Covid-19, Cloud Computing, Connectivity and Collaboration
Industry came to a standstill, as nation by nation went into a shutdown, and life got stuck in its tracks! With mounting infections taking the toll, the resulting chaos halted everything without exception! All our daily motions and life’s workflows were halted as cities and nations frooze movement and mingling. Routine rituals such as getting your morning coffee to watching a movie in the theatre or grabbing a bite at a restaurant became a memory and yearning. The only one constant left in our lives was connectivity! Never before in modern history especially in peacetime, we needed a lifeline as this one and as versatile as this one! Connectivity became our work enabler, entertainment provider, our school, our family’s healthcare adviser, and our passageway to socializing via hangouts, zoom webex, whatsapp calls.
The year 2020 became a disruption for individuals and the Industries
The Burning Man festival was canceled and the 34th Annual Tony Awards were also suspended. Other major events that were canceled or rescheduled were the 2020 Olympics (Tokyo), Cannes International Film Festival, Bonnaroo Music and Arts Festival, iHeartRadio Music Awards, Kentucky Derby, Boston Marathon, Electronic Entertainment Expo (E3: video game convention), TED 2020, Facebook Global Marketing summit. The 2020 Wimbledon Championships were also canceled for the first time following the Second World War.
None of us would have seen it and saw it coming (with the exception of Bill Gates). Not humanly possible and predictable. In this time of need we got a lifeline.. Again not intended or planned or even envisioned… In Fact Internet was blazing at more speed and horsepower than ever before as all the additional capacity was redirected and re-pivoted to residential customers and prioritized tasks. The speed of response was phenomenal as truly cloud-bursting came into play and tech companies delivered the proverbial “walk the talk’’. The resulting agility to expand, extend and enhance traffic from original to intended/needed was phenomenal and packets continue to function and function well… through intricate web of load balancers, routers, DNS and throttling wares. Telco’s, ISP’s, and of course hyperscaler (GCP, AWS, Azure) were holding the civilization and us sane!(No pun intended) Aka Massive redirection of traffic from downtown cores/hubs to residences and apartments was done in a wholesale way with no major outages which was never before accomplished at this scale. While physically distanced we are communicating and collaborating more than ever before at no additional costs and effort with just one keystroke, whether it was video calls, audio chats and or plain emails/texts.
This didn’t happen overnight and in vacuum and in siloed/proprietary fashion. Decades of planning, and iterative experimentation by tech companies along with investments into modern computing environments, led to the creation of this backbone infrastructure. Adoption of open source, quest for @ scale experimentation for universal access and accessibility and favorable policy became the catalyst for such build-outs. The ashes of the dot com bubble did pave the way for this foundational capability.
Now let us examine the forces…and some of the overarching trends that were experienced during the pandemic had some stickiness…
Shifting Landscapes for Retail + Restaurant — Amazon Primed!
The tectonic forces of technological innovation and shifting consumer expectations started transforming commerce long before coronavirus emergence.
The advancements in AI and robotics allowed for Amazon to become the warehouse to the world and triggered a customer reset in expectations , which came in handy as a blueprint for delivery during the lockdown. From Groceries to Food and all in between mimicked the model in their own ways to best meet the need, including curb-side pickups, drive thru grocery and home delivery meal kits. The loss of your customer trust and loyalty is always somebody gain as there is always a high price to be paid in the end. Shipping logistics and customer experience became the holy grail in a heartbeat and continues to rule the world. The resulting expansions in teams and technology was rewarded by the investors accordingly as well. Amazon grew 40% during the months as well as all ecommerce sites were running on all cylinders and investors stoked the fires with more fuel along the way to support the appetite for seemingly unmet demand. Shopify legend grew stronger and the story played out more times as its systems were humming @nanosecond latency and did not disappoint the customers or compromise their experience. Once we were over with fetishes of hoarding toilet paper and hand sanitizers, things started to move up the food chain. The tales of bankruptcy, missing payments and store closures was the tragic end that stuck a note with us but in reality some of the big retail names were already on borrowed time, their imminent demise was accelerated. According to WSJ “Roughly 100,000 stores are expected to close over the next five years — more than triple the number that shut during the previous recession — as e-commerce jumps to a quarter of U.S. retail sales from 15% last year”.
“What we’re seeing now is not an anomaly. It is the blueprint for the future of retail”
Shopify Harley Finkelstein in an interview with BNN Bloomberg’s.
With goods sold on the Shopify platforms by all the merchants surged from under $6 billion to $17.4 billion in 2nd quarter. Connectivity and 1-click ordering which pre-pandemic was strictly optional now quickly catapulted to necessity even for the laggards who descended in hordes on the app store. Retailers who were ‘digital by default’ and had invested in the digital retail operating system flourished. Facilitating online sales is a surprisingly messy industry. But the journey is rife with shifts and failures. Success here was tested at scale and a stress test like this was never envisioned before. Never before a large scale experiment was conducted from Bombay to Boston from Anchorage to Adelaide and from Stockholm to Syracuse. You could peddle wares and buy them all at the same time 24X7! The entire world or parts of it was+is fully relying on replenishing their pantries and passions in these times using these services and subscriptions. This has changed our buying patterns and hastened digital transformation of the sector and demise for some of the older business and storefront only models.
Netflixization Sweeten’s up the Streaming POT!!!
By now, Netflix’s global domination throughout the coronavirus pandemic is well-documented. Over the first half of the year, the streaming company added 26 million subscribers after attracting 28 million throughout all of 2019. In the last six months, they’ve seen their stock soar more than 36%. With 200+ million global subscribers, Netflix has capitalized on its position as the first and primary name in digital video streaming. Though its consumer base in the Americas has begun to plateau, the company’s growth in reach (190+ countries) and content (70+ original movies slated for 2021) has put it more than 50 million subscribers ahead of its closest competition. But they aren’t the only streaming platform benefiting from home confinement. Amazon’s position as the second most popular video streaming service with 150 million subscribers might be surprising. However, Prime Video subscriptions are included with membership to Amazon Prime, which saw massive growth in usage during the pandemic. Walt Disney Co. later reported that Disney+ attracted 54.5 million paid subscribers in just six months, and may have headed much higher after the triumphant debut of “Hamilton” on that service July 3.
Were it not for streaming services there would be a riot at hand and many more unhappy people. Did Blockbuster consider these aspects in their Business plan when they decided to turn Netflix down and almost mock them down on the offer and in the boardroom! There is no finality in history and this business deal clearly highlighted the “Disintermediation” trend to continue gaining foothold. But beyond that there is a lesson learned for any czar of customer service. Many of us remember the scars of Blockbuster friendliness when we left the VHS tapes in the minivan after baseball games and or went on a vacation and accidentally forgot to drop them in the slot. Being a loyal customer always expected fair treatment and thought honest admission of mistake would wave off the charges especially for an older movie. But what never surprised me was the arrogance of the crew to penalize and be unforgiving about it. However when we have difficulty defining customer service charter and company culture there is a clash and case to be made for monopolistic tendencies with no empathy for the customer does not end well for management, and stakeholder alike. Consider if Amazon had no return policy or worst yet penalized the returns …imagine Blockbuster 2.0! Not very different from the case of cable companies today… that are still standing and expect to survive.
Netflix pivots from CD mailing to Content Distributor at the Top of Food chain is also a testament to the fact that business is almost secondary to technology and the combination of two can be viral and erase the incumbents like waves washing the sands clean with each receding tide. But that was no accident on part of the Netflix team … The combination of first mover advantage and content production along with a technology fabric for distributing down to any devices became the secret sauce. The seismic shift to streaming from viewers who had held on to cable bundles empathetically validated the years long prophesy of Netflix Chief Executive Reed Hastings. The success of streaming services during the pandemic leads to the invariable question: What do they do for a sequel?
Smells worse than 2008 or 1987…..Stock market decimated!
Sudden moments of panic have repeatedly hit the stock market over time. And when it comes to short-term fluctuations, nothing beats Black Monday. It happened in October 1987. To this day, there is no consensus on what caused it. On October 19, the US market crashed with the DJIA sinking by more than 22%. It is the biggest ever daily drop of the index. Investors were shocked. Regulators took steps to regain the confidence in the market. By 1989, stocks had recovered.
Let’s revisit how we started this in 2020…Prior to opening in Feb, the Dow Jones Industrial Average futures market experienced a 1,300 point drop based on the coronavirus and fall in the oil price described above, triggering a trading curb, or circuit breaker, that caused the futures market to suspend trading for 15 minutes. The Dow Jones Industrial Average lost more than 2000 points, described by The News International as “the biggest ever fall in intraday trading.” It hit a number of trading “circuit breakers” to curb panicked selling. Though the crash began on 20 February, selling intensified during the first half of March to mid March. During the crash, there were multiple severe daily drops in the global stock market, the largest drop was on 16 March, nicknamed ‘Black Monday II’ of 12–13% in most global markets. There were two other significant dates of crashes in the stock markets, one being 9 March, nicknamed ‘Black Monday I’, and on 12 March, nicknamed ‘Black Thursday’.
The U.S. stock market ended 2020 at all-time highs, enriching the wealthy and capping off a soaring comeback despite a deadly pandemic that has killed more than 340,000 Americans and left millions jobless. The S&P 500-stock index, the most widely watched gauge, finished the year up more than 16 percent. The Dow Jones industrial average and the tech-heavy Nasdaq gained 7.25 percent and 43.6 percent, respectively. The Dow and S&P 500 finished at record levels despite the public health and economic crises. Some say, stocks are a proxy into the future, a bet by investors on the winning horse… By the summer, the recession was largely over for the well to do and those privileged in life. The work-from-home crowd kept their jobs and experienced a major savings boost as they spent less on dining out, travel and entertainment. U.S. household savings increased by more than $1 trillion this year, driven by government stimulus checks and the wealthy not having much to spend money on. There’s “North of $1 trillion of accumulated saving,” Richard Clarida, vice chair of the Federal Reserve, said at a Brookings Institution event in November. “This is the only downturn in my professional career in which disposable income actually went up in a deep recession.”
The market’s gains have been driven largely by a handful of stocks, Four of the biggest tech giants — Google, Apple, Amazon and Microsoft — accounted for more than half of the S&P 500′s return this year. While the frugal investor may turn away at this unprecedented frothiness and compare it to the dot-com bubble, this was quite different in the sense that, valuations aside, these super stars had already delivered the goods! The combined value of top 50 brands summed to $2 trillion in 2020. The blue color dots the landscape in the below graphic and as you can see as technology becomes more meaningful, mainstream and integrated in our lives. Average increase for these key brands was north of 50%.
Whether driven by day traders or something else, somehow the 2.2$ trillion surplus had something to do with this. Muffled voices and got a big boost in the chat rooms and boards to counter mainstream views and valuations. Medium became the message and Robinhood and Reddit crowds created a swarm to counter hedge funds and went ahead to counter short stoppers influence. The investors and stakeholders were able to see in the real world not simulated, how the engines of economy flowed through the same pipes whether it was forex, stocks, derivatives and physical products. As a result the market rewarded the winners and enablers heavily as seen by the loft valuations and skyrocketing prices out of the gate. The rush to cash out value long held inside and invested now on to the world marketplace using SPAC or traditional route was the preferred choice and continues to be exercised. The enterprises driving the digital transformation were rewarded and continue to break through new year and price volumes. Tesla (TSLA) being on top at the leaderboard with a whopping 734% return in 2020, spank in the middle of the pandemic. Peloton was also in the top leaderboard with experiencing a whopping 434% price increase, price change in % terms.
Remote work matures into a viable option finally!
As video calling became the norm in the pandemic-hit year, Google Duo and Google Meet hosted over one trillion minutes of video calls globally — equal to more than 18 billion hour-long virtual workouts in a single year. The Google app crossed 100 million users daily and its daily user numbers “had a peak of 235 million” in the third quarter of this year, according to the BBC. At the Covid-19 peak in April-May, Google Meet teleconferencing service added about three million users per day.
Zoom became invaluable as its founder was propelled into the Billionaire club but more importantly its value continued to outpace the airline’s stocks. In April, Zoom peaked at over 300 million daily meeting participants up from ten million in December 2019. Its measurement of “annualized meeting minutes” jumped 20-fold, from 100 billion at the end of January to over two trillion in April. For the quarter ending April 30 2020, it reported total revenue of $328.2 million, a 169 per cent increase from the same period last year. The chart below shows the Zoom stock as compared to the leading Airlines group wherein the business of transporting pixels and bytes became more valuable than human travel.
3.3 trillion annual meeting minutes were hosted on Zoom (as of September 30, 2020). That’s an increase of 65% from the 2 trillion meeting minutes logged in the previous quarter. In Q2 2020, Zoom joined Pokémon GO and TikTok as the only apps to be installed over 300 million times in a single quarter. There were 94 million iOS Zoom downloads in Q2 2020–1% of the total. Amazon provisioned thousands of servers daily to support Zoom From Eric Yuan’s opening remarks on the earnings call: “Immediately during the crisis, our longtime partner AWS and its CEO Andy Jassy enabled us to meet this rapidly increasing demand. As our demand increased and we had limited visibility into the growth, AWS was able to respond quickly by provisioning the majority of the new servers we needed, sometimes adding several thousand a day for several days in a row.”
While not all positions and jobs could benefit from this, yet the scale and quality and simplicity trumped all naysayers, after all what was needed was an account, and an app to roll! Roles requiring “Facetime” in their job descriptions worked flawlessly 100% remote for 12 months and going! Go Figure HR view, perceptions and job descriptions once again disintermediated. While there is no substitute for human-human interactions in pursuits such as education, healthcare, business, & manufacturing, it was demonstrated that using connectivity we could potentially create and find new ways of working that could optimize the workflows into more efficient use of our time and resources.
Make sure your infrastructure is flexible , YOU are DEAD if you are still on servers landscape(hosting)…. While Scaling is Native to CLoud and Failure is always a Norm!
True resilience has never been tested before at scale (minus theoretical) but the principles needed to tackle the problems @ scale, of moving parts and heat dissipation(hot and cold Isles), of closely packing up components in the chassis and racking and stacking them to achieve blade densities creates nonlinear and complex situations that only do one thing cause failure!
“True resilience isn’t about managing a particular instance of risk, but being ready for anything through the way you operate”
The blend of pure science, brute force experimentation and art of managing infrastructure nurtured @ Google created this science of SRE. To me this is fine art and blend of human capability to monitor and respond using planned service levels…with no degradation. Imagine if Google search was down when you needed it…and ability to keep all service elements up in a unison with minimal latencies is the final trick. A lot of science that has been perfected in its own ways by the two giants in particular Google and Amazon Web Services. While Google SRE is synonymous with the advent of observability and devops movement, AWS has contributed and created its service levels and availability mantras that work @ scale.
What was considered a dream and art of possible was demonstrated via industrialized pipelines and its culture acceptance into runbooks and operating guidelines has become the mantra and mainstream of modern cloud computing operations. Common themes around it were scalability, & resilient and responsive software. I think to sum it up the quote from Marc Andreessen equally resonates the sentiment very succinctly:
“Six decades into the computer revolution, four decades since the invention of the microprocessor, and two decades into the rise of the modern Internet, all of the technology required to transform industries through software finally works and can be widely delivered at global scale.”
If I can add software, is driving the World! Till next time.
