Home Amazon, VCs Woo Seattle-area Developers

Amazon, VCs Woo Seattle-area Developers

Two days after wowing Wall Street with earnings handily beating all estimates, Amazon held an
event wooing local (Seattle area) web developers and venture capital firms alike. Perhaps its just a coincidence
after adding US$7 billion in market capitalization the last two days, but money definitely seems to
be following Amazon’s investment in Web Services (AWS). Madrona Venture Group, a VC firm in Seattle, helped sponsor the event, with a long list of VCs working the room.

Regardless of whether you use Amazon services, if you are a Web 2.0 company, it makes sense to keep these firms to keep in mind for funding. And if you are using Amazon web services and are looking for money, you might want prepare your elevator pitch and contact one of the below:

Of course, the competition for their attention may be strong, as a full room came to hear a presentation focused mainly on
Amazon’s developer offerings and what they can do for business owners. One claim repeated several times was that Amazon eliminates 70% of the non-differentiating work for web
startups. That means, things like building server farms, maintenance, and any operation that doesn’t distinguish you
from your competition. 70% strikes me as a bit high, but then my company produces desktop applications so I
may not be the best judge. The other 250 people in the room were generally nodding their heads in agreement.

If you’re already familiar with the Amazon web services pitch, there wasn’t much new in the presentation. However, a
question and answer session led by Andy Jassy, Senior VP of AWS, to clarify that Amazon is in fact building a distinct
line of operation with its own investments and not using idle capacity sitting around until the next Christmas season, was interesting.
True, they have not yet opened up Elastic Cloud Computing, but the servers currently running EC2 are dedicated for that purpose.

Some Take-aways

One participant wondered why Amazon hasn’t started its own venture capital arm to make strategic investments
in their AWS platform. Then we looked around the room and noticed all the engaged VC representatives and
came to the conclusion they didn’t need to.

The question of ‘What happens if <Big Company> moves in on this space?’ is becoming more common, and
the big company on everyone’s mind in this part of the world (Seattle) is Microsoft. To this, the only thing the AWS
folks could do was smile and claim first mover advantages. However Matt McIlwain of Madrona Venture Group mentioned that
he had just returned from a Silicon Valley forum where people thought Microsoft simply can’t ignore what’s happening here much longer.
I did hear a rumor that the first Microsoft data center has come online in the last month, and one can only speculate about Google
and Akamai, so stay tuned…

Speaking of data centers, there was a question among some attendees about whether Amazon actually owns or leases them. If someone
from Amazon would like to clarify this in the comments, that would be appreciated.

Finally, something to watch for. Up to now, most of Amazon’s success stories are in the consumer market. Since
Amazon runs one of the largest consumer web sites, this makes a certain amount of sense. However, they must have
designs on the business market too. While they have the technology, and events like today’s certainly show developer
interest, it may take a bit more effort to convince corporations their platform is secure enough for enterprise
data. Once corporate IT departments begin buying in to Amazon’s vision, the other big technology houses will be
forced to respond. Given the recent stock market activity on AMZN, that time may come sooner rather than later.

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