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Snap commits $2B over 5 years for Google Cloud infrastructure

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Re: Snap commits $2B over 5 years for Google Cloud infrastructure

#231

Post by pythonaut_16 »

the_duke wrote: post #206
bogomipz wrote: post #122

Earlier quoted context omitted.

A "random person"? How about a HN reader who is taking part in a discussion? They offered their view and why they believe that. Nowhere did they they claim "authority." Unlike your snide commentary they are actually contributing to the conversation.

Yes, the OP does claim authority, by stating his opinion as a plain fact, without knowing anything about it other than the publicly available information, and at the same time labeling a company that has raised 2.6 billion and has 100+ employees as complete idiots. Good discussion would have ensued after a statement like "I wonder why they don't build out their own infrastructure because at this scale it is usually c…

Would it be better for everyone to preface their comments with "This is only my opinion but..."? Making a statement in a comment implies speaking your opinion, unless you start making strong claims to fact or citing sources. We don't need the extra linguistic clutter of framing every statement as a matter of opinion.

Re: Snap commits $2B over 5 years for Google Cloud infrastructure

#232

Post by tonfa »

patrickg_zill wrote: post #83
010a wrote: post #19

Earlier quoted context omitted.

I'm not so sure. $33M would buy 412PB of egress alone. At 160M daily active users, that's roughly 2GB per user. In just bandwidth. That's high, and they've probably negotiated some deals to lower their bills, but also consider instances, storage (photos and videos), 10% of their bill is easily support... $33M a month is the right magnitude. The more I think about it, the more I wonder if it's actually way too low, an…

I was just offered 1 gigabit unmetered for $500/month in the Denver colo I run my servers in. I have to be sure, that Google gets their bandwidth for far, far less! Which means, 50 cents per Mbps/per month. Usually a 1Mbps means about 190GB of transfer over the course of a month, I think. So 1000 * 190GB = 0.190 PB per month. 412PB thus means ~ 2200 Gbit/s . Under my pricing, I get a whole lot less than $33M / month.…

You colo bandwidth is likely not from a global CDN with hundreds of PoP: https://peering.google.com/#/infrastructure

Re: Snap commits $2B over 5 years for Google Cloud infrastructure

#234

Post by vidarh »

andrewstuart2 wrote: post #91
randartie wrote: post #50

Needing this amount of resources implies that Snap is expecting huge growth. This sounds like a really bad move on their part and they should have committed to building out their own infrastructure on 'bare metal' over the next 5 years instead. If you read their S-1, they list a dependence on Google cloud as one of their big risk factors. Yet they then go ahead and make this commitment instead of working towards elim…

Facebook reported $27 billion in revenue in 2016. Snap reported $400 million. You're talking two orders of magnitude lower than Facebook and almost three lower than Google. Snap simply does not have the resources to pour into custom data centers, even if they can raise $2 billion for infra over 5 years. Unless they have serious talent already, they're not going to match Google's massive 15 year investments by a long…

You don't need to have $400 million revenue and do custom data centres to pay less than the published rates for any of the public cloud providers. Heck, you don't need a million in revenue to be able to save on going managed hosting or bare metal colocated.

The key here is: Compared to published rates. They'll not be paying published rates, the same as there's no way Netflix is paying published rates at AWS.

They'll be paying extremely highly discounted rates, assuming they're negotiating team isn't staffed with a bunch of people who failed their business degrees.

Re: Snap commits $2B over 5 years for Google Cloud infrastructure

#235

Post by nrh »

georgeott wrote: post #44
hemancuso wrote: post #3

So they hit $400m of revenue in 2016 and have committed to spend at least that much on infrastructure each year for the next 5 years? After all the costs for staffing and everything else they better I hope they achieve amazing growth if they ever intend to profit.

Will Snap exist in 5 years?

An article much more relevant to that question: https://techcrunch.com/2017/02/02/slowchat/

It took Instagram Stories two quarters to catch up to Snapchat's total MAU.

Re: Snap commits $2B over 5 years for Google Cloud infrastructure

#236

Post by late2part »

Klathmon wrote: post #227
late2part wrote: post #129

Earlier quoted context omitted.

So outsource the risk so you can blame someone else? Maybe....

Outsource the risk to someone who has an entire product devoted to that one area, and has many years of experience and is probably the largest provider on the planet for that service...

On the one hand - you're right. Google is good, I use GCP, they are competent and good to work with.

On the other hand "someone who has an entire product devoted to that one area, and has many years of experience and is probably the largest provider on the planet for that service" also describes Enron at the time.

Google's no Enron, but Size isn't the metric one should use.

Re: Snap commits $2B over 5 years for Google Cloud infrastructure

#237

Post by late2part »

origami777 wrote: post #222
forgetsusername wrote: post #211

Earlier quoted context omitted.

> Snap also has google by the balls here. Surely they don't. > What if snap comes out with a statement saying Gcp sucks and they're moving to aws? Then we question why Snap committed billions of dollars to infrastructure that "sucks", and wonder why they couldn't figure it out, but Google could. You think people will take Snap more seriously than Google itself?

Yes, I do think Google's biggest customer leaving their platform vocally would be more impactful than Google promoting/defending itself. If Snap threatened to leave I'd wager that even the CEO of Google would get involved to keep their biggest cloud customer. Snap's revenue and brand name have enormous value to Google. There simply aren't that many $2 billion dollar cloud customers right now.

I'd bet $200k that Eric, Sergey, and Larry have all spent hours with this deal.

Re: Snap commits $2B over 5 years for Google Cloud infrastructure

#238

Post by late2part »

origami777 wrote: post #151
hamandcheese wrote: post #140

Earlier quoted context omitted.

That's assuming that: - GCP will always have a margin that high - Snapchat is paying the advertised rate - They can find the requisite talent in a reasonable timeframe

Bingo. They aren't paying advertised rates. Google will have margin but not as much as usual. Snap also has google by the balls here. What if snap comes out with a statement saying Gcp sucks and they're moving to aws?

Snap signed a contract - how are they going to leave that contract? Yes, maybe if there is significant breach by Google, but that's lawsuit level.

Re: Snap commits $2B over 5 years for Google Cloud infrastructure

#239

Post by ciaranm »

randartie wrote: post #50

Needing this amount of resources implies that Snap is expecting huge growth. This sounds like a really bad move on their part and they should have committed to building out their own infrastructure on 'bare metal' over the next 5 years instead. If you read their S-1, they list a dependence on Google cloud as one of their big risk factors. Yet they then go ahead and make this commitment instead of working towards elim…

But ensuring 5 years of guaranteed service at a fixed price is reducing their risk. It prevents Google from pulling the rug out from under them, or from the price going up and they have no option but to accept it.

I imagine part of their plans are to move away from the dependency, but while it exists - this is exactly how you reduce your exposure to that risk.

Re: Snap commits $2B over 5 years for Google Cloud infrastructure

#240

Post by lallysingh »

randartie wrote: post #50

Needing this amount of resources implies that Snap is expecting huge growth. This sounds like a really bad move on their part and they should have committed to building out their own infrastructure on 'bare metal' over the next 5 years instead. If you read their S-1, they list a dependence on Google cloud as one of their big risk factors. Yet they then go ahead and make this commitment instead of working towards elim…

I think they're paying for technical runway. They're not a big company yet, but expect substantial user growth. Right now, they probably believe that growth is more important than profit. So they're going to spend their engineering resources on getting more users to use and keep using their stuff.

GCP isn't sticky. They can leave, or renegotiate, or even try to get Google to do some of their engineering work for them ("We'd really love if this API did this as well..."). Or some combination thereof to minimize risk vs max profits.

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