AWS

`3:18:25`

or 3.4 million at its peak. That's kind of a lot of money. 3.4 million, I mean we have a ton of users and customers, but still that just struck me as unreasonable. And the reason why it was so unreasonable was because I had the pitch for the cloud ringing in my ears. Hey, this is gonna be faster. This is gonna be easier. This is gonna be cheaper. Why are you trying to produce your own power, right? Like, do you have your own power plant? Why would you do that? Leave the computers to the hyperscalers. They're much better at it anyway. I actually thought that was a compelling pitch. I bought in on that pitch for several years and thought, do you know what? I'm done ever owning a server again. We are just gonna render our capacity and Amazon is gonna be able to offer us services much cheaper than we could buy 'em themselves because they're gonna have these economies of scale. And I was thinking Jeff's word ringing. My competitors margin is my opportunity. That was something he used to drive amazon.com with.

`3:19:26`

That if he could just make 2% when the other guy was trying to make 4%, he would end up with all the money. And on volume, he would still win. So I thought that was the operating ethos for AWS. It turns out that's not true at all. AWS by the way operates its almost 40% margin. So just in that, there's a clue that competitors are not able to do the competitive thing we like about capitalism, which is to lower costs and so forth. So the cloud pitch in my optics, it's fundamentally false. It did not get easier first of all. I dunno if you've used AWS recently, it is hella complicated. If you think Linux is hard, you've never tried to set up IAM rules or access parameters or whatever for AWS. — AWS is always difficult. It was always complicated. — Well, I think it's gotten even more difficult. But yes, now some of that is it's difficult because it's very capable and you have a bunch of capacity on tap. And there are reasons I don't think they're good enough to justify how complicated

`3:20:26`

the whole jing-a-ma-jing has become. But what's certainly true is that it's no longer easier. It's not easier to use AWS than it is to run your own machines, which we learned when we pulled out the cloud and didn't hire a single extra person. Even though we operate all our own hardware, the team stayed exactly the same. So you have this three-way pitch, right? It's gonna be easier, it's gonna be cheaper. Certainly wasn't cheaper. We've just proved that by cutting our spend on infrastructure by half to two thirds. And it's gonna be faster. The last bit was true, but way too many people overestimated the value of that speed. If you need a thousand computers online in the next 15 minutes, nothing beats the cloud. How would you even procure that? If we just need another 20 servers, it's gonna take a week or two to get boxes shipped on pallets delivered to a data center and unwrapped and racked, and all that stuff, right? But how often do we need to do that? And how often do we need to do that

`3:21:27`

if buying those servers is way, way cheaper so we get vastly more compute for the same amount of money. Could we just buy more servers and not even care about the fact that we're not hyper optimized on the compute utility? That we don't have to use things like automatic scaling to figure things out because we have to reduce costs? Yes, we can. So we went through this journey over a realization in early 2023 when I had finally had enough with our bills. I wanted to get rid of them. I wanted to spend less money. I wanted to keep more of the money ourselves. And in just over six months, we moved seven major applications out of the cloud in terms of compute caching databases to works onto our own servers. A glorious, beautiful new fleet bought from the king of servers, Michael Dell, who really, by the way, is another icon on my, I saw he just celebrated 41 years in business. 41 years this man has been selling awesome servers