Dan Rose Profile picture
Jan 8, 2021 15 tweets 3 min read
I was at Amzn in 2000 when the internet bubble popped. Capital markets dried up & we were burning $1B/yr. Our biggest expense was datacenter -> expensive Sun servers. We spent a year ripping out Sun & replacing with HP/Linux, which formed the foundation for AWS. The backstory:
My first week at Amzn in '99 I saw McNealy in the elevator on his way to Bezos' office. Sun Microsystems was one of the most valuable companies in the world at that time (peak market cap >$300B). In those days, buying Sun was like buying IBM: "nobody ever got fired for it"
Our motto was "get big fast." Site stability was critical - every second of downtime was lost sales - so we spent big $$ to keep the site up. Sun servers were the most reliable so all internet co's used them back then, even though Sun's proprietary stack was expensive & sticky.
In 2000, brand new Sun servers started appearing on eBay for 10 cents on the dollar as VC-backed start-ups went out of business (this was pre-AWS when you had to roll your own datacenter). Amzn could have negotiated a better deal with Sun, but Jeff chose a more radical approach.
Amazon's CTO was Rick Dalzell - ex-Walmart, hard-charging operator. He pivoted the entire eng org to replace Sun with HP/Linux. Linux kernel was released in '94, same year Jeff started Amzn. 6 years later we were betting the company on it, a novel and risky approach at the time.
Product development ground to a halt during the transition, we froze all new features for over a year. We had a huge backlog but nothing could ship until we completed the shift to Linux. I remember an all-hands where one of our eng VPs flashed an image of a snake swallowing a rat
This coincided with - and further contributed to - deceleration in revenue growth as we also had to raise prices to slow burn. It was a viscous cycle, and we were running out of time as we ran out of money. Amzn came within a few quarters of going bankrupt around this time.
But once we started the transition to Linux, there was no going back. All hands on deck refactoring our code base, replacing servers, preparing for the cutover. If it worked, infra costs would go down by 80%+. If it failed, the website would fall over and the company would die.
We finally completed the transition, just in time and without a hitch. It was a huge accomplishment for the entire engineering team. The site chugged on with no disruption. Capex was massively reduced overnight. And we suddenly had an infinitely scalable infrastructure.
Then something even more interesting happened. As a retailer we had always faced huge seasonality, with traffic and revenue surging every Nov/Dec. Jeff started to think - we have all this excess server capacity for 46 weeks/year, why not rent it out to other companies?
Around this same time, Jeff was also interested in decoupling internal dependencies so teams could build without being gated by other teams. The architectural changes required to enable this loosely coupled model became the API primitives for AWS.
These were foundational insights for AWS. I remember Jeff presenting at an all-hands, he framed the idea in the context of the electric grid. In 1900, a business had to build its own generator to open a shop. Why should a business in 2000 have to build its own datacenter?
Cloud infrastructure would have emerged eventually even w/out AWS (like electric vehicles w/out Tesla), but how much later and at what opportunity cost ? After the cost of starting a company was reduced dramatically by AWS, innovation exploded and the modern VC ecosystem was born
Amzn nearly died in 2000-2003. But without this crisis, it's unlikely the company would have made the hard decision to shift to a completely new architecture. And without that shift, AWS may never have happened. Never let a good crisis go to waste!
PS: Amzn recently spent years ripping out Oracle, something few have attempted. It takes muscle to do hard things, and muscle gets built by doing hard things. The best companies look at every challenge as an opportunity and engrave that mindset into their culture.

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More from @DanRose999

May 4
I was at Amzn early '00s when we lost 95% of our market cap. Later at FB I negotiated a down-round in '09, and then in '12 our stock dropped 50% post-IPO. I was on the board of a public company that went bankrupt (Borders) and a start-up that went under (Hello). Some lessons:
1/Raise capital when you can, not when you need it. Amzn tapped convert debt in Feb '00 - if we had waited another month we would not have survived. 9 years later at FB we raised a 33% down-round despite having plenty of runway. Don’t wait until your back is up against the wall Image
2/Cash is king. Forget about valuation, dilution, etc - if you run out of cash, none of it matters. Borders used its free cash flow to buy back stock for yrs, ignoring the internet. By the time a PE firm fired the board and asked me to join in ‘09, we had no runway for turnaround
Read 12 tweets
Apr 3
In a full day of interviews at Amazon in 1999, I met 3 people who would go on to shape the internet: Andy Jassy built AWS and is now Amazon's CEO, Leslie Kilgore built Netflix and joined their board, Ram Shriram seeded Google and joined their board. Here’s what happened that day:
I was in my first year at University of Michigan Business School and had hustled my way into interviews for a summer internship at Amazon.

I knew Amazon only recruited from Harvard and Stanford, so when I was introduced through a family friend to a marketing manager named Andy Jassy I begged him for an interview. He passed me off to the recruiting team who didn’t return my calls. But I was persistent.
Read 17 tweets
Jan 24
Great CEOs are willing to declare war when necessary. Great executives find creative ways to achieve the CEO’s goals without going to war. Here’s how I brokered the peace for Bezos and Zuck:
My job at Amazon in 2004 was to secure 100k digital book titles for the eventual v1 launch of Kindle. But my efforts fell on deaf ears with book publishers who viewed eBooks as a waste of time. They couldn’t understand why I was being so persistent.
Back in Seattle we were working in secret on the Kindle, but Jeff wouldn’t let me share our device plans with publishers because he was worried they would leak to the press and deflate our big launch. So I tap-danced my way through NY every few weeks with a new pitch.
Read 20 tweets
Jan 2
In 2006 I was meeting with Jeff Bezos to discuss acquiring Audible when he described their founder Don Katz as “a missionary, not a mercenary.” I later learned Jeff got this framing from John Doerr, and it struck me as a good distinction when evaluating people. Here's a 🧵:
Most great founders are missionaries. Starting a company requires a level of commitment that lends itself to missionary zeal. Of course some founders are primarily motivated by money, but mercenary founders tend not to build lasting companies, opting instead for a quicker exit.
Missionary founders also care about making money, but they are primarily motivated by a higher calling. The mission of the company means something to them in their bones. They truly believe in serving their customers, improving people's lives, putting a "dent in the universe."
Read 15 tweets
Dec 6, 2021
I gave a talk to my team at Facebook many years ago where I asked the question "what would it look like to experience flow at work?" I later expanded on this idea as a framework for my leadership philosophy. Here's what "flow at work" means to me:
Most of us have hobbies that engage our minds fully and completely. For me, it's when I'm surfing. As I see a wave on a horizon coming towards me and I start paddling for it and then suddenly stand up on my board, I lose all track of time and I'm not thinking about anything else.
Mihaly Czikszentmihalyi defined this experience as flow. Many of us spend our free time chasing flow, but we usually don't associate flow with our time at work, where we're often just trying to get through the day.

Read 16 tweets
Nov 15, 2021
I love business because it's the infinite game - the stakes are always rising and it never ends. Unless you lose! The game is only infinite if you continue winning, and not every company is a winner. Here's what I learned about winning from my time at Amazon and Facebook:
When I joined Amazon in '99, we were under attack from all sides. With $20B market cap & endless media attention, we had stirred the giants. When Barnes & Noble launched a website and Barron's published a cover story titled "Amazon.toast," Jeff Bezos used it as a war cry.
Shortly after that, Walmart raised venture capital to mount an attack on Amazon. And then they sued us for hiring away their executives. Everyone assumed Walmart would steamroll us, just as they had done to virtually every other retail business over the prior 40 years.
Read 17 tweets

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