Amazon's amazing turnaround: How Andy Jassy secretly wooed Wall Street and overhauled a bloated tech giant

For the next hour, over boxed coffee and fruit salad, the investors peppered Jassy with pointed questions. He shared long-term plans for making Amazon’s retail and cloud businesses more efficient. His answers were “grounded in facts,” not sugar-coated to please the audience, according to one shareholder who attended.

The group was impressed by early signs of what turned out to be an amazing comeback. Since then, growth has rebounded, costs have been reined in, and profit recently hit a new record. Amazon shares have more than doubled, pushing the company’s market cap above $2 trillion for the first time.

“You’re seeing a much more focused, highly determined company now,” this shareholder told BI. “I’d rather have Jassy than Bezos.”

This person is one of over a dozen Amazon employees, investors, and analysts that BI interviewed to better understand Jassy’s first 3 years as CEO. Most of them asked not to be identified due to confidentiality agreements.

These sources described how, after a worrying start, Jassy had put a distinctly personal stamp on Amazon by making ruthless cuts and more measured investments, a break from Bezos’s growth-at-all-cost management style. Jassy is also adapting to changes that inevitably come with running a bigger, more mature company while reviving key parts of Amazon’s original frugal culture through meticulous attention to detail and new internal communication.

“A lot of cleanup required”

Taking over a giant corporation is hard, especially when it has been run for decades by a highly respected, charismatic founder like Bezos.

Since starting Amazon as a small online bookseller in 1994, Bezos has been the face of the company. But his priorities began to shift as the decades passed, and he became incredibly wealthy. He acquired The Washington Post, went through a divorce, got a new girlfriend, and bought a superyacht.

When the COVID-19 pandemic hit in 2020, Amazon went on an unprecedented hiring spree to keep up with demand from consumers stuck at home.

Jassy became CEO in July 2021. Just as he was getting established, the pandemic boom collapsed. Online shopping growth evaporated, tech stocks plunged, and Amazon was left with too many employees and a bloated cost base. Some inside Amazon even whispered about bringing Bezos back.

“Jassy was handed a deck of cards that had a lot of cleanup required,” said Mark Shmulik, a top internet analyst at Bernstein.

How the revival began

The turnaround went through a hallmark of Jassy’s administration: A new level of Wall Street engagement.

In 2023, Jassy started appearing on Amazon’s earnings calls to answer live questions from analysts, a practice Bezos had abandoned years ago. The move came after some investors griped about Jassy’s absence on those calls, as Amazon’s stock plummeted in late 2022, one of the people said.

For years, Bezos had focused less on investors, with Amazon reporting little or no profit in a quest for endless growth. Jassy, however, is much more cognizant of Wall Street, often making key decisions based on how shareholders might think and react, according to the people who spoke with BI.

A year ago, Bernstein’s Shmulik wrote a brutal open letter to Jassy demanding clarity on Amazon’s spending to “quell investor concerns.” Since then, the CEO has made dramatic improvements in almost every part of the business that investors wanted.

“He’s delivered,” Shmulik said.

Bringing ‘frugality’ back

As the pandemic boom turned to bust, Jassy prioritized frugality. Though Amazon has always preached this, he pushed the company to become more mindful of unnecessary costs and even penny-pinching, according to some of the people who spoke with BI.

Jassy has driven this home in a series of internal meetings. During one all-hands in early 2023, he urged employees to think like business owners with their own money at stake.

“Think about, if this were my money, would this be the way I would spend it?” he said, according to a recording of the meeting obtained by BI.

In another meeting this year, Jassy said Amazon has become “much scrappier” lately because of a renewed focus on frugality.

In May, the CEO launched a new internal video series that shares his take on each of Amazon’s 16 leadership principles, according to an internal memo seen by BI. Some employees saw the videos as a reminder to return to Amazon’s frugal roots.

An ominous warning for managers

Some staff members have been frustrated by Amazon’s “Do more with less” attitude, but Jassy seems intent on keeping it this way.

During an internal fireside chat in August 2023, the CEO reminded employees that some of AWS’s earliest products were built by small teams of fewer than 20 people.

Amazon needed to do away with bloated teams, Jassy said, while delivering an ominous warning to managers.

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“The last several years, people have believed that the best way to get promoted is to have a big team. That’s not the way I think about it,” he said. “We have big enough teams right now. We have just got to invent and be frugal at the same time.”

Game of Cuts

Jassy has also eliminated long-term, expensive moonshot projects while slashing roughly 27,000 jobs.

Amazon leadership told the One Medical healthcare business to cut projected losses this year by at least $100 million. And even historically profitable units, such as AWS and advertising, have seen job cuts.

The messaging around Prime Video, one of Amazon’s biggest investment areas, has also changed. Bezos wanted big-budget blockbusters to rival Game of Thrones. Jassy, meanwhile, made it clear in an April shareholder letter that he expects Prime Video to become a profitable business on its own.

Amazon declined to make Jassy available for an interview. However, company spokespeople weighed in on several points raised by BI’s reporting. For instance, Jassy doesn’t directly order changes like the One Medical edict. Instead, he asks direct reports to improve operating income at certain units and leaves those executives to make the specific calls, according to the spokesperson.

These painful steps have produced financial results far stronger than at any time when Bezos was in charge. In its latest period, Amazon saw growth reaccelerate while operating income tripled from a year ago to $15.3 billion, the largest quarterly profit in company history.

‘Very strong’ opinions

Jassy is also known for meticulous attention to detail, which some say is more in-depth than Bezos’s.

Jassy’s need to approve almost every major press release, blog post, and even company statements sent to reporters has irked some employees, according to people familiar with the matter. In some cases, these people claim that Jassy openly criticized the performance of individual employees several levels below him, an unusual level of engagement for the CEO of such a huge, sprawling company.

Jassy often has “very strong” opinions about certain businesses, making it difficult to get the approvals needed to move forward, two people said. Some teams within the retail business often seek to combine their Jassy meetings with those of Amazon Stores CEO Doug Herrington to avoid going back and forth, one of the people said.

The Amazon spokesperson said there are select instances where Jassy and other leaders intentionally review a topic at the same time “to move faster and eliminate extra meetings.”

The spokesperson also said Amazon requires leaders to be both strategic and deep in the weeds, and Jassy regularly provides detailed feedback. Those meetings include “people at all various levels within the organization” to support their development as leaders, the spokesperson explained.

Jassy’s management style has drawn a mixed bag of supporters and detractors. In his first 3 years as CEO, Jassy has lost many senior staff. That includes high-profile executives, such as press and policy chief Jay Carney, Alexa and devices lead Dave Limp, and AWS CEO Adam Selipsky.

Dave Clark, Amazon’s former worldwide consumer boss, left a year after Jassy’s appointment. Clark said in a podcast last year that he felt like a “bureaucrat” because he spent too much time talking to government and press members and “managing my boss.” Amazon’s spokesperson said the company has “strong retention and continuity” among senior leaders.

Potential downsides of Jassy

Jassy’s new approach has some potential downsides. Amazon employees used to leave a meeting with Bezos feeling “inspired” and more ambitious about their projects, some of the people said. In meetings with Jassy, there’s a much greater emphasis on mundane topics such as the bottom line, they noted.

Amazon’s spokesperson said this description was “incorrect” and stressed that the company has always invested in a “wide array of potential growth areas,” including Prime Video, Alexa, and Grocery.

Still, some of the people who spoke to BI worried that Amazon is becoming too short-term in its thinking. A good example is the near shuttering of Grand Challenge, Amazon’s moonshot lab that worked on ambitious ideas. In late 2022, Amazon killed most Grand Challenge projects and let go of a big chunk of the team, resulting in the departure of its leader, Babak Parviz.

Jassy “has been trying to turn this engineer into someone who can also think about business issues in a deeper way,” Parviz said several months before leaving.

‘Cutting and trimming’

Indeed, a common refrain among employees about Jassy’s leadership is his lack of innovation. Some employees noted that Bezos fostered the creation of many new businesses and products, including the Kindle e-reader, Echo speakers, Alexa voice assistant, and Just Walk Out cashierless technology. Jassy, meanwhile, has mostly focused on improving operational efficiency so far.

“He spent all of his energy in the last 3 years cutting, trimming, and reorganizing,” one of the people told BI. “And none of that resulted in true invention.”

Amazon’s spokesperson told BI that Jassy started at a time when there were macroeconomic factors that required many companies, including Amazon, to “make some difficult decisions, which is why streamlining happened to take place early in his tenure.” Jassy is still actively engaged in “innovating customer experiences” across the company, the spokesperson added.

Less ‘chaotic’

The next big test for Jassy is Amazon’s response to the sudden rise of generative AI.

Evercore analyst Mark Mahaney said AWS being late to the “Gen AI party” and potentially losing market share to Microsoft is a concern that “likely won’t be resolved for another year or two.”

Internally, it’s an all-hands-on-deck situation. Every team is busy working on some kind of AI project, with Jassy directly involved in many of those.

Even so, some employees say Jassy takes a much more measured investment approach to generative AI. This is in stark contrast to how Bezos previously led a mad scramble over the Alexa voice assistant when the company quickly expanded the team and invested huge amounts of money, only to lose billions of dollars.

“Alexa was chaotic,” one of the people said. “Gen AI is not like that. We’re not just throwing things at the wall.”

Amazon’s spokesperson said the company is making “huge investments” in AI across AWS and the retail business.

The company is hiring “a lot of AI folks and re-allocating those resources from other non-GenAI areas,” the spokesperson added. “Under Jeff, the company was smaller and it was not possible to reallocate resources as easily.”

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