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Why Some Startups Say the Cloud Is a Waste of Money

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Re: Why Some Startups Say the Cloud Is a Waste of Money

#11

Post by area51org »

awjr wrote: post #6

Basically the Cloud is a stepping stone on your way to greater things. You may outgrow the cloud or you may find you have economies of scale where the cloud is becomes the expensive option. Recognise it and change your set up. TBH you should be doing this with all aspects of the business. Start in a room/garage, move to serviced offices, then rent your own building, then buy your own building (should it become financ…

It's a stepping stone for some companies. For many others, it's not (e.g. Netflix, Heroku).

I see a false dichotomy here: start off with the cloud, then move to bare metal servers. If you've got an OLTP database that demands high-performance, you may need bare metal. Many companies don't, though.

I've been a consultant to companies who've over-extended themselves on EC2 and ended up with huge monthly bills they didn't anticipate; in every instance, it was because they hand-built servers, cloned them, and then hand-modified them. The result was a set of servers they would like to be able to destroy (when they didn't need them) and then respawn (when they did), but couldn't because of the modifications. So, yeah, you can get in trouble with cloud services. But that doesn't mean you can't use it cost-effectively on a permanent basis. Like anything else, it requires planning.

Switching to bare metal? Sure: as hypervisors to your private cloud. Projects like OpenStack, an EC2 clone supported by Rackspace and Red Hat (among others) make it straightforward and compelling to virtualize your environment.

edit: content

Re: Why Some Startups Say the Cloud Is a Waste of Money

#12

Post by DanielBMarkham »

awjr wrote: post #6

Basically the Cloud is a stepping stone on your way to greater things. You may outgrow the cloud or you may find you have economies of scale where the cloud is becomes the expensive option. Recognise it and change your set up. TBH you should be doing this with all aspects of the business. Start in a room/garage, move to serviced offices, then rent your own building, then buy your own building (should it become financ…

Yeah I almost flagged this. There's nothing there except a title that might be provocative and a bunch of "Can you use math? If so, you might make decisions based on it" prose. (I didn't flag it because, frankly, the HN audience isn't what it used to be, and to many this actually might be news. Plus the comments promised to be useful for many)

I honestly don't want to insult the publication or author here. I'm sure for many people who don't use math, the cloud might seem like the best choice at all times.

However I'd really like to believe that if you're creating a product involving technology, and you're busy creating a business model, that at some point you're going to be figuring out things like cost of a new customer acquisition, or overhead cost per user. This stuff isn't exactly arcane or even terribly complicated.

Re: Why Some Startups Say the Cloud Is a Waste of Money

#13

Post by techtime77 »

I think it really depends on your solution and what you are trying to accomplish. The cloud can offer levels of redundancy, speed and security at a much lower cost than if you needed to build it yourself. The process to scale requires less engineering and resources. The ability to link to globally distributed networks and a multitude of technologies with the "flip" of a switch will never be replaced by hardware. I think it takes a combination of the two to architect rock solid infrastructure. Just choose your providers wisely!

Re: Why Some Startups Say the Cloud Is a Waste of Money

#14

Post by bluedino »

>> That’s $324,000 a year. But for just $120,000, the company could buy all the physical servers it needed for the job

What about power, cooling, rent in the building for the room you're keeping them in, backup generator, internet connectivity, administration costs (setup, repairs, installation), etc?

>> “The public cloud is phenomenal if you really need its elasticity,” Frenkiel says. “But if you don’t — if you do a consistent amount of workload — it’s far, far better to go in-house.”

Yup.

Re: Why Some Startups Say the Cloud Is a Waste of Money

#15

Post by area51org »

DanielBMarkham wrote: post #12
awjr wrote: post #6

Basically the Cloud is a stepping stone on your way to greater things. You may outgrow the cloud or you may find you have economies of scale where the cloud is becomes the expensive option. Recognise it and change your set up. TBH you should be doing this with all aspects of the business. Start in a room/garage, move to serviced offices, then rent your own building, then buy your own building (should it become financ…

Yeah I almost flagged this. There's nothing there except a title that might be provocative and a bunch of "Can you use math? If so, you might make decisions based on it" prose. (I didn't flag it because, frankly, the HN audience isn't what it used to be, and to many this actually might be news. Plus the comments promised to be useful for many) I honestly don't want to insult the publication or author here. I'm sure f…

Well, let's define "cloud": in this instance they seem to only mean EC2, which can be expensive if not used carefully.

So can bare metal. And what's worse, bare metal means a whole lot of care and feeding that you may not be prepared for.

There is no one prescription that will fit every company in every situation. But this article describes an anecdotal situation, not something typical. And, "the cloud" does not automatically mean someone else's services. For the vast majority of typical computing applications, companies should be using private virtualization (OpenStack, Vsphere, what-have-you) rather than just buying a bunch of pizza boxes or blades.

Re: Why Some Startups Say the Cloud Is a Waste of Money

#16

Post by omonra »

freyr wrote: post #4
omonra wrote: post #3

Linkbait - this is just common sense. New companies also rent office space but at a certain point they buy/build their own. Should we say 'Why some companies say office rental is a waste of money'?

I disagree that everybody knows this. Cloud services are marketed as extremely scalable solutions that grow with your business. I doubt that everybody starting out realizes that the costs can grow at a much faster rate than your revenue.

Right - but when you start spending 10,000 or more per month to Amazon, you might consider analyzing if you can save money with own servers, right?

Re: Why Some Startups Say the Cloud Is a Waste of Money

#17

Post by csears »

bluedino wrote: post #14

>> That’s $324,000 a year. But for just $120,000, the company could buy all the physical servers it needed for the job What about power, cooling, rent in the building for the room you're keeping them in, backup generator, internet connectivity, administration costs (setup, repairs, installation), etc? >> “The public cloud is phenomenal if you really need its elasticity,” Frenkiel says. “But if you don’t — if you do a…

There's also the an opportunity cost to consider if your actual demand turns out to be higher than projected and you're not able to scale up to meet it.

I think we'll see more companies using a hybrid model where you can run your steady-state workload level on dedicated gear but with the ability burst into a cloud to handle peaks and flash demand.

Re: Why Some Startups Say the Cloud Is a Waste of Money

#18

Post by cnlwsu »

freerobby wrote: post #5
freyr wrote: post #4

Earlier quoted context omitted.

I disagree that everybody knows this. Cloud services are marketed as extremely scalable solutions that grow with your business. I doubt that everybody starting out realizes that the costs can grow at a much faster rate than your revenue.

I don't know. Even engineers who don't know right from left seem to grok it. ;) ( http://www.wired.com/wiredenterprise/wp-content/uploads/2013... )

spoiler: headphones ... took me awhile

Re: Why Some Startups Say the Cloud Is a Waste of Money

#19

Post by mjolk »

bluedino wrote: post #14

>> That’s $324,000 a year. But for just $120,000, the company could buy all the physical servers it needed for the job What about power, cooling, rent in the building for the room you're keeping them in, backup generator, internet connectivity, administration costs (setup, repairs, installation), etc? >> “The public cloud is phenomenal if you really need its elasticity,” Frenkiel says. “But if you don’t — if you do a…

>What about power, cooling, rent in the building for the room >you're keeping them in, backup generator, internet >connectivity,

Most companies that I've dealt with just rent space in a colo and those costs, plus bandwidth, are far less than $200k.

>administration costs (setup, repairs, >installation), etc?

It doesn't take that long to rack and stack. Maybe a day for 20 servers if you're doing it alone.

Re: Why Some Startups Say the Cloud Is a Waste of Money

#20

Post by chris-allnutt »

Article Title is sensationalist at best. It explains what most data heavy startups do. Start in the cloud and move to baremetal. IMO Amazon pricing is confusing and expensive. Look into Rackspace or Digital Ocean if you want better pricing and more options. There are also a lot of hybrid cloud options now too where you could host web heads in a cloud but have your heavy lifters in baremetal.
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