4 ms·

So one of the things that's interesting here is the Amazon component. And the anonymity of Amazon vs a smaller provider. Let's assume for a minute the founders

So one of the things that's interesting here is the Amazon component. And the anonymity of Amazon vs a smaller provider. Let's assume for a minute the founders actually wanted to keep it alive (I'm guessing they didn't but that's a whole other story) You're generating revenue of say $40,000 and your Amazon costs are $30K. If you went to a small or mid tier sized provider and said "Good news/bad news. We're generating $40,000 a month and growing (oddly revenue isn't which is again another story) You're costing us $30,000 a month. If we can cap you at $20,000 a month for 12 months that frees us up $20,000 and we can keep 3 employees on in the short term and still grow the business. We can get through the rough patch and continue to grow and in a year from now we can adjust this upward and be worth more. If you insist on $30K, which is your right, we shut the whole thing down because we can't keep the lights on. Now the provider is either looking at generating $240,000 for the next 12 months or losing everything from your account. He/she is probably doing the deal with you because much of their costs are fixed. But I don't know if/how you have that conversation with Amazon. EDIT: Oh and fantastic that they shared.

zaidf 13y ago
When I first read their story, I wondered exactly what you wrote: how much was their amazon hosting bill and could they have at least kept the lights on if they went with a smaller provider? I know when I was doing my music start up it would cost is many many times more to be on amazon than the two high power dedicated servers. I don't know the story in their case but I find it shocking how many high bandwidth start ups have never even explored the option of not using AWS. I mostly blame this problem to the easy availability of funding which encourages you to throw money at problems. The issue though is that the more you build out your infrastructure around AWS exclusively, the harder it will be to explore other options later.
- jasonwatkinspdx 13y ago
  I think some people only see one side of the trade-offs here. A counter example would be a start-up I worked with that started out on a smaller provider. When we launched a beta of the application, we unexpectedly got invitations for national TV coverage with less than 24 hours notice. We asked the provider for everything they could give us, but they only had a limited amount of unused capacity themselves so there was little they could do. Of course we couldn't come near to soaking up the traffic spike, and lost a huge potential number of positive user experiences. That sort of thing doesn't happen to you on Amazon or the other largest on demand providers.
  - nutanc 13y ago
    That's why you start with Amazon. And then once you reach scale you slowly start building your own private cloud. Its much more efficient and costs a lot less. We have been doing the same in our startup.
    - jasonwatkinspdx 13y ago
      Yes. Something else I think people fail to consider is what I would call a hybrid approach. For example, even if you mostly operate on your own infrastructure, keep a replica of your data tier going on EC2, along with freshly configured images for the rest of your moving pieces. This way you have an instant pop up B site for disaster scenarios. There are a lot of other possible concepts. Keeping a dataset at amazon to use for map reduce jobs is convenient. Or even if you want to keep your infrastructure virtual, being able to price arbitrage across a couple providers could be a powerful cost reduction. The price of entry for all this is devops automation, but I think people are now mostly convinced that's worth it.
      - nraynaud 13y ago
        I think it's the best way to go, but also for a resilience approach, I want to be able to ditch a datacenter in 15min. If you can ditch the datacenter, why not ditch the whole provider? So we tried to keep the deployment scripts ready for a competitor at all times, having backups we could restore there etc. And if you grow big enough, this becomes a bargaining chip with your provider too: I can ditch you in 15 min.
swisspol 13y ago
[Everpix founder here] Interesting idea and no we didn't try negotiating with Amazon. Not sure how much room there is here? However it's important to keep in mind in a situation like this, and at this scale of burn rate, you're not looking for a solution to shave off a few thousands $ left and right, which is kicking the can down the road (if even), but for a long term solution. The key problem here is that I don't think you can realistically switch a business built on the VC funding track to the bootstrap track without the collateral damage of killing your company's essence i.e. the product. For instance: when suggesting to have fewer employees, that is implying you have room for that or that your employees are interchangeable, which is far from the truth. It's not like we had 5 tech support people, and we could have downscaled to 3. We had hired quite slowly and were already as lean as it gets i.e. 1 person per project: iOS, Web, Infrastructure, Science, Design, Imaging / QA. All these folks were working at full capacity managing a multi-platform service managing hundreds of millions of full-res photos with ~100 servers, displaying photo collections of 10,000+ photos in very responsive apps, and running cutting edge computer vision science at a scale no other consumer photo startup was doing (the closest was the semantic search in Google+ Photos). You can certainly cut salaries (which we did and only works up to a certain point in the very competitive SV hiring market), but you can't remove positions which would be akin to extending a bridge to nowhere. Regarding the infrastructure expense, I shared some thoughts here: https://news.ycombinator.com/item?id=7041640 https://news.ycombinator.com/item?id=7041640
- fauigerzigerk 13y ago
  Bootstrapping it with the existing team would cost about 1.5 million a year by my extremely rough estimate. So you'd have to make $30 per user per year. Facebook's ARPU is about $6 per year (much higher in the US though). If you make as much in ad revenue as Facebook, each of your 7000 paying customers would have to foot a yearly bill of $171 to keep the service going (but that number would go down as you grow). So I think you're right. Bootstrapping it at this point is probably unrealistic. You may need like 10 times the number of users for it to be a viable business. Thanks for sharing your data!
- jusben1369 13y ago
  Yep totally understand. I meant this more as a general exercise perhaps more applicable to bootstrappers or even seed funded folks who had a single large cost that wasn't currently scaling.
jph 13y ago
> But I don't know if/how you have that conversation with Amazon. I do. I've had a conversation like that with Amazon. What I found is the Amazon hosting team is excellent: they moved mountains for my account to get us to success. The Amazon account exec arranged immediate discounts and bridge services, even working through the holidays, then brought in multiple engineers for phone calls with me to teach me how to optimize our project to cost less to run. Every one of the Amazon people who helped me was 100% on board with finding ways to make the project successful. That conversation is always worth having with vendors in my experience. They may be able to come up with ideas, or offer rebates, or promotions, or even convertible note financing toward the next fundraising round.
- yeldarb 13y ago
  Can vouch for this as well. So far Amazon customer service has been great for us as well. We just got introduced to our account manager a couple of months ago but she has been very helpful in getting us connected with the right people and helping us save money on our monthly usage.
- chanux 13y ago
  I loved Everpix and wanted you guys to succeed. But when I finally heard the bad news, I thought Amazon should buy Everpix and make their cloud drive super awesome with it (Right now cloud drive is nearly terrible). Everpix was a great product and I still can't believe there is no one who sees value in it.
- jusben1369 13y ago
  Kudos to Amazon then and thanks for sharing.
- ericcholis 13y ago
  I can vouch for this with Rackspace as well. Our account is nowhere near $30k per month, but we do pay the $100/month managed service fee. I've had multiple conversations in regards to new services and infrastructure changes that might save us money. It's always good to approach any of your business-critical vendors and service providers to discuss pricing. You might find that they are more than willing to negotiate.
deleted 13y ago
[deleted]
rnts08 13y ago
Or simply take those $30k and get some colocation and hardware - get the monthly operational costs down to sub-$10k easily. It strikes me every time how much money people sink down on Amazon(AWS) when they can do it themselves for a lot less. The usual counter-argument is "but we didn't have money for a sysop", well yeah - your devs/devops needs to manage the AWS system as well, it's not much harder to manage real hardware / servers and network. Another post that striked me was $300k in consultants, thats more than 3 years of full-time employees - what did they do? Was it worth it?
- napoleond 13y ago
  People keep saying this, and I can see how it's easily true if we're talking about EC2 or one of Amazon's database services. But what's the hardware equivalent of S3 (the majority of the costs in this case) that's cheaper and "not much harder to manage" than S3? I feel like once you want to get past a couple TB of (redundant!) storage in colo/dedicated you're back to the land of sysops, no? I mean, I am decently comfortable in my ability to keep a server running, but I've never maintained a SAN (is that what I would need to replace S3?) and wouldn't trust myself to provide the level of resilience that Amazon is able to provide.
  - rnts08 13y ago
    GlusterFS on Supermicro Storage servers and loads of raid-grade harddrives, install once - scale forever. And it's not very hard to learn one additional software, and everyone knows that you need to setup a simple backup solution or system. What I'm saying is that if you pay a cold $30k to AWS it is probably time to look at other solutions - or your COGS will keep growing out of hand. I understand the greatness of AWS and Cloud systems when starting up, especially to keep CapEx down, but only to a certain point, you still have to manage systems (servers), security and storage/mount-points etc, so why not take the time to learn how to do it yourself and save a lot of money? Why not get an experienced DevOps instead of pure Developer? And this company was already paying $300k to consultants, why not use a consultant or outside company to setup/manage their own hardware and service contracts as well? It would still be less than $30k and would still scale a lot better.

zaidf 13y ago

When I first read their story, I wondered exactly what you wrote: how much was their amazon hosting bill and could they have at least kept the lights on if they went with a smaller provider? I know when I was doing my music start up it would cost is many many times more to be on amazon than the two high power dedicated servers. I don't know the story in their case but I find it shocking how many high bandwidth start ups have never even explored the option of not using AWS. I mostly blame this problem to the easy availability of funding which encourages you to throw money at problems. The issue though is that the more you build out your infrastructure around AWS exclusively, the harder it will be to explore other options later.

jasonwatkinspdx 13y ago
I think some people only see one side of the trade-offs here. A counter example would be a start-up I worked with that started out on a smaller provider. When we launched a beta of the application, we unexpectedly got invitations for national TV coverage with less than 24 hours notice. We asked the provider for everything they could give us, but they only had a limited amount of unused capacity themselves so there was little they could do. Of course we couldn't come near to soaking up the traffic spike, and lost a huge potential number of positive user experiences. That sort of thing doesn't happen to you on Amazon or the other largest on demand providers.
- nutanc 13y ago
  That's why you start with Amazon. And then once you reach scale you slowly start building your own private cloud. Its much more efficient and costs a lot less. We have been doing the same in our startup.
  - jasonwatkinspdx 13y ago
    Yes. Something else I think people fail to consider is what I would call a hybrid approach. For example, even if you mostly operate on your own infrastructure, keep a replica of your data tier going on EC2, along with freshly configured images for the rest of your moving pieces. This way you have an instant pop up B site for disaster scenarios. There are a lot of other possible concepts. Keeping a dataset at amazon to use for map reduce jobs is convenient. Or even if you want to keep your infrastructure virtual, being able to price arbitrage across a couple providers could be a powerful cost reduction. The price of entry for all this is devops automation, but I think people are now mostly convinced that's worth it.
    - nraynaud 13y ago
      I think it's the best way to go, but also for a resilience approach, I want to be able to ditch a datacenter in 15min. If you can ditch the datacenter, why not ditch the whole provider? So we tried to keep the deployment scripts ready for a competitor at all times, having backups we could restore there etc. And if you grow big enough, this becomes a bargaining chip with your provider too: I can ditch you in 15 min.

swisspol 13y ago

[Everpix founder here] Interesting idea and no we didn't try negotiating with Amazon. Not sure how much room there is here? However it's important to keep in mind in a situation like this, and at this scale of burn rate, you're not looking for a solution to shave off a few thousands $ left and right, which is kicking the can down the road (if even), but for a long term solution. The key problem here is that I don't think you can realistically switch a business built on the VC funding track to the bootstrap track without the collateral damage of killing your company's essence i.e. the product. For instance: when suggesting to have fewer employees, that is implying you have room for that or that your employees are interchangeable, which is far from the truth. It's not like we had 5 tech support people, and we could have downscaled to 3. We had hired quite slowly and were already as lean as it gets i.e. 1 person per project: iOS, Web, Infrastructure, Science, Design, Imaging / QA. All these folks were working at full capacity managing a multi-platform service managing hundreds of millions of full-res photos with ~100 servers, displaying photo collections of 10,000+ photos in very responsive apps, and running cutting edge computer vision science at a scale no other consumer photo startup was doing (the closest was the semantic search in Google+ Photos). You can certainly cut salaries (which we did and only works up to a certain point in the very competitive SV hiring market), but you can't remove positions which would be akin to extending a bridge to nowhere. Regarding the infrastructure expense, I shared some thoughts here: https://news.ycombinator.com/item?id=7041640 https://news.ycombinator.com/item?id=7041640

fauigerzigerk 13y ago
Bootstrapping it with the existing team would cost about 1.5 million a year by my extremely rough estimate. So you'd have to make $30 per user per year. Facebook's ARPU is about $6 per year (much higher in the US though). If you make as much in ad revenue as Facebook, each of your 7000 paying customers would have to foot a yearly bill of $171 to keep the service going (but that number would go down as you grow). So I think you're right. Bootstrapping it at this point is probably unrealistic. You may need like 10 times the number of users for it to be a viable business. Thanks for sharing your data!
jusben1369 13y ago
Yep totally understand. I meant this more as a general exercise perhaps more applicable to bootstrappers or even seed funded folks who had a single large cost that wasn't currently scaling.

jph 13y ago

> But I don't know if/how you have that conversation with Amazon. I do. I've had a conversation like that with Amazon. What I found is the Amazon hosting team is excellent: they moved mountains for my account to get us to success. The Amazon account exec arranged immediate discounts and bridge services, even working through the holidays, then brought in multiple engineers for phone calls with me to teach me how to optimize our project to cost less to run. Every one of the Amazon people who helped me was 100% on board with finding ways to make the project successful. That conversation is always worth having with vendors in my experience. They may be able to come up with ideas, or offer rebates, or promotions, or even convertible note financing toward the next fundraising round.

yeldarb 13y ago
Can vouch for this as well. So far Amazon customer service has been great for us as well. We just got introduced to our account manager a couple of months ago but she has been very helpful in getting us connected with the right people and helping us save money on our monthly usage.
chanux 13y ago
I loved Everpix and wanted you guys to succeed. But when I finally heard the bad news, I thought Amazon should buy Everpix and make their cloud drive super awesome with it (Right now cloud drive is nearly terrible). Everpix was a great product and I still can't believe there is no one who sees value in it.
jusben1369 13y ago
Kudos to Amazon then and thanks for sharing.
ericcholis 13y ago
I can vouch for this with Rackspace as well. Our account is nowhere near $30k per month, but we do pay the $100/month managed service fee. I've had multiple conversations in regards to new services and infrastructure changes that might save us money. It's always good to approach any of your business-critical vendors and service providers to discuss pricing. You might find that they are more than willing to negotiate.

deleted 13y ago

[deleted]

rnts08 13y ago

Or simply take those $30k and get some colocation and hardware - get the monthly operational costs down to sub-$10k easily. It strikes me every time how much money people sink down on Amazon(AWS) when they can do it themselves for a lot less. The usual counter-argument is "but we didn't have money for a sysop", well yeah - your devs/devops needs to manage the AWS system as well, it's not much harder to manage real hardware / servers and network. Another post that striked me was $300k in consultants, thats more than 3 years of full-time employees - what did they do? Was it worth it?

napoleond 13y ago
People keep saying this, and I can see how it's easily true if we're talking about EC2 or one of Amazon's database services. But what's the hardware equivalent of S3 (the majority of the costs in this case) that's cheaper and "not much harder to manage" than S3? I feel like once you want to get past a couple TB of (redundant!) storage in colo/dedicated you're back to the land of sysops, no? I mean, I am decently comfortable in my ability to keep a server running, but I've never maintained a SAN (is that what I would need to replace S3?) and wouldn't trust myself to provide the level of resilience that Amazon is able to provide.
- rnts08 13y ago
  GlusterFS on Supermicro Storage servers and loads of raid-grade harddrives, install once - scale forever. And it's not very hard to learn one additional software, and everyone knows that you need to setup a simple backup solution or system. What I'm saying is that if you pay a cold $30k to AWS it is probably time to look at other solutions - or your COGS will keep growing out of hand. I understand the greatness of AWS and Cloud systems when starting up, especially to keep CapEx down, but only to a certain point, you still have to manage systems (servers), security and storage/mount-points etc, so why not take the time to learn how to do it yourself and save a lot of money? Why not get an experienced DevOps instead of pure Developer? And this company was already paying $300k to consultants, why not use a consultant or outside company to setup/manage their own hardware and service contracts as well? It would still be less than $30k and would still scale a lot better.