Business & Markets

Andrew Carnegie: Titan of Steel

The Hero Show recently celebrated the Titan of Steel, Andrew Carnegie, one of the greatest industrialists of history.

Issues covered include “Carnegie’s early years in Scotland,  Carnegie’s arrival in America and his childhood jobs, Carnegie’s productivity and great moral character, How Carnegie took advantage of opportunities in oil production and the railway industry, and How Carnegie dominated the steel industry.”

Must watch!

What is the Purpose of a Business? Objectivist Yaron Brook Debates “Conscious Capitalist” John MacKey

From the description:

At each of Whole Foods Market’s more than 500 American stores, managers ask every team member—from the meat clerks to the baristas to the janitorial staff—to orient their work around a shared purpose, which is to make natural and healthy food widely available. This goal, according to Whole Foods CEO and co-founder John Mackey, is in no way inconsistent with maximizing shareholder value, often seen as the essential purpose of a corporation.  As Mackey writes in his new book about leadership, “At the heart of Conscious Capitalism is a radical refutation of the negative perceptions of business, and a rejection of the split between purpose and profit.” Mackey believes that this is the key to defending capitalism against those who condemn it for having no inspiring ideals.  At a Reason-sponsored Soho Forum debate held on February 18, 2020, Ayn Rand Institute Chairman of the Board Yaron Brook challenged this view. He believes that maximizing profit should always be the primary goal of companies, and it’s that focus which explains why capitalism has lifted the broad masses out of poverty. That’s the message businesses should be emphasizing, he said, and it’s inspiring enough.

Rational Optimism: Jordan Peterson Interviews Matt Ridley

Matt Ridley and Jordan Peterson discuss “economic optimism, trade through the reciprocity of nations, enlightened self-interest, virtues relation to trade, feeding nine billion people, the triumphs of cities, escape of Malthusian population trap, and more.”

The Antitrust Suit Against Facebook is Exactly How Antitrust Is *Supposed* To Work

Facebook’s chief counsel Jennifer Newstead responds to Antitrust Suit in “Lawsuits Filed by the FTC and the State Attorneys General Are Revisionist History“:

The Federal Trade Commission and state attorneys general today attack two acquisitions that we made: Instagram in 2012 and WhatsApp in 2014. These transactions were intended to provide better products for the people who use them, and they unquestionably did. Both of these acquisitions were reviewed by relevant antitrust regulators at the time. The FTC conducted an in-depth “Second Request” of the Instagram transaction in 2012 before voting unanimously to clear it. The European Commission reviewed the WhatsApp transaction in 2014 and found no risk of harm to competition in any potential market. Regulators correctly allowed these deals to move forward because they did not threaten competition.

Now, many years later, with seemingly no regard for settled law or the consequences to innovation and investment, the agency is saying it got it wrong and wants a do-over. In addition to being revisionist history, this is simply not how the antitrust laws are supposed to work.

I would not be so sure.

Writes philosopher Ayn Rand in her article “Choose Your Issues,” The Objectivist Newsletter, Jan. 1962, 1, on  the nature and purpose of the antitrust laws:

The Antitrust laws—an unenforceable, uncompliable, unjudicable mess of contradictions—have for decades kept American businessmen under a silent, growing reign of terror. Yet these laws were created and, to this day, are upheld by the “conservatives,” as a grim monument to their lack of political philosophy, of economic knowledge and of any concern with principles. Under the Antitrust laws, a man becomes a criminal from the moment he goes into business, no matter what he does. For instance, if he charges prices which some bureaucrats judge as too high, he can be prosecuted for monopoly or for a successful “intent to monopolize”; if he charges prices lower than those of his competitors, he can be prosecuted for “unfair competition” or “restraint of trade”; and if he charges the same prices as his competitors, he can be prosecuted for “collusion” or “conspiracy.” There is only one difference in the legal treatment accorded to a criminal or to a businessman: the criminal’s rights are protected much more securely and objectively than the businessman’s.

Recommended Reading:

 

Ludwig Von Mises’ Human Action: The Movie

Marcin Chmielowski and Krzysztof Paweł Bogocz have produced a documentary on one of the greatest economists of the 20th century — Ludwig Von Mises.

Ludwig von Mises was one of the most important economists in history. Unfortunately, he is commonly known and appreciated only in a narrow circle of experts and enthusiasts – ordinary people don’t know him or his extraordinary achievements. A fearless intellectual, scientist, teacher and in some sense a social inventor, Mises showed that human action is an important area of study, and that we all need to work to secure the blessings of liberty. But at the same time he was a conscript, refugee, husband, friend. A normal everyday person, somebody like our professor or a neighbor. We want to show that interesting combination, and to stress that in every freedom fighter lies a spark of genius.
Project financing was based entirely on voluntary donations from individual and corporate donors. No taxpayers suffered during production of this movie. The movie was produced by the Freedom and Entrepreneurship Foundation, an independent organization whose aims include: developing economic education, spreading libertarian philosophy and the concept of the minimal state, as well as exemplifying the benefits of a voluntary cooperation.

The Capitalist Professor Podcast with George Reisman

With the assistance of Capitalism Magazine, Dr. George Reisman author of Capitalism: A Treatise on Economics now has an online podcast — The Capitalist Professor.

The Capitalist Professor is a podcast featuring his university lectures on the micro and macro-economics of capitalism.

George Reisman, Ph.D., is Pepperdine University Professor Emeritus of Economics, and the author of Capitalism: A Treatise on Economics.

Link: The Capitalist Professor

 

Our Favorite Business Ethics Book is Now on Audible

How to Be Profitable and MoralProfessor Jaana Woiceshyn’s marvelous book on business ethics, How to Be Profitable and Moral: A Rational Egoist Approach to Business, has just been released as an audiobook narrated by Sean Salsbury.

Does one have to sacrifice business profits to be moral?

Dr. Woiceshyn says “no”, and explains why, by introducing business students a set of rational, logical, scientific principles on how they can maximize profits in the long run by acting morally.

Required reading — or listening — for all employees, business students, and CEOs.

Get it here.

p.s. We will have a full review posted shortly!

Mossoff: Google’s Absurd “Fair Use” Excuse For IP Theft

Writes Adam Mossoff in Newsweek on why Amidst Chinese Aggression, U.S. Cannot Afford to Dilute Its IP Laws:

The fact that Google copied Oracle’s software code to build Android, its smartphone operating system, is not disputed by anyone—not even by Google. Both the Obama and Trump administrations recognized, in their respective court filings, that Google directly copied 11,500 lines of computer code “from a rival software platform, inserted them into a competing, incompatible platform [Android] and then marketed the infringing product” to consumers. But Google is now arguing before the Supreme Court that the software code it took is not copyrightable—or alternatively, if it is, that the “fair use” doctrine should permit its illicit copying.

As it was first developed, fair use is a limited exception for education, parody, news reporting or other transformative purposes. For Google to argue that its undisputed copying of computer code for its own commercial gain is “fair use” is absurd.

Moreover, software code is clearly protected under American copyright laws. U.S. copyright law has expressly protected software code since Congress enacted in 1980 the Computer Software Copyright Act. What followed was a technological and commercial explosion in personal computers running all sorts of software programs—as well as the explosive technological growth in the software that runs on the internet and in our mobile devices.

….For the sake of global security for U.S. creators and innovators, the Supreme Court should hold Google accountable for copyright infringement.

Why health-care costs are 75% lower in Singapore than in the U.S.

Here is a breakdown from OECD on Health expenditure per capita, 2018 (or nearest year).*

Observe that the U.S. leads the way.

George Shultz and Vidar Jorgensen write in the Wall Street Journal on Singapore’s “Market-Based” Healthcare System:

Does a real health-care market exist anywhere in the world? It certainly doesn’t in the U.S., where health-care providers don’t tell patients in advance about pricing, outcomes or alternatives. Consumers don’t know what they’re buying or how much it costs. And the costs are largely paid by insurance companies, which don’t spend their own money. With a health-care market this dysfunctional, little wonder the U.S. spends 18% of gross domestic product on health.

If the U.S. wants lower costs, better outcomes, faster innovation and universal access, it should look to the country that has the closest thing to a functioning health-care market: Singapore. The city-state spends only 5% of GDP on medical care but has considerably better health outcomes than the U.S.

…What does Singapore do that’s so effective?

…All health-care providers in Singapore must post their prices and outcomes so buyers can judge the cost and quality.

…Singaporeans are required to fund HSAs through a system called MediSave and to purchase catastrophic health insurance. As a result, patients spend their own money on health care and get to pocket any savings.

…The combination of transparency and financial incentives has led to price and quality competition so intense that health-care costs are 75% lower in Singapore than in the U.S.

…Singapore’s system of health-care finance shouldn’t seem foreign to Americans, nor should we doubt that it could work here. The U.S. has already seen that the combination of competition and price transparency can be successful: Witness the falling prices for Lasik and cosmetic surgery, which aren’t covered by insurance. (“A Real Market in Medical Care? Singapore Shows the Way“, WSJ, June 15, 2020)

*Source: OECD Health Statistics 2019, WHO Global Health Expenditure Database. Note: Expenditure excludes investments unless otherwise stated. 1. Australia expenditure estimates exclude all expenditure for residential aged care facilities in welfare (social) services. 2. Includes investments.

Reisman’s University Lectures on Capitalism Now Downloadable For Free

From George Reisman:

Recently, a reader of my book Capitalism: A Treatise on Economics, told me that he believed that he had been able to get more out of my book and do it more easily because he had listened to a series of lectures I had delivered over the years 1967-2007.

On the basis of my discussions with him, I’ve decided to release recordings of the lectures I delivered in my courses in my final year at Pepperdine University, 2004-05. These lectures are very closely related to my book, which was the main text for the courses.

Try reading a chapter and then listening to the lectures related to it, or vice versa, whichever works best for you.

There are two 4-unit courses, which, in order to follow convention, I labeled “micro” and “macro” respectively.

Each of the courses had 13 sessions (not counting exams), typically recorded in two parts of more than an hour and a half each.

The chapters in Capitalism assigned in the “micro” course are the Introduction, 1-11, and 14. The chapters assigned in the “macro” course are 12, 13, and 15-19. In both courses there are also some supplementary readings as well.

All of the lectures are available on Google Drive and can be downloaded to your hard drive without charge. Here is the link.

Consider these lectures as a work in progress in that I intend to make various revisions and additions over the next year or so.

Downloads for the courses include a syllabus and eight detailed syllabus supplements that describe the content of each of the lectures.

The book Capitalism: A Treatise on Economics is available on Amazon.com in Kindle, hardcover, and paperback formats. Go to here to order it.

Download link for course.

Unwoke HR: Hire Employees Based on Merit

“Woke” figurative is slang for awoken, as in waking up. In politics, it means one has awoken from their slumber to embrace “social justice.” The demonstrative response has been racist, sexist “affirmative action” hiring practices, and cancel culture.

Yet there are companies that are fighting back. One example is the cleverly named, unwoke.hr. From their website of unwoke.hr:

Unwoking work.

The modern workplace has become a hotpot for unchallenged radical thinking and left wing ideology. Our mission is to advance society based on a culture of enlightenment, beauty, truth and freedom through free market initiatives. First up – unwoking work.
Their basic principle is that hiring an employee that operative consideration should be merit, or in their words,”hiring based on skin color, ethnicity, origin, gender identity rather than merit.” According to the company:

Affirmative Action Programs (AAPs) has become the norm in recruitment. It involves the practice of hiring candidates based on arbitrary attributes such as ethnicity, gender or origin, even when far superior candidates are available. At the same time, Americans wonder why the standards in our country are falling and the Japanese, Koreans and even the Chinese are getting ahead; Affirmative Action with its toxic twins, Sufficiency and Diversity & Inclusion, is the enemy of excellence. It stands to reason that the direct consequences of AA is a culture of mediocrity, incompetence and decadence.

Our platform instead, is designed to help you build a culture of excellence. We believe in the principles of merit. In the best ideas and the most competent people from all walks of life regardless of gender, origin or ethnicity. While merit is not an absolute value, there are strong prima facie reasons for hiring candidates on its basis, and it should enjoy a weighty presumption in social and business practices. Not only because it shows respect to the individual rather than to a group but simply because the best people should have the best positions.

The response to unWoke.hr has “triggered” a barrage of contempt, slanderous accusations, and deplorable hacking attempts to which the company has responded to in a clever statement:

An update from the creators of Unwoke.

We understand that a very small but loud group of people have taken serious offense by the Unwoke Platform.

– We don’t care.

We just find it jaw-dropping that so many people in that particular line of work (destruction) have been shouting for years about establishing hiring processes where the ethnicity of a person is masked. Now, when we’ve created it, their heads suddenly explode because of how “racist” it is. It makes one wonder how dedicated to their principles they really are [rhetorical question].

To Vice Media
Please remove your statements linking us to “white supremacists”, calling us “dumb” and deserving of being “trolled to death”. Fail to do so and you will have a nice defamation suit coming your way very soon. Trust us, serving you would be an absolute joy.

To our users
Thank you for the unimaginable level of support. The amount of love letters are in the thousands and we’re working diligently to reply to each and everyone of you.

Some people out there including some media outlets, would like to have you believe that we’ve had a “rocky start”. We not only disagree, that whole notion is blatantly false.

First of all, we weren’t hacked. We were “XSS-attacked”.

Secondly, the email “leak” wasn’t really a leak.

We built the entire Unwoke platform over a weekend to see if a concept like this would stick. So of course there were flaws. But the trolls did us a favor by exposing our vulnerabilities. Then they put their findings on social media so we could fix everything immediately. Just brilliant work there. Free lunch as far as we’re concerned. So stay tuned, a lot of new and exciting updates are coming very soon!

– What have we learned?
Nothing. It only confirms what we already knew. That the people shouting are incapable of creation and only capable of destruction. And that a platform like Unwoke is desperately needed and desperately feared by the same people who seek to destroy it.

– Is the platform secure?
Unequivocally yes.

Sincerely,
The creators of Unwoke.

Of course, having the proper premise is no guarantee of success. But it will be interesting to see how it goes.

Jeff Bezos Testimony To House Subcommittee on Antitrust, Commercial, and Administrative Law

Amazon has posted the prepared statement by Amazon CEO and Founder Jeff Bezos to be given to the U.S. House Committee on the Judiciary as Testimony before the Subcommittee on Antitrust, Commercial, and Administrative Law.

Bezo reflects about his early life and the lessons he learned from his family on dealing with setbacks and adversity, the greatness of America in its worship of innovation and entrepreneurial risk-taking, and his excitement for creating things. Though there are things that one can criticize in the statement, it is an important read inside the mind of the CEO of one America’s most admired and successful companies.

Statement by Jeffrey P. Bezos
Founder & Chief Executive Officer, Amazon
before the U.S. House of Representatives
Committee on the Judiciary
Subcommittee on Antitrust, Commercial, and Administrative Law
July 29, 2020

Thank you, Chairman Cicilline, Ranking Member Sensenbrenner, and members of the Subcommittee. I’m Jeff Bezos. I founded Amazon 26 years ago with the long-term mission of making it Earth’s most customer-centric company.

 

My mom, Jackie, had me when she was a 17-year-old high school student in Albuquerque, New Mexico. Being pregnant in high school was not popular in Albuquerque in 1964. It was difficult for her. When they tried to kick her out of school, my grandfather went to bat for her. After some negotiation, the principal said, “OK, she can stay and finish high school, but she can’t do any extracurricular activities, and she can’t have a locker.” My grandfather took the deal, and my mother finished high school, though she wasn’t allowed to walk across the stage with her classmates to get her diploma. Determined to keep up with her education, she enrolled in night school, picking classes led by professors who would let her bring an infant to class. She would show up with two duffel bags—one full of textbooks, and one packed with diapers, bottles, and anything that would keep me interested and quiet for a few minutes.

My dad’s name is Miguel. He adopted me when I was four years old. He was 16 when he came to the United States from Cuba as part of Operation Pedro Pan, shortly after Castro took over. My dad arrived in America alone. His parents felt he’d be safer here. His mom imagined America would be cold, so she made him a jacket sewn entirely out of cleaning cloths, the only material they had on hand. We still have that jacket; it hangs in my parents’ dining room. My dad spent two weeks at Camp Matecumbe, a refugee center in Florida, before being moved to a Catholic mission in Wilmington, Delaware. He was lucky to get to the mission, but even so, he didn’t speak English and didn’t have an easy path. What he did have was a lot of grit and determination. He received a scholarship to college in Albuquerque, which is where he met my mom. You get different gifts in life, and one of my great gifts is my mom and dad. They have been incredible role models for me and my siblings our entire lives.

You learn different things from your grandparents than you do from your parents, and I had the opportunity to spend my summers from ages four to 16 on my grandparents’ ranch in Texas. My grandfather was a civil servant and a rancher—he worked on space technology and missile-defense systems in the 1950s and ‘60s for the Atomic Energy Commission—and he was self-reliant and resourceful. When you’re in the middle of nowhere, you don’t pick up a phone and call somebody when something breaks. You fix it yourself. As a kid, I got to see him solve many seemingly unsolvable problems himself, whether he was restoring a broken-down Caterpillar bulldozer or doing his own veterinary work. He taught me that you can take on hard problems. When you have a setback, you get back up and try again. You can invent your way to a better place.

I took these lessons to heart as a teenager, and became a garage inventor. I invented an automatic gate closer out of cement-filled tires, a solar cooker out of an umbrella and tinfoil, and alarms made from baking pans to entrap my siblings.

The concept for Amazon came to me in 1994. The idea of building an online bookstore with millions of titles—something that simply couldn’t exist in the physical world—was exciting to me. At the time, I was working at an investment firm in New York City. When I told my boss I was leaving, he took me on a long walk in Central Park. After a lot of listening, he finally said, “You know what, Jeff, I think this is a good idea, but it would be a better idea for somebody who didn’t already have a good job.” He convinced me to think about it for two days before making a final decision. It was a decision I made with my heart and not my head. When I’m 80 and reflecting back, I want to have minimized the number of regrets that I have in my life. And most of our regrets are acts of omission—the things we didn’t try, the paths untraveled. Those are the things that haunt us. And I decided that if I didn’t at least give it my best shot, I was going to regret not trying to participate in this thing called the internet that I thought was going to be a big deal.

The initial start-up capital for Amazon.com came primarily from my parents, who invested a large fraction of their life savings in something they didn’t understand. They weren’t making a bet on Amazon or the concept of a bookstore on the internet. They were making a bet on their son. I told them that I thought there was a 70% chance they would lose their investment, and they did it anyway. It took more than 50 meetings for me to raise $1 million from investors, and over the course of all those meetings, the most common question was, “What’s the internet?”

Unlike many other countries around the world, this great nation we live in supports and does not stigmatize entrepreneurial risk-taking. I walked away from a steady job into a Seattle garage to found my startup, fully understanding that it might not work. It feels like just yesterday I was driving the packages to the post office myself, dreaming that one day we might be able to afford a forklift.

Amazon’s success was anything but preordained. Investing in Amazon early on was a very risky proposition. From our founding through the end of 2001, our business had cumulative losses of nearly $3 billion, and we did not have a profitable quarter until the fourth quarter of that year. Smart analysts predicted Barnes & Noble would steamroll us, and branded us “Amazon.toast.” In 1999, after we’d been in business for nearly five years, Barron’s headlined a story about our impending demise “Amazon.bomb.” My annual shareholder letter for 2000 started with a one-word sentence: “Ouch.” At the pinnacle of the internet bubble our stock price peaked at $116, and then after the bubble burst our stock went down to $6. Experts and pundits thought we were going out of business. It took a lot of smart people with a willingness to take a risk with me, and a willingness to stick to our convictions, for Amazon to survive and ultimately to succeed.

And it wasn’t just those early years. In addition to good luck and great people, we have been able to succeed as a company only because we have continued to take big risks. To invent you have to experiment, and if you know in advance that it’s going to work, it’s not an experiment. Outsized returns come from betting against conventional wisdom, but conventional wisdom is usually right. A lot of observers characterized Amazon Web Services as a risky distraction when we started. “What does selling compute and storage have to do with selling books?” they wondered. No one asked for AWS. It turned out the world was ready and hungry for cloud computing but didn’t know it yet. We were right about AWS, but the truth is we’ve also taken plenty of risks that didn’t pan out. In fact, Amazon has made billions of dollars of failures. Failure inevitably comes along with invention and risk-taking, which is why we try to make Amazon the best place in the world to fail.

Since our founding, we have strived to maintain a “Day One” mentality at the company. By that I mean approaching everything we do with the energy and entrepreneurial spirit of Day One. Even though Amazon is a large company, I have always believed that if we commit ourselves to maintaining a Day One mentality as a critical part of our DNA, we can have both the scope and capabilities of a large company and the spirit and heart of a small one.

In my view, obsessive customer focus is by far the best way to achieve and maintain Day One vitality. Why? Because customers are always beautifully, wonderfully dissatisfied, even when they report being happy and business is great. Even when they don’t yet know it, customers want something better, and a constant desire to delight customers drives us to constantly invent on their behalf. As a result, by focusing obsessively on customers, we are internally driven to improve our services, add benefits and features, invent new products, lower prices, and speed up shipping times—before we have to. No customer ever asked Amazon to create the Prime membership program, but it sure turns out they wanted it. And I could give you many such examples. Not every business takes this customer-first approach, but we do, and it’s our greatest strength.

Customer trust is hard to win and easy to lose. When you let customers make your business what it is, then they will be loyal to you—right up to the second that someone else offers them better service. We know that customers are perceptive and smart. We take as an article of faith that customers will notice when we work hard to do the right thing, and that by doing so again and again, we will earn trust. You earn trust slowly, over time, by doing hard things well—delivering on time; offering everyday low prices; making promises and keeping them; making principled decisions, even when they’re unpopular; and giving customers more time to spend with their families by inventing more convenient ways of shopping, reading, and automating their homes. As I have said since my first shareholder letter in 1997, we make decisions based on the long-term value we create as we invent to meet customer needs. When we’re criticized for those choices, we listen and look at ourselves in the mirror. When we think our critics are right, we change. When we make mistakes, we apologize. But when you look in the mirror, assess the criticism, and still believe you’re doing the right thing, no force in the world should be able to move you.

Fortunately, our approach is working. Eighty percent of Americans have a favorable impression of Amazon overall, according to leading independent polls. Who do Americans trust more than Amazon “to do the right thing?” Only their primary physicians and the military, according to a January 2020 Morning Consult survey. Researchers at Georgetown and New York University found in 2018 that Amazon trailed only the military among all respondents to a survey on institutional and brand trust. Among Republicans, we trailed only the military and local police; among Democrats, we were at the top, leading every branch of government, universities, and the press. In Fortune’s 2020 rankings of the World’s Most Admired Companies, we came in second place (Apple was #1). We are grateful that customers notice the hard work we do on their behalf, and that they reward us with their trust. Working to earn and keep that trust is the single biggest driver of Amazon’s Day One culture.

The company most of you know as Amazon is the one that sends you your online orders in the brown boxes with the smile on the side. That’s where we started, and retail remains our largest business by far, accounting for over 80% of our total revenue. The very nature of that business is getting products to customers. Those operations need to be close to customers, and we can’t outsource these jobs to China or anywhere else. To fulfill our promises to customers in this country, we need American workers to get products to American customers. When customers shop on Amazon, they are helping to create jobs in their local communities. As a result, Amazon directly employs a million people, many of them entry-level and paid by the hour. We don’t just employ highly educated computer scientists and MBAs in Seattle and Silicon Valley. We hire and train hundreds of thousands of people in states across the country such as West Virginia, Tennessee, Kansas, and Idaho. These employees are package stowers, mechanics, and plant managers. For many, it’s their first job. For some, these jobs are a stepping stone to other careers, and we are proud to help them with that. We are spending more than $700 million to give more than 100,000 Amazon employees access to training programs in fields such as healthcare, transportation, machine learning, and cloud computing. That program is called Career Choice, and we pay 95% of tuition and fees toward a certificate or diploma for in-demand, high-paying fields, regardless of whether it’s relevant to a career at Amazon.

Patricia Soto, one of our associates, is a Career Choice success story. Patricia always wanted to pursue a career in the medical field to help care for others, but with only a high school diploma and facing the costs of post-secondary education, she wasn’t sure she’d be able to accomplish that goal. After earning her medical certification through Career Choice, Patricia left Amazon to start her new career as a medical assistant at Sutter Gould Medical Foundation, supporting a pulmonary medicine doctor. Career Choice has given Patricia and so many others a shot at a second career that once seemed out of reach.

Amazon has invested more than $270 billion in the U.S. over the last decade. Beyond our own workforce, Amazon’s investments have created nearly 700,000 indirect jobs in fields like construction, building services, and hospitality. Our hiring and investments have brought much-needed jobs and added hundreds of millions of dollars in economic activity to areas like Fall River, Massachusetts, California’s Inland Empire, and Rust Belt states like Ohio. During the COVID-19 crisis, we hired an additional 175,000 employees, including many laid off from other jobs during the economic shutdown. We spent more than $4 billion in the second quarter alone to get essential products to customers and keep our employees safe during the COVID-19 crisis. And a dedicated team of Amazon employees from across the company has created a program to regularly test our workers for COVID-19. We look forward to sharing our learnings with other interested companies and government partners.

The global retail market we compete in is strikingly large and extraordinarily competitive. Amazon accounts for less than 1% of the $25 trillion global retail market and less than 4% of retail in the U.S. Unlike industries that are winner-take-all, there’s room in retail for many winners. For example, more than 80 retailers in the U.S. alone earn over $1 billion in annual revenue. Like any retailer, we know that the success of our store depends entirely on customers’ satisfaction with their experience in our store. Every day, Amazon competes against large, established players like Target, Costco, Kroger, and, of course, Walmart—a company more than twice Amazon’s size. And while we have always focused on producing a great customer experience for retail sales done primarily online, sales initiated online are now an even larger growth area for other stores. Walmart’s online sales grew 74% in the first quarter. And customers are increasingly flocking to services invented by other stores that Amazon still can’t match at the scale of other large companies, like curbside pickup and in-store returns. The COVID-19 pandemic has put a spotlight on these trends, which have been growing for years. In recent months, curbside pickup of online orders has increased over 200%, in part due to COVID-19 concerns. We also face new competition from the likes of Shopify and Instacart—companies that enable traditionally physical stores to put up a full online store almost instantaneously and to deliver products directly to customers in new and innovative ways—and a growing list of omnichannel business models. Like almost every other segment of our economy, technology is used everywhere in retail and has only made retail more competitive, whether online, in physical stores, or in the various combinations of the two that make up most stores today. And we and all other stores are acutely aware that, regardless of how the best features of “online” and “physical” stores are combined, we are all competing for and serving the same customers. The range of retail competitors and related services is constantly changing, and the only real constant in retail is customers’ desire for lower prices, better selection, and convenience.

It’s also important to understand that Amazon’s success depends overwhelmingly on the success of the thousands of small and medium-sized businesses that also sell their products in Amazon’s stores. Back in 1999, we took what at the time was the unprecedented step of welcoming third-party sellers into our stores and enabling them to offer their products right alongside our own. Internally, this was extremely controversial, with many disagreeing and some predicting this would be the beginning of a long, losing battle. We didn’t have to invite third-party sellers into the store. We could have kept this valuable real estate for ourselves. But we committed to the idea that over the long term it would increase selection for customers, and that more satisfied customers would be great for both third-party sellers and for Amazon. And that’s what happened. Within a year of adding those sellers, third-party sales accounted for 5% of unit sales, and it quickly became clear that customers loved the convenience of being able to shop for the best products and to see prices from different sellers all in the same store. These small and medium-sized third-party businesses now add significantly more product selection to Amazon’s stores than Amazon’s own retail operation. Third-party sales now account for approximately 60% of physical product sales on Amazon, and those sales are growing faster than Amazon’s own retail sales. We guessed that it wasn’t a zero sum game. And we were right—the whole pie did grow, third-party sellers did very well and are growing fast, and that has been great for customers and for Amazon.

There are now 1.7 million small and medium-sized businesses around the world selling in Amazon’s stores. More than 200,000 entrepreneurs worldwide surpassed $100,000 in sales in our stores in 2019. On top of that, we estimate that third-party businesses selling in Amazon’s stores have created over 2.2 million new jobs around the world.

One of those sellers is Sherri Yukel, who wanted to change careers to be home more for her children. She started handcrafting gifts and party supplies for friends as a hobby, and eventually began selling her products on Amazon. Today, Sherri’s company employs nearly 80 people and has a global customer base. Another is Christine Krogue, a stay-at-home mother of five in Salt Lake City. Christine started a business selling baby clothes through her own website before taking a chance on Amazon. She has since seen her sales more than double, and she’s been able to expand her product line and hire a team of part-time employees. Selling on Amazon has allowed Sherri and Christine to grow their own businesses and satisfy customers on their own terms.

And it is striking to remember how recent all of this is. We did not start out as the largest marketplace—eBay was many times our size. It was only by focusing on supporting sellers and giving them the best tools we could invent that we were able to succeed and eventually surpass eBay. One such tool is Fulfillment by Amazon, which enables our third-party sellers to stow their inventory in our fulfillment centers, and we take on all logistics, customer service, and product returns. By dramatically simplifying all of those challenging aspects of the selling experience in a cost-effective way, we have helped many thousands of sellers grow their businesses on Amazon. Our success may help explain the wide proliferation of marketplaces of all types and sizes around the world. This includes U.S. companies like Walmart, eBay, Etsy, and Target, as well as retailers based overseas but selling globally, such as Alibaba and Rakuten. These marketplaces further intensify competition within retail.

The trust customers put in us every day has allowed Amazon to create more jobs in the United States over the past decade than any other company—hundreds of thousands of jobs across 42 states. Amazon employees make a minimum of $15 an hour, more than double the federal minimum wage (which we have urged Congress to increase). We’ve challenged other large retailers to match our $15 minimum wage. Target did so recently, and just last week so did Best Buy. We welcome them, and they remain the only ones to have done so. We do not skimp on benefits, either. Our full-time hourly employees receive the same benefits as our salaried headquarters employees, including comprehensive health insurance starting on the first day of employment, a 401(k) retirement plan, and parental leave, including 20 weeks of paid maternity leave. I encourage you to benchmark our pay and benefits against any of our retail competitors.

More than 80% of Amazon shares are owned by outsiders, and over the last 26 years—starting from zero—we’ve created more than $1 trillion of wealth for those outside shareholders. Who are those shareowners? They are pension funds: fire, police, and school teacher pension funds. Others are 401(k)s—mutual funds that own pieces of Amazon. University endowments, too, and the list goes on. Many people will retire better because of the wealth we’ve created for so many, and we’re enormously proud of this.

At Amazon, customer obsession has made us what we are, and allowed us to do ever greater things. I know what Amazon could do when we were 10 people. I know what we could do when we were 1,000 people, and when we were 10,000 people. And I know what we can do today when we’re nearly a million. I love garage entrepreneurs—I was one. But, just like the world needs small companies, it also needs large ones. There are things small companies simply can’t do. I don’t care how good an entrepreneur you are, you’re not going to build an all-fiber Boeing 787 in your garage.

Our scale allows us to make a meaningful impact on important societal issues. The Climate Pledge is a commitment made by Amazon and joined by other companies to meet the goals of the Paris Agreement 10 years early and be net zero carbon by 2040. We plan to meet the pledge, in part, by purchasing 100,000 electric delivery vans from Rivian—a Michigan-based producer of electric vehicles. Amazon aims to have 10,000 of Rivian’s new electric vans on the road as early as 2022, and all 100,000 vehicles on the road by 2030. Globally, Amazon operates 91 solar and wind projects that have the capacity to generate over 2,900 MW and deliver more than 7.6 million MWh of energy annually—enough to power more than 680,000 U.S. homes. Amazon is also investing $100 million in global reforestation projects through the Right Now Climate Fund, including $10 million Amazon committed in April to conserve, restore, and support sustainable forestry, wildlife and nature-based solutions across the Appalachian Mountains—funding two innovative projects in collaboration with The Nature Conservancy. Four global companies—Verizon, Reckitt Benckiser, Infosys, and Oak View Group—recently signed The Climate Pledge, and we continue to encourage others to join us in this fight. Together, we will use our size and scale to address the climate crisis right away. And last month, Amazon introduced The Climate Pledge Fund, started with $2 billion in funding from Amazon. The Fund will support the development of sustainable technologies and services that in turn will enable Amazon and other companies to meet The Climate Pledge. The Fund will invest in visionary entrepreneurs and innovators who are building products and services to help companies reduce their carbon impact and operate more sustainably.

We recently opened the largest homeless shelter in Washington state—and it’s located inside one of our newest headquarters buildings in downtown Seattle. The shelter is for Mary’s Place, an incredible Seattle-based nonprofit. The shelter, part of Amazon’s $100 million investment in Mary’s Place, spans eight floors and can accommodate up to 200 family members each night. It has its own health clinic and provides critical tools and services to help families fighting homelessness get back on their feet. And there is dedicated space for Amazon to provide weekly pro-bono legal clinics offering counsel on credit and debt issues, personal injury, housing and tenant rights. Since 2018, Amazon’s legal team has supported hundreds of Mary’s Place guests and volunteered more than 1,000 pro-bono hours.

Amazon Future Engineer is a global childhood-to-career program designed to inspire, educate, and prepare thousands of children and young adults from underrepresented and underserved communities to pursue a computer science career. The program funds computer science coursework and professional teacher development for hundreds of elementary schools, introductory and AP Computer Science classes for more than 2,000 schools in underserved communities across the country, and 100 four-year, $40,000 college scholarships to computer science students from low-income backgrounds. Those scholarship recipients also receive guaranteed internships at Amazon. There is a diversity pipeline problem in tech, and this has an outsized impact on the Black community. We want to invest in building out the next generation of technical talent for the industry and expanding the opportunities for underrepresented minorities. We also want to accelerate this change right now. To find the best talent for technical and non-technical roles, we actively partner with historically Black colleges and universities on our recruiting, internship, and upskilling initiatives.

Let me close by saying that I believe Amazon should be scrutinized. We should scrutinize all large institutions, whether they’re companies, government agencies, or non-profits. Our responsibility is to make sure we pass such scrutiny with flying colors.

It’s not a coincidence that Amazon was born in this country. More than any other place on Earth, new companies can start, grow, and thrive here in the U.S. Our country embraces resourcefulness and self-reliance, and it embraces builders who start from scratch. We nurture entrepreneurs and start-ups with stable rule of law, the finest university system in the world, the freedom of democracy, and a deeply accepted culture of risk-taking. Of course, this great nation of ours is far from perfect. Even as we remember Congressman John Lewis and honor his legacy, we’re in the middle of a much-needed race reckoning. We also face the challenges of climate change and income inequality, and we’re stumbling through the crisis of a global pandemic. Still, the rest of the world would love even the tiniest sip of the elixir we have here in the U.S. Immigrants like my dad see what a treasure this country is—they have perspective and can often see it even more clearly than those of us who were lucky enough to be born here. It’s still Day One for this country, and even in the face of today’s humbling challenges, I have never been more optimistic about our future.

I appreciate the opportunity to appear before you today and am happy to take your questions.

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