Andy Jassy, who was recently named CEO of Amazon Web Services, says the cloud computing business is just getting started and has a bright future in enterprise computing. Jassy started at Amazon right out of Harvard Business School in 1997, just three weeks before Amazon’s initial public offering. At the time, recalled Jassy, speaking at this year's Metropolitan Grill “Guess the Dow” event, Amazon’s marketing team had just eight people.
Amazon CEO Jeff Bezos asked Jassy to look into other categories Amazon should consider entering, including music. Jassy ended up authoring the business plan for Amazon’s entry into the music business. Bezos then selected him as a kind of “chief of staff” and he shadowed Bezos for 18 months.
Among the issues Bezos asked Jassy to look at was a set of technologies Amazon had developed for use by its merchants. Amazon had hired lots of engineers to develop the services, but each service was taking far longer to develop than expected and Bezos wanted to know why.
When Jassy asked the developers what the problem was, one developer explained that he had to start from scratch each time. “I spend three months on the storage piece before I even get to the product,” the developer explained. “It was all jumbled up,” says Jassy.
Jassy saw that Amazon needed a broader technology platform, not just for its merchants but also so its own retail team could move quickly. Jeff Bezos hosted an offsite meeting at his house in 2003 where Jassy presented his 6-page proposal for Amazon Web Services. “We were good at infrastructure deep in the stack,” says Jassy. “If he you believed that companies will build apps on our infrastructure, then the OS (operating system) is the internet. Which pieces are built? None.”
Jassy proposed a platform for which customers could pay according to how much capacity they used. He asked Amazon for 57 people to build out the technology platform. “I was terrified,” says Jassy. He received approval for the idea, and the business was launched in 2006. It quickly gathered steam with such customers as Dropbox and Netflix. In 2013, when the CIA started using Amazon Web Services, Jassy established standard API’s so that other companies could develop applications on Amazon’s platform. But it soon became clear that customers found it too much trouble to build their own applications. Customers wanted Amazon to add the features. Hadoop, an open source approach for storing large quantities of data, for example, had become popular, but customers found it took too much trouble to set up the software and asked Amazon to offer the data warehouse approach as a service. “If 10,000 customers use it, that’s a big return for new software,” says Jassy.
Today, Amazon Web Services has one million active business customers. It has 10 times the computer capacity of the next 14 companies combined. Most incredibly, Amazon Web Services is adding new features at an accelerating pace. In 2013, it added 280 new features; in 2014, it added 516 new features; in 2015, it added 720 new features. “We are the fastest growing company, but we are just getting started,” says Jassy. “We are just getting to enterprise adoption.” Jassy says Amazon may avoid consumer applications but he sees no enterprise area that Amazon would not consider. “When customers demand something, we look at it.”
Amazon’s move into the enterprise space, once dominated by Microsoft, is making waves. Fear of competition from Amazon was given by analysts as one reason for the plunge in Tableau’s stock price by more than 50 percent earlier this year.
Jassy says Amazon’s single-minded focus on customers helps avoid conflict within the company. We avoid fiefdoms by focusing on customers. We are also extremely long-term oriented. We are willing to plant seeds that bear in seven to ten years. That usually means we go through lots of variations of a product or business model. We say we are strategically patient but tactically impatient.”
Jassy says Amazon also hires builders. “It’s a great place for people who are innovators, who like to think up new ideas, who want to re-invent the business experience. In the Bay Area, companies tend to focus on a product launch. At Amazon, we just keep experimenting.”
At a lot of places, leaders avoid new ideas because they worry about cannibalizing their existing businesses. At Amazon, leaders have a bias toward saying “yes,” says Jassy. They then focus on how to make an idea work. Everybody has an incentive to work on their idea because they know the leadership team is liable to say yes. Ideas are often picked up from lower-level executives.
Amazon's key advantage, Jassy says, is its tendency to be a first mover and pioneer. “All businesses are like closing windows, and there are big advantages if you move first. We expect teams to move fast. We are more like a big startup. We work in small, autonomous units. They are single-threaded teams focusing on only one initiative. There is a high level of ownership, not bureaucracy. We know our customers well and we can dynamically change the roadmap every month.”