The Capitalist Investor - Episode 63

Amazon is the 2nd largest company in the entire world. It’s in most of our client’s portfolios. So everyone’s big question is: Will Amazon stay healthy now that Jeff Bezos is stepping down as CEO? What does this mean for Amazon? What are his next steps? In this episode of The Capitalist Investor, we look at how Amazon was started, how it’s grown, and where we see it heading. Don’t miss it!

Outline of This Episode

  • [0:25] Jeff Bezos is stepping down
  • [3:18] What role should Bezos play?
  • [8:57] Where did Amazon start?
  • [9:53] The new CEO: Andy Jassy
  • [12:44] Will the change impact Amazon?

From startup to household name

Jeff Bezos supposedly came up with the idea for Amazon when he read a report that said the potential growth of online retailers was 23,000%. Things like CDs, computer hardware/software, and books were the things he originally targeted to sell online. Just selling books started putting bookstores out of business. Soon, they expanded to other retail items.

Jeff Bezos started Amazon out of his garage. Steve Jobs started Apple out of his garage. People can build mind-blowing businesses from their homes. Jeff Bezos’ Mom and step-mom invested $250,000 in his startup (Amazon stock) in the beginning. That stock is probably worth $30 billion now.

That begs the question, where should the founder of Amazon be focusing his efforts now? You want a guy like Bezos in a place where he’s constantly innovating. You want him to focus his input and expertise on the next path(s) for Amazon. What industry can they disrupt next?

The new CEO: Andy Jassy

Bezos is stepping down as CEO and will transition to “executive chairman.” Andy Jassy will be his successor as CEO. Who is Jassy? Jassy isn’t new to Amazon. He graduated from Harvard in ‘90 and Harvard Business School in ‘97. Then he went straight to Amazon. It was still a startup at this point (Amazon went public on May 15th, 1997 at $18 a share).

Jassy has been leading AWS (their cloud division) for over 20 years. It’s their most profitable division and grows 30%+ year after year. It accounts for 10-15% of Amazon’s total revenue, but 60% of their profit. Amazon just eclipsed $100 billion in revenue for the first time. They hit $125 billion in revenue. Amazon’s market cap is roughly $1.7 trillion. Jassy will have no problem as CEO.

Will the change impact Amazon?

CEOs stepping down and being replaced is part of the natural progression of any company. In the short-term, Bezos stepping down will likely have little-to-no impact on Amazon’s stock. Long-term? We’ve seen it play out in Apple.

Tim Cook took over when Steve Jobs stepped down. Cook is making Apple as profitable as ever. People were worried Apple would lack innovation when Steve Jobs stepped aside, but they’ve been able to innovate just fine. Tim Cook has even improved the execution of building + distributing iPhones and marrying devices together in the Apple ecosystem.

As we look forward, what do we think? Will Amazon still enter and disrupt new industries, or perfect what they’ve already grown? It’s probably a net-positive impact on Amazon. Bezos will now have the opportunity to focus on the key activities for the business. He won’t get distracted by the day-to-day noise and can focus on innovating and staying relevant for the next 20+ years.

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Show Notes by

Keep Listening to The Capitalist Investor:
Episode 15:
Spending Strategies in a Bear Market, Ep #15
Episode 31:
Handicapping the 2020 Election, Ep #31
Episode 47:
11 Investments in Your Home That Pay Off, Ep #47
Episode 79:
7 Ways Biden Plans to Tax American Families (Part II), Ep #79
Episode 95:
5 Beaten Down Stocks to Buy on the Dip, Ep #95
Episode 111:
Special Episode – Talking Energy with Daniel Turner, Ep. #111
Episode 127:
Retail Earnings Tank & What The Heck is Greenflation? Ep. #127