Slashdot Mirror
Amazon is Introducing Private Investors To High-Risk Startups in a New Pilot Program (cnbc.com)
Amazon is testing a new way to bolster its relationship with startups and possibly bring in more capital to the ecosystem. From a report: The fledgling effort, known as the Amazon Web Services Pro-Rata Program, is designed to link private investors with companies that use AWS, as well as venture funds whose portfolios are filled with potential cloud customers. Amazon is not investing money through the program.
The Pro-Rata program is being run by Brad Holden, a former partner at TomorrowVentures (founded by ex-Google CEO Eric Schmidt), and Jason Hunt, who are both part of AWS's business development team focused on angel and seed relationships, according to an email they sent to investors in January. "The Pro-Rata Program is a new pilot intended to connect family offices and venture capitalists for specific investment opportunities from the AWS ecosystem," according to the email, which was viewed by CNBC. "Pro rata" refers to the rights investors have to put money in subsequent rounds. Mike Isaac, a reporter at The New York Times, writes, "If Amazon is using its direct knowledge of startups' health based on the fact that Amazon literally owns and operates the servers, how is this at all ethical? If that's not the case, Amazon should make that crystal clear (even though i'd have a hard time believing it). It's like Facebook's years of insights into [various] apps' data with the Onavo team, only instead of ripping companies off (which FB did), they invested in them."
The Pro-Rata program is being run by Brad Holden, a former partner at TomorrowVentures (founded by ex-Google CEO Eric Schmidt), and Jason Hunt, who are both part of AWS's business development team focused on angel and seed relationships, according to an email they sent to investors in January. "The Pro-Rata Program is a new pilot intended to connect family offices and venture capitalists for specific investment opportunities from the AWS ecosystem," according to the email, which was viewed by CNBC. "Pro rata" refers to the rights investors have to put money in subsequent rounds. Mike Isaac, a reporter at The New York Times, writes, "If Amazon is using its direct knowledge of startups' health based on the fact that Amazon literally owns and operates the servers, how is this at all ethical? If that's not the case, Amazon should make that crystal clear (even though i'd have a hard time believing it). It's like Facebook's years of insights into [various] apps' data with the Onavo team, only instead of ripping companies off (which FB did), they invested in them."
It is insider trading. Plain and simple.
If Amazon is using its direct knowledge of startups' health based on the fact that Amazon literally owns and operates the servers, how is this at all ethical?
That assumes you CAN determine a startup's health from server activity.
Maybe there's not a lot going on, but they have one huge trial customer and a really low burn rate.
Maybe there is a lot going on server-wise, but the burn rate is high and the large amount of traffic is really killing the company sooner rather than later as they are not moving towards profitability quick enough.
How honestly would you consistently determine a companies health from server activity? You have no emails, you have no Slack communications, hell you may not even have the whole server picture, what if they are also using color hosted servers or a mixture of Amazon for storage and other servers for compute?
So I'm not sure how this is really unethical.
"There is more worth loving than we have strength to love." - Brian Jay Stanley
with such a low UID, i would expect you to be a forward thinker. we have moved out of the days of pure compute, all companies must consider data to be successful these days. in the case of AWS, they have tons of analytical data based on your usage of AWS. in fact, they have unfiltered access to all of the commands you send to AWS in cleartext. sending data into ML? they can read it. storing data on S3 unencrypted? they can read it. code deploying code? cool story bro, they can see your CI/CD pipeline.
one of the startups I'm working for has a $200k credit on AWS. AWS could see they are doing a lot of RDS based work and summize they are an up and coming data services project and could put potential investors in front of them. OBVIOUSLY THEY ARE NOT INVESTING BLINDLY BASED ON WHAT AMAZON SAYS. No investor does this, ever. In the history of life. However it helps weed out the useless startups from the ones who are actually producing value.
they have unfiltered access to all of the commands you send to AWS in cleartext. sending data into ML? they can read it. storing data on S3 unencrypted? they can read it.
Yes... but so what?
First of all, if Amazon were ever to be found to be scanning containers that would be the end of AWS, so honestly I doubt they are dong this even if they technically COULD.
Secondly as I said, even if they do risk the company by scanning text uploaded to containers for every tiny startup, what honestly would they really learn? Are you storing your email there? What are you storing there that would really be that huge a help to determining viability?
And like I said, you don't even know what other servers a company is using, so low activity is not a good indicator for viability even if you know the general company type.
I'm just not convinced that even looking at the things you described gives you enough of a picture to make the "insider trading" claim that is being put forward.
"There is more worth loving than we have strength to love." - Brian Jay Stanley
First of all, if Amazon were ever to be found to be scanning containers that would be the end of AWS, so honestly I doubt they are dong this even if they technically COULD.
No it wouldn't be the end. Google and Yahoo! scan everything that passes through them and they are doing quite well. And yes they can scan inside.
Secondly as I said, even if they do risk the company by scanning text uploaded to containers for every tiny startup, what honestly would they really learn? Are you storing your email there? What are you storing there that would really be that huge a help to determining viability?
In this day and age of "Big Data" and with Amazon's resources, it would be a treasure trove of information. And a tiny startup would probably put everything on AWS and it would result in Amazon knowing everything about the organization.
And we're seeing the dangers of the oligopoly of the tech industry. You could have something disruptive and innovative but you will have to pass through the gatekeepers one way or another. They then can kill the business, buy it, or just force it to wither away if you don't play ball. We've seen it before *cough*Microsoft*cough*.
This is simply an end run around the SEC, one which will not make it very far...
Can't wait to see the next round of changing-the-world taxi and meal kit ripoffs. Can we throw in a couple blockchain startups too?
(What? Too soon?)
The last thing the bureaucrats in Washington want is for small investors to get the same access to early stage investing opportunities as the rich liberal donor class in Silicon Valley. If we all had a chance to get a pre-IPO piece of companies like Uber or Facebook suddenly "the wrong type" of people might start making wealth from the Democrat dominated tech economy. You can count on Warren and Ocasio-Cortez to shut this shit down with the full blessing of that old ghoul Pelosi.
AWS specifically forbids itself from examining or otherwise gaining access to customers' resources.
Kriston
LUL.
How naive.
Repubtard fallacy. Blame the liberals!!!!
Someone mod this up!
which would have been a much cooler story.
I am a private investor.