Earlier quoted context omitted.
From the sounds of it, what doomed them was pricing too low in a way that made it impossible to create higher tiers of service, and, perhaps most importantly, using AWS for everything. AWS bills monthly, so if in fact they were running a $35k/mo bill there, a HUGE refactor was passed by. But then again, startups don't hire sysadmins anymore.
Do you think they were better off by having their own servers ? (Honest question we use AWS and Rackspace, and we feel the pain of Monthly bills as well).
pricing out servers and researching / working with smaller infrastructure providers who actually care about you and your account (imagine that) is real work, which is why so many people avoid it these days.
it's much easier to click a few buttons and "choose" machine type x in the offerings that amazon has designed to maximize their own profit.
computers are hard, let's go shopping.