Draconian Overlord

Oppressing software entropy

Reinvent 2012 Bezos Notes

As a continuation of my AWS re:Invent keynote notes, here are some from Werner Vogel chatting with Jeff Bezos.

Bezos: we only win when our customers win, for example:

  • Kindle hardware is break even, so we only make money when our customers actually use it, not just have it sit around in a drawer.
  • This aligns our goals with the customer’s–enjoy it as much as possible, by encouraging them with useful content, even if it’s an ancient 1st gen device.
  • (My comment: this is a less evil view than “oh, they just want to make more money on the consumption of content”, but if the customer is choosing to consume the content anyway, and this alignment means amazon.com is incentived to line up more content for the consumer to consume, vs. letting their device rot away un-updated on Android 3.x cough carriers cough, then perhaps the customer is actually getting a better deal, and more realized value, out of it than an up-front cost of the device anyway, even if the content cost ends up being higher over time.)

AWS utility pricing is the same way, aligned with customers. Helps customers drive their own costs down–that will lead to more usage, more adoption, more revenue in the long run.

Flywheels:

  • Don’t ask “what’s going to change in 10 years”…ask “what’s not going to change in the next 10 years”?
  • That’s what you can build a business around: stability.
  • For retail this is stuff like low prices, a huge catalog.
  • Customers will always want low cost goods. Impossible to imagine customers wishing for slower delivery.
  • So spinning up, investing in, these sorts of fly wheels is worth the long-term investment.
  • No one will say AWS should be less reliable, or more expensive, or have less than APIs.

Good ideas are not obvious, and its hard to see the obvious all of the time.

Principles of innovation:

  • It’s a point of view.
  • Select people who want to explore, want to invent (vs. people whose view point is, say, destroying the competition–that can be successful too, but is different).
  • Work backwards from customers–which customers can we please today.
  • What is not as fun:
    • Willingness to fail, to be misunderstood.
    • Both well-meaning and self-interested critics will question you–that’s okay and expected.
  • Ramp up rate of experimentation–try until you find things that customers care about.
  • How do you organize your life and time to increase your rate of experiments?

Biggest surprise about AWS: early adoption within government, enterprise, and education. Knew startups would adopt it (although much quicker than expected), but thought government would be a hard sell.

On business models:

  • Assume customers have access to perfect information.
  • Because they do: the Internet empowers users with better information each year (e.g. price comparison–used to require driving store to store, then phone calls, now just Google)
  • Balance of power is shifting from producers of goods to consumers.
  • If your business model depends on customers being misinformed, you need a new model.
  • AWS is a huge success, with no salesforce like HP/IBM/Oracle–consumers find new options that work by themselves.

Lean:

  • Defect reduction, don’t let defects move downstream, muda
  • But requires information to make decisions.
  • Data centers historically have been information free, no visibility–AWS changes that.
  • About line workers “stopping the line”:
    • Stopping the line was just not done in Detroit, scene as insane, stopping the output
    • But defects were still being made, so instead of being fixed, they just got skipped over and passed along.
    • amazon.com customer service rep knew a customer was going to want to return a table (“everyone returns this table”)–but no communication was happening with distrubtion. This sort of communication doesn’t happen automatically. Now customer service reps can pull products from website until customer complaints are addressed.
  • Kaizen training: fiery “insultant”. Don’t sweep, eliminate the source of the dirt.
  • High margins cover a lot of sins, so you don’t need to be efficient. And it’s more fun to align with customers anyway.

How has entrepreneurship changed since founding Amazon:

  • Rate of change is even faster.
  • The heart of entrepreneurship is still risk taking:
    • Entrepreneurs are all about taking and then reducing risk
    • Take a business concept and drive the risk about of it until it’s sustaintable.
    • Systematically identifying risk.
  • Empowering people with new tools can lead to new interesting results (AWS utility model enabled many, many unforeseen uses and adoption.)

Can AWS serve startups and enterprise at the same time? Of course, it already does.

The 10,000 year clock:

  • In a mountain in Texas, it should run for 10k years.
  • The symbol is about long term thinking.
  • Allows solving things that you wouldn’t even consider otherwise. Time horizons matter.
  • If asked to solve world hunger in 5 years, it’s impossible. But in 100 years? You can start envisioning gradual, long-term change.
  • Ask amazon.com team: could you deliver a book to Mars in 8-10 years? Super-excited to answer. What about Mongolia? “Oh right.”

Blue Origin: you can’t practice with non-reusable vehicles, they will never be low cost.

Advice:

  • Never chase the hot thing, you need to be there already to catch the wave when it starts.
  • So make sure you do what you are passionate about, so you can do it anyway, before it’s hot, and even if it never does get hot.
  • Prefer missionaries (doing something they love anyway) over mercenaries (chasing the cash). Ironically, missionaries usually end up with more money anyway.
  • Start with the customer and work backwards.