Pinterest commits to spending $3B with AWS through to 2029

https://twitter.com/bensign/status/1429942858669244422

by hasheddan • 5 years ago

77 81 5 years ago

twitter.com

nicoburns• 5 years ago

This is over 8 years, which makes it somewhat less sensational than the headline makes out.

abc112832• 5 years ago

As another comment mentioned, this is through 2029 and Pinterest believes they are on track to spend that much.

Another useful comment from the thread:

Makes sense for both parties.
For AWS, it allows them to make hardware investments early on
For Pinterest - it allows them to keep costs manageable and get a significant discount on MSRP

komaromy• 5 years ago

For AWS, it allows them to make hardware investments early on

I can't imagine this deal (signed in April 2021) has that much impact on either AWS's hardware budget or their usage projections.

pm90• 5 years ago

Believe it or not cloud providers don’t have unlimited compute elasticity. That’s a fundamental deceit of cloud computing. While Pinterest by itself may not make a difference, the accumulated guaranteed compute requirements across all such deals give AWS a pretty solid resource provisioning baseline to target.

QuinnyPig• 5 years ago

Sorta; it depends upon whether the deal is scoped to specific AZs or not. At this scale the contracts are effectively bespoke.

rasz2• 5 years ago

allows them to keep costs manageable

~$400M/year, for a company with negative income so far

abc112832• 5 years ago

I wasn’t gonna say it!

vasilipupkin• 5 years ago

They could try doing it themselves but it’s a big risk and far from guaranteed to be cheaper.

jgalt212• 5 years ago

454 million MAU, so about $0.88 per year per user. Not a terrible deal by any stretch.

snarf21• 5 years ago

Do people still use Pinterest? I used to hear/see females in my family talking about it but not anymore. It seems like all Pinterest does today is destroy google image search.

sullivanmatt• 5 years ago

Pinterest voluntarily entered this agreement, which provides better pricing in exchange for committed use - an offer AWS provides to many of its customers. This is a highly sensationalized headline.

KoftaBob• 5 years ago

Really lame to leave out the “through 2029” part in the title. Take those sleazy clickbait talents to Buzzfeed.

Lionga• 5 years ago

for ~$400M/year you could also rent over 100K root servers at Hetzner with unlimited traffic etc.

I think you could have a server running for about every 10 or so users that are online at the same time.

justushamalaine• 5 years ago

But you couldn't, could you? 400 million is more than Hetzner total revenue.

I think 400 million is staggering amount of money to be used for computing, but if you are using that amount of money there are only handful amount of players that can absorb that kind of money and provide you services.

afroboy• 5 years ago

With that amount of money can't they invest in house hosting?

brutus12132• 5 years ago

Regardless of the long time horizon, it is still a significant number. Cloud is known to not be the cheapest option at large scale, so it is a bit curious they decided not to build their own infra. I'm sure the folks at Pinterest are smart cookies, so this is an indicator that cloud is now cost competitive even at scale (with these kinds of deals, which presumably come with a discount).

taylodl• 5 years ago

"Cloud is known to not be the cheapest option at large scale"

Oh really? Ever try building, staffing, powering, cooling and equipping a data center? And then build a DR? Let me tell you, my company has foolishly done that just in the past ten years and WE are screaming uncle! We're now transitioning to AWS because it's much, much, much cheaper!

The biggest eye-opener? Not only is the physical part of the data center a super expensive ongoing expense - staff, server life cycles, power, property tax - but the software licenses (we gotta have support!) will EAT YOU ALIVE! I've transitioned many projects to AWS and was able to justify it on the ongoing licensing costs alone - never mind all the other costs related to building a data center.

I bet Pinterest did their homework and realized the $3 billion they're going to pay to AWS is cheaper than building, staffing, and running their own infrastructure. That's the conclusion we came to - after building our own data centers.

fooblat3• 5 years ago

I did exactly this project for a high traffic site about 10 years ago. We got datacenter rooms wholesale that included power and cooling. Did everything else ourselves and cut our burn rate in half. However, we were totally open source so no licensing costs.

Even after leasing all the hardware, hiring the staff, getting the transit brought in, we still cut our compute costs in half.

Even so, we ended up keeping cloudfront+S3 for serving static content because we couldn't beat the price they offered.

jjav2• 5 years ago

Oh really? Ever try building, staffing, powering, cooling and equipping a data center? And then build a DR? Let me tell you, my company has foolishly done that just in the past ten years and WE are screaming uncle! We're now transitioning to AWS because it's much, much, much cheaper!

Since most of my career postdates and predates renting capacity on someone else's computer, yes, have done that many times.

Would be great to publish a case study on your experience, would love to understand the numbers.

While for some rare scenarios AWS can be cheaper, for just about any use case it's going to be much more expensive than running your own.

robjan• 5 years ago

When you become a significant user of cloud they start to offer pretty significant negotiated discounts on top of committed usage discounts.

jasode2• 5 years ago

Cloud is known to not be the cheapest option at large scale, so it is a bit curious they decided not to build their own infra.

The "cloud" provided by AWS is cheaper -- if you use the higher-level AWS portfolio of services . E.g. DynamoDB, Redshift, Kinesis, etc.

If the mental model of "cloud" is just "bare metal servers", aka EC2, then AWS is more expensive than self-owned datacenters.

So yes, if you're only looking at cpu and egress costs, AWS as a "dumb data center" is a terrible deal. But that's not how Pinterest uses AWS. They use AWS high-level services:

E.g. they use AWS Rekognition -- machine learning service to annotate images with text : https://aws.amazon.com/solutions/case-studies/innovators/pin...

Pinterest also tried self-hosted Elasticsearch but it cost them more money than AWS Elasticseaerch: https://aws.amazon.com/solutions/case-studies/pinterest-elas...

(Yes, those are AWS marketing articles but writing those case studies require cooperation and approval by the customer (Pinterest in this case.).)

So far, Pinterest concluded it would not be cheaper to build their own machine learning algorithms to process images. Paying for AWS Rekognition is part of the ~$400m/year cost.

brutus12132• 5 years ago

Interesting points. Is AWS Rekognition just doing OCR as a service? I guess there isn't enough value in that to build a competitive solution. So good point. For more complex perceptual models, I'd be really surprised if the model wasn't considered proprietary/value-added.

securitypunk• 5 years ago

This is standard practice. Most SaaS IT departments negotiate big rebates in exchange for long term commitments, and those who don't are leaving money on the table. I've seen datacenter deals over 10 years that looked far worse.

akh• 5 years ago

Capacity planning challenges can't be ignored and it's interesting that Pinterest share their forecasts with AWS significantly in advance. Makes me wonder if AWS will offer more incentives to older/larger enterprises that are used to datacenter-era capacity planning, I suppose RIs and Savings Plans are a manifestation of that already.

garyrichardson• 5 years ago

For big orgs it’s quite common to have NDA’s with AWS and embed their staff for support and decision making. You get expertise and insights into the upcoming roadmap as well. It would be no surprise to know that Pinterest shared these details with AWS.

pcdoodle• 5 years ago

Good, I'm sick of their results in image search.

itronitron• 5 years ago

DDG doesn't seem to include pinterest in their image search, hopefully that will continue.

KaiserPro• 5 years ago

$400m a year which if my maths is correct is about $0.80 a user a year.

Obviously this $400M is inclusive of a fairly large discount. So one does wonder how much shit they are doing.

Naively I had assumed that barring the algorithm, most of the cost would be bandwidth. I would have assumed that there were cheaper CDNs out there.

jasode2• 5 years ago

This is just a normal business-to-business pricing agreement contract for a long-term commitment. In this case, it's ~$400 million per year for 8 years.

Also, I guess lawyers copy&paste each other because the Snapchat text about its GCP contract looks very similar with the word "required":

excerpt from Snapchat S-1: On January 30, 2017, we entered into the Google Cloud Platform License Agreement. Under the agreement, we were granted access and use certain cloud services. The agreement has an initial term of five years and we are required to purchase at least $400.0 million of cloud services in each year of the agreement, though for each of the first four years, up to 15% of this amount may be moved to a subsequent year. If we fail to meet the minimum purchase commitment during any year, we are required to pay the difference. Our agreement with Google permits us to use other third-party service providers for a portion of our cloud services.

[1] https://www.vox.com/2017/2/2/14492026/snap-ipo-2-billion-con...

newdude1162• 5 years ago

Sorry for the rage but, WTF is pinterest? They spam google picture search. I hate them!

rasz2• 5 years ago

apparently google image spam is bringing up to $700mil/month in ads revenue

newdude1162• 5 years ago

Great. Drug dealing may bring in money to but what kind of value do they deliver? Except staling content all over the internet, spamming google picture search and then offering click bait?

hiyer2• 5 years ago

I used to use Pinterest for recipes a few years back, but their recommendations sucked (or they didn't have enough content). I would either keep getting the same suggestions again and again or recommendations for meat dishes though I'm vegetarian. Now I just follow a few well-known chefs on youtube instead.

martin_a• 5 years ago

Better title (probably): Pinterest makes deal with AWS, spending $3B up to 2029

rattray• 5 years ago

Pinterest agrees to spend $3B on AWS through 2029

look_lookatme• 5 years ago

Better title: "Pinterest somehow spends more than $400mm/year on infrastructure..."

tsjq• 5 years ago

more pinterest results in image searches ?

Cthulhu_• 5 years ago

Is it still going to be ~$3B by 2029 if they use (a lot) more?

I mean I can't see it happening; I can't see Pinterest growing much larger than it currently is, and as hard- and software improves, AWS will lower prices and Pinterest will be able to use resources more efficiently.

nacs2• 5 years ago

$3B is the minimum spend and not a fixed fee.

They are still billed based on usage but must hit at least $3B total by 2029.

yawaworht1978• 5 years ago

I used to sell both cloud products and server/storage infrastructure.

There are too many factors, often legal requirements and the umbrella company policies not being flexible, but , if you need 20 or more servers and redundancy and are legally permitted to go cloud, do it. You can run non business critical parts of the it on cloud and see if it makes sense to the cfo.

Buying physical servers and the premises is one thing, but there's so much more to it, it's far from plug and play. You need hypervisor, licences, one or two admins, it adds up.

laputan_machine• 5 years ago

I'd really like to know where their costs are coming from, $400m/yr seems absolutely wild. I work for a large org who has 90-95% of stuff in cloud infra and we don't spend even close to this.

xyzzy_plugh• 5 years ago

A well-known still-private YC unicorn has a similar spend to this, if not more.

Thousands of beefy EC2 instances, petabytes of warm-to-hot S3 objects, chunky RDS instances and a large data warehouse add up pretty quick.

It's important to note that these negotiated prices are way, way less than the sticker price. It's a win-win.

xchaotic2• 5 years ago

or you could pay $1m to someone like Corey to revisit the architecture a little and shave $100-200m off that bill by not doing silly things? https://www.lastweekinaws.com/about/

JamesSwift• 5 years ago

Bandwidth is probably way up there on the list. Thats always been a surprisingly large chunk of the large AWS bills I've been a part of.

archildress• 5 years ago

These types of agreement are relatively common in some manufacturing environments, and are often called "take or pay." In essence you're reserving capacity.

What's interesting to me about this one is that I fundamentally believe that both:

- Cloud computing will be increasingly commoditized, with lower cost providers emerging in the next 3-5 years

- More companies of scale will go back to building their own infrastructure as a cost savings project.

For Amazon, I think the incentive is as much about locking in revenue as it is locking in "demand" - helps with their demand planning of how much more to build out.

300bps• 5 years ago

What does cloud computing mean to you? It seems like you are thinking of traditional “virtual machines in the cloud”.

When I think of AWS for new development I mostly think of serverless technologies like Lambda, DynamoDB and even serverless RDS. It’s going to be difficult for any company to do it for themselves cheaper.

To me, AWS is about the exact resources needed for a task blinking in and out of existence for the exact number of milliseconds they’re needed. I don’t know how anyone will compete with a cheaper on-prem solution.

Azure seems similar.

jjav2• 5 years ago

for a task blinking in and out of existence for the exact number of milliseconds they’re needed

Right, in cases where the capacity needed is so low that "blinking out of existence" is a frequent scenario, it is indeed cheaper to rent only those CPU-milliseconds that are needed.

But as usage grows, it will fairly quickly exceed the cost of just having dedicated servers.

sofixa2• 5 years ago

Cloud computing will be increasingly commoditized, with lower cost providers emerging in the next 3-5 years

There are plenty of alternatives ranging from just IaaS ( you rent VMs) to more advanced PaaS/SaaS type "clouds" (e.g. Scaleway have managed databases, Kubernetes, FaaS, CaaS). There are some fairly decent ( in terms of coverage, cost, features) providers out there, outside of the big three.

However they are in an entirely different market similarly how Tata Motors, PSA Group and Lamborghini aren't competitors. Yes, both are used to move people around, but the scale and features aren't even close. There are so many managed services on AWS it's impossible to list them all coherently. Whatever you could need, it's probably there. Digital Ocean or Scaleway or similar are perfectly fine when you're smaller, more technically advanced, with more time available, higher failure tolerance. They can make sense to use, but aren't for every use case.

mattlondon2• 5 years ago

I sometimes wonder about these huge deals like this...

Is there a bunch of AWS sales people who just became instantly "Fuck You Money"-rich as part of their sales commission on this deal?

I don't know how it works in FAANGS for sales commission, but I've heard of 5-10% being "normal"... so sales comp on this deal @ 5% comp is 150 mil? If so, are there loads of sales people just kicking around waiting for their "one big sale" and then insta-quit and go live on their own private island?

And if commission is capped, then surely the flip side is now there are loads of disgruntled sales people sitting around spitting teeth and annoyed that they just pulled in 3 billion for the company but they "only" got 100K capped-commission or whatever and so rage-quit and go somewhere else?

Anyone know how this sort of thing pans out?

DSingularity• 5 years ago

I would guess they have bonuses which scale with sales and not a direct commission.

zzbzq• 5 years ago

No idea.

It's not clear what was sold by the saleperson since Pinterest could have just self-served themselves infrastructure off any combination of platforms. Presumably the idea is they're getting a discount in exchange for having this incentive favoring exclusivity. Their commission might also be amortized over the length of the contract (2029) since that's the length of time the value is generated.

gruez• 5 years ago

Is there a bunch of AWS sales people who just became instantly "Fuck You Money"-rich as part of their sales commission on this deal?

No. Do you think "Fuck You Money"-rich people are being minted every time a billion dollar government contract is awarded?

mattlondon2• 5 years ago

That is the question

rognjen• 5 years ago

Very often commission is paid out on profit.

So it'd not be 5% of 3B but 1B (assuming 30% margin, but it's probably less on a deal this size). Still quite a nice chunk of change.

But, after that less-than-ethical companies often try to inflate costs as much as possible to even further reduce commission.

hiyer2• 5 years ago

This is not a new contract - Pinterest has been using AWS since at least 2013 (I used to work in a company that Pinterest purchased a service on AWS from, and Pinterest was our largest customer by far on AWS even then.) So maybe they've gone from 200-odd or 300-odd to 400 million an year. I bet that would affect the commission dynamics too, but I'm sure it's a decent chunk of change nonetheless.

throwdbaaway• 5 years ago

Looking at https://news.ycombinator.com/item?id=4004551, their AWS bill was about $100,000 a month back in 2012.

So it was $100,000 a month for 18 millions visitors, and it is now $20,000,000 a month for 454 millions MAU.

Corey Quinn has to take a look at this.

EDIT: Corey provided some insight on contract negotiation at https://twitter.com/QuinnyPig/status/1430327936519872514

xchaotic2• 5 years ago

Everyone keps saying this works out to $0.88 so I tried to figure out what is pinterest for: https://about.pinterest.com/en

The page is free from any content? Why do people bother setting up accounts there?

type0• 5 years ago

Is Pinterest still considered to be a startup?

mrkramer• 5 years ago

For example in 2017[0] Snapchat committed to spend $2B with Google Cloud in the next 5 years plus $1B with AWS over the next 5 years. I guess they wanted to rely on 2 public cloud providers not exclusively on one.

Btw it's crazy how these big cloud providers and especially AWS are making billion dollar deals left and right. It's good that we have multiple of them so they can compete meaning lower prices for buyers and increased quality for end users.

[0] https://www.zdnet.com/article/snap-commits-to-spending-1b-wi...

Pinterest commits to spending $3B with AWS through to 2029

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