AI-driven cloud cost optimization for startups

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Happy Tuesday, folks.

Teeny, tiny bit of programming news. Feedback requested.

My first internship was with a YC-backed company.

My first gig post-college was another YC company.

I’ve done consulting work with a third YC company, and while doing a gig with Draper Associates, one of the team’s favorite hacks was “go find the former YC companies.”

While the other startup newsletters might not be as brilliantly witty as I am, and while they probably don’t even make their own memes, the truth of the matter is that The Startup Breakdown is one of many, a black-striped white horse among a plain of white-striped black zebras.

One of the best pieces of general startup advice that I can give is that when things start to feel overwhelming and you’re being pulled in too many directions at once, it’s time to niche down and regain focus on what makes you different.

And while I refer back to my charm and super memorable domain name as my super powers, I realize that my content can be made even more one of a kind, too.

I’m considering writing exclusively about YC companies in the most recent batch.

There are literally hundreds of companies, so it’s not like I will run out of startups to write about.

They’re super early stage, so you’re still going to get to know them before anyone else.

And I’d be the only source of this content, meaning when you tell someone what The Startup Breakdown is about, you can say “Trey writes about the latest YC companies!”

Eventually, the goal would be to expand and include other accelerator alumni, other VC-backed early companies, and ideally, even some shoutouts to our boost-strapped founders out there.

But alas, ‘tis not I who must make the decision, ‘tis you. (tissue? i didn’t even sneeze!)

What's on the agenda?

• Pump: The AI-Driven Cloud Cost Optimization Platfo …

  • The story: cloud cost optimization through group b …

  • The numbers

  • Links of the week:

• How am I doing?

Pump: The AI-Driven Cloud Cost Optimization Platform for Startups

The story: cloud cost optimization through group buying

You may enjoy the benefits of $5 Rotisserie chicken or $1.50 footlong dog with a fountain drink, but has your business?

Pump wants to be the “Costco of Cloud,” providing cloud cost optimization by enabling companies to save up to 60% on their AWS (and eventually Azure, GCP, etc) through group buying.

While the Apples of the world may be able to get some nifty discounts when they go to purchase massive amounts of resources for their own individual use, there haven’t traditionally been a ton of options for much smaller customers, the minnows to Disney’s whale.

While this cloud infrastructure is essential for any company regardless of size, the financial burden of this spend on the pre-seed startup is far more cumbersome than it is on a trillion dollar tech company, and that is even more evident when accounting for the discounts that these big companies have secured as a result of their massive size as cloud providers compete to incentivize customers to use their services.

Now, this cloud cost optimization will be available to every company, regardless of size.

Pump serves platform for group buying, allowing companies to sign up with some basic information about themselves, such as industry, size, and their specific cloud needs, before they’re automatically paired with other companies with similar profiles that will help collectively form a more lucrative customer grouping for infra providers.

The craziest part?

It’s free for customers, taking just a small cut of the savings directly from AWS.

It wouldn’t be a YC company without being an AI company, and Pump is no different. Its advanced AI systems are responsible for creating the most cost-efficient pairings on the resource needs of these collectives for the sake of cloud cost optimization.

Then, this same AI goes back and constantly reevaluates the offers and opportunities that exist to ensure that customers are constantly getting the absolute best deal possible.

Pump not only organizes the initial purchases, but it intelligently moves assets from company to company as needs change.

And, being the experts on all things AWS that they are, Pump introduced PumpGPT, a chatbot trained on AWS data to answer all of your questions on the labyrinth that is the AWS interface, and it even proactively offers recommendations for budgeting in real time.

Beyond just being another chatbot, though, Pump’s service can write Amazon-standard code and even file tickets on the customer’s behalf. Again, at no additional cost.

The numbers

Traction:

• Hundreds of customers

• $20,547,955 in savings

• Recently signed deal with Techstars, giving it access to thousands of startups

Market Size:

• TAM = $16.5 billion

• SOM = $70 million

• SAM = $3.5 million

Competition:

• CloudCheckr

• Vantage

• Infracost

• Spot (by NetApp)

Team:

• Spandana Nakka, Founder and CEO: Founded, raised from Lightspeed and other T1 investors, and sold Sleek to Snackpass; Forbes 30u30 (hasn’t been arrested… yet)

  • Side note, YC taking a solo founder is like… a big deal. You need the sort of resume that Spandana brings to get that vote of confidence

Risks:

• Staying buddy-buddy with cloud providers. What happens when AWS just says “no, we’re not going to give you a discount?” If Pump scales to the point of being a known commodity, they represent too much business to turn away, but there’s incentive to snuff them out now while they’re small…

• Cloud providers roll out their own AI tools. PumpGPT is the only chatbot for AWS on the market. However, I have a buddy at Amazon who says that the company is working on one of their own and will have one prod-ready in 18 months…

• Pricing model. Marketplaces require a looooot of volume to make the platform’s small cut worth it.

What I like:

• Network effects with a B2B product? Virtually unheard of.

• Targeting Startup Networks: B2B is all about relationships, and there is none better than getting in good with the accelerators and incubators that can offer access to customers at bulk like YC and Techstars can

• Industry Expertise. The founder is established in the industry, and their growth plan is pretty well planned as evidenced by their solid search rankings for a wide variety of top-of-funnel topics like general AWS support

Opportunities:

• Expanding to other providers: They’re already on it, though 👍️ 

• Cloud consulting and software for larger businesses: Some enterprises have entire teams dedicated to keeping cloud costs down. Plus, I see outsourced optimization services make far more money.

• Other industries: Cloud services are definitely the biggest market, but there are other industries that could see the same sort of group buying discounting and optimization. Yes, think value-size insurance deals, but imagine something like whole sale ordering ingredients for neighboring restaurants.

I imagine that Nakka used the word “democratization” at least 10 times in her deck, but in this case, it’s really warranted.

Founders are already willing to crawl over broken AI Humane Pins for a dollar that can extend their runway. With Pump, they’re saving far more.

Links of the week:

How am I doing?

I love hearing from readers, and I’m always looking for feedback. How am I doing with The Startup Breakdown? Is there anything you’d like to see more or less of? Which aspects of the newsletter do you like most?

Cheers to another day,

Trey