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Comment by dehrmann | Hacker News Reader

What the article fails to mention is just how much tech has changed people's lives in the past decade. People spend more time staring at their smartphones, order more through Amazon, are more likely to take an Uber or rent an Airbnb, etc. With tech companies being a much bigger part of people's lives, it's only natural that the industry will be more valuable.

My only real fear right now is what happens when funding contracts, and how much of the growth in the sector is a synergistic circle jerk? Is Amazon only worth a lot because of AWS, and only because AWS makes a big chunk of its revenue off startups?

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There isn’t any need to question why Amazon is worth a lot.

Investors thought - before AWS - that Amazon would win online retail (more than likely) and once they won, they would have pricing power to increase margins (doesn’t look likely).

With AWS, Amazon does have pricing power to an extent and it is a low marginal cost business. But, it could get Yahoo’d. Yahoo was doing well when it was taking money from venture backed unprofitable startup, but saw its fortunes rapidly turn when VC funding dried up. AWS won’t fall as fast or as hard but it will be affected.

Uber isn’t profitable - even their marginal profit is negative since they subsidize rides. No one knows how well Ubsr will do once it has to raise prices or cut drivers’ salary enough to be profitable.

Amazon is basically at this point a diversified conglomerate. For almost every tech startup, there is an Amazon solution. That and online retail is growing. Their biggest consumer facing risk is the 3rd party market, knockoffs and basically cheap Chinese crap. We are basically back to brand name vs generics... at least for some electronics. Also anything you can buy at Walmart, Target and Amazon is usually cheaper or the same price at Amazon.

,,cheap Chinese crap''

Why do you need to say crap?

I have a Xiaomi robot vacuum cleaner that was cheap and it's amazing at the same time (much better than other US robot vacuums that I tried before).

I bought my girlfriend a Xiaomi Mi 9T mobile phone, it's working great as well (after hiding the Mi software crap, but I had to do the same on my expensive Samsung 9S Plus as well)

Right? Roborock S5 is a solid device. And most devices (Walmart and Target and everywhere else) are also manufactured in China.

They're saying crap because they're not referring to a Xiaomi phone or vacuum cleaner. They're referring to the 'Xiaonni Vacuum 3800' that's $5 in parts, sold for $500, because people confuse it with the one you're talking about. It's like the issue with Hoverboards a couple years back. The race to the bottom caused battery safety issues, and everyone lost trust in all of them because of a few cheaper ones with crappy charging circuits.

I guess this was true before Xiaomi built a brand by buying up mostly good Chinese companies. Having a few unified brands make a lot of sense for building trust between Chinese companies and people in the world.

I don't have any numbers so this is a genuine question: Is a big chunk of AWS revenue from startups? My intuition says most startups have small cloud footprints unless they're dealing with massive scale.

I'd assume they have small footprints as well, but there's a lot of them. A lot of tiny feet will still make an impact.

Even a lot of large tech companies with insanely complex infrastructure run on AWS. Just talking about EC2 alone, you can see that Netflix, Twitch, LinkedIn, and Facebook run AWS [0]. I am aware that the info is from last year and is a tiny bit outdated (LinkedIn is migrating to Azure; FB doesn't use AWS for everything they do; etc.), but the general sentiment still shows that even tech giants tend to resort to using outside cloud providers.

0. https://www.quora.com/Who-are-the-top-10-Amazon-AWS-customer...

Sure, I wasn't arguing that they don't, I was just saying that even though startups tend to have small footprints, the sheer amount of them makes them a large segment. Similarly to how no consumer has as close to as many cars UPS does but the whole delivery industry is dwarfed by the amount of cars consumers in total have.

Look at Lyft's S-1. They're spending $100 million per year on AWS.

That's how I feel about Google ads. Half of money might come from small and medium size businesses.

In most cases, it's wasted money. As soon as those businesses realize it is wasted money,they will stop using Google ads. Leaving behind only the big guys (cops, IBM etc)

"In most cases, it's wasted money."

Of course it is!! In a business, it's pretty normal that almost everyone you tell your offer to (advertising) will decline most of the time.

Expecting an advertising impression to turn into a sale 100% of the time is delusional. Even just 10% can be easily considered a remarkably good campaign.

Google ads are not that different from putting an ad in the newspaper back in the day, as in almost everyone who sees it wont care.

I think by "in most cases" the parent is speaking per-campaign (and therefore saying something interesting, although I have no idea as to the veracity) rather than per-impression (and therefore saying something banal but obviously correct).

Ah yes, that would make a lot more sense.

What on earth... hopefully no one was expecting 100% of ad impressions to turn into sales. Putting ads in the newspaper was fairly effective at driving interest. It still is in some cases, and so is online advertising. You price out your cost per click or cost per thousand impressions and then you see if it changed your sales numbers enough to stand out from the noise and more than paid for itself.

Absolutely. If your market is geographically concentrated, a newspaper - if the people you're targeting in your geography read that newspaper - can be a great channel.

And as soon as more people start using ad blockers....

I think it depends. I know people who sell exclusively through Google Ads and they do really well. These are mostly niche items though.

The thing with online ads (Google, FB, etc.) is that you can tell pretty quickly if your ads have a positive ROI or not with a minimal setup and correct from there. The fact that Google Ads continues to be such a huge revenue driver is evidence that the ROI is positive enough for a large number of businesses to continue using it.

The biggest threats to Google Ads & co. are:

- Recession (less money in pockets = less money to spend on stuff = less ad clicks)

- Ad blockers gaining more popularity

- New competitors with higher ROI for customers (it's anyone guess who these will be)

- Increased privacy regulation (less data collection/utilization = less targeted ads = fewer clicks)

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