWS’s sale of facial recognition technology to the Immigration and Customs Enforcement agency. They faced a few curveballs too. “Why do you need a helipad?” Corey Johnson, speaker of the city council, asked at one point. After Huseman answered evasively, Johnson thundered, “Do you realize how out of touch that seems for the average New Yorker?!” Meanwhile, angry protesters in the mezzanine unfurled anti-Amazon banners (“Amazon Delivers Lies”) and jeered.

  After the disastrous session, Amazon refocused on old-fashioned retail politics. Holly Sullivan and her longtime D.C. colleague, Braden Cox, the soft-spoken and introverted director of public policy, traveled through Queens, meeting with community groups and local officials. Schoettler invited twenty small business owners to dinner at a local Italian restaurant in Long Island City. The company marshaled its supporters into counterprotests and promoted polls that showed the majority of the community supported the plan. Fliers appeared in the mailboxes of Queens residents, declaring “Happy New Year from your Future Neighbors at Amazon” and highlighting the coming jobs, career training, and tax revenues Amazon would generate.

  But as the debate stretched into the new year, it started to coalesce around a different and potentially dangerous topic: organized labor. New York City was a union town, plain and simple. Amazon had fiercely defended against all unionization attempts in its FCs, and Bezos had told human resources VP David Niekerk said that a disgruntled and entrenched hourly workforce posed one of the greatest dangers to the company.

  Amazon actually had some union support in the city: the influential building and labor trades, which also backed the company in Seattle and whose members would construct the new buildings. But other unions, which over the previous decade had failed to organize workers in Whole Foods supermarkets and Amazon fulfillment centers, saw an opening. Amazon was on their turf now.

  Though none of this had much to do with the white-collar workers who would fill Amazon’s new offices, that hardly mattered. A kinetic political fight was gathering energy and feeding on itself.

  A second city council hearing devoted to Amazon’s plans in Queens took place on January 30, 2019. Huseman, looking impatient and annoyed, did most of the talking and delivered a veiled threat. “We want to invest in a community that wants us,” he told the council. Then, for another three hours, Huseman and Sullivan endured withering questions and offhand anecdotes about the historic importance of labor unions to New York City.

  Finally, Corey Johnson, the council speaker, asked pointedly: Would Amazon commit to neutrality if its New York City workers wanted to organize?

  “We respect the right for all employees under federal and state law to organize if that is what they so choose” was the legal boilerplate that Huseman should have recited—but didn’t.

  Instead, he blundered with “No we would not agree to that,” and the battle was lost. Asked about the issue later that day at a news conference, Mayor Bill de Blasio offered: “Welcome to New York City. We’re a union town.” He added, “There is going to be tremendous pressure on Amazon to allow unionization and I will be one of the people bringing that pressure.”

  On February 8, the Washington Post reported the company was rethinking its New York plans. “The question is whether it’s worth it if the politicians in New York don’t want the project, especially with how people in Virginia and Nashville have been so welcoming,” an anonymous source who was almost certainly a member of the Amazon public relations department told the paper.

  On the ground in Queens, Amazon’s HQ2 staff and their lobbyists were kept in the dark and believed a deal was close. On February 13, Huseman, Sullivan, and Braden Cox met in the governor’s office with officials from several unions to hash out the basis of an agreement that would allow Amazon workers in New York City to hold “fair elections” about whether to unionize. Mayor de Blasio would later say that it appeared things were “moving forward.”

  Then, on the morning of Valentine’s Day, February 14, Cox and other Amazon employees delivered a presentation and answered questions from members of the largely supportive HQ2 community advisory committee at the Brewster building in Queens. Senior staffers from the mayor’s and governor’s offices, also oblivious, were there as well. On the subway back to Manhattan afterward, members of Amazon’s entourage received text messages informing them that the company had just dismissed its PR firm, SKDK. That was odd. About fifteen minutes later, their phones started blowing up. Amazon had announced it was canceling the plan to build an office complex in Long Island City.

  Jay Carney called both de Blasio and Cuomo to deliver the news. Their reactions diverged both on the phone and later in public: the mayor raged in disappointment, while the governor tried to bargain for a second chance. On the 15th, an apoplectic de Blasio appeared on local radio station WNYC and complained that Amazon’s move was “disrespectful to the people of New York City…. To get a call out of the blue saying ‘see you… we’re taking our ball and we’re going home’—it’s absolutely inappropriate. I’ve never experienced anything like this.”

  Though Carney tried to discourage it, Cuomo angled to rescue the deal. Eighty business officials, union leaders, and politicians signed a full-page letter to the company, a docile apology begging for a second chance, which was published as an advertisement in the New York Times. “We know the public debate that followed the announcement of the Long Island City project was rough and not very welcoming,” it read. “Opinions are strong in New York—sometimes strident. We consider it part of the New York charm!” Cuomo also reportedly spoke on the phone with
Bezos, but he wasn’t changing his mind.

  There was plenty of blame to go around. The mayor and governor had enticed Amazon to Queens without securing the backing of its local politicians. Those leaders were also at fault; they assembled the opposition atop the falsehood that Amazon was getting an indecorous $2.5 billion handout, rather than a rebate on the sizable tax contributions it would make over the course of two decades. They also played on innate fears that the character of a cherished community and its surrounding neighborhoods would change. Yet much of Long Island City had gentrified years ago, and most of the lower-income housing in the area and surrounding neighborhoods was either rent-stabilized or belonged to large public housing complexes whose residents were protected from rising rents. And the alternative to rising home prices and an increased cost of living is rarely stasis; usually, it’s falling home prices, a lower cost of living, and hopelessness. By rejecting Amazon, an outer borough undergoing its own dramatic transformation was robbed of an economic injection that may have tangentially benefited its poorer residents.

  But Amazon executives deserved censure for the debacle as well. Inexperienced in the martial art of New York City politics, they counted on the backing of two public officials who normally never got along, including a mayor whose support for the deal “almost de facto meant that the rest of the city council would oppose it,” as Carney later admitted.

  Moreover, their synapses were molded by fifteen months of supplication—from cities and their own colleagues—during the HQ2 process. Bezos and his S-team figured they’d be viewed as conquering heroes and blithely stumbled into New York’s complex terrain of regulation, union politics, and community activism. They seemed to care little about what it took to earn a “social license to operate” in New York City. And unlike Elon Musk, who had personally led the Gigafactory site selection, Bezos had remained invisible from the public process and tried to keep his intentions private—even as he micromanaged things from afar and journalists guessed at his personal preferences anyway, with stunts like tracking his private plane to see which HQ2 candidate cities he might be visiting.

  In characteristic style, Amazon was also vague about the reasons it pulled out, citing resistance from local politicians and their constituents. “The decision to pivot away from New York for this specific project was really based upon, ‘Did we have that political support for the long term?’ ” said Holly Sullivan at the conference in 2019. “We were increasingly getting the feeling that we didn’t.”

  But one of the specific breaking points, of course, was the talk of unions, which had triggered the same reaction from Jeff Bezos and his colleagues that they had exhibited across the entire arc of Amazon history—at a Seattle call center in 2000, at German fulfillment centers in 2013, and soon, in France, at the start of the deadly Covid-19 pandemic. In all those cases, when talk of unionization and worker strikes came up, Amazon either tamped down on growth plans in the region, temporarily shut things down, or walked away from a site altogether. Nevertheless, Amazon later insisted that unionization concerns had nothing to do with its withdrawal from New York.

  Inside Amazon, little self-reflection followed the New York City fiasco. The D.C. team did not author a “correction of error” or COE report—which is often the case when Bezos himself is partly responsible for some mistake. Brian Huseman somehow evaded blame for his bungling of the ground game in Queens and remained in his role. Holly Sullivan, by consensus the hero of the process, was promoted to head of worldwide development and later to vice president. Only mild-mannered Braden Cox seemed to pay a price; he promptly lost most of his direct reports in a reorganization and left the company soon after. Many of his colleagues felt that he had been unfairly scapegoated.

  In the ensuing years, Amazon would expand its offices in the Hudson Yards area of Midtown Manhattan and announce plans to hire an additional two thousand workers in New York City, considerably fewer than the forty thousand employees once slated for Long Island City. It also grew in cities like Bellevue, Austin, Dallas, Denver, Phoenix, and San Diego—but not in Seattle, or in Queens. After navigating a disaster of its own making, the company barely missed a step. Online purchases, cloud computing contracts, and Prime video streams appeared totally impervious to the unanticipated flavors of controversy that were suddenly coming Amazon’s way. This was the true lesson of the HQ2 saga: Amazon was getting perilously close to invincible.

  CHAPTER 13 Complexifiers

  Jeff Bezos was late. It was February 14, 2019, and the S-team was meeting for the first time since the shocking revelations had ricocheted around the globe—the world’s richest man was romantically involved with a married former television host and getting divorced from his wife of twenty-five years. Just that morning, Amazon had publicly canceled its plans to build part of its second headquarters in Long Island City. As executives waited for their tardy boss in the early afternoon, the large conference room on the sixth floor of Day 1 tower in downtown Seattle vibrated with even more anxiety than usual.

  Finally, Bezos strode in and took his seat at the center of the main table. He picked up the six-pager that had been placed in front of his chair, looked up, and surveyed the assembled group. “Raise your hand if you think you’ve had a harder week than I’ve had,” he said, momentarily cutting through the tension by leading the group in a hearty laugh. Then his colleagues settled back into an expectant silence. Bezos was a master compartmentalizer; his ability to keep the intricate threads of his personal and professional lives separate was unrivaled. But now those threads had gotten tangled up. He needed to address the elephant in the room.

  “Just to set the record straight,” he started slowly, according to two people who heard the comments, “I did have a relationship with this woman. But the story is completely wrong and out of order. MacKenzie and I have had good, healthy adult conversations about it. She is fine. The kids are fine. The media is having a field day. All of this is very distracting, so thank you for being focused on the business.”

  With that, Bezos picked up the document that outlined a new set of headcount goals across the company, indicating it was time to get back to work. Colleagues would remember his short speech as remarkable—a moment when Bezos came short of apologizing for a scandal he had brought to the gates of Amazon but still managed to express a sense of humility and gratitude.

  Still, many Amazon execs and alums would have a hard time moving on so easily. Bezos had always demanded that Amazonians comport themselves with discretion and impeccable judgment. He ripped documents in half and walked out of rooms when employees fell short of expectations. By conducting an extramarital relationship so carelessly that it became fodder for a salacious spread in the National Enquirer and then a high-profile media free-for-all, he had failed to meet his own high standards. Dozens of current and former executives would later say that they were surprised and disappointed by Bezos’s affair. Their infallible and righteous leader was, after all, a flawed human.

  The revelations also might have explained some of the more curious changes in his recent behavior. Bezos had been increasingly hard to find in the Seattle offices over the past year; OP1 meetings had been delayed or postponed, and longtime deputies were finding it difficult to get time on his calendar. He was spending more time traveling, colleagues had noticed, and that November had popped up with only a few hours’ notice in the Santa Monica offices of Ring, the connected doorbell startup Amazon had acquired in February 2018.

  There were also those inexplicable helipads that Amazon requested for the new headquarters in Long Island City and Northern Virginia. Amazon’s PR representatives claimed that having helipads in New York City would have been “useful for certain events, like receiving dignitaries.” But it was also true that Bezos’s new girlfriend, Lauren Sanchez, was a helicopter pilot, and he had taken flying lessons himself. His personal holding company, Poplar Glen LLC, had even purchased at least one helicopter from the Bell Textron company around this time, according to the FAA Aircraf
t Registration database.

  News of Bezos’s impending divorce seemed relevant to another nagging mystery as well. A few weeks before Jeff and MacKenzie made their announcement, Amazon’s legal and finance departments began canvassing the company’s largest institutional shareholders asking whether they would support the creation of a second class of Amazon stock that carried a lower share price and reduced voting rights. Such dual-class stock structures, employed at Facebook and Google’s parent company, Alphabet, can end up concentrating voting power with their founders, giving them ultimate sway over matters of corporate governance even when they own only a small percentage of the stock. Amazon had gone public a decade before most of its Silicon Valley brethren, before such A- and B-class stock formulations were in vogue.

  When Amazon made this request, some shareholders were perplexed. Why would such a venerated CEO need to secure greater control over his own company? His influence stemmed not from his 16 percent ownership stake but from twenty-five years of prophetic invention, strategic foresight, and disciplined management. There was little chance an activist investor could gobble up Amazon shares and then win over other big investors to support major changes—like splitting apart the AWS and retail units—as they had done so successfully at companies like eBay and Whole Foods Market.

  Amazon said it began studying this arrangement in early 2018 and explained that it was exploring the change to be able to give stock to fulfillment center workers, who often had to sell the shares they received to cover their tax obligations. Amazon also said it could use a second class of stock to pursue acquisitions, in much the same way as Warren Buffett’s Berkshire Hathaway. But according to some investors who heard the pitch at the end of 2018, the argument was strange and unpersuasive. Amazon had just announced it would no longer grant stock to warehouse workers after the wage hike to $15 an hour; and a tough regulatory environment meant that it probably wasn’t going to be doing any massive acquisitions anytime soon. “Compared to the typical Amazon argument, it was thin and not aggressively supported,” said an investor who received the pitch and joined others in opposing it. “It left all of us feeling confused.”