The Supply Times
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Flywheels Coming Off

Flywheels Coming Off

The Supply Times Issue #55

Naseem Malik
April 25, 2024

Hello again, Supply Timers!

Oops, they did it again. Amazon has reportedly been caught engaging in all sorts of dodgy behavior, including setting up a shell company to engage in ten years’ worth of corporate espionage. Below, I take a look at this emerging story and link it to a specific incentive at Amazon that rewards employees for gaining access to data at any (unethical) cost.

Also, what’s with all the freelancers? The latest figures show a startling rise in independent workers across the US workforce, particularly among Gen Z. This is creating a headache for HR and other leaders who are on a fast learning curve to engage with freelancers and manage a blended workforce effectively.

This issue features a short excerpt from my upcoming book (be sure to check it out!) along with the usual bunch of AI Insights and recommendations for the week's podcasts, books, shows, charts, and tweets, followed by a final chuckle.

Let’s get going.

Industry Highlights: Amazon’s Big River Shenanigans

E-commerce giant Amazon reportedly conducted a secret operation known as 'Project Curiosity' over ten years, spying on its competitors. To carry out this operation, Amazon established what appears to be a shell company called Big River Services International.

According to The Wall Street Journal, the project was initiated in 2015 to compare the experiences of third-party sellers on Amazon with those of rival e-commerce platforms like Walmart, eBay, and FedEx.

However, Curiosity soon evolved into a sneakier endeavor, with Big River purchasing and selling products on Best Buy, Overstock, and even Walmart. They also utilized logistics services such as FedEx and UPS, which are competitors to Amazon's own logistics operations.

Amazon employees involved in Project Curiosity were given specific instructions to capture screenshots and photographs of their competitors' pricing, cataloging, and advertising systems. They even attended conferences held by rival companies to gather exclusive information.

What do you think? Was Project Curiosity valid competitor research or corporate espionage? Reading the report, it's clear that Amazon knew it was acting unethically. Staffers were told to hide the connection between Amazon and Big River by using their second, non-Amazon email address and encouraged to work off the grid as much as possible. Amazon’s lawyers reminded the Big River team not to disclose the connection to Amazon when conversing with FedEx. They were even told not to discuss Project Curiosity with other Amazon employees who weren’t involved in the project.

When the news of this covert operation came to light, Amazon responded by stating that they offer a range of products through various subsidiaries and online channels. Legal experts suggest that Amazon's actions could potentially lead to corporate or industrial espionage lawsuits. It remains to be seen how this situation will unfold and what consequences, if any, Amazon will face as a result of its clandestine activities.

Cutthroat Culture and Accessing Data to Gain An Edge

A separate analysis by WSJ tied these shenanigans to Amazon’s cutthroat culture. The secret to its success (and arguably the root of its problems) is a system known as “stack ranking”, where employees are pitted against one another and the bottom 6% are shown the exit each year. It's ruthless practice. New recruits receive the lion's share of their restricted stock units in their third and fourth year at the company, but given Amazon's notoriously high turnover rate, many of these fresh faces never lay their hands on those coveted units.

WSJ’s Dana Mattioli pinpoints the heart of the issue:

“An environment where every year employees are cut from an already all-star pool of talent at a company with unprecedented access to data meant that accessing data to gain an edge—as well as using other tactics to hurt competition—was a powerful way to stay ahead and make it to their restricted stock units.”

The FTC’s Antitrust lawsuit

Meanwhile, a federal judge has set October 2026 as the trial date for the Federal Trade Commission's (FTC) antitrust lawsuit against Amazon.com. The lawsuit, supported by 17 state attorneys general, accuses Amazon of an “ongoing pattern of illegal conduct [that] blocks competition, allowing it to wield monopoly power to inflate prices, degrade quality, and stifle innovation for consumers and businesses.”

The FTC has requested a permanent injunction to stop Amazon's alleged unlawful conduct. Potential remedies in the case could include requiring Amazon to divest a part of its business. The FTC claims that Amazon used illicit strategies, including an algorithm called Project Nessie to raise prices for U.S. households and extract over $1 billion directly from consumers.

Amazon has requested the court to dismiss the lawsuit, arguing that the FTC misunderstood common retail practices as anticompetitive behavior and failed to demonstrate harm to consumers.

The Future of Work: The Rise of the Freelancer

“We don’t use freelancers.”

I was recently perusing the website of a marketing agency that made a big deal of the fact that they don’t use freelancers. “All of our talented professionals are employed in-house,” the value proposition read, which made me ask myself two questions: 1) What do they have against freelancers, and 2) do they think they can sustain this policy in the face of the unstoppable trend towards the gig economy?

McKinsey’s 2022 American Opportunity Survey found that 36% of employed respondents, which equates to around 58 million Americans, identify as independent workers. This is a significant jump from 2016 when only 27% of the workforce was independent. A more recent study by Upwork (2023) found that 64 million Americans performed freelance work that year, representing 38% of the U.S. workforce.

Here’s the stat that caught my attention: 52% of all Gen Z professionals and 44% of all Millennial professionals performed freelance work in 2023. This doesn’t mean older Americans aren’t in the mix - nearly 8.3 million people (13% of all freelancers) were aged 59 or above at the time of the survey. Globally, independent workers are expected to make up 35% to 40% of the workforce by 2025.

So, why do some companies continue to resist engaging with freelancers?

Perhaps it’s about control. Freelancers work independently, so companies might feel uneasy about not having direct oversight over their work. They might worry about the quality and consistency of the freelancer's output. Another issue is communication and coordination: working with freelancers often means remote collaboration, which can be challenging. It's not always easy to align expectations, especially for projects that require close teamwork or real-time interactions.

Then there’s the issues of availability and commitment. Freelancers usually juggle multiple clients and projects, which can make companies uncertain about their availability, reliability, and level of commitment to a specific project or timeline.

How well can freelancers fit into a company's culture? Since they're not part of the internal team, they might not fully understand the company's values, processes, or dynamics. Intellectual property and confidentiality can also be issues. When working with external freelancers, companies worry about protecting their sensitive information and trade secrets. Ensuring data security and confidentiality can be trickier when sharing information with people who aren't directly under the company's control.

Lastly, some companies prefer having an in-house team to build long-term relationships, ensure continuity, and facilitate knowledge transfer within the organization. Freelancers might not align with these strategic goals since they usually work on a project basis.

But not all companies feel this way. Many embrace freelancers and appreciate their benefits, like specialized skills, flexibility, cost-effectiveness, and access to a global talent pool. It depends on each company's specific needs, goals, and values.

It also depends on your organization’s willingness and ability to manage a blended workforce or full-time, in-house employees, freelancers, temp/contract workers, and workers on outsourcing contracts. An HBR deep-dive into this issue talks about the struggle of some HR managers who are puzzled about how to lead and motivate a freelancer without the traditional levers such as the promise of a pay rise or promotion opportunities. HBR offers the following suggestions:

Help freelancers understand and embrace company culture by giving them the same in-depth induction you give to employees.
Follow rigorous practices to retain institutional knowledge so valuable skills and knowledge are not lost when the freelancer moves on. Engage in disciplined project hygiene practices, use shared project-management tools, and consider assigning full-time employees to take responsibility for end-to-end critical project deliverables.
Adopt a “sponsor” mindset to guide freelancers’ performance and motivate them with challenging, varied, and interesting projects.
Leverage digital workflows to build trust, manage changes in project needs, and gain visibility into freelancer’s availability and bandwidth.

HBR leaves the reader with two interesting questions to ponder: Firstly, as newer generations increasingly choose freelance work, is the entire full-time employment model at risk? You can see why HR and Executive Recruiters are paying close attention to this trend.

Secondly, are companies in danger of developing a concentration of risk-averse individuals in their in-house workforces? Does choosing the security of benefits and steady work mean a full-time employee is somehow more cautious than a risk-taking freelancer?

There’s so much to learn about working with freelancers. If you’re interested in reading more, check out the Queen of All Things Freelance-Related, Eryn Peters, who has written a very helpful Ultimate Freelance Guide: Risk Mitigation.

AI Insights

Got an eye condition? Ask GPT: OpenAI’s GPT-4 model was tested against non-specialist junior doctors, trainees, and expert eye medics, outperforming the juniors and matching the experts across 87 patient scenarios. Interestingly, it performed equally well on questions requiring higher-order reasoning such as interpolating and interpreting information.
AI to revolutionize the Olympics: The International Olympic Committee (IOC) has laid out its vision for an AI-assisted future, intending to employ LLMs for several use cases including finding and screening talented athletes, building custom training routines, judging and refereeing, and creating individualized experiences for viewers.
Advanced AI agents to move from advice to action: The team at Google Deepmind has released a paper exploring the ethics of AI’s next frontier: advanced agents that will make decisions for us rather than simply providing advice. For example, instead of giving us options for a holiday, it will pick the destination, and book the flight, hotel, and car. This raises ethical dilemmas about influencing who we are, and who is responsible if the AI’s decision impacts/hurts others.

The Supply Aside

📕 Read - 2054: A Novel

Image: X

Elliot Ackerman and Admiral James Stavridis have done it again. After the success of their previous novel, 2034: A Novel of the Next World War, the follow-up 2054 considers a future where AI can assassinate a US President. America has lost four sitting presidents to assassination in the past, and democracy has always somehow survived. But what would happen if such an event occurred in a climate of rampant misinformation, distrust, and an increasingly violent partisan divide? 2054 is a must-read work of speculative fiction. I’m not much of a fiction reader, but this dynamic duo sure are compelling, if not downright scary, storytellers.

What Else I’m Reading

Why a strong dollar is dangerous: The greenback has shot up, but The Economist thinks this isn’t necessarily good news. A strong US dollar can negatively impact exports, manufacturing competitiveness, and increase imported inflation. It can also result in higher debt repayments, financial instability, and trade tensions with other countries, potentially setting the stage for another Trump-China trade war.
FTC to issue non-compete ban: The FTC has voted to implement a nearly complete ban on non-compete agreements that prevent workers from switching jobs within the same industry. This rule, aimed at limiting the impact of non-compete provisions on workers, was encouraged by an executive order from Biden. However, the Chamber of Commerce has pledged to challenge the ban in court. Non-compete agreements affect approximately one in five Americans.
The West says China makes too much: This interesting BBC article explores China’s manufacturing shift towards high-tech industries such as EVs and solar panels, the challenges of overproduction, and how Chinese workers are being left behind.

📺 Watch - A Brief History of the Future (PBS)

Providing an antidote to the vision described in 2054, A Brief History of the Future challenges the prevailing dystopian narrative and offers a fresh perspective on what lies ahead. Hosted by futurist Ari Wallach, the show takes viewers on a journey filled with hope and potential, inviting us to reconsider our present reality and envision a better future. By interweaving history, science, and unconventional ideas, the series expands our understanding of the profound impact our choices today will have on tomorrow. Featuring interviews with influential figures like Emmanuel Macron and Pete Buttigieg, the series showcases the efforts of individuals working to address humanity's greatest challenges.

👂 Listen - In Good Company with Sal Khan

This episode of In Good Company features the ever-enthusiastic Sal Khan, CEO & Founder of Khan Academy. Sal talks about how personalized education and AI have helped revolutionize global education: “[Historically] the best education has always involved personalized attention or a 1:1 tutor.” This was impossible at scale, but the dawn of AI has changed the whole conversation. Sal also shares his journey from hedge-fund manager to educational philanthropist and looks ahead to a transformative future of AI in education.

💡 Think - T-120 Days

The FTC isn't afraid to stir the pot. We've been talking about Amazon's run-ins with them, and soon, we'll dive into Apple’s challenges, too. But this is about the FTC's latest move—banning non-compete clauses. Maybe the sweet spot here is somewhere in the middle, as it often is with big changes.

This new rule could really shake things up for millions, from fast-food workers to corporate leaders. It's all about letting people jump ship or start something new without fearing the legal boogeyman.

As the debate sharpens, proponents see the ban as a victory for worker freedom and economic growth, while opponents caution about potential negative impacts on business stability and innovation. The former group hopes it will significantly increase wages as employees gain the freedom to negotiate better terms when switching jobs. The latter fears it will stifle competition and jeopardize business secrets.

The US Chamber of Commerce has challenged the FTC's authority in court, arguing that three unelected bureaucrats shouldn't legislate policy.

So, what's next? It looks like the courts will have to act as referees to decide how this all plays out.

📕 From my upcoming book…

This story is a short excerpt from my upcoming book, Fire the Boss, Keep the Love: 10 Jobs, 10 Exits, 10 Lessons. Release date coming soon!

I started my first job at Navistar on a sunny summer day. I was keyed up and nervous about making a good first impression.

So imagine my surprise when, after lunch, my interim manager told me I could take the afternoon off and enjoy the beautiful day.

“Is this some kind of test?” I thought. But it was a gorgeous day outside, so I took him up on it. Let’s just say it was the last afternoon I ever got off.

Back when I started, I was navigating an hour-long commute from Chicago to Navistar’s headquarters.

But after a few days of enduring brutal traffic, I adjusted my routine, arriving at the office around 7 AM daily.

Arriving early and leaving late helped me dodge the dreadful commute and ensured visibility with higher-ups.

Plus, earning a reputation as the early bird willing to tackle any project wasn’t a bad start.

That first job was a golden opportunity and I truly saw it for what it was—a launching pad.

And looking back, the way I made the most of the opportunity boils down to one thing: sheer hard work. My grad school experience taught me theoretical knowledge, but practical business had its own learning curve.

I devoured the leadership books and articles that my boss suggested and made The Wall Street Journal my lunchtime companion.

I know praising hard work may seem old-fashioned in today’s working world. But in the early stages of your career, there really is no substitute for putting in the hours.

For those starting in their careers, I cannot think of better advice than this: persist, work hard, and keep educating yourself. If you keep going, the rewards will come.