The $3.2 million reason why Basecamp quit the cloud

The cloud market which has been enjoying exponential growth in recent years seems to have hit a snag this year as more customers continue to raise their concerns over the high cost of cloud services. Recently, David Heinemeier Hansson, CTO of 37Signals shocked Twitter users after recounting how much his company spent on cloud services in 2022 which led them to quit the cloud.

After doing the maths Heinemeier who is also the founder of Ruby on Rails says that 37Signals spent a whopping $3,201,564 in 2022. That translates to $266,797 per month.

“We spent $3,201,564.24 on cloud in 2022 at @37signals, mostly AWS. $907,837.83 on S3. $473,196.30 on RDS. $519,959.60 on OpenSearch. $123,852.30 on Elasticache,” the CTO wrote on his Twitter account.

He further added that this was even after deliberate attempts from the company to keep the cost down. Heinemeier noted that the company operations team runs a tight cost-inspection program with monthly reporting and tracking and they have signed up for long-term agreements on Reserved Instances and committed usage which provides them leeway to negotiate the price.

He then went ahead to compare the numbers with an on-premise solution noting that it significantly reduced the cost.

“Contrast that with just this one example of insanely powerful iron you can buy from Dell. The first R6525s have 256GB RAM, 3TB NVM, 2x10G net, 2x AMD EPYC 7513. Second, same, but 2x AMD EPYC 7443. So that's a total of 288 vCPU, 15 TB NVM, 1.3TB RAM for $1,287/month over 3 years!” he wrote.

Hansson revealed that the company’s biggest cloudy line item is $907,837.83 to store over eight petabytes of data in AWS's Simple Storage Service (S3) which uses a dual-region replication strategy to ensure services are not disrupted if one location fails.

This is one issue that the CTO will have to deal with since moving to on-premise exposes the company to a single point of failure (SPOF).

Hansson has said that he will repeat the public accounting exercise again next year, so I guess we just have to wait and see how it all works out.