AWS to breach $10 billion barrier through fail-fast business model

posted in: Cloud/SAAS | 0

By Jamie Davies

Amazon Founder and CEO Jeffrey Bezos has announced the company has become the fastest ever to reach $100 billion in annual sales, while AWS will also breach the $10 billion milestone in 2015, owing the success to the company’s “fail-fast” business model.

Bezos claims in a letter to the company shareholders the cloud computing business unit has grown at a faster rate than the business on the whole as it celebrates its tenth birthday this year. The company launched its first major service in 2006, a simple storage service, but now offers more than 70 services for compute, storage, databases, analytics, mobile, Internet of Things, and enterprise applications.

“AWS is bigger than was at 10 years old, growing at a faster rate, and – most noteworthy in my view – the pace of innovation continues to accelerate – we announced 722 significant new features and services in 2015, a 40% increase over 2014,” said Bezos in the statement.

“Many characterized AWS as a bold – and unusual – bet when we started. “What does this have to do with selling books?” We could have stuck to the knitting. I’m glad we didn’t. Or did we? Maybe the knitting has as much to do with our approach as the arena. AWS is customer obsessed, inventive and experimental, long-term oriented, and cares deeply about operational excellence.”

Throughout the statement Bezos referred to the company as “the best place in the world to fail” as he coupled numerous failures within the business as the catalyst for innovation. The concept builds on a popular industry model of “fail-fast” and while numerous companies around the world claim to incorporate the model into their innovation models, industry insiders have told BCN the management team are less than happy to accept failure.

The model builds on the idea that failure within the innovation team is an acceptable practise, assuming it is done quickly and lessons are learnt to improve the product offering. Failing fast, in theory, enables the team to remove inadequacies in the product offering, encouraging innovation and efficiency. Sources said while the model can drastically improve the product offering, the management team can rarely come to terms with the idea that failure can lead to greater success.

On the surface, the organization wants to be seen to incubate innovation, though the management team rarely accepts failure. According to Bezos, Amazon is seemingly one of the few companies to have successfully embedded such a business model.

“Most large organizations embrace the idea of invention, but are not willing to suffer the string of failed experiments necessary to get there,” said Bezos. “Outsized returns often come from betting against conventional wisdom, and conventional wisdom is usually right. Given a ten percent chance of a 100 times payoff, you should take that bet every time. But you’re still going to be wrong nine times out of ten.”