Can Amazon Make Startupping A Science?

24 Comments

Amazon (AMZN) is trying to turn the art of internet startups into a science. At an open event at Stanford yesterday, a couple hundred or so entrepreneurs, VCs, and developers talked about how Amazon Web Services — cheap and elastic storage, computing, message queuing, and payments — could change, or is already changing, their businesses.

“We’re now at a point that business plans really don’t matter,” said VC Randy Komisar of Kleiner Perkins Caufield & Byers. “It’s an iterative process of quickly getting your ideas into the hands of others.”

Komisar, who is writing a book on the topic, admitted that cheap and testable company building makes his job a lot harder, and in some cases irrelevant. “Before — there was a black art,” he said. “We don’t need gurus, we have a market.”

Amazon Web Services — which kicked off with the release of Amazon S3 (Simple Storage Service) last March — now hosts over 265,000 developers, more than 5 billion objects, and up to 25,000 requests per second, according to Andy Jassy, Amazon’s senior vice president of AWS.

Amazon representatives — including a surprise appearance by CEO Jeff Bezos and Amazon backer John Doerr of KPCB — expressed awe at how much traction the services have gotten in such a short time.

Case studies from AWS users — which include disparate startups like virtual world Second Life, live-video service Mogulus, and peer-to-peer expense tracking site Buxfer — drove the potential for the “pseudo-scientific method,” as Komisar called it, home.

“This next wave is not about making it cheaper, it’s about making it so you only pay when you have success,” said Jon Boutelle, CTO of startup SlideShare, an AWS customer since inception. He suggested AWS should use the unlikely motto “failure is an option.”

Joyce Park, CTO of Renkoo, discussed how her social events company was able to play around with building an app for the new Facebook platform without draining too many company resources. The app, Boozemail, turned out to be wildly successful, with some 69 million virtual drinks exchanged by Facebook members since June 29. Because of AWS, Boozemail never had a chance to take down Renkoo’s servers and its main service.

But the money part is important too. SmugMug CEO Don MacAskill reiterated he’s saved $692,000 using AWS for his photo-sharing startup. He said that figure was as of April of this year and would be higher if he recalculated.

The startups seemed to be willing to hand over to Amazon just about every aspect of their backends, telling Amazon at the event they’d pay for additional services, such as a content delivery network. Various Amazon execs, including Bezos, dropped hints about things like Amazon-Oracle integration and the introduction of a service-level agreement (SLA) — which would make Amazon guarantee its services formally and let its customers breathe easier.

Prior to the event, Amazon had announced it would be holding a promotional startup contest over the next month, with the grand prize $50,000 in cash and $50,000 in AWS credits. Four second-prize winners will receive $5,000 in AWS credits.

The contest didn’t seem to be generating much excitement among attendees, with the prize money and the chance of winning perceived as too small. However, Bezos did mention that his personal investment manager might look at the participants, and Doerr heartily encouraged startups to contact KPCB. So maybe the old ways will stick around for a while longer.

There’s another version of the AWS in San Francisco this afternoon; you might still be able to get in.

Additional Stories on Amazon Web Services from our archives:

1. Bezos’ Dilemma

2. Amazon.com, harbinger of Web 2.0 trends.

3. Making Facebook Platform applications scale on the cheap

24 Comments

Billionaire Strategies

Don’t bet against Jeff. Everybody who did so during the 1990s lost. Jeff is one of the most impressive entrepreneurs in the history of the Net.

Ryan Coleman

“But, I question why Amazon is the one providing them. Does this help Amazon’s business? Will it ever? Are Amazon’s web services a success or just a distraction?”

It’s important to remember that the “bookstore” is just the most visible face of Amazon. In reality they are trying to do for distribution what Google is doing for Information.

Google wants to find, organize and make available the worlds information.

Amazon wants to distribute it, both physically & digitally. (Look at their grocery acquisitions etc.)

AWS, I would suggest, is a very important part of Bezos’ broader vision.

jonah

Thanks for reminding me about S3. I’ll be looking at using it in the future.

chessnoid

I think this is a good idea for Amazon to explore. Those who succeed will be the ones who have the most motivation to make it work and exploit everything that the company has to offer. Of course, Amazon will benefit no matter what.

vadver

You know what I want off my plate, operational finance (and I was the head of a quant group for bond issuers, once). If anybody is planning on building something like http://www.xero.com for the US market, please contact me as an evangelist, investor and customer.

Patricia

I think there’s demand and will continue to be. Amazon’s the noisiest, but there are a few players in this space, including British Telecom, from what I understand, 3Tera, etc.

P. M.

Amazon does perform pretty well. AWS is a great service… I actually found out about it through India Web 2.0 News, which was pretty surprising… turns out they have a lot of great information.

Matt

It’s important because it’s disruptive. It’s challenging the road blocks that have caused a lot of great ideas and services to fail because of cost prohibitive infrastructures and high-priced service providers.

Bezos is an entrepreneur, an inventor. True that as CEO of public company, he’s responsible for increasing share value. But, he’s not focussed just on quarterly earnings and that pisses off wall street and the like.

Nevermind if it’s projected to bring in zillions in revenue, it’s changing how others do business. Kindof like changing the way we buy books…

Parag Mathur

Amazon could get into the CDN business too. I would guess they have a strong infrastructure in place for their website.

At some point, shareholders will start asking how the AWS strategy is paying off. For now though, they should be pretty happy with AMZN performance.

Greg

$50K cash + $50K AWS credits is more than what can be won at TechCrunch40 ($50K) which is not suffering for lack of interest.

Liz Gannes

When asked by an attendee about the outlook for AWS being profitable, Bezos launched into a spiel about how Amazon is and has always been a company focused on long-term bets. He said he welcomes investors who are also in it for the long term; “it may not be the right strategy, but it’s our strategy” was the way he put it.

Nick

I think in terms of online storage you have to mention Nirvanix, which launched last week. They will be a true competitor to S3.

Anonymous

Jeff Bezos … expressed awe at how much traction the services have gotten in such a short time.

Traction, huh? How much revenue have these services produced? How much have they cost so far to develop? Are they profitable yet? Are they positively impacting Amazon’s bottom line?

Don’t get me wrong. I think there is demand out there for remote hosting and storage services like EC2 and S3. I am glad someone is providing these services.

But, I question why Amazon is the one providing them. Does this help Amazon’s business? Will it ever? Are Amazon’s web services a success or just a distraction?

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