Originally published on LinkedIn.com on Nov 17, 2015 By Jon Fortt
Photo: Deborah Findling, CNBC
When Jeff Bezos decided to try making cloud computing a side business at Amazon, he had Andy Jassy write the business plan. Ten years after Amazon launched its cloud, Jassy is still running that business — and it’s now a $7 billion behemoth, arguably growing faster than any enterprise tech venture in history.
A few weeks ago I sat down with Jassy for about an hour, ahead of his keynote at Amazon’s annual AWS Re:Invent conference in Las Vegas. Only a fraction of our conversation made it to air, so I figured I’d go back through my notebook and pick out the most eyebrow-raising bits for readers to chew on.
So. Here are seven things you probably didn’t know about the single most disruptive force in business technology today:
1. Hunger
As prices drop, it’s looking for tasty acquisitions
One of the things that you learn in business journalism is that executives never tell you when they’re about to buy something. Makes sense: Why drive up prices by announcing you’re on the prowl? So this, when I asked about Amazon opening up its wallet, is as close as it gets — especially when you consider how private market valuations have been falling lately.
Jassy: I would argue that we’ve been relatively not acquisitive so far. You know, we’ve done some of them. But we’re very interested. There’s a number of really incredible solutions that have been built. And we have deep partnerships with a lot of those solutions. And we’re interested in continuing to add that capability. And the thing that’s stopped us in the past is just, you know, some of the valuations are high. And so we expect that we will continue to acquire more companies.
2. Scale
Amazon believes it’s too big for many rivals to catch up
Like Usain Bolt down the stretch, Amazon knows it has certain advantages. Among them: It takes literally billions of dollars a year to be a player in the business of renting computing resources over the Internet, and not many rivals have that kind of cash.
Jassy: It takes a lot of capital. I mean, we would never say never about anything. And the history of business is littered with examples of companies that people didn’t think had a chance or that didn’t exist at different stages of its evolution who’ve come and become major leaders. But this is a business, when you’re talking about infrastructure technology, that is very capital intensive. And I don’t think there’ll be only one successful player. Because if you look at the market segments this touches, infrastructure software, hardware, and data center services, that’s trillions of dollars globally. So there’ll be more than one successful player. But there aren’t going to be 20. It’s going to be a small number.
3. Silence
Amazon won’t say how many people work on cloud
Wouldn’t it be nice to know exactly how many people Amazon has working on building its cloud-driven vision of the future? Jassy won’t say. I will note that the cloud unit represents about 6.5% of Amazon’s operating expenses, and Amazon has around 155,000 employees overall. So an educated guess would be that Amazon has around 9,000 employees working on cloud, once you back out the corporate overhead like human resources and accounting.
Jassy: We don’t disclose the number. But it’s a large team. I mean, I remember when we wrote the vision document and proposed 57 people, we felt like it was such a bold ask. Because all it was, was this six-page document. And as the business has grown really quickly to a $7 billion-plus revenue run rate business, we’ve had to scale, you know, a number of people, too.
4. Smarts
Don’t be surprised if Amazon starts selling more cloud expertise
One of the new developments in the cloud this year: Companies like Rackspace are building consulting businesses around helping clients operate on Amazon’s cloud. The CEO of Rackspace was telling me what a great, high-margin business it will be, which got me thinking: Why wouldn’t Amazon do this itself? Sounds like it might:
Jassy: We do a little bit of it today. We have a professional services team that mostly works in conjunction with systems integrators to do that work for our customers. But look, at the end of the day, what we decide to prioritize is what our customers tell us is important to them. I think that space that you were just talking about of managed services on top of the infrastructure is very broad. There aren’t enough providers today that do it well, although it’s growing really quickly. And I think there’s a lot of room for, really, literally, hundreds of very strong systems integrators to provide those managed services.
5. Fear
Amazon was paranoid that Microsoft would get to the cloud first
In retrospect it would have made total sense for Microsoft to start the cloud revolution instead of Amazon. Fortunately for Bezos & Co., the folks in Redmond were busy working on the Zune.
Jassy: We thought it had the capability of being something big. But being in Seattle, we know lots of people across the lake, at some of the, you know, usual suspects, old-guard technology companies. And we tried really hard to build not just as quickly as we could but as quietly as we could. Because I think it would’ve been harder back then — Amazon was mostly known as a retailer — to have been the infrastructure platform of the world, if we weren’t the first into that space. And so we felt very pleased that we were able to launch it first.
6. Diplomacy
Amazon sides with Microsoft (and against the feds) on encryption
In the wake of the tragedy in Paris, many in the U.S. government are calling for companies to stop locking down, or encrypting, customer data in a way that law enforcement can’t access it. Amazon is firmly on the side of Microsoft and Apple in pushing back against the U.S. government’s desire to access customer data, particularly when the data is being stored overseas.
Jassy: We have a very large global business. And one of the concerns that people outside of the U.S. sometimes have is making sure that their data is able to be stored in the cloud, where you know, the U.S. government could never have any access to it. … I think any technology provider cares about that issue. I mean, technology is one of our biggest exports as a country. You know, we’re fortunate in our business. Because we give our customers an easy way to encrypt their data, so that even in the very unusual case, where somebody, you know, a government may try and seek access to it, they can’t do anything with it. Because the data’s encrypted. But I think, as a technology industry as a whole, having policies that make countries outside of the U.S. comfortable with using U.S. technology providers is important.
7. Tweets
At the highest level, Amazon uses Twitter to boost customer service
Believe it or not, Twitter has become an important canary in the coalmine for Amazon’s cloud operations — so much that Jassy monitors hashtags including #AWS daily.
Jassy: Number one, I would say that it’s probably more real time. Number two, you tend to have customer forums that are focused on a particular topic, whereas Twitter is much more of a forum for, really, freedom of expression, whatever’s on your mind at that moment. And so I look at Twitter many times a day. And I’ll often look at #AWS. And I see issues where customers are struggling with things all the time. And anybody in our team will tell you that they probably get three or four emails a day from me with a forward of a tweet saying, “Can we help this customer with this issue?” And we have a whole team in customer support that just monitors Twitter, monitors various hashtags as well as other ones that we think might be related to try and help customers in real time, when they’re having issues.