YES! This is VERY true
I'm curious to learn why, if there's any more you can share. What about vertical scaling, i.e. bigger machines instead of more of them? Can't that go pretty far?
For everyone that will say "well why..."
1. real products need a generally available shipping unit (SKU) when your customers are enterprise / telco types.
2. for item 1, what is the lowest common thing this type of customer would take - a VM they can run on their existing virtualization setups. the reality of K8s, containers in this type of customers at that point was near zero.
3. there was thoughts about a SKU of a HW appliance, ie, beefy server and just toss CPU/RAM in it and ship that. shipping some stupid HW appliance that we controlled would just be a distraction and a waste of money also requiring 2 shipping artifacts, 2 test setups, etc. not to mention the need to sort for support for HW failure (you can contract with Dell for example to have them label their Kit as your appliance).
I don't understand the issues with using a bigger VM, but I have no reason to doubt you.
I absolutely hate waste and was always proud of myself when I found ways to shave a thousand here and there off our AWS bill, but it was a bit depressing when I went through the thought exercise of "What would it be like for the company if I managed to get everything onto the AWS free tier?" And then compared that to what it would be like for the company if we found a way to make 1 or 2% more in revenue.
Early on, the math heavily favors worrying less about infra spend and more about product enhancements that can build revenue.
(Although often reducing the size of your infra for other reasons - usually around complexity for ops or ease of development can also have the side benefit of reducing cost and it seems worthwhile in those cases.)