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How to Build a Business on Amazon's Back

I never thought of Amazon as a friend of entrepreneurs. Several years ago I remember a friend of mine who self-published an entrepreneurial handbook for teens telling me that authors had to give up too many rights to list a book themselves on Amazon. They do have the Associates program that lets website operators make money by linking to Amazon products (which I use, more for tracking than for income), but that's old news and doesn't generate serious money for many anymore. Amazon enables entrepreneurs to sell over Amazon, but eBay clearly dominates that enterprise. Slashdot even posted an entry titled Google's Love For Small Businesses that points to a Cringely article, but both don't even mention Amazon.

If you look closely at Amazon's portfolio of services, you'll see they now produce some extremely disruptive tools that they've opened up to any entrepreneur with the vision to use them. Here's your Amazon arsenal:

Amazon Mechanical Turk: Their slogan is "Artificial Artificial Intelligence" because they systematize basic tasks preformed by humans to the point that they work like automated tasks. It's basically a marketplace for people willing to do simple tasks to find people who need those tasks done. Amazon doesn't expect end users to use this system in a big way, but rather relies on entrepreneurs to build specialized front ends. For example, CastingWords built a podcast transcription service using Mechanical Turk's API. This allowed them to drive costs down by using a worldwide network of typists. The market for local typists, who base their cost on the local cost of living and who might be unavailable at the time someone needs them, might shrink drastically. What other markets could entrepreneurs go after with Mechanical Turk?

Amazon S3 - Simple Storage Service: Amazon's solution for people to easily store and serve files on the web. But the one "s" word they left out from the title is scale. Typically when you build a web service you suffer higher rates at the beginning for storage and bandwidth because you're not operating on a large scale. Worse, your systems will in all likelihood crash as you scale up. And all the while, you must negotiate with your hosting or content delivery vendors to get your rates down. S3 throws a highly scalable system out at developers and give them prices normally only achievable at a large scale to start. This could be huge for the college dorm room startup crowd who would otherwise be particularly ill equip to negotiate deals like this on their own, or for any bootstrapping entrepreneur. Venture Voice alum Scott Johnson said in his blog that he's using it for Ookles. He calls it "a gift from heaven." Dave Winer and Michael Arrington also seem smitten by S3.

Alexa Top Sites: Alexa is Amazon's search engine that is best known among obsessive statistically-oriented entrepreneurs and VCs for it's traffic rankings. It's like a poor man's Nielsen ratings that will rate any website that has even minimal traction (Nielsen//NetRatings by comparison only ranks a few of the top websites). They've opened it up to anyone to use their data in creative ways. Alexaholic uses it to make it easy to compare the performance of up to five different sites. Alexadex has created a fantasy market that allows you to buy "stock" in any website. On a more serious note, Venture Voice alum Philip Kaplan uses Alexa stats to inform AdBrite advertisers about the sites they can advertise in.

Amazon could be your startup's most important partner without them even knowing who you are.

Posted by Greg Galant on May 14, 2006 | Permalink | Comments (3) | TrackBack (0)

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Thanks for the Alexaholic plug, Greg. You're right about Amazon being 3rd party developer-friendly. A few weeks after I launched Alexaholic, I got a call from Geoff at Alexa saying that their team all thought it was a cool app, they wished me well, and then they even blogged about us.

On a related note, another website of mine, BookCrossing.com, uses Amazon for book identification (by isbn) and hosting thumbnail images of over 3M books. Shortly after our launch back in 2001, I got a call from a SVP of Amazon saying it was fine as long as their (Amazon's) affiliate link came first in our long list of affiliate booksellers.

Posted by: Ron Hornbaker at May 16, 2006 12:46 PM

Hi Greg,

We've built a contextual ads technology on top of Amazon's webservice. It's called TicTap Contextual Ads

You can take a look at http://www.tictap.com/free

There's even a wordpress plugin.

Amazon has done really cool stuff with their API, and Yahoo! is right there with them.

Posted by: Alex Choo at May 29, 2006 9:31 AM

Hi Greg:

We've used Amazon's S3 service as part of our Ratchet-X solution for customers who want associate documents with records in their favorite applications. For example, if a Ratchet-X user wants to associate a credit report with a specific record in Salesforce.com or FreeCRM (or any other application for that matter), he can do so and the document is stored on S3 where it can be retrieved on demand any time he navigates back to that record. Very cool.


Posted by: Joe Labbe at May 29, 2006 5:12 PM

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