While I was standing in line for one of the first iPhone 3G’s in Holland last July, this tweet by Amazon CTO Werner Vogels made me chuckle:
Strange how people who fanatically promote openness are lined up outside a shop that delivers some of this era’s most closed/lockedin tools
He was absolutely right. The iPhone IS locked-in and many examples of rejected iPhone apps show what the consequences are. If you develop an app that comes close to Apple’s core products, you don’t stand a chance. Just ask Dutch iPhone app developer Vincent Verweij about his experiences with the Apple Store.
Yet almost every 2.0 geek seems to have one, even mr. Vogels himself. Thus the best thing we can do is accept it and laugh about it. Here’s a suggestion how to do so: wear a t-shirt of an exploded iPhone. The most locked-in device, now revealed on your t-shirt. Quite a funny example of fashion sarcasm.
Werner Vogels shared his wisdom and experience today with 100 cross media talents at Picnic yesterday. He’s the CTO of Amazon, a company with a 20 billion dollars revenue and 17,000 employees. Despite its giant size, the Seattle-based company experiments with products. Like the Kindle, the nifty little device that supplies books on the go. The process behind this innovative approach is called corporate creativity, Vogels said. He was kind of enough to share it with the young and eager audience.
Take a moment and look back
Every successful person has someone even he looks up to or learns from, same goes for Vogels. He starts the presentation with a quote from American computer scientist, researcher, and visionary Alan Kay: “perspective is worth 80 IQ points”. Look back every once in a while to not lose perspective. Within Amazon, employees have to periodically ask themselves: “Why are we in this business? Are we as agile as we would like to be?”
Grow really, really big trees
Perspective is important for innovations, so much is clear. At Amazon, you’re not supposed to have a short term version. Vogels: “An Amazon principle is to plant a seed and watch it grow. Innovations don’t have to pay off in six months, they might take five or seven years to fully bloom. We are interested in growing really big trees”. That sounds like a healthy ambition, but how does Vogels figure out whether something is going to be big?
Focus on needs that last
Amazon found one thing that works for them. There are two ways of finding inspiration for innovation. There’s the reactive mode. Notice what changes in the world or what your competitors do and try to adopt to that. But why wouldn’t you focus on the inverse? Vogels: “Focus on things that stay the same all the time”.
In Amazon’s retail space, it’s not hard to imagine what customers want: more choice, faster shipping, and lower prices. Innovate with keeping those basic needs in mind. Innovate to extend your catalog, innovate to deliver products faster, and innovate to drive prices down. “By doing that”, Vogels said, “you build flywheels. They keep spinning faster and faster”.
Cannibalize
With that vision in mind, most innovations don’t seem logical at first sight. Amazon now has earth’s largest catalog, which is an absolute unique selling point. Yet the company didn’t always have that, since only a limited amount of sellers had access to the site. Thus Amazon invited other parties to use the site as a selling platform. At first glance this seemed to be wrong, as Amazon would lose money by cannibalizing its own business. But in the end, as we all know now, it turned out to be a master move.
Another example, Vogels: “When Amazon introduced customer reviews, book publishers became extremely angry. What if somebody would put up a bad review? We pushed it through and now there’s not one ecommerce site without customer reviews”.
What are you known for?
Back to the reactive mode, you should really, really, not adopt it. “When Google became popular, we figured we might add some more white space to the Amazon site as well. Sales dropped immediately because the site didn’t look ‘messy’ anymore.”
So don’t focus on competition because you’ll lose focus on your own goals. Sure, you can benchmark yourself against them, they’re perfect for that. But it’s more important to be ahead of the game and ask yourself: what are you known for? Vogels: “Amazon wants to be the world’s most customer-centric focused company. It’s our tie breaker when we face tough decisions”. Daring decisions like choosing for free shipping seem logical when your focus is customer centric. So stay put with your focus and “do experiments all the time”.
Make it hard to say no
These basics of corporate creativity would be worthless if there wasn’t something like the “institutionalized yes”. “It’s very hard to say no to innovation at Amazon”, said Vogels. So if you’re trying to run an innovative company, make sure it’s really difficult for anyone to say no to new innovative approaches”.
Here is Werner Vogels’ keynote titled “Uncertainty” from The Next Web Conference 2008. Vogels shares with us that “everything fails all the time. We lose whole datacenters! Those things happen.” and “let us worry about those things, not you as a startup. Focus on your ideas.”. An interesting presentation whether you are considering using Amazon’s shared hosting solutions or not.
There is also a very detailed post about this keynote by Anne Helmond for TheNextWeb.org, and you can listen to an audio interview with Werner given at the Next Web Conference to David Petherick about Amazon’s Kindle. The video also shows all the questions and answers from after the keynote. Also see our other Next Web Conference videos:
According to research firm Parks Associates roughly one-fifth of all U.S. households are disconnected from the Internet and have never used e-mail. Apparently they called 20 million households and asked them if they had Internet Access. (Had they gone door to door that number would have been way higher as I can imagine that a high percentage of people that don’t have a phone in their houses also don’t have Internet.)
John Barrett, director of research at Parks Associates is quoted:
“Nearly one out of three household heads has never used a computer to create a document. These data underscore the significant digital divide between the connected majority and the homes in the unconnected minority that rarely, if ever, use a computer. Many people just don’t see a reason to use computers and do not associate technology with the needs and demands of their daily lives”
There is hope though as 7 percent of the 20 million disconnected homes plan to get connected within the next 12 months.
Werner Vogels at The Next Web Conference 2008
Last Friday we had dinner with Werner Vogels, CTO Amazon, who told us how dangerous it is to ignore users who still use 800×600. One guest said “It is just too much work to design your website in such a way that it works on all resolutions. You should just ignore the older browsers and systems and make sure everything works for 98% of your users”.
Vogels replied that Amazon currently has over 80 million members, that lots of those come to the service because of its low pricing. Many Amazon customers are very price aware and that Amazon is also attractive for customers with lower incomes. If he would ignore even a few percent of his customers that would come down to millions of disappointed users.
When you are surrounded by geeks and early adopters it is easy to forget that not everybody own the latest MacBook Pro, a speedy broadband connection and a 23 inch monitor. We are very focused on what the Next Web will look like and are always looking ahead. Just remember that sometimes it pays to look back a bit too…
Werner Vogel is Vice President & Chief Technology Officer at Amazon.com and focuses on technology innovation within the company. As “the oldest guy in the slate” at the Next Web Vogel takes a few steps back and looks at the larger patterns in the media world instead of presenting a visionary view.
Media have changed significantly in the past 10 years and there are dramatic shifts in how media production and consumption:
The tools to create content have become low cost
The internet as distribution medium has really taken off
We have many new devices and media has been transfered onto old devices such as phones
New business models
The world of media has changed from a few corporations that push information to you as a consumer who decides what to consume. You can pull in information at any moment you like without being controlled by a few mega corporations. The general trend is a shift from push to pull. This is not only visible online and in media production but also in many school systems where you are no longer offered 50 courses but instead you get offered 400 courses of which you have to pick 50. Education reflects the larger trend of connecting and pulling in information.
Why is this shift happening and what are the consequences of this shift from push to pull models? It causes a great amount of uncertainty and raises questions such as “will people actually watch my video?” We currently live in an era with an abundance of products and a great amount of competition. Consumers are incredibly powerful and know exactly what they want. As a startup the world has become very uncertain because with an abundance of products and picky consumers you don’t know if you’re going to succeed or not.
The main drivers of uncertainty are:
abundance
fierce competition
focus on learning
increasing consumer power
Resources are a very important part of an idea but the word “resources” has almost become a dirty word in the current era because you no longer know if you can support them. This requires a shift in the way we think about resources: you must be able to acquire resources on demand. Get them when you need them and release them when you don’t need them anymore. This lowers the costs because you only pay for those resources you need and only when you need them. This means there are no longer expensive servers sitting in the back of the room without getting used.
Running a complex infrastructure is a highly specialized job and takes a lot of money and trained manpower. As a startup you shouldn’t invest in becoming a world class infrastructure provider. Instead you should focus on managing pulled-in infrastructure(s) so you can focus on innovation instead of infrastructure. In the current era we can push and pull services and you should use them to our advantage in order to innovate.
Amazon is structured as a service-oriented model that provides cloud services based on this new model. Vogel wonders if any of the startups present at the Next Web are using any cloud services? Most startups don’t because they want to use their own stuff for a 100% but Vogel thinks they are fooling themselves because you cannot run a 100% reliable service by yourself. Vogel admits that even Amazon fails sometimes even though they are experts in providing these services. However, by providing services for startups they allow them to innovate and focus at what they are good at and focus on the idea.
This raises the question if this is not simply a marketeer’s (read: Amazon’s) dream. Why is not the whole world building applications with Amazon? What happens if startups heavily rely on their services? A very relevant question with the recent hiccups at S3. Vogel assures worried startups that they always have backups and that they are always aiming for the 100%. Vogel shares with us that “everything fails all the time. We lose whole datacenters! Those things happen.” However, Vogel assures us that as a customer never notice anything: “let us worry about those things, not you as a startup. Focus on your ideas.”
Day One has finished and we have seen lots of great stuff and speakers. From the immortal web to the semantic web in 8 hours. That’s only possible at The Next Web! And of course, not to forget, a live Diggnation show in Amsterdam. With people flying in from all over Europe: Denmark, Germany, Sweden and France. Only to see Kevin Rose and Alex Albrecht present Diggnation.
But it was probably worth the drive or the flight. What fun we had! Talking on stage about Red Heads and Table f*cking.. :-) The crowd went wild and they even started an mustache rage seen latest in the early 60’s… Later on the party moved to the inner centre of Amsterdam where you had to possibility to chat with the guys and drink beer with them. The people from Rummble threw a nice party with (again) free beer. Yes, free beer is definitively a hot topic amongst the Diggnation guys. But, ok, who’s not in for a free drink?
Tomorrow you can again see a lot new great start-ups, Werner Vogels from Amazon and lots more. Check the conference online and watch the live stream through-out the day! First up tomorrow: An Internation Open Coffee meeting.
Written on 4th January 2009
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