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0 pointsmatthewaveryusa6y ago0 comments

I think the basic idea is 'you need money to make money.' The hope is that with scale and engineering they can burn less. It is dubious that anyone can reduce from 100 to 10 -- 90% reduction would be an incredible feat, and this is why:

AWS has something like profit 25% margin. Therefore assuming that AWS is within 15% of doing a half-decent job at controlling costs, that's still max 40% profit margin if you were running bare-metal and beating AWS at their own game to the tune of 15%. So if you're selling stuff for 10/month, your AWS bill should be 17/month just to break even after all the awesome engineering you've done with the VC money -- at least that's how I see it.

Now, if they are doing incredibly stupid stuff, to the tune of 90% wasted ec2 cpu cycles/db requests, then maybe they've priced it right -- who knows.

Would love to hear some insights on where I might be wrong/misjudging here.

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jiveturkey6y ago

You're not including the scale factor in your reasoning.

AWS has (taking your number as correct) 25% margin at immense scale. Hardware is cheap at this scale. unit pricing for power and space is cheap at this scale. But labor cost is enormous at this scale. Even factoring in leverage of automation, at this scale there is just enormous bureaucracy. One guy or just one team just can't "do something". Anything worth doing will have enormous repercussions across many areas and needs to go up and down the chain. Stuff still gets done, because impact is large at this scale.

> 90% wasted ec2 cpu cycles/db requests,

So then, my point is, if you are just using EC2 and egress, AWS is very expensive. You don't need all the big scale engineering they have, to launch an MVP. Of course, you need to be able to hire the type of people that can manage in-house compute, and that may be hard to find these days, at any price. But taking labor shortage out of the calculation, it's vastly better to DIY.

If you are using PaaS features, that's the sweet spot where you get tremendous value out of AWS.

> profit 25% margin. Therefore assuming that AWS is within 15% of doing a half-decent job at controlling costs, that's still max 40% profit margin.

Getting back to this, even if you dispute all of what I've said, your basic math is wrong. 15% short on 25% is 29.4%. (25/.85, not 25+15).

paulstovell6y ago

We’re confident our v2 architecture can. Current costs are between $10-15 per trial. Future posts will go into detail around how it works.

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