The ongoing TCO of AWS is much higher than Linode, of course. But that's precisely my point: you want to capture customers at birth, incubate them into adulthood, and then charge them a lot of money now that they can afford it.
Although if you want to be pedantic, let's say "actually useful, potentially-production barrier to entry". There. Fixed.
I don't find my cheap t1.micro based IRC bouncer / VPN / reverse SSH endpoint / static-content generation box to be an awful joke at all. They're quite useful for many things.
There are $10 VPS solutions out there, but their poor reputations lends credence to the idea that $10 VPS solutions are not where the money is at.