Dev Patel BitYota
BitYota CEO and cofounder Dev Patel
BitYota is a cool new cloud startup that Amazon invited to launch this week on stage at the online retailer's first-ever cloud customer conference in Las Vegas.

And then Amazon turned around and punched it in the gut.

On the same stage where BitYota had given its demo, Amazon executive Andy Jassy, who runs its Amazon Web Services division, announced its own new service that will directly compete with it, Amazon Redshift.

Such is the weird life today for a cloud startup, where your best friend can also become your biggest competitor in a heartbeat.

Both Amazon and BitYota are announcing cloud-based data warehouses. BitYota calls its product "data warehouse as a service." A data warehouse is a system in which a company can store tons of data—like every transaction customers has ever made or every trouble ticket users have ever logged. It can then run "business intelligence" apps to find correlations, make predictions, and better run its business.

Data warehouses are expensive, requiring high-end computer servers, pricey software, and an ever-growing supply of computer storage. So selling it as a lower-cost cloud service is a great idea. It makes it accessible to companies that couldn't otherwise afford it.

CEO Dev Patel told Business Insider that BitYota's service has helped an education software company identify which kids were in trouble acedemically based on how they used the software.

BitYota had no idea that Amazon was launching a competitor, reports the Wall Street Journal.

With Amazon as a competitor, BitYota's hopes aren't completely dashed. It has impressive leadership. Its cofounders hail from Yahoo, where they worked on big data and geolocation technologyes. They incude Patel, Harmeek Bedi, and Poulomi Damany.

It may not have Amazon's resources, but it has raised $12 million in a round led by Globespan Capital. Other investors include Andreessen Horowitz and famous angels like Yahoo cofounder Jerry Yang; former eBay COO Maynard Webb; and big-data entrepreneur Sharmila Mulligan.

The competition will nonetheless be rough. While BitYota had some beta customers to talk about (smaller companies like Cognitive Match and Agnitus), Amazon has lined up a much bigger names, including Netflix and Flipboard.