WHEN: Today, Thursday, December 7, 2023
WHERE: CNBC’s “Mad Money with Jim Cramer”
Following is the unofficial transcript of a CNBC interview with Amazon CEO & President Andy Jassy that aired on CNBC’s “Mad Money” (M-F, 6PM-7PM ET) today, Thursday, December 7. Video clips will be available on CNBC.com.
All references must be sourced to CNBC.
JIM CRAMER: So Andy, we know about how artificial intelligence works. There are two camps though. There’s one camp which says we’ve gotta be very beware of it. It could be a dangerous thing. We don’t know what’s gonna happen. Then there’s another camp, which just says, look, we can’t all go to Stanford comp-sci. It’s going to enable millions of people to be involved in computing, democracy. Which camp do you fall in?
ANDY JASSY: Well, I think you can’t fully be in only one of those camps. You know, I happen to think that generative AI is gonna change every customer experience, and it’s gonna make it much more accessible for everyday developers, even business users to use. So I think there’s gonna be a lot of societal good. But you have to pay attention to some of the dangers of generative AI, and you have to have the right security. And you gotta make sure that the models are not overly hallucinating. And so you do have to care about safety and that. And in the businesses we operate in, whether you’re talking about consumers in our consumer businesses or enterprises in our AWS business, they’re gonna care about the safety pieces. So we have a lot of focus there But I also don’t think that you should throw the baby out with the bathwater. Like, I actually think this is gonna be hugely helpful in every customer experience.
CRAMER: But, you know, how do you know exactly what I’m going to buy before I know it?
JASSY: Well I don’t know if we always know But thank you. But we work hard You know, based on what you’ve bought, what other people bought, similar things to what you’ve bought, what you’re actually looking at, we try to predict what you might be interested in and show you those things in recommendations.
CRAMER: So that is in many ways great customer service. Like, nine years ago I came out and met with one of the Nordstrom brothers, and he said, look. Watch it. Amazon’s going to end up having the best touch. Do you think you’re there yet, or more things you can do?
JASSY: Oh my gosh. I mean, I think that we do a very good job of recommending items to people and helping them discover items. And yet, I think all of us at, you know, on the team would say that there’s so much more we can do. And we’re constantly improving our model And generative AI are gonna make our models even better and it’s also gonna make discovery even easier. So I think we’re pretty good at it, and I think we’re still in the early days.
CRAMER: Now I listen to the value of Prime and listen to what you guys are offering, and I think about the FTC and how the FTC frankly just feels that you’re entrapping people in Prime. It’s almost laughable to me. You do everything to keep prices down, entrap. I mean, it’s a joy. When you see these things, I know you’re – I’m not asking you to litigate here. But doesn’t it seem almost–
JASSY: Thank you.
CRAMER: – just simplistic way of looking at things?
JASSY: Well, we’ve said a few times we think they’re wrong on the facts and the law. And, you know, and I think even on the Prime issue you’re talking about, for us, it doesn’t really behoove us to trick people into signing up for Prime because the Prime subscription fee is a small part of the total value for customers and for our business. What really works for us with Prime and for customers is that they get that fast, free, unlimited shipping and they can use it off of Amazon. And they get all the Prime Video benefit and the Prime – you know, it’s that collection of benefits. And so if we somehow tricked people into signing up for Prime and they didn’t actually use the benefits, it wouldn’t really do us very much good. And customers actually – we have many, many customers who found it easy to cancel Prime if they decide they want a change.
CRAMER: Well, now there are other people who just say, listen, you’re too big, you hurt small business. I think it’s a canard, but I understand that people could feel that way, because of the size of your operation.
JASSY: Well, I think that if you really look at the facts, you know, what we have done for small companies and small businesses in this country and across the world I think is pretty remarkable. We have a couple million small businesses that sell in our marketplace where they’re able to have a much larger business and reach many more customers than they possibly could themselves. What’s hard about starting a business is not putting up a website. That’s relatively straightforward. It’s actually finding all the customers, and then actually having to pick, pack, and ship and deliver to customers. And so the fact that we do that for so many small businesses has changed the magnitude of what small businesses can actually earn.
CRAMER: You guys in your quarterly talk about, you’ve created millions of businesses.
JASSY: Yeah. And we’ve done it in the marketplace, and we’ve also done it in AWS. If you think about, in the old days when you were a startup, you had to raise $4 or $5 million up front just to pay for your data center and your hardware and your networking gear. And then you get one shot at trying your idea. With AWS, you actually don’t have to worry about spending any of your capital that you raise on the data centers with the service and network and gear. You can try lots of instantiations of your idea for, you know, pennies or a few dollars a month until you find traction. Like, that has totally changed the game for small companies and startups.
CRAMER: Alright, now, let’s talk about things that I’m not sure are working yet. I find Alexa stilted, for instance. Sometimes she just doesn’t understand me.
JASSY: Not enough personality for you?
CRAMER: No. She doesn’t. She’s flat, and look, she’s a yes man, she does whatever I want. I do feel like that it’s not conversational enough. Can you change that?
JASSY: Yeah. I think, you know, it’s funny. Our vision for Alexa was to build the world’s best personal assistant. And, you know, if we were trying to just build a smart speaker, we would largely be there. There’d always be things to work on, but we’d be much further along. But if you want to build the world’s best personal assistant, that’s a much broader endeavor. And people used to scoff at that vision and that notion but if you study generative AI and you’re still scoffing, you’re really not paying attention. It is going to happen. And, you know, with 500 million Alexa-enabled devices out there with a couple hundred million active endpoints in entertainment and smart home and shopping and information, we think we have a real opportunity to be the leader there. And we’re in the process of building a much more expansive large language model underneath Alexa that will make her both much more knowledgeable and much more conversational for you, Jim.
CRAMER: Good. We need that. Now my trust is worried about the following, okay. You’re doing satellites, you’re selling cars. I mean, you’re doing healthcare. I worry, okay, they’re doing too much. There’s no – you can’t humanly possibly do all the things that you’re doing.
JASSY: Well, you know, the way we have always thought about new investments here at the company, and again, I’m not saying it’s the right way, it’s the way we’ve always thought about them is we ask ourselves four questions. We ask, if we’re successful, can it be big and move the needle at Amazon? Is it being well-served today? Do we have a differentiated approach? And then, do we have competence there, and if not, can we acquire it quickly? And if we like the answers to those questions, we will invest. Now sometimes that leads to very natural extensions like getting into more international countries or grocery or buy with Prime. And sometimes it leads to less obvious extensions. Like, you know, AWS was not obvious to people given what we were doing. And so each of those businesses that you’re talking about, investments, fit that criteria. Just take Kuiper as an example. So Kuiper, there are 400 to 500 million households across the world that have no broadband connectivity. That means they can’t do education online, they can’t do business online, they can’t shop, they can’t do entertainment. You know, enterprises have no network around them. Governments have no visibility. And so the low earth orbit satellite that we’re building with Kuiper is gonna change the connectivity for all those households that just haven’t had it. It just completely changes what’s possible for them.
CRAMER: But that’s gonna cost you a fortune.
JASSY: It’s capital intensive up front, but it has a lot of the same types of characteristics of AWS, where if you’re willing to invest the capital up front, there’s a large market segment there that you can actually provide something that they couldn’t otherwise have. And I think we can charge a low price and still make good margins where it’s a good business for us. So I actually am very bullish about that business.
CRAMER: And cars?
JASSY: Well, remember, cars are really an extension of our retail business. So we did a strategic agreement with Hyundai, and it’s got three elements to it. The first is that they’re gonna make their cars available on Amazon. So there really aren’t any websites where you can buy a car end to end. They’re usually lead generation for the dealerships.
CRAMER: Right.
JASSY: Here with what we’re doing with Hyundai is that they’ll have their cars available. Customers will be able to buy a car end to end with whatever features they want and pick it up at whatever dealership they want. And they get to take all the muck of having to negotiate and financing and wait for the loan that takes three hours, it’ll take about 15 minutes on Amazon. So it’s gonna be a great customer experience. So then as part of the strategic agreement, they’re gonna put the Alexa experience in their cars. And they’re gonna move their on premises technology infrastructure to AWS. So it’s a very broad, expansive strategic agreement. The selling of cars is really an extension of our retail business but we’re very bullish about the partnership. They are very focused on customers like we are.
CRAMER: Healthcare. Very hard to do and you’re wading into that.
JASSY: Well, if you think about that rubric I said earlier, are there customer experiences that are worse than healthcare?
CRAMER: No. I don’t know, passport and driver’s license, when you do that.
JASSY: But even some of those are getting better. I mean, you know, and getting into the country is a lot better than it was before. And so, you know, for us, I think when we tell our grandkids that the way you used to have to see a doctor was, you know, call three weeks in advance, drive 20 minutes, park, wait in the waiting room for – wait in the reception for 20 minutes, get into an exam room for 15 minutes. Doctor comes in, talks to you for ten minutes. Drive 20 minutes to the pharmacy, drive to work or wherever you’re going. They’re just not gonna believe us. Like, I used to not believe my parents didn’t have color TV when they were growing up. And so, you know, we have an opportunity with One Medical, which is primary care. It’s a radically different experience. It’s a really amazing digital app with all your information readily available. You can chat with physicians. You can do video conferences. We have physical clinics. Doctors will come see you and spend 30 or 60 minutes with you. It’s patients call, you can get an appointment same day. You can see specialists next day. Like, it’s a totally different experience. And then we have to go to the pharmacy, you can have Amazon Pharmacy deliver it, and you know, it’s a really broad selection, it’s great pricing. We have programs like RxPass, which allow you for, you know, key generics for $5 a month to get unlimited amounts of that. Like, these are very different experiences in healthcare. I think we can be a big part of that solution being a better experience.
CRAMER: Okay. I worry about international. Now it looks like it’s about to go in the black, but it took you years and years and years. You have to be in India. It’s the fastest-growing big country in the world but again, I mean, are we gonna start at zero and spend fortunes?
JASSY: I think you don’t have to worry that much about international, Jim. It’s a really big business today, and it’s growing really nicely and I think it’s gonna be a very large profitable business for us. When you enter a new geography, you know, if you think about, in our established international geographies, U.K., Germany, Japan, grown really nicely, grown even faster than we anticipated. Like the profitability – trajectory there. We have a lot of new emerging markets, India, Brazil, Mexico, Australia, Africa, Middle East, some countries in Europe and, you know, those are all places that want to have delivery and local operations. And when you launch those, you know, that you have to lay down a certain amount of fixed costs, and you need enough revenue to cover those fixed costs. But they’re following the same type of trajectory the U.S. did and the U.K. and Germany and Japan did. And they’re all growing well, and the profitability is moving the right way. It’s gonna be a very large profitable business for us.
CRAMER: No, it – what happened? What was the delta that it was so good this last quarter?
JASSY: In international –
CRAMER: And so close to break even, so close.
JASSY: Well, we continue to grow at a more rapid clip that we might have projected, and then we’re continuing to take our cost to serve down our fulfillment network. And that’s changed our profitability profile.
CRAMER: Well, it’s amazing. Now I do have something from – I do want to add. I’m trying to figure out that you guys must love my wife, because there’s a present from Amazon on our step every single day.
JASSY: Bless her, Jim. Thank you. Great to see you.
CRAMER: That’s Andy Jassy, President and CEO of Amazon. Thank you, Andy.
JASSY: Thank you. Thanks for having me.
