Amazon’s amazing turnaround: How Andy Jassy secretly wooed Wall Street and overhauled a bloated tech giant

Amazon CEO Andy Jassy.

In November 2022, roughly a dozen top Amazon investors convened in a large conference room at the company’s Seattle headquarters.

They were there to meet Andy Jassy. It was the first opportunity for many in the room to get face time with the new CEO since he replaced Jeff Bezos.

The shareholders were not happy. Amazon had just become the first company to shed $1 trillion in market value and was on its way to a $2.7 billion annual loss.

For the next hour, over boxed coffee and fruit salad, the investors peppered Jassy with pointed questions. He shared long-term plans for making Amazon’s retail and cloud businesses more efficient. His answers were “grounded in facts,” not sugar-coated to please the audience, according to one shareholder who attended.

The group was impressed by early signs of what turned out to be an amazing comeback. Since then, growth has rebounded, costs have been reined in, and profit recently hit a record. Amazon shares have more than doubled, pushing the company’s market cap above $2 trillion for the first time.

“You’re seeing a much more focused, highly determined company now,” this shareholder told us. “I’d rather have Jassy than Bezos.”

This person is one of over a dozen Amazon employees, investors, and analysts B-17 interviewed to better understand Jassy’s first three years as CEO. Most of them asked not to be identified because of confidentiality agreements.

These people described how, after a worrying start, Jassy had put a distinctly personal stamp on Amazon by making ruthless cuts and more measured investments, a break from Bezos’ growth-at-all-costs management style. Jassy is also adapting to changes that inevitably come with running a bigger, more mature company, while reviving key parts of Amazon’s original frugal culture through meticulous attention to detail and new internal communication.

‘A lot of cleanup required’

Taking over a giant corporation is hard, especially when it has been run for decades by a highly respected, charismatic founder like Bezos.

Since starting Amazon as a small online bookseller in 1994, Bezos has been the face of the company. But his priorities began to shift as the decades passed, and he became incredibly wealthy. He acquired The Washington Post, went through a divorce, got a new girlfriend, and bought a superyacht.

Jassy replaced Jeff Bezos as Amazon’s CEO in July 2021

When the COVID-19 pandemic hit in 2020, Amazon went on an unprecedented hiring spree to keep up with demand from consumers stuck at home.

Jassy became CEO in July 2021. Just as he was getting established, the pandemic boom collapsed. Online-shopping growth evaporated, tech stocks plunged, and Amazon was left with too many employees and a bloated cost base. Some inside Amazon even whispered about bringing Bezos back.

“Jassy was handed a deck of cards that had a lot of cleanup required,” Mark Shmulik, a top internet analyst at Bernstein, said.

How the revival began

The turnaround went through a hallmark of Jassy’s administration: a new level of Wall Street engagement.

In 2023, Jassy started appearing on Amazon’s earnings calls to answer live questions from analysts, a practice Bezos had abandoned years ago. The move came after some investors griped about Jassy’s absence on those calls as Amazon’s stock plummeted in late 2022, one of the people who spoke with us said.

For years, Bezos had focused less on investors, with Amazon reporting little or no profit in a quest for endless growth. Jassy, however, is much more cognizant of Wall Street, often making key decisions based on how shareholders might think and react, according to the people who spoke with us.

A year ago, Bernstein’s Shmulik wrote a brutal open letter to Jassy demanding clarity on Amazon’s spending to “quell investor concerns.” Since then, the CEO has made dramatic improvements in almost every part of the business where investors wanted them.

“He’s delivered,” Shmulik said.

Bringing ‘frugality’ back

As the pandemic boom turned to bust, Jassy prioritized frugality. Though Amazon has always preached this, he pushed the company to become more focused on unnecessary costs and even penny-pinching, according to some of the people who spoke with us.

Jassy has driven this home in a series of internal meetings. During one all-hands in early 2023, he urged employees to think like business owners with their own money at stake.

“Think about, if this were my money, would this be the way I would spend it?” he said, according to a recording of the meeting obtained by B-17.

In a meeting this year, Jassy said Amazon had become “much scrappier” lately because of a renewed focus on frugality.

In May, the CEO launched an internal video series that shares his take on each of Amazon’s 16 leadership principles, according to an internal memo seen by B-17. Some employees saw the videos as a reminder to return to Amazon’s frugal roots.

An ominous warning for managers

Some staff members have been frustrated by Amazon’s “do more with less” attitude, but Jassy seems intent on keeping it this way.

During an internal fireside chat in August, the CEO reminded employees that some of Amazon Web Services’ earliest products were built by teams of fewer than 20 people.

Amazon needed to do away with bloated teams, Jassy said, while delivering an ominous warning to managers.

“The last several years, people have believed that the best way to get promoted is to have a big team. That’s not the way I think about it,” he said. “We have big enough teams right now. We have just got to invent and be frugal at the same time.”

Game of Cuts

Jassy has also eliminated long-term, expensive moonshot projects while slashing roughly 27,000 jobs.

Amazon leadership told the One Medical healthcare business to cut projected losses this year by at least $100 million. And even historically profitable units, such as AWS and advertising, have seen job cuts.

The messaging around Prime Video, one of Amazon’s biggest investment areas, has also changed. Bezos wanted big-budget blockbusters to rival “Game of Thrones.” Jassy, meanwhile, made it clear in an April shareholder letter that he expected Prime Video to become a profitable business on its own.

Amazon declined to make Jassy available for an interview. However, company spokespeople weighed in on several points raised by B-17’s reporting. For instance, Jassy doesn’t directly order changes like the One Medical edict. Instead, he asks direct reports to improve operating income at certain units and leaves those executives to make the specific calls, a spokesperson said.

These painful steps have produced financial results far stronger than those at any time when Bezos was in charge. In its latest period, Amazon saw growth reaccelerate, while operating income tripled from a year ago to $15.3 billion, the largest quarterly profit in company history.

‘Very strong’ opinions

Jassy is also known for meticulous attention to detail, which some say is more in-depth than Bezos’.

His need to approve almost every major press release, blog post, and company statement sent to reporters has irked some employees, people familiar with the matter said. In some cases, these people said that Jassy openly criticized the performance of individual employees several levels below him, an unusual level of engagement for the CEO of such a sprawling company.

Jassy often has “very strong” opinions about certain businesses, which makes it difficult to get approvals to move forward, two people said. Some teams within the retail business often seek to combine their Jassy meetings with those of Amazon’s stores CEO, Doug Herrington, to avoid going back and forth, one of the people said.

There are select instances, the Amazon spokesperson said, where Jassy and other leaders intentionally review a topic at the same time “to move faster and eliminate extra meetings.”

The spokesperson added that Amazon required leaders to be both strategic and deep in the weeds, with Jassy regularly providing detailed feedback. Those meetings include “people at all various levels within the organization” to support their development as leaders, the spokesperson said.

Jassy’s management style has drawn a mixed bag of supporters and detractors. In his first three years as CEO, Jassy has lost many senior staffers. They include high-profile executives such as the company’s press and policy chief, Jay Carney; its Alexa and devices lead, Dave Limp; and AWS CEO Adam Selipsky.

Dave Clark, Amazon’s former worldwide consumer boss, left a year after Jassy’s appointment. Clark said on a podcast last year that he felt like a bureaucrat because he spent too much time talking to government and press members and “managing my boss.” Amazon’s spokesperson said the company had “strong retention and continuity” among senior leaders.

Amazon’s former retail CEO, Dave Clark.

Potential downsides of Jassy

Jassy’s new approach may have some downsides. Amazon employees used to leave a meeting with Bezos feeling inspired and more ambitious about their projects, some of the people said. In meetings with Jassy, there’s a much greater emphasis on mundane topics such as the bottom line, they added.

Amazon’s spokesperson said this description was incorrect and that the company had always invested in a “wide array of potential growth areas,” including Prime Video, Alexa, and grocery.

Still, some of the people who spoke with us worried that Amazon was becoming too short term in its thinking. A good example is the near shuttering of Grand Challenge, Amazon’s moonshot lab for ambitious ideas. In late 2022, Amazon killed most Grand Challenge projects and let go of a big chunk of the team, resulting in the departure of its leader, Babak Parviz.

Jassy “has been trying to turn this engineer into someone who can also think about business issues in a deeper way,” Parviz said several months before leaving.

‘Cutting and trimming’

Indeed, a common refrain among employees about Jassy’s leadership is a lack of innovation. Some employees said that Bezos fostered the creation of many businesses and products, including the Kindle e-reader, Echo speakers, Alexa voice assistant, and Just Walk Out cashierless technology. Jassy, meanwhile, has mostly focused on improving operational efficiency.

“He spent all of his energy in the last three years cutting, trimming, and reorganizing,” one of the people told us. “And none of that resulted in true invention.”

Amazon’s spokesperson told us that Jassy started when there were macroeconomic factors requiring many companies, including Amazon, to “make some difficult decisions, which is why streamlining happened to take place early in his tenure.” Jassy is still actively engaged in “innovating customer experiences” across the company, the spokesperson added.

Less ‘chaotic’

The next big test for Jassy is Amazon’s response to the sudden rise of generative artificial intelligence.

Mark Mahaney, an Evercore analyst, said AWS’s late entry to the “gen-AI party” and potential loss of market share to Microsoft were concerns that “likely won’t be resolved for another year or two.”

Internally, it’s an all-hands-on-deck situation. Every team is busy working on some kind of AI project, with Jassy directly involved in many of those.

Even so, some employees said, Jassy takes a much more measured investment approach to generative AI. This is in stark contrast to how Bezos led a mad scramble with the Alexa voice assistant when the company quickly expanded the team and invested huge amounts of money, only to lose billions of dollars.

“Alexa was chaotic,” one of the people said. “Gen AI is not like that. We’re not just throwing things at the wall.”

Amazon’s spokesperson said the company was making “huge investments” in AI across AWS and the retail business.

The company is hiring “a lot of AI folks and re-allocating those resources from other non-GenAI areas,” the spokesperson added. “Under Jeff, the company was smaller and it was not possible to reallocate resources as easily.”