# 37Signals’ Audacious Strategy: Diverging from the Cloud Trend
In a time when cloud computing has established itself as the standard foundation for numerous businesses, 37Signals, the company behind Basecamp and HEY, has taken a daring leap in the contrary direction. Co-founded by David Heinemeier Hansson (DHH), the firm has gained attention for its choice to withdraw its seven cloud-based applications from Amazon Web Services (AWS) and revert to self-hosting. This action, which Hansson characterizes as “swimming against the stream,” has ignited debates across the technology sector regarding the direction of cloud computing and if other businesses should think about following suit.
## A Legacy of Change
37Signals has consistently been a catalyst for disruption in the tech world. The organization has a rich history of pushing against conventional norms, whether through its operational methods or its outspoken views on industry matters. Once regarded as a Mac-centric firm, it adapted when Apple’s decision to restrict Progressive Web Apps (PWAs) compelled them to adopt a blend of Windows, Mac, and Linux environments. The company also famously contested Apple’s App Store subscription regulations, contributing to a shift toward more developer-friendly policies.
Thus, when 37Signals declared its exit from the cloud in the autumn of 2022, it was not wholly unexpected that the company would publicly articulate such a significant decision with thorough justifications. At the time, Hansson referred to the firm’s cloud expenses as “an at times almost absurd premium” to guard against erratic usage spikes. The company projected it could save $7 million over five years by investing $600,000 in Dell server equipment and managing its own applications.
## The Financial Benefit
Zoom to 2023, and the financial benefits have surpassed expectations. In a recent update, Hansson disclosed that 37Signals now anticipates saving $10 million over five years, with their hardware expenditure nearing $800,000. By fine-tuning its infrastructure—maximizing hardware in existing racks, prolonging hardware lifespan to seven years, and shifting its 10 petabytes of S3 storage to a dual-DC Pure Storage flash array—the firm expects not only to cut costs but also enhance performance and boost storage capacity.
Hansson’s excitement about this decision is evident. “The motto of the 2010s and early 2020s—all-cloud, everything, all the time—seems to finally have peaked,” he stated. He does, however, recognize that the cloud remains a viable option for organizations with “enormous fluctuations in load” or those in nascent or uncertain growth phases.
## The Trend of Cloud Repatriation
37Signals is not the only entity re-evaluating its dependence on cloud services. In March 2024, AWS eliminated data transfer fees for customers transitioning away from its platform, a move influenced partly by European regulations. Numerous trade publications have showcased stories of rising cloud expenses and firms opting to “repatriate” their workloads back to on-site data centers. Dropbox, for instance, notably reversed its cloud strategy by transferring much of its infrastructure back to its own centers.
However, not everyone believes this indicates a widespread trend. Lydia Leong, a cloud computing analyst at Gartner, has extensively discussed what she terms “the myth of cloud repatriation.” According to Leong, many narratives about businesses exiting the cloud stem from misconceptions or oversimplifications. She contends that while some organizations might be shifting specific workloads back on-site, this doesn’t signify a broad movement away from cloud computing.
Rich Hoyer, director of the FinOps group at SADA, concurs that the discourse is often presented too simply as “cloud versus on-premises.” He notes that inadequate cloud architectures, vague objectives, and unclear return-on-investment calculations frequently contribute to the belief that cloud expenses are spiraling uncontrollably.
## The Argument for Hybrid Solutions
While 37Signals has decisively opted to distance itself from the cloud, other companies are adopting a more balanced approach. Hybrid cloud strategies, which merge cloud services with on-site infrastructure, are becoming increasingly favored as a means to reconcile the flexibility and scalability of the cloud with the cost savings and control associated with self-hosting. Corporations like Red Hat and Citrix have observed that hybrid solutions are regaining traction after a period dominated by cloud reliance.
Even AWS has recognized the competitive pressure from on-premises IT alternatives. In a summary of a UK market competition inquiry, AWS reported that it faces heightened competition from businesses choosing on-site infrastructure. This indicates that while the cloud continues to be a major player in the tech landscape, there is space for other methodologies.
## Should Other Companies Take Note?
The decision by 37Signals to exit the cloud has undeniably created a stir, but it’s crucial to remember that not every
