Monday, May 16, 2022

Jeff Bezos steps down as Amazon CEO, opens a new era for the company

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Jeff Bezos has a formulation about one-way doors—decisions that are irreversible and permanent, and two-way doors—decisions that can always be unwound. On Tuesday, Bezos stepped through what’s almost certainly a one-way door as he said he will resign as Chief Executive Officer (CEO) of Amazon and become executive chairman later this year. His longtime head of Amazon Web Services (AWS), Andy Jassy, will take over the day-to-day control. 

With this resignation comes, if not in entirety, at least a partial end to one of the most epic runs in modern business history. Yet, the move seems to be natural and even inevitable. Over the last 25 years, Amazon witnessed one of the most fertile periods of any American business ever.

The company was first just an idea at the Wall Street hedge fund D. E. Shaw & Co., where Bezos was a vice president; before becoming an online bookseller and high-flying dot-com stock the late 1990s. Bezos then formulated and guided the company to make new inventions like the Kindle, Amazon Prime, and AWS.

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Over the last decade, under Bezos’ leadership, Amazon achieved a $1.7 trillion market capitalization, where it currently occupies the same rarified trillion-dollar air as Microsoft Corp. and Apple Inc.

Bezos’s resignation reflects an uncomfortable reality for one of the wealthiest people in the world: The walls of his particularly distinguished empire have been collapsing for some time. It’s not easy being Jeff Bezos, especially in these times. He presides over a collection of properties apart from Amazon, including The Washington Post, several philanthropies, and a space company, Blue Origin LLC, that lags far behind its chief rival, Elon Musk’s SpaceX.

Let’s take a look at the ways Bezos’s various assets have collided over the past few years. His ownership of The Washington Post consistently angered Donald Trump and his administration and arguably cost Amazon the Pentagon’s $10 billion JEDI cloud computing contract, which the former U.S. President’s Defense Department awarded to Microsoft. In early 2020, on his trip to India, Prime Minister Narendra Modi declined to meet with him, and a senior official criticized the Post’s coverage of the country. Union organizers have been seen consistently protesting Amazon’s treatment of its blue-collar workforce and periodically show up in front of Bezos’s homes. 

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Bezos and his empire have received a lot of criticism, many are reasonable and can be addressed. But Bezos’ own time, the most constrained resource in his web of conflicting business holdings, is something that can’t be easily reconciled. A part of his Wednesdays and weekends were spent at Blue Origin, his Kent, Washington-based space company, which may no longer be enough. Blue Origin is two years older than SpaceX but despite the fact that Bezos funds the company by selling $1 billion of his Amazon stock every year, so far the company has little to show for. 

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The Blue Origin website proclaims, “We are not in a race, and there will be many players in this human endeavor to go to space.” But of course, practically everyone in the space industry understands that Musk is flying literal circles around Bezos. SpaceX regularly flies into orbit and to the International Space Station (ISS) and also recently announced plans to take paying civilians into orbit. In his email to Amazon employees on Tuesday, Bezos said stepping down will give him more time to focus on “other passions,” including Blue Origin. “I’ve never had more energy, and this isn’t about retiring,” Bezos wrote.

Another potential reason for Bezos’ resignation from active duty at Amazon could be that things from here out could potentially become a lot less fun. Amazon just cleared $100 billion in quarterly sales for the first time and reaching $200 billion may not be as satisfying an endeavor.

There are complicated, maturing businesses to oversee, take, for example, the Amazon Marketplace, which consists of a crowd of dissatisfied merchants who sell on Amazon.com and have constant complaints of fraud and unfair competition from overseas sellers. Regulatory challenges are also looming large in Washington and Brussels. Several U.S. states, as well as the Federal Trade Commission (FTC), are examining Amazon’s conduct, though the investigation status is unclear. When Bezos testified virtually last July in front of the U.S. House antitrust subcommittee alongside Apple CEO Tim Cook, Facebook CEO Mark Zuckerberg, and Google CEO Sundar Pichai, he did perfectly fine—but looked like he would rather be building rockets or doing just about anything else.

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ANdy Jassy. Image: AllThingsD

Amazon now has an accomplished and disciplined leader in Jassy, who performs well in the spotlight. He also presents a somewhat humbler target for Amazon’s political opponents. Jassy was Bezos’s first “shadow,” or technical assistant, at the company. In the late ’90s, Jassy made his first mark on the founder as a new graduate from Harvard Business School, by inadvertently hitting him in the head with a kayak paddle during a recreational game of broomball. Fast forward to now, he has steered AWS to a $50 billion annual rate of sales, for a business just 15 years old, which is an extraordinary accomplishment. “It’s really hard to build a business that sustains for a long period of time,” Jassy said on the virtual stage at the AWS Re: Invent conference last December, according to Bloomberg. “To do it, you will have to reinvent yourself many times over.”

Bezos promised employees that he intends to stay active at the company and to “focus my energies and attention on new products and early initiatives,” much as he did during the early days of Alexa and the Kindle. Brian Olsavsky, Amazon’s chief financial officer, said on a call with reporters that Bezos “will be involved in many large, one-way door issues,” the sort of practically irreversible decisions that include major acquisitions. This is no doubt a comfort for investors if there’s one thing they’ve learned about Bezos over the last 25 years of his reign, it’s to trust that he knows exactly which door to go through at precisely the right time.

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