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The serverless economy – why you should care about serverless

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I recently helped out with the inaugural Serverless Conf, and gave the closing remarks. The event was held in a warehouse in Williamsburg, New York. Organiser Ant Stanley of ACloudGuru did a great job of organising his first conference.

There are plenty of smarter people than me explaining what “serverless” is – Paul Johnston, who spoke at the conference, has a great blog series on the topic. To me however serverless computing is primarily interesting for three key reasons:

  • On demand computing is taken to its natural conclusion – paying at the point of customer value. AWS Lambda, the first mainstream serverless platform, runs compute services in response to events – you write and upload code to AWS Lamda, associating it with particular AWS services, but what is kind of mind-blowing is that you don’t pay for the services until they are actually invoked. A startup can build out an entire infrastructure, without paying anything for it until the customer does.
  • The atomic unit of compute is the function. Just as we begin to understand the implications of container-based computing, in which the atomic unit of compute is the application, comes a new model to consider, in which the individual function is the service. As with microservices this kind of approach creates coordination overheads, but it also offers a great deal of flexibility.
  • You don’t need to think about running containers, any more than you do running an operating system when developing to a PaaS. Unlike containers, which have been associated closely with microservices, serverless is more like PaaS in abstracting all infrastructure required to run a service. Serverless certainly doesn’t obviate the need for ops, but it does exemplify a more PaaS like model.

The chart above suggests a couple of interesting things about the discontinuity in 2007. Deal size shrunk, while average number of deals dramatically increased. Why? The obvious answer is the launch of AWS, and the attendant creation of Y Combinator and the accelerator model, rather than traditional VC-driven company creation. Given that serverless hasn’t exploded so far, it might seem overblown to draw comparisons with the introduction of AWS. And yet. And yet. There is no doubt that today smaller teams can make a bigger impact than ever before. Consider Instagram or WhatApp, which sold to Facebook for $1.9bn with only 55 employees. Serverless attempts to industrialise developer impact- if we’re going to see the first single employee billion user multi-billion dollar valuation startup it’s likely they’ll be building on something like AWS Lambda. Could we see another similar discontinuity to the chart above, with deal size cratering again, and many more flowers blooming? It’s a reasonable scenario. Certainly Amazon’s serverless implementation would hope to enable that. Serverless is fundamentally about permissionless, the ongoing direction of travel for all IT decision-making.

As Sam Kroonenberg, CTO of ACloudGuru put it:

“AWS Lambda is to compute what s3 is to storage.”

AWS is pretty confident about serverless advantages. Its Serverless GM Tim Wagner made it pretty clear that he expects serverless to put severe pressure on orthogonal markets – such as Docker-based infrastructure, partly because he expects the model to drive more testing into the cloud. Serverless is not solely an Amazon phenomenon. IBM has adopted an open source model with OpenWhisk, while Google is building a set of services around Firebase, originally a database as a service it acquired. Microsoft has taken a hybrid hosted/open source approach with Azure functions.

Competition has been sufficient that Amazon took the surprising step of announcing it was to open source a serverless framework called Flourish. On that more details as they emerge.

Joe Emison works at DMGT building B2B applications and services. He gave a great presentation which was frankly pretty scathing about AWS.

“In this case i don’t think Amazon has the best option for any of the services out there. It’s about the front end. AWS serverless is largely about back end processing, which we have largely outsourced. To me, the advantage of serverless is the key is faster iterations, and a move to fatter clients”
Emison argued that AWS Lambda is focused on enterprise adoption, with the attendant complexity that necessitates, in order to boost revenues. For Emison serverless is simply the most effective way to establish product/market fitEmison recommends a stack of services designed from the ground as developer friendly service for high scale ops, including  Algolia (for search), Prerender (Javascript SEO), Sendgrid (email delivery), Cloudflare (CDN), Google Firebase (data storage and associated services), Auth0 (authentication).
Beyond product/market fit serverless potentially means not needing to penalise customers for being interested

That is why I think serverless could be a big deal. It’s the economy, stupid.
[update: While not intended to be completely comprehensive, one point I had originally intended to include in the post was that serverless may not be AWS only, but the approach clearly makes the most sense when you have a ton of resources at hand, with automation to support it. Mary Branscombe called me on it over the weekend and her comments are worth including verbatim:

Surprised you didn’t mention how serverless rewards massive operational efficiency of hyperscale. it’s a byproduct of cloud at a different unit of scale. by being that good at offering images you become able to offer a unit of compute at a much granular level. which means there’s an operational aspect to evaluating services, not just the technology. Can a business ever be efficient enough to make running serverless themselves economic? I’m doubtful, frankly. A model where essentially putting images on machines is something we do very fast and we don’t need to pass on the cost.

Serverless as a side effect of operations as scale. Nicely put. Kind of like AWS as a side effect of operations at scale.
Amazon AWS and IBM are both clients. Serverlessconf paid my T&E to be there.
Original Chart by Chris Tacy. He’s pretty awesome.


  1. Great post. Note: Azure Functions runtime, templates, UI and SDK are open source. Azure Function runtime will be portable so you can run Functions anywhere – on Azure, in your datacenter or other clouds.

    1. thanks @johnevdemon appreciate the comment and clarification

  2. Serverless coordination overheads could lead me to drink, or lead me to use blockchain to role my transactions commits over distributed systems.

  3. If I wanted serverless plus distributed systems, I’d stay on azure and use DocumentDB for the distributed bits (an Azure service I think is as under estimated as Functions), or add Flow for workflow between Functions if they needed services as well as storage. Matching the nicely granular unit of compute with integration tools. Also, my last line is a quote from the Functions team to me about their business model;I think it’s the kind increase in scale where it becomes a step change.

  4. Are many people viewing serverless as an approach to replace existing computing models, or a pattern to supplement them where appropriate? It seems that where a reactive, event driven solution is the answer, it’s 100% the right pattern. The applicability of serverless seems important, but possibly narrow in scope

    1. great point @sinclair. we have a wonderful varied toolbox, and of course no one tool in it meets all needs. just as monoliths have a place, alongside microservices, so serverless is particularly apposite for reactive event driven apps. all that said, until developers really get to it, it’s hard to say how narrow the scope will be. you’re certainly on point that use cases seem a bit limited at this point. It was a running joke at serverlessconf that every demo or hello world was a photo or video processing app. But there are startups going all in on serverless- notably ACloudGuru – but then again, they’re a online training app using… video! 😉

      1. I thought both apps that Joe Emisson talked about were neither video nor photo..

        1. @dmitri yes for sure. the point rather was that almost everyone was doing those.

  5. […] The Serverless Economy – Why You Should Care About Serverless […]

  6. […] Lo único que tienes que hacer es proporcionar el código. La computación bajo demanda llevada a su conclusión natural, dicen. […]

  7. […] infrastructure requirements? We talk a lot in tech today about event-driven reactive platforms. The serverless economy is going to come into its own here. An architecture based on waiting, where you only pay at the […]

  8. […] With Google Cloud Functions, the issue is still live because the product is still labeled as a beta. Google may have invented the notion of a perpetual beta, but it’s not something enterprises are ever going to love. Note to Google – production mode soon please. Cloud Functions aside, Google has one back end as a service, or perhaps that should be backend as a serverless – that developers have bought into – Firebase. The platform is a really good beachhead for Google, especially now Parse is gone. If Google acquired Auth0 it would be in a position to start building a suite of best of breed serverless platforms, that even Joe Emison might approve of. […]

  9. […] is a great model for efficient cloud computing. I have written before about how serverless is as much an economic phenomenon as a technical one. Please check out this great Trek10 post for more on that (I totally stole the […]

  10. […] using OpenWhisk for check clearing, doing all the image processing. Image processing is very much a hello world kind of app in the Serverless ecosystem, but check processing is an application with a more immediate revenue […]

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