Thinking about Amazon, ‘Nomadland,’ and the shared value created by entrepreneurial innovation

By James Pethokoukis

This is a big quarterly earnings week for many well-known tech companies, including Amazon, Alphabet (Google), Facebook, and Twitter. But for Amazon, specifically, it’s already been a big week. The film Nomadland won the Academy Award for Best Picture. The film’s lead character, Fern (Frances McDormand), temps at an Amazon warehouse during busy holiday shipping seasons. I’m not sure if it would have won in a more competitive, non-pandemic year, but I thought the movie was pretty good. One thing that really jumped out was that Nomadland didn’t treat the $1.7 trillion (market cap) retailer as Big Evil Company. As I wrote the other day, Fern “clearly likes the money and flexibility of the job — and doesn’t seem miserable doing it. As with many jobs, much of the non-monetary reward comes from interacting with other workers rather than the inherent nature of the work.”

In a Vulture piece on Nomadland, What Nomadland Gets Wrong About Gig Labor” — we find out how the film got the right to shoot inside an Amazon warehouse:

[McDormand has] explained that she got permission to shoot in Amazon by sending an email to the company’s senior VP of business development, Jeff Blackburn. “It was right before they started giving people $15 an hour,” she told The Hollywood Reporter last fall. “This was a really smart move for them because … we are telling a story about a person who is benefiting from hard work, and working at the Amazon fulfillment center is hard work, but it pays a wage.”

As the headline of the piece suggests, the writer has big problems with how Amazon is portrayed:

The idea of authenticity has been core to Zhao’s previous films, which were developed around the real-life stories of her cast of mostly non-professional actors; she imports this technique to Nomadland, featuring actual nomads from Bruder’s book, including Linda May and Swankie. Fern, however, is a fictional character, sutured into the landscape by Zhao and McDormand to be our compassionate, dryly humorous, Shakespeare-reciting guide to the nomadic world. Crucially, unlike the subjects in the book, Fern has no complaints about her jobs—including her time at Amazon. And because the film is primarily a character study of her, it exchanges Bruder’s sharp indignation over capitalist exploitation for a muddled message about individual freedom that downplays the real stakes of gig labor.

Now it’s not as if the movie — besides showing Amazon jobs as perfectly fine —  also showed Amazon founder and outgoing CEO Jeff Bezos as an admirable super-entrepreneur whose company has created tremendous employment, values, and wealth. But had it, that would’ve been OK. In his recent letter to Amazon shareholders, Bezos calculated that Amazon created some $310 billion in value last year, including $21 billion for shareholders in the form of net income and $91 billion for workers in the form of compensation. And since Bezos only owns an eighth of Amazon shares outstanding, that means most of the value went elsewhere — to other shareholders, to workers, to customers. Bezos:

These numbers are part of the reason why people work for us, why sellers sell through us, and why customers buy from us. We create value for them. And this value creation is not a zero-sum game. It is not just moving money from one pocket to another. Draw the box big around all of society, and you’ll find that invention is the root of all real value creation. And value created is best thought of as a metric for innovation.

Some economic research suggests that Bezos’ fundamental point here is correct: Most — almost all, really — of the value from innovation doesn’t go to the innovator but rather flows outward to consumers. Economist Timothy Taylor adds value with this take on Bezos’ calculations:

I’m sure one can tinker with these estimates in a variety of ways, and combining wages paid to employees with time saved by consumers will represent conceptually different categories of “value.” One could also expand this list in various ways: for example, there is value to consumers (especially consumers who may not live close to lots of other retail options) in the extreme variety of products readily available via Amazon.

But my goal here is not to fine-tune the estimates, but to make a general point here worth noticing. The value of Amazon’s profits in a given year is much, much less than the value created by the company in other ways: wages, facilitating sales by third-part [sic] firms, time savings for consumers, and so on.

These gains didn’t just happen.  Building an interactive website that works at large scale is a monumental task. … Yes, it’s plausible that if Bezos had never started Amazon, some other company would have emerged from the dot-com scrum of the late 1990s. However, Bezos led the company that actually did it. Whether you are a fan or detractor of Amazon, the sheer size and scope of what has been built commands attention.

Yeah, the entrepreneurial and business accomplishment that is Amazon definitely commands attention — admiration, too, I would add.