Andy Jsssy is the founder and CEO of Amazon Web Services. Photo / Telegraph
Andy Jsssy is the founder and CEO of Amazon Web Services. Photo / Telegraph
By any measure, it's an astonishing story.
When Andy Jassy was hired by Jeff Bezos straight out of Harvard Business School to join Amazon in 1997, the company was three years old and had fewer than 200 employees - 50 at headquarters and another 150 in a Seattle warehouse packing books into parcels.
"I knew pretty much everybody by name," smiles the 51-year-old New Yorker, seated last week in Amazon's sleek offices overlooking London's Smithfield meat market.
"It was a much smaller company and we were a books-only retailer."
These days, the founder and chief executive of Amazon's most profitable business, Amazon Web Services (AWS), is a pivotal player in the world's second biggest company.
With 625,000 staff and a market value of $937bn only its crosstown rival Microsoft, at $1027bn, is worth more.
Jassy, Amazon's second-biggest individual shareholder with a stake worth $173m (£136m), may not be a household name like Bezos, who he shadowed for years as his right-hand man, but as the brains behind AWS - which now generates over half of all Amazon's profits - he has played an instrumental role in building the Seattle-based company into the ubiquitous global colossus it is today.
The revenue earned by Amazon Web Services has grown steadily since 2013. Image / Amazon
This year, AWS - the world's biggest technology infrastructure and cloud computing provider whose customers including everyone from Goldman Sachs to the CIA and Apple to Britain's Home Office - is on track to generate $31bn (£24bn) in revenue and is growing 41pc year on year.
AWS hosts their vast pools of data on its servers and rents out computing power by the hour and storage by the gigabyte, enabling them to access it like a utility in much the same way they might purchase gas or electricity.
Crucially, the bumper profits thrown off by AWS of $7.3bn (£5.7bn) last year have helped subsidise Amazon's better known but often loss-making e-commerce arm, which has achieved dizzying growth rates by sticking rigidly to a high-volume, low-margin formula.
With Jassy at the helm, AWS now towers over the $214bn (£168bn) global cloud computing market with a 65pc market share compared with 25pc for Microsoft and 10pc for Google, according to estimates from Jefferies.
It forecasts that AWS revenues will reach $71bn (£56bn) by 2022, valuing the division at about $350bn (£276bn) - not bad for a company he created less than 16 years ago with a team of 57 people.
Even so, AWS is only just getting started, claims Jassy, looking relaxed in a jacket and an open-necked checked shirt on a sweltering London afternoon.
"We believe that we're in the early stages of adoption," he says, stressing that the potential for further growth in cloud computing remains huge.
"The vast majority of adoption is yet to come. Of all the IT workloads out there today, only 3pc are in the cloud at this point. So I think there's a lot of growth."
Consumers may be more familiar with Amazon's e-commerce site but most of them use AWS services far more than they know.
The backbone of modern life
The company provides much of the technology backbone on which modern life depends. When you check your Barclays online banking service, order an Uber or watch a film on Netflix, you are using services running on AWS.
Apple, which uses AWS to host services including the iOS App Store, AppleCare, Apple Pay and iCloud, reportedly shells out $30m (£23m) a month to Mr Jassy's company.
Success has been down to a relentless focus on customers, he says.
"A lot of companies say they are customer-oriented. Very few walk the talk."
Like many successful businesses, AWS started out almost by accident, explains the soft-spoken Jassy, a keen fan of Seattle's rock music scene who spoke exclusively with the Telegraph during a whistlestop trip through Europe meeting customers before joining his wife and two children for a holiday in Iceland.
Back in 2003, Amazon's e-commerce business was experiencing phenomenal growth but the company was struggling to build the in-house infrastructure required quickly enough to fulfill its rapidly expanding ambitions, including rolling out new products in new territories.
"Amazon has always been a technology company at its core," says Jassy, a Seattle resident who enjoys baseball and whose musical tastes extend to Foo Fighters, the Dave Matthews Band and Brandi Carlile.
"There was real thirst inside the company for reliable, scalable cost-effective infrastructure services."
Amazon has steadily grown its share of the cloud market. Image / Amazon filings
Instead of building the data centres, servers and IT plumbing needed to host this growing business in a haphazard way, Amazon came up with a highly regimented, building block style approach which could be quickly replicated and adopted across the organisation for new projects.
It was so successful, that Bezos and Jassy, who had led the project, soon realised they had struck upon a potentially valuable new business opportunity offering similar services to other Internet-based businesses facing similar challenges.
"We realized we could provide all of those key components. The goal was, could we build a business? Can we build an infrastructure technology platform that enabled any individual or company to build all their technology applications on top."
That basic kernel of an idea for AWS was contained in a six-page presentation document in 2003.
"In the first half dozen years it was largely startups who were building their entire businesses from scratch - like Pinterest and Airbnb, Slack and Deliveroo. In the last seven years, the enterprise and public sector adoption has got very dramatic."
He continues: "Now we have a big government business where we have 5,000 government agencies worldwide using AWS. So it's, it's a very diverse customer base."
Unsurprisingly, this extraordinary success has been tempered by controversy.
Fears over wealth and power
Critics say the vast cache of data Amazon holds on its competitors poses a competitive threat.
Others fret about privacy or the systemic risk of what could happen if AWS was to experience a catastrophic failure.
And with regulators in the US and Europe seeking new ways to rein in the technology giants amid fears over their growing wealth and power, some have proposed AWS should be spun off into a stand-alone business.
Jassy, the son of a lawyer who grew up in Scarsdale in the northern suburbs of New York, casually bats away such concerns.
The idea that AWS could exploit some of the sensitive commercial data it hosts on rivals of Amazon's in other business areas is a non-starter, he says.
"If you want to be able to serve companies that compete with Amazon's consumer business, they have to believe that they're going to be treated every bit as well," he says, insisting other Amazon businesses are treated the same as any customer.
"They're important, but they're treated like a third party."
Amazon's share price also motored ahead. Image / Amazon
If that sounds like a stretch, Jassy offers up the example of Netflix, the video streaming giant which is one of AWS's biggest customers but also a bitter rival of Amazon's Prime Video streaming business.
"Netflix runs everything that they do on AWS. And they would tell you that they feel like they are treated as every bit as important. And in fact, the Amazon Prime Video business often argues with me that we treat Netflix better than we treat them."
He continues: "They understand that they're treated just as well and the businesses are totally firewalled."
Usually cheaper and more efficient than hosting data in-house, as cloud computing has surged in popularity, so AWS's services have expanded to include sophisticated machine learning and artificial intelligence (AI) tools, allowing customers to analyse and exploit their data in new and potentially valuable ways.
But in a world of mounting fears over cyberhacking and state-sponsored espionage, security remains a key concern, he admits.
Is it safe for one organisation to be such a vast repository of sensitive commercial and government data, including biometric, criminal records and financial information?
'You always have to remain alert and vigilant and paranoid' Intelligence agencies and police forces are among AWS's government clients.
"You always have to remain alert and vigilant and paranoid," says Jassy, who is eager to skewer the idea that storing data on the cloud is inherently risky.
"For us, security is unquestionably the number one priority, because when you have government organisations or enterprises with mission critical data, and operations that really change people's lives if they don't work, you must have a platform that's highly secure."
Technical solutions exist, he claims arguing that by storing highly encrypted data simultaneously in "multiple data centres across multiple regions", many of these concerns can be addressed.
"AWS doesn't have just one data centre. Customers can distribute themselves in such a way where if there's a failure to any one data centre, they can withstand it. That gives them extra resilience against any kind of catastrophic event."
AWS itself can't view its customers' stored data either.
"It just looks like a blob to us."
In recent years attitudes have shifted, he claims.
"When people do the detailed analysis of the security capabilities and architecture, they come away thinking they're going to have better security in the cloud," he says.
He flatly rejects the need for a break-up of AWS from its parent on anti-trust grounds.
"When I look at Amazon, if you look at the two main businesses, our retail business is 1pc of the total worldwide retail market segment share. And today, cloud is only 3pc of the total IT workloads. So while Amazon's done a good job of building compelling customer experiences in multiple business segments, we have a really small percentage of the total market share so I don't see a high need to spin things out."
So could Amazon's e-commerce business survive without AWS?
Some have claimed it would struggle but Jassy insists that the division's importance is sometimes overstated and they complement each other.
"I think Amazon would be doing quite well even if AWS wasn't there. Our retail business is very successful in its own right. It's a very high volume, relatively low margin business."
He may now be the master of cloud computing but Jassy didn't set out to go into business at all.
"I originally thought I wanted to be a sportscaster so I worked at TV stations when I was at college as an intern."
He was bitten by the bug when he worked as the advertising manager for a college magazine while studying at Harvard and enjoyed it so much he decided he wanted to study for an MBA.
AWS has attracted criticism for other reasons too.
A voracious consumer of energy, the rise of cloud computing and of services like video streaming are emerging as an important contributor to greenhouse gas emissions, prompting calls for them to take steps to improve their environmental credentials.
Jassy says AWS's goal is to run all of its global operations - including dozens of datacentres from Indonesia to Sweden, independent power, cooling systems and thousands of kilometres of subsea cables and other kit - on 100pc renewable energy.
That is still some way off, he admits, but the company is making progress.
"Four or five years ago, we were probably around 20pc renewable are now well over 50pc renewable on our way to over 60pc in the near future. Our firm passion is to get to 100pc renewable which we expect to get to in the future."
Then there is the issue of tax, a common gripe for critics of Amazon, which has forked out only £61.7m in UK corporation tax in 20 years - less than Marks & Spencer paid last year alone.
Unsurprisingly, Jassy sticks to the usual party line trotted out by Amazon top brass.
"Amazon has paid the required amount of taxes in every country in which we've operated forever. Whether or not countries have it right in terms of how much tax they charge, that's up for those governments to decide."
Secret to success
He says Amazon makes a big contribution in terms of investment and jobs in the countries in which it operates.
"We employ 625,000 people and if you look at our sellers and the retail businesses who are building on Amazon's marketplace, that's another 900,000 employees involved in those companies."
As for the future, Jassy believes Amazon's recipe for success stems from its way of doing business.
"I think one of the real secrets of the Amazon's success for 24 years is that we have a very strong culture with very clear leadership principles which really have remained the same," he says.
"If you read Jeff [Bezos]'s shareholder letter, when we went public in May 1997, it's very clear that if you are an investor looking for short term returns, you shouldn't invest in this company. We are always going to do the right thing by customers over the long term. And we have always very religiously lived to that credo."
"If you want to build a business that outlasts you, the best way is to do right by customers over a long period of time. I think those are some things that are pretty consistent have held true even as we've gotten larger as a company."
