Why 37Signals Abandoned the Cloud

Web software firm 37Signals has migrated off the cloud after spending $3.2 million on Amazon Web Services last year, said co-founder David Heinemeier Hansson, who is also the creator of Ruby on Rails. The Basecamp project management software-maker bought $600,000 of Dell servers and expects to save over $7 million in five years by running operations in-house. From a report: DHH likened clouds to 'merchants of complexity' where they are incentivized to make things as complex as possible to keep customers hooked. He compared that to the original Internet, which was not built on complex cloud services geared for multi-tenancy, but rather on simpler tools such as Linux and PHP, which anyone could use without cost. This is not to say cloud has zero value for all use cases, [Kelsey] Hightower and DHH agreed.

Clouds make perfect sense in many cases, for start-ups that do not know how much infrastructure they will need, and also for enterprises with a lack of expertise and money to burn. For many companies in the middle, though a lot of profit margin can be recovered by reducing cloud costs and running things in-house instead, the two argued.

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