alt Hacker NewsI'm starting to wonder though whether companies even have the in-house competence to compare the options and price this risk correctly.
>Now a good company would concentrate risk on their differentiating factor or the specific part they have competitive advantage in.
Yes, but one differentiating factor is always price and you don't want to lose all your margins to some infrastructure provider.
Replies
sam_lowry_ • today at 8:34 AM
Precious real-world engineering skills also play a role.
But most importantly, the attractive power that companies doing on-premise infrastructure have towards the best talent.
Software companies have higher margins so these decisions are lower stakes. Unless on premises helps the bottom line of the main product that the company provides, these decisions don't really matter in my opinion.
Think of a ~5000 employee startup. Two scenarios:
1. if they win the market, they capture something like ~60% margin
2. if that doesn't happen, they just lose, VC fund runs out and then they leave
In this dynamic, costs associated with infrastructure don't change the bottomline of profitability. The risk involved with rolling out their on infrastructure can hurt their main product's existence itself.