The greatest opportunity for Amazon Web Services to grow in the short term lies in convincing large enterprises to move their computing into the cloud. Given the sheer volume of enterprise on-premise installations, AWS is counting on the incremental, and in many cases wholesale, migration of legacy operations to the cloud to fuel the next phase of its explosive growth. But despite this being the year of the enterprise at this month's AWS re:Invent conference, the drumbeat of AWS as a fertile ground for startups remained loud and steady.
Everybody understands the rationale for cloud computing: no capital investment, near infinite scaling, and a constellation of ancillary services to address security, analytics, storage, and other requirements. It is now possible to build a substantial business with minimal technical infrastructure and staff. As such, the promise of cloud computing for startups is very enticing, and AWS spared no opportunity to drive this point home. In panel after panel with VCs and angel networks, the message was repeated. If you are a technology startup expecting to get funding, you had better have a pretty good reason for not basing your operations in the cloud.
The implications of these offerings are a double-edged sword for entrepreneurs. It is now possible through services like AWS to build robust computing architecture with investment in the hundreds of thousands of dollars rather than the millions it might have taken a few years ago. With the growth of angel investing and crowd funding, companies can get off the ground using services like AWS and postpone or avoid seeking venture capital altogether.
But for companies seeking VC, the bar has been raised. Prominent VC panelists at re:Invent from such firms as Sequoia, Greylock, Sierra and Union Square reiterated numerous times that they are far less inclined to fund concepts or business plans than in the past. Given how inexpensive it is to build product offerings on AWS, the VCs are now expecting companies that approach them to have already built a product and demonstrated market traction.
In addition, as the cost of technology for startups has been reduced, the pace of innovation is accelerating. One example of this can be seen in the AWS Marketplace - the "app store" for AWS customers - that currently hosts more than 1,100 services from independent software vendors. Much like the evolution of Apple's App Store, early participants have been able to garner significant attention and customer engagement.
But over time, as the channel becomes increasingly crowded, the ability of startups to differentiate themselves in terms of both their product offerings and their message will grow more challenging. And the pace of new features and services launched by AWS means that startups using the Marketplace channel (and legacy vendors offering services on AWS) must always be innovating and delighting customers to ensure they aren't marginalized.
AWS's focus for this year's re:Invent conference was on bringing enterprise customers into the cloud, but the company clearly recognizes that the future lies in nurturing a vibrant ecosystem of developers and cloud-native businesses. The company has proven its willingness to support this up-and-coming generation through training, professional services and even startup credits for use of the AWS service. Folks like Brad Steele, who works with venture-backed companies such as ours to help them access resources within AWS, serve to make AWS a great asset to startups.
Access to AWS' services and support resources will not guarantee startup success. But through AWS, startups like us who choose to be cloud-native from day one are finding a willing partner who will be a large contributor to our realizing our potential.