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.
00:17:05 · Molly O'Shea
[00:17:05] S1: How do you build the internal team out for that? Are you pulling from public sector? Are you training people? How do you get that type of, and what kind of expertise do you look for?
00:17:15 · Teresa Carlson
[00:17:15] S0: I found when I built this business, it was very different than my business at Microsoft. In fact, I love my team at Microsoft. They were so good. I've honestly, when I look at myself, I think one of the things, my superpowers has been building good teams. I love people and I like to make sure those human connections make sense in building out a team and that there's good synergy and energy. And I also look for people that have a burn in their belly for that industry. I used to say for every leader that I hired, like my state and local, my education, my intel, I tried to find somebody that loved that industry as much as I love the work I was doing. And I know that kind of sounds silly, but when I saw that in their eyes and the way they behaved, I knew if they were smart, they were diving deep and they wanted to deliver results, I was moving in the right direction. But at Microsoft, we had very more, I would call it transactional leaders back then, not in a bad way. They were very good, but we had tools and products that they took and they put it to work. They sold it into government, and that was their job. So they configured an enterprise agreement. They configured something specific. And they had to be able to talk about what the tool did, but it was more transactional. At AWS, it was very different. We were actually, in order to get the customer to buy something, we had to first demonstrate their desire and their delight in using that tool because in a software license model, it's a one to one transaction. I sell you something, you pay for it, you get it. In cloud, that's not the case. You only paid for what you used. So, and this is kind of a funny story. When I first looked at my spreadsheet of what customers I had and how much they were using, I had hired my biz ops guy that came over from Microsoft. And we looked at a spreadsheet and I said, Oh, that's like, okay, this is good. Here's four customers. This is 100,000. This one's doing a million. And he said, No, that's a dime and that's a dollar. And they were literally spending a dime and a dollar. And I was like, What? How are we ever gonna make any money if they're And spending dimes and they would get a charge as they spin up the instance. So they might spin it up and then stop just to get an account going.