Amazon announced that founder Jeff Bezos will step down as CEO in the third quarter of 2021, moving into a new role as executive chair.
Andy Jassy, currently CEO of Amazon Web Services (AWS), will become Amazon.com’s CEO at that time. The ecommerce giant made the announcement alongside blowout fourth-quarter 2020 earnings, its biggest-ever quarter of revenue — a staggering $125.6 billion — and net income, with $7.2 billion.
In prepared remarks, Bezos said it was an “optimal time” for the CEO transition, because Amazon is “at its most inventive ever.” The 57-year-old exec, one of the wealthiest people in the world with a current net worth of about $197 billion, founded Amazon.com as an online bookstore in 1994 and has headed the company ever since.
“Amazon is what it is because of invention,” Bezos said in a statement. “When you look at our financial results, what you’re actually seeing are the long-run cumulative results of invention. Right now I see Amazon at its most inventive ever, making it an optimal time for this transition.”
In a memo to Amazon’s employees, Bezos said the CEO transition “isn’t about retiring.”
“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,” Bezos wrote in the email.
By stepping out of the day-to-day CEO role, Bezos said he will “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. (Read the full memo below.)
Neither Bezos nor Jassy joined Amazon’s Q4 earnings call Tuesday. As usual, CFO Brian Olsavsky was the only senior exec who took questions from analysts. “Andy has his chance to put his imprint on Amazon,” Olsavsky said when asked about the CEO succession plan. As executive chair on the board, Bezos will be involved in “many one-way-door decisions,” which Olsavsky said refers to things like acquisitions and strategy. “Jeff’s always been involved in that,” the CFO added, and that’s what “he’ll keep his time focused on in that role.”
Jassy first joined Amazon in 1997 as a marketing manager. Jassy formed AWS in 2003, and Amazon promoted him from SVP of the division to CEO in 2016.
Under Jassy’s leadership, AWS has experienced massive growth — and massive profitability. For Q4, AWS had $12.7 billion in revenue (up 28%) and operating income of $3.6 billion (up 37%). The web services and infrastructure unit had an operating margin of 30% for 2020, compared with operating margin of 5.9% for the company overall.
Bezos, in the email to employees, outlined the “crazy things” that Amazon has done as a team 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 do it right, a few years after a surprising invention, the new thing has become normal. People yawn. That yawn is the greatest compliment an inventor can receive,” Bezos wrote.
Overall, Amazon continued to ride coronavirus tailwinds in Q4 2020, historically the e-tailer’s biggest quarter thanks to holiday shopping. Sales increased 44% to an eye-popping $125.6 billion in Q4, and Amazon’s net income more than doubled year-over-year, to $7.2 billion. That translated into earnings of $14.09 per diluted share — utterly smashing Wall Street expectations.
Analysts on average had expected Amazon to post $119.7 billion in revenue and EPS of $7.23 for the year-end 2020 quarter, according to Refinitiv.
During the quarter, Amazon Studios announced deals for upcoming Prime Video series and movies, including the Eddie Murphy comedy “Coming 2 America,” set to premiere in March, and an unscripted docuseries and new coming-of-age series based on Jessica Simpson’s memoir “Open Book.”
In Q4, Amazon said that its Fire TV devices now reach more than 50 million monthly active users around the world. The company also landed new content deals with premium streaming providers, including HBO Max, Discovery Plus, and Xfinity in the U.S., as well as Disney Plus in Mexico and Brazil; Now TV in the U.K.; and Canal Plus in France.
Separately, earlier Tuesday Amazon unveiled a proposed design for the second phase of its Arlington, Va., headquarters, referred to as “HQ2,” the ecommerce giant’s biggest office complex outside of its Seattle home base. The HQ2 campus in Arlington will feature “The Helix,” a tower that will function as an alternate workspace for Amazon employees “amidst lush gardens and flourishing trees native to the region,” according to the company. It’s similar to the Spheres structure at Amazon’s Seattle headquarters.
Read Bezos’ memo to 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.