Amazon: Automation doesn't have to kill jobs

From South by Southwest, Amazon's vice president of innovation talks workers, drones and flops.

Misener showing off an Amazon delivery drone at SXSW 2017.

A front cover of the New York Post in December offered an unflattering view of Amazon Go, a test convenience store that does away with cashiers. The cover included Robby the Robot modified with Amazon branding and standing beside the giant headline: "THE END OF JOBS."

Paul Misener, Amazon's vice president of global innovation, sees things a little differently.

"We've not seen a slowdown in our hiring at all because of increased automation," Misener, an Amazon veteran of over 15 years, said in a phone interview Monday while he was visiting SXSW. "It's been our pattern. We continue to deploy automation and we continue to hire people. They go hand in hand for us."

Work going on at companies like Amazon, Uber and Google has sparked fears that the rise in automation and drones could kill off thousands of jobs for taxi drivers, delivery workers and cashiers. The issue is gaining more attention these days because of the development of potentially disruptive tech like artificial intelligence and autonomous vehicles, as well as President Donald Trump's focus on increasing US jobs.

Misener argued there can be both more automation and more jobs. For example, despite Amazon deploying robots in its warehouses and developing delivery drones and cashier-less stores, the world's largest e-commerce company said in January that it will be hiring 100,000 more people in the US over the next 18 months.

New technology will shake up the status quo, he said, but "if it does turn out to be better and more efficient, that benefits everybody." With e-commerce accounting for less than 10 percent of US retail, he added, there's still plenty more that Amazon and other players can do to make shopping more efficient for customers.

Yet with many traditional retailers struggling to keep up with Amazon's pace, it's unclear whether all this change is good for retail and customers, or just tech giants like Amazon.

In discussing the importance of innovation at Amazon, Misener, who ran global public policy for the company until taking on his new position last year, touched on these other topics.

Amazon's drone-deliveries program

At SXSW, Amazon took the opportunity to publicly show off one of its delivery drones for the first time. The presentation came after Amazon in December revealed a test program to deliver goods within 30 minutes or less to customers outside of Cambridge, England. Other companies developing delivery drones include UPS and Google.

Misener said he expects the UK program will grow over time -- it started with just two customers -- but he declined to provide an update on how many customers are now using the service.

"I can tell you this: Not surprisingly, customers love it," he said. "The feedback we've received is extremely positive. In that sense, it's going great."

Current Federal Aviation Administration regulations prevent Amazon from pulling off a similar program in the US, but Misener said he's "very bullish" on the long-term prospects of bringing delivery drones to the States. Amazon is developing drones in multiple countries, including the US. Still, the company can't logistically roll out the technology to all its markets at the same time, so it will likely offer the service in phases as regulations allow, Misener said.

"The regulatory permissions will come over time, and so if some countries are sooner than others," he said, "we'll end up serving customers there sooner than elsewhere, and that's OK."

The Fire Phone failure

Misener talked about some of the practices embedded in Amazon's culture that help it develop new ideas, such as the "two pizza" rule, which stipulates that teams can't get any bigger than the number of people who can comfortably share two pizzas together. That way project groups don't get too big, bloated and inefficient.

Granted, sometimes these practices result in duds, like the Fire Phone.

"It was a high-profile product. It was really pretty lousy," Misener said. "There's a reason I have an iPhone in my pocket."

It was a pretty spectacular failure.

Paul Misener

After the phone launched exclusively on AT&T in 2014, its lack of appeal quickly became apparent. Within months, AT&T dropped the price from $200 to just 99 cents with a two-year contract. Amazon then took a $170 million charge to wipe out the lost value of its unsold Fire Phones. A Fire Phone 2 never materialized.

"It was a pretty spectacular failure, but we take big bets all the time," he added. "Some will pay off, some won't."

Misener said the company did come away with two important lessons from the flop. First, employees learned a lot from a technical perspective on what does and doesn't work in consumer technology. Second, they learned that failure, even a huge failure, is sometimes OK.