Ted S. Warren/AP Photo
Dave Clark, then senior vice president of worldwide operations for Amazon, talks to reporters on June 27, 2018, in Seattle.
It was hard not to feel a hint of schadenfreude over the unusually public, mysteriously nasty firing of former Amazon worldwide operations czar Dave Clark, who’d last year joined a buzzy supply chain startup after getting beaten out for the top job at his former employer by his longtime rival Andy Jassy.
For nearly a quarter-century, Clark was the rare human embodiment of the dark side of a company that seems to outsource most of its dirty work to robots and algorithms. The son of a Georgia carpet salesman, he joined the company the day he graduated business school in 1999, and built his reputation at the company not in Seattle but from a warehouse in Kentucky, where he once told fellow executives he made a habit of “lurking in the shadows [and] scoping out slackers he could fire,” a vignette that won him the nickname “The Sniper.” Clark’s affect is unsettlingly bland: prodigious Diet Coke drinker and wearer of sweater-vests, whatever accent he’d grown up with suppressed into a deceptively low-key monotone. Colleagues nicknamed a clique of intermediaries variously known within the company as “Dave Whisperers” and “Vesties” (for the sweater-vests), who interpreted Clark’s directives so as not to incur his wrath.
In 2015, Clark launched Amazon Flex, the much-loathed Uber-like platform that expanded the ranks of Amazon delivery drivers to millions of gig workers with promises of wages as high as $25 an hour; the next year, he presided over a stealth cost-cutting initiative to secretly usurp tens of millions of dollars in tips customers had voluntarily paid to those same Flex drivers, despite multiple internal warnings from subordinates that such a move could ignite an “Amazon reputation tinderbox.”
But in spite of his reputation as a penny-pincher among Amazon’s worker army, Clark was also famously extravagant when it came to expanding and protecting the company’s retail monopoly. He spent billions on planes and ships and warehouse robots, even custom manufacturing proprietary shipping containers. More than perhaps anyone at Amazon save Jeff Bezos himself, Clark embraced burning cash as a long-term strategy for making Amazon the shipper to the world, the gears behind and the toll collector for every transaction in the economy. In 2021, the FTC ordered Amazon to repay its Flex drivers $61 million in stolen tips; the previous year, it spent a staggering $61 billion on shipping alone.
And so it was probably inevitable that Dave Clark at the helm of the young San Francisco logistics startup proved unable to compete with the juggernaut Dave Clark had built with hundreds of billions of dollars in other people’s money. Last week, his new employer, the ten-year-old Flexport, fired the Amazon veteran and at least a half dozen of his top recruits in unusually soap-operatic fashion, just a day after he appeared on a Fortune magazine podcast discussing his leadership style and plans for supply chain dominance.
His specific fireable offenses are not entirely clear, but Clark’s ouster was closely preceded by the announcement that Flexport’s most important partner was doing a major deal with … Amazon. If Amazon’s stranglehold over e-commerce seemed impregnable while Clark was running things, the saga at Flexport vividly encapsulates how much stronger its dominance has become in a landscape of soaring interest rates and inflation-battered demand. Fortunately for Americans, the Federal Trade Commission is widely reported to be on the verge of filing a comprehensive antitrust lawsuit seeking to break up Amazon. Less auspiciously, Amazon did not even attempt to offer any concessions of its own in hopes of preempting the agency’s case, and the federal judiciary has given the company ample reason to believe it is inclined to side with Big Tech. In the meantime, Flexportgate is just the latest sign we may be seeing more and more of our consumer dollars flow into Amazon’s tollbooth.
DAVE CLARK FIRST BECAME A TRENDING TOPIC after the Retail, Wholesale and Department Store Union launched a drive to unionize a distribution center in Bessemer, Alabama, in 2020. When Bernie Sanders traveled to Alabama to rally the union’s supporters, Clark taunted the Vermont senator on Twitter, and Rep. Mark Pocan (D-WI) responded with a reference to Amazon drivers’ notorious practice of peeing and pooping in bottles and bags in the effort to finish deliveries quickly enough to avoid getting penalized by the company’s punishing productivity algorithms. The “anonymous” author of the Amazon News account responded mendaciously, “You don’t really believe the peeing in bottles thing, do you? If that were true, nobody would work for us.” (A female Amazon driver alleged in a lawsuit filed in May that her supervisor even counseled her to buy a “Shewee” to make bottle-peeing easier.)
Amazon ultimately apologized for its tweet, but a few months later Clark banned the term “restroom” from an internal worker messaging app—along with “slave labor,” “plantation,” and “union”—in what he described as an attempt to “reduce employee attrition by fostering happiness in workers.”
In his zeal to “foster happiness” without unions or bathroom breaks, Clark crossed a major line, however. Not long before the tweetstorm, Clark personally requested that the United States Postal Service install a mailbox on the Bessemer property, over which the company placed a tent instructing workers to “vote here” in the union election. The mailbox, which an Amazon employee later testified she had seen security guards unlock, was ultimately the subject of a National Labor Relations Board investigation that led to the overturning of the warehouse’s first union election, which had resulted in a blowout loss for the RWDSU. A subsequent spring 2022 re-election yielded a much more favorable result for the union, but 18 months later more than 300 contested ballots still have yet to be recounted. (A hearing two weeks from now could determine whether the warehouse holds a third election.)
In 2015, Clark launched Amazon Flex, the much-loathed Uber-like platform that expanded the ranks of Amazon delivery drivers to millions of gig workers.
Notably, Amazon’s domineering relationship with the USPS may have been fodder for the initial opening of the federal antitrust investigation into the company’s operations. Back in March 2018, then-President Donald Trump began tweeting furiously about how Amazon was “scamming” the Postal Service out of “billions” by underpaying for its last-mile delivery services, and that the time had come for the company to start paying its fair share of both postage and taxes. Then-Attorney General Bill Barr officially opened an antirust investigation into the company the following year, after raising some eyebrows by promising to make antitrust enforcement a “priority” during his confirmation hearings.
Oversight of the investigation moved to the Federal Trade Commission under Joe Biden, whose chair Lina Khan made her name with a 2017 Yale Law Journal article arguing that Amazon’s business was almost entirely predicated upon the ostensibly illegal practice of predatory pricing, wherein a dominant company sells goods and services at a loss for a protracted period of time with the intention of running erstwhile competitors out of business, only to recoup earnings thereafter. Predatory pricing is, of course, the foundational business model of the entire ecosystem of 21st-century Silicon Valley venture capital, but as Khan explained in her analysis, the emergence of Amazon and its imitators coincided with a few Supreme Court decisions that raised the burden of proving a company had engaged in predatory pricing to veritably impossible standards.
While Clark’s project of establishing its own end-to-end transportation empire cost Amazon dearly, it is also the source of the company’s dominance over retail. Most of the stuff sold on the Amazon platform comes from independent businesses that pay Amazon commissions to appear on the platform. The vast majority of third-party sellers now also pay Amazon to warehouse and deliver their products themselves, and a large proportion also pay Amazon extra commissions to advertise their products and preference their goods in search results. All in, the average third-party seller in 2022 paid Amazon nearly 52 percent of the revenue they generated on the platform, up from 35 percent in 2016, according to Marketplace Pulse data.
This surge would seem to bolster Khan’s predatory-pricing thesis, as well as the notion that Amazon is illegally tying and bundling services to eliminate competition. And after all that, third-party sellers say, a small tweak in the algorithm, or a stealth sabotage campaign orchestrated by a competitor (or Amazon’s own private-label department), can instantly cut their revenues to zero. The FTC lawsuit, which is likely to be filed this month, will probably seek to separate the various parts of Amazon that make it so dominant over commerce: logistics from marketplace, advertising from private label.
GIVEN THE BACKDROP OF BOTH THE ANTITRUST and the NLRB investigations, no one was surprised when Dave Clark left Amazon last summer, just over a year after Bezos passed him over for CEO in favor of his “Better Cop” rival Jassy, who had helmed the company’s cash-cow web services division. But Clark’s landing spot was eyebrow-raising: Flexport was a mostly unknown shipping startup whose fortunes and profile had been buoyed by the supply chain crisis and the Twitter fame of its young founder/CEO Ryan Petersen, whose popular threads (and … children’s book?!) on logistics bottlenecks garnered him a profile on the front page of the Los Angeles Times, a Forbes cover, and an extra $935 million in venture capital funding at the start of 2022.
Back in 2016, Petersen had broken the news on the Flexport blog that Amazon China had registered to operate as an ocean freight forwarder, speculating that the company might be making a bid to undermine rivals like Wish with Chinese merchants but cautioning domestic businesses not to trust Amazon with their data or sourcing relationships. Flexport’s own business model was something of a moving target. When it launched as a tech-savvy customs brokerage in 2013, its stated “aim [was] to be the most disruptive company in global trade since the East India Company—only we’ll be a LOT nicer.” By 2015, it was billing itself as the “Uber of shipping containers”; more recently, it’s described its business as “shipping as a service.”
By the time Clark came aboard, Flexport was having an undeniable Moment: The supply chain crisis was driving even import-export veterans to seek out new sources of expertise and relationships, and Flexport netted clients as big as Georgia-Pacific, and turned its first profit in 2021. With Clark on board, the company pivoted yet again: It would seize the opportunity to become a sort of asset-lite, DIY Amazon alternative. In hindsight, this was obviously a cursed idea: Flexport had raised all of $2.5 billion in venture funding, interest rates were headed to levels Silicon Valley hadn’t seen since AOL bought Time Warner, and the global freight business was on the precipice of a collapse in demand.
But it’s also easy to see why it was so enticing: From the small-business community to the business press, demand for an “Amazon only a LOT nicer” type of tech unicorn was legitimately rabid. Pandemic lockdowns had unleashed a million small merchants selling stuff online, but only the Canadian retail software company Shopify and its “anti-Bezos” founder Tobi Lütke seemed to view small businesses as anything other than prey. The problem with Shopify, though, was that it had no way of helping clients get stuff to customers in a timely fashion; during the supply chain crisis, FedEx ground shipments regularly took more than a month to arrive. As one Shopify seller lamented in an otherwise fawning profile in late 2021: “It sure would be nice if they did something to help us compete against Amazon.”
All in, the average third-party seller in 2022 paid Amazon nearly 52 percent of the revenue they generated on the platform.
Under Clark’s leadership, Flexport cast itself as just that something, staffing up with well-remunerated Amazon veterans, signing leases across the country, and brokering a deal in May to acquire Shopify’s fledgling supply chain arm in exchange for $1 billion in stock, a transaction that left Shopify with a board seat and a 17 percent stake in the company—far larger, it’s worth noting, than Petersen’s. The deal, in which Flexport became Shopify’s “sole official logistics partner,” was cheered as a potential paradigm shift for small e-tailers, with business pundits depicting Clark as going head-to-head against his old behemoth. “I personally would rather think of ourselves as more of an extension of the Amazon network than a competitor to the Amazon network,” he told Maria Bartiromo in a news segment touting the deal. At the time, the hedge seemed like an innocent mix of company-man modesty and the shrewdness of someone who knew better than to openly proclaim his intention to come for the King.
But then, on August 31, Shopify announced it would be offering its sellers the opportunity to partner with another official logistics partner: Amazon. The news sent Shopify’s stock soaring, but at Flexport heads began to roll. The company’s board tapped Petersen to return to the company, fire Clark and at least five of his cronies, and rescind offer letters the Clark administration had extended to some 75 new hires.
Last Wednesday, according to an interview Clark gave The Information, Petersen told him via Zoom that he could either resign that afternoon or be fired by the board the following day; Clark chose to resign, casting Petersen as a stereotypical control-freak founder who didn’t approve of a stranger running his baby—an implausible scenario given Petersen’s tiny ownership stake in Flexport. Weirdly, Clark’s camp also told The Wall Street Journal he’d been considering running for the governorship of Texas as a “moderate Republican.” (Clark recently donated $25,000 to Greg Abbott.)
At that point, Petersen seems to have gotten angry. On Thursday, FreightWaves broke the news that Flexport had actually fired Clark; on Friday, Petersen posted a profuse apology to all the new hires whose offer letters were being rescinded, taking a dig at Clark in the process. “It’s messed up. But no way around it, we have had a hiring freeze for months I have no ideas why more than 75 people were signed to join. Or why we had over 200 open roles are on our web site.”
A viral conspiracy theory circulated, suggesting Clark had deliberately sabotaged Flexport on Amazon’s behalf—which certainly wouldn’t have been out of character for Amazon, which famously used the data of its own third-party sellers to form competing brands when their wares got popular enough.
But just as likely, Clark’s attempt to build Flexport/Shopify into an Amazon alternative could have been part of some larger project to create the appearance that Amazon’s e-commerce empire has viable competition, or that said fulfillment empire operates autonomously from its marketing and payment platforms. And perhaps even likelier, Clark failed to turn Flexport into a juggernaut for the same reason his former colleague Matthew Furlong failed to turn around GameStop, which fired the former Amazon executive in June: It’s a lot easier to succeed when you’re working for the monopoly than it is when you’re trying to compete with it.
Whatever the case, between the Flexport coup and its expectations-obliterating recent earnings announcement, Amazon’s monopoly seems more impregnable than ever, and if her agency is serious about breaking its stranglehold over American commerce, it might behoove Lina Khan to slide into Ryan Petersen’s DMs sometime soon.
