cloud cost optimization

Where cloud management is going next • ZebethMedia

By zebethcontrolPosted on October 26, 2022Posted in cloud cost optimization, cloud infrastructure, EC Cloud and Enterprise Infrastructure, Enterprise, finops, product-led growth, Startups, usage-based pricing, VentureNo Comments

“There’s a big wave of innovation in managing cloud costs,” Team8 co-founder and managing partner Liran Grinberg told ZebethMedia as part of our latest cloud investor survey. Having noticed tailwinds for the wave of B2B startups that offer cloud cost-optimization solutions, and cloud management more broadly, we were curious to know where VCs thought the space was headed — and the answers we heard show promise. Indeed, the tailwinds we are referring to aren’t limited to the current macroeconomic climate. The need to better manage cloud spend is undoubtedly fueled by the downturn, which makes everyone more cost-conscious. But, as we will explore, innovation in this field is also a corollary to broader trends, such as the rise of product-led growth among B2B SaaS companies, which have become both practitioners and consumers of usage-based pricing. There are also reasons to think that we haven’t seen all of it yet. “We continue to see tremendous opportunity in the cloud management space given how early we are in the cloud adoption journey,” Battery Ventures venture investor Danel Dayan said. So what might be next? Let’s dive in. Beyond cost optimization The first wave of cloud optimization solutions did the obvious: help companies track and lower their cloud spend. Per Team8’s Grinberg: “The first generation of cloud cost management (represented by Cloudability, CloudHealth) helped provide visibility and clarity on the spend on AWS, Azure and GCP. Meanwhile, cloud cost-optimization tools (represented by Spot, Granulate) allowed for tactical changes to lower costs.” Consolidation followed, ZebethMedia’s Kyle Wiggers noted, “as incumbents in adjacent sectors saw the opportunities presented by cloud cost optimization. Microsoft in 2017 acquired Cloudyn [ … ]. Then, in 2019, Apptio snatched up [ … ] Cloudability, while VMware and NetApp bought CloudHealth and Spot (formerly Spotinst), respectively, within the span of a few years.” And this April, Intel bought Granulate for $650 million. As time and mergers went by, it became clear that there was more than startups in this space could do for their customers. First and foremost, cloud teams required more than cost optimization — they needed cloud management.

Why startups are better off prioritizing growth instead of optimizing cloud costs • ZebethMedia

By zebethcontrolPosted on October 24, 2022Posted in cloud cost optimization, cloud infrastructure, Enterprise, investor survey, Startups, VentureNo Comments

Everybody’s talking so much about cost optimization and extending runways that startups across the board are looking at every little expense as they seek ways to navigate the downturn. But some costs are better left untouched simply because the work involved may not be worth the payoff. According to several investors we surveyed recently, cloud costs are one such area that startups can afford to ignore, at least in the early days. As Zetta Ventures managing director Jocelyn Goldfein put it, the math needs to make sense if you’re prioritizing cost cuts over growth. “It’s not really worth optimizing your cloud spend until you can squeeze out at least half a month, better yet a full month, of runway. Usually, that’s not the case at the early stage.” It’s also increasingly important to not lose focus on product development if you’re a growth-stage startup. “I’ll always believe that getting things working end-to-end in a timely fashion and iterating on user feedback is the priority. Over-optimizing early is an anti-pattern,” said Menlo Ventures partner Tim Tully. “As they say in product teams, K.I.S.S. (keep it simple, stupid). You can always go back and optimize later.” We’re widening our lens, looking for more investors to include in ZebethMedia surveys where we poll top professionals about challenges in their industry. If you’re an investor who’d like to participate in future surveys, fill out this form. Keeping it simple, though, isn’t always an option for startups these days with the plethora of cloud and component providers crowding the market. Multicloud is now a more viable option than ever in such an environment. “While choosing a single public cloud offers more simplicity and speed,” Team8 managing partner Liran Grinberg says, “a multicloud setup will allow you to leverage the best-of-breed offering from a functionality standpoint as well as optimize for cost down the line.” However, Grinberg added that startups should be mindful of the implications of using multiple cloud vendors down the road. “Firstly, egress costs can be expensive enough to make this not worth the while. Second, you need to manage more than one provider, so your monitoring, cost management, infrastructure as code, and security solutions need to support all the vendors you are using.” Besides the usual suspects, there are now more vendors and models available to startups than there were a few years ago. This includes virtual private clouds, which can be useful for companies dealing with privacy and regulatory concerns. For a company to run its own servers, all the investors agreed that founders should first carefully weigh the pros and cons of doing so, and only proceed if it’s going to be worth it. Tully said, “Going on-prem from a data center perspective, as opposed to cloud on-prem, i.e., virtual private cloud (VPC), would require a very compelling business reason to justify.” “For starting on-prem, you should have a really, really good excuse, as the overhead cost for running this kind of operation is almost never worthwhile for startups (and even for very mature companies, for that matter),” Grinberg added. Read the full survey to find out what investors look for in cloud startups, the best ways to approach and pitch them, why cloud marketplaces are a hit, and more advice on what to prioritize when it comes to cloud-related decisions.

5 cloud investors illustrate the various paths ahead for startups • ZebethMedia

By zebethcontrolPosted on October 21, 2022Posted in cloud cost optimization, cloud infrastructure, EC Cloud and Enterprise Infrastructure, EC investor survey, Enterprise, enterprise startups, investor survey, StartupsNo Comments

Cloud cost optimization startups have become ubiquitous, and they’ve found a friendly ear among enterprise clients looking to cut costs amid the downturn. But should younger startups similarly scrutinize their cloud spend? According to several cloud investors, startups should prioritize building over optimization — unless it’s going to save them a big chunk of money. Boldstart Ventures partner Shomik Ghosh summed it up succinctly: “In early product or go-to-market stages, optimizing cloud spend should be the last thing on a founder’s mind besides utilizing as much cloud resource credits as possible.” We’re widening our lens, looking for more investors to participate in ZebethMedia surveys, where we poll top professionals about challenges in their industry. If you’re an investor and would like to participate in future surveys, fill out this form. While founders shouldn’t lose sleep over cloud costs at the early stages, they should still carefully ponder other expansionary decisions, like cloud marketplaces, before foraying out. Himself an entrepreneur, angel investor Anshu Sharma noted that using cloud marketplaces as a distribution channel has pros and cons, and shouldn’t perhaps be done from Day 1 because “it can commoditize your offering.” Quiet Capital founding partner Astasia Myers concurred, saying startups should focus on finding product-market fit first. “We encourage startups to consider cloud marketplaces once they have found product–market fit, not before,” she said. “To successfully leverage cloud marketplaces, a solution’s product marketing, value proposition, and return on investment need to be clear while exhibiting a fast time to value, which happens post-PMF.” However, because of how fast things are moving, startups can explore marketplaces earlier than they could: “Historically we saw startups join cloud marketplaces at Series D+. Now we are starting to see companies consider it post Series B.” Founders should also remember that startups are destined to become bigger, and should therefore plan ahead. “It’s always important to select a technology stack that is available in all major cloud providers and that is as elastic as possible to support those migrations should they be needed (using Kubernetes is a great example of allowing for that),” Liran Grinberg, co-founder and managing partner at Team8 said. To find out what cloud-related advice investors are giving startups these days, we spoke with: Shomik Ghosh, partner, Boldstart Ventures Liran Grinberg, co-founder and managing partner, Team8 Tim Tully, partner, Menlo Ventures Astasia Myers, founding partner, Quiet Capital Anshu Sharma, angel investor and co-founder & CEO, Skyflow Shomik Ghosh, partner, Boldstart Ventures Founders are looking to cut costs amid the downturn. How important is it for startups to optimize their cloud spend in the early days? It depends on what is meant by “early days”. In early product or go-to-market (GTM) stages, optimizing cloud spend should be the last thing on a founder’s mind besides utilizing as much cloud resource credits as possible. Finding product-market fit, engaged users, and understanding the end-user workflow and how the product is essential to these users is the most important area founders need to focus on. As the company starts to have a few million in ARR, then it starts to make sense to manage cloud spend more closely to improve gross margins and therefore the bottom line (net cash burn or free cash flow). Major cloud providers often lure startups with free credit, but they also charge data egress fees later on. As cost optimization becomes a bigger consideration than ever, how consequential are early stage decisions on choosing a cloud provider? I think picking a cloud provider at the early stage based on cost is missing the forest for the trees. I know some founders who, in the early days, switch cloud providers to keep utilizing free credits. This may be possible when there are only a few people on the team, but as the team gets bigger, everyone needs to learn and relearn documentation, APIs, and UIs, which has a bigger hidden “cost” than any money being saved. Cost optimization is not just the size of the bill at the end of the month. It’s also the velocity of the team’s product development, downtime avoided, developer experience to allow teams to move faster, etc. All of these points should be top of mind when choosing a cloud provider at the early stages. What are the pros and cons of using a multi-cloud setup instead of building on top of a single public cloud? As a company scales, teams become a bit more focused on functional areas. In the early days, everyone does everything, but as the team scales, you have not just a backend infra team but inside of that, a database team, a security team, an ML team, a QA team, etc. Multi-cloud can help get the benefits of best-of-breed tooling from each cloud provider. In the early stages of a startup’s life, it is most important to go from 0 to 1. Astasia Myers, founding partner, Quiet Capital For example, Google BigQuery may be better for some use cases than Redshift or Azure Synapse, while AWS may have the best infra management tooling. The trade-off, of course, is having to make all those tools across platforms interoperable, and the major cloud providers are not exactly incentivized to do this. This is where startups come in, and by focusing on making one product the best, they can work across platforms and integrate easily (i.e. Snowflake can be used across any major cloud provider). When should a startup consider going on-prem, if at all? Would you advise AI/ML startups any differently? In terms of terminology, I think on-prem should also be called “modern on-prem,” which Replicated coined, as it addresses not just bare metal self-managed servers, but also virtual private clouds. The most common reason startups should consider modern on-prem is for dealing with sensitive data, which especially occurs in regulated industries (healthcare, financial services, or pharma). The scope of what is considered sensitive is growing over time with regulations though, so it’s something more startups need to be aware of. A lot of