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Having done both, I think I mostly agree with you. And I'm a big proponent of having your engineering team focus their efforts on building and maintaining the p

by kelp 5y ago

Having done both, I think I mostly agree with you. And I'm a big proponent of having your engineering team focus their efforts on building and maintaining the product you are selling to customers. Avoid doing undifferentiated work. Outsource it when you can. Focus on the core product. I think this is especially true as you're scaling a company in the current SWE labor environment. If your business is growing quickly, you probably have money, and can get more funding when you need it. But hiring more SWEs is always a challenge. That is your scarce resource. Don't waste it on undifferentiated work. All that said, at larger scale and more mature businesses. I think the core thesis of the article makes sense. You may be in the slower growth part of the S curve, but you can still increase your company value and profitability substantially by increasing margins. One way do do this is to invest in cheaper infrastructure. Then you're taking on some undifferentiated work, but in service of better margins.

throwawaaarrgh 5y ago
But you have to be very careful where that cheaper infrastructure is used, due to how difficult it can be to manage, and its potential impact on the business. I've worked for a handful of very large businesses (10s of thousands of employees, profits in the billions) running infrastructure and services. With one exception, they all sucked at managing their own hosting. The only one that did well literally poached all the core employees of a web hosting company, and then listened to them. Except for that one company, none of the others was willing to build their own internal managed hosting company. They all didn't staff right, didn't fund right, didn't do support right, and their org structure and financing model had no capacity for a single department to straddle every BU. (Well, ok, "IT" often did, but "IT" wasn't directly managing and running the underpinnings of every product in the company) In fact, some of the largest, most well known companies in the US actually moved to the cloud specifically because they sucked so bad at running their own shop that they needed to stem the bleeding by just buying Cloud services that worked. And that's after they hired consulting/management companies to try to jointly manage their self-built setups. The article makes sense. The idea that larger businesses can figure out how to do it right at scale, sounds logical. But my whole career is one long proof that those theories don't match reality. In fact, I would go so far to say that the larger the organization is, the harder it is to self-manage. The only general category of company that I think is OK to self-manage hosting is one where either almost all of the profit is coming from keeping hosting costs down, or the business value is not impacted by hosting quality at all. I think that's a very small proportion of tech businesses today.

by kelp 5y ago

throwawaaarrgh 5y ago

But you have to be very careful where that cheaper infrastructure is used, due to how difficult it can be to manage, and its potential impact on the business. I've worked for a handful of very large businesses (10s of thousands of employees, profits in the billions) running infrastructure and services. With one exception, they all sucked at managing their own hosting. The only one that did well literally poached all the core employees of a web hosting company, and then listened to them. Except for that one company, none of the others was willing to build their own internal managed hosting company. They all didn't staff right, didn't fund right, didn't do support right, and their org structure and financing model had no capacity for a single department to straddle every BU. (Well, ok, "IT" often did, but "IT" wasn't directly managing and running the underpinnings of every product in the company) In fact, some of the largest, most well known companies in the US actually moved to the cloud specifically because they sucked so bad at running their own shop that they needed to stem the bleeding by just buying Cloud services that worked. And that's after they hired consulting/management companies to try to jointly manage their self-built setups. The article makes sense. The idea that larger businesses can figure out how to do it right at scale, sounds logical. But my whole career is one long proof that those theories don't match reality. In fact, I would go so far to say that the larger the organization is, the harder it is to self-manage. The only general category of company that I think is OK to self-manage hosting is one where either almost all of the profit is coming from keeping hosting costs down, or the business value is not impacted by hosting quality at all. I think that's a very small proportion of tech businesses today.