Amazon’s Strategy Makes D.C. a Likely Choice for Its HQ. He…
Everyone is speculating as to where Amazon will locate its new headquarters, but industry rumors and specific actions taken by the company suggest the D.C. area is top of the list. Yes, Bezos has a home in D.C. Yes, he owns The Washington Post. And, yes, Amazon’s presence in the region has already grown dramatically.
But most significantly, the word in tech and political circles is that Amazon is the front-runner for the coveted $10 billion Joint Enterprise Defense Infrastructure (JEDI) cloud-computing contract to simplify and streamline the Defense Department’s IT infrastructure (or a significant portion of the contract).
Amazon is competing for the contract with Oracle, Microsoft, and other tech giants. While the government has delayed its request for proposals for JEDI for the time being, the lucrative contract is still in play.
There are reasons every tech entrepreneur should be following this story closely.
Even if the company you launched is just a fraction of the size of an Amazon or an Oracle, there are still important lessons to be learned by watching some of the most powerful tech companies in the world compete to sign a deal with the government and expand their presence in Washington, D.C.
So, why are the stories about the competition for a government contract relevant to the average entrepreneur?
The government is an attractive enterprise customer.
The government is just another massive enterprise customer. In fact, given its size and breadth, it’s better characterized as another set of Fortune 500 customers combined. As an entrepreneur looking to secure large, long-term customers, you need to pay attention to that kind of spending power, even if just for competitive reasons.
The government is also a sticky customer, allowing entrepreneurs to leverage one deal into many–the coveted “land and expand” strategy in enterprise sales.
Most entrepreneurs fear the government, because they worry they will have to tailor their technology in too many ways to appease a government customer. But this fear is often unwarranted, which brings me to a second point:
The paradigm for working with the government is changing in favor of startups.
Amazon, Microsoft, IBM, Google, and others have successfully become public sector cloud service providers, building a bridge for entrepreneurs that should facilitate engagement with the government.
The cloud service providers, as well as companies like SAP and Salesforce, have already built–and are expected to expand–the scope and breadth of their cloud marketplaces, which all consider a significant growth opportunity for themselves.
Private sector startups on these marketplaces can now more easily access public sector customers to readily deploy their commercial technologies without the same technical and certification burden that would have fallen on them in the past.
As a result, tech entrepreneurs have more access to this massive sales vertical than they have ever had in their toolkit before.
The power of disruption and first-mover advantage.
Company founders should always be thinking about creating a competitive advantage when it comes to commercializing products and services. They should bring a similar lens when contemplating doing business with the government.
Though a newer player in the government, Amazon actually has a first-mover advantage as it vies for the JEDI contract. Entrepreneurs should remember that the company was actually the government’s first major private sector cloud provider, disrupting the traditional players in the Beltway ecosystem.
Palantir did the same years ago with its analytics software, and has grown into a multibillion-dollar company, in many ways fueled by its early government business.
Being first to market is often important. The government is on the hunt for a wide variety of new technologies, so when the fit is right, being first to target government customers can provide a tremendous competitive benefit for your company.
The government can provide other advantages too.
State and local incentive programs may be controversial, as Amazon’s search for a new headquarters has made clear. But wouldn’t it also be controversial for a cash-strapped startup to ignore an opportunity to reduce spend while growing and innovating even faster?
Smart technology leaders have often used nondilutive government funding to scale their operations, open new offices, or simply extend their runway.
Amazon and Tesla are prime examples of companies that have made use of grants and tax incentives to get a leg up on the competition.
But these opportunities often go unnoticed if you aren’t engaged with the public sector, or with partners and players who are politically savvy. Amazon sees opportunity in Washington, D.C., and the JEDI contract is just the tip of the iceberg. It makes sense that rumors suggest they may accelerate their presence in the region to better chip away at the rest of that iceberg.
Instead of seeing the government as an impediment, as many tech founders do, you should see it as an opportunity.
If you’re a startup founder, you might tune out when it comes to the JEDI deal because of its scale and scope, or because the players are large public companies. But it is just one example of how the opportunity set for enterprise startups in the public sector is growing quickly and becoming easier to access.
This reality should be on every founder’s radar screen.