Dropbox saved $75M over two years by building its own infrastructure (2018)

IMO, this has happened. AWS GovCloud. Since the USGov has near unlimited spending power, it's better for integrators to just pass the costs along. Compared to certifying your own infrastructure, this will probably be much cheaper for most everybody.

You also might not want to manage that many it experts for your infrastructure or you are not able to get them.

Also if your companies product is very technical, i would argue that those companies are much better equiped doing it by themselfs then others.

Nonetheless, it also doesn't need to be all or nothing. You can easily combine a MultiCloud approach.

Build only the stuff which is easy to build and costs a lot on cloud yourself. I would say Buildsystems or compute instances are good candidates.

Like i could imagine putting netflix authentication system on a cloud provider while doing the compute stuff in my own data center and building the CDN myself.

It's not to offset risks, if you have very little load (a site with 10k visits a day, for example), you can share the costs on the cloud and save nearly the entire bill.

Companies with a high revenue/load ratio tend to stay at the cloud even after they get big. That is because even though the cloud is very expensive for their needs, it adds speed on their internal processes by saving the time to decide and buy equipment. But when that ratio is small, they just can't afford it.

colo'd datacenter or 'off brand' cloud provider can easily be much cheaper than the big 3, still get you out of 'dealing with hardware' and either way you are still 'setting up infrastructure' in terms of developing software management tools for your system

The problem will be finding skilled labor. Short-haul networking, power configurations, thermal load, hardware maintenance; these and many more are specific skills that can’t be learned overnight. Data center work used to be a viable middle-class career, but the pay scale for it has gone down and down. Companies that do run their own DCs like Google and Facebook have a few centralized experts, a thin professional staff on-prem, and an army of minimum wage disk swappers who are told what to do by a ticket system, just like an Amazon warehouse worker. The knowledge of how to build and run these things is all at the top now.

I’m not saying the jobs or talent pool are gone. Just that they’re shrinking, and will continue to shrink. Like the manufacturing industry, the fewer people there are who are comfortable working with real hardware, the harder it will be to start anew.

Every corporate use case I have seen is labor based. They dont want the overhead of salary and healthcare for the IT department. Even if long term they end up paying more, they always view it has pay for it now or pay for it later. And they always choose later because they dont know better.

(none of these have been the scale of dropbox, that is different)

Their product is extremely close to basically just reselling storage space. Of course it makes sense for them to build their own infrastructure.

For a company whose product is a saas application (business logic in code) with users spending hundreds or thousands of dollars per month, those cost savings may never materialize relative to the amount of infrastructure each customer is using per dollar.

Dropbox is essentially buying a barrel of gasoline and selling it in gallons. Their product can never be profusely more valuable than the underlying infrastructure.

As I recall there are giants like Netflix that still run on AWS...which brings up another point! If you’re large enough to consider your own data center, you’re large enough to negotiate contracts with cloud providers at below-retail rates.

Isn't the financial implications of capex vs opex a huge consideration? I've heard that opex is is a lot simpler to account for. Technically once you get big enough cloud becomes more expensive. But hiring people to manage both your own datacenters and cloud services does complicate things. I find it understandable that companies are willing to pay more for cloud providers if their core business doesn't require expertise in cloud computing.

Disclosure: I work at Microsoft on Azure, but I’m on the product/dev tool side not on infra.

I think this is already happening to a certain extent and will happen more in more verticals as time goes on. There are massive government use cases for the cloud and it isn’t as if governments and agencies haven’t been maintaining their own datacenters and servers before. Clouds optimized for healthcare are also a thing and are only becoming bigger — again, industries that have long maintained their own infra.

You also have the private cloud model, which OpenStack pioneered but Azure Stack and AWS Outpost have put their own spin on, which essentially lets you host specific cloud services and tools on your own infrastructure.

There are always going to be some businesses that reach a size and scale where it doesn’t make sense to offload to the cloud, where paying for people to do maintenance and support, build out monitoring, handle everything soup to nuts makes sense. I think Dropbox, which is a storage provider, is a key example of that.

I talked with the then CTO of Dropbox right after it finished moving from AWS to it’s own datacenters and the process was extraordinary and really impressive. For what Dropbox is doing, it makes sense that it owns and operates its own infrastructure and storage and tooling.

Of course, you can also have the inverse. Zynga famously moved off AWS as its demand peaked and it saw the cost savings, and then had to move back to it, after demand died down and the numbers of owning and maintaining its own infrastructure no longer made sense.

Netflix has moved much of its stuff in-house, but still relies on AWS and likely will for quite some time.

But on the whole, yes, I absolutely see cloud providers moving to offer specific business and business vertical centric solutions with pricing that is lower than what those businesses could achieve on their own, even if you take some of the “services” stuff out of it snd are just looking at raw infrastructure costs.

Is it because Starbucks has the most efficient cost outlay for long term investment in a user's needs?

Or is it because people just want some damn coffee and there's one on every corner?

Or is it because, in a world full of places to buy coffee, one place gives you everything you could ever dream of in a coffee place?

That is what the big cloud providers are. They are Starbucks. They are not the cheapest. They aren't even the best. But they are everything you want.

If your company gets Starbucks-huge, you don't need to buy your coffee from Starbucks. You have your own deals with roasters and your own supply chains and baristas and coffee logistics experts.

That's why some companies build their own. Not because it's a better idea (it's not), or because Starbucks costs too much (compared to the investment in re-creating Starbucks?). It's because they are a business that effectively makes their own coffee already, so it makes no sense to pay Starbucks for it. Of course, they won't have a Starbucks once they make their own coffee, but they will have served their needs well enough.

That may actually work the opposite way. The big guys can negotiate pricing with the cloud providers to the point where they may be running at close to cost. It's the small and mid tiers that get hosed with cloud pricing.

>You personally need to run the numbers with both scenarios. Depending on your use case, it may be cheaper to be in AWS

I'm not sure about that. Certainly cloud infrastructure provides a level of flexibility which may be advantageous if you're going through high rate of growth. Outside of that, I'm not sure you'd see any cost savings.

Stories like this can be really misleading because large companies almost can't help but trick themselves into financial shenanigans. It's very possible that Dropbox just spent $100M upfront to start saving $35M / year relative to AWS current prices... but discovers in year 3 that they are no longer saving money because AWS has reduced prices via their own R&D, which is spread over a massively larger customer base.

Now, because Dropbox is a storage company, it may well make since for them to continue R&D and try to keep pace with AWS, at least for their own needs. But 99% of other companies - of any size - would likely fall on the wrong side of the scenario above.

Nothing I have seen indicates dropbox "built its own datacenter." It looks like they are in Equinix, CoreSite, and DRT colocation.

Or they can go through a 3rd party consultant to take care of it so they can focus their cycles on more important issues.

Not everyone is an infrastructure provider. Time is a limited commodity, and there are clear benefits of spending as much of your time on the core business.

Just saying spend isn't the only factor here.

Wow thank god some of y'all aren't running these businesses.

It still surprises me every time I see failures to think marginally.

2.8% of a big number is still a bigger number than 2.8% of a small number. Not sure what point you're trying to make here...

So even if it were a wash financially, it's still a huge plus.

So, essentially, in the same building or across the street? May be very tricky to pull off.

The usual rule of thumb is that you assume 2:1 for salary and support costs — that starts to drift at the higher end of the pay scale but I'd doubt that a company in San Francisco isn't paying a substantial amount for office space, health insurance, etc.

Your general point is still correct: call it a hundred engineers to break-even and it's likely still a substantial win, and there are some interesting angles for additional cost-optimization given Dropbox's mix of high network traffic and long-tail storage.

I think it's a good idea. But when deciding whether to acquire a company or not, there are several factors involved, only one of which is the technical fit.

But why run servers when you can just put your workloads in lambdas. That's a huge money saver, unless you're hosting video games.

"Cloud" providers are so much more than just the hardware. There are probably a lot of AWS customers who could absolutely save lots of money if they took all their cloud servers and magically made them physical on-prem servers. But then they might hit a situation like:

"We need to create a whole new prod-sized cluster for load testing but only for a day". Do you rack all those servers, do the test, then take them off and bin them? Or what?

I'm tempted to go on and on with similar examples but imo the biggest deal with cloud providers is that they can operate at such an insane infra scale that it lets you treat extremely large quantities of servers like an abstraction instead of a physical metal box that needs to be bottle-fed and rocked to sleep at night lest it get cranky.

I think at fairly small scales it's easy to build in-house systems that let you treat servers like abstract units as long as you're not trying to 2+x your infra dynamically. But cloud solutions let you do that because your scale <<< the cloud providers' scale even at pretty large values of scale for any one company.

How much time you have to spend is generally related to how many servers you have. In my experience, if you have automation setup correctly (1-2 weeks) you can average around 5 hours per month to manage about 30 servers.

Also, there is not only aws vs on prem.

There are solutions in the middle where you don't have all of the AWS services but price is much lower.

I've seen very average businesses spending 1mln per year in AWS for, really not much. IMHO most mid businesses would be better off renting servers and having some staff maintaining them.

Virtual private servers, bare metal hosting, cabinet, rack, or cage in a colo, and then operating your own datacenters.

The more you buy into the AWS services and not just EC2 instances, the harder it is to move out. In other parts of the thread, people are saying you need to have a good team to run your own infra, but you also need to have a good team to run on other people's infra, and debug their bugs without visibility, so that you can guide their techs to fixing your issues, so I don't think that using other people's services absolves you of having a good team.

Really the issue isn't age of company or number of engineers. It's the number of servers you need, and how stable that is. If you can't predict your server count 3 months out, you need to host with someone who has stock on hand to buffer your growth. If your server count is small, you get better geographic redundancy picking up an instance here and there from around the world from a single vendor; colo space is available everywhere, of course, but you would likely be dealing with different vendors in each locality.

If you can take advantage of growing and shrinking your deployment throughout the day in response to load, and there's a dramatic difference between peak and trough, it makes a lot of sense to be somewhere that you pay by the hour, instead of by the month or have to buy for the peak and let it idle.

[1] Or Google Cloud, or Azure, or Oracle Cloud or whoever.

The issue is that people use the cloud as just another random VM to run their software.

I'm sure Netflix uses a lot of AWS, but as a percentage of their total traffic (which is absolutely enormous), it's probably not that much.

I use OneDrive because it's free with Ms Office, which I need anyway, and their 'family plan' pricing is great. I decide cloud storage for like 5 accounts, backups of family photos, etc.

That is in spite of the fact that dropbox is miles better, and has extra features - they dont move the needle.