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.
00:12:56 · Teresa Carlson
And that was a big culture shift for Amazon because we had to get people cleared, people had to go into skiffs, we had to build skiffs if we won this contract. And we literally bid this thing. I had a team of four people. That was it. And we did one outside contractor that helped us. And other teams, IBM, Microsoft, others that bidded had these huge teams bidding this thing, and they kept saying, you guys can't win it. But the CIA had a really, they were very far ahead. They had been looking at cloud computing already, and they knew that they could not, they could build this, they had very smart people, but they couldn't sustain it because of the contracting environment in government. And what I mean by that, Molly, is that, you know, in government, the reason they've moved toward commercial is because they can build something now and it can be really good. But in order to keep it up to date with how fast technology is moving, their contracting process can't do that anymore. So they kind of would bill things and it became very stagnant quickly. And if you just fast forward, we'll talk about this later with AI, they really couldn't do it now with an AI model. So we won this contract. We built the first classified environment for the intelligence community. And it really was kind of the shot heard around the world because commercial enterprises were like, what? If the CIA can use cloud, we can use cloud. And at that point in time, people were still very skeptical about the security and compliance, because we would hear things like, Oh, that's not secure. Oh, you can't use cloud. I mean, we had everything thrown at us. And you have to be really patient and answer questions and just know you're doing this for the long term. And you're doing these things to outlive what you are doing. You're building something that is meaningful and that you know your government really needs. But these industries, to your point, are very different. And in government, have these also at state local education, not for profit NGOs. And then I had the global scope. So you have countries that act and behave differently globally. But the one thing I'll say that we did really well, we got NIST in the US government to define what cloud computing was. And then other governments around the world started using that same definition. Oh, wow. Yeah, it was funny.
00:15:24 · Teresa Carlson
The first contract we did in Australia, we kind of laughed. We saw they'd use the NIST definition. And then we worked with GSA to actually do something called FedRAMP, which was the first security and compliance model for cloud, Because you couldn't have a paper based model because it was distributed computing, you really needed to have this ongoing model that you could look at cloud. We worked with them, and I really have a deep appreciation for what the U. S. Government did. People say they're slow, but they knew that there was a change and they had to get through it. On the industry side, I'll share in healthcare and financial services as an example, they began to adopt the same models that the US government, and this was probably the first time that I had seen more regulated industries say, Oh, the US government has actually created a model that we will snap into. So even today, that FedRAMP process, if you look at it, healthcare and financial services still use that model as much as government uses it in terms of certification and compliance. So this is how industry trends begin. You need to shape them and make sure that you're building something because, again, back to those connection points, Molly, the Fed Reserve, the SEC that are government FINRA, they have connection points to every bank. So you've got to make sure these things work. That's why the commercial industry side of regulated industry and government, there's just such close connections. Telecommunications, things like that. It's critical that you build something that will move across these types of industries.