How to Run Your Company Like Amazon and Why Google and Microsoft Are Laying Off People

0:00Dude, do you know how Amazon runs their company? No. Okay. I know how they run their meetings. Okay, but this is part of it. There's a book. Did I tell you about this book? I think I told you about this book, Working Backwards. No. So this book is called Working Backwards. And this guy that was the chief of staff for Jeff Bezos for two years, imagine that you're just following Jeff Bezos, shadowing him everywhere. That's one guy that wrote the book. The other guy that wrote the book, he worked at Amazon for 15 years, and he helped start Amazon Prime. I think he helped with the launch of Kindle, all these things, right?

0:28Like a lot, the media division for Amazon as they're trying to get out a book. So he was there for 15 years. And there are a couple of things. First, let's talk about the meetings because you brought up the meetings. First thing is they, for the longest time, everyone was doing PowerPoints, right? And then at a certain point, they're just like, dude, like no more PowerPoints because PowerPoints are easier for the, for you, the creator, but it's harder for the audience to understand, right? So they, they mandated this thing where you have to write narratives and memos where like, if you came up with an idea, Neil, you'd have to write out like, Hey, this is what I'm thinking right now.

1:00This is what it's going to look like. Here's the resources required here. And then FAQ, like this is how much is it going to cost? Here's, here's how much we might get from it. And so it forces clear thinking because the problem as a company gets bigger is everyone has an idea, right? Oh, I have this idea. I have this idea, but this, this stops the laziness. It's like, Oh, you have an idea. You're going to write a narrative. Okay. And some of these narratives will take like a week, two weeks to write. Cause they're like seven, six, seven pages or so. And it's, it's, they're really refined, right?

1:26If they're not refined and people just leave the meeting. And so that's a good place. That's a good starting point because we started doing that at our company and it's so much easier now. I'm just like, Oh, okay. You really like, okay, do a memo. Right. And then I'm leading my example. I'm writing memos all the time. Is it a pain in the ass? Yes. But at the same time, it's really, um, it feels a lot clearer in terms of where we're going. So what's the example of a memo that you wrote recently? So there's a concept. So, you know, I went to that retreat recently, right? And one of the key takeaways was the entire group was like, dude, you guys are so good at top of the funnel marketing.

1:57You guys are order takers, but you don't fulfill the middle 60%. And then our mutual friend, Yannivan, I'm like, oh shit. Yeah, that's true, right? You're talking about for sale specifically. Yeah, so just let me back up a second. The reason I call it missing 60 % is, let's say 100 people come into my funnel, 20 people will never buy. 20 people are hand raisers, they're ready to buy. And then 60 % that the middle 60 % are, they need to be nurtured. Right. And so I wrote an entire memo. It probably took me about two hours or so. And it ended up being like six, seven pages. But through that, that sparked a lot of side conversations and ideas.

2:30And now we have a list of things and we're just tackling those things now. So, but there's no, like, there's a lot less questions and confusion. And you're actually seeing people take action. Yeah. Yeah. People are like, and then I'll have, I'll like have people talk, talk about like, Hey, how helpful has it been? And it's like, dude, it's like amazingly helpful because now it's, we're not just throwing ideas all over the place. We're like forcing clear thinking. And I'm assuming everyone reads the memo before they attend the meeting. They can read it before, but you have them read it during because you just never know.

2:57Like you, like if we go into meet, like, are you going to actually read it before? Like probably not, right? Well, six pages is hard to read during a meeting. So here's how it works. So for Amazon, the way they do it is if it's a six page narrative, you allocate 60 minutes for it, right? The first 20 minutes, so a third of the meeting is for reading. The other 40 minutes is for deciding and debating. If it's a three-page memo, then it's 30 minutes and it's 10 minutes of reading. So people give or take will probably take about, I don't know, two to three minutes per page to read. And so the whole thing is like it forces accountability with the entire group because nobody can say, oh, I didn't have time to read it.

3:31Because people are at varying levels too. But that's just like one thing that they do, right? There's like a bunch of other things that they do where it's like, oh, okay, here's the entire playbook on how to run Amazon. What else does Amazon do that you found interesting from the book? So let me see. I mean, that one's the first one that comes to mind. I'm like struggling to think of a couple other ones. Maybe as we go through this episode, I'll try to pull up a couple other ones. But that's like the main one so far. And yeah, let me think about as we go through this episode. Yeah, I know they have really good operators.

4:10if you look at their hiring history because I used to live in Seattle when I lived there and I haven't read the book but one thing that they did that was really interesting is they didn't just look for people who came from good colleges they looked for people who were really good at systems and processes and they would find them from any parts of the world and I remember I met this family the guy was from India or the whole family was from India he did so well at Amazon this is before they were in India right so but they're still hiring from India for Amazon US but this is before they entered the Indian market for marketing within India and this person did really well so what Amazon did was they took a picture of their apartment every single thing in there and how it was laid out crew came in put it on a boat and then they moved them to the United States.

5:06Once the stuff came, the apartment was ready just the way they had it in India. Like they would go above and beyond to get really good people. They didn't care where they were from. It wasn't about the cost because if you're moving someone from India to the United States, you're paying US wages, especially in Seattle, which is an affordable city. But the one thing I did notice when I was living in Seattle is they would look everywhere for just amazing talent and operators who are really good, not just Booksmart, because a lot of Booksmart people everywhere, but really good at systems and processes.

5:39Dude, I got more for you now because you sparked the memory again. And I'm also looking at the sheet over here. I think I talked to you about this, but in the book, the book came out in 2022 maybe, or maybe 2020. So it's a pretty recent book. And I remember one of the chapters said that Amazon, to this day, this is what the authors believe, they don't pay over$160 ,000. most of it is in stock, right? And they believe that that helps align people for the long term. Now, not everybody can do that, but I thought that was interesting. We talked about this. We did talk about this. It's literally in the book.

6:12Yeah, but that point on how they're saying$160, it's a bunch of bull. The real reason they only pay$160 is that$160 goes against their P &L. When they compensate people with stock grants, that doesn't go against their earnings for a publicly listed company. Well, it's the employee spinning the narrative, right? But it's like, it still is what it is. Like I get what you're saying from like a business standpoint, but yeah. It's just their way to save money. There's no difference between compensating someone in stock or cash. They compensate them in stock because it helps their earnings. That's really it.

6:44They have another thing where, so this I definitely didn't talk to you about, but when they hire people, they remove the reference checks because they found that reference checks are useless, right? So like they might do backdoor reference checks, but like, let's say I'm hiring you, Neil. If whoever you're going to give me is going to put their best foot forward. and it's like you never make a negative decision off of people's references. So you end up wasting a bunch of time. I was like, and I thought about it for a second. I was like, yeah, those references have never helped me. The backdoor references have helped, never going direct.

7:10And so I'm like, oh, that's going to save a lot of time. So we're much smaller than Amazon and Headcount, but we still have a lot of employees. We follow up on people's reference checks. With their references or the backdoor references? Yeah, we've been doing it. So we were hardcore about it. We do this thing called extreme reference checking where like, you know, let's say if you're a senior, like a VP or something. We want two people that were your managers, two people that were your direct reports, and then two people that were your peers, right? And then we're just going through all of it.

7:36And then we had it all documented. And like, how would you rate this person, everything. And even the person that was, the people that were stellar across the board, they ended up being like, some people were like a nightmare and some people that were like, okay, they ended up being superstars. So we don't look at reference checks from that perspective. Funny enough, when people have given us reference checks, there's a lot of people who are going to say amazing things. That's majority. All right. we don't really care too much about those. Funny enough, a few times we've had people actually give them terrible references.

8:05They're like, I don't even know why they added me. Which is bad judgment. Yes. So then that has helped us not necessarily hire some people because the reference checks did not pan out. But the way we look at it is if you're going to someone's going to give you reference checks, almost everyone's going to say positive things. You can pretty much ignore those. And the ones that are negative, if you get those, it is quite a bit telling and it saved you potentially making a bad decision. Let me give you a, let me give you one or two more. I will say when we did the backdoor reference check, so I might go to you and say, Hey Neil, we're also going to do backdoor reference checks too.

8:38Is there anybody you like us not to talk to? So not your current employer. Is there anybody else we shouldn't talk to? I remember we went to some backdoor reference checks. Oh my God. One, one person turned out to be like a sexual offender or, and it's like, we've never figured out. Like we talked to them and they're like run in the other direction. Right. But then my, the HR team really love this person. I was like, sorry, we're just not going to do it. You just never know. No. By the way, Neil and I have an agency owners group called the Agency Owners Association. All you have to do, just go to marketingschool.io slash agency.

9:07Once again, it's marketingschool.io slash agency to learn more. And now back to the show. But anyway, so two more things over here and then we can work towards getting off this one. But they have a program called the bar raiser program, right? So it's like Amazon wants to hire bar raisers. So like you want to, the idea is to continually hire people that are smarter than you. And so they have a bar raiser. Like I can appoint you as a bar raiser in the company. If I think you're like top tier and your job is to, you'll come into the interview process. You're not a hiring manager. You have no, this role doesn't affect you.

9:40Basically you'll come and say like, do I think this person's a bar raiser or not? So you're going to oversee the process. Wait, is this for a new hire or a new hire? Okay. Yeah. So imagine a new hire, like you're kind of overseeing, you're checking in to make sure that like the people, the hiring people, managers are following the process. Also they have a hiring manager just to make sure they don't repeat the, sorry, the people that are involved with the hiring process are, they have, they're assigned to a certain value, right? And they have like 14 values actually. Right. And so you go through the entire list, but it's like, that's to make sure people don't repeat the same thing.

10:12And they're asking them historical experience related questions as it relates to each value. And then they make a decision at the end, right? So it's very thorough. And I'm like, I've heard of the bar razor thing in the past. Okay. Yeah. Just hire people smarter than you. But like the way they do it, it's all outlined in this book. And that's why I recommend everyone buy the book. No affiliate commission needed. If you've ever built a website, you know how tough it can be to keep a strong design while ensuring site performance is fast. That's where framer comes in and it totally changes the game.

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12:14Shopify lets you easily create email and social media campaigns to reach customers wherever they are, whether they're scrolling or strolling. If you're ready to sell, you're ready for Shopify. Turn your big business idea into with Shopify on your side. Sign up for your$1 per month trial and start selling today at shopify.com slash marketing school. Go to shopify.com slash marketing school shopify.com slash marketing school look Amazon's run an amazing company if you read the book I haven't read it what works for them but what works for them won't really necessarily work for you no you just take what you like and you know it's like most things because Amazon got in early on the internet they were smart amazing execution they did really well on the cloud side with AWS but funny enough you know Microsoft cloud is growing way faster and then Amazon Cloud, right?

13:08How much faster? I don't have the exact stats, but CNBC. Azure versus AWS. Azure versus AWS growth. Let's see if I can count. All right. Revenue at Azure increased 30 % in the quarter compared to 13 % year-over-year growth at AWS. Oh, wow. But AWS has bigger numbers. Yes. Analysts estimate Azure, which is about half the size of AWS five years ago, is now three quarters of its size. Okay. Yeah. Good growth, but AWS is still a little bigger. Not a little bigger, significantly bigger. Yeah, but if they're three quarters of the size, you're 75 % there. If you're growing at 30%, someone's growing at 13%.

13:54I thought you said one third the size for some reason. No, three quarters the size. That's different, yeah. Azure will catch up really fast at that growth number. did you see um did you see that so why do you think google and microsoft are laying people off right now there's a video with with um what's who's the ceo of google uh sundar yes sundar so he made a video on why google and microsoft are laying people off and then his whole thing is we're investing in the future so what do you think that means i think they're just cutting costs to increase stock price and profitability because they got really bloated during covid yeah i mean you look at Facebook, look at all the costs they cut, right?

14:32And that's why they ripped. What did they go up by? 21 % in a day? 25 %? It was something ridiculous. Did Coinbase go up more? That one day this week. I don't know if Coinbase, I know Coinbase is at 180 something as of the recording of this podcast. Yep. But dude, you know, it literally went from 394 to 474. That's what the graph is looking like on Google's stock. I don't know, Google, or Google Finance. Yeah. So how does this apply to you all? What it means is, hey, keep investing in valuable skills because then people will always find value. And the same thing with your business. Keep doing useful things for people and then you will get paid.

15:10That's all. That's all. It really is. Dude, if you make a company more money, you'll make more money. It really is that simple. If not, go leave to somewhere else, a place that actually values you. Yep. All right. So that is it for today. Please don't forget to rate, rate, and subscribe. Go to marketingschool.io slash agency to register or apply for our agency owners association. We're actually going to be doing that event May 8th to the 10th, and it's only going to be limited to a certain amount of people. So go apply, and we'll see you later.