Just finished listening to Ben Thompson & James Allworth discuss how Amazon Web Services is impacting the venture capital business.
My mind is blown!
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Are VCs nervous, I wondered?
The argument goes, as it takes less capital to get started, way more people can step in to help you get going. Startups don’t need a VC from their first day.
1. Is Amazon boiling the VC frog alive?
As the story goes, if you turn up the temperature slowly, the frog won’t notice that he’s being boiled.
Ben Thompson at 9:30 in the podcast:
“I think the real enabler of this is Amazon. Back in the 90’s you had to go buy Sun servers, Oracle databases, and you had to spend hundreds of thousands if not millions of dollars. And they were all up-front costs. And that’s what Venture Capital is good for.”
Indeed, with the advent of AWS, startups can build their application in the cloud with *ZERO* upfront costs, and only dollars per hour. This is truly a seachange.
2. Dell’s 67 billion dollar buy of EMC
o largest acquisition in tech history
o enterprise tech & enterprise storage
At 50:36 in the podcast, James Allworth says:
“I have this mental image of what used to be this massive land mass, and all these companies fighting it out and eventually the ocean is rising, aws is rising and it’s leaving an increasingly small amount of land mass and there are fewer & fewer of them and it’s going to be very interesting to see whether any land mass is remains when aws is finished with it, and i guess this DELL EMC thing, the argument is well there’s gonna be a little bit left & we’re going to take whatever it is because we’re the biggest but it remains to be seen whether there’s gonna be anything left for anyone at all”
Dell buying EMC is apparently the largest acquisition in tech history at 67 billion according to Bloomberg. That sure does say a lot about Amazon’s downward pressure & commoditization.
Though I didn’t know EMC would be bought by Dell for such a ridiculous sum, I was arguing this back in 2011 – the New commodity hardware craze .
Related: Is Amazon too big to fail?
3. Wework & the disappearing server room
Ben Thompson makes a really fascinating point at 46:30 of the podcast:
“There’s been a big shift from the valley to san Francisco all the big companies of yesteryear are in the valley and almost all of the unicorns are in san francisco, and this is also because of AWS…
You can’t afford to pay square footage for servers in San Francisco, but if your startup is only some people, a desk & some computers… suddently it’s much more viable you have companies running businesses out of wework offices… the only reason wework can exist is because you don’t need to have servers because all the servers are housed by amazon the fundamental fabric of the silicon valley is changed because of aws”
Yet again, Amazon has impacted the valley in a huge way.
4. Google & iphone scale
“You could make the argument that AWS is right up there with Google & right up there with the iPhone in it’s fundamental transformation of industry after industry.”
And while Amazon is fully enabled by Linux, and didn’t invent utility computing, they have surely