Swimming with the shark: Can startups stay alive with Amazon eating the world? | #reInvent

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This may be the best of times and the worst of times for technology startups. Cloud infrastructure as a service is making it easier and cheaper than ever for entrepreneurs and developers to set up shop and roll their products out to market. Amazon Web Services provides practically everything a company needs to run their applications. Which begs the question: Why wouldn’t the startups’ customers just use Amazon too?

Stu Miniman (@stu) and John Furrier (@furrier), co-hosts of theCUBE*, from the SiliconANGLE Media team, discussed just that during the kickoff segment at the AWS re:Invent event. “You build the ecosystem, then you eat the ecosystem,” Miniman said. “The joke we always had is, show me the largest booth at re:Invent, and then go listen to the keynote and go see those people crying in their beer, because Amazon just announced some service that’s going to eat some of their business.”

Furrier agreed and said that Amazon’s magnet for customers may be what finally bursts the startup bubble.

“I’m usually not a doom and gloom alarmist, but I am really nervous that the startups are going to implode,” he said, adding that Amazon and other big players like Microsoft and Oracle have huge sales forces. To compete, startups will have to ramp up their own field presence, which is difficult and expensive.

Big fish, little fish

Guest analyst during the kickoff segment, Jerry Chen, partner at Greylock Partners, said that distribution is a huge obstacle to startups . “Distribution as a startup versus incumbents is … really all you have is you have better technology,” he said, explaining that better doesn’t get you far without visibility.

However, Chen sees a silver lining for startups. “I think you’re going to see a lot of innovation in the go-to-market area,” he said.

Chen believes it’s possible to “swim with the shark.” He gave the example of payment processing startup Judopay as an example, saying it is possible to piggyback on the giants. Startups need to be asking, “How do you use Amazon’s or Google’s or Azure’s or Oracle’s weight for you to kind of Judo hack?” Chen said.

Watch the complete video below, and be sure to check out more of SiliconANGLE and theCUBE’s coverage of AWS re:Invent. (*Disclosure: AWS and other companies sponsor some AWS re:Invent segments on SiliconANGLE Media’s theCUBE. Neither AWS nor other sponsors have editorial control over content on theCUBE or SiliconANGLE.)

Photo by SiliconANGLE