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~3% boost to margins is very welcome for a cloud company (would be amazing for a retailer). But what about the risks? What if you need to scale down the operati

~3% boost to margins is very welcome for a cloud company (would be amazing for a retailer). But what about the risks? What if you need to scale down the operation? What if your hardware team ends up costing more? In particular, the R&D department (cloud providers depreciate hardware over 2-3 years, which matches the progress of technology and the speed at which things become obsolete). $35M per year only pays about 50-100 salaries. What if your setup turns out not as good as expected? You can't easily jump ship once you sink in the capex. And I don't think that already big (in terms of revenue) startups should be adding much to their risk profile. It could also be that there's just no other way to cut anything from their enormous opex (for example fire people or buy less ads). I find this hard to believe but may be true. One very good strategic reason to do this, I think, would be to gain independence from cloud providers, who unfortunately happen to be your major competitors.

mbesto 6y ago
> One very good strategic reason to do this, I think, would be to gain independence from cloud providers, who unfortunately happen to be your major competitors. All of the questions you asked before (risks, capex, etc.) all would have been answered during an assessment period. It's almost as if you assumed that none of that was done and that their sys admin group just through together a proposal to move to a colo and their executive management made a decision to do so. That's not how this works. The number one priority of this type of initiative was cost and reliability. Going exclusively cloud is not a silver bullet for every company - that trope needs to die.