- Jeff Bezos will step down as CEO of Amazon and assume a new role as CEO.
- Facebook will be the only technology company among the “big five” that still has its founder as CEO.
- This type of transition is common because it keeps the company’s key visionary involved in big decisions.
- Visit the Insider Business section for more stories.
Amazon CEO Jeff Bezos announced on Tuesday that he will step down as CEO of the online retail empire he founded in 1994 and has become one of the most valuable technology companies in the world.
Andy Jassy, a longtime Lieutenant of Bezos and CEO of the company’s expanding cloud business, will replace him in the third quarter of 2021. But that doesn’t mean Bezos broke up with Amazon; he will assume a new role as executive president, which will involve weighing in general decisions, such as product strategy and new projects.
If that sounds familiar, it should. Bezos is officially a member of the club of elite technology founders, who have ceased to be CEO and have focused on driving big strategic decisions and other grandiose projects.
When Larry Page and Sergey Brin officially left their respective CEO and President positions at Alphabet, the father of Google, they wrote that it was time to “take on the role of boring parents, offering advice and love, but not complaining every day!”
Bill Gates, the billionaire philanthropist and cofounder at Microsoft, said he resigned as CEO in 2000 to return to what he loves most: “focus on technologies for the future”.
And now Bezos is making the transition from CEO to an executive president position that will allow him to focus on early initiatives and new products, while freeing him to focus on his other passions, like Blue Origin and The Washington Post.
“Being the CEO of Amazon is a deep and stressful responsibility,” wrote Bezos in a letter to employees announcing his transition. “When you have a responsibility like that, it’s hard to put your attention to anything else.”
Bezos’ move means that few of the largest technology companies based in the United States are still run by their founders. Of the stock companies FAANG, an acronym that refers to the tech giants Facebook, Apple, Amazon, Netflix and Google, only Facebook and Netflix still have founders in the role of CEO. The case is the same with the “Big Five” technology companies – Apple, Amazon, Facebook, Alphabet and Microsoft. Only Facebook still has its founder as CEO.
There is a reason why big tech companies tend to follow this pattern, according to experts. On the one hand, when you have a CEO who has become known as an iconic visionary like Bezos, the prospect of losing his involvement would surely scare investors and almost every other company or institution that depends on the company in any way. It also gives Bezos the opportunity to run the company in some capacity and stay in the spotlight to some extent, while Jassy gradually becomes the face of the company.
“You want to come out on top, you want to come out when things are going really well,” David Yoffie, professor Max and Doris Starr of international business management at Harvard Business School, told Insider. “And you hand over the reins to a successor who can take advantage of the momentum you’ve established.”
After news of the Bezos transition was released on Tuesday, Amazon was quick to clarify that it will still play an important role in the company. As chief executive, Bezos will be involved in “one-way door” issues, said Brian Olsavsky, Amazon’s chief financial officer, during the company’s fourth quarter earnings conference call on Tuesday. That term refers to critical decisions such as acquisitions, strategy and the decision to enter new markets, such as food, Olsavsky said during the call.
Bezos will still be a big part of Amazon’s future
This type of transition also suggests that we should not expect major changes in Amazon’s overall strategy and direction just because Bezos is no longer in charge.
“When you see a CEO taking on the role of chief executive, it’s a sign that the board really wants to stick with the current strategy,” Mary-Hunter McDonnell, associate professor of management at the University of Pennsylvania’s Wharton School, told Insider. . “This is no time to bring in a new transformative CEO.”
This is what differentiates Bezos’ position as executive chairman from a non-executive chairman, as William Klepper, author of the book “The CEO’s Chief: Hard Love in the Boardroom” and academic director of executive education at Columbia Business School points out.
“Non-Executive President [means] they keep their nose in, but their hands away from the deal, “Klepper told Insider.” In that case, when you use the term executive chairman of the board, it basically means that I’m not going to keep my hands off the deal. . . So in many ways, it’s a partnership now. “
Jassy, a 24-year veteran at Amazon, is known to be Bezos’ second-in-command and even went on to be his first parallel adviser, a role that involves attending all meetings alongside the CEO. Since joining the company in 1997, Jassy has become one of the most influential and important figures on Amazon, building the company’s cloud businesses from scratch, as Eugene Kim and Ashley Stewart of Insider detailed in their profile on Jassy.
This intimate knowledge of Bezos is critical, because what happens next for Amazon will depend on the type of CEO Bezos decides to be and his relationship with Jassy.
“When the chairman and the CEO have a very strong personal relationship, they are able to handle all the tensions and conflicts that will inevitably arise,” said Yoffie. “When that relationship is a little tense or a little distant and there is no deep trust between the two players, it can be a really challenging problem to have the founder in that role as chief executive.”
It is also especially common for technology companies led by founders to follow this succession plan in a protected style because of the specific challenges that technology companies face in bringing external leadership. Outsiders may not understand the culture and technology that are crucial to driving the company’s success, according to Yoffie.
Moving to a role that is more focused on decision-making in general, without the pressure and responsibility of daily management is also, in a way, the next step in the career path of a technology founder.
“Most of these companies that start in the garage,” said Klepper, referring to the famous Silicon Valley trope, “they grow.”