Netflix Loses Its Cloud Guru to a VC Firm | Hacker News Reader

Netflix Loses Its Cloud Guru to a VC Firm

businessweek.com

45 pointsckoglmeier21 comments

I wish we could observe a parallel universe where Netflix went a different route and stayed with dedicated or went with colocation. I'd love to compare the outcome with their decision to go with AWS (minus CDN).

They came from a datacenter world before they moved to AWS. The problem was that they had a traditional enterprise IT organization with big process and relying on Oracle, SANs, and all the same old enterprise IT solutions. It was built to run a company that was focused on operating warehouses and logistics, and not an agile web company.

Moving to the cloud was as much an organizational transformation as it was a technical one. And the move to AWS has paid them dividends in organizational and technical agility, as well as execution speed. I will never believe that it saved them money when compared to a well run physical infrastructure that was more purpose built for what they do, but they did not demonstrate the ability to run a physical infrastructure well so it's kind of moot.

It worked out great for them and gave Adrian some great stories to share. Congrats to him on the move to Battery, that's a fantastic team.

Here is his own blog, maybe more interesting to read: http://perfcap.blogspot.com/

Does Netflix get special pricing for AWS? With their scale, they could probably negotiate with Amazon for lower rates.

Certainly, see for example https://aws.amazon.com/ec2/reserved-instances/, search for "Scale with your Business". Similar discounts exist for most of their other services.

Not to mention, Netflix is a flagship customer for AWS and directly results in AWS getting more business, so I'd expect the discounts to be even deeper for Netflix.

I remember reading something about how AWS is pretty much running very close to at cost (super razor-thin margins, just like the Amazon shops themselves),but seeing these numbers seems to imply otherwise (20% is a big chunk of change).

"AWS is pretty much running very close to at cost (super razor-thin margins"

Compare the Amazon price with other VPSs.

It's a different service, yes, but it's not even close, not even if you reserve the instances (it's been a while since I did the math though)

But for small scale, I recommend strongly against AWS

Isn't the opposite true? It's fine for under 10 instances when you're first starting up and still flexible, but over that you're better off going colo?

I've described AWS as a great "deal" for very small and for very large customers. For people in the middle, not so much.

Also depends on what you consider a deal -- the lower tier hardware works for a Wordpress blog, but not necessarily for much more. For the price, a good Linode or even a dedicated server will get you more bang for the buck.

Amazon (the mothership) runs at a loss [1]

It is predicted that Amazon AWS runs at a huge margin [2]

Of course it's possible that these number are skewed by some Irish Whiskey Double Dutch Vegemite Sandwich tax avoidance system.

[1] http://venturebeat.com/2013/10/24/red-is-the-new-green-for-a...

[2] http://venturebeat.com/2013/09/05/amazons-mountain-of-margin...

Not only Netflix they get some better price (I have no info but it will not be surprising) but I have even heard that Netflix do work with the AWS team to test first some new features before AWS release it to a larger public.

I have even heard that a couple AWS service were in fact created because Netflix was asking for it.

Netflix being probably the most visible company on AWS, I am sure they do have some special deal with Amazon.

Anyway concerning the news, it will be interesting to see Adrian in his new role! He is a great guy!

This type of relationship is common with firms and their largest leading edge customers. It helps both, and it pushes the market.

They most certainly do.

Actually, many many companies (including a startup I once worked for) had negotiated rates w/ Amazon. Netflix is certainly paying far less than sticker price.

One thing to note about a lot of "infrastructure" businesses is it can make business sense for them to offer deep discounts to large customers to cover their overhead - they then make their profit by selling whatever excess capacity is left over to smaller customers.

I.e. imagine you want to setup a new courier business. You convince Amazon to move all their shipping to your new courier company, by giving them a price which is almost unprofitable for you. You then make your profit on the excess capacity you have, by selling it to individuals who need shipping at more profitable prices.

Although, scary business model if you lose that customer

The trick is to have enough of those customers, so one leaving doesn't leave you bleeding.

True. Get them to be an investor in your firm, and that risk is reduced.

Foolish me. I thought this tweet (https://twitter.com/HackerNewsOnion/status/42071605314074214...) was a joke.

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