The increased expenditure on cloud computing infrastructure has a real impact, some of which involve a lot of wasted spending which could affect a company’s margin.
For a software start-up, there will be a point where it must have become more relevant to millions of users, and another point where spending on cloud computing could affect margin, as the cost of cloud computing infrastructure could take up a large share of the cost of revenue or cost of goods.
Martin Casado, general partner at tech investment firm Andreessen Horowitz, and Sarah Wang, partner at the firm, as they hoist a flag over public cloud spending, which is now increasing as the industry matures, note: “It’s becoming evident that while cloud clearly delivers on its promise early on in a company’s journey, the pressure it puts on margins can start to outweigh the benefits, as a company scales and growth slows. Those who have done this have reported significant cost savings: In 2017, Dropbox detailed in its S-1 a whopping $75M in cumulative savings over the two years prior to IPO due to their infrastructure optimization overhaul, the majority of which entailed repatriating workloads from public cloud.”
For more information, read the original story in ZDNet.