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What the Amazon culture means

The recent controversy surrounding Amazon’s “brutal” workplace is missing some critical points about corporate culture.

The recent New York Times piece about Amazon’s ‘punishing’ and ‘bruising’ workplace has generated heated conversation about culture and values in Silicon Valley and the IT industry as a whole. But all the outrage over the exposé is missing some crucial data points in the discussion about culture.

Culture does not have a set definition
If the furor over Amazon’s “bruising” and “punishing” work environment teaches us one thing, it’s that “culture,” while an important benchmark in attracting, hiring and retaining elite talent, is not a one-size-fits all proposition. Culture means different things to different people, and it varies widely in its interpretation from company to company.

Culture is more than just foosball tables, Wine Wednesdays and casual dress. It’s about what your company prioritizes and how it uses those priorities to compete in its marketplace. That’s why, faced with an incredibly competitive talent market and a widening skills gap, many organizations turn to culture interviews to find the best fits so they can reduce attrition and cut costs related to turnover.

“Your company culture should align with your business strategy, with the type of competitive environment you’re in and the markets you’re trying to reach,” says Henry Albrecht, CEO of Seattle-based employee wellness company, Limeade.

Related Story: Goodbye to performance reviews, hello to — what?
According to Albrecht, Amazon, for example, is ubiquitous and they have to have a hard-driving, intense, performance-driven strategy to compete in all the markets they do. They compete with likes of Wal-Mart, Microsoft and Rackspace. “That’s a lot of different irons in the fire,” says Albrecht. “Their culture is in line with their vision, their markets and their strategy and is very consistent with their business drivers. So is ours, but our culture is very different because our customers are different.”
Write your own cultural narrative

A well-defined culture is a signpost meant to attract candidates that thrive within the type of environment you create, or at least the type of environment you intend to create, and to a great extent, that is shaped by your technology, your markets and your customers. But it’s also shaped internally by C-level executives and by those responsible for hiring. You have to define your culture, illustrate what success looks like for those who might want to work within that culture, and clearly set out the boundaries and expectations of work, culture and environment within your company before it takes on a life of its own.

A clear definition of your company culture is going to deter some highly qualified talent while attracting others. The point of making culture relevant to recruiting and hiring decisions is to better gauge whether or not a job seeker is going to thrive within the organization, and whether they share the same mission and values above and beyond their ability to perform certain tasks or master certain skills. It’s not fool-proof; there will be some false positives, hires who don’t fit — and some false negatives, those you don’t hire who would have been great.

“This looks like churn, but it’s not. This is what happens when workers experience a culture and say, ‘This is not for me.’ The culture that’s so maligned at Amazon is actually something Bezos has been clear about since the beginning, and it’s been successful, so I don’t think there’s reason to change it. In fact, I think you double-down on it — celebrate this culture, create more stories about it and point to more examples that truly embody it. You have to write your own narrative,” says Marcus Buckingham, an author, talent management expert, researcher, founder and chairman of The Marcus Buckingham Company.

Keep tabs on your culture

Writing your own narrative requires deep insight into what’s working at your organization, what’s not, and how to fix it. This is the great irony of Amazon’s public relations nightmare — how could a company so focused on listening to customer voices miss the grumbling of discontent within its own ranks? “These surprises happen in every company, they just tend to happen much more frequently the bigger you get. You have to be looking at the feedback loops throughout the entire organization, not just those from your peer group,” says Albrecht.

Even in a small organization where the CEO has an open door policy, communication breakdowns can happen, says Chris Byers, CEO of Formstack, a digital forms solution and data collection company. Transparency is a great goal for organizations to have, but it’s difficult to maintain as a business grows; employees might not feel emboldened to walk into the CEO’s office and share what’s on their mind. “If the door is open but no one comes through, you can’t just think, ‘Well, everything must be fine,’ it’s up to you to go out the door and solicit feedback, or you risk missing an issue that could blow up like it did with Amazon,” Byers says.

Technology that provides insights into engagement, health, well-being and productivity is one way to gather data. Amazon’s anonymous Anytime Feedback tool was supposed to have filled this role. “Bezos should have been able to say to The New York Times, ‘You have these anecdotes, we have the data,’ but he doesn’t have it. That’s the great irony here. And it’s a lesson: Leadership needs to know the real-time, reliable measures of engagement within their companies,” says Buckingham.

Culture does not have a moral value judgment

There’s no such thing as “good” culture or “bad” culture, necessarily (though a toxic, abusive workplace is definitely bad news). Just as different businesses define success differently, each company’s culture is unique because of its specialized technology, its customer base, its business priorities, strategy and mission. In a highly competitive, fast-evolving industry such as IT, cultural norms like working late nights, on-call weekends and 100-hour-work-weeks are more common than in other industries. There’s a much greater emphasis on innovation, change and outside-the-box thinking that drives new products, services and solutions, and your organization’s culture has to keep pace.

This particular brand of culture, as with Amazon or throughout Silicon Valley, becomes unsustainable only when your workers lose interest, not because it’s inherently good or evil. Limeade’s says he Albrecht was miserable working long, brutal hours for another technology firm. However, he works the same number of hours, if not more, at his own company because he loves his work. “If you do it because you care about the mission, you care about the work that’s being done, that’s one thing. If you’re doing it because you feel you ‘have to,’ then maybe your values and your priorities don’t match up with that of the company,” he says.


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5 Things we learned about Amazon’s cloud from its first earnings report

AWS collected $1.56 billion in revenue with a $265 million profit this quarter

For the first time in company history revealed the financial details of its Web Services cloud computing division in earnings reports released Thursday.

In doing so Amazon put to rest speculation about just how much money it is making in the cloud and proved to skeptics that there is big money to be had in this market.

+MORE AT NETWORK WORLD: More numbers to prove just how big Amazon Web Services’ cloud is +

Below are five key figures we learned from Amazon’s first ever earnings report that included details financial figures for AWS.

$1.5B for the quarter

Amazon Web Services collected $1.56 billion in revenue throughout the first quarter of 2015, with a profit of $265 million with a 17% margin. Revenue grew 49% between the first quarter of 2015 and the first quarter last year.

$5 billion for the year

In the calendar year 2014 AWS collected $4.64 billion in revenue. But in the past 12 months (meaning from the second quarter of 2014 until today) AWS has collected $5.16 billion in revenue. Jeff Bezos was quoted in the earnings report saying: “Amazon Web Services is a $5 billion business and still growing fast — in fact it’s accelerating.”

Profits rising

Profits for AWS have been steadily climbing for the past year. In the second quarter of 2014 income was $77 million; it was $98 million in Q3 and $240 million in Q4. Profit for the past 12 months has been $680 million.

It costs money to make money

AWS spent $1.3 billion to operate its Web Services division in the first quarter of this year, that’s up from $805 million it spent on operating expenses in the first quarter of 2014. AWS says that it adds enough computing capacity to its cloud everyday to power when it was a $7 billion business in 2004. Amazon says it has about $6.9 billion in assets in AWS.

Helping out the big business

Net sales for the parent company in the first quarter of this year were $22.7 billion, with a $57 million loss. AWS contributed 5% of total net sales in the fourth quarter last year, and 6% of net sales for the parent company in the first quarter of this year. Without that $265 million profit from AWS,’s losses could be even higher.

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What happens inside Amazon when there’s a Xen vulnerability

Twice in the past six months AWS has had to reboot some of its cloud servers because of a Xen vulnerability.

Amazon Web Services last year was estimated by Gartner to be five times bigger than its next 14 competitors combined. That’s a lot of virtual machines. And they all run on a customized version of the open source Xen hypervisor, so when the Xen code has a security vulnerability, that’s a big deal for AWS.

In the past six months AWS has twice had to reboot some of its Elastic Compute Cloud (EC2) servers because of a Xen vulnerability. In September, 2014 about 10% of EC2 instances were rebooted and just this week AWS announced that about 0.1% of instances had to be rebooted to install a security patch. That may not sound like a lot, but at the scale AWS operates, it’s still a large number.

Verify the vulnerability
AWS is a big user of Xen code, so company officials are some of the first to hear about Xen vulnerabilities that are identified in the open source community. When that occurs the first job for Schmidt’s team is to determine if it will impact AWS. The company is notified of all the Xen vulnerabilities on a regular basis before they’re made public. This allows the company to determine if the vulnerability is applicable to AWS and if so develop and install a patch.

“Xen is a huge software package and there are many aspects that AWS does not use,” Schmidt said.

Most of the Xen vulnerabilities do not apply to AWS because the company has developed its own custom version of Xen. AWS has stripped out all the features of Xen that it doesn’t need, both in order to customize the performance of the open source code to the company’s unique use case, and to limit its exposure to vulnerabilities.

But AWS does something else, too: It doesn’t just use one flavor of Xen, it uses many.

“We intentionally build our fleet differently across (the service),” he said. “You don’t want everything to be homogeneous because if it is then if a problem effects the fleet, it effects everything.” AWS has different custom versions of Xen deployed across different services and regions, and none of them are the vanilla open source code.

If the AWS cloud is impacted then the company tries to hack itself.

“We generate a test scenario to determine if we can trigger the vulnerability,” Schmidt said. Then, extensive testing is done to determine if the vulnerability has been used against AWS.

Meanwhile, other teams of security engineers are already building a patch and testing it across all the variants of Xen that AWS runs to ensure it meets security and performance requirements.

Sometimes the process of installing the patch requires a reboot, as it has twice in the past half-year. Just like on a common PC, some updates and patches require a reboot and others don’t. The majority of patches AWS implements do not require a reboot; AWS has architected its system to minimize the reboots necessary to patch its services.

“We try very hard not to reboot,” Schmidt said. If Schmidt’s team finds it “technically infeasible” to install the patch without a reboot, then it notifies customers which services will be restarted.

The dreaded reboot

“It was very straightforward,” Schmidt said, referring to the September issue. “We couldn’t find a way to patch the service without rebooting, so we had to do it.”

Complicating efforts in situations like this is the fact that AWS has to inform customers that some of their EC2 instances need to be rebooted, but they can’t say why. AWS can’t announce the vulnerability to the world and expose itself or other Xen users.

Customers should be ready for a reboot at any time though and there are steps users should take to ensure their systems can withstand a reboot or VM failure. One is to design their systems to be stateless so that if there is a reboot or a VM failure that the application fails over to healthy VMs without skipping a beat.

Back in September Network World spoke with a handful of AWS users and most survived the reboot without a major issue. Born-in-the-cloud apps tend to be resilient to failure; legacy apps that have been migrated tend to have more trouble.

Schmidt said AWS is always looking to improve its services: both technically to ensure it doesn’t have to reboot VMs, and it is working to keep customers better informed. Part of that process includes sponsoring academic research, including some leading studies into how Xen servers can be hot-patched without requiring a reboot.


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