YWR: Appreciating AWS
It’s the most important business in the world.
Generates >$100 billion in sales/year.
Yet few in asset management know much about it.
Or, where it’s going.
And why it gets even more dominant in the years ahead.
Shame. Because that’s a big blind spot.
Same way you need to know JP Morgan. You need to know AWS.
In Thinking like a CEO with
we discussed how the nature of work changes with AI.But we didn’t really go into the business and investing side. There wasn’t time.
And In {Containerisation of Thought} and how it Changes Everything we used a shipping container metaphor to explore how information flows change in the future. Information flows become AI centric with humans ‘in the loop’ where necessary.
Interesting. And great for sounding smart at parties.
But how do we make money on this?
Lots of ways. And AWS will be a big one.
Here’s the plan.
Let’s go micro on AWS, then zoom out, get macro, and finally pull it all together.
The ‘Business of the US’ is Software Development
What People miss about AWS
AWS as Home Depot for Software Development
AWS Wrappers
Build with AWS
Rise of the Mini-Entrepreneur
It all comes Back to AWS
The ‘Business of the US’ is Software Development
I want to frame this first by saying I increasingly think the main business of the US is software development. There is all this focus on ‘manufacturing’, and how we need to grow manufacturing. Fine, but ‘software’ is what we already do and dominate. We are the China of Software.
Michael Pettis always says that while the US has never had an industrial policy, our ‘policy’ by default was whatever China did’t want to dominate. China targeted domination in Manufacturing so by default we were left with Software. That was the gap. And maybe going forward we find it’s hard to change this structure and Software will be our strongest industry in the future too.
It stands out when I do the quarterly private equity holdings analysis that 14,900 companies out of 46,700 (31%) are in software or internet services. That’s where we allocate capital.
We don’t express it this way, but building software is our dominant industry, our USP.
And the backbone of building software companies is AWS.
What People miss about AWS
Sadly, if you ask many in the investment community why AWS is growing so much, they will say something like ‘because companies are moving to the cloud’. They visualise companies moving their servers out of the closet and moving all the data to AWS. Like in a big truck.
Maybe that is 15% of what is going on. But that trend has mostly happened. It’s kind of 2014’ish.
It’s not what’s interesting about AWS now.
Or in the future.