Amazon’s post-Bezos experiment did not fairly go as deliberate
Amazon CEO Jeff Bezos speaks during a campaign on forests and land use during day three of COP26 at the SECC on November 2, 2021 in Glasgow, United Kingdom.
Paul Ellis | Getty Images
If Amazon When it was announced just over two years ago that founder and then-CEO Jeff Bezos would hand over the helm to former cloud boss Andy Jassy, few investors or analysts reacted with much concern.
Jassy, a close associate of Bezos, was known as the Amazon Lifer and a celebrated figure within the company and across the industry for creating Amazon Web Services, which became one of the most valuable companies in the world. Wedbush analysts practically yawned over the move, saying the transition would likely be “seamless and largely inconsequential.”
Unfortunately for Jassy, his brief tenure at the helm was all too eventful.
Since Jassy officially succeeded Bezos in July 2021, Amazon has experienced its most turbulent period since the dot-com crash. Last year was the slowest year for sales growth as a public company, and Jassy was forced to lead Amazon through a series of cost-cutting measures no one predicted would be necessary as business boomed from the Covid pandemic.
Amazon shares have plummeted 44% since July 5, 2021, Jassy’s first day as CEO. And on Monday, Jassy said the company was cutting another 9,000 jobs, adding to the 18,000 layoffs announced in January. Though the cuts represent only a small percentage of Amazon’s corporate workforce, they still represent a shocking turnaround for a company that has been in an uninterrupted growth streak for nearly 25 years.
“Given the uncertain economy we live in and the uncertainty that exists in the near future, we have decided to streamline our costs and headcount,” Jassy wrote in an email to employees.
Much of Jassy’s unfortunate circumstances can be attributed to poor timing – historically high inflation prompted the Federal Reserve to hike interest rates, crippling growth across the US tech sector. But whether it’s bad luck, personal missteps, or a combination of both, Jassy holds an unenviable position as only the second CEO in Amazon history.
Bezos, his predecessor, transformed Amazon from a bookseller into a retail, cloud computing, and advertising giant known for an imaginative, startup-like vibe. Under Bezos’ watch, the company released breakthrough inventions like the Kindle e-reader and the Echo smart speaker, and invested in new verticals like original content, healthcare, and brick-and-mortar grocery.
So far, the Jassy era has been about tightening its belt and retreating from some of Amazon’s more experimental activities.
Over the past year, Jassy has cut spending across the company. Many unproven bets, such as Amazon’s delivery robot Scout, a virtual tour service, telehealth program Care and a video calling device for children, have been eliminated. It made the decision to close all of its 4-star, pop-up and bookstores and announced earlier this year that Amazon would be closing some Fresh supermarkets and Go’s checkout-less convenience marts. Drone delivery, one of Bezos’ pet projects, is struggling to get off the ground as it too faces cost-cutting.
The pandemic-driven e-commerce boom prompted Amazon to double its physical footprint between 2020 and 2022. The shares rose together with the number of employees. But as the economy reopened and online sales faltered, Amazon found itself with more facilities than it could efficiently use and eventually moved to close, cancel, or delay the opening of many new warehouses.
Earlier this month, Amazon paused construction of the second phase of its sprawling new campus in Arlington, Virginia, dubbed HQ2. Other construction projects in Nashville, Tenn., and Bellevue, Wash., have also been put on hold, in part because much of Amazon’s workforce has been working remotely since the pandemic.
Jassy is under immense pressure to prove he can get spending under control. But eventually, to reignite the enthusiasm Bezos instilled in Amazon’s culture, he must find new engines of growth.
In its fourth-quarter earnings report, Amazon barely turned a profit, and the company issued disappointing guidance for the first quarter, with revenue growth expected to remain stuck in the mid-single digits.
It’s not exactly what Bezos had in mind when he told employees about the upcoming CEO change in early 2021.
“Amazon couldn’t be better positioned for the future,” Bezos wrote in a letter to employees at the time. “We’re firing on all cylinders, just as the world needs it. We have things in the pipeline that will continue to amaze.”
REGARD: Amazon is cutting another 9,000 jobs