This is part two of a five part series discussing the costs related to starting a new web based company. An entrepreneur will raise money to invest in software, hardware, marketing, sales and human resources. The cost of doing all five of these things has dropped so dramatically that an engineer with a good idea and the time to implement the idea can go nuts for almost no startup capital.
Over the past couple of years, I have gotten accustomed to working from anywhere I can find (1) internet access, (2) mobile phone signal, and (3) silence if I need to use the phone. That’s all I’ve gotten accustomed to using.
The beauty of starting a web business is that I should be able to do it from the Caffe Nero that I’m sitting at. I can have meet clients here, interview candidates, and smile at the women who come in. Most importantly, great coffee comes anytime I want. Which brings me to virtual hardware.
A website might be a virtual service that anyone can access from anywhere, but somewhere its physical. Somewhere, there fairly expensive pizza box shaped devices, bolted to steel racks with cool air & environmentally expensive electricity pumping through everything. There are routers, switches, cables, keyboards, mice, LCD screens and a multitude of other crap that keeps it all going. None of this fits in the bag I bring to Nero with me, right?
Wrong. I recently came across a bunch of new services which will. Web services provided by Amazon, Mediatemple and others virtualize everything for me. For insignificant amounts of money, I can enable unlimited amounts of CPU, storage, and bandwidth – scaling up and down as the traffic demand necessitates. A couple of years ago, a startup’s second stop after visiting the hordes of Silicon Valley companies that provide software – would be the hardware store. To build a website that could scale to meet peak demand, it would cost $500,000 is hardware from Sun, Cisco, HP or whoever. Today, for $75/month for the CPU + $.20 per gigabyte, Amazon will “rent” me the hardware.
And, to further yesterday’s point – this whole infrastructure has been enabled by open source software. I’m fairly certain Amazon runs this cluster on Linux, and probably uses the Xen virtualization project to enable virtual servers.
Perhaps the total cost of ownership will balance when my website has a million active users or generates its first million dollars. Stay tuned, I’m sure to be writing about that experience when it happens. 😉