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Cloud Star Heroku Preps for Second Act With New CEO (wired.com)
38 points by sinzone 1607 days ago | hide | past | web | 17 comments | favorite

I was a big user of Heroku for a long time, but at some point over the last year or two it became more cost effective and performant for me to run my projects from an Amazon EC2 instance.

The problem that I experiences is that I wanted my sites to have great performance, even though they only got hit a few times per day. This precluded me from using the Heroku free tier since idle dynos are swapped out and take a considerable amount of time to spring back to life. No big deal, I could just pay for 2 dynos and my app would never idle. Some time after that my postgres database exceded the free tier limit and the only option was to pay $20/mo for a shared postgres DB that was way beyond my needs.

I went from an extremely modest website costing nothing, to an extremely modest website costing over $20 per month.

I switched all of my projects over to an EC2 instance and pay about 15 bucks with no arbitrary limitations.

I hope the new CEO understands that building a healthy customer base means giving people a sensible path for growth.

I don't really mean to be offensive when I say this, but you're almost certainly not the target market for them. They're looking at people growing from initial concept to 3 dynos to 30 dynos, and if your app won't do that, then they have no incentive to cater to you, as far as I understand it.

How is my app going to grow from 2 users per day to 20 users per day if it takes 30 seconds to un-idle my dyno? The answer is it won't because the end-user experience sucks on Heroku.

My bottom of the barrel Amazon EC2 instance gives much better performance for a very reasonable $15/mo.

If one of my apps does start to get traction and I need to increase my hosting capacity you can rest assured that I will do it with Amazon. I have no reason to convert my build & deploy process back to Heroku.

They lost any future sales they could have hoped to have gotten from me.

As jaggederest said, you're not the target customer for Heroku. They are interested in hosting apps that have thousand's to hundred's of thousands of visitors a day for companies like RapGenius who don't want to focus on managing servers. It seems like you don't realise that Heroku is giving you a free dyno to run your apps on. If what they're offering for free doesn't fit your needs that's fine but don't be ungrateful about it.

I don't see what's wrong with pointing out deficiencies in the free tier. It's not as if Heroku is giving devs something out of the goodness of their hearts. It's part of their business model. He's just telling us that he doesn't use Heroku for his projects anymore because their dyno's take so long to warm up. I don't work at Heroku but I think their strategy is to make it a great / cheap platform to start an app on so that you pay them when your app gets traffic and needs to scale. If the free offering isn't compelling then the freemium business model doesn't work.

You just need to ping your website every minute. Pingdom or the like works just fine.

I'm guessing they can do just fine without a pile of customers who blanch at paying $20/month for managed hosting.

You are missing the point. I don't mind paying $20 or even $50 per month for managed hosting. The problem is that I have to pay that kind of price per site. It will quickly add up to a hundred dollars a month or more for all of my sites.

I'm not missing the point; it's just not profitable to run managed hosting at $4/month/app. If you are price-sensitive but time-insensitive, Amazon is the perfect place for you to go to host lots of low-traffic applications. That's not the market they are trying for, and their success or failure doesn't hinge on getting that market.

Not profitable? Hardly. Let's take a look.

On the free tier I pay $0 per month. I get a single dyno (which has poor performance), and a postgres DB with 10k row limit. I end up getting a few users per day, but my app doesn't perform well so it never takes off. Heroku gave me a bunch of stuff for free and never made any money off of it.

Let's say they offered a paid tier at $5 per month that gave me one persistent dyno and a 100MB postgres DB. The usage of my app is not drastically different, but Heroku is taking in $5 per month. If my app takes off I start cranking up the dynos and DB specs. They make more money. I stay happy.

Under the hypothetical scenario Heroku could be making $60/year off of me, with the possibility of future sales.

Under their current pricing model the cost goes from $0 per month to $44/month (2 dynos @ $35 and a 10M row postgres DB @ $9). I'm not going to pay $44/month for each app that I want to run just for the convenience of being on their platform.

I think they are making a huge mis-step by not looking at price points between $0 and $44. There are only so many RapGenius level clients in the world. They can make a lot of money by reeling in the long tail, but so far it seems like all they care about are the big fish.

I think you are missing the point of the free tier and fundamentally misreading the target economics of apps running on Heroku.

The free tier gives you an opportunity to try out the platform very quickly for free and perhaps host an early web only scaffold of a pre-launch app. It's not meant to host any app in production (except maybe an internal copy of Hubot).

Any app with meaningful functionality is going to at least need 1 web dyno ($36 a month) and a background worker, plus a database (Crane @ $50) and likely some add-ons such as SendGrid/Redis.

Heroku is not trying to compete with Amazon EC2 -- it's built on top of it. The real value of Heroku's platform is that it greatly reduces operational overhead spend for businesses hosting their apps on the platform. Rather than paying consultants or dedicated ops personnel, your business can pay a premium for the PaaS and keep the dollars focused on value creating development activities.

Heroku's target market is also not bootstrapped tech start-ups allergic to spending <= $100 a month. These projects have a huge failure rate and very low expected lifetime value. You would be a fool to try and target this market -- it's tiny and unprofitable.

If you take a broader view of the world, there are tons of businesses with technology needs that already have profitable business models and steady growth but are not technology companies themselves. This is the huge market that Heroku is truly addressing. They know that these businesses turn to consultants or hire developers and empower them to drive the technology decisions. That's why developer mind-share is so valuable to Heroku -- it's not that they want you to host your next bootstrapped startup weekend side project on the platform, but instead they need Heroku to be top of mind when somebody with profitable technology needs hires you.

I would bet that applications starting on the free tier and seeing organic growth is a very tiny sliver of Heroku's revenue. Most applications are built from business needs, not ideas. These businesses are not scared to spend when it solves their problems or grows revenue. $100, $1000, or even $10k a month is nothing when you find yourself in such a position.

I have a bog standard shared hosting account with hundreds of sites and only pay like $10/month. I can run Rails as well without issue. Never do any server/OS maintenance. For people who write a lot of sites, only some of which hit it big, it's clueless to pay Heroku prices.

I totally agree with you. I run five "small" web apps on one leased large VPS. Really cost effective! However, I had to set up my own auto deployments whenever I do a git commit/push, and worry about backups, etc. None of these sites individually get over 1000 visits a day, but they are all important to me. If I could pay Heroku $15/month for a single "always on" dyno (avoid loading requests) per application I would run everything there, and they would get $75/month for handling relatively few requests. Except for one Meteor app, all my apps are Clojure == small memory footprint and efficient. Cheap to host.

I don't understand how they can write that article without mentioning RapGenius or even alluding to that fiasco. Wired just lost some credibility in my mind.

Why should they mention RapGenius? At Heroku, I expect it's very much back to business as usual.

Did you read the article? They replaced their CEO and are strategizing about their 'second act' after being displaced as the 'darling of the developer community'. The article quotes the current CEO as saying he is considering cutting off all existing small devs and focusing on the enterprise market.

If that's business as usual, I'm really curious what a crisis looks like.

As for why RapGenius should be mentioned - they were the catalyst for all of the above. Without them, this article never gets written in the first place.

I wouldn't blame them for cutting off the free tier that allows one dyno to run for no cost. They should charge at least $10/month for what is now the free tier, and not time out apps (requiring loading requests). Make the small customers real paying customers.

The thing is: I don't understand why a large company would use Heroku because of the costs. Heroku seems like the sweet spot for a 3 or 4 person company where they don't have the economy of scale to manage their own servers.

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