How Multi-cloud Strengthens Startups

In early startup stages, you’re developing the product, testing market fit, and refining your go-to-market strategy. Long-term infrastructure decisions may not even be on your radar, but if you want to scale beyond Series B, it pays to be planful before you’re locked in with a cloud services provider and storage costs are holding you back.

How will you manage your data? How much storage will you need to meet demand? Will your current provider continue to serve your use case? In this post, we’ll talk about how infrastructure decisions come into play in early startup development, the advantages of multi-cloud infrastructure, and best practices for implementing a multi-cloud system.

Infrastructure Planning: A Startup Timeline

Infrastructure planning becomes critical at three key points in early startup development:

• In the pre-seed and seed stages.
• When demand spikes.
• When cloud credits run out.

Pre-seed and Seed Stages

Utilizing free cloud credits through a startup incubator like AWS Activate or the Google Cloud Startup Program at this stage of the game makes sense—you can build a minimum viable product without burning through outside investment. But you can’t rely on free credits forever. As you discover your market fit, you need to look for ways of sustaining growth and ensuring operating costs don’t get out of control later. You have three options:

1. Accept that you’ll stay with one provider, and manage the associated risks—including potentially high operating costs, lack of leverage, and high barriers to exit.
2. Plan for a migration when credits expire. This means setting up your systems with portability in mind.
3. Leverage free credits and use the savings to adopt a multi-cloud approach from the start with integrated providers.

Any of these options can work. What you choose is less important than the exercise of making a thoughtful choice and planning as though you’re going to be successful rather than relying on free credits and hoping for the best.

Waiting Until Demand Spikes

Let’s say you decide to take full advantage of free credits, and the best possible outcome happens—your product takes off like wildfire. That’s great, right? Yes, until you realize you’re burning through your credits faster than expected and you have to scramble to figure out if your infrastructure can handle the demand while simultaneously optimizing spend. Especially for startups with a heavy data component like media, games, and analytics, increased traffic can be especially problematic—storage racks up, but more often, it’s egress fees that are the killer when data is being accessed frequently.

It’s not hard to find evidence of the damage that can occur when you don’t keep an eye on these costs:

That’s right–it’s threading time!@chrisshort‘s surprise @awscloud bill of $2700 looks S3 driven… https://t.co/VnXufn24iA pic.twitter.com/tKLWv5rHtW

— Corey Quinn (@QuinnyPig) July 6, 2020

The moment you’re successful can also be the moment you realize you’re stuck with an unexpected bill. Demand spikes, and cloud storage or egress overwhelms your budget. Consider the opposite scenario as well: What if your business experiences a downturn? Can you still afford to operate when cash flow takes a hit?

Waiting Until Cloud Credits Run Out

Sooner or later, free cloud credits run out. It’s extremely important to understand how the pricing model, pricing tiers, and egress costs will factor into your product offering when you get past “free.” For a lot of startups, these realities hit hard and fast—leaving developers seeking a quick exit.

It may feel like it’s too late to make any changes, but you still have options:

1. Stay with your existing provider. This approach involves conducting a thorough audit of your cloud usage and potentially bringing in outside help to manage your spend.
2. Switch cloud providers completely. Weigh the cost of moving your data altogether versus the long-term costs of staying with your current provider. The barrier to exit may be high, but breakeven may be closer than you think.
3. Adopt an agnostic, multi-cloud approach. Determine the feasibility of moving parts of your infrastructure to different cloud providers to optimize your spend.

The Multi-cloud Guide for Startups

More companies have adopted a multi-cloud strategy in recent years. A 2020 survey by IDG found that 55% of organizations currently use multiple public clouds. The shift comes on the heels of two trends. First, AWS, Google, and Microsoft are no longer the only game in town. Innovative, specialized IaaS providers have emerged over the past decade and a half to challenge the incumbents. Second, after a period where many companies had to transition to the cloud, companies launching today are built to be cloud native. Without the burden of figuring out how to move to the cloud, they can focus on how best to structure their cloud-only environments to take advantage of the benefits multi-cloud infrastructure has to offer.

The Advantages of Multi-cloud

1. Improved Reliability: When your data is replicated in more than one cloud, you have the advantage of redundancy. If one cloud goes down, you can fall back to a second.
2. Disaster Recovery: With data in multiple, isolated clouds, you’re better protected from threats. If cybercriminals are able to access one set of your data, you’re more likely to recover if you can restore from a second cloud environment.
3. Greater Flexibility and Freedom: With a multi-cloud system, if something’s not working, you have more leverage to influence changes and the ability to leave if another vendor offers better features or more affordable pricing.
4. Affordability: It may seem counterintuitive that using more clouds would cost less, but it’s true. Vendors like AWS make their services hard to quit for a reason—when you can’t leave, they can charge you whatever they want. A multi-cloud system allows you to take advantage of industry partnerships and competitive pricing among vendors.
5. Best-of-breed Providers: Adopting a multi-cloud strategy means you can work with providers who specialize in doing one thing really well rather than doing all things just…kind of okay.

The advantages of a multi-cloud system have attracted an increasing number of companies and startups, but it’s not without challenges. Controlling costs, data security, and governance were named in the top five challenges in the IDG study. That’s why it’s all the more important to consider your cloud infrastructure early on, follow best practices, and plan ways to manage eventualities.

Multi-cloud Best Practices

As you plan your multi-cloud strategy, keep the following considerations in mind:

1. Cost Management: Cost management of cloud environments is a challenge every startup will face even if you choose to stay with one provider—so much so that companies make cloud optimization their whole business model. Set up a process to track your cloud utilization and spend early on, and seek out cloud providers that offer straightforward, transparent pricing to make budgeting simpler.
2. Data Security: Security risks increase as your cloud environment becomes more complex, and you’ll want to plan security measures accordingly. Ensure you have controls in place for access across platforms. Train your team appropriately. And utilize cloud functions like encryption and Object Lock to protect your data.
3. Governance: In an early stage startup, governance is going to be relatively simple. But as your team grows, you’ll need to have clear protocols for how your infrastructure is managed. Consider creating standard operating procedures for cloud platform management and provisioning now, when it’s still just one hat your CTO is wearing.

By making thoughtful choices about your cloud infrastructure and following some basic multi-cloud best practices, you plan as though you’re going to win from the start. That means deciding early on as to whether you’ll take cloud credits and stay with one provider, plan for multi-cloud, or some mix of the two along the way.