AWS

Inside AWS: 3 bets where EC2 was the unicorn that paid for the losses

Shaan relays what an Amazon Prime exec told him about AWS's origins: it started small with three services (S3, EC2, SimpleDB) built by a two-pizza team. Treated like a VC portfolio, S3 was a small win, EC2 was the hockey-stick unicorn, SimpleDB a small loss, and Amazon famously whiffed on payments, leaving the gap that Stripe filled.

“if you think about like a VC portfolio, AWS was 3 bets. One was a, we can get our money back with a little bit of profit acquisition exit. Like S3 was like a small win. EC2 was like a unicorn IP that went to IPO. And one was a small loss, which was SimpleDB. But you know how, you know how it goes. The unicorn pays for all the other losses that you had.”

Wait until your core is stable before expanding (the AWS timing rule)

Shaan argues that branching into a new line of business works when the core is already mature, using AWS as the model: Amazon only spun out its compute system ~10 years in, once it could throw hundreds of people at it. Do it too early and it becomes a distraction.

“Let's call AWS being the best example of this, where Amazon takes its own sort of server and compute system and services system and makes it available to any company. And now AWS brings in, you know, tens of billions of dollars a year. And so that's like the best case scenario. And then you have probably, you know, hundreds of thousands of other examples that you could come up with where somebody does this it doesn't take off, it becomes a distraction, etc., etc.”

Steal thisOnly spin out a new business unit once your core is stable enough to survive without your attention.

Founder pays $3M/mo AWS bill on personal Amex for lifetime top-tier status

Shaan's friend negotiated to pay his company's massive AWS bill (around $3M/month) on his personal Amex, earning the highest tier card for life with perks like first-class flights and free Equinox, all tied to his name.

“He's like, I'd like to pay the AWS bill for my company on my personal credit card. And so he earned like whatever, Amex Double Black Platinum Gold, whatever it is, like the highest tier for life, because they were spending like, you know, $3 million a month on AWS or something crazy.”

Steal thisNegotiate to run company expenses through your personal rewards card and keep the perks tied to you.

Go niche and direct to capture more of the revenue

Jack explains that a hyper-niche tutorial (e.g. getting the most out of a specific facet of AWS) sold direct can charge a similar price to a book while capturing far more revenue, because a book's return is low unless you have a huge publisher and reputation.

“So it's like super niche. And you can imagine if you wrote a book on that, you know, you might charge a similar price for it, but it would be the return would be significantly lower, I would imagine, unless you're with some huge publisher and you've got big reputation. But you can get into that niche and capture so much more of the revenue.”

Steal thisSell a hyper-niche tutorial direct instead of a book to keep most of the revenue.