Saturday, June 18, 2011

Cloud Computing and Startups : A tale of Two cities ..!!

Cloud computing as the name suggests helps in raining …!!!!

Cash Rain (of course, this was what I was talking abt) ...for Start Ups… How?

Cloud computing is more of a pricing innovation more than a technological innovation. (That’s what I think, what’s your take??)

Let’s explore together……

Cloud computing is the savior for a lot of Web based start ups , letting them start with small amounts of capital and scale quickly in response to demand (That’s why they call them On Demand CRM sometimes).

New startups don’t own anything yet, so they don’t have a legacy investment in physical infrastructure. They also don’t have IT departments, who
often have a stake in the old way of doing things.

After all, cloud computing is really just virtualization that’s hosted by somebody else. The mind-blowing thing is the ability to pay for computing like it is a utility.

Advantage 1: Success-Based Scaling

When something is a utility, you pay for it based on the amount you use. A startup can do “success-based scaling,” and have many months of minimal costs (and no revenue), before finding product market fit and starting to grow rapidly.

Success-based scaling reduces the risk of launching a startup, and reduces the capital required to do so. A startup might never find product-market fit, or it might be a hit for a few months and then turn out to be a flash-in-the pan. With cloud computing, you can quickly scale up to meet demand, and you can scale back down just as quickly.

More you Save, More you invest….

Advantage 2: Cash-Flow Positive Infrastructure

When something is a utility, you pay after using the service, instead of before you use it , that’s the difference between dedicated hosting and cloud computing. For a start up, the chance to delayed payment is real deal. Because revenues typically take time to collect, the business normally has to have a fair amount of cash on hand to continue to function while it waits to be paid.

Even a very profitable startup that is growing rapidly might have trouble paying its bills because it simply hasn’t collected the cash from its customers yet! For more information here…I have a story to tell…mail me on gold[at]screen-magic[dot]com

Advantage: Startups

Cash is the oxygen of business, and cloud computing allows companies to inhale the oxygen (by collecting revenue) before they exhale (pay their vendors). No wonder that in the last few years, web-based startups have grown like weeds even as the broader economy collapsed!

Cloud computing offers the potential to be inherently cash-flow positive and infinite growth without much of bandwidth (which is of course important in a start up).

What do you think about it….??

"Had Matrix been written on some cloud, humans would have been safe in all Matrix movies..."

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