Andy Jassy has just completed a difficult first year since becoming CEO of Amazon

Andy Jassy, ​​chief executive officer of Amazon.Com Inc., during the GeekWire Summit in Seattle, Washington, U.S., on Tuesday, Oct. 5, 2021.

David Ryder | Bloomberg | Getty Images

Tuesday marks Andy Jassy’s one-year anniversary as CEO of Amazon. Celebrating is probably not the operative word.

Jassi, a 25-year Amazon veteran, succeeded Jeff Bezos on July 5, 2021. The stock hit a record high a few days later. It has fallen more than 40% since then, including a 35% drop in the second quarter, the steepest drop for any period since 2001.

As only Amazon’s second CEO since Bezos founded the company in 1994, Jassi is facing a macroeconomic hurricane that will be completely out of his control. From the lingering effects of the Covid-19 pandemic, record inflation and rising interest rates to supply chain constraints and the war in Ukraine, Amazon faces the prospect of rising costs and a slowdown in consumer spending, while investors are pulling out of tech stocks that have fueled recent gains. bull market.

But it’s not just about the economy. There is also the threat of antitrust regulation as lawmakers move closer to passing landmark legislation that seeks to limit the power of Amazon and other tech giants. And Jassi is fighting a labor struggle that culminated in a Staten Island warehouse vote in April to form the company’s first U.S. union. Amazon is challenging the union’s efforts in court. Meanwhile, some of the company’s top executives have left.

When Jassi officially took over as CEO last July, Amazon’s business was stronger than ever. The company just hit a $100 billion first quarter, reflecting a pandemic-induced surge in e-commerce activity that has pushed Amazon to expand at a breakneck pace.

The story unfolded rapidly. Amazon is now losing some of the warehouse space it added during the pandemic. And after months of labor shortages, the company is now overstaffed in its fulfillment network as a cooling off of e-commerce means many of its recent hires are no longer needed.

With its core business slowing, Amazon announced in April that it posted its weakest quarterly revenue growth since the dot-com crash in 2001 and its first quarterly loss since 2015.

Investors are now weighing whether the poor results are a reflection of management struggles or just a brief setback as the company emerges from the global pandemic and finds the economy sputtering.

When asked if Jassi was responsible for the over-expansion of warehouses and recent shortcomings in Amazon’s business, Tom Forte, an analyst at DA Davidson, said that the new CEO still has doubts.

“Today, I still feel the answer is no,” said Forte, who recommends buying the stock. “But I’m watching if the stock continues its multi-year period of weakness, at which point investors will start turning to Andy and assigning blame.”

Forte is not alone. After the company’s first-quarter earnings report, several Wall Street analysts said Amazon’s problems are likely to resolve themselves in the coming months.

But with a workforce of more than 1.6 million and an investor base that has come to expect operational excellence, Jassy has something to prove regardless of the direction of the economy.

“My core belief is that large companies face the greatest internal risks,” Matt McIlwain, managing director of Madrona Venture Group in Seattle and a longtime Amazon investor, said in an email. “The key for Amazon will be to continue to follow their culture of innovation and make decisions quickly/nibly so that they can continue to grow at scale.”

An Amazon spokesman declined to comment for this story.

Keeping workers happy

It is unlikely that work problems will disappear in the near future.

After the union victory in Staten Island, Amazon aggressively fought other organizing efforts and was staunchly anti-union. After reports of unsafe working conditions at warehouses, Jassi said injury rates at Amazon are “sometimes misunderstood,” but he acknowledged that Amazon could do more to improve injury rates at its facilities.

“At our scale (we hired over 300,000 people in 2021 alone, many of whom were new to the job and needed training), getting where you want requires rigorous analysis, thoughtful problem-solving and a willingness to reinvent.” – wrote Yassi in his first letter to shareholders in April. “We analyzed every path of the process to understand how we can improve further.”

Office workers have their own set of demands and have gained considerable leverage, demanding higher wages, better benefits and more flexibility to work from home. Last October, Amazon abandoned its office-centric culture when it allowed individual managers to decide how often their employees would need to come into the office.

Amazon’s headquarters is virtually empty in downtown Seattle, Washington on March 10, 2020. In response to the coronavirus outbreak, Amazon has advised all employees at its Seattle office to work from home, leaving the downtown area almost empty.

John Moore | Getty Images

Earlier this year, in response to a strengthening labor market, Amazon increased the maximum base salary to $350,000 from the previous maximum of $160,000.

That’s not enough to keep some of the company’s longest-serving employees, who are rapidly leaving. The trend preceded Yasi’s tenure. More than 45 senior executives left Amazon between early 2020 and April 2021, according to Business Insider’s count, an unusually large number for the company.

The exodus continued near Yassami. Last month, 23-year Amazon veteran Dave Clark stepped down a little more than a year after taking over as the retailer’s chief from Jeff Wilke, one of Bezos’ top deputies, who is stepping down in early 2021. Later in June, two prominent black leaders—Dave Boseman and Alicia Boehler-Davis, senior vice president of global client services and a member of the company’s leadership team—announced their departures.

Ian Fried, a former Amazon vice president who oversaw the development of key projects like Alexa and the Kindle, said that as the company grows, it becomes harder to attract and retain the same talent.

“The fact that it’s growing is a welcome place for innovators, whether they’re engineers, marketers, retail experts or whatever, if that goes away, I feel like a lot of things will start to fall apart.” said Fried. “I don’t necessarily think it’s going to go away, but I think it’s always the biggest risk.”

Amazon said it has a high retention rate. The average tenure for vice presidents is about 10 years, and for senior vice presidents, it’s “significantly longer,” the company said.

Finding Amazon’s Fourth Pillar

In his 2014 letter to shareholders, Bezos outlined three areas of Amazon that he often referred to as the “pillars” of the business: Prime, Marketplace, and Amazon Web Services.

In the following years, investors looked for a potential fourth or fifth column. Now they’ll be asking Jassi what can move the needle at a company with a market capitalization of $1.1 trillion.

Bezos has covered ambitious projects like the Echo smart speaker and delivery drones, while also taking on wildly ambitious ventures outside of Amazon, like investing $42 million in a “Long Now Clock” that will tell the time for the next 10 000 years, and the creation of the space company Blue Origin.

Jeff Bezos, CEO and founder of Amazon, holds the new Amazon Kindle Fire HD during a product launch in Santa Monica, Calif., Thursday, Sept. 6, 2012. (AP Photo/Reed Saxon)

Reed is a Saxon

Jassy’s big innovation was AWS. After serving as Bezos’ “shadow” in the early 2000s, Jassi was personally empowered by Bezos to launch the cloud business, which has grown into a $60 billion company and the company’s profit center.

“Andy is a visionary in his own right, but in a different way than Jeff,” Craig Berman, Amazon’s former vice president of global communications, said in an interview. “I think it would be very unfair to say that Jeff is a better innovator or builder than Andy.”

During Amazon’s all-hands meeting in April, Jassi reminded employees that he “was here when we only sold books.” From there, the company branched out into music, video, consumer electronics, cloud computing, devices and streaming entertainment, Jassi said at the meeting, a transcript of which was obtained by CNBC.

When exploring new markets, Jassi said the company asks if the opportunity is big enough, if it’s well-served, if Amazon has a “differentiated approach” and if it has confidence, or “can we gain confidence quickly?”

“If we like the answers to those questions, we’ll take that opportunity, even if it’s really different from what we’ve done in the past,” Jassi said. “And that philosophy has been what you see in the various clients and business segments that we pursue.”

WATCH: CNBC’s full interview with Amazon CEO Andy Jassy

Andy Jassy has just completed a difficult first year since becoming CEO of Amazon

Source link Andy Jassy has just completed a difficult first year since becoming CEO of Amazon

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