> what stops a bank from selling "virtual racks" that work financially the same as owning an Oxide rack, but it's just AWS?

I'm struggling to understand what you're suggesting here, to be honest. First of all, banks don't sell cloud compute, so no bank is going to do that. Secondly, what does "work financially the same" mean? These are fundamentally different products, AWS is a service, Oxide is purchasing hardware that you then own.

> $1m buys you 42U of, whatever. You're handed an AWS account you do not pay for, but it has the $1m worth of, whatever in it, in perpetuity. Maybe the bank even throws in some fakey market you can "part out" and "sell" your rack to, years later, at some "market price."

What would be the advantage to anyone in this arrangement? Why not just have an AWS account in this case?

> "AWS stays greedy longer than the average Y Combinator company stays private"

Just to be clear, we are not a yc company. But beyond that:

> The problem with AWS isn't even that they are expensive. It's that Amazon is greedy. It could be cheaper, which is a different thing than being expensive.

It is true that if Amazon dropped prices, then the "rent vs buy" equation changes for some customers. But there always will be some people for whom it makes sense to own, and some people for whom it makes sense to buy.

> RudderStack, Weights & Biases

Neither of these companies seem to sell general cloud computing? They also don't sell hardware? These seem like completely different businesses.

> So what IS it?

We sell servers. Customers buy those servers, put them in a data center, and get a private cloud. That's the business. Other folks are doing similar sorts of things, but they all tend to be integrating parts from various vendors. We believe that our product is of a higher quality, because we built the whole thing, from the ground up. Hardware and software, working together. There are other things that matter as well, but that's the big picture.

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doctorpangloss 3 days ago | parent [-]

> I'm struggling to understand what you're suggesting here, to be honest. First of all, banks don't sell cloud compute, so no bank is going to do that. Secondly, what does "work financially the same" mean? These are fundamentally different products, AWS is a service, Oxide is purchasing hardware that you then own.

You're telling me it's important to people to "own" instead of "rent." Well I can manufacture an "Own" out of a "Rent": I write up a contract for my customer that says "$1,000,000 for 100 EPYC servers", I ship an empty steel box, the end user gets an AWS account which they cannot add anything to, and it has 100 EPYC server metal instances in it. I pay the bills in that account. Okay? Now I have created "owning" out of renting.

If we pontificate on the objective value of owning versus renting, such as the ability to sell the hardware, I can manufacture that too: you might want to sell your empty steel box 5 years later, and I will buy it from you for $300,000. Or maybe the value of owning versus renting is that owning is "cheaper" than AWS. Okay, I'll sell the rack for $500,000 instead of $1,000,000. Do you see?

The important part of course is, I didn't have to make any racks. I didn't have to write any software. I give people something they really, really want, AWS, and I give it to them in the shape of an "Own." Of course, your "Own" and my "Own" are different, but whose "Own" is more different from a typical IT purchaser? You guys know 100x better than me.

I agree that it sounds stupid though. That's BAD. If it sounds stupid to manufacture an "Own" out of a "Rent", and it is an arbitrage, and it also is something people like, that is BAD for you. If it sounds like something banks should not be involved in, that is BAD. Banks are involved in extremely lucrative businesses!

> First of all, banks don't sell cloud compute, so no bank is going to do that.

Ha ha, but this is what you do! You might not be a bank, but you are a $100m bank account. You're more bank than I am today. And you are selling something - you know, you say you sell a rack, and you say, "that's the business," and there are people on this thread - and this is not at all an unorthodox opinion - who are saying, what is really the material difference between cloud and on-premises compute, when the interfaces between the two look so similar?

A huge difference is "Rent" versus "Own" which is why we are talking about it and why you brought it up. But I am showing you that you can manufacture an "Own" out of a "Rent," and it would be interesting to see, well, should I take $100m and spend $200m on R&D with it (ha ha), or should I take $100m and directly fuel it into a flywheel of reselling AWS into a shape that people like, which is "Own" instead of "Rent"?

> Hardware and software, working together.

See it's stuff like this that says to me, "Apple (Minus the iPhones) of Racks." That is really your thinking. It's about buying experiences. You guys are answering this question, clearly, in your own rhetoric. Because if it was really about "Own" versus "Rent," a bank could do it.

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sudomateo 3 days ago | parent | next [-]

Similar to what others noted earlier I'm having trouble understanding exactly what you're trying to communicate here. I'll respond based to points I am clear on.

Selling a customer a contract for on-premises computing and giving them a fake metal box and SaaS is borderline unethical depending on the terms of said contract. I understand the sentiment of that point though. There are many reasons a customer chooses to own instead of rent. Legal requirements, financial incentives, and even control over performance to name a few.

On-premises computing was so good that the cloud providers packaged it up and sold it back to people at a premium that could only ever be rented. The finances of that model don't make sense to many businesses as they look to reignite their on-premises computing with the modernity of the cloud providers. That's where Oxide shines in my opinion- being able to have on-premises computing that combines the efficiencies of the hyper scalers with an API-driven approach to managing resources. We take that a step further by building hardware and software in-house for additional benefits such as power efficiency, control over the networking stack, additional telemetry, etc.

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doctorpangloss 3 days ago | parent [-]

there's seriously nothing complicated about this. Define ownership. Who cares about owning a bunch of computers? If you can get the compute, and you pay up front for it once, and then you can sell "it" later, and it's cheaper than renting, what does it matter if the compute comes in the form of a physical box or if it is in the cloud? So these are all things that matter about ownership! To me, occupying a physical space is not important for ownership, wrt servers.

Nobody is saying anything about anything unethical... I am mocking the idea of needing the steel box, forget about the steel box.

It's just Amazon Reserved Instances, but with an indefinite period. Okay? Isn't that an attractive product?

Why am I talking about banks? Because maybe in Oxide's deck it says, "Amazon will NEVER do this. Amazon will NEVER sell indefinite reserved instances." Fine. Well a bank can simply pay spot prices and sell you an up front price, if you want. Okay? It's the same thing. It only matters what Amazon does when we're talking about $100m Series B, which is what this article is about! It's not about the technology.

> On-premises computing was so good that the cloud providers packaged it up and sold it back to people at a premium that could only ever be rented.

No... guys... AWS makes sense. It's not a premium "that could only ever be rented." There are a ton of much cheaper cloud providers. Amazon just happens to be selling the Rolls Royce of clouds. They have a ridiculous margin. Figma makes more profit for AWS each year than it will ever make for itself in its entire lifetime. "that could only ever be rented" is simply not true, they can afford to make all sorts of innovative pricing models, reserved instances being one of them.

Oxide just hasn't had to compete with "99 Year AWS Reserved Instances." But absolutely, positively, utterly nothing stops them from offering that. They already give you a massive, MASSIVE discount for 3 year reservations.

That said, obviously not having to deal with human beings managing hardware is valuable. It's the same shit as the difference between "AI" meaning a computer and overseas workforces. They might produce the same outputs for the same cost, but think deeply about yourself: how much are you willing to pay to deal with a computer instead of an IT tech? To avoid phone calls? To avoid doing things that might be faster, but are in person?

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kev009 3 days ago | parent | next [-]

You are casually transitioning between something that is pretty well understood through the history of online commercial computing (i.e. 1970s): 1) owned hardware versus leased/timeshared/rented hardware or services and 2) concepts of financial instruments that many readers here are probably not intimately familiar with.

If I needed a generator to run a remote mining operation, and you just told me to just buy energy futures instead, we'd be having a silly discussion. Whether it makes sense for me to rent or buy the generator has more to do with governments, [,tax ]laws, and risks that ultimately manifest as cashflow decisions. You have some valid thread you are pulling on for what are the economics of general purpose compute and to whom, but your argument needs a lot more care to carefully define and make your case and why it is okay to dismiss the outlier cases for instance.

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steveklabnik 3 days ago | parent | next [-]

> If I needed a generator to run a remote mining operation, and you just told me to just buy energy futures instead, we'd be having a silly discussion.

Exactly. Just because they are similar in some senses doesn't mean that they're fungible. Generator manufacturers still have a business even though you can purchase energy futures.

	▲	doctorpangloss 3 days ago \| parent [-]
		okay well this is an interesting and engaging conversation, if you guys someday make something in the $1,000 range you have a customer.

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doctorpangloss 2 days ago | parent | prev [-]

It would be like if you needed to buy a generator versus, I will give you a giant cable that has all the same economics as buying a generator. In that case yeah, if I am giving you all the same economics as buying your own generator, but cheaper, you would be stupid not to take my deal. It’s got nothing to do with energy futures. My suggestion is to copy what I am saying to a chatbot, and ask it what “looks like a duck, quacks like a duck” means, and what’s going on here.

	▲	kev009 2 days ago \| parent [-]
		"giant cable" -- this kind of thing does obviously happen, rural electrification is heavily subsidized by governments (see the rest of my comment..). But it is also not a realistic option in plenty of cases as such and therefore industrial companies like Cat and Cummins are happy to sell multi-million dollar generators. If your approach to the subject is to copy it into a chatbot it might explain why this discussion is ultimately specious, because a casual and even jocular approach to this is not really adequate to make any point.

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mustyoshi 3 days ago | parent | prev | next [-]

I'm not part of Oxide, but I think you're assuming everyone is okay with not controlling the hardware they run on.

There is plenty of addressable market where a public cloud or even a colocation of hardware doesn't make sense for whatever bespoke reason.

I don't think their target customer is startups, and that's okay. You likely aren't their target customer. But they've identified a customer profile, and want to provide a hardware + software experience that hasn't been available to that customer before.

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ShroudedNight 3 days ago | parent | prev | next [-]

It's not clear to me that the counter-party risk is _remotely_ similar between the two offerings. Someone reselling indefinite access to AWS could relatively easily set things up to go "poof" after a few years, whereas if it's your box, that's not possible. Now, critical components of the box could croak, and someone could still be screwed, but even there, you likely have more options for support than just paying Amazon's ransom.

	▲	doctorpangloss 3 days ago \| parent [-]
		yeah... AWS isn't going to set up anything to go poof, Oxide, despite making something awesome, will go poof if it charges too little money for it. Amazon is expensive but not that expensive.

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esseph 3 days ago | parent | prev [-]

Oxide is selling a technical solution to technical customers with ownership needs or desires for security, regulatory, or other reasons. Access to the complete stack source code is another. I know a bajillion of these customers and they all have very, very deep pocket books.

They are specifically going after features in a way that no other vendor is, with an extreme care of execution of their crafts at the highest level.

The problems oxide is solving for these customers is something Amazon has shown no interest in. Could they? Sure, they could do anything they put their pocket books to doing, but they haven't.

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steveklabnik 3 days ago | parent | prev [-]

> You're telling me it's important to people to "own" instead of "rent." Well I can manufacture an "Own" out of a "Rent": I write up a contract for my customer that says "$1,000,000 for 100 EPYC servers", I ship an empty steel box, the end user gets an AWS account which they cannot add anything to, and it has 100 EPYC server metal instances in it. I pay the bills in that account. Okay? Now I have created "owning" out of renting.

No, you haven’t. You didn’t deliver what was paid for. This wouldn’t be accepted.

> Do you see?

I’m sorry, but I do not. You’re not describing a business. You’re throwing some numbers out to describe a fraudulent enterprise.

> what is really the material difference between cloud and on-premises compute, when the interfaces between the two look so similar?

The material differences are around capex vs open spending, that you can locate your own hardware where you want to (which matters for things like “must be in a colo in southern Manhattan” (or any of the other reasons why physical location matters for latency reasons) or “must not leave the soil of $COUNTRY”), and the entirety of “TCO of owning is cheaper than renting for many workloads.” That’s just some of the larger obvious ones.

	▲	doctorpangloss 2 days ago \| parent [-]
		Okay well my feedback to you is, maybe have a chatbot read what I am saying to you, and ask for a charitable interpretation, which is the site’s rules. It’s simply a “looks like a duck, quacks like a duck, it is a duck” argument. It’s not complicated. The way I am looking at things is how a lot of execs at giant companies and VCs look at things, you are welcome to ask them too, or ask for that frame of reference from a chatbot. You guys just raised $100m, you should be able to engage over questions of arb or whatever, and just know this stuff, and be able to talk to bankers and talk like a banker. The stubbornness around interpreting this argument as negatively and as flawed as possible is a bad look.