Amazon has begun laying off some 10,000 employees, but the pain at the tech and e-commerce giant isn’t spread evenly. The company’s best performing and least recognized business is cutting few, if any, jobs. Amazon Web Services, which sells cloud computing services to millions of organizations and individuals worldwide, delivered 74% of Amazon’s operating profit in 2021 and will likely beat that mark in 2022. Despite the massive wave of layoffs in the company’s devices, human resources, and retail divisions, a senior AWS executive told Bloomberg recently, “I anticipate that we actually will add some headcount next year.”
Total revenue last year was $62.2 billion, and AWS has barreled ahead even in this year’s slow economy, with revenue growing 32% (a $14.3 billion increase) in the first three quarters. Though the division's growth didn't quite meet analysts' expectations in the third quarter, its projected revenue for 2022 is around $80 billion.
As this locomotive continues to outpace the economy and the rest of Amazon—and Wall Street analysts expect it will continue to do so—CEO Adam Selipsky will inevitably attract more attention. He’s already famous in the tech world, but not well known outside it. He became AWS’s chief in 2021 when his predecessor, Andy Jassy, succeeded Jeff Bezos as Amazon’s CEO.
Selipsky took a somewhat winding journey to the top of AWS. Tech wasn’t a big part of his education. Growing up in Seattle, he attended the elite Lakeside School (best-known alumnus: Bill Gates), and then, like Jassy, he went to Harvard, majored in government, and earned an MBA at Harvard Business School. He went on to work for Mercer Management Consulting and the Seattle-based RealNetworks software firm.
Selipsky started at AWS in 2005, a year before it launched launched its inaugural storage service. He built AWS’s marketing, sales, and support team and created the team that built AWS’s first user interface. After 11 years of helping to manage the business’s rocketing growth, he accepted—“much to my own surprise,” he says—an offer to become CEO of Tableau, a Seattle software company. Salesforce bought Tableau in 2019. Then, when Amazon announced that Jassy would succeed Bezos in 2021, Selipsky was tapped to come back to AWS as his successor.
Fortune recently sat down with Selipsky, 56, to talk about the culture that has made AWS dominant, how he chooses team members, his unplanned career ascent, and how anyone can put themselves in a position for good things to happen, among other topics.
This interview has been edited and condensed for clarity.
On what makes AWS different:
We take a very long-term view. We believe it can take many years to create something of deep value and of scale that works for customers and works as a business. Many companies are so short-term driven for a lot of reasons. Amazon has been exceptional in always taking that long-term view—I'm talking about 10- or 20-year visions—and AWS was a great example of that. We knew it would take many years, even if we executed perfectly, for AWS to become a large business and to grow into the long-term economics that we believed were there.
What “customer obsession” means at Amazon:
Everybody says they’re customer-focused. Despite the talk, most companies don’t do it in a deep and meaningful way.
Two things are unusual about Amazon and our customer obsession. First is the ability to deeply understand what customers want and where they're going at a level of depth and a fidelity that most companies don't achieve. That turns out to be the easier of the two steps.
The second thing, which is much more cultural, is to keep that customer perspective in the room when the most important decisions are made. At some companies, customer focus can mean you focus on your customers until it becomes inconvenient, and then you focus internally. When you get to a pricing discussion, it immediately comes to, “What does it mean for our margins this quarter or this year?” I think at Amazon we've done a great job of bringing that customer perspective into the center of the discussion precisely when we're making our most important decisions. And that's unusual.
Our relationships with our customers have really set us apart. Customers consistently tell us that we behave differently with them than other companies do. We're not coming to them at the end of the quarter with the sizzlin’ summer special discount of the day. We're saying, how are we going to have a large and successful relationship years from now?
How he chooses people for his team:
We obsess over how we make sure we can continue to innovate, and it starts with whom you hire. We talk a lot about hiring builders, not managers. And that's not a generic concept. You look for personality characteristics, like people who are restless and dissatisfied. If you’re not dissatisfied with what you see around you, you’re usually not compelled to reinvent something. Also curiosity—if you're not curious about how something works, you're unlikely to figure out a better way that it might work.
We find people who want to be on a mission, who are restless and dissatisfied with what they see around them, who are curious about how the world works and how it can work. Then we try to create an environment where we free builders to build. We take constraints out of their way and try to remove as many dependencies as we can from them, so they're free in a single-minded way to focus on their mission.
Why AWS rejects the conventional concept of corporate strategy:
A good part of the success of AWS has been driven by our belief that we need to listen to customers intently and react quickly. If you have a top-down planning model, it’s probably slow and probably not that in tune with what customers are telling you that day. We really believe that speed matters.
And speed is a choice. Some companies think speed is somehow preordained. We'll hear customers say, “We’re just not that fast a company,” or “That's not who we are”—as if it's like gravity, just given. But speed is a choice. We talk with customers all the time in a very detailed way about the choices they make, the way they organize, the technologies they use, and the leadership principles they choose to stress, which directly impact the speed at which they can move as an organization.
It's really important that we practice what we preach. Speed matters for us, too.
The unorthodox early decisions that helped launch AWS:
We made some important fundamental decisions at the dawn of AWS. One was that we were going to offer customers very low prices.
There are a number of examples of technology that gets sold at a high price, and as the unit cost comes down over time, the price gets lower. We decided we weren't going to penalize our customers for our lack of scale. We were going to price these services as if they were already successful—and we knew they could be successful. We knew the internet economics would quickly fall in line if we continued to build well.
Showing customers they could have these powerful capabilities at prices much more attractive than what they were accustomed to paying was really important. So was the fact that we made these services pay as you go. You could dramatically burst up and dramatically shrink your capacity, all when you want to. No required long-term contracts, no required commitments. It gave developers complete flexibility to grow and shrink their business on demand.
How AWS avoids stagnation:
To me, it's this concept of insurgents versus incumbents. One thing that we intentionally worry about all the time is that we continue to act as insurgents and don't become an incumbent. We must continue to feel the urgency to keep the customer need dancing in front of our eyes at all times.
What tends to happen at larger companies is bureaucracy sets in and you focus on, “How do we keep doing what we're doing? How do we protect our revenue streams? How do we protect our margins?” Time and again, companies fail to understand that if you're not willing to cannibalize yourself, somebody will happily come along and do it for you.
We have to make sure we keep that same mentality of an insurgent who is still hungry to deliver on the promise we're making to customers, because it's still so early. No way do we turn internally and say, “It's about us. It's about our revenue stream. We've built up bureaucracy to service that revenue and that profit structure.” That's a lesson I try to get us to remember every day.
Selipsky’s advice to young people:
I grew up with people who knew they were going to be orthopedic surgeons from the age of 12. And that's great, if you had that conviction. I more subscribe to putting yourself in a position where good things can happen.
The best analogy is, think about atoms in a chamber. I can't tell you anything about what will happen to any individual atom. It’s random and chaotic. But if I have the right-sized chamber and the right heat and the right pressure, I can absolutely guarantee you the atoms will slam together and will produce molecules, even though I can't tell you which ones and when. But you know it will happen.
I advise younger people to create your own chamber, with you in it. Make sure you've got the skills, the passion, the right people around you. Make sure you've got the right reputation. Even if you can't predict which good thing will happen and when it will happen, on average you know that, given enough time, good—and hopefully delightful—things will happen.
