Amazon’s AWS Is Growing Up; Should You Be Scared?

Comment

Image Credits: Dr. Morley Read (opens in a new window) / Shutterstock (opens in a new window)

Dan Scholnick

Contributor

Dan Scholnick is a general partner at Trinity Ventures and has active investments in companies including Docker, New Relic Workpop and Bulletproof.

More posts from Dan Scholnick

Amazon Web Services (AWS) is the undisputed leader in infrastructure-as-a-service (IaaS). Historically, this meant focusing on low-level “building block” services such as object storage, scalable compute and caching.

But recent years have seen them build and launch higher-level products such as databases and content delivery platforms. These services are cheap, scalable and performant, but still narrowly defined. Now Amazon seems to be getting even more aggressive, and more serious, about moving “up the stack.” No longer content with reselling fractionalized hardware, they’ve set to work building complex software products to serve more of their customers’ needs.

Some cloud entrepreneurs are concerned, and rightly so. Among the new products launched this year and on the roadmap are many that bring them into direct competition with startups — startups that never expected to have to go head-to-head with AWS.

For example, Amazon’s new Elasticsearch Service allows a customer to deploy an Elasticsearch cluster with the click of a button, and costs no more than the standard rates for the underlying EC2 nodes on which it will run. At Elastic, the company behind the open-source Elasticsearch project, they have built a substantial business supporting these clusters, many of which run on AWS. Amazon didn’t pull the plug on them, but they made it easier than ever for customers to deploy Elasticsearch without ever picking up the phone to do business with Elastic. Other software vendors, open source or otherwise, who see their offering on Amazon’s roadmap may feel equally threatened.

Before we all give up and go home, I think it’s important to consider why Amazon is moving up the stack, and what it means for the industry as a whole. The dream of the public cloud has always been to achieve levels of scale and cost savings such that private data centers could never compete.

Cheap, instantly-deployable and infinitely-scalable cloud infrastructure is equally good for big companies with enormous demands and evolving needs as it is for the startup ecosystem just trying to innovate and show value to customers as quickly as possible.

Now that the foundation of infrastructure services is in place, Amazon is building the other features their offering needs to make it an attractive home for even the biggest and most demanding customers.

For every customer, the goal is to serve 100% of their infrastructure needs from the public cloud. In order to do this — in order for big companies to feel comfortable shutting down datacenters and re-learning how to manage infrastructure — Amazon must have an offering for every need. But it also means that AWS is maturing overall, both as a platform and as a business.

Beyond launching new, higher “ambition” products, Amazon is also behaving more like a big, growing and innovative company. From their partnership with Accenture, to the roadmaps they published during re:Invent, to the growing business development and customer service teams which make it easier to get someone on the phone — AWS is taking steps to be a supportive partner and provide transparency and comfort that investments today will not be squashed tomorrow.

Unlike Facebook, I wouldn’t be surprised if AWS’s motto was “break nothing and plan ahead.”

So a big, mature and ambitious AWS is good for the whole ecosystem, but many startup founders will still find themselves in direct competition with a much larger company, which is never fun. If that’s the case, there are several things you can do.

Be better at something important.

Amazon, and many big companies, try to make sure they have something for everyone, but would acknowledge that they’re not trying to build the best of absolutely everything. They’re exceptionally good at fundamental infrastructure, and their broad platforms like Redshift are great options when they work for the need, but by applying the 80-20 rule you can hone in on something important where you can beat them.

Amazon has offered CloudWatch since mid-2009, but that hasn’t stopped New Relic (disclaimer: I was an early investor and am on the board) from becoming the dominant player in the application performance management space. In fact, New Relic recently launched a beta version of an AWS-specific product, particularly well-suited to ephemeral EC2 instances that other monitoring products struggle with.

Aggressively move up the stack.

Amazon is talking more openly about its roadmap, and while there are some exceptions, most of what they’re building remains relatively low level. To stay out of their crosshairs, move up the stack, or build cross-platform and cross-cloud services that it would never make sense for AWS to build.

Make friends with their enemies.

Speaking of cross-cloud, you can always work with other cloud providers like Google, Microsoft, Rackspace or IBM. They all feel enormously threatened by AWS and are scrambling to close the gap in their offerings. If you have a solution that can help them I’m betting they’ll be receptive.

You could also try to get acquired. AWS has become more acquisitive as they take a strategic approach to enriching their product portfolio, though they may make you move to Seattle…

Five weeks ago at AWS re:Invent Amazon launched several products that sit at levels above their core IaaS products and attempt to solve big problems for their customers. Presumably these products also generate higher margin, but the more important thing they do is fill out a platform and bring it closer to the public cloud one-stop-shop that AWS wants to be.

While this may feel threatening to startups that see their vision on Amazon’s roadmap, the future is brighter for all of us who build products for the public cloud — change your strategy, build some new relationships and be the best at what you do. We’re still in early innings.

More TechCrunch

Companies are always looking for an edge, and searching for ways to encourage their employees to innovate. One way to do that is by running an internal hackathon around a…

Why companies are turning to internal hackathons

Featured Article

I’m rooting for Melinda French Gates to fix tech’s broken ‘brilliant jerk’ culture

Women in tech still face a shocking level of mistreatment at work. Melinda French Gates is one of the few working to change that.

6 hours ago
I’m rooting for Melinda French Gates to fix tech’s  broken ‘brilliant jerk’ culture

Blue Origin has successfully completed its NS-25 mission, resuming crewed flights for the first time in nearly two years. The mission brought six tourist crew members to the edge of…

Blue Origin successfully launches its first crewed mission since 2022

Creative Artists Agency (CAA), one of the top entertainment and sports talent agencies, is hoping to be at the forefront of AI protection services for celebrities in Hollywood. With many…

Hollywood agency CAA aims to help stars manage their own AI likenesses

Expedia says Rathi Murthy and Sreenivas Rachamadugu, respectively its CTO and senior vice president of core services product & engineering, are no longer employed at the travel booking company. In…

Expedia says two execs dismissed after ‘violation of company policy’

Welcome back to TechCrunch’s Week in Review. This week had two major events from OpenAI and Google. OpenAI’s spring update event saw the reveal of its new model, GPT-4o, which…

OpenAI and Google lay out their competing AI visions

When Jeffrey Wang posted to X asking if anyone wanted to go in on an order of fancy-but-affordable office nap pods, he didn’t expect the post to go viral.

With AI startups booming, nap pods and Silicon Valley hustle culture are back

OpenAI’s Superalignment team, responsible for developing ways to govern and steer “superintelligent” AI systems, was promised 20% of the company’s compute resources, according to a person from that team. But…

OpenAI created a team to control ‘superintelligent’ AI — then let it wither, source says

A new crop of early-stage startups — along with some recent VC investments — illustrates a niche emerging in the autonomous vehicle technology sector. Unlike the companies bringing robotaxis to…

VCs and the military are fueling self-driving startups that don’t need roads

When the founders of Sagetap, Sahil Khanna and Kevin Hughes, started working at early-stage enterprise software startups, they were surprised to find that the companies they worked at were trying…

Deal Dive: Sagetap looks to bring enterprise software sales into the 21st century

Keeping up with an industry as fast-moving as AI is a tall order. So until an AI can do it for you, here’s a handy roundup of recent stories in the world…

This Week in AI: OpenAI moves away from safety

After Apple loosened its App Store guidelines to permit game emulators, the retro game emulator Delta — an app 10 years in the making — hit the top of the…

Adobe comes after indie game emulator Delta for copying its logo

Meta is once again taking on its competitors by developing a feature that borrows concepts from others — in this case, BeReal and Snapchat. The company is developing a feature…

Meta’s latest experiment borrows from BeReal’s and Snapchat’s core ideas

Welcome to Startups Weekly! We’ve been drowning in AI news this week, with Google’s I/O setting the pace. And Elon Musk rages against the machine.

Startups Weekly: It’s the dawning of the age of AI — plus,  Musk is raging against the machine

IndieBio’s Bay Area incubator is about to debut its 15th cohort of biotech startups. We took special note of a few, which were making some major, bordering on ludicrous, claims…

IndieBio’s SF incubator lineup is making some wild biotech promises

YouTube TV has announced that its multiview feature for watching four streams at once is now available on Android phones and tablets. The Android launch comes two months after YouTube…

YouTube TV’s ‘multiview’ feature is now available on Android phones and tablets

Featured Article

Two Santa Cruz students uncover security bug that could let millions do their laundry for free

CSC ServiceWorks provides laundry machines to thousands of residential homes and universities, but the company ignored requests to fix a security bug.

2 days ago
Two Santa Cruz students uncover security bug that could let millions do their laundry for free

TechCrunch Disrupt 2024 is just around the corner, and the buzz is palpable. But what if we told you there’s a chance for you to not just attend, but also…

Harness the TechCrunch Effect: Host a Side Event at Disrupt 2024

Decks are all about telling a compelling story and Goodcarbon does a good job on that front. But there’s important information missing too.

Pitch Deck Teardown: Goodcarbon’s $5.5M seed deck

Slack is making it difficult for its customers if they want the company to stop using its data for model training.

Slack under attack over sneaky AI training policy

A Texas-based company that provides health insurance and benefit plans disclosed a data breach affecting almost 2.5 million people, some of whom had their Social Security number stolen. WebTPA said…

Healthcare company WebTPA discloses breach affecting 2.5 million people

Featured Article

Microsoft dodges UK antitrust scrutiny over its Mistral AI stake

Microsoft won’t be facing antitrust scrutiny in the U.K. over its recent investment into French AI startup Mistral AI.

2 days ago
Microsoft dodges UK antitrust scrutiny over its Mistral AI stake

Ember has partnered with HSBC in the U.K. so that the bank’s business customers can access Ember’s services from their online accounts.

Embedded finance is still trendy as accounting automation startup Ember partners with HSBC UK

Kudos uses AI to figure out consumer spending habits so it can then provide more personalized financial advice, like maximizing rewards and utilizing credit effectively.

Kudos lands $10M for an AI smart wallet that picks the best credit card for purchases

The EU’s warning comes after Microsoft failed to respond to a legally binding request for information that focused on its generative AI tools.

EU warns Microsoft it could be fined billions over missing GenAI risk info

The prospects for troubled banking-as-a-service startup Synapse have gone from bad to worse this week after a United States Trustee filed an emergency motion on Wednesday.  The trustee is asking…

A US Trustee wants troubled fintech Synapse to be liquidated via Chapter 7 bankruptcy, cites ‘gross mismanagement’

U.K.-based Seraphim Space is spinning up its 13th accelerator program, with nine participating companies working on a range of tech from propulsion to in-space manufacturing and space situational awareness. The…

Seraphim’s latest space accelerator welcomes nine companies

OpenAI has reached a deal with Reddit to use the social news site’s data for training AI models. In a blog post on OpenAI’s press relations site, the company said…

OpenAI inks deal to train AI on Reddit data

X users will now be able to discover posts from new Communities that are trending directly from an Explore tab within the section.

X pushes more users to Communities

For Mark Zuckerberg’s 40th birthday, his wife got him a photoshoot. Zuckerberg gives the camera a sly smile as he sits amid a carefully crafted re-creation of his childhood bedroom.…

Mark Zuckerberg’s makeover: Midlife crisis or carefully crafted rebrand?