CEO of Amazon Web Services: Cloud, GenAI, two pizza rule and customer obsession.

This translates to 80 billion Norwegian kroner, or over 8.

1 billion U.S. dollars. This means that each Norwegian owns 15,000 kroner in this company. Most of the internet is run on cloud-based services, but how does the cloud work? how do they protect it?

And how is AWS competing with Microsoft and Google? Tune in.

Now, the cloud is the backbone of everything digital, and you control a third of this market. Now you've got customers such as Netflix, Apple, NASA, CIA, Tesla, Spotify and so on. So just to kick off with the basics here. What is the cloud?

They'd hook up networking, they'd worry about keeping those servers up and running. And when AWS launched in 2006 and pioneered the cloud, all of a sudden there was this illusion of infinite capacity. Like you could just tap into compute capacity, you could tap into storage capacity.

And it didn't matter to you where it was or how it worked. You just had to concentrate on serving your customers, building your applications instead of worrying about it. Infrastructure.

And that means there's a huge amount of workloads that are still going to be moving to the cloud for years to come. So actually, we're very early in this cloud migration.

But often when we have big organizations with a lot of data, it requires higher throughput to get the data up into the cloud. And also you really want to be careful about security and privacy. So many of our customers set up dedicated connections, essentially a direct connect over a private connection to AWS. And that can be again, just like all other aspects of the cloud, that can be scaled up or scaled down to whatever size it needs to be. And we'll be securely transferring data over those private, encrypted, direct connections to us.

Of course, they're no longer considered startups, those are all enterprises now, but they were all startups. And then later on came companies like Stripe and Crowdstrike again, big companies now who used to be startups. And we're still at it.

So if you look at unicorns, the startups who are worth over a billion dollars, over 80 of the world's unicorns run on AWS. And it's a great, great privilege to work with all of those innovators.

And that's a really, really important set of concepts because it provides incredible resilience for customers. So each region is built to operate independently. If you have any kind of problem in one region, it's not going to affect you in another region and even inside of a region. If you architect so that your resources run inside of multiple availability zones inside of a region, they're also built to be available separately. Not to fail for the same reasons. And so our customers can build very, very highly resilient applications with very high uptime.

And each availability zone could be just one data center. It's usually a pretty large data center. Or an availability zone could actually be a conglomeration of a number of big data centers, all put together. It all depends on how much customer demand we have in the region for those workloads, but we have a very large, very scaled worldwide.

You're going to see a whole series of data centers, they're going to be hard to find. By the way, we don't advertise them and put our names on them. Security is more important than marketing, but we can have data centers with many, many, many thousands of servers in them.

But assuming we get permission and we actually go inside, we'll have to get past physical barriers to get inside, we'll have to get past significant security to go inside. We wouldn't be allowed in to any sensitive area. But if we just pretend for a moment that we are, we'd see. Many, many banks of servers, and really just a small number of human beings who are absolutely essential for keeping those servers running. For replacing any servers or disk drives, for example, with or power supplies with issues. And it would look hopefully, very clean and very orderly.

Hopefully it would look very boring, because when everything's operating very smoothly, there's actually nothing to see. Which is the best state of affairs?

If you're a news organization, you probably have a big spike first thing in the morning, maybe at lunchtime, et cetera, et cetera. And basically, with the scale at which AWS operates, we're over a $90 billion a year revenue organization. Again, with those 32 full infrastructure regions around the world, we essentially aggregate all of that demand. So when one company has high demand, another has low and then they flip. And so that makes our infrastructure very efficient and lowers our cost structure because we're making high utilization of all of the infrastructure resources.

And that, in turn, allows us to charge really low prices for customers and to keep dropping prices to customers. We've lowered prices over 120 times in the past 17 years since we launched. But really, our ability to manage all those peaks and valleys for customers throughout the course of their day, their week, their month, their year is one of the benefits that we provide to them.

And so customers appropriately have a lot of choices, which we think is good for customers. And by the way, I think at the end of the day, it's good for us. It keeps us sharper and makes sure that we keep our focus on really what we need to do to delight customers. So I think that AWS, as you alluded to, was the pioneer of the cloud we launched in 2006. And lots of folks scratched their heads and said, What does this have to do with selling books?

I can't tell you how many times I got asked that question, and of course, the answer is. It has nothing to do with selling books, but the technology that we built to sell books has everything to do with our exposing that same technology for many, many other organizations to use. But because it came from Amazon, some people said, Oh, they're just a bookseller and nobody will use this, and then startups began using it.

And they said, well, no enterprise will ever use it, and then enterprises started using it, and they said, well, nobody will ever run mission-critical applications on it. And then we started doing things like powering Netflix and controlling NASA's Mars Rover SUV-sized vehicles on the surface of Mars. And people started to get the idea that mission-critical workloads were indeed running in the cloud.

And so I think we just proved ourselves over a number of years. We also moved very, very fast on product innovation. And it was probably five to seven years before other companies really started to come out with even vaguely competitive offerings. And our founder, Jeff Bezos, has actually publicly called that five to seven-year head start the largest gift in business history.

Now I have no idea if that's true or not, but it's just an interesting concept. What does it mean by that? Well, it means that we had five to seven years to build a large array of really powerful, really important services, to gain traction, to get a customer base. Most importantly, to gain knowledge, to gain experience about what it took to operate really, really well in this new business. But why were the other people so slow? I think because we were so threatening to their business model.

They didn't want to believe it. If you look at the old guard of technology companies, particularly software companies, in some cases hardware companies. For 30 or 40 years, they overcharged customers, they intentionally locked them in, so they made it hard to leave. And we really offered a completely new model of not having to commit, being able to elastically use as much or as little as you want. To see. Your prices go down continuously, not going up continuously, all while being highly available, highly secure, and highly reliable. And so it was really threatening to those high prices and high margins by these other technology companies.

And so it was easier to find excuses to dismiss us as not knowing what we were doing, rather than to see the enormous customer value that was being created. Now, at some point, it became obvious and inevitable to see how customers were voting, and of course, we had other customers get into this market segment. And over time, given enough years and you're a competent technology company, there are absolutely other offerings out there and we try not to be naive and to understand what competitors are doing.

But we still, to this day, focus the vast, vast majority of our time, our effort, our mental energy, on being customer-obsessed and figuring out what customers need us to do. As opposed to having a competitively driven strategy, how does artificial intelligence?

I mean, generative AI is going to fundamentally change many, many technologies will fundamentally impact probably every application that you and I interact with, both in our professional and our personal lives. So it's fundamental, but it's not a different thing. It is the next huge thing that will happen in the cloud, and it's very much tied to your data strategy.

So we have all of these companies who have built data platforms on AWS and have vast amounts of data in the cloud. And that data is what helps them differentiate with generative AI. There are these models there, but what you've got to do is bring your data to the models. Whether it's your customer service data, your investor data, your medical research data, whatever it is. And use that data to your advantage. Using these new, powerful, large language models.

And helping companies to really marry together their data and their generative AI strategies, we think, is what's going to unlock the real power, the real value.

And as our relationship with them has deepened, I think that we provided a really great opportunity for them to get access to massive amounts of compute capacity, which they need to train their cloud models, they're now in Cloud two, which is a really leading edge model. It's as good as anything in the world. And at the same time, they're really smart people. And we saw that there was an opportunity to collaborate with them and have them help us to optimize and improve the hardware, the custom design chips that AWS designs.

And we decided to deepen that partnership together, and as one element of it, we also did invest into Anthropic. So it's a tight partnership, it's a special partnership. Anthropic now uses AWS as its primary cloud provider.

And I think we'll be partnering together for a long time to come.

Chinese-based companies, but there are smaller European-based competitors as well. And I think it's very dynamic and a quickly moving space. And I think there are opportunities for companies from all countries if they've got a great value proposition to gain market segment shares. So for now, this is the way it's played out.

But.

And these are not very European slogans.

India is another place where people are really looking.

At for innovation to come out of. So again, I think it's very dynamic and I think there have great conditions for technical innovation in the U.S. For sure. But I think you'll see it.

We have over 400 other organizations, including many large companies, who have signed on to the climate pledge, so we're really gratified by that now. We can't just wait till 2040 and we have a lot of interim goals along the way, one of which is to be 100 renewable energy powered by 2025. Now, obviously, that is just around the corner.

And the good news is, we are already over 90 renewable energy powered across all of Amazon. But a huge part of that, of course, comes from AWS data centers. So we're already at 90, on our way to 100. And one of the big ways we do that is by being the largest corporate purchaser of renewable energy on Earth over the past three years. And we've done long-term funding for wind farms, for solar projects around the world, including, you know, the first offshore Wind in Japan project, and many others like it.

It's also really important that we innovate to just use less energy, period, and I mentioned custom-designed chips a little while ago. So the first AWS, we certainly buy a lot of chips for our servers from a lot of really great partners. But in addition, for a number of years now, AWS has actually designed its own chips, which customers can use in, you know, different servers, virtual servers. And that general-purpose chip is called Graviton.

Our graviton-based.

Chip actually consumes 60 less power than equivalent chips that our customers use. So, simply by moving into the cloud and then moving onto our graviton-based capacity, customers, can, you know, reduce their energy consumption by up to 60%.

I know a lot of other companies are as well, and I think it's a great, an area of great potential for the world. But at the same time as we keep that eye towards the future, we're keeping the other eye on the technologies we need today to improve price performance for our customers.

And what I really like is that some of them are big companies like Amazon, and some of them are very, very young. Startups like Anthropic or Cohere, or Stability AI or AI21, all of whom are great AWS startup partners. Or Hugging Face is another one. And I think that mix is really important for innovation, having the resources of big companies, along with the fresh thinking of very young, smaller companies. And so I think that the U.S. and the Western world is very well positioned.

I think we have a lot of questions around not only where the technology will go, but how you think about responsible AI and ethical AI. And making sure that these capabilities are used in the right way. We're busy at work, as you can imagine, in all of those areas, technical, out there, in the market, with customers, as well as very intently with regulators and policymakers.

We're the ones with the technology and with the customers. So we have really important voices in that conversation and we're helping very actively to shape those conversations. I was at the White House this summer when President Biden announced his voluntary commitments around AI, which about seven companies signed up for. Later this week, I'll be in the UK at the AI safety summit that the UK government is putting on, which will have a lot of world leaders at.

And we're devoting the time and the resources to participating in those forums, participating in those discussions. And I think that industry needs to come together along with academia, as well as policymakers and regulators. To figure out with this powerful set of new technologies, how we can ensure safe, responsible use with a lot of visibility into it, while at the same time,—and this is essential,—not squashing innovation. We've got to let companies keep on innovating, particularly as some of the countries you mentioned are probably not going to worry so much, are going to keep on innovating. And so we have to make sure that our countries and our companies keep on innovating unfettered as well.

What is it going to do? Well, it is very exciting.

Those tests have gone really well, really as well, or better than what one could have hoped. And so those teams are going to keep pressing forward really urgently and relentlessly and as fast as possible. Getting the first production satellites up next year and then moving into commercial availability for customers after that. And the first and primary mission of Project Kuiper was to provide internet access to unserved and underserved people around the world. And there are billions of those people who are either unserved or underserved. And I'm really excited for that mission.

I think over the next several years it's going to be really exciting. We're obviously still early in that journey, but Amazon takes a very long-term view of most things. And we think it'll be an amazing set of offerings for customers for many years to come. So that's a great place to pivot to your.

S.

For example, and there's tremendous pressure. And I think that if you have a culture where you care a lot about the optics, short-term optics. And you just don't focus yourself as much on creating long, long-term value for customers, then you kind of end up in that trap. Now, I'm not saying short-term results don't matter, they do.

And having targets and hitting them matters, but really building a business for the long-term is what matters the most. And I think we've done a good job over time about trying to run a good business in the short-term, while really building enormous value for the long-term. Well, Sam Altman from OPenAI.

I think we've been talking for the past 30 or 40 minutes about a really good example, which is AWS. If you go back in time, Amazon was mainly a retailer, had a few retail categories. And then there was this crazy idea about turning Amazon inside out, offering up the guts of Amazon for other companies to use. And a lot of people didn't understand it, other people thought it was crazy.

And it was definitely a long-term proposition. Because it requires not only building all of the software services that we offer customers today around compute and storage and database and machine learning and AI and call center operations, and everything in between. But also spending all of the capital required for the data centers and servers and all that infrastructure that we've already discussed. And we knew it would take years for it to become a big business and a profitable business. But at the same time, we believed, and still believe that in time, in the fullness of time, it could be the biggest business that Amazon.

So automotive companies who want to do business with AWS and integrate our devices and entertainment systems into the vehicles. And supply Amazon with electric delivery vehicles. And that's just the automotive industry, so I think all the pieces of Amazon work very, very well together.

And it would help price, it would help customer selection, and it would help convenience and delivery speeds. If they could get big fast, and they did. And again, that took a very long-term perspective instead of just worrying about the very, very short term. And as a result, the retail business has been great, it is a retail business.

And obviously retail businesses, you have to be appropriately cost-conscious. Those folks have always done a great job of really investing for the future while also being really, really efficient. And it's been great to partner with them and see the.

Although I think loving your customers is a good thing, but at Amazon, and I think the reason why we actually are so customer-obsessed. I think that what it means is two things one understanding customers at an incredibly deep level, a level that is hard to achieve, a level that takes effort continuously. And most companies simply don't go through all of the energy, don't expend the energy, and go through the effort required. To understand on each one of their services, each use case, what do customers really need from you? what real problems do they have?

And then, as hard as that is, that actually turns out to be the easier of the two things. The second is to ensure that every important decision you make is taken from that customer perspective. I've seen a lot of companies outside of here who actually understand a fair amount about the customers. But then when they decide to price something, it's just about profit maximization, or if they decide whether to build something, it's about, well, can we afford to build it? And they kind of drop the customer perspective outside the door for some weird reason.

And I think you have to have the discipline to say we not only have all this knowledge about what customers really need. We are going to bring it into the room and make sure that we're basing our decision around that. And you see that embody itself in a lot of different ways. At Amazon, it's not just talk, it's not just a philosophy. One example is we have this fairly well-known mechanism called a press release slash FAQ process PRFAQ. What that means is that before we build anything of substance, a new service, a new AWS feature, we'll actually write a full press release along with a full FAQ.

It doesn't matter whether we ever actually issue that press release or not. And the idea being that you need to be able to describe in detail why what you're matters. How it's going to delight customers. Or why would you bother to waste your engineer's time on it? And we call that our working backwards process, and it's a process that we've actually got a number of customers who have seen, loved and adopted. And we actually go in and do workshops with a number of our customers to teach that technique.

It's very powerful, a lot of our customers have really grasped it. It's interesting I spoke to some.

And that spirit has endured after we signed the contract and you guys have really delivered so well done. It just seems so basic.

And we try here to make sure that we don't. You have some really cool.

I sometimes call them the operating system of Amazon or the Central Nervous System. Customer obsession is vital, for sure. I think. Another one, which is absolutely core, is invent and simplify, and that's really about innovating and also embodies the principle that innovating doesn't mean just making things more complicated.

It means making them more powerful, but also more simple.

And you know, we've always tried to move very fast as a company. And in fact, one of the reasons why AWS was founded was because Amazon wanted to move faster. And they wanted to create the shared layer of infrastructure services, so all the other teams at Amazon could worry about their customers and not about infrastructure. And so we've, I think we've built in many, many mechanisms to move fast, we hire people who like to build, who are innovative.

We organize for speed, a lot of people think speed is preordained, we think speed is a choice, and so we organize ourselves. Both culturally as well as, you know, just our teams themselves. To be able to innovate and to be able to do it really, really quickly. And so I think that invent and simplify is incredibly important for customers.

And it's actually been a huge advantage for Amazon in the market segments we're in as well. You have something called a two-pizza team, what is that? so, a two-pizza team? So the concept of that is, you know, wherever possible, you should have a team no larger than can be fed with two pizzas.

And we've had a lot of teams at Amazon over the years who actually are two-pizza teams. And even when, you know with our scale, you obviously have teams that grow larger than that. And we very often try and refactor or slice those teams up to create even smaller, more nimble teams. But even where we don't actually do that, it's the concept that's alive and well. And the concept is, you know, stay small, stay nimble, and, very, very importantly, you know, control your destiny.

You know, don't take dependencies where you don't have to on many other teams, you know. Figure out how to be able to own your own progress, overcome your own obstacles, and make rapid progress for customers.

And when everybody's finished reading the document, there's no presentation, somebody just says, Okay, what questions do we have? And it's an incredibly powerful mechanism. To me, it is one of the most powerful ways to move the business forward because it creates real understanding. With Powerpoint bullets, it's so easy to be on the surface.

It's so easy also to not get through the material because you just interrupt the presenter with the narrative, you are forced. It is very obvious if you have not thought through a problem deeply with a four-page or a six-page narrative. So you have to have depth of thought, you have to have been able to lay out all of the issues to have a good conversation.

And in addition, it's very egalitarian. By the end of reading the document, everybody has the same information, nobody has special knowledge. And then anybody in the room, regardless of who they are, can ask questions, and it's all from the same fact base.

And so it's been one of the most to me personally, one of the most amazing mechanisms that I've seen at Amazon. To really help create deep understanding, to make decisions and to move.

And insurgents don't mind disrupting, insurgents just want to create new things and want to create value. And incumbents want to preserve value and worry about what they already have instead of worrying about what they can build for customers. And I think, you know, it's very easy as you grow larger and you have revenue streams, you have businesses to slip into that incumbent mentality. And I think one of the most important jobs I have as a leader is to try and remind everybody at AWS that it is still day one.

It is very, very early in the cloud journey that there's way more work to do than we have already done. And that our customers demand and expect us to be innovating on their behalf. It's our job to do that and figure out how to create a good business for ourselves along the way. Not to figure out how to create a good business and bring customers along with us. And I think you've got to have a lot of leadership, a lot of cultural mechanisms. To continuously remind everybody across what is now a pretty scaled and pretty sizable team about how we believe we want to.

Understanding, so understanding where people come from, understanding why they're saying, what they're saying. Instead of just focusing on the words coming out of somebody's mouth. Trying to go back a step and understand. Are they saying this because they're worried about a program?

What's going on, or what's going on with the person, the human being? Where are they coming from? And in order to do that, I've tried to really, really focus. As obvious as it may sound, I've tried really, really hard to focus on listening more over the past few years. Can empathy be learned?

Is it an acquired skill? Absolutely, I think it starts with your listening skills. So I've figured out over the past few years that I don't learn that much when I talk, and then I learn a lot more when I listen.

So I think they're very tactical things, very tangible things I should say, like listening.

And I think if you have empathy and really listen and understand where people are coming from, that allows you to be really open and honest. In return. And my personal leadership style, I try to really be open and honest and transparent and let people understand what I'm thinking and why I'm thinking it. And I think that really resonates with most people. If they feel that you've brought them along the discussion, that you've brought them along the decision process.

They've had a voice, they've been heard, there's been thoughtful discussion. I've had many examples where I've had to make a decision, which a lot of people disagree with. And I found that in the vast majority of cases, they don't like the fact that we've decided something that they wouldn't have decided, but they're okay with it.

They're okay with it because of the process, they're okay because they feel respected, because they feel listened to. And they trust that their leaders are, even if not always, in complete agreement with them that they have the best intentions and that they're going through a thoughtful, appropriate process. How do you deal with stress? stress? what stress?

No, we're in a very.

I'm very privileged, we're an incredible business, I have an incredible position, I'm very, very lucky.

But it is fast-paced. Of course, there's stress, I think, in a couple of ways, one of which is at work. Having a really, really good team and knowing that I can talk to the people on my team. People used to tell me, Oh, the CEO job is very lonely, I've never found it lonely.

I think that's a choice and I don't find it lonely because my senior leaders know what's going on. I don't keep things inside my own head, I share with them, they help me.

They make my ideas better, they bring new ideas which are usually better than mine, and we really operate as a team. I think that reduces my personal stress at work. And then I think it's really important to set boundaries and to have time for whatever it is that's important to you.

For me, my family is really important, spending time with the family is important. There's also some sporting things I love to do, I love to water ski in the summer, I love to play tennis year round.

You've got to carve out time for those things, to stay whole and to stay healthy. Do you read? I don't read nearly as much as I would like to, I do read, but unfortunately, at this particular stage, it's a little more episodic. But I do love to read, and I've been a lifelong reader since I was a little kid.

We have tens of thousands of.

One is try and remember that you have a long life, hopefully, and a long career. And I think people early in their career are measuring themselves against their peers that they went to university with, or that they started a job with. And whether you do something 12 months earlier or later than I do, it really doesn't matter, what matters is the experience you gain, so just gain experience.

Build skills, do things which you can see could be valuable to you down the line, and I promise that if you gain those skills, it really won't matter. That 20 years from now that I had some promotion six months before you did so, just take that long-term view about skill building. And the second thing I'd say, and I really wish that I had learned this earlier in my career, is this concept of being vocally self-critical.

And most people are able to very quickly critique somebody's shirt, whether they like the coffee they're drinking that day. But when the camera turns on themselves, they lose that objectivity because it's painful and it makes you insecure. And I think if you can understand what you're really good at, what you're not so good at, what you really want to work on. If you have that clarity of understanding, it's the old adage you can't manage what you can't measure. And if you can't sort of understand yourself, how can you really hope to know what to work on? And I think if you could just be objective with yourself about what the things you want to work on are. No matter how good you actually are at other things, that is an incredibly powerful skill.

Well, it's been really great.