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- Jeff Bezos will step down as CEO of Amazon and take on a new role as Executive Chairman.
- Facebook will be the only “big five” tech company to still have its founder as its CEO.
- This type of transition is common because it keeps the key business visionary involved in big decisions.
- Visit Insider’s Business section for more stories.
Amazon CEO Jeff Bezos announced on Tuesday that he would step down as CEO of the online retail empire he founded in 1994 and has grown to become one of the most valuable tech companies in the world. world.
Andy Jassy, longtime Bezos lieutenant and CEO of the company’s burgeoning cloud business, will replace him in the third quarter of 2021. But that doesn’t mean Bezos is done with Amazon; he will take on a new role of executive chairman which will involve influencing global decisions such as product strategy and new projects.
If this sounds familiar to you, it should. Bezos is officially a member of the club of elite tech founders who have stepped down from their role as CEOs to focus on driving major strategic decisions and other grandiose projects.
When Larry Page and Sergey Brin officially stepped down from their respective roles as CEO and chairman of Google Parent Alphabet, they wrote that it was time for them to “take on the role of harassing parents, offering advice and support. love, but not daily stalkers!
Bill Gates, the billionaire philanthropist and Microsoft co-founder, said he gave up his CEO title in 2000 to return to what he loved most: “focusing on technology for the future.”
And now, Bezos is moving from the role of CEO to Executive Chairman, which 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 responsibility, and it’s consuming,” Bezos wrote in a letter to employees announcing his transition. “When you have a responsibility like this, it’s hard to call attention to anything else.”
Bezos’ decision means that few of the biggest US-based tech companies are still run by their founders. Among the FAANG joint-stock companies, an acronym that refers to tech giants Facebook, Apple, Amazon, Netflix and Google, only Facebook and Netflix still have founders in a CEO role. The same is the case with the “Big Five” technology companies – Apple, Amazon, Facebook, Alphabet and Microsoft. Only Facebook still has its founder as CEO.
There’s a reason big tech companies tend to follow this pattern, experts say. For one thing, when you have a CEO who has come to be known as an iconic visionary like Bezos, the prospect of losing his involvement would surely scare off investors and just about any other business or institution that depends on a company’s business. one way or another. It also gives Bezos the ability to lead the company at a certain level and stay in the spotlight to a certain extent as Jassy gradually becomes the face of the company.
“You want to come out on top, you want to come out when things are really going well,” David Yoffie, Max and Doris Starr professor of international business administration at Harvard Business School, told Insider. “And you hand over the reins to a successor who can build on the momentum you’ve built.”
After announcing Bezos’ transition on Tuesday, Amazon was quick to make it clear that he will still play an important role in the business. As executive chairman, Bezos will be embroiled in “one-way door” issues, Amazon CFO Brian Olsavsky said on the company’s fourth-quarter earnings conference call on Tuesday. This term refers to critical decisions such as acquisitions, strategy and the decision to enter new markets like grocery, Olsavsky said on the call.
Bezos will always be a big part of Amazon’s future
This type of transition also suggests that we shouldn’t expect major changes in Amazon’s overall strategy and direction just because Bezos is no longer in the driver’s seat.
“When you see a CEO step into an executive chairman role, it’s a signal that the board really wants to stick with current strategy,” said Mary-Hunter McDonnell, associate professor of management at the Wharton School of the University of Pennsylvania, at Insider. . “Now is not the time to bring in a transformative new CEO.”
This is what differentiates the position of executive chairman of Bezos from a non-executive chairman, as pointed out by William Klepper, author of the book “The CEO’s Boss: Tough Love in the Boardroom” and academic director of executive education at the Columbia Business School.
“Non-executive chairman [means] they keep their noses in it but their hands away from the company, “Klepper told Insider.” In this case, when you use the term executive chairman of the board, it basically means I’m not going to keep my hands about the company. . . So in many ways it’s a partnership now. “
Jassy, a 24-year Amazon veteran, is known to be Bezos’ second in command and even served as his first ghost advisor, a role that involves attending every meeting alongside the CEO. Since joining the company in 1997, Jassy has grown into one of Amazon’s most influential and important people, growing the company’s cloud business from the ground up, as Eugene Kim and Ashley Stewart d ‘Insider detailed it in their profile on Jassy.
This intimate knowledge of Bezos is essential, as what happens next for Amazon will depend on the type of executive chairman Bezos decides to be and his relationship with Jassy.
“When the president and the CEO have a very strong personal relationship, they are able to handle all the tensions and conflicts that will inevitably emerge,” said Yoffie. “When this relationship is a little strained or a little distant, and there is no deep trust between the two actors, it can be a really difficult problem to have the founder in that role as executive chairman. .
It is also particularly common for founder-led technology companies to follow this protected style succession plan because of the specific challenges that technology companies face in bringing in outside leadership. Outsiders may not understand the culture and technology that are critical to business success, according to Yoffie.
Shifting to a role more focused on overall decision-making without the pressure and responsibility of day-to-day management is also, in some ways, the next step in a tech founder’s career trajectory.
“Most of those businesses that start in a garage,” Klepper said, referring to the famous Silicon Valley trope, “they grow.”
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