As he has done annually in his letters to shareholders, Jeff Bezos this year again insisted that "It remains Day 1" at Amazon. This is meant to ensure investors that the e-commerce behemoth he started as an online bookstore a quarter century ago is still innovative, hungry and growing.
Bezos has railed against moving on to "day two," stipulating in his 2016 letter, "Day 2 is stasis. Followed by irrelevance. Followed by excruciating, painful decline. Followed by death. And that is why it is always Day 1."
He won't be doing that again because he won't be writing those letters anymore.
When Bezos stepped back as chief executive on Monday to prepare to blast off into space, his company was, on Earth, hurtling toward day 10,000. Figuratively, it may even, at long last, be day two. In any case, a CEO switch can be a tense moment for any company, especially one as disruptive and, in many measures, successful as Amazon has been.
"The biggest question, and it's sort of always the question when you have these founder-led businesses transitioning to a longtime lieutenant, is — can they maintain the spark of innovation?" Keith Anderson, Profitero's senior vice president of product strategy and insights, said by phone. "Are they going to continue to be the company that obsoletes itself, or are they going to miss some of the biggest transformational shifts in computing or retail or media or some other category?"
Anderson said there will likely be some "pruning of the underperforming stuff" with Bezos out, but he, like many analysts, expects Amazon to maintain the status quo. For one thing, new CEO Andy Jassy joined the company to lead its AWS cloud services in 1997, so he's been at Bezos' side almost the entire time. For another, despite a May shareholder call for independent board leadership, Bezos is now ensconced as executive board chair.
"Overall, I think there will be very little change – mostly because Bezos will still be involved at some level and because Amazon has a culture which is deeply embedded and is more than about one person," GlobalData Managing Director Neil Saunders said by email. "On top of this, Jassy is an Amazonian through and through. Wall Street is also pleased with the current narratives coming from Amazon, so there is little need to make wholesale changes."
That sentiment is likely to keep Amazon's share price safely in the stratosphere, even under a new boss.
"If Bernard Arnault suddenly stepped down, I would be much more concerned about LVMH since he's much more difficult to replace in the CEO role than Bezos," Kristin Bentz, president of KB Advisory Group, said by email. "It should really be a non-event in terms of the transition since Andy Jassy has been there for almost 25 years and played a huge role in every major undertaking by Amazon."
All that Jassy
Under Jassy, Amazon may go forward with even more innovation. That's in part down to his management style, according to former Amazon executive Jon Reily, now president of Dentsu Commerce.
"Andy's more of a traditional executive I think than Jeff is," Reily said by direct message. "Jeff was a bit of a micromanager and that culture will fade. I think the dreaded 'Jeff meetings' when teams have to write one or six pagers ... for new programs will go by the wayside and Andy will defer more to his S-team to handle those kinds of things. The core culture of Amazon's 'is it good for the customer' will still be there of course, but I suspect that green lights will be given to more projects than perhaps wouldn't have been before."
It was Jassy who argued for establishing Prime membership as an annual payment; expect more subscription options to emerge under his command, Reily also says. "That's Andy's world. That's his mindset, don't pay once — pay again and again," he said. "Teams will know that and as a result work hard to find new and different ways to apply that mindset to existing programs."
That mindset is common in the tech and cloud services sectors, according to Profitero's Anderson, who believes that new subscriptions or subscription tiers might be applied to more of Amazon's business-to-business as well as its consumer services.
It's notable that Jassy comes from the AWS side, not retail, Anderson and other experts said. Amazon's reputation as a tech company has trained its shareholders not to expect dividends and to prize growth over profits — something most other retailers aren't privy to. That's likely to mean even more operations accomplished via AI and bots, according to Jason Boyce, founder and CEO of Avenue7Media, an agency that supports Amazon marketplace sellers.
That may sound good to investors, but it will further erode Amazon's human side, warns Boyce, co-author of "The Amazon Jungle" and for years an Amazon marketplace seller himself.
"Amazon is a massive beast, and how the heck do you manage a company that's really six companies without automation, in a way that makes you profitable?" he said by phone. "But here's the problem with artificial intelligence. We're decades away from it being able to start thinking in nuanced ways [like] great managers. They think about an engineering solution that solves 98% of the problems, that's a good thing in engineering. What they don't realize is that 2% means tens of thousands of sellers can't pay their rent that month. There's a lack of humanity in AI bots, there's a lack of humanity in the way that Jeff Bezos is thinking about how to hire warehouse workers, and it's a lot of short term gain with long term pain."
Why now?
Bots were blamed for worker confusion and even maltreatment in a recent report by The New York Times, just the latest in a series of damning accounts of how Amazon treats its rank-and-file employees. Jassy is taking over as CEO at a thorny time for the e-commerce giant, with legislators and regulators probing the company's practices and exploring whether its scale constitutes a monopoly.
Some observers believe that's exactly why Bezos took the opportunity to leave, citing the escalating interest in Amazon in Congress, the White House, state legislatures and various attorneys general nationwide.
"I thought the timing was curious," Stuart Appelbaum, president of the Retail, Wholesale and Department Store Union, said by phone. "He did it after a new administration has come in and a Democratic Senate is in place, which means that it would be much more likely for Amazon to face congressional scrutiny. With the change of title, when the Senate calls in the 'head of Amazon,' as they're likely to do at some point, it won't be Jeff Bezos, it will be the new CEO."
RWDSU recently filed objections with the National Labor Relations Board over what many see as Amazon's union-busting behavior during the failed organizing effort at its Bessemer, Alabama, warehouse earlier this year. The vote could be overturned depending on the NLRB's decision, which is pending. Also late last month the Teamsters, the largest union in the U.S., voted to establish an "Amazon Project," dedicated to "maintain standards in Teamster core industries against the threat posed by Amazon and support Amazon workers as they build power across the country."
Appelbaum doesn't believe that Jassy's tenure will mean better working conditions, however, in part because he's "really skeptical about how much Bezos' day-to-day involvement really changes."
Boyce similarly believes Bezos prefers Jassy in the hot seat after last year's U.S. House Judiciary Committee hearing on e-commerce and tech. Republicans and Democrats alike confronted Bezos about the fairness of Amazon's marketplace and reports of ripoffs of third-party sellers' goods, among other issues. Like Appelbaum, Boyce says Amazon's practices are out of hand and that closer inquiry and tighter regulation are warranted.
"I think he was humiliated in front of Congress and had a really bad time, and decided 'I don't want to do that anymore,'" Boyce said. "I don't know that they thought there were going to be [so many] bills this year, introduced and moving along at rapid speed through Congress. I think maybe they underestimated just how much heat would come from the regulatory and legislative community. The second thing is the union efforts — the Teamsters have mounted an impressive attack on Amazon. That doesn't fit well with Bezos's plans for how to run the warehouse operation. So that's an enormous amount of heat on Andy Jassy."
Not everyone appreciates the intensifying focus on Amazon. GlobalData's Saunders believes the company may be better represented in this climate by a chief executive with a lower profile.
"All these troubles and headaches and bad press have not yet resulted in people leaving Amazon in massive droves, their customer base is still rock solid."
Jason Boyce
Founder & CEO, Avenue7Media,
"Unfortunately, Jassy's watch will coincide with one of the toughest periods in terms of regulatory scrutiny and this will absorb a great deal more management time," he said. "It will also be interesting to see how much of a public face Jassy wants to be in terms of defending Amazon and its record. In some ways, Jassy may have an easier time of it – even if only cosmetically – as Bezos is unfairly seen by some as bad because of his vast wealth."
So far, Amazon has reacted in different ways to the controversies that have garnered it bad press and regulatory review. The company has embarked on what Anderson sees as public relations campaigns to address criticism over working conditions or popular issues like climate change, efforts he likens to Walmart's attempt 15 years ago to reform its image with the hire of Democratic political strategist Leslie Dach. Otherwise, it has fought back hard, as with its demand last week, according to an account first reported by The Wall Street Journal, that new Federal Trade Commission chair Lina Khan recuse herself from antitrust matters involving Amazon, given her policy positions on such matters.
It remains to be seen whether any of that evolves under Jassy. If so, it could define a "day two" at Amazon that, unlike what Bezos has long feared, could be positive for the company.
"From the investors' perspective, it's 'Don't fix what's not broken'," Boyce said. "All these troubles and headaches and bad press have not yet resulted in people leaving Amazon in massive droves, their customer base is still rock solid. However, they should be concerned that if all these stories are negative for the next decade and they don't do something about it progressively, then they will start to lose customers. And that should be one of their bigger concerns."
