How Amazon Revolutionized Shopping and Changed the World
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The year was 2006, and the most influential people in America's fashion industry were gathering at a fancy event at the Harmony Club in Manhattan. CEOs like Saks Fifth Avenue, Dianne Van Furstenberg.

That's investigative journalist Dana Mattioli. The fashion world was meeting to discuss new trends and how to market them to consumers. But this year, there was a newcomer among the group of fashion moguls. He was a bit nerdy, thin and balding.

Jeff Bezos, founder of Amazon. And one of my sources sees him at the bar and he says, you know, what are you doing here? At this point, Amazon was just selling books, electronics, toys, and everyday apparel, not high-end fashion. And Bezos tells him, well, your margin is my opportunity. And that's how he viewed the world.

Weeks after this event in Manhattan, Bezos shocked most of the attendees when Amazon announced a deal to buy the luxury apparel website Shopbop, a store that featured 75 leading designers at the time. And this kind of expansion has become a signature move for Amazon. Bezos told his team that he wanted Amazon to become this daily habit.

He didn't want people to just visit once a month for books or paper towels. He wanted it to become ingrained in the daily lifestyle of Americans and shoppers and consumers. For the most part, that is exactly what happened. It's like Amazon's definitely the first go-to to find anything. And then if I can't, then I'll look to an actual store.

I order diapers. Lots and lots of diapers. My most recent purchase was mouthwash. I got shoelaces to replace the shoelaces on my shoes. I mean, it's really convenient. Sometimes I just think of something and so it's easier to get just delivered than remember to go to the store the next day or something. I use Kindle all the time. I didn't even register that it was Amazon until I started thinking about it. But that's where I read the majority of my books now is like e-books via Kindle.

Amazon turns 30 this summer, and what started off as a small online bookstore in 1994 quickly grew into a global e-commerce giant.

Today, Amazon accounts for 40 percent of online sales in the U.S., and they deliver more packages than FedEx or UPS. But far beyond retail and bringing us stuff, Amazon has ventured into surprising corners. They are the world's largest cloud computing company. They're now a health care company. They're launching…

things into space in the next few years. They're going to be one of the biggest AI companies. And those are just some of its tentacles that they've been able to spawn. On this episode, Amazon at 30, the making of a giant, the innovations that made it possible, and how it will continue to affect the future. ♪

To get started, let's stick with investigative journalist Dana Mattioli. She covers Amazon for The Wall Street Journal, and she's written a new book called The Everything War, Amazon's Ruthless Quest to Own the World and Remake Corporate Power.

Before Dana started covering Amazon, her beat was mergers and acquisitions. My whole job was to break news on who was buying whom. So if Coke was buying Pepsi, I had to break that story before it got announced. But she noticed there was always a lot of buzz around Amazon. It seemed like this company that started out as this online book retailer was spreading its tentacles into every industry and dominating many of them. You know, Amazon would...

announced that it was making a big hire from a different area like healthcare and all the healthcare company stocks would tank on that news. Or there'd be rumors about them making an acquisition and the other companies, the incumbents, would tank. And it just seemed like the most fascinating company to me. It was so feared. And it was also this black box. No one really could penetrate how

Amazon always seemed to win. How this perpetual winner was born in 1994 is a well-known story. The humble beginnings in the garage of Jeff Bezos, he shared a grainy video of that office online. Okay, this is my desk here. And that's the fax machine, as you can see over there.

See this big orange extension cord? That's just one of the contraptions we have to have because there's not enough power in this room. So we have to bring in some extra circuit breakers. It looks just like every other sad office, not the kind of place where the future is being built. But Dana says Jeff Bezos managed to tap into something that most people couldn't yet envision.

This is when most people didn't have computers in the U.S. Only 3% of Americans had ever been online. Main Street reigned supreme. Malls were king. Bookstores were places where you hung out, browsed, read, enjoyed that new book smell. Maybe got a cup of coffee. And this was a test case for him to see if selling things on the internet would work. And not only did it work, it was revolutionary. And bookstores were really the canary in the coal mine.

But from there, Bezos spotted an opportunity to have sellers from around the world sell different products and really jumpstart selection. And this was also an asset light strategy because the sellers owned the inventory and Amazon would ship it for them. In 2000, it launched a marketplace. And I spoke to some of the early employees at Amazon that helped with those different categories. One of them told me that they were opening categories like

consumer electronics, toys within months when in the physical world it would take years to open up different categories like that. But they were doing this in like a rinse and repeat sort of methodology where they had come up with a way to launch categories super quick. What were some of the technological advances that helped Amazon grow? You know, this company sort of caught the wave right at the first moments of the internet, so to speak. Right.

But then it kept just like changing and growing and changing and growing with all the new technological advances that have come through. So talk a bit about how technology and Amazon have sort of like carried each other along. Well, in the early days, Jeff Bezos convinced Wall Street that this was not an ordinary retail stock. And he told them, you will not judge us based on our profits. You'll judge us based on our growth.

And that salesmanship, without convincing Wall Street not to judge them in the normal way that Gap and Linens and things and Best Buy were being judged, Amazon would not exist today. That allowed them to build out a very expensive logistics network.

and an e-commerce capability and really just spread the delta between them and everyone else. And there's a scene in the book where I spoke to Linens and Things, his CEO from the 1990s and 2000s. And he tells me that he went to his board of directors and said, we have to be in e-commerce. We have to have warehousing and logistics capabilities. And they said, okay, how much will that cost? And it was something like $100 million. And they said, no, we cannot give you that money for that. We'll give you $25 million, which was a paltry amount and not enough.

because they didn't want to tank the stock. So I think e-commerce and logistics was one of their early and really important innovations. But from there,

You know, they really started innovating in lots of different areas, especially, you know, cloud computing. That was a game changer for the company. How so? So they created this solution for their e-commerce side of the business where they're realizing they needed different compute power and storage and different sorts of technological abilities that they were building from scratch every time they needed to get up and running. So they were able to come up with Amazon Web Services.

and offer this solution not only to their own retail side of the business, but to every other business that was going online. And it became their cash cow. Today, it's still the bulk of the company's profits. And it means that

Amazon has almost become a utility of sorts that some of its largest competitors have to work with Amazon on the cloud. So, for instance, Netflix is on Amazon Web Services. All the ride-sharing companies are on Amazon Web Services. Apple pays Amazon Web Services $2 billion a year.

for its services. Dana says another driving force of the company's success is its obsession with competitors. Amazon spends a lot of time saying that they don't pay attention to the competitor, but I found that they spend an inordinate amount of time on their competition. There are scenes in the book where Amazon is threatening predatory pricing to crush rivals.

where they are meeting with founders and CEOs and entrepreneurs under the guise of investing in the company or buying them in an acquisition, and then mining these founders for all of their proprietary information about their technology. So one example of this is a company called Ubi. And this company was founded by a man named Lior Grebler in 2012. And he had created a first-to-market kind of device

that could listen to voice commands and follow them. So you could tell your Ubi device to turn on the lights or turn off the lights or to check your email. And if this sounds familiar, there's a reason. So he and his co-founders created the Ubi and

He reached out to Jeff Bezos. He guessed Bezos' email and says, you know, I have this revolutionary device. Would you be interested in meeting with us? And Bezos says, absolutely. Lior even calls it a Star Trek computer in the email that I have. And Bezos puts him in touch with a man at Amazon named Greg Hart. And Greg says,

sets up this meeting with Ubi right away. Greg does not disclose in his emails to Lior that he's actually working on a secret project at Amazon, looking at the very infant stages of looking into creating a device just like this. Lior met with Amazon executives over the course of several months. They discussed the technology and product roadmaps. And right before their last meeting in early 2013, Lior gets asked

a legal document from Amazon and it says that we would like to void our non-disclosure agreement with Ubi and he's sort of new at this and he thinks maybe it's a precursor to being bought so he agrees to it it's right before that demo where he shows them everything that this product could do and it basically says that anything that is shared with us is no longer confidential

But he doesn't think twice about it. So they do the demonstration, and the Ubi device tells the participants the weather in the room. After being asked it, it turns on the light. It does all these great things. And then after that meeting, Amazon stops contacting Ubi. You know, Lior's phone calls and emails go unanswered. And it's this weird dynamic because he feels like everything went really well. And then in November of 2014...

Lear gets an email from his brother. And the subject line of it is, uh-oh. And it contains a link to an article about Amazon's new revolutionary Echo device. And he's just gutted. It does many of the same things that Ubi does. And Bezos even calls it his Star Trek computer in public comments. And, you know, this creates this downward spiral for Ubi. And cut to months later, the company has to start winding down.

It was really that Echo was winner takes all, and Lear felt that his technology was stolen over the course of the M&A process and the due diligence process, but he had no recourse because suing a giant...

that has more lawyers than most New York corporate law firms and has a big balance sheet, was not an option for Lior. And it's not an option for many companies that feel that Amazon acted in this way. We reached out to Amazon to ask about Ubi. They send us a statement. Quote, We do not use confidential information that companies share with us as an investor or potential investor to build competing products. Period. End quote. So,

Generally speaking, Amazon has certainly, from the perspective of a consumer, Amazon has driven a lot of innovation. But what do you think this company could be doing to innovation, you know, if it kind of squashes smaller innovators like the one you just described with the story of Ubi? Yeah, I think there are tradeoffs to one company having so much power.

You know, Amazon's size makes it hard for rivals to compete, and that's led to bankruptcies. It's led to job loss. And the reliance on the giant from its sellers might even be translating into higher prices for customers. You know, and because the company has become unavoidable in a lot of ways, it's for partners and competitors. It means that Amazon has all the leverage in negotiations and could use that power to bully partners. And I've spoken to a lot of venture capital firms recently.

about the innovation issue. And they've told me privately that they are very wary about funding companies that compete with Amazon because there's a sense that Amazon will crush them or that you can't go up against them. So that's resulted in companies not getting founded, people not even trying to go up against them. And on the job loss front, I think it's really interesting in just one area. If you look at retail, for instance.

There's one study that estimates that in just 2018, Amazon led to a net loss of 700,000 retail jobs in the U.S. There's another study that between 2001 and 2017, there were 18 times as many department store jobs lost in the U.S. than in coal mining.

And that's just one of their tentacles, right, is retail. And I spoke to a lot of CEOs of companies that have gone out of business to see if they feel that Amazon had their fingerprints on their bankruptcies. And many of them told me yes. Now, you just mentioned coal mines. And, you know, in reading the book,

I kept thinking about old mining towns where the mining company was sort of the only game in town. You had to work for them, but then they also had the company store and you had to shop there. And you could not exist without that company. And sometimes I feel like that's where we're headed. Yeah.

Lena Kahn, who's the chair of the FTC, who brought this monopoly lawsuit against Amazon, when you go back to her 2017 Law Review article that really kicked off her rise to prominence, she describes Amazon as this utility that's unavoidable. And I think that's a really fascinating analogy. And it's funny, I spoke to a lot of Amazon's early employees that helped create Amazon and have since left to see how they feel about the company. And

What's telling to me is a lot of these people made tons of money because they had stock in the company at a very early time. But a lot of them have reckoned with the moral consequences of Amazon's power. Many of them don't shop on Amazon.com. Many of them canceled their Prime accounts. But they do point out that they're hard to avoid in some ways. You know, in reporting out this book, during my reporting process, Amazon bought my doctor's office. They bought one medical. It's ingrained in our society in so many ways. And I think if you go back to Jeff's

rallying cry to his leadership team in those early days about making Amazon a daily habit, it's truly succeeded. What is Amazon doing in the healthcare space? And where do you see the company's aspirations?

Yeah, Amazon's been intrigued by the healthcare space for about a decade and just given the size of healthcare in America. Healthcare represents nearly 20% of GDP in the country. So it'd be crazy to think that that's not an area that Amazon would want to have margin. That's their opportunity, right? So they've had some mixed success in this space.

One of the first ways Amazon dipped its toes into healthcare was in the insurance space. They had this partnership with Warren Buffett's Berkshire Hathaway and JPMorgan, and this was in 2018. And the three companies had more than a million employees, and they had high healthcare costs. So they set up this initiative called Haven to see if they could lower costs for themselves and their employees. And the idea was that if it took off, they'd extend it to other companies.

Well, the day that they announced Haven, the shares of pharmacy, benefit managers and other health care companies dropped because everyone was betting on this technology taking off and Amazon winning.

But three years later in 2021, they shut it down. I think they underestimated how complicated health care is. You know, this is a regulated industry and it's not easy. You know, there was a similar cautionary tale with an Amazon initiative called Amazon Care that they launched for their own employees for like primary care use. They also shut that down. But I don't think these failures have slowed them down at all.

I think Andy Jassy, the current CEO of Amazon, is very bullish on health care and Amazon's effects on health care. You know, they bought One Medical, which is this big chain of primary care doctors in the U.S., and that's an area that they're dedicating a lot of resources. They bought a company called PillPack, which is an online pharmacy. So even though there's been mixed success, I don't think this is an area that they will back down from.

As for the future of this giant, it may at least in part fall victim to its own success. In September of last year, the Federal Trade Commission filed a lawsuit against Amazon for illegally maintaining a monopoly. The trial is expected to begin in late 2026. And if the FTC is successful, that could make lasting changes in the future of the company. It could even result in a breakup, possibly.

But in the interim, Amazon really does not seem all too fussed about it. There have been regulators around the world saying that this company is too big. This company might be a monopoly. And Andy Jassy, the company's current CEO, has been telling his deputies that we're not big enough. That in 10 years from now, we should be a $10 trillion company. You know, today, they're not even $2 trillion. So think about all the areas of growth that they see internally, if you could give that sort of projection. ♪

Dana Marioli is an investigative reporter at The Wall Street Journal. Her new book is The Everything War, Amazon's Ruthless Quest to Own the World and Remake Corporate Power.

Coming up, one of the company's biggest cash cows is power hungry, and that's creating some tensions. These enormous buildings are cold and unwelcoming. We all know this about data centers, and I assume we have all felt this. If you haven't, drive through the black hole of data centers in Ashburn. That's next on The Pulse. This message comes from Stamps.com. How much is an hour of your time worth? Whether

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Since 2014, Amazon has made more than half of its profits not from selling stuff online, but from cloud computing, a branch of the company called Amazon Web Services, or AWS.

Think of it as where a lot of the internet lives. Before cloud computing, companies and organizations with websites had their own computer rooms with servers that stored all of the information on those sites.

But then companies like Amazon started hosting all of this data, the text, the images, the videos, in physical locations with endless rows of computers in sprawling buildings called data centers. The largest concentration of these is in Northern Virginia. Amazon estimates that about 70% of global internet traffic goes through that state.

Amazon is not alone in this business, but their share of the market is twice as big as the next largest company, Microsoft. Data centers have become a booming industry in Northern Virginia, but that has come with some controversy and trade-offs. Alan Yu has more.

More than 10 years ago, Julie and Chris Bornemann bought 30 acres of property in Northern Virginia. That was in pretty bad shape. There was a house, some woodlands, and a lot of junk.

There's old lawnmowers and washing machines and scaffolding, concrete testing cylinders. And then you'd open up the cabinets and inside each cabinet would be just full of cabinet doors. There was at least two vehicles here, old used fuel oil drums. Julie and Chris made a project of restoring and cleaning up the property. They cleaned up the stream, hauled away the trash, restored the landscape with native plants,

And they have turned it around. We've seen river otters and fisher cats and deer and bear and fox and coyotes and possums and raccoons. And we'll have an occasional bald eagle come through and herons, tons of owls.

Julie runs a plant nursery on their property. Chris works for a software company. They are used to seeing data centers driving around their region. But now those centers are coming closer to home in the form of a proposed transmission line feeding power to those data centers.

Big metal towers with wires that carry electricity running right through the woods they spent so much time restoring to their natural beauty. And so it's taking out all of that really old growth forest to bring in that power line. And then it literally goes right through two of our neighbors that join our property, goes right through their houses. So all that will have to be condemned and removed.

Julie and Chris are active with local environmental groups. They signed petitions, wrote to their local officials, and joined a campaign against putting the power line there. Data centers use a lot of energy. And unlike a factory or an office building, data centers need that energy constantly because the internet does not run on regular business hours.

Julie and Chris understand that we, people who use the internet, rely on these data centers. We all love the internet. You know, if it wasn't for Google, I don't know that we would survive anymore. And the Amazon guy comes to our house way more frequently than he should. But they are worried about the environmental impact and how much they will have to pay for this infrastructure in their power bills.

Data centers use a lot of the energy, so they would pay more. But household consumers could see their electric bills go up as well. Julie Boathouse is the director of land use at a local environmental nonprofit called the Piedmont Environmental Council. She grew up in the area and has worked at the nonprofit for 15 years.

She started paying attention to data centers in recent years because of how much power infrastructure is going up to support them. Prior to maybe 2021, I had only worked on two or three transmission line proposals. They were very rare, infrequent. And within the last three years, I've been a participant.

participant and stakeholder meetings for at least a dozen transmission line proposals. The amount of transmission lines that our community is seeing is unprecedented. We've never seen this many transmission lines at once. The Piedmont Environmental Council has been keeping track of all these data centers and associated power infrastructure. They say that the power company and state regulator have been approving many of these projects.

But there is not enough public information about how much energy the data centers use and their impact on air and water quality. We need transparency so that we can proactively plan ahead. Because right now what we're doing is basically like our utility is handing out blank checks that say,

We, the rate payers, are on the hook for paying for. And as a public utility, we are the most heavily regulated industry in Virginia. Aaron Ruby is a spokesperson for Dominion Energy, the largest utility in Virginia. He says the state regulator reviews the energy costs to make sure everyone is paying their fair share.

He says the share of energy costs that households pay for has gone down, whereas the share for data centers has gone up. This issue has gotten a lot of residents riled up.

There have been some memorable public meetings in Northern Virginia about the expansion of data centers last year. One that ran for eight hours and another one that ran for more than 24 hours with hundreds of people lining up to speak. Here are some highlights. Good evening or good morning. I'm tired, but I'm here to speak.

I hope you forgive me for speaking before my turn, but I have to go to school tomorrow. These enormous buildings are cold and unwelcoming. We all know this about data centers, and I assume we have all felt this. If you haven't, drive through the black hole of data centers in Ashburn. This feeling is just like the one described in Harry Potter. Like you are encircled by dementors.

And paraphrasing, it is an intense cold that sucks the happiness from you until you have no sense of self anymore. Some speakers even issued a warning to elected officials supporting the new data centers. You'd better be real sure that the scratch that Amazon promised to line your pockets with is enough to buy you a one-way ticket and a new identity.

because you'll never be able to show your face around here again. Buddy Reiser helped bring data centers to Loudoun County in Northern Virginia as the Executive Director for Economic Development for the county for the past 17 years. He was not at that particular public meeting, but he says in 2007, during the Great Recession, their local economy took a big hit.

When the housing bubble burst, the county lost a third of its tax revenue. So he and his colleagues made an effort to attract more data centers. For the first decade or so, we were thankful to have them. To be able to transform our economy the way we did...

to be able to collect about a billion dollars in local tax revenue a year from one industry, to be able to build world-class schools and put a billion dollars into road improvements. He says all of that happened in Loudoun County because of data centers. Data centers have such an inordinate return on investment for a community that there's nothing else that comes close.

As an example, for every dollar a data center uses in services in our community, we get $26 back. There's nothing that comes within $24 of that. He says the tax revenue from data centers is almost a third of the county's budget and completely funds their operating budget.

But he has also heard all the concerns about how quickly the industry is growing in their area. So I have a lot of conversations at the grocery store or when I'm filling my car with gas. And it's a very visible topic in our community. The unprecedented demand for electricity is what worries him.

Dominion Energy, the power company, said that they expect the power demand from data centers to nearly quadruple over the next 15 years. The demand for power has never gone up by so much so quickly.

Some of that will be from natural gas plants. But Dominion says most of that will be from renewable energy, like wind and solar power. The fact of the matter is, the data center industry is the number one purchaser of renewables in the world.

And they're funding a great deal of the renewables that are being built. And Amazon's spokesperson echoed that sentiment. In a statement, the company pointed out that Amazon has been the world's largest corporate purchaser of renewable energy for four years, and that 90% of the energy the company uses comes from renewable sources. ♪

Buddy says data centers actually do not have a lot more room to grow in Loudoun County anymore. The more recent proposals for new data centers have been in the surrounding counties, Maryland, states like Kansas and Mississippi, or other countries like China, India, Japan, and Malaysia. That story was reported by Alan Yu.

Keeping the power supply steady is a top priority for data centers. And beyond working with utility companies to up their capacity, there is another potential solution here. Create your own power supply. Grant Hill has this story. Salem Township is a small town in western Pennsylvania that's home to about 4,000 people. Last spring, they learned that a new neighbor was moving into town, Amazon. ♪

That, on its own, is not remarkable news. The company operates hundreds of fulfillment centers across the country. But that's not what the company was doing in town. In Salem, Amazon was going nuclear. Last March, the company announced it was purchasing a newly constructed data center that's completely powered by the Susquehanna Steam Electric Station, a 40-year-old nuclear power plant in Salem Township.

According to local news reports, residents had a lot of questions about what's to come. After all, the company that runs the power plant, Talon Energy, just finished construction on the data center last year, shortly after the firm had filed for bankruptcy. The company emerged from their financial troubles just a few months later. Amazon bought the Salem facility for $650 million.

sent out unsolicited bids to local property owners to buy up adjacent land for even more capacity, and essentially proclaimed nuclear-powered data centers a thing. Amazon promises the site will create 600 well-paying jobs in Salem. But the questions remain. The reactors are scheduled to be decommissioned in just 20 years. What happens then? And if Talon goes under again...

Who will take over responsibility for the power plant and the radioactive material inside it? The danger with this model of siting data centers at existing nuclear plants is

really has to do with the nature of their contracts. Edwin Lyman is the director of nuclear power safety for the Union of Concerned Scientists. He says the nuclear power plant business has always been precarious, despite its low carbon footprint and always-on advantage. You know, I don't want to sell nuclear power too short. It has proven its ability to generate electricity. There are significant risks.

And those risks have not been appropriately dealt with in my view. The laws of physics are stubborn, and the price for the manpower and costs associated to operate and protect these facilities? Astronomical.

Historically, investors haven't gotten great returns. It's part of the reason why investment stalled in the 1980s. The only two new plants that have been started up in the United States in decades, the Vogel 3 and 4 reactors in Georgia, those projects have turned out to be as successful

expensive and experience similar delays to the projects that were canceled back in the 80s. Since new construction doesn't seem feasible, data center operators are looking to tap into the already existing nuclear fleet like Amazon in Salem Township. In the short term, Edwin says that interest may represent an enticing lifeline for struggling power plant operators.

But in the long term, Edwin says the incentives can easily become misaligned. Presumably these data center operators are going to want a long-term power purchase agreement to get the electricity at a certain price.

And this puts a burden on the operator. In the case of Susquehanna plant, that's Talon Energy, a company which has already gone bankrupt. They have to supply, you know, the power at a fixed price. And these are aging plants.

And it's this long view that worries Edwin. As profit margins compress with time, will this new demand leave the companies running our creaky old nuclear fleet in even worse financial shape than they are now? And even if those agreements are well thought out,

What happens to all the radioactive waste if those operators can't stick it out? If it's stored properly, there's a low chance it's going to contaminate the environment, but it's going to be around for hundreds of thousands of years. Amazon did not comment on its long-term plans for what happens when the nuclear reactors powering its new data center will be decommissioned in a couple of decades.

But Clay Sell, CEO of the Maryland-based company X-Energy, welcomes the new nuclear renaissance and the data centers that are ready to reignite the industry. Of all of the industries that produce power,

The nuclear industry actually has the best waste story of any of those industries. Clay served as deputy secretary of the Department of Energy under George W. Bush. He says nuclear energy gets a bad rep. We don't release our waste into the environment. We don't release it into rivers and lakes. We keep it contained in steel and concrete boxes until the U.S. government comes and picks it up.

and puts it in a permanent geologic repository. But a recent report from the U.S. National Academies of Science, Engineering, and Medicine found that things are not that clear-cut or simple. In 2023, nearly 90,000 metric tons of highly radioactive nuclear waste from commercial reactors remained at these reactor sites, boxed up with nowhere to go.

Experts estimate that number will grow by 2,000 metric tons each year. Clay says that's not stopping the industry. But he and his team at X-Energy want to give data centers and other industries a second nuclear option, one that doesn't involve relying on these older nuclear facilities.

His company is developing small modular reactors, or SMRs. Imagine a nuclear power plant that's mass-produced and safe, but shrunk down to the size of a small building. For over a decade, SMRs have been a bit of a holy grail of industrial energy production, attracting investment from the likes of Bill Gates.

The dream is for these tiny theoretical reactors to produce enough power to run a factory around the clock or supplement utility companies when renewable energy sources like wind and solar go dark. Small nuclear reactors have powered naval submarines for decades now, but commercial land-based SMRs have proven elusive.

Despite several efforts from an array of companies and investors, only one SMR is almost ready for primetime, and that's in China. Clay believes X-Energy has finally cracked the code with unique reactor designs that he says are impossible to melt down, cost-effective, and uniquely positioned to get the okay from the U.S. government.

There's a public perception around waste that is not actually an issue for our customers because they understand it. The issues for our customers are licensing risk and construction execution risk, and that's why we're so heavily focused on that. The state of Texas recently announced that its taxpayers will fund half of X Energy's very first project.

a partnership with the chemical company Dow to power a factory entirely with X-Energy's reactors by the end of the decade. If you can't build coal plants anymore because companies are unwilling to take the carbon risk, and I think that's appropriate, then you need a clean, firm source of power, and that comes from nuclear. And that's really what is driving the demand from industrial customers,

data center operators and utilities that say we have to have 24-7 power and we don't want it to emit carbon. Clay says his company will soon be ready with SMRs to meet demand from other data center operators who want to go clean.

Amazon says it will run on 100% carbon-free renewable power by next year. And with its arrival in Salem Township, the company declared nuclear power part of that plan. For The Pulse, I'm Grant Hill.

We're talking about Amazon at 30. So here are a few things I ordered recently. A cable for a speaker, collagen powder, a book. How does it get from their warehouse to my doorstep with just a few clicks? We'll look into the logistics powering online shopping. So we have 216 stops today and then we have 322 packages. That's next on The Pulse.

This is The Pulse. I'm Maiken Scott. We're talking about Amazon at 30 and the innovations that have powered this company.

A lot of what makes Amazon so successful is hidden from our view. It's the millions of wheels turning behind the scenes. This is one of the areas where the company has done most of its innovating in taking control and optimizing every part of a massive supply chain. How does it work? Liz Tang looked into it.

I'm sitting on my couch, engaging in one of my favorite hobbies, if you can call it that. Browsing skincare on Amazon. Right now, I'm looking for exfoliants. So when I type in beta hydroxy acids, I get 824 results.

OK, let me filter by average customer review. We've got Pharmacy Deep Sweep, Clean and Clear, COSRX, Pixi Beauty. Ten or 15 years ago, this selection process would have happened in my nearest drugstore. But here I am, not just sitting on my couch, but also choosing from hundreds more products than I could have ever dreamed of before.

Okay, here it is. Paula's Choice Skin Perfecting 2% BHA Exfoliant. So I'm going to go ahead and add that to my cart, proceed to checkout, and oh great, it'll be delivered tomorrow. The key to this skincare product getting to my house, and really the key to Amazon's success, lies in hundreds of connections that happen behind the scenes.

goods being picked, shipped, and transferred until they arrive at my door. A giant global structure. A supply chain. Mostly invisible to customers. So how does it all work? Selena Silvestri is a research scientist at the MIT Center of Transportation and Logistics.

And she says getting so much stuff from point A to point B requires answering a lot of questions. Which suppliers serve which items in which amount? How often do they do that? How these goods are actually shipped from suppliers to distribution centers using which transportation modes? And how these goods are managed into a warehouse? And then how do we ship these goods to final customers?

Today, Amazon sells more than 600 million products. And as their offerings have grown from books to toys, electronics, clothes, and eventually pretty much everything, it

it became necessary to take more control over their inventory. They needed to ensure that items were available, that they could deliver promptly. They also needed to start having their own warehouses. And they had to do so with two things in mind. They needed these to be cost-efficient, and they needed also to have these warehouses in location that would allow them to ship fast. Amazon called these warehouses fulfillment centers—

sprawling buildings where products are received from manufacturers or sellers, sorted and packaged for delivery. A process that operates like intricate clockwork. They now have hundreds of these fulfillment centers around the world. I talked with Linda, a woman who works at one of them in the Philly area. She asked us not to use her last name to protect her job.

The center where Linda works is around a million square feet, with a staff, Linda estimates, of 3,000 to 4,000 people.

All of whom have highly specialized jobs to go along with a highly streamlined packing process, which begins at the first floor loading docks. The inbound stuff will come in, then it goes on a belt and the belt will go upstairs. Here, the goods get unboxed and stowed into what are basically these big freestanding shelves they call pods.

After that, somebody else counts the items to make sure nothing's been lost. And then it goes to a picker who is picking inventory out of the pods and then putting them into totes. Big yellow plastic bins that then get sent back down to the first floor, where items get packaged into boxes and envelopes, plastered with shipping labels, and then taken to the ship dock, where they're placed on pallets to be loaded into trucks.

This is where Linda works. And it isn't just humans who are doing this. Amazon also has robots helping out.

And then Amazon also has other strategies for speeding up the packing process, putting pressure on employees. Yes, automatic write-ups. They will automatically, like, it's not even a person writing you up. It's just a computer saying, like, you were in the bottom 3%. And it's like, everyone could be going fast, but if you're at the bottom 3%, they could write you up just automatically. ♪

So that's how the warehouses run and keep running at greater and greater speeds. But how does the company know what stuff needs to be in which warehouses and when? The answer is another key innovation that's allowed Amazon to stock thousands of different products in the places they need them. Machine learning.

Here's Selena again. Amazon has been able to develop solutions, analytics, leverage analytics, leverage machine learning to build algorithms that would allow them to predict demands. That way, they know how much of a product to stock at any given time. Some of the predictions are easy. For example, that you'll see a surge in demand for grills ahead of the 4th of July or for winter coats in November.

Others are a lot more complicated. Like, for instance, predicting the run on toilet paper or demand for sweatsuits during COVID.

For those, the forecasting algorithm takes into account everything from browsing trends to medical data to macroeconomic trends. All of these innovations, from warehouses to deep learning algorithms, have helped Amazon build its own inventory system. Selena says another key thing Amazon did to win over customers was to improve shipping speeds.

Their shipping operation went on steroids in a way when the company announced Amazon Prime in 2005.

For a fixed annual fee, customers could order as much as they wanted, as often as they wanted, and for no extra cost, get those products delivered in two days. And that was a game changer because what happened then was that customers started to shop more often and buy more things because it was for free once they had paid that fee.

And this increased also the expectations, which back then, at least at the beginning, the competitors could not meet. So how did Amazon achieve this super fast shipping? In the beginning, Selena says, they formed relationships with existing delivery companies like USPS, FedEx and UPS. At one point, they agreed with USPS.

to also deliver on Sundays, which was the first time that happened ever. This new system, relying on third-party delivery services, worked for a while. But in 2013, Amazon faced a reckoning. That Christmas, the company ended up dealing with whores.

hordes of angry customers and bad news coverage to boot when thousands of packages arrived late. One of them calling UPS standing for undelivered parcel shipment. Others saying that the company's ruined Christmas for them. The culprit? UPS, which in turn blamed bad weather and a last-minute surge in orders for their failure to deliver on time.

It seemed like Amazon had created customer expectations it could no longer meet, at least not with the current delivery model. So Amazon's first reaction was they started to invest on their own fleet.

So they started to buy their own vans to manage on their own the last mile piece. And that marked the beginning of Amazon's now ubiquitous army of navy blue vans. This new homegrown fleet wasn't just designed to solve the problem of orders exceeding the capacity of UPS or USPS. It was designed to solve something Selena just mentioned.

The last mile problem. So the last mile problem is the moment in which consumers meet the supply chain of the companies. A lot of Amazon products make a huge, sometimes global journey from manufacturers to suppliers, suppliers to warehouses, warehouses to delivery trucks. And then comes the actual delivery right to your door. The last mile. Which

which surprisingly is the hardest and most expensive leg of the journey. So there is this problem for delivery guys to navigate the complexity of urban areas to deliver. They need to respect constraints on streets. They also need to face traffic issues.

and peak hours. So there is a lot of uncertainty because most of the last mile deliveries are done in urban areas. And if you don't do that properly in an optimized way, that's the most expensive piece of the supply chain, of the journey of a good, and you run the risk of not meeting customer expectations. Like everything else with Amazon, their delivery process is highly streamlined.

There's an Amazon driver named Chris Singh who goes by the YouTube handle Laos House and posts about his daily challenges. So we have 216 stops today and then we have 322 packages. Once he's all loaded up, Chris sets off. So we just left the station and we're headed to our first stop. It's about 21 minutes and all we got to do is start traveling.

And he starts making deliveries. All right, I found my first two packages. They're going to go to this house. So let's do it. Don't forget the pitcher. Now we just got to do that 215 more times and we'll be done. So let's do it. And this is how, two days after I ordered it, my fancy exfoliant arrived at my house. Oh, I think that's him.

Great. Thank you so much. The driver quickly moves on to the rest of the 200-some stops on his journey. And I look at the package. I'm not exactly sure where it was shipped from. But having peeked behind the curtain, I feel like I've just been handed the baton in the world's most complicated relay race.

That story was reported by Liz Tong. That's our show for this week. The Pulse is a production of WHYY in Philadelphia, made possible with support from our founding sponsor, the Sutherland family and the Commonwealth Fund.

You can follow us wherever you get your podcasts. Our health and science reporters are Alan Yu, Liz Tong, and Grant Hill. Charlie Kyer is our engineer. Our producers are Nicole Curry and Lindsay Lazarski. I'm Maiken Scott. Thank you for listening.