Dan Rose Profile picture
Jan 8, 2021 15 tweets 3 min read Twitter logo Read on Twitter
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 24
Watching the movie Air reminded me of a few times in my life when I trusted my gut and put all my chips on the table. You can’t be successful in business without taking risk, and there’s no guarantee it will work out. But when it does… Here’s a story about my big bets:
After my first year of business school at U Michigan I got a summer internship at Amazon. 3 weeks into the job they offered me a full-time position. I had a wife and 18 month-old baby. Amazon was a 5 year-old start-up, though already a public company.
When I told my friends and family I was dropping out, everyone thought I was making a huge mistake. But I knew I would learn more about business at Amazon than in school. Allison & I never looked back, literally. We hired movers to pack our stuff and never set foot in Ann Arbor.
Read 10 tweets
Dec 9, 2022
The best companies always have a strong senior leadership team, filled with people who complement each other and play well together, like a winning sports team. Here’s how I built my career by learning how to play my position at the highest level:
As a kid, soccer was my primary sport. I played center half-back and rarely scored a goal, but I was the leader in assists. I was co-captain of my high school varsity team, along with my best friend who played striker and scored most of our goals.
On the other hand, I made the mistake of thinking I should play quarterback on the football team. I rode the bench as 3rd-string QB until I switched to wide receiver where I had more success. (Eventually I left the team and found a new way to assist, as a male cheerleader!)
Read 12 tweets
Nov 20, 2022
I love to read autobiographies of people who started iconic companies. I was fortunate to work for Zuck and Bezos as their origin stories were still being written, and it's fun to pattern match against other founders. Here’s a list of some of my favorite business biographies:
1/ The Autobiography of a Founder: It’s one thing to be a great founder, it's another thing entirely to write a compelling book about your life and your company's origin story. Each of these iconic CEO’s wrote amazing autobiographies:
Sam Walton wrote an autobiography shortly before he died, and it's so good I’ve read it twice. When Walmart sued Amazon in the 90s for poaching executives, Bezos quoted from Sam’s book in his defense :-)
Read 21 tweets
Oct 2, 2022
The best tech companies drive strategy through product. This is why founders and CEOs tend to be product leaders, and product / design / engineering is more important than ops / marketing / finance. Here’s what this looked like for me as a business leader at Amzn and Facebook:
Jeff and Mark were very different, but both of them spent most of their time in product meetings, and they both scrutinized product ideas down to the pixel. They didn’t waste cycles debating strategy in the abstract, they drove it via the roadmap. They never hired consultants.
Everyone in the company understood the strategy because it showed up in the product’s evolution. There was no need for long slide decks explaining where the company was going. Company all-hands meetings simply focused on the product roadmap. Our product leaders were the stars.
Read 8 tweets
Sep 8, 2022
When I first started out in my career, I thought I had to “fake it until you make it.” Later I learned to ask questions and embrace situations where I didn’t have all the answers. Here's how I went from being an insecure manager to a more honest leader:
Amazon was my first real job, and I found myself surrounded by brilliant people with strong opinions. Everyone seemed to know exactly what they were talking about, and Jeff Bezos was the smartest person in the room. It felt to me like a culture where the strongest survived.
In that environment, I thought I needed to project confidence. For example, after a promotion to merchandising manager, I was asked about my forecast for gross margin vs contribution margin. I barely understood these concepts at the time, yet I pretended to have clear answers.
Read 18 tweets
Jul 22, 2022
In the early days of Facebook, people wondered how we would make money. The obvious answer would have been the wrong answer. Here’s how we landed on the non-obvious right answer, and transformed the advertising industry in the process:
We ran banner ads in the right-hand column of Facebook.com to generate some revenue in the early days of the company. Banner ads were the standard way to monetize media properties at that time, and most people assumed that’s how FB would monetize long-term.
Advertisers loved banner ads because the format was standardized across the web. This is why Yahoo, AOL, MSN, MySpace and every other digital media property sold banners. It was easy for advertisers to create and syndicate their ads, and it scaled with publishers' page views.
Read 21 tweets

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