37signals estimated in December 2023 that it would save $7 million over five years after ordering $600,000 in Dell servers. That is a company forecast, not an independently audited result. The company had completed its migration by June 2023 and separately estimated savings of at least $1.5 million per year. Those figures use different framings and should not be treated as proof of realized savings.
What 37signals meant by the $7 million figure
In a December 19, 2023 FAQ, 37signals co-owner and CTO David Heinemeier Hansson said the company ordered $600,000 worth of Dell servers and estimated $7 million in savings over the next five years. The estimate followed the company’s move off major cloud services; it was not an audited comparison of realized costs.
The company’s June 2023 migration-completion post offered a different estimate: “at least $1.5 million per year,” which Hansson described as back-of-the-napkin math. A later 37signals cloud-exit page summarizes a roughly $10 million five-year projection. These are company estimates published at different times, not interchangeable measures or independently verified results.
What 37signals spent on cloud before the move
37signals reported $3.2 million in AWS cloud spending for 2022 in an accounting post published January 13, 2023. The company described that budget as highly optimized: it said it inspected costs monthly, right-sized services, used long commitments, and had a Private Pricing Agreement.
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| 2022 AWS cost item | Company-reported amount | Context |
|---|---|---|
| Total cloud spend | $3.2 million | 37signals’ accounting published January 13, 2023; described by the company as optimized. |
| S3 storage | $907,838 | 37signals said this covered around eight petabytes with dual-region replication. |
| OpenSearch | $519,959 | Company-reported amount for 2022. |
| EC2 and EKS | $759,983 | Company-reported combined amount for 2022. |
The figures show why the decision was more than a comparison of virtual-machine prices: storage, search, and compute all contributed to the bill. 37signals said current Basecamp and Basecamp 2 already ran largely on company hardware, while cloud services supported HEY and legacy applications and dependencies.
What the move involved
“Leaving the cloud” did not mean building and staffing private data centers. 37signals bought servers and leased rack space, bandwidth, power, and related “white glove” services from Deft. An August 2023 overview by operations director Eron Nicholson placed the company’s equipment in Deft-run facilities in Ashburn, Virginia, and Chicago, Illinois. Nicholson described an approximate footprint of 90 servers at each site; 37signals employees did not need to rack equipment or pull cables.
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The June 2023 completion account says the migration took six months. 37signals reported adding 4,000 vCPUs, 7,680 GB of RAM, and 384 TB of NVMe storage with its server purchase. For software operations, the company described KVM virtual machines on Dell R7625 systems, Docker containers, and Kamal for deployment and rollback. It says it moved six established services and then the more complex HEY service in stages, without increasing the operations team. These details are the company’s account, not an independent assessment of the migration.
Why the company said cloud was a poor fit for its needs
37signals’ October 2022 announcement argued that its growth and demand were predictable enough to plan capacity, making the elasticity premium unattractive for its then-current needs. Hansson wrote, “Renting computers is (mostly) a bad deal for medium-sized companies like ours with stable growth.” He also said, “The savings promised in reduced complexity never materialized,” describing the company’s own experience.
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The company did not argue that cloud services are always a mistake. Its announcement identified very early services with little traffic and workloads with highly irregular demand as cases where cloud can make sense. 37signals also said it relied on cloud elasticity when HEY launched and sign-ups exceeded its forecast.
In a February 22, 2023 post, Hansson called cloud costs “grotesque” in several key instances. That is his characterization of the company’s experience, not an industry-wide measurement. He also named independence, support for a distributed internet, investment in owned hardware and people, and leading by example as motives alongside cost.
Does leaving cloud mean running your own data center?
Not necessarily. In 37signals’ case, “own” referred to owning the server hardware; the company continued to rent data-center space and services. The arrangement shifted responsibility for buying and planning hardware to 37signals while leaving facility operations to a colocation provider.
That distinction matters when comparing costs. An organization considering a similar change needs to account for equipment and its useful life, colocation, power and bandwidth, staff time, operational risk, and the cost of any cloud-managed services it would replace. The company’s published figures do not provide an independent total-cost model that can be applied directly to another business.
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How to judge whether the approach could work for another business
37signals’ case suggests a set of questions to answer before treating its estimate as a template:
- How predictable is demand? Steady usage makes capacity planning easier; large, sudden spikes can make elastic cloud capacity more valuable.
- How much operational experience is already in place? 37signals said the same operations team supported its services before and after the migration. A company without relevant staff may need to include hiring, training, or outside support.
- What will replace managed services? Compare the actual storage, database, compute, search, and other services in use, rather than comparing only server rental with server purchase.
- Can the business wait for capacity? Buying hardware can reduce ongoing costs in some circumstances, but ordering and deploying new equipment takes time. The company identified that lag as a trade-off.
- Can the upfront expense be spread over the hardware lifecycle? Compare owned equipment plus colocation across the period it will be used, including the work and services required to keep it running.
37signals had stable workloads, existing infrastructure experience, and an operations team, and chose colocation rather than running facilities itself. Without comparable conditions and a business-specific cost model, its forecast does not establish what another company would save.
Quick Recap
Sources
- 37signals’ October 19, 2022 announcement on leaving the cloud
- 37signals’ January 13, 2023 accounting of cloud spend
- David Heinemeier Hansson’s December 19, 2023 FAQ
- Hansson’s June 23, 2023 migration-completion account
- 37signals’ August 10, 2023 infrastructure overview
- Hansson’s February 22, 2023 post on costs and motives
- REWORK discussion of hosting software on owned servers
- 37signals’ cloud-exit summary page
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