Out of Bezos’s Shadow: 7 Startup Secrets from Amazon’s Andy Jassy

5/9/13Follow @gthuang

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who was running the startup Pi at the time. Pi was bought by EMC in 2008, and Maritz went on to lead VMware and now Pivotal (both AWS competitors). As usual, there’s a personal element: Maritz was good friends with a member of Amazon’s AWS team in South Africa, so they trusted him.

5. “The operating system becomes the Internet.” Amazon pursued the broader AWS vision because its experience in running IT services convinced the higher-ups (OK, Bezos) that there was a huge opportunity here. The broad goal was to disrupt 30 years of IT/computing pricing by offering a flexible service with lower prices. In the “titanic shift” that is companies’ software and data moving to the cloud, Jassy says, “this is going to be a high-volume, low-margin business” —precisely what Amazon has relentlessly pursued in retail. To that end, AWS has cut its prices 31 times since 2006, he says.

6. “If you’re doing something big and new, you don’t know how customers are going to respond.” There’s always internal debate over how and whether to proceed with a risky project. AWS had its dissenters, Jassy says, even after it was approved. (He says he had hour-long “therapy sessions” with a senior technical team member about staying the course.) The key, he says, is to “try lots of experiments” with users, and ensure you “don’t have to live with the collateral damage of failed experiments.” In other words, fail fast and move on.

7. “We funded AWS without knowing how big a business it would be.” This one speaks clearly to startups and VCs. Amazon Web Services started with just one salesperson. Jassy’s original proposal called for 57 people total—an ambitious ask at the time. He says the first write-up didn’t even have a financial model. “It could be a $1 million business or a $10 billion business,” he says, depending on which levers were pulled. “Projections were always wrong.” The key was hiring the right people (tenacious, good learners, “not pickled yet”) and letting them run. Still, he admits, “We had to buy a lot of infrastructure before we could monetize. That was a little scary.”

Gregory T. Huang is Xconomy's Deputy Editor, National IT Editor, and the Editor of Xconomy Boston. You can e-mail him at gthuang@xconomy.com. Follow @gthuang

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