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MVPs and $100k AWS Bills: Reflections on our launch

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Re: MVPs and $100k AWS Bills: Reflections on our launch

#71

Post by dragonwriter »

dclusin wrote: post #58
pjc50 wrote: post #19

> Octopus Cloud customers could start a free 30-day trial, which meant that those hundreds of trial signups per month, each of which cost us $100 to host, quickly added up. > We also didn’t have our pricing quite right. We initially launched Octopus Cloud at $10/month, with a different pricing model from the one we currently use. Unfortunately, this was one of the most painful lessons we learned because the deficit b…

It seems like napkin math could have alerted them to the potential worst case scenario costs. EC2 instance + db instance per customer alone made my jaw drop. Multiply this by 1,000, 10,000, 50,000 and costs are really regrettable. Edit: I know most database applications like Postgres can handle multiple databases. Does RDS let you have more than 1 database per instance?

> EC2 instance + db instance per customer alone made my jaw drop.

Especially since the DB is SQL Server; the license costs are death for that. An open source DB would save you a lot there if you have a real need for a DB instance per customer architecture.

Re: MVPs and $100k AWS Bills: Reflections on our launch

#72

Post by dragonwriter »

echelon wrote: post #23
teddyuk wrote: post #16

Earlier quoted context omitted.

onboard customers slowly and charge them - as you scale, make sure your charging as well and get paid. you don't need to go from 0 - 100k a month in a single month, octopus could because they have backing.

This is a social media app, so I can't charge money for it. My hope would be for funding or a buyout. Otherwise it will be shut down.

> This is a social media app, so I can't charge money for it. My hope would be for funding or a buyout.

If you have no clue how to monetize it, why would anyone fund it or buy it? People fund or buy businesses, but without a plan for monetization, you don't have a business.

Re: MVPs and $100k AWS Bills: Reflections on our launch

#73

Post by notyourday »

paulstovell wrote: post #69
notyourday wrote: post #6

Pardon me for asking a really dumb question: but do you have a positive item charge - CGS? Because I'm sure one can get a great demand by selling a $1.00 for $0.90 but that's not a business model.

The post didn't make this very clear. $10 was the starting price - at the time it was for 5 users. Similar to Confluence or Jira with a very cheap (in this case loss-making) starting tier. Once a customer got to ~10 users it became profitable. What we didn't know if whether there'd be enough customers for us to care about the loss on those $10 tiers. E.g., if only 100 customers signed up a month, the costs would have…

> The post didn't make this very clear. $10 was the starting price - at the time it was for 5 users. Similar to Confluence or Jira with a very cheap (in this case loss-making) starting tier. Once a customer got to ~10 users it became profitable.

Err.. That's not a correct way of looking at a long tail. CGS on a long tail must still be lower than the unit charge, otherwise you are paying $1.00 for $0.90 which gives you an incorrect signal about the demand.

Say you make apple juice. And each juice uses 4 apples and only apples. 4 apples cost you $3. Setting a price of juice to $1.00 does not actually tell you if there's a demand for the juice because it is below the CGS, which you cannot make up in volume.

The long tail test is to set the juice price at (CGS + x) where x is some number and see if you get the demand even if x is less than the other costs attributed to juice ( rent/electric/juicer/salaries). If you do, then you can make up your loses in volume because the higher the volume you are going to have the smaller process cost attributed to every unit will be so there's going to be a number at which CGS + y < CGS + x where y is the process cost attributed to a unit.

Re: MVPs and $100k AWS Bills: Reflections on our launch

#74

Post by shiftpgdn »

tills13 wrote: post #66
shiftpgdn wrote: post #50

Earlier quoted context omitted.

I can purchase and then colocate 2x Dell R640s (8c/16t, 64gb of ram, as much NVMe storage as I can stomach) with tier 1 bandwidth billed at the 95th percentile and 24/7 remote hands support for about $150/month. The purchase price on the Dells is about $3500/ea. Total first year cost on this setup: $8,800 Total three year cost on this setup: $12,400 2x m5d.4xlarge EC2 instances (this isn't counting ingress/egress rat…

> For the cost of using EC2 you could hire an extra person to help grow your company. You _will_ be hiring an extra person to manage these machines. That's the beauty of The Cloud (tm). Need more compute? You got it. Provisioned too much? Get rid of it. If you're a startup, you don't have time nor money to be managing your own infra. Not to mention the ability to deploy to _any_ region within minutes. Now you're talk…

How much management does a bare metal box need? Nothing more than what an ec2 instance would need.

There are colocation providers all over the world. Psychz.net is a great example. My assumption is a single box per region. There is no redundancy in your ec2 systems.

You should google the Amazon profitability team if you don't believe me.

Re: MVPs and $100k AWS Bills: Reflections on our launch

#75

Post by mullen »

shiftpgdn wrote: post #50
bronco21016 wrote: post #40

Earlier quoted context omitted.

Why would cloud go away? If you’re a team of 3-4 people and have a startup idea what’s easier? Create an AWS account and smartly spin up required servers? Or find a location (rent$), get fiber($$) to that location($$), find hardware($$), install said hardware. Now you’re back to where you were with AWS. For larger already established businesses on prem is probably a setup you should explore but on day 0 of a new busi…

I can purchase and then colocate 2x Dell R640s (8c/16t, 64gb of ram, as much NVMe storage as I can stomach) with tier 1 bandwidth billed at the 95th percentile and 24/7 remote hands support for about $150/month. The purchase price on the Dells is about $3500/ea. Total first year cost on this setup: $8,800 Total three year cost on this setup: $12,400 2x m5d.4xlarge EC2 instances (this isn't counting ingress/egress rat…

2x m5d.4xlarge EC2 instances for 3 year no-upfront reserve pricing is $20,813.76 (You should really do that).

But what are you getting 2x m5d.4xlarge instances from the get go? Start with the smallest instance size your app will run on and then add them on one at a time? Need to run 10 servers in the day but only 2 at night? Then configure autoscaling to do that. What happens if you need to expand out into another part of the world? Okay, now you just copy your setup to another Region instead of trying to find another provider in another country.

What if your service becomes super popular (You got on the front page of HackerNews), with autoscaling, it just grows automatically. No scrambling to get more servers, it just scales.

Don't listen to the "Woe is me!" stories about using the Cloud and feel sorry for these companies. They designed poorly, wrote crappy quick code and paid a price for it.

Re: MVPs and $100k AWS Bills: Reflections on our launch

#76

Post by plasma »

teddyuk wrote: post #38
plasma wrote: post #15

Octopus is a fantastic deployment product for .NET (happy user here).

what's it like working for paul? :)

I’m a long term (5+ years) customer of Octopus, I know Paul is the CEO, I don’t work for him, I’m a startup founder with my own company.

Re: MVPs and $100k AWS Bills: Reflections on our launch

#77

Post by RantyDave »

LeonM wrote: post #28
pjc50 wrote: post #19

> Octopus Cloud customers could start a free 30-day trial, which meant that those hundreds of trial signups per month, each of which cost us $100 to host, quickly added up. > We also didn’t have our pricing quite right. We initially launched Octopus Cloud at $10/month, with a different pricing model from the one we currently use. Unfortunately, this was one of the most painful lessons we learned because the deficit b…

Even without the free trial, how on earth can you burn $100 in cloud resources in a month if you plan to resell it for $10?

The theory is that if you burn through a few (many) kilodollars doing it the inefficient way then you can at least prove the existence of a market for doing it properly ... and have a head start in actually having subscribers.

I see the theory but $100k/mo in AWS fees is madness. They could probably knock a zero off just by deploying in containers.

Re: MVPs and $100k AWS Bills: Reflections on our launch

#78

Post by paulstovell »

Havoc wrote: post #54

Well glad they had the capacity to recover. Even accounting for hindsight being 20/20...every customer gets their own VM is a rather ambitious approach to scaling. Would love to know what made them shift to Azure. Especially while embracing linux at same time.

Compute is one part of it but not much different across clouds. Databases are the other big part (each customer needs their own DB). The SQL Server databases in Azure for our usage scenario turns out a lot cheaper. We’ll explain more in a future post.

Re: MVPs and $100k AWS Bills: Reflections on our launch

#79

Post by dclusin »

tills13 wrote: post #66
shiftpgdn wrote: post #50

Earlier quoted context omitted.

I can purchase and then colocate 2x Dell R640s (8c/16t, 64gb of ram, as much NVMe storage as I can stomach) with tier 1 bandwidth billed at the 95th percentile and 24/7 remote hands support for about $150/month. The purchase price on the Dells is about $3500/ea. Total first year cost on this setup: $8,800 Total three year cost on this setup: $12,400 2x m5d.4xlarge EC2 instances (this isn't counting ingress/egress rat…

> For the cost of using EC2 you could hire an extra person to help grow your company. You _will_ be hiring an extra person to manage these machines. That's the beauty of The Cloud (tm). Need more compute? You got it. Provisioned too much? Get rid of it. If you're a startup, you don't have time nor money to be managing your own infra. Not to mention the ability to deploy to _any_ region within minutes. Now you're talk…

Once you get beyond a few instances you'll need a fulltime person to manage your cloud assets anyway. VPC & associated networking + managing different services is not a trivial task. You'll still have an ops team. Whether it's old school sys admins or devops coders is down to your choice of where you run your system.

Re: MVPs and $100k AWS Bills: Reflections on our launch

#80

Post by swiley »

jcadam wrote: post #21
teddyuk wrote: post #11

Earlier quoted context omitted.

because they didn't know what they were doing - I can say this as this is what the blog shows, they don't understand databases and customers (including me) have suffered this

I've learned much too late in my career that competent software engineering is completely orthogonal to creating a successful(from a market perspective) software product.

Well yeah most of it’s just CRUD and that’s pretty straightforward even at a large scale (ex stack overflow.)
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