Jeff Bezos, who built Amazon from a modest online bookseller to one of a handful of the most valuable companies in the world, said he would step down from his role and transition to executive chair of the company.
The move will take effect in the third quarter of 2021. Andy Jassy, a 25-year company veteran who leads the potent Amazon Web Services division, will take over as the company’s CEO.
The stunning executive transition news came as the company delivered another set of spectacular financial results for the fourth quarter of 2020. Coronavirus-fueled demand for not only holiday gifts but a wide range of services in the quarter boosting revenue to $125.6 billion and earnings to $14.09 a share. Unprecedented orders came with a daunting execution challenge, especially given slowdowns at the U.S. Postal Service, which was prioritizing mail-in ballots for the November election.
The profit number was significantly better than Wall Street analysts had expected and more than double the figure from the same quarter in 2019. The revenue also exceeded Street forecasts and marked the company’s first quarter with more than $100 million in revenue.
Bezos, 57, had been one of a select few founder-CEOs still running the day-to-day business of a major tech company. His letter to employees about his decision (read it below) indicated he will stay involved in “new products and early initiatives.”
After making his reputation as a whip-smart hedge-funder at D. E. Shaw & Co., Bezos founded Amazon in 1994 at the outset of the internet’s initial breakthrough into the mainstream. Two decades on, the founder went through a significant evolution, going through a high-profile (and high-cost) divorce in 2019 and becoming a noted presence in Hollywood. His girlfriend, Lauren Sanchez, is a former L.A. television anchor and the pair was spotted at a wide range of global events before Covid-19 put a damper on jet-setting.
The Hollywood leanings of Bezos are credited with sustaining Amazon’s continued investment in Amazon Prime Video and Amazon Studios. The company was the first to stream movie and TV fare via the internet more than a decade ago and has reached the heights of achievement with Emmy-winning shows like Transparent and potent films like Borat 2 and Manchester by the Sea. Nevertheless, the company’s original programming efforts are still viewed as falling into place, without the clear dominance of third-party revenue machines like Amazon Channels or Amazon Fire TV. Surveys have shown that many subscribers to Prime, the most successful customer-loyalty program in U.S. business history, are not aware of its video offerings but instead pay for free 2-day delivery and other bonuses.
The exit of Bezos, which recalled that of Bill Gates as Microsoft CEO in 2008, sent shockwaves through the business and tech worlds, but investors initially did not panic, with Amazon shares dipping only a fraction in after-hours trading. They ended the regular session at $3,380, up 1% for the day. Because of the difficult comparisons with spectacular 2020 results, the stock has gained just 6%, below the gains of the S&P 500 and the most sluggish performance of any of the FAANG companies.
Amazon in recent years has flexed its immense muscle in logistics and delivery to branch into the grocery and pharmaceutical sectors. AWS is a leader in cloud services, powering top retail brands and dominant services like Netflix. Some endeavors that were kept separate from Amazon’s business nevertheless occupied a significant amount of Bezos’s attention, among them space exploration firm Blue Origin and the Washington Post. Amazon’s Alexa voice-recognition system and its Ring home-security setup have drawn criticism over privacy concerns and conditions in the company’s mushrooming portfolio of warehouses around the world have also brought charges of worker mistreatment.
Washington regulators have been scrutinizing the company along with Big Tech peers like Google and Facebook, but a true breakup attempt has not yet been mounted. Before the earnings and management announcement, the Federal Trade Commission announced that Amazon would pay a $61.7 million fine for failing to pay some of its drivers the entirety of customer tips.
Here is the memo Bezos sent to all Amazon employees:
I’m excited to announce that this Q3 I’ll transition to Executive Chair of the Amazon Board and Andy Jassy will become CEO. In the Exec Chair role, I intend to focus my energies and attention on new products and early initiatives. Andy is well known inside the company and has been at Amazon almost as long as I have. He will be an outstanding leader, and he has my full confidence.
This journey began some 27 years ago. Amazon was only an idea, and it had no name. The question I was asked most frequently at that time was, “What’s the internet?” Blessedly, I haven’t had to explain that in a long while.
Today, we employ 1.3 million talented, dedicated people, serve hundreds of millions of customers and businesses, and are widely recognized as one of the most successful companies in the world.
How did that happen? Invention. Invention is the root of our success. We’ve done crazy things together, and then made them normal. We pioneered customer reviews, 1-Click, personalized recommendations, Prime’s insanely-fast shipping, Just Walk Out shopping, the Climate Pledge, Kindle, Alexa, marketplace, infrastructure cloud computing, Career Choice, and much more. If you get it right, a few years after a surprising invention, the new thing has become normal. People yawn. And that yawn is the greatest compliment an inventor can receive.
I don’t know of another company with an invention track record as good as Amazon’s, and I believe we are at our most inventive right now. I hope you are as proud of our inventiveness as I am. I think you should be.
As Amazon became large, we decided to use our scale and scope to lead on important social issues. Two high-impact examples: our $15 minimum wage and the Climate Pledge. In both cases, we staked out leadership positions and then asked others to come along with us. In both cases, it’s working. Other large companies are coming our way. I hope you’re proud of that as well.
I find my work meaningful and fun. I get to work with the smartest, most talented, most ingenious teammates. When times have been good, you’ve been humble. When times have been tough, you’ve been strong and supportive, and we’ve made each other laugh. It is a joy to work on this team.
As much as I still tap dance into the office, I’m excited about this transition. Millions of customers depend on us for our services, and more than a million employees depend on us for their livelihoods. Being the CEO of Amazon is a deep responsibility, and it’s consuming. When you have a responsibility like that, it’s hard to put attention on anything else. As Exec Chair I will stay engaged in important Amazon initiatives but also have the time and energy I need to focus on the Day 1 Fund, the Bezos Earth Fund, Blue Origin, The Washington Post, and my other passions. I’ve never had more energy, and this isn’t about retiring. I’m super passionate about the impact I think these organizations can have.
Amazon couldn’t be better positioned for the future. We are firing on all cylinders, just as the world needs us to. We have things in the pipeline that will continue to astonish. We serve individuals and enterprises, and we’ve pioneered two complete industries and a whole new class of devices. We are leaders in areas as varied as machine learning and logistics, and if an Amazonian’s idea requires yet another new institutional skill, we’re flexible enough and patient enough to learn it.
Keep inventing, and don’t despair when at first the idea looks crazy. Remember to wander. Let curiosity be your compass. It remains Day 1.