What Startups Can Learn from Amazon

Are you a ‘Day 2’ company?

At Amazon, there’s a name for lumbering corporate monoliths that are too slow and self-obsessed to innovate and keep up: Day 2 companies. A Day 1 company, on the other hand, is always hungry, humble, and eager to serve the customer, as if every morning marks the first day of business. 

It also implies that you’re always learning something new, unafraid to make mistakes along the way, and scrappy enough to invent with limited resources. If you’re wondering what Jeff Bezos thinks of Day 2 companies, he told shareholders in a 2017 letter: “Day 2 is stasis. Followed by irrelevance. Followed by excruciating, painful decline. Followed by death.”

A building on Amazon’s Seattle campus is named Day 1, as is the company’s official blog. It is everywhere during your tenure there. “That’s Day 2 thinking” is the Amazonian equivalent of an expletive-laden insult. For Amazonians the world over, it’s Day 1 or bust. In this article, we’ll dig into why Day 2 companies miss the boat and explore one way startups can take a page out of Amazon’s book to ensure they’re adhering to Day 1 ideals.

Day 2 companies fear speed

The biggest Day 2 offenders in my career experience own some of the oldest brands in the land, where employees would need to stab a colleague in the eye with a billiard cue to be shown the door. Thus, no one takes risks or even speaks up in these nondescript cubicle farms, populated by the meek doing their best to remain unnoticed until payday.

Additionally, those companies’ operating expenditure is overweight, because there’s negligible turnover and thus widespread complacency. These lifers whisper to one other, “Just wait one more year until I retire, and then you can do what you want when I’m gone. Please, don’t upset any apple carts, and if you do, don’t involve me.”

The problem with a line of thinking so common to these corporate anachronisms is that, at any given moment, there’s a never-ending conga line of senior decision makers with one year left to retirement. No Day 2 executive wants to be the one to fail, so even mundane decisions are delayed and taking risks is tantamount to job suicide. Worst of all, to survive, these corpulent beasts must keep prices high, and it’s the customer who’s left with the dinner bill.

Startups: commit to yourselves right now that growth will never equal morbid obesity. Amazon has more than half a million employees worldwide, and take my word for it, the last descriptors one could use to describe the place are ‘slow’ and ‘risk averse’.

How Amazon raises the bar with hiring

One way Amazon avoids organisational inertia is how it handles hiring. You know the drill at most companies: you apply, have an interview or two, and then hopefully you get hired.

At Amazon, all hiring decisions are made against the 14 leadership principles (LPs), particularly Hire and Develop the Best, which reads:

Leaders raise the performance bar with every hire and promotion. They recognise exceptional talent, and willingly move them throughout the organisation. Leaders develop leaders and take seriously their role in coaching others.

With that principle in mind, each candidate’s interview requires at least four hours of the hiring manager’s (HM) time: a one-hour phone screen, a half-hour pre-brief with the team who’s interviewing, a one-hour on-site interview, one hour to complete and submit the notes taken during the loop into the recruiting system, and a half-hour debrief, where the decision is made.

The interview itself is called a loop because the candidate cycles through six employees, which takes the entire day (with an hour for lunch). All but one looper hold positions related to the job on offer, and none of them can be below the level of the role being filled. That one person remaining is the Bar Raiser (BR), who often comes from a completely unrelated team. Bezos put the Bar Raiser programme in place to prevent the gradual decay of the company’s personnel standards as Amazon grows. 

A BR is an employee in good standing who’s been there for at least a few years, demonstrates the LPs in their everyday performance, and has a proven eye for top talent. There must be one BR in each loop to ensure the candidate raises the bar — in other words, who is better than 50 per cent of the existing employees in that organisation — as judged against the LPs as well as their work experience, technical acumen, and communication skills. Each looper, including the BR, can choose from four different verdicts: Strong Hire, Inclined to Hire, Not Inclined to Hire, and Strong No Hire.

In my 300+ loops, I never once saw a BR’s Strong No Hire superseded (even challenging a BR’s Not Inclined was rare).

As you’d expect, things sometimes come down to a tie. When that happens, the final BR question of the debrief is, “Do you genuinely believe this person raises the bar for the organisation?” That’s always met with silence for a moment while everyone on the loop runs a mental roll call, comparing the candidate to their colleagues—keeping in mind that if they hire a dud, everyone around will ask, “Who the heck was on that new hire’s loop?” It is a self-policed mechanism.

A lesson for startups

Bar-raising sends two messages to those who are already Amazonians: first, every loop is your chance to raise the company’s performance; next, you’ve got to keep bringing your A Game or prepare to land on a performance improvement plan someday. Essentially, if you’re at Amazon long enough, you’ll be surrounded by people who are better than you someday. It serves as an organic upgrading mechanism for the future and an everyday performance incentive to existing employees all in one.

It’s easy to see how this approach differs from that of Day 2 companies. If those behemoths actually raised the bar with every hire, the desk jockeys pushing papers with eyes on 5:30 p.m. each day wouldn’t last two review cycles. Not wanting to ruffle feathers, they’re content to hire those who stand on their toes and come this close to touching it. For them, ‘almost’ is good enough.

If you’re at a startup, you probably joined for the chance to flip apple carts outside your company. I’m here to tell you to turn that attitude inward too. In fact, flip it over and set it on fire. Raise the bar in your hiring and you’ll be poised to avoid the fate of Day 2 thinkers. The roadside of business history is littered with them.

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