Jeff Bezos, the founder and CEO of Amazon (NASDAQ: AMZN), is probably the most influential business leader of his era. Bezos launched Amazon from a brand new company that sells books online to a global technology group with dominant positions in e-commerce and cloud computing, with a history of inventions that can be unmatched in the technology world.
The company announced Bezos’ upcoming position change from CEO to CEO in its fourth-quarter earnings report Tuesday after the clock, which stunned the business world. At 57, Bezos is far from retired, and there was no sign that he would step down as CEO.
But perhaps more surprising than his decision to go ahead was investors’ reaction to the news. Usually, when a much-admired chief passes the reins, the stock flops, especially if it’s a surprise, but Amazon’s stock traded higher in the after-hours session, closing 0.3%. The quarterly report included a huge drop in earnings, but the Bezos news clearly overshadows any quarterly results.
Let’s go deeper to see what this news means for the company.
Jeff Bezos. Image source: Amazon.
Bezos says goodbye
Bezos does not go away completely. In the third quarter, he takes over as CEO, and Andy Jassy, the current CEO of Amazon Web Services, takes the top position. In a letter to employees, Bezos said:
Being the CEO of Amazon is a deep responsibility and it is inspiring. If you have such a responsibility, it is difficult to pay attention to anything else. As Exec Chairman, I will keep busy with important Amazon initiatives, but I 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 it’s not about retiring. I am very passionate about the impact I think these organizations can have.
Bezos had earlier explained his decision to launch Amazon as part of a process he called the Regret Minimization Framework. He knew that even if Amazon failed, he would not regret the decision when he was 80, but he would regret not trying.
I suspect Bezos is similarly thinking of joining the company he founded. He has just as many working years left in his career, and he has other interests to which he wants to devote his time, including the space company Blue Origin and The Washington Post, two other businesses he owns.
Amazon is one of the most valuable businesses in the world; it only limited a year with revenues of almost $ 400 billion, and it is much more profitable than one would think just a few years ago. In many ways, it makes sense that Bezos is ready to go on.
What it means for investors
Transition from CEOs, especially if they are one of the most successful leaders in the business world, does not always go smoothly. General Electric stock swung after Jack Welch left, as well Microsoft stock after Bill Gates’ departure, and Starbucks stock after Howard Schultz quit for the first time. In fact, Starbucks was so poorly managed that Schultz returned to successfully rescue the brand before retiring in 2017.
Bezos leaves Amazon with a unique culture shaped in his image, one that appreciates invention and hard work, and puts the Day 1 mentality first, meaning the company still works with the spirit of a startup, though it is one of the largest enterprises in the world.
He also gave a full-fledged endorsement to Jassy, saying, “Andy is a well-known person in the company and has been with Amazon for almost as long. He will be an excellent leader and he has my full trust.”
A number of news outlets have also reported that the transition has been going on for some time, with Bezos focusing for a while on higher-level projects inside and outside Amazon.
He leaves the business in excellent shape, but his departure will be the biggest test yet of the culture he has built at Amazon. The technology giant has a myriad of competitive advantages, such as the Prime loyalty program and its reputation as customer satisfaction, which should boost the growth of the company in the coming years.
But the technology industry is changing rapidly, and Amazon is facing an ever-changing range of competitors. There’s still little reason to worry about the stock, but keep an eye on Jassy’s tone and his first moves as he takes over the summer. Although he is well prepared, Bezos’ record clearly sets the standard.