How do first principles explain the inevitable logic of AWS's transition from 'internal tools' to 'external cloud services'?

This is actually quite easy to understand; let's use an analogy.

Imagine Amazon, in its early days, as a giant online Walmart. To keep this "Walmart" operating 24/7 and handle the massive traffic spikes like Black Friday, they had to do a lot of heavy lifting themselves: building their own warehouses (data centers), laying down their own utility lines (networks), buying their own generators (servers), and ensuring the power supply was absolutely stable and could scale up at any time (elastic computing).

Over time, they became experts in this area, building one of the world's most powerful and efficient "internal utility systems." This system was incredibly robust but also very expensive, becoming one of the company's largest cost centers.

Now, first principles thinking came into play. Jeff Bezos and his team didn't view this system merely as "a tool to support Amazon's marketplace." Instead, they began to ponder its true essence: "What exactly is this thing?"

They peeled back the layers:

It wasn't "the website's backend."
It wasn't "an order processing system."
Its essence was: a collection of computing, storage, and network resources that could be accessed on demand, were extremely stable, and incredibly low-cost.

Just like the electricity in your home, you don't care how it's generated; you only care that the light turns on when you flip the switch, and you pay for how many kilowatt-hours you use.

Once they understood this, the subsequent logic became "inevitable":

Identifying Universal Need: They looked around and realized that everyone who wanted to start a company or build a website faced the same pain they did back then – they all had to "build their own power plants." This was expensive, laborious, and not their core business. A pizza shop's main job is to make good pizza, not to generate its own electricity.
Transformation of Their Own Capability: Amazon realized that the "internal utility system" they had inadvertently built was, in fact, a global "computational power grid." They themselves were its first and largest user.
Birth of a Business Model: The conclusion was simple – "Since I've built the world's best power grid, and all of you need electricity, why don't I rent my electricity to you? You don't have to bother building small coal mines; just plug into my outlet and pay for what you use."

Therefore, the transition from an "internal tool" to an "external cloud service" wasn't a casual discovery like, "Hey, it seems we can sell this thing too." Instead, it was through first principles thinking that they saw the true essence of their core capability and realized that this essence precisely solved a fundamental pain point for businesses worldwide.

In plain terms, it was about transforming the company's largest cost center into a "power company" that could supply electricity to the entire world – a step that was almost inevitable from a business logic perspective.