IMHO, a startup should not start with dedicated, but perhaps when you get to a certain size, perhaps, dedicated hardware, team and bandwidth is the way to go.
Just like you will not have a dedicated chef to cook your meal at start, but rather outsource meals, etc.
-- http://www.bbc.co.uk/news/business-12406171
What's the biggest technology mistake you've ever made - either
at work or in your own life?
Prior to Facebook, I was the chief executive of a small internet
startup called FriendFeed.
When we started that company, we were faced with deciding whether
to purchase our own servers, or use one of the many cloud hosting
providers out there like Amazon Web Services.
At the time we chose to purchase our own servers. I think that was
a big mistake in retrospect. The reason for that is despite the
fact it cost much less in terms of dollars spent to purchase our
own, it meant we had to maintain them ourselves, and there were
times where I'd have to wake up in the middle of the night and
drive down to a data centre to fix a problem.