IBS Journal July 2018
39
and a bunch of timber and you have to put it all together yourself. I was not planning to do another start-up but I realised that the time was right. The team was right. The technology was right and ripe for that matter, to do this. It’s actually a pretty high technological bar as well. And there’s a lot of value in doing this.
“The biggest concern that people raised when I mentioned I was planning to do this was this view that everything is moving to the public cloud so there won’t be any market. Nobody’s going to manage their own network. They’re going to hand it all over to our friend Jeff Bezos. My view here is that we’ve ended up in what I call a medieval computing landscape – because you have Jeff Bezos who’s built this walled garden called AWS, which is a castle. He says, ‘Come under my protection and you will be safe’. Ha ha ha. Exactly what happened in medieval days: peasants were encouraged to think, by the King or Queen, that the highwaymen was a problem. They weren’t a problem. They were part of his/her overall plan. You build this castle, the peasants are beholden to you because you protect them from the highwaymen. So we have ended up in the same thing.
“Now AWS is sold as the public cloud. What does public mean? It means that if you pay for it you can use it. Well, by that definition I claim Disneyland as a public park because you can pay and you can go in and use it. So public cloud is a complete misnomer. Then AWS says, well that’s not the only piece. We don’t just provide computing service. We provide thousands of services. What AWS does is provide a ridiculously high number of new ‘services’ that they add every day. What people are learning is those services are there for lock-in. They’re not all that useful. There’s this disease you get under junior software engineers that say, ‘Gee, I never use them like that. Why don’t I try using it with this application that somebody is paying me to develop?’ You go find these start-ups and big companies end up where they develop some application and it’s using 100 of Jeff Bezos’ little services that are unique to AWS.
“So somebody gets a big bill from Jeff Bezos. Some of the bills I’ve seen are enormous, unbelievable – $1m per month easily and upwards. It’s very hard to move that application because it’s not highly dependent on that service. So you can’t get off of AWS without re-writing the application. Then of course you’re sold this notion that you’re not in the IT infrastructure business. I view that as a myth because Bezos basically says you don’t need your own brain. You can do your thinking with my brain.”
The biggest bank in the world
“Just be aware of Marc Andreessen’s comment that software is eating the world – well Jeff Bezos is eating whole industries. Remember people used to say ‘don’t worry – it’s just an online bookstore’? Well what’s happened to the grocery business? What’s happened to video distribution, music distribution and so on? This guy has enormous clout. If he decided to start a bank tomorrow it would instantaneously be one of the largest banks in the world. There are 100 million Amazon Prime customers at this point with Amazon. This is paying customers. So I think there’s a real risk here that this
WHO IS DAVID CHERITON?
David Ross Cheriton (born 29 March 1951) is a Canadian computer scientist, mathematician, businessman, philanthropist and venture capitalist. He is a computer science professor at Stanford University, where he founded and leads the Distributed Systems Group.
He is a distributed systems and networking expert, with keen insight into identifying big market opportunities and building the architectures needed to address these opportunities. He has founded and invested in technology companies including Google, where he was among the first investors; VMware, where he was an early angel investor; and Arista, where he was co-founder and chief scientist. Cheriton has funded at least 20 companies.
Cheriton was ranked by Forbes with an estimated net worth of US$6 billion (as of 18 February 2018).
guy is not the richest man in the known universe for no reason. I’m not faulting him but I think that anybody who wants to have an independent business should be aware that he does want to own the entire universe here. He’s got incredible capabilities to move into almost any industry.”
This is scary stuff, so what we can do about it?
“My view that there is an alternative which is the private cloud,” says Cheriton. “You can get the same efficiencies as Jeff Bezos more or less, buying your own hardware except for how you operate it. What separates the efficiency of your operations from AWS is purely automation. Part of my enthusiasm is providing this automation that people have developed and providing it to other companies. I think that we’re in this very exciting time of what I’ll call pervasive automation, which you might consider the third wave of computing where the first wave was human productivity.
“Automation – none of this is easy but it’s incredibly valuable to do this. I tried to answer the question, am I smart, lucky or prepared. Well, I think lucky. It was great to end up at Stanford at the time I did and then of course be able to meet and work with a lot of amazing students and other people that came through Stanford or came through Silicon Valley.
Smart, well it’s hard to feel smart in Silicon Valley because there’s so many other smart people. But I think I’ve been smart enough to treat students well, to recognise the ones that are smarter than me and start companies with these folks. If you want to invest like me, you get a position at Stanford 35 years ago and run with it I guess, a little hard. But I think we live in incredibly transformative times, which is great because there are enormous opportunities. But so was the American Revolution. You want to be on the right side of history because the wrong side is fairly painful.”
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