JCM9

The original shareholder letter said the company wouldn’t pander to Wall Street or focus on short term improvements. It’s now slashing jobs a few days before earnings to try and placate Wall Street since it can’t grow via innovation. That’s all the proof you need to see that Amazon is now in full “Day 2” mode.

AWS is probably in last place among computing clouds on AI and the AI managed services from AWS are pretty second-rate.

Amazon had Alexa (Echos) everywhere and that was teed up to knock it out of the park putting a real AI assistant in every home. Then the devices team totally blew it and did almost nothing to take advantage of that huge lead. Folks are now basically just throwing these things in the trash and the devices unit is a huge pit of cash on fire.

The list goes on…

To be clear, it’s worse. Read the press release carefully:

1. 14k was the net change in “corporate headcount” which is PR puffery speak saying they’re firing a lot more but when you net out folks let go slotting into open roles elsewhere the net change today would be a 14k reduction

2. It also says that “looking ahead” “we expect to… find additional places we can remove layers, increase ownership, and realize efficiency gains.” That’s PR puffery speak for “there will be more layoffs coming soon.”

Amazon has really struggled under Andy Jassy’s tenure as CEO. Innovation has slowed, and there were huge misses on areas like AI.

What’s happening today also isn’t the result of “pandemic overhiring” or “AI efficiencies” but the cleanup of big messes that developed on the watch of present leadership. Andy Jassy preaches about company culture and efficiency but the culture went to crap and the company became bloated on his watch so…

Amazon likely needs new leadership to get it past the Andy Jassy chapter and move to a new phase of innovation and growth. It basically needs to replace its present Balmer with a Satya.

The layoffs have nothing to do with AI.

It’s sorting out org bloat, span of control issues, and teams without a clear ROI. Normal “leadership mismanaged the company and now there’s a mess to cleanup” stuff.

Great channel, and yes the ineffectiveness of nearly all commercially available locks is depressing. At best it would briefly slow down a skilled picker.

Like a lot of big tech companies Amazon is a small number of teams with profitable products and a whole bunch of other things that don’t make money. Events like this are when the teams not contributing to the bottom line are cleaned up.

By your definition then every little part of “Amazon” is technically a separate “company” including every geo. For the purposes of the discussion at hand they’re all the same. Amazon PXT and finance is the same team as AWS PXT and finance.

Remember these things tend to be lumpy. While that’s a bit over 10% of corporate employees depending on how you count some teams won’t get touched and thus other areas will either get blown up entirely or have layoff rates of much higher than 10%.

Amazon includes AWS. They’re not “separate companies.”

That’s PR speak for “our leadership has messed up big time and this was the most convenient excuse we could come up with that doesn’t just throw our C-suite in front of the bus.”

Earnings call is this week. Expect some good tap dancing.

Not surprising given folks have been saying Amazon/AWS has been a bloated mess for a while now. After periods of strong growth it’s not unusual for things to need a good cleanup.

Unfortunately good folks find themselves on the wrong team at the wrong time while top leadership, which created the bloated mess, generally squeaks by.

Yes. You don’t need to be moving $ to have a profit or loss. You could take your salary in sacks of potatoes. You still owe the government taxes on the fair market value of your pile of potatoes.

A while back there was a big fuss because executives were caught not paying tax on the fair market value of extra perks they were getting like use of the corporate jet on the weekends for trips to the beach house. Anything that’s not purely a business expense is considered compensation and is taxable.

“Irrational exuberance.”

There are parallels here of folks getting so caught up in the hype that they forgot business fundamentals. Everytime folks say “but this is different” and every time it’s not.

Correct. It wasn’t a secret that AWS was profitable. Revealing those numbers put a lot more pressure on Amazon to get other business lines in better shape financially. Something Amazon was keen to avoid for as long as it could.

Fair. There are counter examples, although those are pretty rare. Usually publicly traded companies don’t hide when they’re doing really well.

The inverse true now with AWS. Lots of press about analysis on how AWS is in “last place” on AI and while AWS leadership has been doing a lot of hand waving to say they’re not, it’s a pretty safe bet this week’s earnings call won’t have any hard financial numbers to counter press that they’re way behind.

Yes. The point of the article though is that the list of usual excuses is becoming hard to justify here.

Agree on the long term concept, but there’s little comparison between Amazon’s early years and now. Amazon spent money on tangible capital infrastructure that was highly differentiated and long lasting (fulfillment centers, logistics networks). That costs a ton up front but can be used for decades. Folks struggle to compete with Amazon now because that infrastructure is a giant physical logistics moat that’s not easily replicated.

The AI bubble is far from that. Companies are spending tons on GPUs that have limited lifespan, building models that have limited lifespan, using algorithms that are all basically the same, in a space where someone can dump a “good enough” open source model on the market and blow up your business overnight. There’s very little lasting value in what’s being built and the “we’re investing for the long term” arguments don’t hold much water. It’s like saying you’re investing in real estate but then you keep tearing down the building and rebuilding it every 18 months. That just doesn’t work.

There might be some longer term fungible value from some of the baseline infrastructure investments (data centers, electrical upgrades) but those are undifferentiated and highly fungible.

Accounting mostly focuses on the value of things, not “liquid money.”

You’re not wrong, but the point of the article is that for a publicly traded company there’s an expectation of more transparency. The size of the losses is getting to a point where it can’t just be kept hidden inside a handwavy “other” line item.

Companies have a lot of tools at their disposal to hide things on their balance sheet for a while. However when that happens it typically means the numbers are bad. Really bad. If they weren’t, they’d do everything they can to highlight how great the investment is going.

Same reason why seemingly every CEO on the planet is making hand wavy statements about how their company is leading with AI and it will revolutionize their industry, and yet almost nobody is willing to break out this amazing stuff in their P&L. Funny how that works.

Fair point that there’s less direct retail investor exposure than there was with the dot-com implosion, but I don’t think many folks believe this bubble is non-poppable. Even megacorps can’t just keep inflating it forever if no viable business model for AI materializes

Yes… a lot of this is pretty hidden on the balance sheets but eventually GAAP catches up one way or another.

OpenAI is a textbook example of having fun by burning cash. Nobody doubts it’s “cool.” Lots of people questioning if there’s an actual business there.

The real story will be when companies report valuation losses from their investments in AI companies after the bubble bursts, or even deflates a bit.

Expect lots of hand wavy “non-GAAP” numbers pushed by leadership trying to gloss over their failed AI investments.

That’s earnings call speak for “If you ignore the pile of your money we lost with bad AI investment decisions, we’ve had a good quarter. Moving on…”

The article strikes me as a self congratulatory solution to solving a problem that they could just have avoided entirely by instead selling hardware with local video storage. Lots of options for doing that efficiently and inexpensively in 2025. Hosting everything in the cloud like this is a 2015-era solution.

It’s an over engineered solution to a, relatively, simple problem of access long the device on the local network. This used to be a hard problem to solve but in 2025 I’d question why they’re going through the headache of all this cloud stuff when they could just build a quality device that runs locally with a simple base station that triggers alerts. They only hosting they really need is something to send alerts to an app.

+1 for Unifi. They’ve added “baby crying” to the audio monitoring for triggering alerts. Everything is kept local on your LAN. Can access remotely via an app if you wish, but that’s simply accessing the device on your LAN so no dumping all your footage into some random “cloud.” Stuff just works and requires no subscription so all your money goes towards better quality hardware.

Well “there was a time” when it was more true. Now so not really. With the exodus the bar at Amazon/AWS for taken has fallen quite a bit and in many areas a leading L7+ at Amazon is maybe a B-lister at best elsewhere. Especially in competitive areas like AI and ML where Amazon can no longer attract and retain the best in the market.

See recent press on leaked internal doc about folks at AWS whining that they struggle to secure speaking spots for their folks at AI conferences because nobody sees AWS as having recognized leaders in this space.

There was a time when the L7+ principal IC at Amazon/AWS were rockstars in our industry that represented the pinnacle of one’s career.

It’s been sad to watch the talent exodus there on my LinkedIn these last 12+ months as these folks flee the ship for elsewhere. So much experience and knowledge just gone and the bar for L7+ with those left has tumbled off a cliff.

Amazon now does this with badge swipe data, and because you must badge in and out of Amazon offices they also track and report on how many hours you’re in the office.