advertisement
advertisement

How AWS CEO Adam Selipsky is keeping its $59 billion flywheel spinning

Amazon Web Services is the engine that powers Amazon—and countless other companies. Here’s how its new leader stays ‘restless and dissatisfied.’

How AWS CEO Adam Selipsky is keeping its $59 billion flywheel spinning
[Illustration: Chris Van Rooyen]

In 2005, a new Amazon recruit named Adam Selipsky joined a small team working on a project that was seemingly far afield from the company’s core business of selling products such as books, laptops, and baby supplies over the internet. Amazon Web Services, as it was known, would give any business pay-as-you-go access to the same robust, cost-efficient computing infrastructure Amazon had built for its own purposes. “In the very early days, we used to walk around inside of Amazon evangelizing that this could be the next billion-dollar business,” Selipsky recalls.

advertisement
advertisement

That turned out to be a rare instance of anyone at Amazon thinking too small. After a decade and a half of remarkable growth, AWS has a current run rate of $59 billion a year. In the second quarter of 2021, revenue increased by a booming 37%. When AWS CEO Andy Jassy became Amazon’s CEO in July, Selipsky—who’d left Amazon in 2016 to run visualization software maker Tableau—took Jassy’s old job.

Even just in the four and a half years that Selipsky was absent from AWS, it became a far more massive operation. “I guess I could honestly say that I didn’t quite anticipate the scale that it is operating at today, even though I knew the stats on paper,” he says. “It was about four times bigger when I returned.”

If all Selipsky did was keep that formidable flywheel spinning, that would probably satisfy Wall Street. That, of course, would not be the Amazon way. Along with preserving AWS’s operational momentum, “part of my job is to make sure that we are restless and dissatisfied,” he says.

advertisement

Adam Selipsky [Photo: courtesy of Amazon]
Much is at stake. AWS has long been Amazon’s most profitable arm, accounting for 54% of operating income in the second quarter of 2021. Those dependable returns aren’t just about making investors happy: Without the bankroll provided by AWS, Amazon wouldn’t be able to uphold the values that Jeff Bezos made central to the company’s identity—invention, long-term planning, the defying of conventional wisdom—at least not on as grand a scale in so many different fields. AWS’s rise is so closely associated with the way it let startups pay for computing resources only as needed that publisher and internet pioneer Tim O’Reilly calls it “the most democratizing thing to happen in technology since the PC.”

Seven years ago, when pharmaceutical and biotech company Moderna was ramping up, managing its own data center “would have cost us a magnitude more than what we were paying AWS,” says chief digital officer Marcello Damiani. “And even if money wasn’t the problem at the time, just to set up this infrastructure locally would have taken us a year or two.” This early bet on AWS paid off in 2020, when its computing power and flexibility helped Moderna develop a COVID-19 vaccine in record time.

Today, millions of small- and midsize customers still make up the majority of AWS’s business. But financial services giants (Capital One), consumer packaged goods makers (Unilever), utilities (PG&E), and Amazon rivals (Netflix) have also concluded that AWS can tackle their IT needs better than they could on their own. Selipsky says that one of his key priorities is to “get better and better at providing great value to really big customers.” Also on his mind is the challenge of getting the company to $100 billion in yearly revenue and beyond without overcomplicating things by adding too many services. The company currently offers more than 200 of them, targeting constituencies from government agencies to game developers.

advertisement

There’s little reason to think that AWS’s success story is in danger of ending anytime soon. According to research firm Canalys, the company accounts for 31% of the market for cloud services, well ahead of second-place Microsoft Azure at 22%; Google Cloud is a distant third, with 8%. All three players have plenty of potential for additional growth, as companies migrate more of their processes to the cloud, says Baird Equity research managing director Colin Sebastian. “The pandemic was a wake-up call for many organizations that digital transformation is not just an opportunity but in most cases a necessity.”

Selipsky says that he isn’t taking anything for granted, including AWS’s continued dominance in the business it created. “Even if we’d done everything a 100% perfectly in the past, which we didn’t, given the way the world is changing, and given the pace at which AWS itself is growing, and given the way that our customers’ demands and needs are evolving, we would have to change a lot of things over the coming years,” he says. “And so it’s really a moot point as to how well we’ve done things in the past.”

AWS everywhere

Some of AWS’s most pressing concerns don’t involve keeping ahead of the competition or even satisfying customer demands. Though AWS’s profile is low compared to that of other Amazon properties, such as Prime Originals, Whole Foods, and Twitch, it has its share of controversies. In July, more than 500 employees supported a petition charging AWS with “an underlying culture of systemic discrimination, harassment, bullying, and bias against women and underrepresented groups. (Selipsky responded by saying that AWS had hired an outside firm to investigate.) And because AWS remains synonymous with the cloud computing field it invented, it’s entangled in just as many aspects of modern life as Amazon’s consumer-facing businesses.

advertisement

Consider artificial intelligence, a critical AWS offering but also the subject of heated debate, with its potential for bias, privacy invasion, and just plain error. In the wake of 2020’s protests following the killing of George Floyd, the company stopped selling its facial recognition service to U.S. law enforcement agencies, a moratorium it extended just before Selipsky’s appointment as CEO. “There was a huge amount of internal consideration in connection with that issue,” says Michael Punke, Amazon’s VP of global public policy. “And at the end of the day, we really came to the conclusion that it was a pretty unique area where both the stakes were very high and where there was a lack of public consensus on where exactly or how exactly the technology should be used by the police.”

Now, like other AI providers, AWS seems to be biding its time until legislation enforces some ground rules for facial recognition. “I absolutely do think that policymakers have a role,” Selipsky says.

Then there’s sustainability. In 2019, Greenpeace accused AWS of backing down from its goal of operating its data centers on 100% renewable energy. Now AWS says that it should get there by 2025—five years ahead of its original target. Its disclosures aren’t enough to satisfy everyone: “AWS is not at all transparent when it comes to their sustainability,” says David Mytton, a London-based entrepreneur who writes about sustainable computing. “They make all the right claims, but aren’t specific enough [for others] to be able to assess their credibility.” Microsoft and Google, he says, have provided more hard data.

advertisement

Still, along with setting its own clean energy goals, AWS is also setting benchmarks for companies in its supply chain, such as those that provide steel and concrete for AWS data centers. “Because of our scope and scale, we can go work with large manufacturers and put that requirement into our build processes,” says Nat Sahlstrom, director of Amazon Energy. “And as a result, we’re getting less carbon-intensive buildings.”

Selipsky says that wrestling with these sorts of issues starts with the question, “How do we embrace the responsibility and the opportunity that we have to be a local citizen in our communities, a citizen of our countries, and a global citizen?” A few months into his new job, he doesn’t claim to have all the answers. But given the pervasive role AWS plays in how business of all kinds gets done today, the impact could be profound—even if it’s invisible to most of us.

Read more about how Amazon is upending business, from A to Z.

advertisement
advertisement
advertisement