Getting from scale to profitability, the question is: How to run lean and continue to grow revenue? How to get to profitability? This session will focus on how to run lean. Attend this session to learn more about: Total Cost of Ownership (TCO) on the AWS Cloud versus on-premise infrastructure Smart ways to lower your costs by leveraging various AWS pricing models The six best practices for "cost aware architecting"

1. Getting to Profitability
Vinoth Gopinathan
Co-founder, Semantics3

2. About Semantics3
We are building the world’s largest database of products & prices
> 20 million products and >200 million price points
Sophisticated system that scours the web to discover products,
categorize, match and merge them with existing products and keep
their prices updated.

3. How Semantics3 runs lean on AWS
Set up on AWS
• 400 instances on AWS for crawling, database, search, and API
• Storage using S3, EBS, and instance-store
• Costs are less than $5K due to smart cost optimization
Cost Optimization
• Commercial – use various AWS pricing models, such as Spot
pricing and Reserved Instances
• Technology – design with cost in mind: being able to leverage
Spot pricing, write code that can run on micro instances, etc.
67% cost reduction

4. Getting to Profitability
Kingsley Wood
Business Development Manager
Dhruv Parpia
Solutions Architect

5. Time
Usage
Page Views
Revenue
Etc.
The Infamous Hockey Stick

6. Time
Usage
Page Views
Revenue
Etc.
The Infamous Hockey Stick
Costs

7. You want only 3 things

8. Revenue to go Up
Unit Costs to go Down
Margin to go Up

9. Time
Usage
Page Views
Revenue
Etc.
The Infamous Hockey Stick
Costs

10. How does AWS help here?

11. Economies of Scale
Pricing Models
Cost Aware Architecting

12. Every Day…
AWS adds the equivalent server
capacity to power Amazon when it was
a global, $5.2B enterprise in 2003
2003
$5.2B retail business
7,800 employees
A whole lot of servers…
Reduced
Prices
More
Customers
More AWS
Usage
More
Infrastructure
Economies
of Scale
Lower Cost

13. What does this look like in
the real world?

14. An example
Enterprise software provider in APAC
Focused on SaaS for storage, security, collaboration, etc.
Backed by leading VC’s in the region
Strong growth – winning customers globally
Focused on profitability & reducing unit costs
Worked closely with the AWS team to optimize its architecture

15. Margin
Growth
-10%
price drop
in S3
-20%
RI purchase
-22%
Migration
Cassandra
to Dynamo
-18%
Price drop in
S3 of 25%
54%
reduction in
unit costs
“Based on a True Story”

16. 01 02 03 04
Idea MVP ProfitabilityScale

17. Getting to Profitability 03 04
ProfitabilityScale
Pricing Models
Cost Aware Architecting
Total Cost of Ownership

18. On-Demand
Pay for compute
capacity by the hour
with no long-term
commitments
For spiky workloads,
or to define needs
Cost Optimization using different purchase models
Reserved
Make a low, one-time
payment and receive a
significant discount on
the hourly charge
For committed
utilization
Spot
Bid for unused capacity,
charged at a Spot Price
which fluctuates based
on supply and demand
For time-insensitive or
transient workloads
Free Tier
Get Started on AWS
with free usage & no
commitment
For POCs and
getting started

19. aws.amazon.com/free

20. Reserved Instance Pricing
Make a low, one-time payment and receive a
significant discount on the hourly charge
For committed utilization
•Light Utilization RI
•Medium Utilization RI
•High Utilization RI
•1-year
•3-year
2 Terms3 Versions

21. Reserved Instance Pricing
Utilization RI option Savings over On-Demand
<10% On-Demand
10% - 40% Light Utilization RI Up to 56%
40% - 75% Medium Utilization RI Up to 66%
>75% Heavy Utilization RI Up to 71%

24. S3 Storage Volume

25. EC2 Instance Hours

26. February 2013
48.7 million users globally
Raised $200M (Total = $338M)
$2.5B valuation

27. • Most traffic happens in the afternoons and evenings, so they reduce the number of
instances at night by 40%.
• At peak traffic $52 an hour is spent on EC2 and at night, during off peak, the spend is as
little as $15 an hour. Saving per hour = 71%

28. Save more money by using Spot Instances
Up to 85% savings over On Demand pricing
Spot market for under-
utilized capacity
Requested Bid Price and
Pay as you go
Spot Price < On-Demand Price

29. Use Case Types of Applications
Batch Processing Generic background processing (scale out computing)
Hadoop Hadoop/MapReduce processing type jobs (e.g. Search, Big Data, etc.)
Scientific Computing Scientific trials/simulations/analysis in chemistry, physics, and biology
Video and Image
Processing/Rendering
Transform videos into specific formats
Testing Provide testing of software, web sites, etc
Web/Data Crawling Analyzing data and processing it
Financial Hedgefund analytics, energy trading, etc
HPC Utilize HPC servers to do embarrassingly parallel jobs
Cheap Compute Backend servers for Facebook games
Use Cases for Spot Pricing

31. Optimizing Video Transcoding Workloads
for a FREEMIUM model
Free Offering
Optimize for reducing cost
Acceptable Delay Limits
Implementation
– Leverage spot pricing
– Maximum Bid Price
– < On-demand Rate
– Use on-demand Instances, if delay
Get strongly reduced price for your
workload
Premium Offering
Optimized for Faster response
No Delays
Implementation
– Invest in Reserved Instances
– Use on-demand for Elasticity
Get Instant Capacity for higher price

32. Getting to Profitability 03 04
ProfitabilityScale
Pricing Models
Cost Aware Architecting
Total Cost of Ownership

33. Cost optimization through ‘Cost Aware Architecting’
…by leveraging:Reduce Cost of…
Compute
1. S3 & CloudFront for Caching & Offloading
Storage 3. Storing derivative objects in S3 ‘Reduced Redundancy’
Database 4. Read Replicas and/or ElastiCache
Test & Dev 5. Rapid proto-typing & Lean Dev/Test
2. Auto-Scaling done Right

34. 1. S3 & CloudFront for Caching & Offloading
• Reduce your compute demand and costs
• Improve end-user experience
• Increase reliability and durability
Cost Aware Architecting to Reduce costs of EC2

35. 1. S3 & CloudFront for Caching & Offloading
Cost Aware Architecting to Reduce costs of EC2

36. 1. S3 & CloudFront for Caching & Offloading
Cost Aware Architecting to Reduce costs of EC2

37. 1. S3 & CloudFront for Caching & Offloading
Cost Aware Architecting to Reduce costs of EC2

38. 1. S3 & CloudFront for Caching & Offloading
Cost Aware Architecting to Reduce costs of EC2

40. 2. Auto-Scaling done Right with Real Time reaction response
• Elastic Load Balancing and (event-driven) Auto Scaling
• Notification of pending news flash (with audible alarm)
• On-demand ramp up of capacity (6 mins.)
• Subscriber alert push delivered
• Mass response traffic handled (followed by ramp down)
Cost Aware Architecting to Reduce costs of EC2

41. Buuuk for Singapore Press Holding (SPH)

42. 2. Auto-Scaling done Right with Real Time reaction response
Cost Aware Architecting to Reduce costs of EC2
Straits TimesBuuuk

43. 2. Auto-Scaling done Right with Real Time reaction response
Cost Aware Architecting to Reduce costs of EC2

44. 2. Auto-Scaling done Right with Real Time reaction response
Cost Aware Architecting to Reduce costs of EC2

45. 2. Auto-Scaling done Right with Real Time reaction response
Cost Aware Architecting to Reduce costs of EC2

46. 2. Auto-Scaling done Right with Real Time reaction response
Cost Aware Architecting to Reduce costs of EC2

47. 3. Storing derivative objects in S3 ‘Reduced Redundancy’
• Original vs. derived assets : 33% savings
• Single reference and consistency
• Control, accurate logs and tracking
Cost Aware Architecting to Reduce costs of S3
Reduced Redundancy Storage
‘RRS’

48. 4. Read Replicas and/or ElastiCache (‘Database Smarts’)
• Scale out and share work
• Optimal performance, minimize load
• Enhance reliability, ensure data safety
• Cost reduction
Cost Aware Architecting to Reduce costs of DB

52. 5. Rapid proto-typing & Lean Dev/Test
• Inexpensive idea validation
• Seamless switch over and versioning
• Rapid dev / test agility
Cost Aware Architecting to Reduce costs of Test/Dev

53. Getting to Profitability 03 04
ProfitabilityScale
Pricing Models
Cost Aware Architecting
Total Cost of Ownership

54. When calculating TCO…
#1 Start by understanding your use cases & usage patterns

55. Traditional HW / Hosting
On and Off Fast Growth
Predictable peaksVariable peaks
WASTE
CUSTOMER DISSATISFACTION

56. AWS = Elastic Capacity
Fast GrowthOn and Off
Predictable peaksVariable peaks

57. When calculating TCO…
#1 Start by understanding your use cases & usage patterns
#2 Apples to Apples – Take all the fixed costs into consideration

60. When calculating TCO…
#1 Start by understanding your use cases & usage patterns
#2 Apples to Apples – Take all the fixed costs into consideration
#3 Leverage ‘Cost Aware Architecting’ to reduce resources

61. 0
10
20
30
40
50
60
Hosting
Traditional Hosting vs AWS
# of
(virtual)
servers
Offload
to S3
Caching
with CF
Auto-
Scaling
Etc.Hosting

62. When calculating TCO…
#1 Start by understanding your use cases & usage patterns
#2 Apples to Apples – Take all the fixed costs into consideration
#3 Leverage ‘Cost Aware Architecting’ to reduce resources
#4 Include pricing models (RI, Spot) and economies of scale

63. Margin
Growth
-10%
price drop
in S3
-20%
RI purchase
-22%
Migration
Cassandra
to Dynamo
-18%
Price drop in
S3 of 25%
54%
reduction in
unit costs
“Based on a True Story”

64. When calculating TCO…
#1 Start by understanding your use cases & usage patterns
#2 Apples to Apples – Take all the fixed costs into consideration
#3 Leverage ‘Cost Aware Architecting’ to reduce resources
#4 Include pricing models (RI, Spot) and economies of scale
#5 Take a look at what’s included: Intangible Cost Savings !

65. New Customers
Amazon EC2
Amazon RDS
Amazon ELB
Amazon S3
Amazon EBS
For All Customers
Amazon SQS/SNS
Amazon DynamoDB
Amazon SES
Amazon SWF
And more…
AWS Elastic Beanstalk
AWS CloudFormation
AWS IAM
Auto Scaling
Consolidated Billing
No Charge for
Inbound Data Transfer
Data Transfer between
Instances within an
Availability Zone
Free Usage Tier
Did you know?
Free Services Data Transfer

66. Trusted Advisor

67. A premium security spec at non-premium
prices
• Security groups for EC2
and VPC
Network ACL
• Multi-Factor Authentication
• CloudHSM
• RDS Oracle transparent
encryption
• VPC
• Direct connect
• Dedicated instances
• Identity & Access
Management
• S3 Encryption

68. DEMO
Getting to Profitability
Off-loading of static content to CloudFront to reduce
required server capacity

69. So what does this mean in terms of costs?
Month
Medium EC2 instances 1 $ 121
CloudFront Data Transfer Out 1Tb $ 168
CloudFront Requests $1.89
TOTAL $ 291
Month
Medium EC2 instances 4 $ 485
AWS Data Transfer Out 1Tb $ 194
TOTAL $ 679
Standard Architecture Optimized Architecture
57% lower cost – 6 x faster

70. Thank you!
aws.amazon.com/start-ups
aws.amazon.com/free

71. Thank You