When Amazon announced last week that founder and CEO Jeff Bezos planned to step back from overseeing operations and shift into an executive chairman role, it also revealed that AWS CEO Andy Jassy, head of the company’s profitable cloud division, would replace him.
As Bessemer partner Byron Deeter pointed out on Twitter, Jassy’s promotion was similar to Satya Nadella’s ascent at Microsoft: in 2014, he moved from executive VP in charge of Azure to the chief exec’s office. Similarly, Arvind Krishna, who was promoted to replace Ginni Rometti as IBM CEO last year, also was formerly head of the company’s cloud business.
Could Nadella’s successful rise serve as a blueprint for Amazon as it makes a similar transition? While there are major differences in the missions of these companies, it’s inevitable that we will compare these two executives based on their former jobs. It’s true that they have an awful lot in common, but there are some stark differences, too.
Replacing a legend
For starters, Jassy is taking over for someone who founded one of the world’s biggest corporations. Nadella replaced Steve Ballmer, who had taken over for the company’s face, Bill Gates. Holger Mueller, an analyst at Constellation Research, says this notable difference could have a huge impact for Jassy with his founder boss still looking over his shoulder.
“There’s a lot of similarity in the two situations, but Satya was a little removed from the founder Gates. Bezos will always hover and be there, whereas Gates (and Ballmer) had retired for good. [ … ] It was clear [they] would not be coming back. [ … ] For Jassy, the owner could [conceivably] come back anytime,” Mueller said.
But Andrew Bartels, an analyst at Forrester Research, says it’s not a coincidence that both leaders were plucked from the cloud divisions of their respective companies, even if it was seven years apart.
“In both cases, these hyperscale business units of Microsoft and Amazon were the fastest-growing and best-performing units of the companies. [ … ] In both cases, cloud infrastructure was seen as a platform on top of which and around which other cloud offerings could be developed,” Bartels said. The companies both believe that the leaders of these two growth engines were best suited to lead the company into the future.
Growth versus nurturing
When Nadella took the reins at Microsoft in 2014, the company was just beginning to take off in the cloud infrastructure market. In fact, the entire cloud infrastructure business was worth just $4 billion in those days, compared to $129 billion in 2020. Microsoft’s Azure business accounted for around $400 million of that total in 2014, according to Synergy Research data from that time.
It was up to Nadella to continue nurturing that side of the business, says Mueller. “Satya had a transformation challenge and then from there, a growth challenge. Andy for now has a get going and [keep] growing challenge,” Mueller said, adding, “Satya got the CEO job because he knew the key growth area, while Andy got it because he grew the profit engine.”
Bartels says that while he sees the similarities, he says that Nadella faced a much more formidable transformation challenge when he took over. “At the time of his appointment, Azure was doing well, but it was a fraction of the size it is now, and a much smaller part of Microsoft’s overall revenues. The fact that Nadella has been successful in running Microsoft undoubtedly made it easier for Andy Jassy to become CEO of Amazon,” Bartels said.
If Jassy is to face the inescapable comparisons to Nadella, he has big shoes to fill. Nobody can argue that Nadella hasn’t crushed it as CEO, not only growing the cloud business, but completely transforming the culture and the overall business model in the process.
How well has Nadella done since taking over in February 2014? Stock price is certainly one way to measure CEO success, and by that metric, Nadella has done outstandingly well. Consider that when he took over on February 4, 2014, the company stock price sat at a fairly anemic $36.35 per share. As of today, that price is $242.51, a truly remarkable rise of 567%.
Jassy’s challenges
But beyond the cloud connection, there are a number of major differences between these two companies as well. Microsoft has always been a technology company with roots in Windows and software on the desktop and on-premises enterprise tooling. Amazon, on the other hand, is at its core an e-commerce company with a profitable cloud division.
While Jassy does have to deal with Bezos hanging around, he has the advantage of a long relationship, says Mueller. “On the plus side Jassy has worked with Bezos for a very long time [ … ] and knowing each other creates trust,” he says.
As Jassy moves into the corner office later, he will take on the role with a much more robust cloud infrastructure market. Unlike Nadella, whose job it was to grow and nurture that part of the business, it will be Jassy’s just to make sure that he keeps on doing what he has been doing since he was promoted to VP at the fledgling AWS in 2006, while being responsible for overseeing the rest of the business as well.
As CEO, Jassy will also have lots of other issues to deal with like possible antitrust legislation and a fledgling labor union movement inside the company’s distribution warehouses. It’s unclear whether he will be more open to the latter than Bezos has been, but as a company Amazon has been firmly anti-union. Uneasy is the head who wears the crown as Jassy will no doubt soon find out.
While Nadella took over in a different time with a much more immature market, he didn’t have the same macro environment, as the economy struggles to recover from COVID. Yet with their roots so similar, and their former divisions so core to their company’s success, people will be comparing them throughout their tenures, whether that’s fair or not.