Turmoil at Bezos' Blue Origin: Talent exodus came after CEO's push for full return to the office

Jeff Bezos’ Blue Origin is suffering from an elevated turnover rate, CNBC has learned, with the space company losing talent primarily from CEO Bob Smith’s pressure to return to the office.

A Blue Origin spokesperson told CNBC that attrition “has never exceeded 12.7%” on an annualized rate, which measures personnel losses over the 12 months.

While that’s notably above the company’s typical attrition of 8% to 9% a year, multiple people familiar with the situation told CNBC that, measuring from the start of the calendar year, attrition has already exceeded 20% for 2021 – noting that Blue Origin’s lower rate includes months of data before the recent surge of employees leaving.

“We are seeing attrition rates comparable to those reported by other companies as part of what many are calling ‘The Great Resignation,'” a Blue Origin spokesperson said in a statement.

Given that Blue Origin has nearly 4,000 employees, the departures represent hundreds of personnel this year. The company’s spokesperson told CNBC that Blue Origin’s total headcount has grown by just over 450 people since the end of last year, from 3,503 employees to 3,957 as of August.

One person explained that losing talent causes widespread delays for Blue Origin’s programs, as getting new hires up to speed can take from six months to a year.

Blue Origin’s talent exodus, which CNBC reported in August, features employees from top to bottom in the corporate hierarchy, including:

• New Shepard SVP Steve Bennett
• Chief of mission assurance Jeff Ashby
• Senior director of recruiting Crystal Freund
• National security sales director Scott Jacobs
• New Glenn senior directors Jim Centore, Bob Ess, and Tod Byquist
• New Glenn senior finance manager Bill Scammell

Multiple people told CNBC that the departures are a direct reflection on the leadership of Smith – in sharp contrast to the praise they gave for the passion and creativity of their peers within the company. The people who spoke to CNBC did so on condition of anonymity, fearing retribution or loss of job opportunities.

The experience of those who spoke to CNBC, and their view of the company’s management, in many ways matched that of the 21 current and former employees who published an essay about Blue Origin on Thursday, alleging a “toxic” work culture. Smith responded internally to the essay in a company-wide email that was obtained by CNBC, seeking to “reassure” the company and emphasize that there is “no tolerance for discrimination or harassment of any kind.”

Smith runs the company for founder Bezos, who hired him from Honeywell in 2017. Many of those leaving Blue Origin do so reluctantly, CNBC learned, loving the technology’s potential and having bought into Bezos’ vision.

Several people emphasized the exodus is a huge concern for Blue Origin, as the space industry has become incredibly competitive. Additionally, its headquarters in the Seattle suburb of Kent, Washington means that the best engineers can find high-paying work in other sectors. Finding the right new hires may also become more difficult without Freund, who left in September.

Some business units have suffered greater losses than others: The New Shepard program has had people leave in droves, one person said. The finance team has also had steady personnel losses, with a source describing budgeting as a nightmare at Blue Origin. One example of budgeting issues told to CNBC was the Jacklyn ship, which Blue Origin bought from Swedish shipping company Stena Line to turn into a landing platform for its New Glenn rocket boosters. Jacklyn has had number of setbacks during retrofitting, one person said, and the project is 21% over budget, according to another – who noted that delays were related to the Covid pandemic.

The company’s vice president of finance Lisa Graham is leaving next week, two people familiar said.

Blue Origin’s human resources team used to perform exit interviews for anyone who left the company. But HR representatives have largely stopped doing so, two people said, with the few still doing exit interviews “drowning in people” leaving.

The central sticking point, and cause cited by many people who recently left, was Smith’s strong push this year for all Blue Origin employees to return to the office. Called “Blue Back Together,” the plan came despite a petition signed by hundreds of employees to at least implement a hybrid work model – a petition people familiar said was never acknowledged by Smith.

Instead, Smith spent millions of dollars this year renting out expansion office space near the company’s headquarters, sources told CNBC. He wanted every single employee back into the office by September, with no flexibility for a hybrid model – and planned to effectively ban remote work, these sources said.

Additionally, as part of Smith’s rush to return employees to the office, people familiar with the matter said the CEO in May began a Covid vaccination disclosure program, through “green dots” on company badges. But Smith’s initiative was on a good faith basis, multiple people said. Employees simply had to ask the office receptionist for the circular green stickers to add to their badge, with no proof of vaccination required. Later Blue Origin added a paper sheet for employees to sign before they could get a green dot, but still no one had to show a vaccine card or indicate when they received it.

While Bezos in the spring was supportive of bringing employees back, a person familiar said he later overruled Smith’s push. Aside from a limited number of essential workers, Blue Origin employees continue to work fully remote, two sources said, with the full return to the office now delayed to January.

Bezos hired Smith to be his right-hand man and make day-to-day decisions, serving in a similar role to SpaceX president and COO Gwynne Shotwell under Musk.

Smith has rapidly grown Blue Origin’s headcount, from just over 1,000 employees when he joined in 2017. But Smith’s time has also seen the company struggle to deliver on multiple major programs, highlighted by Blue Origin’s chief operating officer leaving late last year.

The company’s biggest win this year was the first crewed New Shepard launch, which was a smooth success. But the milestone for the suborbital rocket came after years of delay, with Blue Origin having previously said New Shepard would launch people by the end of 2017.

New Glenn is the reusable, next-generation rocket that Blue Origin is developing for orbital launches, a marketplace dominated by SpaceX and United Launch Alliance. The rocket was originally slated for its inaugural flight in 2020, but was delayed until at least the fourth quarter of 2022. A person familiar with the rocket’s development progress said that goal is extremely optimistic, putting New Glenn’s inaugural launch at 2024 or later.

BE-4, the centerpiece of Blue Origin’s stable of rocket engines, was supposed to be ready by 2017, but a myriad of development issues mean the company has yet to deliver its first flight-ready engines. Notably, the BE-4 program is important beyond the company, as ULA signed on to use the engines to power its Vulcan rockets, choosing Blue Origin over Aerojet Rocketdyne as its supplier – with ULA long-serving as a trusted launch provider for the Pentagon’s valuable and classified spacecraft.

The ULA contract specified that Blue Origin would delivered the first two flight-ready BE-4 engines by April 2020, a person familiar with the deal told CNBC. But, in early 2019, the company’s engines team presented an update to Smith and every component of the BE-4 engine had a technical issue associated with it, that person said. The company has yet to deliver those flight-ready BE-4 engines to ULA.

Blue Origin is also locked in a fierce court battle, after having lost NASA’s award of a multi-billion dollar lunar lander contract to SpaceX.

Pressure from delays and contract losses might explain why some see Smith’s leadership style as gruff or heavy-handed. But one person close to the CEO emphasized a disparity between Smith and the expectations of the largely Washington-based workforce – who are often very competitive, and don’t need to move to find similarly technical, well-paying jobs.

That person also highlighted disjointedness in the team around Smith. At one meeting, for instance, Smith told his team “there’s nothing you guys can teach me that I don’t already know,” according to two people with knowledge of this discussion.

Another person close to Smith told CNBC said that at one point the relationship between the CEO and his senior team deteriorated so much that Blue Origin hired a leadership consultant to examine the situation. After doing hours of one-on-one interviews with Smith’s executive team, the consultant began their feedback presentation to Smith with the line: “It is the unanimous opinion of your senior leadership team that you are a micromanager.”

Smith responded simply: “You think you’re telling me something I don’t know? I’m damn proud of it, and have no intention to change,” according to two people who were in the meeting and a third who heard about his comments after the fact.

A Blue Origin spokesperson denied those comments, saying in a statement: “We have checked with the entire leadership team and the leadership consultant you referenced and we can 100% confirm that those statements were never said.”

While the specifics around Blue Origin’s turnover have not been previously reported, the broad internal distaste for Smith has. It’s reflected in the job site Glassdoor, which shows that just 19% of employees approve of Smith’s leadership. That’s sharply below the approval for other space executives, as Glassdoor shows 91% of SpaceX employees approve of CEO Elon Musk and 77% of United Launch Alliance approve of CEO Tory Bruno.

Bezos, who is investing billions into Blue Origin through Amazon stock sales, has yet to show that he is unhappy with Smith.

For his part, Bezos has begun to spend more time with his space company, as CNBC reported on Monday. Two people familiar with his involvement said Bezos is technically astute, showing an in-depth understanding of spacecraft and rocketry. However, those people also said there is little to no chance Bezos decides to run Blue Origin full-time himself.