I agree that there's a point where co-locating is a good thing to think about. But I don't think $100k is it. To put it in perspective, $100k is probably how much an intermediate engineer costs a company (not just salary).

In exchange, you give up the usual cloud conveniences like easier budgeting, easier scale-up (and scale-down), lower up-front costs (which is a big deal for most early startups), better SLAs, being able to use cloud object storage without paying transfer fees, access to support, fewer things that can go wrong, etc.