00:02:08 · Teresa Carlson, Molly O'Shea
[00:02:08] S0: The hats are crazy. I always go nuts with my hats. I've got stacks of hats in my wardrobe, but it's a lot of fun. I've never seen anyone ever in a bad mood at the Kentucky Derby. There's high spirits no matter what the weather is, and the races are, there's always some thing that happens, something exciting and seeing people bet and win or lose, it doesn't matter. People are just in a really good mood there. I always enjoy going back for that time. [00:02:36] S1: So exciting. That's great. So today, we're going to talk about a couple of things as it relates to policy founders, regulators, and the tech transformation that's going on in DC and Silicon Valley today. You are the founding CEO of General Catalyst Institute. We recently had Hemant on and he touched upon this, so I'm so excited to have the conversation with you. I wanna start going back to your days at AWS, and I know you had a long standing career that also touched upon Microsoft, so we can also touch upon that, but I'd love to start at AWS because you were transformational in bringing public sector to AWS. What was the environment like then, bringing cloud into DC and making sure that that was palatable for not just the tech world, but also for policymakers?
00:03:28 · Teresa Carlson
[00:03:28] S0: Yeah, it was a really interesting time. I started there in 2010 and I went all the way through 2021. And when I started with AWS, Microsoft. I'd been their US federal, I'd been there ten years. I'd been running the federal business for about three years. And you heard people talking about wanting a web service, talking about cloud, but it really had not been defined yet in federal government. But the one thing that was clear is they were tired of paying for this client server model, this licensing model. And just quite frankly, government was paying too much. Like they would buy a lot of license that they never used. And the software companies kind of use this as a model. They would keep selling them. And if you think about adoption and deployment in U. S. Government, it's not easy because there's a lot of legacy systems. So you've got to make sure things integrate And you can't just throw everything out and start all over because you have years and years of data and storage that are critical knowledge points that they just can't get rid of. Whereas a lot of times in larger companies, they'll just create a new application. But when we started, we really literally had to start from scratch. I had two people, no revenue. There was no way for government to even buy cloud. There was no contracting mechanism. So I would say we really did create the industry for cloud computing at AWS for governments around the world. And one of the things that we did, it's kind of crazy when I think back, we would just I had a little team. We were in a little building in Herndon, Virginia, and I would say, look, let's just, I knew all these customers and I said, let's just start demonstrating what cloud is. And we would literally do like pizza or cookie evenings. So we would like email everybody we knew in government, every technical CIO, CTO, director, and we would say, hey, just come and let us show you about cloud. Bring your computer. And we would set up in a little conference room and we would just, I would have my solution architect and we would just demonstrate. We'd give him like a little Amazon card with some credits on it just to try. And we would let him, we demonstrated how cloud computing worked. How did you get on the console? How did you spin up an instance? How did you use storage? And their mind was, I mean, it was like blown.
00:05:52 · Teresa Carlson
And it was like, did you know you can spin up a data center in five minutes? And they would just, it was like almost voodoo. They couldn't really believe it because they didn't have experience. The ones at that point in time that were using a lot of cloud were your startups and individual developers and engineers. They were very savvy. And we always said, hey, we never want to forget startups because they were key to us actually building the business. But then when we started doing that, we started getting momentum. And I will say we had a lot of antibodies because we had a lot of system integrators, larger ones who saw this. Called in CIOs, called them server huggers. They did not want to give up what they felt was their domain, and so we really had to demonstrate to them it actually gave them more control over what they were building. But one of the big dynamics that we saw shifting was you saw kind of the control and momentum move toward the mission owners in government. Whereas a CIO had just more control of what they would buy and build up, you saw a mission owner like NASA, JPL, and others who were some of our early customers. They were like, wow, we have a mission and we need compute and we need storage. Can you help us? So we started not directly with the CIO. A lot of our early workloads were low hanging fruit of things that, you know, the agencies just needed help with. The Mars rover is a really good one. NASA came to us and said, Look, there's a Mars rover up here, and we thought it would only rove for four months. It's still roving, like, eight months later. And they're like, It's using all our data and storage yet or, you know, processing. Can you help us? So we created a model. It was a lot, less expensive for them, and they were thrilled. I mean, did case studies. They were an early customer to get on stage with us at re:Invent. So that was like It was an interesting time because no way to buy it, no definition of cloud, there is no security or compliance regime around cloud computing. We literally just had to go into government and help create all that, and we were very patient because we knew we couldn't just go sell something. We had to actually define the market. And I'll tell you one other really funny story. I've told this before, you probably heard it.
00:08:13 · Teresa Carlson, Molly O'Shea
But one of my kind of moments is I went to Capitol Hill to have some conversations with some congressional leaders I knew, and they were like, Oh, Teresa, you're Amazon. Are you here to talk about books or taxes? So that was their entire concept of Amazon at [00:08:28] S1: Oh the my gosh. [00:08:30] S0: Because taxes back then was a big deal. And I said, No, I'm here to talk about cloud computing. And of all the congressional leaders I met with, there's only a couple that really understood what it was at all. So we had to educate and advocate on behalf of AWS around cloud, and we had to build up the entire partner ecosystem. We had no partners that were certified or understood it. So it was really grassroots from the ground up creating that entire market. And it was really phenomenal when I look back and also feel like we opened it up for so many other companies to come and do that work. [00:09:10] S1: And AWS is one of Amazon's largest businesses.
00:09:10 · Molly O'Shea, Teresa Carlson
[00:09:10] S1: And AWS is one of Amazon's largest businesses. [00:09:15] S0: Yes, yes, by far. And it's also a high margin, higher margin business for them, which allowed even Amazon to do other things. And we were proud of that. It was kind of the first tech business they had. And in retail, the margins are very lean, very lean. You know, I think somewhere, I don't know what it is today, but back then, like 1.2% to 1.5% margins, you don't have a lot of margins. And Jeff Bezos used to say, you know, you have to keep innovating on retail too, because he said, I've never heard of a customer who wants things slower, bad quality and bad service. If you're constantly looking for more innovative ways to provide better service, faster delivery, and as least expensive services and tools, and we kept those same principles at AWS as we were developing and building out what we were doing there. I want to go into all of the sectors that you touched upon within that, because I think the [00:10:16] S1: government is so large and there's so much nuance to everything that you touch. So when you were at AWS, you worked with financial services, energy, telecom, aerospace, and satellite. What did you learn between having to communicate with all these different types of groups?
00:10:36 · Teresa Carlson
[00:10:36] S0: Well, one of the things I'll share, I have always loved working in public sector, and it is not for the faint of heart because I share with everybody, you know, commercial is just so much easier to interact with because their contracting process is just the hoops you have to go through, security and compliance, everything you have to pass in order to actually even do the work. But one of the greatest things about public sector is just what you said. I always used to say, well, if I'm tired of defense, I'll go to Intel. If I'm tired of Intel, I'll go talk to agriculture. If I'm tired of ag, I'll go to HUD or transportation. So it's a diverse group of agencies and customers that you really actually get to learn so much about different industries. And if you're curious and you have agency, you can go in and really understand these industries in a big way, which also helps a business in their commercial side. Because in government, there's so much connection points with how things get built with commercial industry. And if you just think about defense, in NASA, how a satellite or a spaceship gets built, or a defense weapon, all these things come from commercial. They used to be built what we used to call GOTS, which was government off the shelf or custom built, and now you see more commercially built. And I think we were, I'd like to say that at AWS, we were key for governments to be more commercial. And one of the industries I'll just share a little bit about, we won a contract in 2012, 2013 with the Central Intelligence Agency. And that was one of the things I think that really put us on the map. It became controversial because other large providers were really upset that we had won this. But we went in, and this is where I'll say Jeff Bezos and Andy Jassy and the board of directors were unbelievably supportive because we had to literally transform the company at AWS to do that work because we were bidding classified contracts. And we were bidding to actually build a cloud for the Central Intelligence Agency and the rest of the classified, the rest of the intelligence. So it was CIA was the contracting body, but this was for all the IC. So it was for all the intelligence community across the U. S. Government.