Amazon’s Jeff Bezos throws Andy Jassy a unique set of challenges

In a way, new CEO Andy Jassy seems to have an easy task ahead of him. He is inheriting a business that seems to be operating at full capacity, after all.

With founder and CEO Jeff Bezos literally taking off this month, the $ 1.7 trillion company Mr. Bezos founded in his garage almost 27 years ago is falling for the first time in new hands. . In a sense, Amazon is lagging a bit behind as it will be the fourth of five companies known colloquially as “big tech” to transition from founders control. And the first three – Apple Inc., Microsoft and Google – parent company Alphabet Inc. – all managed to achieve new levels of financial success under the direction of their later executives.

But the stakes at Amazon are even higher. Apple, currently the world’s most valuable company, had about a quarter of Amazon’s current annual revenue when Steve Jobs stepped down as CEO in 2011, just weeks before his death. As Mr. Bezos’ anointed successor, Mr. Jassy takes over a company that now generates more than $ 400 billion in revenue per year, while posting an average annual growth rate of 30%. The Amazon Web Services cloud business that Mr. Jassy has led since its inception in 2006 has played a major role in this, particularly in terms of results. Amazon’s operating profits have more than quintupled in just three years.

Wall Street expects Amazon to surpass Walmart to become the largest U.S. company in annual sales next year, according to consensus estimates from FactSet. Five years ago, the e-commerce pioneer was barely a quarter the size of large retailers. The cloud business that Mr. Jassy has developed within Amazon has also surpassed most of his rivals. With revenues of over $ 48 billion, AWS is now eclipsing the enterprise software titans Oracle Corp. and Salesforce. Analysts currently expect AWS revenue to be roughly equal to IBM’s next year.

Surprisingly, not all of Amazon’s business is understood in e-commerce and corporate IT services. The company now operates a large grocery chain, an online pharmacy, and also generates advertising revenue estimated at $ 24 billion annually. Its media ambitions are also vast; Amazon now makes video games, operates a music streaming service, and produces blockbuster-sized movies and TV shows. His impending acquisition of MGM would give him access to major Hollywood franchises like James Bond.

All of these seemingly disparate companies work together in what Mr. Bezos has often compared to a flywheel, meaning they feed and feed each other. Subscribers to Amazon’s Prime service receive free shipping as well as offers at the company’s Whole Foods stores and access to the video streaming service. More retail sales on Amazon are attracting more third-party merchants, many of whom also pay Amazon for order fulfillment and advertising services to increase their chances of making a sale. Amazon’s disparate businesses are creating unusual relationships. Netlflix, Amazon’s biggest competitor to Prime Video, uses AWS to perform the “vast majority” of its computing needs, according to the company’s 10,000 annual statements.

In short, Mr. Jassy’s main job is to operate a well-oiled machine. But Amazon’s very success in such a wide range of businesses has also created unique challenges. The Wall Street Journal has reported on some of the company’s most controversial business practices, such as using seller data to design and promote its own products and also forcing sellers and business partners to do more. business in its ecosystem. Amazon’s focus on giving customers as many choices as possible has also led to a wave of counterfeit and even dangerous items on its site, which in turn is fueling the growing problem of fake customer reviews.

These issues have widened the target already painted on Amazon’s back. Washington has sought to crack down on big tech, and Amazon may now present the easier career. Its vast workforce, which now numbers 1.27 million full-time and part-time employees, is restless and fuels a constant stream of stories about a tough work environment. Amazon’s staunch resistance to unionization has angered the Biden administration after four years of prosecution by the Trump administration over issues such as the rates it pays the U.S. Postal Service. M. Jassy has already tasted it directly; AWS lost a $ 10 billion cloud computing contract with the Pentagon, which the company blamed for “personal animosity and political goals” on the part of President Trump, who has frequently criticized Washington’s coverage Post owned by Mr. Bezos.

Some of the forces deployed against Amazon are even calling for a break-up. And while that seems a little less likely following a federal judge’s recent dismissal of two antitrust cases against Facebook, it is a risk that cannot be ruled out outright. A real break would leave Mr. Jassy with the serious challenge of reinventing a business designed so that all of its parts serve the whole. The government could also curb Amazon in less drastic means, for example by thwarting expansion measures like the MGM acquisition agreement.

If Amazon survives the political onslaught in its current form, Jassy will still face the challenge of striking a delicate balance between retaining what has made Amazon so successful while mastering some of its worst instincts. All of this will take place under the watchful eye of Mr. Bezos. Assuming everything goes according to plan with his July 20 rocket ride, the 57-year-old billionaire will return to serve as Amazon chairman. And while the richest person in the world will also split his time between Hollywood, space companies, superyachts and philanthropy, Amazon said Mr. Bezos plans to stay involved, especially on what he calls the decisions. ” one-sided “which are difficult to undo.

Mr Jassy’s 24 years in the company, primarily as a key lieutenant to Bezos, suggests that major near-term changes are unlikely. But the departure of a distinctive founder after such a race will still leave a mark. “Always Day One” is Jeff Bezos’ favorite mantra for keeping Amazon on top of his age and size.

Andy Jassy won’t have the luxury to deny that it truly is a new day.

(This story was posted from an agency feed with no text editing)

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