CloudForecast's Tony Chan on cloud trends, AWS waste, SaaS marketing

For time-strapped founders, managing AWS is often put on the backburner in favor of building and marketing the best product possible.

While that focus makes sense, mistakes with managing your own servers on AWS can become extremely pricey.

35 percent of cloud spending is wasted every year thanks to mistakes, poor visibility, and infrequent monitoring. That equates to nearly $95 billion thrown in the garbage in 2020.

CloudForecast is working to change that with its monitoring and forecasting tool that helps engineers identify AWS cost anomalies in 30 seconds or less.

CloudForecast cuts through AWS’s complex pricing structures and delivers engineering teams daily Slack or email reports to help quickly identify cost increases by sub-accounts, resources, products, and tags.

As the worldwide public cloud market continues to grow — it's estimated to hit $397 billion in 2022 — CloudForecast is charting ambitious goals. CloudForecast, which entered the TinySeed accelerator program this year and raised $180,000, has goals of hitting 7-figure annual recurring revenue in the next few years.

One strategy CloudForecast hopes will help manifest its million-dollar aspirations is its pricing model.

Many of its competitors require long-term contracts and take a cut of clients' AWS spend, which may not incentivize them to find the most efficient solutions. CloudForecast offers flat pricing and month-to-month subscriptions starting at $99/month.

I spoke with CloudForecast co-founder Tony Chan about CloudForecast’s successes, challenges, and his advice for SaaS founders.

Why did you start CloudForecast?

There are a few main reasons why we started CloudForecast. Francois (technical co-founder) and Kacy (technical advisor) have built distributed systems throughout their whole careers and managing AWS costs in an easy-to-understand way has been a problem at every company they’ve worked at.

They found that the majority of the tools available to high-growth startups and mid-market size companies overcomplicate solving this problem with complex features and dashboards to justify their extremely high cost and traditional enterprise software contracts. When you’re an engineer, your time is best spent focused on technical priorities that move the company forward, not financial modeling or reporting. With that in mind, this seemed to be the right problem to try to scratch the startup itch we had at the time.

Misunderstandings of cloud costs

AWS cost management is a very complex problem that is both technical and non-technical in nature. It’s not only finding the areas of optimization with potentially wasted resources but managing and monitoring for cost anomalies amongst your teams are just as important.

With the non-technical side, making sure your organization across the board are on the same page (finance, engineering, c-level, accounting) in terms of governance, ownership, and expectations is as important as the technical part with reducing cloud costs.

We’ve been on sales calls where the person has said “I can build this over the weekend”. The problem is not that simple where someone can just do this overnight. The best companies we’ve seen do this well and solve the problem thoughtfully and see this as a journey for their whole organization.

How do you stand out in a crowded market?

We make our features easy to understand so engineers can understand and answer potential AWS cost issues in less than 30 seconds. We also proactively push all our reports via email and Slack so it's not another app or dashboards the engineers need to reactively log in to every day to check things. We know how busy engineers are and the last thing they should focus on is financial reporting.

Business model-wise, we are open and transparent with our pricing and how we work with our customers. The traditional model with our competitors is 1-2 year contracts and a percent of your AWS cost. Is that really looking out for your best interest? Our subscription plans are flat pricing with month-to-month options available. Our customers have really appreciated this about us since we’re focused on earning their business.

Lastly, is the opportunity for our customers to work with the founders directly that have empathy towards their problems related to AWS cost. We’ve been in their shoes and can relate directly to the problems with AWS cost they are dealing with. If there are any issues or problems, even if we don’t have features to solve them, we’re always willing to try to help or find the resources to do so.

As our company grows, our customers will always be the center of how we move things forward.

Marketing advice for SaaS founders

The biggest marketing advice early on is to do things that don’t scale, nail down your buyer persona and have conversations with the personas to learn how they make decisions to buy products to solve their problem.

You’re essentially working your way backward to figure out what channels to possibly leverage and how to reach them.

What’s driven your success?

Francois, Kacy, and I have a pretty good rapport with each other and have always focused on doing what’s best for the business and what’s fair to each other. We’ve done a good job of being able to have tough and productive conversations about our business, which is often the point of failure for other early-stage startups.

Another reason why we’ve been successful is our customer-focused approach. We’re customer-centric with everything we do and we try to extract as much learning from them directly. After all, they were our first investors as a bootstrapped startup (now mostly bootstrapped). Through those conversations, we’ve been to learn more about their problems which have allowed us to iterate on our product and build new features to continue towards product-market fit.

Can you give us a sense of your revenue?

We passed 6-figures ARR in 2020. We’re a profitable, mostly bootstrapped SaaS startup that is looking to hire our next full-time engineer to contribute with product and feature development.

CloudForecast’s biggest challenge

The biggest challenge for us is growth. We had to be scrappy and “cheap” with our investment in growth as a bootstrapped startup with a limited budget. Having investors and money can often help you find those key growth channels and do tests at scale. However, we had to be very intentional and thoughtful about where and how much we invest that will maximize ROI.

Now that we got into TinySeed Batch 3, we can be more creative and take more calculated risks with our growth channels. We can take everything we learned and test the growth channels on a bigger scale.

CloudForecast's goals in the next 3-5 years

In the next 3-5 years, we hope to have a small team outside of Francois and me to help our customers with this problem even further. In addition, hitting 7 figure ARR would be a great goal and milestone to reach in that time span. Getting into TinySeed should be able to help guide us down the right path with making these goals happen.

Trends IHers should keep an eye on

Engineering teams are moving towards adopting container orchestration systems like Kubernetes/EKS/ECS to help manage, deploy and scale their applications. It’s important to continue to stay updated with the latest trends and developments there as there is more and more adoption.

Advice for founders

You really need to stick with it through the highs and especially the lows. The low points are the toughest to get through, but those are also the biggest learning opportunities for you as a founder.