I spent the afternoon yesterday with about 250 folks learning more about Amazon
Web Services (AWS) at their Startup Project – Seattle, and came away impressed. Our hosts were Amazon Web Services SVP Andy
Jassy and Evangelist Jeff Barr, and the event was
co-sponsored by Madrona Ventures, and Managing Director Matt McIlwein gave a great presentation for entrepreneurs on venture
capital and the vibrant Seattle startup ecosystem.
AWS has the potential to cause a massive downward shift in the cost of
starting a company, and can help limit the “undifferentiated heavy lifting” of managing servers and swapping hard drives, and help avoid a "success crisis" of not being able to handle spikes in traffic. For those not familiar with AWS, they offer
on-demand Storage and Computing services at $.10 per server/hour for computing power on
EC2, $.15 per gigabyte/month to store data on S3, and $.20 per gigabyte
transferred in either case – and data transfer between EC2 and S3 is always free.
Several companies using AWS were showcased, including Blingee. They launched in January 2007 and they’re now
storing 4 terabytes on S3 and streaming 3.5 terabytes per day, and think
they’ve saved hundreds of thousands of dollars in their self-funded, 2 person startup. SmugMug is storing 192 terabytes of photos, and believes they’ve saved $600K to date,
and expects to save $1-2M in 2007. iConclude built their business that was acquired by Opsware for around $65M in less than 2 years in part by using another AWS service called Mechanical Turk. They help IT organizations with something called run book automation, and originally modeled the cost of creating the required scripts at $1-2K each, but found that with AWS they could easily find people who loved to write scripts, and their actual costs were $5 to $10 each.
What are the challenges? For one it’s not all fully available yet – there’s a waiting list for the limited beta slots for EC2, and there aren’t service
level agreements or uptime guarantees in place yet. A lot of companies would love to see a database offered as part of EC2 before they make the switch. But Amazon Web Services are absolutely a
wave of the future and something to seriously consider in building a startup.