Amazon CEO Jeff Bezos speaks during an action event on forests and land use on day three of COP26 at the SECC on November 2, 2021 in Glasgow, United Kingdom.
Paul Ellis | Getty Images
When Amazon announced just over two years ago that founder and then-CEO Jeff Bezos would hand the reins to former cloud chief Andy Jassy, few investors or analysts reacted with much concern.
Jassi, a close confidant of Bezos, was known as an Amazon lifer and a prominent figure at the company and in the industry for starting Amazon Web Services, which has become one of the most valuable businesses in the world. Analysts at Wedbush practically yawned at the move, saying the transition was likely to be “seamless and largely inconsequential.”
Unfortunately for Jassy, his short tenure at the helm was too eventful.
Since Jassy officially succeeded Bezos in July 2021, Amazon has experienced its most turbulent period since the dot-com crash. Last year saw its slowest revenue growth as a public company, and Jassy was forced to steer Amazon through a series of cost-cutting measures that no one predicted would be necessary as business boomed through the Covid pandemic.
Amazon shares have plunged 44% since July 5, 2021, Jassi’s first day as CEO. And on Monday, Jassy said the company was cutting another 9,000 jobs, adding to the 18,000 layoffs it announced in January. While the layoffs represent a small percentage of Amazon’s corporate workforce, they still represent a shocking turnaround for a company that has been in a phase of continuous growth for the better part of 25 years.
“Given the uncertain economy we live in and the uncertainty that exists in the near future, we have chosen to be more streamlined in our spending and staffing levels,” Jassy wrote in an email to employees.
Much of Jassy’s plight can be attributed to bad timing — historically high inflation has prompted the Federal Reserve to raise interest rates, crippling growth in the US tech sector. But whether it was bad luck, his own missteps, or some combination of the two, Jassy is in an unenviable position as only the second CEO in Amazon’s history.
Bezos, his predecessor, turned Amazon from a bookseller into a retail, cloud computing and advertising giant that became known for an inventive, startup-like atmosphere. Under Bezos’ watch, the company introduced groundbreaking inventions like the Kindle e-reader and the Echo smart speaker, and invested in new verticals like original content, healthcare and brick-and-mortar grocery stores.
So far, the Jassy era has been about belt-tightening and pulling back from some of Amazon’s more experimental pursuits.
Over the past year, Jassy has been cutting costs across the company. Many unproven bets, such as Amazon’s Scout delivery robot, virtual tour service, Care telehealth program and a video-calling device for children, have all been scrapped. It made the decision to close all of its 4-star Pop Up and Books stores and earlier this year announced that Amazon would close some Fresh supermarkets and cashier-less Go stores. Drone delivery, one of Bezos’ favorite projects, has struggled to get off the ground as it also faces cost cuts.
The e-commerce boom fueled by the pandemic has Amazon doubling its physical footprint between 2020 and 2022. Shares have soared, along with headcount. But as the economy reopened and online sales slowed, Amazon found itself burdened with more facilities than it could efficiently use and ended up closing, canceling or delaying the opening of many new warehouses.
Earlier this month, Amazon halted construction on the second phase of its sprawling new campus in Arlington, Virginia, called HQ2. Other construction projects in Nashville, Tennessee, and Bellevue, Washington, have also been put on hold, in part because much of Amazon’s corporate workforce has been working remotely since the pandemic.
Jassi is under enormous pressure to prove he can control his spending. But to revive the enthusiasm that Bezos has brought to Amazon’s culture, he must eventually find new engines for growth.
In its fourth-quarter earnings report, Amazon barely turned a profit, and the company issued disappointing guidance for the first quarter, with revenue growth expected to remain in the mid-single digits.
It’s not exactly what Bezos had in mind when he told employees in early 2021 about the impending CEO change.
“Amazon could not be better positioned for the future,” Bezos wrote in a letter to employees at the time. “We’re firing on all cylinders, just as the world needs us to be. We have things in the pipeline that will continue to amaze.”
WATCHING: Amazon is cutting another 9,000 jobs