With IPOs being announced almost weekly, we get a lot of insight into how Lyft, Pinterest, Uber, etc. are spending their money. And one element they all have in common: a huge infrastructure bill.
Lyft’s S-1 mentions their agreement with AWS to spend an aggregate of at least $300 million between January 2019 and December 2021. In other words: AWS gets $0.14 on every Lyft ride. And another winner when you order a Lyft? Stripe, taking a few cents ever ride for processing your payment.
Pinterest has roughly the same agreement: the commitment to buy at least $750 million of cloud services from AWS between May 2017 and July 2023.
Cloud providers and payment processors, but also marketing platforms, data & analytics vendors, customer support tools, they all provide the more or less critical infrastructure for every growth company. And especially the first category did something amazing: they positioned themselves to be part of every transaction. And by being part of every transaction, you grow with your customer, and you more or less have equity in all your customers.
Amazon, Google, Stripe: they don’t need their venture arm per se: their product is creating a more significant upside than a few percents on a cap table will.
It’s no longer 1848, but it is still lucrative sell shovels in California’s Gold Rush. Or in 2019 terms: to provide the critical infrastructure every new company and app will need. Infrastructure FTW!