In the case of a lot of tech companies, the entire market is broken and leads to weird incentives rarely seen in any other industry: companies that aren’t profitable, don’t have a real product people pay for, don’t have a clear, plausible path to profitability and yet somehow stay in business because investors are happy to burn money.
This completely reverses the typical market dynamics. The company is more focused on catering to investor’s wet dreams than actually solving business problems, and “engineering playgrounds” with 3 different programming languages, microservices, AI & blockchain netting them a 5-figure monthly AWS bill is something that appears to please investors more than a rock-solid, “boring” backend. Maybe the complex architecture succeeds at obfuscating the fact there’s no business model nor plans for one?
I often wonder why investors love paying 5 figure aws bills; even worse, why they consider lower bills or not using 'the cloud' a sign of cto incompetence. Even if the company can run on $500 hosting instead. Must be because it is easy to do DD on: AWS, check, TS (JS is now a reason to not pass VC dd I heard from friends) check , React check, microservices, check, etc.
Not using the cloud has many hidden risks. You need multiple physical locations for reliability, those now need to be staffed.
If you instead use cheaper 3rd party hosting companies, you may have hurdles to growth and future migration cost since those companies do not have many of the certifications required.
From an investor POV, paying a little extra now is often worth it to reduce risk and remove barriers to explosive growth.
You are right but that does not really explain why you would spend so much money, masking incompetence usually. Like not having database indexes because 'the cloud scales' which I see all the time. And it does scale, running up bills for rds or dynamo to extreme amounts. And investor dd sees this as a positive, like 'spending as much as possible' somehow means things are going into the right direction. It can be, however, I think spending it like this is a weird trend.
I can see the upside for many things, but you can do that efficiently, not costing 5 figures.
Is that a real problem with a reputable bare-metal hosting provider? I agree that a fly-by-night VPS provider would be a major risk, but OVH for example is a major host in Europe (that successfully hosted websites long before the "cloud" was a thing). They have all the major certifications and have been in the business for two decades now and their uptime is solid.
The only risk I can see is the lack of managed services, but Postgres isn't that hard to manage yourself, and other value-add AWS services can still be used (the cost savings of your baseline load being on bare-metal would most likely still offset the bandwidth costs of moving data between AWS managed services and your bare-metal host).
Sure cherrypicking postgres since it has more experience as "on-prem". Try and replicate s3 type of service for me or something like sns - even without fancy stuff.
You can still use S3 even without being on AWS, though for more reasonable (< 1TB) amounts of data, old school local storage served by Nginx does the trick.
For SNS, what does it offer that RabbitMQ doesn't? I've always found RMQ to be rock-solid and wouldn't use SNS anyway.
I wonder if this isn't so much about the tech itself, but rather the expectation that the best realistic outcome for a startup is an aquihire. Following the current "industry best practice", even if it's more expensive and might not even make sense for your product requirements, is just insurance that your acquisition will pass a future tech compliance audit: a buyer will want to be able to support your product and cannibalize it if necessary and that's harder to do if it's written in a lesser-known language/framework.
This also goes some way to explain the leetcode, "hiring only the best from Stanford/MIT" hiring nonsense for pretty mediocre cookie-cutter products that could be perfectly well executed by couple mid-range developers: your developers' resumes are as much a part of any potential acquihire package as the codebase and user data.
There's definitely a stage for startups where the AWS bill doesn't matter because sustaining user growth is more important, but there's also a stage where the company, usually B2B, is trying to improve margins because it helps a lot with valuation.
1. They are already an investor in Amazon. They have an interest, both in the actual spending and the trend setting of current and future companies to use AWS.
2. It is actually increasingly hard to get an industry wide reputable hosting provider ( Cloud, VPS , Metal or not ) that many investors could agree upon. Just like you said which makes DD harder.
3. Amazon actually offer heavy discount and even lots free credit to startup by accredited VC. Meaning the difference in the first few years is actually tiny. And in your example, if it can be run on $500 budget elsewhere you can bet it will literally be free on AWS from those startup.
Job hopping programmers are compensated for how rare their skill is and not how much value they add to the business. It’s another flaw in capitalism.
Reward employees a direct and substantial cut of the profits and incentivize to them to stay 5-10 years and these behaviors should disappear.
The loss of job security, frequent job hopping has created more incentives to optimize for the next job switch and not value add.
The explosion of startups also contributes to this. They often have to attract employees by offering the promise of new tech. New tech can propagate these days same way how Bitcoin prices rise. Our industry is in a financial bubble which has created a complexity bubble. The financial bubble collapsing will pop the complexity bubble leading to huge surge in boring / low overhead stable tech.
Not to mention how ageism plays into this. People will hire someone who spent the past 5 years switching between 5 different JavaScript frameworks over someone who spent five years writing Java at some boring company.
Most startup employees know they aren’t getting rich. They go on to milk the startup for maximum resume points and move on.
The VCs unload these bloated companies into inflated stock markets and the cycle continues. Some small progress at the cost of tens of billions and lots of running in the same place.
Our industry is like some eccentric Howard Hughes drowning in so much money that all we do is come up with ever more esoteric contraptions to escape from reality.
DHH starts really small companies and pays his employees really well and doesn’t work them too hard. Employees have no real reason to leave. They see a direct link between the low overhead and their job security and work life balance. Since the team is smaller the work is less alienating / hyper specialized leading to a deeper connection with the company and its customers. Aligning incentives fixes a lot of problems.
Then company B comes along and sells same widget for 3 silver.
Company A will either learn to be more efficient and sell at 2-3 silver, or go out of business.
Perfect competition only happens in text books. In the real world monopolies, oligopolies, regulatory capture, control over social connections and capital, markets with asymmetric information (VCs vs public, employees vs companies), management consecrating itself into a class with its own interests , mean that companies can go on for 10-15 years before they are punished.
By the time the market wakes up you’ve switched 3 times and after 10 times you’re retired in the suburbs with a nice BMW. Who cares then.
This is quite a simplistic view of capitalism. Consider the Moloch effect[1] where rational choices in environments with hard coordination problems can lead to degenerating incentives.
Capitalism is not the same as free market; capitalism is rather a system where your economic power is mainly determinated by the amount of capital you have (money, investments, means of productions...) rather than class, bloodline, titles, popularity, or legislative regulations[2].
Capitalism is linked to free market in that they work well together: free markets want enterpreneuers to be compete for efficient capital gains and people with capital like how their economical power is only bounded by their capital (with the potential of an exponential growth). Apart from this ether can exist without the other.
This is how supporters would like them to work together, but there can be a lot of bugs and traps on the way.
I am not sure about the down votes (no reason for them in my opinion) but the casual jab at capitalism looks gratuitous and does not help making the argument seem stronger.
It's not gratuitous if it is central to the argument. The state of affairs they describe is dependent on a virtualized capitalist economy being in place.
I wouldn't say that that's a flaw in capitalism, it's just that one (skill rarity) is observable ex-ante, the other (value added) is only observable ex-post.
I don't buy this theory, because I don't think there are many investors that actually care about the tech stack. If they are, I'd say they're bad investors.
You could create a successful company on any tech stack. It's really like trying to invest in a company based on the way they decorate their HQ. Does it matter at all? Maybe only if it's ridiculously extravagant compared to their revenue.
I have had it be an issue with investors during the due diligence phase. We were very far along in the fund raising process when we got to the technical due diligence. They brought in an expert advisor to discuss our tech stack and he seemed very concerned that we were building on a php/mysql stack.
They pretty much ghosted us soon after that meeting. Though they did not specify that as the reason, it seems most likely that their advisor told them we don't know what we are doing technically.
I've worked in over twenty languages in my career, and you can't pay me to work with PHP anymore, even though there was a brief period where I thought it was the best thing ever as a new programmer. But that's just an artist being picky about his tools.
What matters with a startup is executing, and that means using tools that let you execute well. If you're most familiar with PHP and MySQL, then that's what you should use.
As someone biased against your tech stack, I fully support your decision and think the expert and the investor have no idea what really matters, hence I stand by that they're a bad investor.
That...is honestly shocking. Yes the programmer in me cringes at the though of going anywhere near php/mysql, but the business side of me looks at this stack as pragmatic, well documented, well understood, and easy to hire for.
On the other side I'm evaluating CL for my next endeavor since I personally find it to be my most productive language, but realistically I'll settle for Clojure and even then I'm worried if that is a bridge too far when it comes to the whole funding/due diligence issues.
I'd love to know what their export advisor considers the right decision?
He was an ex-googler, so I'm sure only some combination of c, go, and java would have sufficed.
Php 7.2+ is great for a lot of saas products and is super fast now. and mysql 8 is rock solid and battle tested in a lot of production systems.
Starting over, I would consider PostgreSQL because it has some nifty features. But now that mysql has added json support, I am less inclined and I see a lot of complaints about performance and scaling that I don't think is as much of an issue with mysql. There isn't a whole lot more out there for relational databases (that doesn't cost a ton). And not using a relational database for most saas systems is just crazy talk.
This completely reverses the typical market dynamics. The company is more focused on catering to investor’s wet dreams than actually solving business problems, and “engineering playgrounds” with 3 different programming languages, microservices, AI & blockchain netting them a 5-figure monthly AWS bill is something that appears to please investors more than a rock-solid, “boring” backend. Maybe the complex architecture succeeds at obfuscating the fact there’s no business model nor plans for one?