One of the lessons of the High Growth Handbook is that the most successful software companies start out with a single product, but soon shift to using their distribution advantage to offer a portfolio of products:
Startups tend to succeed by building a product that is so compelling and differentiated that it causes large number of customers to adopt it over an incumbent. This large customer base becomes a major asset for the company going forward. Products can be cross sold to these customers, and the company’s share of time or wallet can expand. Since focusing on product is what caused initial success, founders of breakout companies often think product development is their primary competency and asset. In reality, the distribution channel and customer base derived from their first product is now one of the biggest go-forward advantages and differentiators the company has.
This advantage is fairly clear when it comes to public cloud providers.
When AWS first launched, it began with basic infrastructure primitives: storage (S3) and compute (EC2). Over time, it has added a vast number of products into the ecosystem.
This is a classic enterprise model: if you buy one product in the suite, when you need something else you will look to the vendor you already have a contract with first. This is because it simplifies management interfaces, network configuration, security, support, billing and legal agreements.
AWS certainly has an advantage here – it has the biggest mindshare amongst developers. The ecosystem effects of people with the right technology experience are compelling. Google is competing hard, but AWS is ahead when it comes to the size of the portfolio.
Yet AWS has a weakness when it comes to the office productivity suite. This is already a massive lead generator for Microsoft and Azure, and it could become a big source of customers for Google too.
Microsoft has been leveraging its licensing advantage amongst the largest, enterprise customers who use their productivity products – Office, Exchange, Windows. For a long time, Azure was being pushed to be licensed as part of the deal. If you’re already using Microsoft products, it makes sense to consider Azure first.
Whilst Microsoft might have a good base within the enterprise, Google has a similar foothold within the technology community. Pretty much every startup uses G Suite for email, calendar, docs, etc. Most of these use AWS. But the improvements in Google Cloud Platform, and the security and identity products in particular, are making the G Suite to G Cloud cross-sell more compelling.
Hows does AWS compare? WorkMail and WorkDocs. Not particularly compelling products, and products which seem to have been neglected. I don’t know anyone using either of these. Why would you?
This is one major area that AWS is significantly behind.
The Microsoft / Azure demographic is quite different from those using AWS and Google, but as G Suite and GCP become more tightly integrated, it will become a big differentiator for them.