No, you don’t need to offer AWS equity in your startup, but you need to act like it.
This concept is simple in principle but many startups fail to take this seriously. When you sign a hosting agreement with a company it needs to be treated just like bringing a partner into your startup. Early stage startups who are utilizing open APIs such as Yelp or Google Maps to power their apps, the same goes for you.
Your product depends on these service providers like life support. If one of them shuts down, you shut down. If your API provider can’t handle your user load, your users lose, and you lose. Even the data they provide can cripple your product and turn away users.
Take for instance a mobile food ordering system we built at my consulting company. The client needed access to restaurant menus to power the app. We integrated an API called Locu, which upon solid Google-ing appeared to be one of the top providers available. However upon implementing their API we found it severely lacking in available data. Menus were often outdated, missing, or just flat out incorrect. This all added up to a pretty poor experience for the users. For a portion of the development, their entire system went down for about a month while they transitioned to a v2 of the API. This meant total loss of any kind of development schedule as well as massively pushing back release for the app.
Another great example is the acquisition of Picturelife by Streamnation. I won’t get into all the details here and highly suggest checking out this episode of Reply All which dives deep into what happened. Essentially Picturelife has temporarily shut down and all it’s customers have lost access to thousands of photos they have uploaded due to an issue with the hosting provider and the agreement between the companies. So even during an acquisition, your tech stack can kill your product.
Treat your providers like board members. You would not invite someone to be a partner in your company without first checking them out, interviewing them, researching their past performance, and getting testimonials. The same steps need to be taken before you sign an agreement with any part of your tech stack.
