Why Andy Jassy’s Appointment Signals That Cloud, Not E-Commerce, Is Amazon’s Future

Jeff Bezos sent shockwaves through corporate America on Tuesday, when he announced that he would step down as Amazon CEO after 27 years leading the company. But the man he named as his successor came as no surprise. 

Andy Jassy, who joined Amazon in 1997, three years after its launch as an online bookseller, has been running the tech behemoth’s biggest money maker, cloud service provider Amazon Web Services, since 2006. On the same day Bezos announced his replacement, Amazon reported $12.7 billion in revenue generated by AWS in the last quarter of 2020 — on company-wide sales of $125 billion — with operating income of $3.6 billion, a 37% jump year-over-year. 

Jassy’s appointment serves as a clear view into Amazon’s future and that of the tech industry: its way forward lies in the cloud. Just as Satya Nadella was made CEO of Microsoft in 2014 after leading its Azure cloud division, Jassy will lead Amazon with an intimate understanding of an industry that hosts much of the world’s data and computing power. 

“There has always been a debate about whether AWS could be a bigger business than Amazon,” says Todd McKinnon, CEO of cloud software company Okta. “This is a vote for the answer to that question, which is probably yes.”

The so-called “cloud” has become the technological backbone to much of the corporate world, yet is largely invisible to consumers who use the cloud every time they scan a QR code menu at their local restaurant or watch Netflix films. 

Since launching more than a decade ago, AWS has been at the forefront of the cloud sector, and become the industry’s biggest vendor with more than 30% of the global cloud market. During Jassy’s 15 years overseeing AWS, the business has grown into a $50 billion enterprise with more than one million customers — including Pfizer, Walt Disney and Johnson & Johnson.

Jassy “has single-handedly changed the face of computing,” says Frank Slootman, CEO of Snowflake, the cloud storage giant that is both an AWS customer and competitor. “The whole notion of a public cloud was pioneered by Amazon.”

Jassy joined Amazon fresh after his Harvard graduation in 1997, shadowing Bezos as a technical assistant. In the early 2000s, the two men came up with the idea to outsource computer networks, years before other tech giants like Microsoft and Google began toying with the concept of what was then called “infrastructure-as-a-service.” 

Once he launched AWS in 2006, Jassy set about evangelizing the lofty idea of the “cloud” — first by targeting small companies and startups; the idea that a multinational conglomerate would outsource computer infrastructure was still a hard sell. Okta’s McKinnon recalls meeting Jassy after one of his speeches in 2009, when he was trying to get his own cloud-based company off the ground. “No one was all in [on cloud],” McKinnon says. “[Jassy] proved it would work.” Today, valued at $35 billion, Okta is among dozens of multi-billion dollar companies that use AWS and have grown alongside the last decade’s cloud industry boom.

 In recent years since, Jassy has espoused his cloud gospel at AWS’s annual conference Re:Invent. Most recently at the 2020 conference in December, Jassy recalled how, just as Amazon graduated from selling books to the everything store, AWS is only the latest example of how Amazon moves with the nimbleness of a startup, despite employing more than 1 million people. “You have to have the courage to pick the company up and force them to change and move,” he said.

Unlike the frigid public persona of Bezos, those who know Jassy speak of him as a “congenial” figure with a life outside of Amazon. Matt McIlwain, the managing director at Madrona Ventures, who has known Jassy for two decades, offered a thought not often linked to buttoned-up CEOs: “He's the kind of person you'd love to have a beer with.”

Yet, as a business leader, Jassy has not shied from attacks on competitors, and has attracted controversy for defending AWS’s facial recognition software being sold to law enforcement agencies, amid privacy concerns. When AWS lost its bid for a $10 billion U.S. military cloud contract to Microsoft last year, he called out the Trump administration for its “disdain” of Amazon.

Jassy has also overseen AWS’ reign on the cloud industry as both an essential vendor, but also an imposing foe to its competitors, big and small. Perhaps few other companies face this complicated relationship on a larger scale than Snowflake, the $85 billion cloud storage company which is built largely on AWS’ infrastructure, but in recent years has been forced to fend off competition to its data warehousing services from Amazon’s own product, RedShift.

“They are keenly aware of what’s going on with us, because hell, they can look at their own consumption of computing storage, and can see how well we are doing,” says Snowflake’s Slootman. “So much of our business runs on the Amazon platform.”

With Amazon’s immense size and market power, Jassy has his list of challenges ahead as CEO, most notably a multi-pronged antitrust campaign against the company led by the federal government, which has highlighted the company’s dominance in its e-commerce business. “Amazon has gotten sufficiently big. That makes industries nervous, and governments nervous,” says Ed Anderson, an analyst at Gartner. “One of the potential risks is that AWS and Amazon.com will get closer together.”

With such a gaping hole left by Jassy, questions abound as to who will take the reins of Amazon’s web services business. Many are looking to Amazon’s so-called S-Team, a group of company leaders who report directly to Bezos and work on key business decisions. Among some of the rumored names are AWS executives Peter DeSantis, head of infrastructure, and head of utility computing services Charlie Bell. 

But one name has come into focus for many observers: Matt Garman, who has overseen AWS’ core products since its inception and in the past year became AWS’ vice president of sales and marketing. “Matt Garman is the most logical person,” says McIlwain, whose Madrona Ventures was an early investor in Amazon. “He’s got this unusual breadth of experience inside AWS and he’s one of Andy’s longstanding, trusted team members.”

Whoever fills Jassy’s role, among the most powerful positions in the cloud computing industry, will have to define whether AWS is run independent of the new CEO.  But considering he worked under Bezos’ towering shadow for two decades, Jassy may resolve to cast his own across Amazon’s future.