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Cloud costs are in a bubble

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Re: Cloud costs are in a bubble

#41

Post by paxys »

shubhamjain wrote: post #13

Be it VC money, or just general apathy, it seems cloud costs are rarely a priority. My biggest gripe is when see that justification that goes like, "developer's time is $100/hr and better spent elsewhere." Okay, I agree, doing something like self-hosting everything to reduce costs would be a terrible idea, but there's a fine balance. In 2019, Lyft spent $300M on AWS [1]. Sure, it's a big service, but are you seriousl…

Literally from the first line of the article you linked:

> Lyft has signed up to pay cloud market leader Amazon Web Services at least $80 million per year for the next three years, totaling at least $300 million.

You can launch a massive project, hire dozens of people, buy server and colo space across the globe, rebuild their infra from scratch, and get costs down to – what – $60 million a year? Lyft is closing in on $4 billion in annual revenue. A few million in savings is meaningless, especially when balanced with the massive risks of such a project.

Re: Cloud costs are in a bubble

#42

Post by samvher »

randomdata wrote: post #37
brundolf wrote: post #28

Earlier quoted context omitted.

And also don't panic, because nobody knows the future (especially in tech), despite the OP's confidence. Nobody knows the future in either direction.

What we do know is that the market thinks the career is risky, charging a substantial risk premium. The market isn't infallible, but tends to be right more often than not. But that also means that you need not be too alarmed. Even just one year of making the aforementioned $300,000 allows you several years of not working at all before you are making less, on average, than a typical low risk job. As you've already pri…

What makes you interpret it as a risk premium? My sense is it's mostly driven by demand growing ahead of supply, and barriers existing to the supply expanding (which is partly because of the value of experience, which takes time to build). I.e. I'd say it's a scarcity thing more than a risk thing.

Re: Cloud costs are in a bubble

#43

Post by epberry »

I work for Vantage and I do think that startups are starting to care about cloud costs, but not necessarily for the cost itself.

The thing to understand early these days is COGS and whether the business can scale its service with good margins. That is a significant change of concerns for investors from the past years where growth was the only thing that mattered.

The other thing that I think is a little off in this post is the idea that startups not caring about costs are a big driver of hyperscaler revenue. I suppose that may have been true a few years ago but AWS, Azure, and to some extent GCP are having a lot of success moving legacy on-prem deployments to the cloud. It's not uncommon to encounter 50 year old enterprises with a billion dollars of cloud spend. One example of this is the dedicated SAP instances that AWS has, some of which cost $100K per month.

Re: Cloud costs are in a bubble

#44

Post by throwaway894345 »

xadhominemx wrote: post #38
crmd wrote: post #5

The most valuable information for the average HN reader, especially younger colleagues who have only been in the workforce for the last decade, is that the ~70% gross margins of the hyperscalers, and by extension the $300k+ salaries for early career software developers, has been fueled by a temporary era of low central bank interest rates and an excess of VC capital. This era is almost certainly coming to a close. We…

Another unhinged HN comment ripped straight from ZeroHedge. Loss making venture funded startups are a small part of cloud revenues. The overwhelming majority of cloud revenue and gross profit comes from stable and profitable enterprise customers who have a 15 year plan to exit the majority of their on prem footprint, and interest rates have little bearing on these plans.

As someone who doesn't understand finance or economics very well, both the parent comment and yours were interesting, but I don't know why you have to use such an adversarial tone. Your point seems like it stands on its own, no need to go into attack mode.

Re: Cloud costs are in a bubble

#45

Post by jayzalowitz »

shubhamjain wrote: post #13

Be it VC money, or just general apathy, it seems cloud costs are rarely a priority. My biggest gripe is when see that justification that goes like, "developer's time is $100/hr and better spent elsewhere." Okay, I agree, doing something like self-hosting everything to reduce costs would be a terrible idea, but there's a fine balance. In 2019, Lyft spent $300M on AWS [1]. Sure, it's a big service, but are you seriousl…

I've managed down a cloud budget in that range. Trust me you can get there surprisingly easily if you want resiliency, security, and uptime on thousands of services.

Re: Cloud costs are in a bubble

#46

Post by moris_borris »

jimhi wrote: post #19
crmd wrote: post #5

The most valuable information for the average HN reader, especially younger colleagues who have only been in the workforce for the last decade, is that the ~70% gross margins of the hyperscalers, and by extension the $300k+ salaries for early career software developers, has been fueled by a temporary era of low central bank interest rates and an excess of VC capital. This era is almost certainly coming to a close. We…

Always good advice to budget and prepare for the worst, but wow this is a big stretch from the article. Of the large salary companies - Amazon, Google, and Microsoft are in the cloud space. Google doesn't make most of its profits from cloud. Netflix and Facebook don't sell these services at all. Dropbox and Digital Ocean (and sort of Cloudflare) are also in the cloud space and aren't known for such salaries. It's pos…

Last year I worked as a dev at an ad tech firm that apparently had a money printer. The amount of waste, particularly in their cloud architecture, was staggering. Prestigious office in a very expensive city. I noticed that they hired from big-name companies known for being staggeringly wasteful like Uber.

Just one company, sure, but it did make me wonder about adtech in general.

Re: Cloud costs are in a bubble

#47

Post by pessimizer »

pc86 wrote: post #16
cpursley wrote: post #8

Why are people still using Mongo when you can just set up a jsonb column in Postgres now? Is this just legacy applications that are stuck with Mongo? Certainly nobody is starting new projects on Mongo? Serious question.

Why would you have a dev team who has used mongo before and is comfortable with it move to a different DB? Serious question.

IMO it's already a problem if my team is more knowledgeable about mongo than postgres. It means I'm exclusively hiring from a weird pool.

Re: Cloud costs are in a bubble

#48

Post by vkou »

crmd wrote: post #5

The most valuable information for the average HN reader, especially younger colleagues who have only been in the workforce for the last decade, is that the ~70% gross margins of the hyperscalers, and by extension the $300k+ salaries for early career software developers, has been fueled by a temporary era of low central bank interest rates and an excess of VC capital. This era is almost certainly coming to a close. We…

If you believe we're in a high-inflation economy, your recommendation is incorrect, as the real cost of mortgage payments very quickly gets eaten by inflation.

If you believe we're in a low-inflation economy, you may want to have an argument on that subject with folks that don't. :)

Re: Cloud costs are in a bubble

#49

Post by bushbaba »

This is more SaaS costs are in a bubble, not core-infra (Compute & Storage) offered by Azure/Amazon/GCP.

Some of the cloud provider compute (VMs) and storage (disk/object store) has very low margin. With it highly unlikely a company could provide equivalent offering in-house.

Re: Cloud costs are in a bubble

#50

Post by randomdata »

samvher wrote: post #42
randomdata wrote: post #37

Earlier quoted context omitted.

What we do know is that the market thinks the career is risky, charging a substantial risk premium. The market isn't infallible, but tends to be right more often than not. But that also means that you need not be too alarmed. Even just one year of making the aforementioned $300,000 allows you several years of not working at all before you are making less, on average, than a typical low risk job. As you've already pri…

What makes you interpret it as a risk premium? My sense is it's mostly driven by demand growing ahead of supply, and barriers existing to the supply expanding (which is partly because of the value of experience, which takes time to build). I.e. I'd say it's a scarcity thing more than a risk thing.

> My sense is it's mostly driven by demand growing ahead of supply

That, from an employer point of view, is certainly what makes the difference between offering a high risk premium and deciding that the work isn't worth doing.

> which is partly because of the value of experience, which takes time to build

All jobs value from experience. The question the worker has to ask himself is: Where am I going to allocate my time to gain experience? One can't do everything. They have to make a choice. Tech is a risky place to allocate your time, but compensates for that by offering a premium to compel you in that direction.

Tech is risky because it is all about exploring unknowns. You get periods of fruit, but you are also likely to get periods of dead ends, and when those dead ends start to accumulate people start to back away. That is quite unlike, say, road maintenance where there is a strong belief that roads will be around for the lifetime of one's career. That isn't a guarantee, but it is lower risk. Tech is known to disappear.

Tech has crashed many, many times before after too many dead ends. It feels to me like we're in a dead end period. When was the last time you were excited about new tech? The WFH period during the pandemic brought some small excitement in tech emergence, but it seems we're trying as hard as possible to back away from that.

But who knows? This time might be different. And if that's the case you've got your risk premium as a reward for taking the risk.

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