Andy Jassy just wrapped up a rocky first year after succeeding Bezos as Amazon CEO

Andy Jassy celebrated his one year as Amazon CEO on Tuesday. Celebrate is probably not the operative word.

Jassi, a 25-year veteran at Amazon, succeeded Jeff Bezos on July 5, 2021. A few days later, the stock hit an all-time high. Since then, it has fallen more than 40%, including a 35% drop in the second quarter, the steepest decline of any period since 2001.

As only Amazon’s second CEO since Bezos launched the company in 1994, Jassi is staring down a macroeconomic hurricane that is 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 slower consumer spending as investors turn away from tech stocks that led to a recent bull market.

But it’s not just 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 fought a labor battle that culminated in a vote at a Staten Island, N.Y., warehouse in April to create 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.

Last July, when Jassy officially took over as CEO, Amazon’s business was stronger than ever. The company just posted its first quarter of $100 billion, reflecting a pandemic-induced surge in e-commerce activity that has caused Amazon to expand at breakneck speed.

The story quickly developed. Amazon is now freeing up some of the warehouse space it added during the pandemic. And after months of worker shortages, the company is already overstaffed in its fulfillment network as cooling e-commerce means many 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 2001 dotcom crash and its first quarterly loss since 2015.

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

Asked whether Jassy was responsible for warehouse overgrowth and recent weakness in Amazon’s business, Tom Forte, an analyst at DA Davidson, said the new CEO was still getting the benefit of the doubt.

“Today, I still feel the answer is no,” said Forte, who recommends buying the stock. “But I watch if there’s an extended multi-year period of weakness in stocks, at which point investors will start looking for Andy and start assigning blame.”

Forte is not alone. After the company’s first-quarter earnings report, several Wall Street analysts said Amazon’s challenges would likely 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 embrace their culture of pioneering and making decisions with speed/agility so that they can continue to grow at scale.”

An Amazon spokesperson declined to comment for this story.

The difficult challenges are unlikely to disappear anytime soon.

Since the unions’ victory in Staten Island, Amazon has aggressively fought other organizing efforts and staunchly maintained its opposition to unions. After reports of unsafe working conditions in its warehouses, Jassi said Amazon’s injury rates were “sometimes misunderstood,” but he acknowledged that Amazon could do more to improve safety at its facilities.

“At our scale (we hired over 300,000 people in 2021 alone, many of whom were new to this type of work and needed training), it takes rigorous analysis, thoughtful problem solving and a willingness to innovate to get to the desired location,” Jassy wrote in his first letter to shareholders in April. “We analyzed every process to understand how we can improve further.”

Office workers have their own set of demands and have gained significant leverage demanding higher wages, better benefits and more flexibility in working from home. Last October, Amazon moved away from its office-centric culture when it let individual managers decide how often their employees would have to come into the office.

Earlier this year, in response to a strengthening labor market, Amazon raised its 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 leaving quickly. The trend predates Jassy’s tenure. More than 45 senior executives left Amazon between early 2020 and April 2021, according to Business Insider data, an unusually high number for the company.

Under Iasi, the exodus continued. Last month, 23-year Amazon veteran Dave Clark resigned a little more than a year after taking over the role of retail director from Jeff Wilke, one of Bezos’ top aides, who stepped down in early 2021. -late in June, two prominent black leaders — chief operating officer Dave Boseman and Alicia Boller-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 may become harder to attract and retain the same kind of talent.

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

Amazon said it has high retention rates. The average tenure for vice presidents is about 10 years, and for senior vice presidents it is “much longer,” the company said.

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

In the years since, investors have looked for a potential fourth or fifth pillar. Now they’ll be asking Jassy what can move the needle on a company with a market cap of $1.1 trillion.

Bezos has greenlighted ambitious projects like the Echo smart speaker and delivery drones, while taking unconventional, ambitious ventures outside of Amazon, such as investing $42 million to build the “Long Now Clock,” which will tell the time for the next 10,000 years. and launch of the Blue Origin spaceflight company.

Jassy’s big innovation was AWS. After serving as Bezos’ “shadow” in the early 2000s, Jassi was personally empowered by Bezos to start a cloud business that has transformed into a $60 billion powerhouse and become 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 terribly unfair to say that Jeff is a better innovator or builder than Andy.”

During Amazon’s AGM in April, Jassi reminded employees that he “was here when we were just a book retailer.” From there, the company focused on music, video, consumer electronics, cloud computing, devices and streaming entertainment, Jassi said at the meeting, a transcript of which was obtained by CNBC.

As it explores 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 competence or “can we quickly gain competence?”

“If we like the answers to those questions, we’ll pursue that opportunity, even if it’s really different from what we’ve done in the past,” Jassi said. “And that philosophy is what you see in the different consumer experiences and business segments we’re pursuing.”

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