Kevin Garber: [00:00] This week on the It's a Monkey Podcast.

John Rossman: [00:03] I think what drives Amazon is to serve new customers and existing customers in new ways and to reinvent many of the businesses that they're involved in, largely using technology and digital approaches to help reinvent around the traditions of businesses.

[00:28] I think they see themselves as explorers and inventors and they're willing to undertake hard and really long problems to help invent and make the experience so much better. That reflects itself not only in the retail business, but in the cloud business and in many other businesses that they're in.

[00:48] [music]

Kevin: [00:59] Good morning, good evening, hello wherever you are in the world. It is Thursday the 6th of July, 2017, here in beautiful Sydney, Australia. We are having sunshine, after sunshine, after sunshine. Even though it is the middle of our winter, it is like spring. 18 degrees Celsius every day.

[01:17] You're with me, Kevin Garber. I'm the CEO of ManageFlitter and soon-to-be ManageSocial as well. You're listening to "Episode 98" of "It's a Monkey Podcast," where we talk about everything related to tech entrepreneurship startup and all those exciting bits and pieces.

[01:31] With me, as usual, is my co-host, Kate Frappell, who's the design leader at ManageSocial and ManageFlitter. For the first time, we're doing this remotely via Skype because Kate has relocated to the wonderful land of Canadia. You're in Whistler, Kate. Is that right?

Kate Frappell: [01:48] Yes, just moved to Whistler, BC. It's about two hours out of Vancouver.

Kevin: [01:55] Well, it's good that we're going to be able to keep up these podcasts. We'll have to juggle all the time zone bits and pieces, but we're going to keep them going. Today is episode 98, and coming up later in the show I've got a fantastic interview with John Rossman.

[02:12] John Rossman used to work at Amazon, pretty high up in the exec suite there. He's written a book about his experience and the 14 principles that Amazon go by with their work culture. That was really interesting. That's coming up later on in the show.

[02:25] But, as usual, Kate and I just touch on a few of the tech stories of the week because, boy, does our industry move so fast. Kate, we've been speaking a lot on the podcast about bitcoin, block chain, cryptocurrencies.

[02:39] One of the challenges with cryptocurrencies has been that it's still pretty early days in the sense of being able to trust it as Tim Lee -- who's been in the show, he's author of a book about the block chain -- mentions 30 percent of online wallets have been hacked.

[02:57] Unfortunately, this week the fourth-largest bitcoin exchange, and I think one of the largest, Ethereum -- which is one of the popular cryptocurrencies -- one of the largest Etherium exchanges was actually hacked for billions of won. It was a South Korean bitcoin exchange and, unfortunately, they got nailed this week.

Kate: [03:17] Yes, there are a few cases where people are reporting losing 1.2 billion won in bitcoin that have been stolen from these hackers which, by my calculation, is about a million dollars USD.

Kevin: [03:33] I think more than actual amounts is that the distress that it creates in the industry. Right? You're not going to put a money in a bank if every couple of months a bank gets hacked even just a little bit. Right? [laughs] It's like...

[03:51] [crosstalk]

Kate: [03:51] Yeah, for sure. The other think is, they're not only just taking the money, they're taking their names, and phone numbers, and email addresses as well. Your whole identity is at risk.

Kevin: [04:02] What I found interesting about this hack is there was a layer of social engineering that happened. They were calling people that had cryptocurrency in this exchange. These hackers were saying that they were from the exchange and saying that, "We need do double check. There's an unauthorized transaction in your account.

"[04:23] Please give me some details. Please do this. Please do that." It's easy to, perhaps, judge these people. If someone would call you from the bank, we're so used to authenticating ourselves with these companies, but we're not used to having them authenticate themselves. Right?

Kate: [04:43] Right.

Kevin: [04:43] If someone would call you from your bank and say, "Hi, Kate, it's let's CommBank here. I need you to log in and do something because there's been an issue with your account." If they sound professional, would you actually challenge them?

Kate: [04:57] Yes and no. Lately, I've been getting a lot of notifications from the bank saying, "We will never ask you for X. Don't provide us with X." I think because the banks themselves are waking up to the fact that there's lots of hackers and these are the type of things that hackers are going to ask for.

[05:18] On the other hand, particularly if I had an existing issue with the bank, I probably would just spill all my details to them and trust them.

Kevin: [05:27] Yeah, I think people have to be incredibly vigilant. I know some telcos allow you to put a special password over and above your normal credentials, so every time you check with them they ask you for your password.

[05:40] You cannot have too many layers these days. Identity theft is a real issue. I know people where they have had issues with amounts being clocked up in their name. You really have to be careful with all of this. In the cryptocurrency space, it's a shame because this credibility has the potential to actually kill the whole industry as these hacks continue to happen.

[06:07] No one can really take it seriously. You know what would be great? There has been some talk about countries like Dubai and Estonia creating their own cryptocurrency. What would be really great is if one of these countries did create their own cryptocurrencies with its own features, and with its own guarantees and security, and just sidestep cryptocurrency being a toy in a way.

[06:35] Let's start getting serious about cryptocurrencies and challenging all the potholes and the weaknesses in it. Until we move that 30 percent of online wallets have been hacked right down to maybe 01 percent, this industry's not really going to get serious attention. It's a big issue and it's not a simple thing to solve.

[07:03] That's why banks still exist, because securing money is still not an easy thing to do. They've been doing it for a long time. There's some, even, federal guarantees in a lot of countries that even if the bank loses a certain amount of your money, you are going to get them back. All of these layers add to the trust that we have in the system.

Kate: [07:24] Definitely, and even in the article that you sent me, it says at the bottom that some countries, like Japan, they started to give cryptocurrency a legal standing. Eventually, South Korea and stuff as well, I think, will start bringing in bills that can stop hacking and help with the making cryptocurrency legitimate, I guess.

Kevin: [07:48] Yeah, yeah, and there needs to be a multi-pronged approach. I definitely think when we have the first national cryptocurrency. I think all the countries are waiting for someone to take the first move. Humans are very predictable like that. No one ever wants to take the first move. They get confidence from each other.

[08:07] I always laugh when I go to events and, so often, no one wants to ask the first question. [laughs] Once the first question's been asked, all the hands go up. It's just... [laughs]

Kate: [08:17] That is true, that is true. You ask one and then everyone's like, "Oh, I can do better than that one," or, "I've got another question related to that one," and it just keeps going.

Kevin: [08:25] Exactly. Bitcoin's price is still holding, though it's still about 2,600 US dollars. A few months ago, four months ago, it was 800 US dollars. That's just such a huge jump and it's still holding.

Kate: [08:39] It's interesting as well. Since coming to Whistler, I've actually met a few people who have spoken to me about Bitcoin and they're trading in Ethereum. I was like, "Wow." It seems it's more common now. People are talking about it.

Kevin: [08:58] Money raises the profile of things, Kate. When the price went...I think I mentioned on the previous podcast that I had friends who, when I was speaking to them a year ago about block chain and Bitcoin, and these are guys in finance who are like, "Oh, not for me, not for me, not for me."

[09:16] Suddenly when the prices went nuts, I suddenly started getting this phone call and saying, "Tell me about this Bitcoin thing."

[09:21] [laughter]

Kate: [09:23] Sure, so they can make something.

Kevin: [09:25] If you are going to double in Bitcoin, and Ethereum, and cryptocurrencies, be careful because online wallets do get hacked. Ironically, as Tim Lee explained, that people that are very careful actually print out their private keys and have them on paper in a safe-deposit box, not on their computers.

[09:46] Which is a bit ironic that the safest thing is to have details of your wallets on a piece of paper in a safety deposit box, but yeah. Anyway.

Kate: [09:55] Definitely.

Kevin: [09:56] That's Bitcoin and then, staying in that part of the world, that was a South Korean exchange that got hacked. Shanghai is developing a facial recognition system to identify jaywalkers. I'm not sure whether to love or hate this. Kate?

Kate: [10:13] I feel like I hate it, already.

[10:19] [laughter]

Kate: [10:19] Yeah, from what I read, basically, they've tested a camera at a pedestrian red light. They're basically just going to name and shame anyone that jay-walks. They'll record you if they detect movement on a red light. Then they're going to throw your picture and your name, your identity, onto the closest bus stop. Then they're also going to charge you.

Kevin: [10:46] This all just happens seamlessly.

Kate: [10:50] Well, yeah, supposedly. In this test, they got 300 people, but only four of them were able to be identified and punished, so they might have a little way to go. The idea is kind a crazy to me.

Kevin: [11:02] There's a couple of false positives. Right?

Kate: [11:04] Oh, yes. I think so.

Kevin: [11:07] It sort of works with theft. I know in Sydney, when there's shoplifting, stores sometimes take a snap from their CCTV. They try to shame them on the store window, but I guess shoplifting is a little bit more of a serious crime than jaywalking.

Kate: [11:27] Yes, I agree. Yes, jaywalking's against the law, but it feels like a money revenue raiser for the government, to me.

Kevin: [11:36] Facial recognition and image recognition is just so advanced, it's a little bit spooky. I uploaded an old photo, maybe a four-month old photo, to Facebook yesterday of me and a friend at a café. Probably, three quarters of the photo was my body and their body that took up most of the photo. There was a little bit of a background of a shelf and a cup of coffee, but not much at all.

[12:07] Facebook said, "Oh, were you at Two Chaps café? Is this photo at Two Chaps café?"

Kate: [12:15] Oh, OK.

Kevin: [12:17] I'm not sure if they got that from some meta tag information in the photo, like GPS, that I'm not aware of that's on my Android, or there's some meta information there, or it actually, somehow from all the photos at this café, it has built up a profile almost of every little image profile at this café.

[12:39] I was quite amazed that from that little bit of information...It wasn't a sign. It wasn't an expansive photo of the café, and it identified what café this photo was taken at.

Kate: [12:52] Yeah. Obviously, I don't know 100 percent, but, to me, it sounds like they've mapped the café. I've been reading a few things where they're compiling Google Maps for interiors, if that makes sense, so inside public places, in museums, probably in cafés and stuff, too, from other people's pictures. The good chance, yeah, they've just picked up on a scene in a particular area and they've matched it with that café.

Kevin: [13:19] That's remarkable, though, when you'll see this photo what a small proportion of background is in this photo, though.

Kate: [13:26] Yeah, that's odd. That's really odd.

Kevin: [13:28] Obviously, I didn't upload it at the café. I uploaded it on the go miles away. It wasn't from that. The only thing I could think of is any meta information. Coming back to this facial recognition, these images are just...There's tons of information in them. I'm sure very soon they'll be able to be searchable in interesting ways.

Kate: [13:50] It's interesting, too. I didn't realize, but the article was saying that China has an identity database, so they can match people's photos with their identity and their address. That's where they send the fines to.

Kevin: [14:07] Right, right, and that's why...

Kate: [14:09] I don't know, but I feel like they don't really have that back home in Sydney.

Kevin: [14:13] No. We've got a driver's license, which is sort of a de facto identity card or you need to get an identity card if you don't have a proof of age that you need, but there is no identity mega database, per se. There's just the de facto one.

[14:30] People have pushed back against having an identity database for that exact reason, because it would get into the wrong hands or it can be interrogated. There's so much data about everyone these days, that...

Kate: [14:42] For sure. It almost sounds a little bit hypocritical that you put all your details on Twitter, but you don't want to give it to the government. I there's this distrust in a lot of people where they don't want to give the government all their details straight off like that. They're going to get fined or tracked down and stuff like that. It's a bit different.

Kevin: [15:04] You know what the things is, Kate? I think these days, a lot of the time, companies are doing better jobs of all this data than governments. Last night was one of the deadlines for the tax in Australia. Their systems crashed again. Granted, when you have a whole country trying to submit something.

[15:21] If this was a Google system or a Facebook system, there's a high chance they got the expertise and the experience [laughs] to make this happen.

Kate: [15:32] Yeah, it would be a lot faster [laughs] and executed better.

Kevin: [15:36] Yeah, in the old days, fifty years ago, sixty years ago, governments were the only one that had the resources to have expensive computers and things like that. This is where the power is shifting so much.

[15:46] This is where block chain technology is so exciting in the getting involved with governance and aspects like that, moving that even lower down to the people and concentrating it less in the governments, per se.

Kate: [16:01] Yes, it's very true. Very true.

Kevin: [16:03] This is episode number 98 of the "It's a Monkey Podcast." Please email us podcast@itsamonkey.com to say hi. Please rate us on iTunes. Please tell your friends. Please try out ManageFlitter or sign up for the ManageSocial Alpha. It's very, very close to Alpha. If you're an Instagram user or you're a Twitter user, it's a great set of tools to help you grow your account.

[16:25] Tweet us. We love to hear from you. If you want to be a guest on the show, please email us at podcast@itsamonkey.com. We are going to take a short break. Then we're going to play my interview that I did with John Rossman, who's a digital and Internet of Things expert. He's a managing director of Alvarez & Marsal. He's a keynote speaker. He's an author.

[16:47] He used to work at Amazon.com, has written a terrific book about his experience there. Stay with us. We will be back after this short break.

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[17:13] For example, let's say you are an online bicycle retailer. ManageFlitter could help you grow your Twitter account by helping you find and follow people who have the word cyclist in their bio. The more targeted your search is, the higher likelihood these Twitter accounts will follow you back.

[17:34] We have millions of users, literally, that have used ManageFlitter's search, sort, and filtering tools to grow their account with the right followers. This has provided them with a solid base to kick-start their social selling.

[17:48] Feel free to drop by ManageFlitter.com to trial our product or email us at contact@manageflitter.com to schedule an obligation-free walk-through.

Kevin: [18:02] You're back with It's a Monkey Podcast. My name is Kevin Garber. I am the CEO of ManageFlitter and soon to be ManageSocial as well, our new reworked social media management platform. We talk about everything relating to tech startups, entrepreneurship. Of course, how could you mention all of those things without the name of one particular company called Amazon?

[18:25] Amazon recently punched through the $1,000 share price level. Amazon basically is a platform these days, not only where we buy so many things -- and that's how Amazon started -- but it's actually a platform with which a lot of the Internet that we use, including things like Netflix, actually sits on Amazon's service in the AWS side of things.

[18:51] I'm very excited to say I've managed to find someone who has not only worked deep in the bowels of Amazon but has actually written a couple of books about Amazon. From the West Coast of the USA, happy to say I've got John Rossman, who's the managing director at Alvarez & Marsal.

[19:11] He's also written a couple of books, including a book titled, "The Amazon Way." John, thank you so much for joining us in the podcast.

John: [19:19] Kevin, thanks for having me. Great to be here.

Kevin: [19:22] Obviously, we don't give financial advice on this podcast, but Amazon punching through 1,000. A lot of people were waiting for a couple of other shares to get there first, I think Google being one of them, but Amazon made it to the [laughs] post a little bit quicker.

John: [19:40] Certainly the market is rewarding Amazon, and Google, for their performance and what they see as a very rosy future.

Kevin: [19:51] Now, Amazon, of course, famously...Jeff Bezos, I should say, the founder of Amazon. Actually before that, Jeff's business was based out of Seattle and Amazon is has based out of Seattle. In the bay area there's this religious idea, almost, of starting up businesses with a cofounder.

[20:13] I think it's almost impossible to get funding for a business if you don't actually have a tech founder, maybe two tech cofounders or a tech founder and a non-tech founder. Jeff started that business alone. Am I correct in saying he did get some funding, but it wasn't a typical cofounder scenario?

John: [20:31] That's right. He's the sole founder.

Kevin: [20:33] Of course, it's typical to Jeff's style. He was contrarian right from the start.

John: [20:42] Yeah, I think he's always had a big vision and seeing the opportunity to serve customers in new ways. He's always viewed Amazon as a technology company, and retail was the first manifestation of their business model, but they've never limited themselves to just retail or, really, to any constraint.

Kevin: [21:07] I started using Amazon way back when it was really just books. Old habits die hard, John. I still struggle to break free from that headspace that they sell more than books. But, of course, we have been at a disadvantage in Australia in that, generally, you've only been able to buy books actually on Amazon.

[21:28] A lot of the other interesting bits and pieces we haven't been able to buy it. I believe Amazon is going to do a local launch in Australia sometime this year, which is exciting consumers and putting a lot of fear into the retailers.

John: [21:43] Exactly. What their game plan is for Australia still has to unfold, but absolutely its coming and they are way beyond books, music and video. The business I ran at Amazon, I'd launched the third-party selling marketplace back in 2002 and 2003.

[22:03] That was really the platform and the vehicle that we used to launch so many new categories, primarily with third-party sellers, leading the way. As Amazon has grown and learned the business, they carry some vendor products and they also launched their own private label brands.

Kevin: [22:24] Amazon seemed to have, quite early in the piece, got their head around the idea of platforms, which is just so interesting because it's almost textbook against conventional wisdom to hold on to your competitive advantage and not open up a platform that will almost allow your competitors to work alongside you.

[22:49] Amazon's one of the few places, I think, you can buy a new product from Amazon and you can buy a secondhand product from someone else, but, of course, on a platform that was created by Amazon. By the sounds of things, you were heavily involved in that. That's incredible. I don't think people realize how groundbreaking such a seemingly small innovation is like that.

John: [23:12] I think you mentioned a really key innovation that people just don't give enough credit to, which is selling a used item right next to a brand-new item. In fact it's on the same detail page. It's listed as the same item with multiple offers across it, really revolutionary in its time.

[23:34] The platform businesses are really the notion of how do we take a core capability, turn it inside out, and let others not only use it but actually innovate on top of it. Amazon has a number of platform businesses. You mentioned Amazon Web Services. The cloud business is certainly a big platform business. The marketplace is a platform business.

[23:56] But things like FBA, which is a fulfillment by Amazon which allows third parties to leverage Amazon's fulfillment network, network planning, transportation capability, negotiated transportation rates, algorithms on where to place their items in their fulfillment centers.

[24:14] They let others leverage that capability of helping those parties avoid having to build fulfillment centers and manage those things, but it allows Amazon to leverage their capital expenditure and allows them to more aggressively build out their fixed costs infrastructure.

Kevin: [24:34] Before we get into the 14 leadership principles behind the success of Amazon, which so much to talk about on that side of things, curious about Jeff Bezos's long-term play. He's on the record many times saying that he's not interested in short-term profits. The market sometimes has got a bit frustrated with that.

[24:55] As someone who's worked with him indirectly, closer than most of us, what is his long-term play? Personally, he's involved in space exploration. He's even invested in things like Basecamp. What is the meta vision and what drives Jeff?

John: [25:15] I think what drives Amazon is to serve new customers and existing customers in new ways, and to reinvent many of the businesses that they're involved in largely using technology and digital approaches to help reinvent around the traditions of businesses. I think they see themselves as explorers and inventors.

[25:44] They're willing to undertake hard and really long problems to help invent and make the experience so much better. That reflects itself not only in the retail business but in the cloud business and in many other businesses that they're in.

[26:01] Kevin; The Amazon Way, 14 leadership principles of the world's most disruptive company just reads like...I'm looking at the 14 principles and I want to talk through each of them. Because, as a CEO, one of my frustrations is communicating what we're about in a way that our team understands.

[26:24] Some of us -- especially the people that have been with my team for a longer period of time -- get what we're about, but for us to articulate that is so, so difficult. I just want to read these four principles because they're just so fantastic. Obsess over the customer, one. Two, take ownership of results. Three, invent and simplify. Four, leaders are right, a lot. Five, learn and be curious.

[26:53] Six, hire and develop the best. Seven, insist on the highest standards. Eight, think big. Nine, have a bias for action. Boy, do I love that one. 10, practice frugality.

John: [27:08] Frugality, yes.

Kevin: [27:09] Earn the trust of others, 11. 12, Dive deep. 13, have a backbone -- disagree and commit. Love that one as well, and 14, deliver results. It basically covers everything in an incredibly succinct way. I'm going to print this out, put it in our select channels, pin it. I hope you don't mind.

John: [27:31] No. I think what's so critical about these principles is...I don't advise anybody else like these are the right principles for anybody else. These work for Amazon, but they are authentic. They're used in everyday meetings. It really allows them to scale out consistent thinking and approaches across the organization.

[27:54] For as large as Amazon is, it really is a non-bureaucratic, fairly flat, fast-moving, nimble organization. They come from an entrepreneurial spirit. They want to maintain that entrepreneurial aspect to their business. These principles are really the core that ties a very conglomerate business together in a very loosely tethered manner.

Kevin: [28:20] I sort of smile gently at number 10 -- practice frugality -- because it's famous. That's in the early days at least, the desks I believe in Amazon were trestles placed upon unwanted doors. Is that correct?

John: [28:38] Yeah. It was a door desk. Ostensibly, a door with four wooden legs to it. They still use door-desks today as a visual reminder of frugal, but they really use frugality as a forcing function to help drive innovation and improvement. Constrained resources are one of the ways that you problem solve in a different way.

[29:05] When you have lots of resources and you can afford to be sloppy about them, you don't get wired tight. But, when you have small margins and you have to be extremely precise, you can't afford errors and you can't afford quality issues, guess what? You have a much higher attention to operational excellence.

[29:26] That's that one of the reasons why that's a principle, is because they want everything to be world-class and to always be improving.

Kevin: [29:37] I've got this philosophy that every entrepreneur, their first business should be a bootstrap business, even if it's a lemonade stand because, exactly as you say, those constraints. They force you to be resourceful in a way that if you're heavily funded...There's lot being written about this.

[29:54] That if you're a heavily funded company you can't get distracted by that big balance and start spending on things that really don't matter. The mind is a funny thing. It's very hard to genuinely empathize with the situation that you are not in. But, when you've got constraints that are unmovable, buoy the human spirit.

[30:14] Humans are alive today because we're so adaptable, and we adapt to those constraints, and the business better for it.

John: [30:21] And driving the everyday sense of urgency to get stuff done. So you just know, like, "Hey, we can't sit idle. We have to change. We have to improve today." I think that's really a big part of the ethos behind these.

Kevin: [30:35] John, working at Amazon, what was the day-to-day culture? Obviously, they could hire the cream of the crop. Sometimes, when I sit in a café in Palo Alto in one of my trips to San Francisco, or even if I sit in a café in the West Village in New York, the type A personality DNA is thick in the air. [laughs]

[30:57] In a Palo Alto café, you're just hearing talk about metrics and crypto-currencies and deep engineering problems. Was it Amazon had that type of DNA internally? Did it feel incredibly intellectual, and sort of heady and robust, and type A personality?

John: [31:17] I would see everything except the type A personality. That doesn't necessarily rule the day, but people that are very intelligent, I think, are nimble thinkers and problem solvers, and that are action-oriented. They're passionate about customers. They're passionate about getting things right.

[31:36] It was a very transparent culture, meaning you played your cards and you argued for what was right. But then, when the decision was made, everybody committed to moving forward with it. That's really the essence of leadership principle number 13 -- have backbone, disagree and commit. In general, it's not passive-aggressive environment and stuff, but yeah, it was a great place.

[32:03] It was an always-on kind of environment. You were always thinking about the business. What was great about Amazon was you could get real things done without asking for much permission on everything, so you had great accountability and the resources to do things right.

Kevin: [32:20] I think what's important for people listening to this podcast -- we have a lot of people that are entrepreneurs or want to be entrepreneurs -- it's quite easy to look at the outside of Amazon now, a $1,000 plus share price, and its hugely successful AWS business, etc., etc., but Amazon has also had its failures including the FIFO.

[32:43] They've never quite cracked the phone side of things as well. It's easy to get biased when companies have had success and a lot of the bumps in the road get smoothed over. I'm sure we only see the tip of the iceberg.

[32:57] Every company has things that don't go according to plan, has disappointments, have wrong hires, have HR issues, have PR issues, etc., and I'm sure Amazon has had its share of those.

John: [33:13] Maybe I'm one of the few old people who remembers, back in the early 2000s the cynics were high on Amazon -- like amazon.bomb, and Amazon wasn't going to survive, and free shipping was unsustainable and reckless, the business wasn't going to survive. All of these things.

[33:35] It was really by having fortitude and belief in the long vision, and not giving way to the traditional beliefs and ways of doing business, and sticking to it that Amazon got to where it is today.

[33:51] Life and business are cycles. I think, above all else, Amazon has always been committed to some core assets and some core beliefs. They were going for it from day one, and they didn't let traditional thinking get in the way of reinventing business.

[34:12] Kevin. The physical goods businesses is such a difficult business. I don't think people in the software business or on the SaaS game realize how difficult eCommerce is when you've got logistics, and trucks, and people in warehouses, and you have to ensure physical stock.

[34:36] It's, obviously, each rung on that value chain has room for innovation and competitive advantage. Boy, it's physical goods businesses really scare the hell out of me.

John: [34:48] Yeah. The fulfillment network and logistics capability of Amazon is an incredible asset for that organization. I think it's one of the ways that Amazon really differentiates itself from some of its other digital competitors like a Google. You can't just build those things in a hurry.

[35:14] It takes a long time to build the organization, to build the infrastructure, to build the capability. That's why they continue to invest in both big ways and very innovative ways in supply chain and in fulfillment. I think it's a very exciting space for innovation and way bigger than just the drones that seem to get a lot of headlines.

Kevin: [35:37] [laughs] The drones. Yes, the drones, I think, represent...They're a symbol of the future, John.

John: [35:46] They are, yeah.

Kevin: [35:47] They're a symbol of flying cars or, at the very least, self-driving cars. I think people do love the drones and the idea of a package just making its way across the air onto our balcony.

John: [36:04] I think what's ironic about the drones is, I think it was just three years ago -- on a show here in the US just before Thanksgiving -- that Jeff announced the drone program. Again, everybody panned it. They were like, "Oh, what a marketing ploy. It'll never happen." Think of how fast that has advanced in just three or four years.

[36:27] It wasn't five years ago that everyone was laughed at about drones. It was an impossibility in our lifetime.

Kevin: [36:33] You know, John, I saw a little video clip on Twitter the other day from China, how they have a drone that helps to clear power lines. Sometimes on a power line, pieces of material somehow just fly through the air -- plastic bags or things like that -- and get caught in the power lines.

[36:53] This clip showed a drone with a flamethrower. Would you believe? A small flamethrower that flies up to the power line and burns the fabric that cut across the different power lines and cuts in between and makes it small so it can fly off this power line. [laughs] It was really quite remarkable.

John: [37:16] Fascinating. I saw one. I think it was in China also, about a drone that could lift up to a ton.

Kevin: [37:23] Wow. Wow, there's that...

John: [37:25] That's just stunning what they can deliver.

Kevin: [37:28] There's some serious innovation going on in China. That's a whole other topic of discussion, John. John, you left Amazon a couple of years ago. What are you up to these days?

John: [37:40] I actually left quite a while ago, 12 years ago. I've been a partner at a professional services firm called Alvarez & Marsal that's based in New York. I live in the LA area in Southern California. We help clients improve their capabilities and tackle hard problems that create value for clients.

[38:01] I didn't start writing these books...It was really seven years after I left Amazon when I started writing the books. It was a client of mine who actually encouraged me to, because I was just taking all the little anecdotes, and mindsets, and tricks of Amazon and inserting them into my client's work to help make change happen.

[38:22] He encouraged me to write a book, and so we wrote the leadership principles book. Then, just last year, I released "The Amazon Way on IoT." My goal with that book was to help a business leader answer the question -- What should my Internet of Things strategy be?

[38:39] I didn't find anything that gave principles and durable methods to think through how can connected devices impact my business and lead you to help answer the question of what should my IoT strategy be for yourself. Those are the two books I've written.

Kevin: [38:59] What type of problems are businesses out there facing? As a consultant, you obviously get across all of them? Is there common theme these days?

John: [39:07] A lot of them are bundled under a general header of digital capabilities on everything, but a lot of them come back to the basics. I'm in industrial engineer by background. It's like, "Hey, what we really need to do is decrease cycle time, improve efficiencies, decrease costs, make a better experience for our customers." That's what a lot of them come back to.

[39:34] Now you have a lot of different tools at your disposal to help make those things happen, but those efficiency attributes and goals have never changed. That's what a lot of them come under. Then the organizational churn and challenges in keeping up with the velocity of change, I think, is a real challenge in businesses.

[40:00] There's so many projects and capabilities that organizations need to get done. The IT organization can't possibly keep up among other types of functions in the business. They need help in both articulating, "What, exactly, am I going to get done?" and then they need help in driving that change to happen in getting to the right business outcome out of it.

Kevin: [40:25] I think, as a CEO myself, these days the challenge I find is this pressure to go deep and wide at the same time. Everything's becoming so specialized and you do have to focus on your industry, and your organization and your domain.

[40:42] But, at the same time, you can't take your eye off everything else that's happening out there because it's going to flow back to your core-value prop in some way, manner, or form, but you're not exactly sure when, how, or what, so you have to maintain awareness about that as well.

John: [41:01] Yeah, that kind of gets at the heart of something I think Amazon does really well -- and I write about it in my IoT book -- which is, before they start on an initiative, or a project, or a program, they work very hard to get at common understanding in a very clear articulation of, "Exactly what are we going to do, and how do we imagine that it works?" and thinking through it in a 360 degree manner. In the IoT book I talk about the approaches that we would take of writing narratives instead of using PowerPoint to explain our ideas and our projects.

[41:43] Writing a future press release which painted a vision for why customers would love it and what exactly about it that we accomplish to make sure that we get into clarity about writing an FAQ -- a frequently asked questions list -- early on, covering any topic that we could imagine relative to the initiative or the proposal.

[42:06] Writing a user manual before we developed anything because being able to start with the customer and working backwards, and being able to write a user manual since so many of our products were used by developers or used by customers. We wanted to just make sure that we were developing it from their point of view.

[42:23] Those are some of the techniques that we used at Amazon to get to clarity and simplicity within the organization so weren't talking past each other.

Kevin: [42:33] That helps us to get in the zone. Right?

John: [42:37] Absolutely. It is so hard to make things both simple and clear. That is a true skill. Most presentations, most deliverables, most people talk in very complex manners and that's really a symptom of not understanding how to make things just as simple and clear as possible.

[42:59] I think it was Steve Jobs who talked about. I think it is, simplicity is the greatest elegance. That is so true, especially in how you articulate and how you write things out.

Kevin: [43:12] That's an absolute bugbear of mine, where I talk to my team, when I say, "When it comes to communication, don't worry about being creative and funny. That's for the one percenters. Clarity gets you all the way," and it's something that I'm frustrated with the education system.

[43:32] I'm not picking on any country. Whether it's universities or schools, it's just trying to communicate verbally and written clearly and succinctly. I think it was Mark Twain that said -- I've written you a long letter because I didn't have time to write you a short one.

John: [43:49] That's right, that's exactly right. It takes incredible work to write a simple narrative document about a proposal or a situation.

Kevin: [44:00] Wasn't it Jeff Bezos as well where there was a one-pager? The project plan or the proposal needs to fit in one page, something along those lines?

John: [44:11] Yes. That is the narrative technique and it's typically either a two-pager or a six-pager. There's no defined structure for it. It just depends on the project, but that is the forcing function that forces the team that's writing it to make sure that they get to the simple clarity to propose it.

[44:31] Then, the way they start meetings is 10 or 15 minutes to actually then...the audience to read the paper and then discussion. It forces disciplines on both the writing team as well as the reading team. Again, with the purpose of making sure that we are not talking past each other and that we are at the right level of depth on a topic.

Kevin: [44:55] Again, it's the idea of constraints. One of Twitters' success was the fact that there was 140 characters and you had to sit there and you had to work out how to communicate either in one Tweet or a series of Tweets. So often you we use Slack internally, as I'm sure many companies do.

[45:13] Sometimes I'll be writing a message to a co-worker and I'll see that it's five paragraphs long and I actually just stop and it's so easy to just hit enter. I think, "What outcome am I trying to achieve? Are these five paragraphs going to achieve that more than one or two paragraphs." The likelihood is no. Usually, I just delete it all and say, "How do I say all of that in one of two paragraphs?"

[45:38] It's really tricky, but I do find that it actually helps with me communicating my points with higher impact.

John: [45:46] One of the funny stories I tell in the leadership book is about an ST meeting, which is just senior team, and he asked me a question. It was about how many sellers have been launched. I started to explain why we actually couldn't launch any sellers. He stopped me. He goes, "The answer to this question begins with a number."

[46:13] I then said the number -- which was eight, or six, or something like that -- and I was going to explain it. Then he tore off on how that was just unacceptable and there was lot of constraints around it. He wanted me to not allow the business to be constrained by other limiters in the business, and that it was my job to open those up whether they reported to me or not.

[46:38] That was the essence of the message, but that lesson of answering the question that is posed to you, especially when it's from a senior executive...They know what they're asking. They know what they're looking for, so answer the question and then explain if it's appropriate.

[46:55] So many people, they answer questions in these circuitous, long-winded ways that you actually can't find the answer within all of that verbiage, and so answer the question upfront and then explain.

Kevin: [47:09] I think your points about leadership as well, of leaders are right a lot...Leaders don't know everything. No one's got a monopoly on everything. I think one of my frustrations as well is that leaders see through windows and get a bigger picture about issues that you may not even be aware are issues.

[47:36] They're factoring that into their choices, and their decisions, and what they're guiding you towards. It's a case of sometimes you know you what you don't know, but more often than not you don't even know what you don't know and that, I guess, we have to stay humble with respect to leaders with respect to that point.

John: [47:58] Really the essence of that leadership principle is that within your domain of expertise you actually need to be an expert, and you should understand the things that are going on within your business and within your organization to a detailed level that others might find surprising.

[48:21] That by paying attention to those details, A, it's sets the tone for the rest of the organization, B, it helps drive to operational excellence, and, C, that's where insights for innovation come from -- is by paying attention to the details and trying to improve them over time. There is a high expectation at Amazon that leaders understand their business to an incredibly detailed degree.

Kevin: [48:49] John, I know we're running out of time, but one more of these points that I wanted to chat with you about is hire and develop the best. Now, I always say that every business is a people business and your team isn't only important, it's everything. It is absolutely make or break.

[49:07] I know it's a cliché, but I live, eat, and breathe it every day where the good hires just open up your business in remarkable ways. Missteps in hiring -- and sometimes it's not even the wrong person, but it's the wrong seat on the bus for that person -- can really derail things.

[49:25] How does Amazon approach to hiring, and retaining, and nurturing the best and having the right person on the right seat of the bus, which for an organization the size of Amazon must be a real puzzle unto itself?

John: [49:39] They put a lot of effort into the interviewing process. They really don't skip steps. They try not to hire in a hurry and everything, because that's when your worst hiring mistakes happen. One of the processes they have -- and this has all been written out there about it, and I write in my book -- is called the bar raiser.

[50:05] The bar raiser is a role in the interview loop. They aren't within the organization that is hiring, so they don't have the pressure of why we're hiring this person and everything. Their job is just to evaluate this person within a specific category of skills and say, "Could this person do a bunch of other jobs here at Amazon?" because jobs are going to change quickly over time.

[50:29] We need to hire people that are fungible, that they're able to do multiple things.

Kevin: [50:32] Adaptable.

John: [50:34] They're adaptable and they want to be adaptable. The bar raiser can veto a hire and the hiring manager, nobody, can change it. That's the type of commitment to hiring excellence that really sets the basis for getting the right people on the team.

[50:55] I think the other thing that they do is they do they do quickly of all roles, and they make it a positive thing to be working your way out of a job and to be automating your business, and so that the job in a year from now is not nearly the same job as it is today. That's just part of how the organization runs.

Kevin: [51:16] What happens when a hire is not working out?

John: [51:20] They are pretty quick to address it and everything. They try to coach. When that doesn't take effect, then then they part ways.

Kevin: [51:33] John, so much fascinating food for thought. I'm going to put all the links to the show notes, but I believe you've got a bit of a special gift for people listening to the show.

John: [51:44] At johnrossman.com/monkey, that's johnrossman.com/monkey, you get a poster of the 14 leadership principles of Amazon. You can remind yourself what those leadership principles are every day, and I've got a sample chapter from each of my books that you can download and read from there.

Kevin: [52:04] These books are so cheap. I think they are less than 10 bucks a pop on Kindle.

John: [52:11] Well, I did them on one of the Amazon's platforms. I built them on the CreateSpace, a self-service publishing platform, and that allows for a really good book at a great price because we don't have all the middlemen involved.

Kevin: [52:25] It's fantastic. It is such an incredible investment. I'm going to buy couple of my team this book. John, really appreciate the time joining us. John Rossman who's a former Amazon exec. He's also currently the managing director at Alvarez & Marsal. A fascinating chat. You've given me a lot of food for thought, even personally you have. [laughs]

[52:47] I really appreciate it and thanks for joining us in the podcast.

John: [52:51] Kevin, thanks for having me.

[52:52] [dog barking]

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[53:27] [dog barking and howling]

Kevin: [53:31] Kate, I absolutely love those 14 principles.

Kate: [53:34] I love them myself.

[53:35] [laughter]

Kevin: [53:38] You know why? It's very difficult, as a CEO, to actually articulate a culture that you want, or an approach that you want, or an attitude that you want. You have a sense of what you want, but to actually articulate that in a way that's not fluffy but that's quite practical is actually incredibly hard and Amazon have done it very, very well.

[54:02] Just to tell our listeners that I love it so much that I've been going through them principle by principle every week and challenging our team with a question around each individual principle. The team is answering and I'm collating that in a document that the team has visibility to and they can each see each other's answers.

[54:24] I've loved the insights, and the knowledge, and so much that has been surfaced in our organization as a result of these 14 principles. Yes, it's just been another tool for us.

Kate: [54:36] Yeah. I think I've enjoyed writing them as well. It gives you something a little bit deeper to think about and contribute, which is good.

Kevin: [54:47] Look, Amazon have done...Not only have they done a lot right, they've done a lot right in an incredibly difficult industry -- eCommerce. When you got physical goods, and you got logistics, and you got frights, and you got returns, that is tough. That's tough to get right.

[55:08] I know a lot of people also don't realize that Apple's one of the most effective manufacturing and logistic companies. Forget software and hardware. To get the supply chain right, not have significant overstocks, to have quality, to make sure everything gets sent to the right places, that's where there's a huge amount of secret sauce in Apple as well.

Kate: [55:31] Yeah. They made a good point too about Amazon being a platform business or a business that other businesses can build on top of, which I guess is sort of similar to what ManageFlitter's doing with Twitter's API. That, in itself, would pose a whole heap of problems for Amazon themselves as the base company.

[55:52] They're going to have to make sure that everyone else is relying on them, so they're responsible for so many things.

Kevin: [55:59] Well, I can tell you that 99 percent of business school professors, I would say, that if the CEO of Amazon came to them and said, "One of our biggest competitive advantages is our technology stack that we've built to service all these millions of customers and we've developed all this amazing server technology.

"[56:20] But, I think we should actually sell that service technology as a side business, and make money off that," and even so much that competitors, other e-commerce companies, can even use their technology."

[56:33] I'm 99 percent sure that business professors would have actually said, "Don't do that. I mean that's a classic mistake. You're actually selling your competitive advantage. Hang onto it." What did Amazon do? They went and they built AWS. They were selling a lot of the secret sources, even to competitive businesses, and they're coexisting.

[56:58] AWS is turning over, I don't know, between 5 to 10 billion dollars, huge amounts of money. It's the leader in this space by far. They're breaking all the rules [laughs] of established thinking around business strategy, and they're being rewarded with an incredible share price growth.

Kate: [57:20] Definitely. I think the trick there would be that you just have to be the best option or the best product. For them, they just keep working on AWS and making it so amazing that, why would anyone bother to build their own when you could just build on top of this?

Kevin: [57:36] Now Jeff Bezos, just like Elon Musk, is involved with rockets.

Kate: [57:41] Oh, really?

Kevin: [57:43] Yeah, he's one of the big competitors to Elon Musk. They've even had some friendly stroke, snarky little Tweet exchanges. [laughs]

Kate: [57:49] Oh, I didn't realize. Did not realize. Interesting.

Kevin: [57:57] I haven't kept track. I think they're taking slightly different angles. I haven't read about...Elon Musk has been getting a lot more press about this than Jeff Bezos, but Jeff Bezos is definitely in the space rocket game. He's also invested through his private investment company, in Basecamp, Jeff Bezos. In fact, as far as I know, he's the only external investor in Basecamp.

Kate: [58:24] Oh, OK, but I thought Basecamp were bootstrapped.

Kevin: [58:28] They were bootstrapped, but they sold a little bit of equity. I think I chatted to David Heinemeier about this on our previous podcast where we chatted with him.

Kate: [58:44] Interesting.

Kevin: [58:45] They were already profitable, I believe, when they took...It wasn't an investment, per se. It was just, I guess, de-risking a little bit and getting Jeff on board to work with him, which in itself would be worth a lot.

Kate: [59:02] What else I find interesting from this interview with John Rossman was Amazon's hiring process and the role of the bar raiser. I did a little bit more extra research, actually, and the idea that these people already work for Amazon.

[59:22] They get identified as people who really care about the culture, really care about their job, and they're invested in the company, but they don't get paid any extra money. They're just required to work an extra five to six hours on top of their already full-time job in order to hire people who aren't even in their department.

Kevin: [59:43] Interesting.

Kate: [59:43] Yeah, and these people have the power to completely veto a hire, so they'll throw questions from left field that are a little bit tricky and, at the end of the day, they're looking for people who are really flexible and can provide values for more than the role that they're going for.

Kevin: [60:04] Boy is that hard to work out in an interview.

Kate: [60:09] Definitely. That is the interesting thing -- that they use this as...It's not even a promotion, it's just an honor, I guess, [laughs] to be elected as the bar raiser at Amazon.

Kevin: [60:22] I love it. Hiring is probably something that I think about more than any other issue in our business. It's the hardest thing to get right. Amazon probably have a separate problem to us in that, because they're such a strong brand, their pipeline of hires is so big that they have to work out ways to filter.

[60:46] We have a bit of a different challenge where we have to get visibility and we have to reach out and work out ways to get people in, but it's still the same problem of getting the right person for the right role, and it's a famously difficult problem.

[61:03] It's so difficult that, Google even just banks people. They've just got a lot more people than they need because they'd rather just keep them when they find them. Some of them, they even just keep away from their competitors and they just say, "Choose a project that vaguely ties in with something we're doing and do it on your terms, and just don't get hired by a competitor.

"[61:26] That's it. Thank you very much." They pay some [laughs] of these smart people a lot of money. It's crazy out there for tech talent. It's unbelievably crazy out there for tech talent. If you're a young person and you're listening to this podcast, or even not a young person, dare I say -- I was not a young person, myself -- coding.

[61:45] If you got an aptitude for coding and an interest in coding, boy is there unlimited demand for good coders, and also project managers with a technical knowledge, and anyone that's got a technical literacy, but particularly if you're a good coder, a front-end coder, full-stack, back-end.

[62:06] It's only going to get a higher demand. I think the growth of industry industry's far outpacing the growth of candidates in our industry.

Kate: [62:17] At this stage, yes. I think if they start making development a little bit more sexy for education and for high school students, then we could see a big turnaround. At the moment, it gets pigeonholed a little bit as not a cool thing to do.

Kevin: [62:36] It's a catch-22 situation, because the cool kids don't do it and it's a vicious cycle. If cool kids start doing it, then it becomes the cool thing. Humans, they follow each other like that. In Iran and Russia, for a woman, software engineering is a very established common path because they see others doing it, and their mother's done it.

[63:02] In the west it's still so unusual. It's so, so, so unusual.

Kate: [63:08] Definitely.

Kevin: [63:10] I don't think, inherently, the brains are that different. In Iran, Russia, and India there's plenty of female developers, so what should be different about Australia and America. It's probably just the socialization around it.

Kate: [63:26] Yeah, for sure. I agree 100 percent there. I think it is. It just needs to be better...Education itself could also be improved. In this age more emphasis on it and be a little bit more open, more accessible. I think you could really sell people, too, on even working remotely now. I actually surprised myself and I really like it.

[63:49] Somebody told me that you could take your computer and work for a great company overseas, and travel, and basically roll to your feet type thing. You would be like, "Wow, that's a career for me," but you don't think about that stuff. It's not taught, it's not told.

Kevin: [64:05] We're going to chat about this, in a couple of podcast's time, about the whole remote work side of things. I don't know if it's the future because I think a lot of companies still don't have the confidence to actually go with it.

[64:21] I do think there's a lot of opportunity for companies that are confident enough to take the leap to actually secure good candidates. We're shifting to a full remote or remote optional company, and my philosophy these days is I'd rather have the 100 percent perfect person somewhere in the world than having the 50 percent correct person sitting in Sydney.

[64:48] The war for talent in Sydney is so extreme that we almost...I'll be honest. I'll say we can't compete with the banks. We can't compete with Atlassian. We can't compete with Campaign Monitor. We have to look at other options, and it's working out well. I'd much rather you working for us in Canada than having no Kate.

[65:10] [laughter]

Kate: [65:11] Back to our point about it just being a more appealing career. This sort of work never, ever occurred to me until a couple years ago. If it got taught better, I think more people would jump on it.

Kevin: [65:29] I chatted with a woman the other day who's involved in Tech Sydney. We spoke about an initiative of going out to schools, to high schools, and just surfacing a little bit about our industry. We want to get the smart kids to consider tech startups as an option, not just law, and medicine, and the traditional careers in accounting and finance. You can go straight into startups.

[65:56] We need the ambitious sorts to head into our industry, not just those traditional industries, which is still a little bit of a problem in Sydney. Anyway, that's episode number 98. Our first episode with Kate in Canada. We're going to try to keep...

Kate: [66:17] Haven't seen any of those yet.

[66:19] [laughter]

Kevin: [66:19] We're going to try keep these coming once a week. We've got some fantastic interviews lined up for the next few weeks. I'm really excited for you folk to hear them. As mentioned, please Tweet me, please email me. We love hearing from you. We know you're listening.

[66:36] Two things really help us. One thing is if you leave a review on iTunes. Another thing is if you give ManageFlitter a little whirl and, if you do use Twitter, we'd love you to have a look at that. Anyway, we're going to catch you next week. Thanks so much for listening.

Kate: [66:50] See you.

[66:51] [music]