Cloud Computing Set To Bring Next Start-Up Boom

Going by the numerous negative economic headlines recently, it is understandable if one assumes that we are stuck in economic hopelessness. Taking another look however one can see the potential for another major economic boom. But how?

This boom will be engineered by the vigor and creativity of a kind of entrepreneurs mostly youth who are either still in college or just out of college while others are currently working in this environment which is almost void of opportunities. Another deviation of this boom from the norm will be that the entrepreneurs in the current times have cloud computing an amazing resource readily available.

With the huge number of unemployed professionals and huge amounts of resources available for very little initial investment the view is now shifting with most people preferring start up to full-time employment.

This is not limited to cloud service providers only but rather includes all types of companies from law to science to engineering to entertainment and any other field imaginable. It also includes groups or departments in large organizations currently in place and even individuals working from home.

A New York Times columnist, Tom Friedman recently observed in an interesting way how the advancement of our economy is envisioned: cloud computing bringing about new growth and opportunities. He talks of a statement by LinkedIn CEO Jeff Weiner who reiterated how easy and cheap it is to now start up a business in spite of location due to access to infrastructure for innovation.

In the past beginning a serious enterprise demanded huge amounts of start-up capital for man power acquisition, advertising, physical space and technology was needed. Thanks to cloud computing however the part on technology acquisition has become much less intimidating since cloud computing has made the cost of acquiring infrastructure for a new venture very little.

A survey of 550 recent start ups by Best Vendor shows that most use the cloud: 71% used quick book for accounting, 70% used Google Analytics for BI, 59% used Sales force for customer relationship management while 30% used Drop Box for storage and backup. A report on 280 North Inc. which is a start up based in San-Francisco and which produces presentations and web development software was carried out a few months ago. Its founders reported using $4500 as initial monthly expenses by utilizing free code available on the internet and storing data on Amazon in rented space. ‘For these companies, now food and rent are their greatest worry while ten years ago I don’t imagine a line of code being written for less than a million dollars.’ These were the sentiments of Chris Secca an investor of 280 North Inc. and a former executive at Google Inc.

To clarify, I am only talking of start-ups since the cost of the cloud is fair for the initial 2-3 years but soon equals the cost of on-location IT infrastructure. Some start ups actually prefer to make up their own IT from the word go but it is at this start up period that that the cloud allows for more innovators to enter the field. Statistics by O’Riley media show that companies can reduce IT costs by up to 30% over a period of three years by using cloud as compared to on-premise infrastructure. For a small user with 2 application servers and 2 database servers it would cost $149000 to setup an on-premise IT center while if cloud is used it would cost a total of $106000 for a period of three years. With cloud, a small server operation will incur nearly zero cost as compared to $40000 needed for a normal on location software and servers.

To attain an insider’s perspective I had a chat with founder and CEO of cycle computing, Jason Sowe on his journey as a businessman who started his venture on the cloud and now gives others a similar opportunity. Cycle computing offers high band-width supercomputer capabilities to many start-up firms in various fields including scientific engineering and technical fields. He says any organization size not withstanding can now tap into supercomputing power. Cycle can offer super computing power to the masses thanks to the cloud, a service he calls ‘utility supercomputing’.

Many start ups and SME’s are utilizing the new cloud resource. Some of the examples Stowe gives include: a firm that designs chips runs simulations of its circuits – cycles cloud clusters, Bioinformatics’ researchers Index and query genomics on the cloud to help fight disease while a young upcoming scientific instrument company can process the high data volumes from their products on cycle’s clusters.

‘In such instances, start ups can access incredible supercomputing power and still be able to major on their main area of competency.’ Stowe goes on to say. Stowe says science oriented kind of start-ups would never get started if they didn’t have cloud and utility supercomputing. As an example he tells of Top-five Pharma which required a 30,000-core cluster at a cost of between 5-10 million dollars and was to take a period of six months to build. With Cycle’s Cloud services however it took a mere 8 hours at a cost of $10000 to have the project up and running.