Amazon CEO Andy Jassy in shareholder letter says he's committed to cost cutting while investing in AI

🌈 Abstract

The article discusses Amazon CEO Andy Jassy's annual shareholder letter, where he outlines Amazon's commitment to cost-cutting while also investing in new growth areas like artificial intelligence (AI). Key points include:

• Jassy pledges to continue lowering Amazon's "cost to serve" in its retail business, even as the company doubles down on AI and other new initiatives.
• Amazon is building "primitive services" - discrete, foundational building blocks that can be used to rapidly innovate and build new applications.
• Jassy sees generative AI as a key "primitive service" that will enable many new AI-powered applications, both within Amazon and for external customers.
• Amazon is investing heavily in AI, including building its own custom AI chips and services like Amazon Bedrock to help customers build generative AI applications.
• Jassy believes Amazon needs to remain resilient by staying focused on solving real customer problems, building in primitives, and embracing new technologies like AI.

🙋 Q&A

[01] Amazon's Cost-Cutting and Investment in AI

1. What is Jassy's approach to cost-cutting and investment in new growth areas?

• Jassy is committed to continuing to lower Amazon's "cost to serve" in its retail business, even as the company doubles down on investing in new growth areas like AI.
• Jassy believes there are ways for Amazon to further reduce costs in its retail operations in 2024 and beyond.
• At the same time, Jassy is focused on finding new areas of growth within the company, such as generative AI, to ensure Amazon remains "resilient" in the long term.

2. How is Amazon approaching its investment in AI?

• Amazon sees generative AI as a key "primitive service" that will enable many new AI-powered applications, both within Amazon and for external customers.
• The company is investing heavily in AI, including building its own custom AI chips and services like Amazon Bedrock to help customers build generative AI applications.
• Jassy believes much of the "world-changing AI" will be built on top of AWS, Amazon's cloud computing platform.

[02] Amazon's Approach to Innovation

1. What is Amazon's approach to building "primitive services"?

• Amazon characterizes "primitive services" as discrete, foundational building blocks that can be composed together in different ways to rapidly innovate and build new applications.
• The company has found that building in primitives, rather than tightly coupled components, has allowed it to innovate much more quickly, both internally and for external customers.
• Examples of Amazon's primitive services include its logistics capabilities, which have been exposed to third-party sellers through services like Fulfillment by Amazon.

2. How does Amazon's focus on primitives relate to its resilience as a company?

• Jassy believes that Amazon's discipline around building in primitives, solving real customer problems, and embracing new technologies like AI is key to the company remaining resilient in the face of rapid change.
• By creating flexible, reusable building blocks, Amazon is able to rapidly experiment and innovate to address evolving customer needs, rather than being constrained by tightly coupled systems.