Why I love and fear AWS
The AWS launch of Amazon Connect (see techcrunch article) got me thinking about the current state of play in SaaS. Amazon Connect is a call center in a box, the same tech it uses in-house for their current platform. With that release, companies like Talkdesk and others have much to fear. While I see partnerships with companies like zendesk, salesforce and freshdesk to integrate voice with chat and email, I also firmly believe that it is just a matter of time before AWS continues to extend outward and deploy their own chat/email customer support system to go after their partners. Trust me, it will happen.
I fully acknowledge and love AWS for the opportunity to fund so many amazing founders who are fully leveraging the power of the cloud platform and services. What I also greatly fear is that Amazon and AWS have proven that they are amazing at taking markets that become hyper competitive and just blowing them up overnight with the lowest cost and good enough offering. AWS has also proven that it will continue to move upstream in the stack from the pure infrastructure layer to the application layer.
Here are a few examples:
- Amazon Quicksight (launched 10/15) — fast, easy to use business analytics at 1/10 the cost of traditional BI Solutions
- Amazon Chime (launched 2/17) — frustration-free online meetings with exceptional audio and video quality — companies like gotomeeting (Citrix) made a smart move selling to LogMeIn
- Amazon Workdocs (1/15) — fully managed, secure enterprise storage and sharing service, users can comment on files, share, etc — box, dropbox watch out
There are many more examples in the infrastructure space like identity management, API gateways, etc. To be clear, this does not mean that AWS will win everything as those products above have not seemed to make a meaningful dent in competitors, but at the same time, we also can’t ignore the power of AWS. Advantage wise, I would say startups will clearly have the ability to go premium, offering a much better and more comprehensive product but prices will eventually come down.
So as I think about where the world is going, I am constantly reminded of the mid-2000s and now when retailers were/are concerned about being “Amazoned.” As an investor in infrastructure software, I have always been fully aware of this same phenomenon. It’s just now that I can also clearly see that we need to think about which SaaS apps are the next in line to be disrupted. AWS won’t win and own every market, but they sure as hell can disrupt pricing and make life difficult for many competitors.
also published on BeyondVC on 3/29/17