The Cloud as Business Philosophy

Notes on the cloud as a philosophy of labor and comparative advantage. 2018; trails off.

Amazon’s workflow

Invent services that don’t yet exist.

If there is a service I would like to buy:

If it can’t be purchased, invent it.
If it can be purchased it, purchase it while investigating how to provide the same service to others for a lower cost. Implement that approach.

What is a service?

Much like distributed systems decompose complicated interactions into individual services that can be scaled more or less independently, amazon extends this approach to business and business processes.

Amazon looks at problems that take human labor and tries to find a way to do it more efficiently with the aid of technology, and then sells that technology as a service. Let’s take an obvious example:

Businesses need access to computational resources to function at even a minimum level. That means business employees need to plan for, purchase, operate and maintain computer systems. This is obviously a very limited approach unless you are a very large company and can afford to invest in labor saving processes and tools.

What if you could just sub out all that planning, installation, and payments to dudes with nerf guns to a single line item that you can scale without really thinking about it? This is the promise of the cloud.

The cloud is turning business processes into services, not just

People think of the cloud as a bunch of computers floating in the sky, but this is a misunderstanding. The cloud is actually a business philosophy that just happens to have become notable first in the form of computer services, but can be applied at every level from the individual to the megacorporation.

The cloud as a business philosophy is summed up in the following question: How much does it save me to do this myself? Or alternately: How much does it cost me to do this myself?

The single irreducible input into all business processes is human labor. Everything else is technology.

If you are a CEO, is it worth 5% of your work time to manage a set of technology staff to build datacenters, or could you spend that time more effectively if you could reduce that entire part of your organization to a budgetary line item?

People think that the cloud is for the IT part of their organization to use, but it’s entirely wrong. The cloud is an optimization of the time of the CEO. The only reason ever as a CEO to let someone else do something for you is: 1. It isn’t worth your time or 2. They can do it better.

Can someone else do this better and cheaper? If so, then don’t waste a moment more of your time than you have to. That part of your organization will never be a competitive advantage for you. Any time spent here would be wasted. Spend your time wisely: spend it where you have an edge.

Are you a business-minded CEO? Then you need to worry about technology as little as possible. For you, technology is a means to an end. You create value elsewhere. Find the way to spend the least time possible but get the results you need. Maybe you can just buy the service you need directly, and not involve even one other person. If not, then you need to hire a CTO and tell him: I need the following technical capabilities, and I need you to buy or build these. But on every step along the way I need you to ask yourself: if someone else can do this better or cheaper than me, then I should just pay them to do it.

But this is not just a philosophy for business, it is a philosophy for productivity, a philosophy for happiness and a philosophy for life. And it is enabled by the cloud. The cloud also helps remove the need for high trust relationships to do business.

Let’s say you’re a small businessman and you have expanded your business to the level that you need to purchase labor from someone else, say a trusted person to handle some of your business while you manage the relationships.

What value does the second employee bring to the business? Perhaps you gather all the clients and both of you do the work. The answer is that you can put them to work for more money than they can make on their own.

Why can’t that employee do the same thing you are doing and take a cut of the profits? Perhaps that’s what you’ve brought to the table. If you can find that thing, then you know where your talent lies and what you should be focusing your energy on. Perhaps it’s mentoring, perhaps it’s finding clients, perhaps it’s scheduling?

Being a businessman is like being a maestro.