From 0 to $70B ARR: The AWS Profile - Product Growth Deep Dive

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Sep 23, 2023
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From 0 to $70B ARR: The AWS Profile - Product Growth Deep Dive
Product Zeitgeist Fit: A Cheat Code for Spotting and Building the Next Big Thing
In the world of technology, it's not uncommon for companies to experience rapid growth and success. One such example is Amazon Web Services (AWS), which went from zero to a staggering $70 billion in annual recurring revenue (ARR). However, this level of success didn't come without its challenges and a strategic approach to product growth.
At the heart of AWS' success was its ability to adapt to the ever-changing needs of its customers. The company recognized that in order to continue growing, it needed to move away from its monolithic structure and embrace a more distributed computing model. This led to the creation of the "Distributed Computing Manifesto," which outlined the company's shift towards a microservices architecture and a focus on APIs to drive development.
By becoming a "services company" with a well-documented set of APIs, AWS was able to not only support its internal teams but also test the external market. The company targeted affiliate marketers, providing them with an SDK that allowed them to access extensive data about Amazon's product catalog. This initial feature proved successful but was just the beginning of AWS' journey.
One of the key strategies that AWS employed was the process of working backwards. This approach involved starting with a fundamental insight and then developing a press release, an FAQ document, and a visual representation of the customer experience. This method helped AWS maintain clarity and prevent building for building's sake.
To articulate its vision for AWS, the company identified its core competencies in compute, storage, and databases. The goal was to create an "operating system for the internet" that would serve as a foundation for web-scale applications. With this vision in mind, AWS released its first feature, Simple Storage Service (S3), followed by Elastic Compute Cloud (EC2).
The success of S3 and EC2 propelled AWS forward, leading to the release of additional products such as Amazon SimpleDB, Elastic MapReduce, and Virtual Private Cloud. These offerings allowed AWS to cater to a wide range of customers, from garage startups to Fortune 500 companies, by providing low-cost services on a usage basis.
AWS' focus on customer obsession played a significant role in its growth. The company embraced the concept of the Ideal Customer Profile (ICP), targeting players in the market who were open to transformational IT solutions. By honing in on this specific customer segment, AWS was able to build a sales team that could effectively communicate the value of its products.
One unique aspect of AWS' approach was its commitment to not deprecating older products. Instead of taking them offline, AWS offered them to customers at cheaper costs, helping the company better predict hardware needs and control costs. This approach, along with the release of new products like Kinesis for real-time data processing, created a cycle of continued innovation and increasing demand for AWS' infrastructure.
In order to spot and build the next big thing, it's important to understand the concept of product zeitgeist fit (PZF). PZF occurs when a product resonates with the mood of the times, connecting with users on an emotional level. It buys companies the time and energy they need to gain support on their way to product-market fit.
One of the key indicators of PZF is when people use a product despite its shortcomings or when it feels misunderstood or controversial. This is where the "Eyebrow Test" comes into play. Additionally, the presence of "Nerd Heat," where talented individuals are excited and intrigued by a product, and the "T-shirt Test," where people associate themselves with a product through merchandise, are also indicators of PZF.
However, finding PZF is just the beginning. Companies still need to work towards functional use cases and mainstream adoption, ultimately achieving product-market fit. It's important to frame the company's story around why it matters, not just what it does, and to ensure that product decisions remain connected to the mission.
In conclusion, AWS' journey from 0 to $70 billion ARR was driven by a combination of strategic product growth and an understanding of the product zeitgeist fit. By embracing a distributed computing model, focusing on APIs, and continuously innovating, AWS was able to meet the evolving needs of its customers. Additionally, by identifying and cultivating the product zeitgeist fit, companies can gain a competitive edge and increase their chances of success in the market.
Actionable advice:
- 1. Embrace a distributed computing model and focus on APIs to support development and drive innovation.
- 2. Adopt a customer-centric approach, targeting players who are open to transformational IT solutions.
- 3. Identify and cultivate the product zeitgeist fit by creating a product that resonates with the mood of the times and connects with users on an emotional level.
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