It will be fair to say that Jeff Bezos, the Amazon founder and the world’s richest man, has his sights set higher than ever as he steps down as the CEO of one of the most valuable companies on Earth. After all, he is headed to the edge of space as he marks his exit from actively running the company that he launched on this day 27 years back as an online book delivery company. In less than three decades it has grown into a behemoth with interests in everything from cloud computing to online streaming while its core retail business is basking in a pandemic boost to sales. Here’s what you need to know about the Amazon journey, Bezos’s transition and the road ahead for both.
Why Is Bezos Leaving Amazon?
Well, Bezos, who is worth $201 billion on July 5, is not exactly quitting Amazon. It’s more like taking a step back from the day-to-day running of the company. He remains Amazon’s largest shareholder — even after transferring a part of his stock to his now divorced wife MacKenzie Scott — and its executive chairman, so he’ll still have a lot of say in the company’s affairs.
“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,” he told employees in a letter after announcing his decision to step down in February this year.
The Day 1 fund is a $2 billion initiative that Bezos had launched in 2018 to help homeless families and set up a
“network of new, non-profit, tier-one preschools in low-income communities,” Bezos had said at the time. The Earth Fund has earmarked $10 billion for aiding scientists, activists and organisations working against climate change.
Bezos had acquired legacy title The Washington Post in 2013 for $250 million and is reported to have transformed the company so that it had doubled its web traffic within three years and turned profitable.
But the most exciting project, as much for the world at large as for Bezos himself, is arguably his space company Blue Origin, with which the 57-year-old Bezos aims to bring space travel closer to ordinary people while pushing humans further into exploring the final frontier.
How Does He Leave Amazon?
As Bezos steps back, Amazon is today a $1.7 trillion company, and among the most valuable anywhere. And the pandemic how Bezos’s big picture mindset and long-term focus has paid off. At a time when companies across sectors have been struggling to balance costs and revenues, Amazon saw sales zoom and the company is said to have hired more than 5 lakh people only in 2020 to meet all the excess demand as people turned to online shopping for their everyday needs.
But the thing about Amazon is, of course, that while its core business may be retail it still has other verticals that are also raking in profits. Take for example its cloud business. Sales for Amazon Web Services, whose boss Andy Jassy is succeeding Bezos, grew by 32 per cent in the first quarter of 2021 to $13.5 billion. Then there is the online subscription and advertising businesses that, too, bring in sizeable revenues to the company.
“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,” Bezos had said in his letter.
Industry watchers say that the end of the pandemic and rollback of lockdowns will see a slowdown in Amazon’s online retail business and for Jassy, that could be the number one priority as he takes over from his long-time mentor.
What Are Challenges Ahead For The Company?
From regulatory pressures across the world, including in India, to issues with its vast workforce, the new Amazon boss will have his hands full right from the get go. Specifically, it is Amazon’s own product lines that are under threat as regulators study whether it can compete on its own platform with its own customers, that is the third party sellers who use Amazon to connect with buyers. Draft regulations brought out by authorities in India point to greater scrutiny of such practices.
Then there is the question of acquisitions that have come under the scanner. The US competition watchdog, Federal Trade Commission, has said it will review Amazon’s proposed takeover of Hollywood biggie MGM Studios as it aims to deliver a stronger challenge to the likes of Netflix and Disney.
The company has also been in the new over allegedly questionable working conditions and recently survived an attempt at unionisation at one of its facilities in the US. As he prepred to step down, Bezos had announced that Amazon will strive to become the “Earth’s Best Employer and Earth’s Safest Place to Work”. But to earn those tags may require adjustments that may pose a challenge for the company going ahead.
“Despite what we’ve accomplished, it’s clear to me that we need a better vision for our employees’ success,” Bezos had told shareholders in a letter earlier this year.