Sure, but for many venture funded companies and even large enterprises top-line is the top metric you're focused on. If you're in a growth industry it's about top line revenue, capturing market share, and cost of underlying bits will eventually come down.
> turns out to just not be true in practice. People pay us (Cloud SQL) and AWS (RDS) a surprising amount of money to run MySQL in a VM for them.
For infrastructure providers to "service-ize" you can set cost as a much smaller markup on the cost of the raw infrastructure. Most large organizations (AWS/GCE) have a model where they give some credit for the underlying infrastructure back to the team that servicized things. This is quite a bit different from a smaller startup that still needs to make some reasonable margin but has significant cost of goods of the infrastructure itself.
At the same time I fully agree with the notion that you should build and run a service, but if the marketing or even product perspective of such a thing is we installed a VM for you you're entirely missing the point. Having built an as-a-service product a few times over, there is a lot of engineering and product work that goes into it. Turn key backups, point in time recovery, high availability, performance monitoring are all not just installing a VM. And it's very different from building a core database engine. While there can be many benefits from collaborating on them, they are very different skill sets and the notion of focus shouldn't be underweighted.
So outsourcing the database is a very logical thing to do: if you can trust a third party to have a reliable backup/recovery story, that's one thing that can kill your business that you don't have to worry about.
As a happy RDS user, I totally agree. Surely, I could run MySQL and the result would be mostly fine, after some mistakes and lessons learned. But all the things such as upgrading, etc still take time, add a bit of stress, one more thing to care about. Could that time and energy be spent on more valuable (from business point of view) activities? Yes.
I have regretted this decision.
If you're open to edits, the $200k revenue/employee rule of thumb really doesn't make a lot of sense when you're comparing your three alternate business models (Hosted Rethink, DBaaS Rethink and "Hey, maybe PaaS on top of Rethink?").
Like you, I thought it would be way too hard to run a service (my own company was encouraged to do so, and we shied away for it for the same reason you stated). However, having seen it now from the inside for GCE for nearly 4 years, I can say it's much easier to "service-ize" yourself than it is to have built a product people want. And moreover, the shell scripts and operations stuff really scales (effectively, the hosted DB offering is the binary plus a bit of bash, while the other offerings require yet more "not done before" software).
Even more surprisingly, this statement:
> Managed hosting is essentially running the database for people on AWS so they don't have to. The alternative to using these services is setting up the database on AWS yourself. That's a pain, but it isn't actually that hard. So there is a very hard cap on how much managed database hosting services can charge.
turns out to just not be true in practice. People pay us (Cloud SQL) and AWS (RDS) a surprising amount of money to run MySQL in a VM for them. It turns out that people really like outsourcing even a small amount of pain, but that we're (as engineers) easily blindsided to "Um, why would I pay you XX% over the raw VM price? You're just running some shell scripts for me". Little things like automatically updating to the latest version, configuration replication, etc. are things that nobody will bat at an eye at paying you for (I believe in the DB space in particular, it's because the overall cost of your DB is dwarfed by "All the rest", so it's a good trade of people time versus $$s).
I hope this doesn't come across as Monday-morning quarterbacking, but if I did mine over again I'd take the "Build a great piece of software, and even if it's open, service-ize it for folks". It's true that you're competing with the Cloud providers, and that it seems like you wouldn't really be able to get people to pay you for it (and it's not your core competency), but I think it's the best option for this flavor of infrastructure software moving forward.