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Summary:

Inexpensive rented data center capacity and cheap but powerful open-source toolsets have completely changed the game for tech entrepreneurs, says Silicon Valley legend Andy Bechtolsheim. In short, you would have to be nuts to build, rather than rent, a data center.

Arista's Andy Bechtolsheim at GigaOM RoadMap 2011
photo: Pinar Ozger (c) 2011 GigaOM

Arista's Andy Bechtolsheim at GigaOM RoadMap 2011Today’s tech entrepreneurs would be out of their minds to build out their own data centers rather than renting capacity from Amazon or another low-cost provider.

That wasn’t a direct quote, but it’s pretty much the takeaway from Andy Bechtolsheim, the co-founder of Arista Networks (and also of Sun Microsystems).

The combination of low-cost data center infrastructure and rapidly evolving, free or nearly free open-source development tools means that tech startups can get going cheap, and if things don’t work out, move on to other things, Bechtolsheim said today at the GigaOM RoadMap Conference.

When does it make sense for a startup to invest in back-end infrastructure?

Hardly ever, it seems.

A company might build out its own infrastructure only if it’s raised a lot of venture capital, he said. But it needs to be a lot. And even then, maybe AWS is a better way. “Netflix  … uses Amazon for infrastructure. Here’s the leading, largest company in a field deciding it’s cheaper and more efficient to use a competitor for infrastructure rather than building its own.”

Silicon Valley is notorious for its high-cost structure. “It’s hard to justify  the cost of doing anything locally when the cost of power is 30 cents per kWh here vs. 3 cents for Amazon,” he said.

And it’s not just a hardware thing. “The current quality of software tool sets have improved unbelievably,” he said.

“Software programming levels have improved from C to C++ to Java to Ruby to you name it. You can now do more with fewer people and open source deserves all the credit here for creating and maintaining these tools,” he said.

The net effect is that barriers to entry have collapsed for people who know how to use these tools — and who know enough to avoid heavy spending on infrastructure hardware. “That changes the model to allow for experimentation. Unlike ten years ago, when you had to raise tens of millions to get going, now you can do it on your credit card,” Bechtolsheim said.

Bechtolsheim is also on the board of the new Open Compute Foundation, formed by Facebook to propagate specs for standard, energy-efficient data center infrastructure. OCF hopes to bring open-source innovation that so improved software tools into the hardware realm.

For those brave souls wanting to build data centers, the OCF blueprint could help. But, Bechtolsheim said, that’s for truly big companies that need to do huge webscale computing, not for startups.

For nearly every entrepreneur weighing a tech startup, it’s better to rent than to buy or build.


Photo by Pinar Ozger.

  1. Joshua Goldbard Thursday, November 10, 2011

    I stood up for five minutes waiting to ask Andy a question, so I figured I might as well take the opportunity to post it here:

    The way we consume data is evolving along and the ways we access data have to evolve as well. Companies like Cisco have made a tremendous amount of money by selling massive routers at the edge of the network. As we enter an age of edgeless networks with stochastic data access, how must networks evolve to deal with this change in access behavior? Who is leading this charge and how? In particular your comments on OpenFlow would be appreciated.

    Cheers,
    Joshua

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    1. I hope he answers!

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      1. Joshua Goldbard Friday, November 11, 2011

        Me too :D.

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  2. We could generalize that to any SMEs. They would be out of their minds to build out their own data centers rather than renting capacity from Amazon or another low-cost provider. However a problem persists in Europe, we haven’t any European low-cost cloud provider on the market and that maybe a problem for guaranteeing the confidentiality of the data!

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  3. Bechtolsheim: AWS, open source rewrite rules for startups http://t.co/wpPx0QkL
    #amazon #web #services #tech #entrepreneurs #startup #info

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  4. Bechtolsheim: AWS, open source rewrite rules for startups http://t.co/CcDuwuO1

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