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SNAP's infrastructure story in the S-1 filing was a mess. They had 2016 revenue of $404M with a cost of revenue of $451M. A 5 year, $2 billion dollar vendor lo
by teej 9y ago
SNAP's infrastructure story in the S-1 filing was a mess. They had 2016 revenue of $404M with a cost of revenue of $451M. A 5 year, $2 billion dollar vendor lock-in to Google. They basically admitted that Google has them completely by the balls and it costs them $3 per user per year to keep the servers on. Both of these independently are very very bad, together it's a disaster.
Facebook was at $1/user/year in their S-1, Twitter was < $1.
From the SNAP S-1:
"We rely on Google Cloud for the vast majority of our computing, storage, bandwidth, and other services. Any disruption of or interference with our use of the Google Cloud operation would negatively affect our operations and seriously harm our business."
"We have committed to spend $2 billion with Google Cloud over the next five years and have built our software and computer systems to use computing, storage capabilities, bandwidth, and other services provided by Google, some of which do not have an alternative in the market."
- sonaltr 9y agoFor a B2B SAAS company...what's the ideal user cost of infrastructure? (I understand that it depends on the service..but a ratio of profit per user vs cost per user should be close no?)
- matthewowen 9y agoIt surely depends on how much users pay for the service, and how high the non-software costs are. But in any case, the examples given are B2C free to use products which are generally going to provide... not a ton of revenue per user.
- sonaltr 9y agoI thought Dropbox's revenue mainly comes from it's business clients - B2B is more $ compared to B2C although B2C might be more profitable as customers might pay the $10/1TB and not really use that much anyways) Their paying users have increased, but the revenue per user has decreased (based on the S1...which I assume is because of enterprise deals).
- jtmcmc 9y agoThis is from the SNAP S1 not the dropbox S1
- toomuchtodo 9y agoThe ideal cost is as low as possible without sacrificing future scaling needs or development velocity. At some point, you'll start to experience diminishing returns. It usually goes POC->Cloud provider->Your own gear
- sonaltr 9y agoapart from the bigger companies (like Fb), have there been any major SaaS companies (esp. B2B but I guess that's trying to be too narrow so B2B & B2C) that have moved from Cloud to their own Data Center? (I know Etsy comes to mind...but apart from them?).
- toomuchtodo 9y agoDropbox: https://techcrunch.com/2017/09/15/why-dropbox-decided-to-drop-aws-and-build-its-own-infrastructure-and-network/ https://techcrunch.com/2017/09/15/why-dropbox-decided-to-dro... Github: https://githubengineering.com/evolution-of-our-data-centers/ https://githubengineering.com/evolution-of-our-data-centers/ Backblaze: https://www.backblaze.com/blog/our-secret-data-center/ https://www.backblaze.com/blog/our-secret-data-center/ Twitter: https://blog.twitter.com/engineering/en_us/topics/infrastructure/2017/the-infrastructure-behind-twitter-scale.html https://blog.twitter.com/engineering/en_us/topics/infrastruc... LinkedIn: http://www.datacenterdynamics.com/content-tracks/design-build/how-linkedins-data-centers-grew-up/99215.fullarticle http://www.datacenterdynamics.com/content-tracks/design-buil... FastMail: https://www.fastmail.com/help/ourservice/security.html https://www.fastmail.com/help/ourservice/security.html Stack Overflow: http://highscalability.com/blog/2014/7/21/stackoverflow-update-560m-pageviews-a-month-25-servers-and-i.html http://highscalability.com/blog/2014/7/21/stackoverflow-upda... Wikipedia: https://meta.wikimedia.org/wiki/Wikimedia_servers https://meta.wikimedia.org/wiki/Wikimedia_servers OpenStreetMap: https://blog.openstreetmap.org/tag/infrastructure/ https://blog.openstreetmap.org/tag/infrastructure/ The Internet Archive: https://www.theregister.co.uk/2017/11/16/head_like_a_memory_hole/ https://www.theregister.co.uk/2017/11/16/head_like_a_memory_... Gitlab tried, but didn't have the necessary in-house experience before they made the attempt: https://about.gitlab.com/2017/03/02/why-we-are-not-leaving-the-cloud/ https://about.gitlab.com/2017/03/02/why-we-are-not-leaving-t... Instagram was migrated from AWS onto Facebook's infrastructure: https://www.wired.com/2014/06/facebook-instagram/ https://www.wired.com/2014/06/facebook-instagram/ WhatsApp was migrated from IBM to Facebook infrastructure: https://www.cnbc.com/2017/06/07/facebook-planning-to-move-whatsapp-off-ibms-public-cloud.html https://www.cnbc.com/2017/06/07/facebook-planning-to-move-wh... Hacker News and Pinboard (acq. Delicious) run on a single server. It's not hard, but you do need to know what you're doing and have resources to do it (most orgs rent colo space in someone else's datacenter, they don't build their own). There's a reason AWS margins are so high (which leaves a lot of cost savings to be had when your workload isn't highly variable). Any questions, email is in my profile. I spent ~16 years building data centers, hosting environments, infrastructure, etc.
- bkanber 9y agoI forget which report it was in but the average tech-focused startup spends 10-15% of revenue on infrastructure. Mature businesses spend ~5%.
- dpweb 9y agoNote that the modern gospel is any net business dont give a crap about costs, only growth and the ability to raise money. This has been explicity stated by the saas business ‘gurus’ So even at 3$ per user that goes lower pretty quickly. Plus they get alliance w/goog. Aws is a force but if i had a choice id have goog as a best friend over amazon. Preferably id build my own data center and keep those assets.
- phamilton 9y ago> modern If by modern, you mean 2015. Things definitely changed by 2017.
- mrep 9y agoThey also committed to a 1 billion dollar deal with AWS soon after that: http://fortune.com/2017/02/09/snap-inc-signs-big-aws-deal/ http://fortune.com/2017/02/09/snap-inc-signs-big-aws-deal/