Vendor Lock-In, Heroes, and Timezones

Colleen Schnettler  0:00 
So for those who are just joining us, I am in the process of building my first software business.

It is a small software widget that I am trying to sell. And so right now it's invitation only in the Heroku marketplace. So I was sharing this idea I have, and it's a product, with a friend of mine. And he brought up an interesting point. And I don't think of what I'm building as a commodity, right? We all want to feel special. But at the end of the day, I am repackaging cloud storage and selling cloud storage. So we were discussing, moving to a low a more low cost storage provider. And the storage providers claimed to have S3 compatible API's, of course, like it didn't, it wasn't really compatible. So I'm trying to determine if it's worth my time to sort it out. I mean, these guys are so much cheaper than AWS. And there's two big players in this space right now, in the file management space, they can't move to a low a lower cost storage provider, right? They're like entrenched, but if I do it now, then I can just be cheaper than everyone else.

Michele Hansen  1:13 
That can be an advantage.

Colleen Schnettler
Right?

Michele Hansen
Especially in a commodity space.

Colleen Schnettler  1:17 
Right? So I again, like I don't like to think I'm a commodity, but really, it's like cloud storage with a bow on it. Right? Like, I'm like --

Michele Hansen
It's okay to be a commodity. We're a commodity.

Colleen Schnettler  1:23 
it doesn't feel special. I guess you are.

Michele Hansen  1:28 
There's some businesses that are commodities. And I think it's just knowing what you are, and then knowing how to compete in that space, right. And in a commodity business, if you have an operational cost advantage over the competitors, even if those competitors are huge companies, then that can be an advantage that you can build on.

Colleen Schnettler  1:52 
Yeah, and I think like these, these low-cost storage providers, they just released these S3 compatible API's, like last year. So I feel like this is kind of a untapped opportunity is that no one is really, as far as I can tell, no one's wrapping them up and reselling them yet. And they're much cheaper. So AWS, you're looking at point, you're looking at two cents a gig on AWS on this other provider, you're looking at .005 cents a gig,

Michele Hansen
Wow.

Colleen Schnettler
A lot cheaper. Of course, you know, when you don't have a lot of storage, like I don't right now. It's like, Oh, it's like $5 versus $3. But if I want to really be a storage provider, like this could be a cool opportunity. And I was thinking about the solutions that are already out there are very, very image heavy. And I had been thinking that way, because I approach this problem as an image problem is well, but there seems to be a hole in the market for other file types.

Michele Hansen  2:47 
Like PDFs, CSVs, and stuff?

Colleen Schnettler  2:50 
Yeah, there's doesn't seem to be anyone kind of like helping or optimizing for -- Yeah, I mean, someone, the person I was on a call with wants to host static webpages on it, custom 404 pages. So there seems like there might be an interesting hole in this space to handle non image files. And to handle image files at a cheaper price point. I've been kind of thinking is like, I'm like the Southwest of image management, the airline, like bare bones, I don't resize your images for you. I don't give you user crapping on the front end, but I deliver a simple service with no frills. And it's easy to implement.

Michele Hansen  3:27 
I think that's a good place to start. And you're kind of reminding me of where we started with Geocodio -- even when you said Southwest, you know, my first thought was not airlines. But you know, deserts and our branding from the beginning was Geocodio, rhymes with rodeo and we had all of this Southwest style branding.

If you can find a way to be cheaper than everybody else, and be easier than everybody else like that worked really, really well for us and then differentiating into other adjacent categories that are neglected by major providers. And the way someone described this to me once, you know, I was like, "Well, what if you know, one of the big companies add that adds this and then we're out of business?" If you're doing a business, that's $500,000 a year, a million dollars a year, that's not a big enough opportunity for the big companies to go after it. And if there are people in that space who have something they need, and they're not satisfied by the option, the current options, and you can build a business that makes a couple hundred thousand dollars a year. That is a great income for a one person company and not really big enough to be a threat to any larger company so that they might go into your space, it can be a good spot to be in.

Colleen Schnettler  4:49 
Yeah, that would be an amazing spot to be in. So the only thing I have a little bit of a psychological block here because I have worked on the technical side of this for quite a while now. And now I have to potentially learn a new API to integrate with these third party storage providers. And I'm just like, I started doing it yesterday. And I was just like, I don't want to, like I'm tired. So convince me that it's worth it. It's worth it to do now. Right? Like I should do it.

Michele Hansen  5:16 
Well, let's talk about the downsides too.

Colleen Schnettler
Yeah.

Michele Hansen
Sounds like your brain is in downsides mode. So one of the risks here is a vendor lock in risk, right?

Colleen Schnettler
Yeah.

Michele Hansen
Like, if you switch vendors.

Colleen Schnettler
Yes.

Michele Hansen
Because they're six times cheaper, if they raise their prices by six times, that creates a lot of risk for you that one of these vendors, raising their prices, or changing their policies, like you are dependent on another company to make your company happen. Now, there's a lot of people who build their companies off of another company's platform. But you're, you're creating substantial risk there.

Colleen Schnettler  6:03 
But I have the same risk if I stay on AWS, and I feel like AWS is way more likely to raise their prices, because everyone is locked. Not everyone. But they have such a lock on people, right? Because they feel more reliable. I was actually looking at the stats. So my first thought was, maybe these other cloud storage providers aren't, don't have the same kind of uptime AWS does, but they do! People act like AWS has 100% uptime. And they don't always so they just have this reputation because they're the biggest player in this space. But either way, I've got a lock in, right, like I can't, I mean, I can't, I'm going to do a probably a mirror service. So I'll use two storage providers to help but ultimately, my primary storage provider is going to be locked in. I think one of the concerns, though, is these companies. I mean, they've been around for a while, like they're not materializing out of thin air. But as I mentioned, they've only had these S3 compatible API's for like a year. So I'm putting a lot of trust in a company that doesn't have the AWS level reputation.

Michele Hansen  7:02 
And that's another risk too. Like, we get this question, sometimes from customers too, right, because they're like, why would we go with you over a big company? Like, how do we know you're not just going to shut down tomorrow?

Colleen Schnettler
Yeah.

Michele Hansen
And when I dive deeper into that question, oftentimes something that's driving that fear is, they have integrated a critical vendor,...