Shows you how you shouldn't worry about this stuff till late. They saved $75 million while losing $3 billion of market value -- capturing market share is vastly more important than operational excellence.
Dropbox saved $75M over two years by building its own infrastructure (2018)
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Re: Dropbox saved $75M over two years by building its own infrastructure (2018)
#92We are a startup. We decided to host our full stack in self managed vpses running debian. We started at one provider, but because we have everything (except the hardware) under our own super vision, we were able to move to another provider (hetzner) in just a few days. Moving away to another provider wouldn't be an issue. I believe the key is to not use any of the propitiatory services offered by all these big player…
The thing is that if you don't use any of the proprietary services offered by the bigger players they look at lot less appealing. AWS with just EC2 is one expensive-ass server provider with murderous rates for egress traffic.
Re: Dropbox saved $75M over two years by building its own infrastructure (2018)
#93Anything more recent than 2018? Any examples of other companies doing this? I see in the article that it was a public filing from Dropbox. I’ll look into more recent ones when I have some time unless someone beats me to it.
Re: Dropbox saved $75M over two years by building its own infrastructure (2018)
#94I think this quote really hits the nail on the head and confirms what a lot of people may have intuitively known about the value of cloud providers: But once certain startups turn into big companies with hundreds of millions of users, with computing needs that they’ve come to intimately understand, it can be far more efficient to set up computing infrastructure designed exactly with those needs in mind. I think the m…
Dropbox is in a relatively specific situation wherein their cloud costs would be extremely high (storage, bandwidth) and their in-house technical skills are probably quite good.
Dropbox is itself a cloud provider. A consumer/SMB cloud provider. It makes total sense they build up their own infrastructure, not only from a purely profit/scale point of view.
It's about their core values and identity, at least because in this way they are seen in the market as a big player and not just as another AWS reseller with some added benefits.
Re: Dropbox saved $75M over two years by building its own infrastructure (2018)
#95Cloud is taking a taxi everywhere, bare metal is owning your own car. In one case, you pay a premium so that somebody else worries about all details and maintenance, and in the other, you take on that burden but don't pay the premium. This has always been true for everything where a service is provided to you. Great if your needs are small or not well known because there is no initial investment, but bad in the long…
Not a bad analogy, but the taxi also comes with a driver, which makes it expensive but allows you to get work done in the back while you're en route. It'd be like a cloud provider that came with a devops person dedicated to you.
Except when driver decides to take couple days off and you can’t get anywhere or their cars breaks down for a day and they say it’s still within slo because the radio still worked (looking at you GCP)
Re: Dropbox saved $75M over two years by building its own infrastructure (2018)
#96So they saved next to nothing? Their yearly operating expenses are in the order of $1.3B, which doesn't even include cost of revenue. $75M savings versus $2600M operating expenses over those 2 years comes out to about 2.8% savings.
> So they saved next to nothing? Their yearly operating expenses are in the order of $1.3B, which doesn't even include cost of revenue. Wow thank god some of y'all aren't running these businesses. It still surprises me every time I see failures to think marginally.
~3% boost to margins is very welcome for a cloud company (would be amazing for a retailer). But what about the risks? What if you need to scale down the operation? What if your hardware team ends up costing more? In particular, the R&D department (cloud providers depreciate hardware over 2-3 years, which matches the progress of technology and the speed at which things become obsolete). $35M per year only pays about 50-100 salaries. What if your setup turns out not as good as expected? You can't easily jump ship once you sink in the capex. And I don't think that already big (in terms of revenue) startups should be adding much to their risk profile.
It could also be that there's just no other way to cut anything from their enormous opex (for example fire people or buy less ads). I find this hard to believe but may be true.
One very good strategic reason to do this, I think, would be to gain independence from cloud providers, who unfortunately happen to be your major competitors.
Re: Dropbox saved $75M over two years by building its own infrastructure (2018)
#97Earlier quoted context omitted.
You’ve described the historical value of cloud computing perfectly. That said, I think the days where all but the largest or most stubborn companies run their own datacenters are coming to a close. The problem will be finding skilled labor. Short-haul networking, power configurations, thermal load, hardware maintenance; these and many more are specific skills that can’t be learned overnight. Data center work used to…
But it's insane that running a for-higher data center is considered a high-margin business. (And testament that the customers are VC-gorged price-unconcious baby gremlims.) In a sane economy, data centers for higher would be a fully-commoditized barely-profitable common carrier with little natural monopoly.
Reliability concerns make datacenters resilient to commoditization. A datacenter that’s available 90% of the time is worth vastly, vastly less than 90% as much as one that 99.95% of the time. Commodity businesses are largely built on presumptions of linearity. Produce 90% as much corn/iron/wood/widgets as you expected and you’ll probably make something like 90% of the money you expected. Produce a 90% available datacenter and you’ll have a hard time finding anyone willing to pay you anything. And that’s just availability, not to mention data durability, which is even more critically nonlinear.
Re: Dropbox saved $75M over two years by building its own infrastructure (2018)
#98Earlier quoted context omitted.
Here's another way that you're not Dropbox (unless you are): you are not a public company that gets points from investors for removing [$35M] dollars from COGS (cost of goods sold), even if you spend [$40M] on R&D + capitalized expenditures to replace it. Stories like this can be really misleading because large companies almost can't help but trick themselves into financial shenanigans. It's very possible that Dropbo…
Why must Amazon pass off its savings to your org, in this example, rather than taking most of those realized R&D savings to their own investors? Sure, AWS may be constantly innovating on doing things more cheaply and scalably. Sometimes, those savings get passed off to the customer; but not most of it, and not necessarily all that frequently.
> ... and not necessarily all that frequently.
Did you miss where AWS reduces prices multiple times a year? I don't know the latest figure, but as of 2018, they reduced prices 67 times since launch in 2006.
Re: Dropbox saved $75M over two years by building its own infrastructure (2018)
#99Earlier quoted context omitted.
You’ve described the historical value of cloud computing perfectly. That said, I think the days where all but the largest or most stubborn companies run their own datacenters are coming to a close. The problem will be finding skilled labor. Short-haul networking, power configurations, thermal load, hardware maintenance; these and many more are specific skills that can’t be learned overnight. Data center work used to…
But it's insane that running a for-higher data center is considered a high-margin business. (And testament that the customers are VC-gorged price-unconcious baby gremlims.) In a sane economy, data centers for higher would be a fully-commoditized barely-profitable common carrier with little natural monopoly.
Not nitpicking but I had trouble understanding one thing: for higher should be spelled for hire I guess
Re: Dropbox saved $75M over two years by building its own infrastructure (2018)
#100I think this quote really hits the nail on the head and confirms what a lot of people may have intuitively known about the value of cloud providers: But once certain startups turn into big companies with hundreds of millions of users, with computing needs that they’ve come to intimately understand, it can be far more efficient to set up computing infrastructure designed exactly with those needs in mind. I think the m…
You’ve described the historical value of cloud computing perfectly. That said, I think the days where all but the largest or most stubborn companies run their own datacenters are coming to a close. The problem will be finding skilled labor. Short-haul networking, power configurations, thermal load, hardware maintenance; these and many more are specific skills that can’t be learned overnight. Data center work used to…
I'm not in the web or cloud business, but I've filled a rack with my stuff before. My impression is that hardware has become a lot more capable even relative to its tasks. With high iops memory, many cores and obscene amounts of RAM, I would expect companies of a much larger scale (in $, FTEs, or most other metrics) can be served by one 4HE machine, or by one rack, or by one room. Thus I would expect the knowledge of how to handle 5000 hard drives to become more obscure, naturally, but the skill to run a decently sized web application to remain almost constant.
Does this math work out, or have the tasks become more demanding at the same speed that hardware has improved?