How to build a nearly zero-cost startup
There are tons of free things for startups, if only you knew about them
When I got started with my startup, I knew pretty much nothing about startups. In fact, not only did I not know anything, I didn’t know the extent of what I didn’t know.
This was 2008. Co-working was not yet a thing. Accelerator programs were just launching. The cloud was emerging, so building and deploying software was cheaper, but definitely not free. My only guides at the time were blogs by Fred Wilson of USV and Paul Graham of Y Combinator, and my advisors were fellow commenters.
I should mention that I was trying to launch a tech startup in New York City. That meant that everything was more expensive and when I told anyone what I was doing, they would ask, “What’s a startup?”
Fast-forward fifteen years later, and the environment for startups is vastly different. Not only did NYC quickly evolve into a major startup hub, startup communities sprouted all over the world from Auckland to Zurich. Within each one of these communities emerged co-working offices, accelerators, events & networks, and programs for startups. On top of that, you could get started for free building software in the cloud.
Mark Suster of Upfront Ventures shared a chart on his blog about the decreasing costs for launching a startup. This was not a steady decline, but an exponential drop in costs from $5 million to $5,000, or a 1000x decrease within a decade. With the addition of freemium models and cloud credits, the costs have essentially dropped to $500.
The costs of launching a startup from 2000 to today
For nearly every software startup, the costs are generally the same. You have labor, infrastructure, sales & marketing, and operational costs. But there is also another cost that almost no founder ever takes into account when building a startup, the cost of time.
With my startup, I felt the constant pressure of time on my back. Building features took time, optimizing our architecture took time, getting customers took time, generating awareness took time, and all of these things ate into the very limited window we had to prove product-market fit.
There were no programs or resources back then specifically for startups. We all had to deal with taking on these “time costs” as well as the hard costs like renting compute. Then in 2013, AWS launched the Activate program which gave any startup credits to apply towards their cloud spend. This was a game changer as it took hard costs and risk off the table for anyone that wanted to build and launch an MVP.
Now there are abundant programs that startups can tap into that essentially bring your initial startup costs to zero in terms of dollars and time. Many tech companies have dedicated startup teams and programs, like AWS Startups, HubSpot for Startups, and NVIDIA Inception.
With any startup program, the first and most obvious benefit is use of the software for free or nearly free. With AWS Activate, startups can get up to $100,000 in credits to apply to their cloud costs, with most startups using the $1,000 Founders tier to get started.
However, these programs offer plenty of additional services and goodies that many startups do not know about or have yet to tap into! From idea phase to scale phase, these programs offer added value that you can access based on criteria such as VC funding or customer traction. The best startup programs help in four ways:
Since I am most familiar with AWS, let’s dive into how AWS structures its startups program in each of these areas.
When Activate first launched, the focus was on credits. Now it has expanded through the launch of the Activate Console to include support credits, tailored content, training resources, and targeted offers from software partners offering discounted rates. Once a startup signs up for Activate, they have access to the in-person and virtual Lofts for content, events, and getting technical help. There are also credits available through partners for startups to migrate over to AWS.
Another benefit of Activate is “Build on AWS” with more than 30 pre-built infrastructure templates and reference architectures covering a wide variety of needs using CloudFormation templates that are deployable in a single-click. Once a startup has some traction, using the Well-Architected Framework can help optimize the architecture for further scale along six pillars of operational excellence, security, reliability, performance efficiency, cost optimization, and sustainability.
AWS offers several equity-free, early-stage accelerators for startups to access additional credits, business & technical guidance, and introductions to investors and industry mentors. For example, there is the AWS Startup Loft Accelerator for EMEA-based startups, the Impact Accelerator for underrepresented founders, as well as industry specific accelerators across space, smart cities, healthcare, fintech, etc. The program cohorts also offer the benefits of community support, such as the CTO Fellowship for early-stage startup CTO’s.
Once a startup has reached product-market fit, they can access go-to-market programs like the AWS Marketplace, which allows any AWS customer to use and buy a startup’s service with a single click. In addition, programs such as the Global Startup Program help startups reach global scale through co-selling and co-marketing mechanisms.
As startups scale, of course there are going to be plenty of hard costs that cannot be avoided. Early on though, the idea that you can build and launch a startup for zero cost is absolutely possible, especially with the many programs offered to startups that can accelerate your growth and save you time.
What are some programs, tools, or resources that you have found invaluable in your startup journey that have saved you money or time?
There were quite a few programs mentioned, if you are curious to learn more, we have provided more information and links to each of these resources from AWS:
AWS Activate - Free tools, resources, content, pre-built solution templates, and expert support to accelerate your startup journey (as well as up to $100K in credits).
AWS Startup Lofts - In-person and virtual locations to connect with a wealth of resources, exclusive events, and sessions with AWS startup experts.
AWS Startup Accelerators - Virtual, equity-free programs to help early-stage startups with mentorship, technology assistance, go-to-market and fund-raising advice.
Well-Architected Workshops - Enable growing startups to optimize their architecture for scale around six pillars—operational excellence, security, reliability, performance, cost, and sustainability.
AWS Startup Content - Access to webinars, blog posts, technical deep dives, presentations, and training resources to help startups across their journey from idea to scale.
AWS Startup Events - From Startup Days to Summits to our global conference AWS re:Invent, startups can connect, collaborate, and learn from each other and AWS experts.
AWS Partner Network - A global community of programs, expertise, and resources for startups to build, market, and sell their offerings to AWS customers.
AWS Marketplace - Enables startups to gain visibility and traction in the market by providing access to millions of AWS customers looking for innovative products.
AWS Global Startup Program - A go-to-market program supporting mid-to-late stage startups to support startups in three key areas: product development, go-to-market, and co-sell.
AWS SaaS Factory Program - Helps SaaS startups with access to technical and business best practices, solution architects, and SaaS experts to accelerate delivery of SaaS solutions on AWS.
Speaking of the AWS Startups Lofts mentioned in the essay, they have on-going content that we host in the in-person Lofts in New York and San Francisco as well as plenty of virtual sessions across all regions. Check out upcoming events in the Americas, EMEA, and APJ.
The middle part of June will see the Startup Advocate team tour South America to learn more about the LATAM startup ecosystem. We are joining 42 Geeks on this tour to visit Sao Paulo, Montevideo, and Buenos Aires to meet founders, investors, and startup ecosystem leaders. Check out the agenda and if you are in any of these places during the time we are there, let’s meet up!
42Geeks are coming to South America this month!