Hemant Mohapatra Profile picture
Mar 4, 2019 11 tweets 3 min read Read on X
So @lyft is paying $8m/mo to @AWS -- almost $100m/yr! Each ride costs $.14 in AWS rent. I keep hearing they could build their own DC & save. My early days at @Google cloud, heard the same from customers: "at scale, owning is cheaper". It wasn't - they all came around. Here's why:
Construction of a mid-sized Enterprise DC (just 5000sqft), at just "tier3" availability (3 9s) will cost around 40m. If you want 5 9s redundancy you will need 1-2 failovers, so 3x that. Incld racks, cooling, power, construction and land. Using a colo @Equinix will likely save 20%
But your DC costs will amortize over 10 years, correct? Yes. But there's more. Construction will take 12-24mos. For that time, company loses focus, hires non-core engg, vendors, and planners that understand bldg codes, fire safety, env rules, security, maintenance etc.
Then for 10 years you have: ongoing support, maintenance & repair, costs of power, heating/cooling, and biometric security of physical assets. Power bills alone run in xxMs that's why Google DCs are so remote and near Geo/hydro/solar power sources.
Moreover, you need to build for 10yrs out, not today, so you'll likely either keep building more and more, or overbuild capacity by 50-100%. Your initial estimate of 40m (x3) is now 60-80m (x3).
Next comes some of the most expensive stuff: fiber! Without gigabit connectivity you are toast. Building your own undersea cables will cost 100s of Ms, so you'll be beholden to buying dark fiber from tier1/2 telcos and pay exorbitant rates for intercontinental traffic.
Next comes the outages: no matter what you do, you'll never have hot-swappable everything managed by ultra fast robotic arms that replace hard drives in seconds. Your hw will fail at rack/server level at 2-3x the avg cloud. Massive costs to missing SLAs to the biz that you bear.
Finally comes certifications for PCI, for HIPAA, for Gov, bla bla bla. You'll coordinate with the consultants day and out and it'll take anywhere between 3-12 months to get most of your infra certified to run your biz the right way.
I ran a "TCO" analysis at Google to convince a large customer why GCP was better. The numbers were clear, but customer wasn't convinced. Went to Verizon cloud, which shut down, then HP cloud, which also got shut down. Went on-prem. Then came to us. Zynga story is well known too.
Few rare examples of this working in parts. Netflix & Dropbox. When companies reach "internet scale" & have to do a lot of customization on the stack, running own infra may make sense IFF you have the GMs to cover 2yrs CAPEX & plan upfront. Both firms still use the cloud a lot.
E.g. if you are +30% of the internet traffic (nflx) it doesn't make sense to pay rent to telcos any more and feed their margins. You have the volume and stable demand to justify ownership. For the rest, cloud is where they'll live and die.

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More from @MohapatraHemant

Jun 8
For those of you following anything SaaS, you'll note there have been a lot of calls around 'saas is dead' lately. If you are wondering why, I wrote about this last yr here👇. This isn't just about saas but rather a 50yr macro CAPEX/OPEX cycle at play under the hood. : shorturl.at/sJ4IZhttps://medium.com/@MohapatraHemant/capex-opex-supercycles-the-dusk-of-saas-and-the-dawn-of-ai-saas-8aa5cfe74c93
Over the last 20yrs, both the cost of building and distributing software has COMPLETELY crashed. 20 years ago, it’d take a 4yr CS degree to write software, today thanks to internet anyone who wants to work hard can learn to code. In 20yrs world has gone from 5-6M software developers to 60M+ today. Second, the cost of distribution has gone to zero thanks to SaaS. I remember the days MSFT used to ship us a new MSDN CD monthly; imagine if you had to burn 60M CDs monthly as MSFT today? Software is shipped hourly, globally, all at once to everyone now.Image
Result? A Cambrian explosion in SaaS Globally. Every revenue pool is fragmented across lots of players now. This is also why even at $200-300M ARR scale, network effects of brand/WOM are becoming harder to see -- there are very few to none of "no one gets fired for buying IBM" type businesses today. Public markets can't foresee a 300M ARR business going to 1B ARR as easily as they would in the past. Ergo, multiples compression across the board.
Read 9 tweets
Feb 10, 2023
This is for SaaS & esp India-SaaS but applies more broadly as well. I’ve been investing in India-SaaS since '18 & harping abt this endlessly to anyone who’d listen. I’ll say it again: the age of “business model innovation” in SaaS is over. It’s done. What does this mean? 🧵1/20
If you don’t have a fundamental product or tech innovation at the heart of your company, you are looking at a 10yr slog ending in a $5-10M ARR plateau → a [10-20]% CAGR lifestyle biz; a sub-$50M M&A by the category leader; or a slow death to $0. What changed, you may ask? 2/20
10yrs ago, “GTM as product” still had a shot. Building a basic SaaS product was *hard*. Cloud was in relative infancy. At GCP, the 1st thing customers would ask us was ‘why should we entrust our mission critical software, infra, data to a 3rd party?” Today we laugh @ this Q. 3/20
Read 20 tweets
Nov 12, 2021
gm! We are pumped to release v1.0 of Lightspeed's India & SEA Crypto market map spanning L1 & L2s, devtools, CeFi & DeFi, NFT & P2E gaming, DAOs, analytics & more across India+SEA. See shorturl.at/lwJQ4 for the full blog & what we are looking to invest actively behind: 🧵
Circa Nov'20 we were seeing 1-2 crypto cos/mo. Today we see 2-3 crypto cos/day! India & SEA are fast emerging global epicenters for crypto. Lightspeed has invested in 50+ crypto cos since 2013 - most of it in 2021 e.g. @FTX_Official @AaveAave @OffchainLabs @solana @PintuID & more
The opportunity set 2-3yrs ago in this region was primarily in CeFi -- e.g. @CoinDCX @CoinSwitchKuber @WazirXIndia @PintuID @indodax have scaled really well. Today we see a much broader opportunity set spanning infra, devtools, DeFi, NFTs, DAOs and Gaming - v. exciting times!
Read 10 tweets
Nov 7, 2021
The 2010s were all about the Cloud wars. The 2020s might just be about Chain wars. Before chain maxies, there were cloud maxies. I know because I was one while @Google. We ended up in a precarious race to the pricing bottom before learning few hard lessons & innovating out of it:
In early days of a stack, innovation first concentrates & then moves up. The 1970-80s were about the processor wars. The 90-00 were about the OS wars. Early days of cloud were about basic storage, compute, networks, before moving to higher level services e.g DB-aaS.
But Fragmented lower layers can't support upstream innovation; good luck building higher-order services when the underlying infra keeps breaking apart. So, not only does innovation concentrate, lower layers also consolidate as innovation starts to move up.
Read 15 tweets
Apr 26, 2021
Oxygen vendors for Banglore (23 total). All are verified today. Please RT (multiple tweets / thread):

1. Drug Controller Helpline 24x7

2. Ganesh

3. Manoj

4. Ramesh

5. Srikanth V
6. Contact: Universal Air Products
Subhashish Guha Roy

7. Company Name: Peenya Industrial Gases Pvt. Ltd.
Name: Ramesh
Number: 9686196642

8. Contact: Amogh Gases Pvt. Ltd.
R. Mohan Kumar

9. Contact: Bhuruka Gases Pvt. Ltd.
10. Contact: Eureka Gases
9035588758 , 9535509423

11. Contact: Galaxy Air Products
R Tothumuthu
9448821347, 8867715015

12. Contact: Inox Air Products
Kiran Radu

13. Contact: Lindie India Ltd.
Read 5 tweets
Mar 8, 2021
It was great to talk to my friend @balajis a few weeks ago. He is a quintessential futurist, living maybe 10-20 yrs in the future & has been right about so many things that sounded ridiculous back in the day. Genomics, Crypto, DeFi, Covid. Highlights in thread. #EE21 (1/11)
We asked Balaji - why is he the way he is? He responded by explaining that there are 2 types of CEOs - a COO type (those who ensure the trains run on time) & a CTO type (those who think & live in the future). While both have their merits, he gravitates towards the latter.
As the CTO type, he spoke of his interest in identifying powerful secular trends & behaviours e.g. rapid adoption of internet applications that are revolutionizing humanity - from meeting to mating! Being aware of these ‘curves’ helps in hypothesizing where we are headed.
Read 12 tweets

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