Mark fletcher was chiming in with Joe Kraus on the topic “It’s a Great Time to Be An Entrepreneur”, so I thought I would chime in as well. I haven’t started any companies worth noting, but I was an employee of Mark’s back in the Onelist/eGroups days. When he started Trustic (which became Bloglines) I helped advise him on the infrastructure.
After analyzing his situation, I said that he should consider hosting the service since it is so much more inexpensive. You end up not having to deal with a lot of the problems you have if you start the service yourself. He chose to go at it himself, and it worked out. However, he has obviously changed his position.
Why? Many people don’t understand the gotchas and little difficulties that arise when you have to manage your own infrastructure. There are many that Mark lightly touched upon in his blog (like the non-stop hard drive failures he had at one point) It ends up being time spent on things that don’t really move your service forward. So I still recomend hosting for small companies versus going through the process of being your own ops department.
In fact, if you can pull the timing off, this is the way you should do it. Use a hosting service that is reputable and that will answer your phone calls and requests (not renting machines, use a hosting account). If things go well and traffic is increasing, then move to dedicated-hosting. Stay with that setup, if you can.. until you are acquired/merged with some other company. Why? By the time you get to that level, you will end up having to do the big ‘move’ with your new company. Regardless of whether you hosted or bought your machines, the pain is similar and you will probably end up having some downtime for it. Also, the longer you hold off on acquiring hardware, the more your currency goes with the latest and greatest technology.