Amazon CEO Andy Jassy’s annual letters to shareholders haven’t yet reached the canonical business status of his predecessor’s essays, but they still offer an interesting glimpse into the company’s strategy, and hint at what’s next.
“At our best, we’re not just customer obsessed, but also inventive, thinking several years out, learning like crazy, scrappy, delivering quickly, and operating like the world’s biggest start-up,” Jassy wrote in this year’s letter, released Thursday morning, putting his own spin on former CEO Jeff Bezos’ “Day 1” mantra.
Jassy also pointed to specific areas of momentum in Amazon’s business — writing, for example, that the company has “increasing conviction that Prime Video can be a large and profitable business on its own,” and calling the company’s Project Kuiper satellite venture “a very large revenue opportunity.”
But the vast portion of Jassy’s letter focuses on “primitives,” the concept of creating basic building blocks for internal and external use, exemplified most successfully by the core Amazon Web Services of storage and compute that laid the foundation for the company to build a giant cloud business.
Jassy goes on to identify other areas where Amazon has built and released basic components and services for customers and partners in a way that lets them mix and match “primitives,” including different aspects of its fulfillment and delivery services. Here’s how he explains the overarching benefit of the approach.
“Building in primitives meaningfully expands your degrees of freedom. You can keep your primitives to yourself and build compelling features and capabilities on top of them to allow your customers and business to reap the benefits of rapid innovation. You can offer primitives to external customers as paid services (as we have with AWS and our more recent logistics offerings). Or, you can compose these primitives into external, paid applications. …. But, you’ve got options. You’re only constrained by the primitives you’ve built and your imagination.”
He makes it clear that Amazon is looking for more areas to apply this “primitives” strategy. One of the examples hints at something that Amazon must be considering (and probably already working on) in its grocery business:
“We’ve been working hard on building a mass, physical store offering (Amazon Fresh) that offers a great perishable experience; however, what if we used our same-day facilities to enable customers to easily add milk, eggs, or other perishable items to any Amazon order and get same day? It might change how people think of splitting up their weekly grocery shopping, and make perishable shopping as convenient as non-perishable shopping already is.”
Jassy writes that the biggest opportunity for primitives is in generative AI, but in this area he mostly reiterates what the company has announced, and its previously described three-layered strategy of enabling customers to create new AI foundation models, helping them use existing foundation models, and building AI applications.
Also notable is what’s not included in the letter. There’s no direct reference to regulation or the FTC’s antitrust lawsuit against Amazon.
However, Jassy does address the company’s resilience and the vast expanses of the global retail and enterprise tech markets that its consumer and cloud computing businesses have yet to reach.
Asked about regulation during an interview on CNBC, Jassy described the “sad story” of antitrust enforcers in Europe and the U.S. opposing and effectively forcing the company to drop its iRobot acquisition, saying the process left iRobot with a “real question of whether they’re going to be a going concern.”
Addressing regulators’ scrutiny of acquisitions in the interview, Jassy added perhaps his most pointed statement to date on the topic: “I think a lot of it is outside the bounds of the law right now.”
Read Andy Jassy’s full letter to shareholders here.
