How Basecamp Saved $7M in 5 Years by Leaving the Cloud

The Challenge

Basecamp, one of the world's leading project management and team collaboration platforms, was facing escalating cloud infrastructure costs. With millions of users relying on their service, AWS bills were becoming increasingly unpredictable and expensive.

DHH (David Heinemeier Hansson), creator of Ruby on Rails and CTO of Basecamp, noticed that as their business grew, their cloud costs were growing even faster. The economics just didn't make sense anymore.

The Decision

In 2022, DHH made a bold decision: move Basecamp's entire infrastructure from AWS to their own bare-metal servers. This wasn't just about cost savings—it was about regaining control, improving performance, and achieving predictable expenses.

Key Motivations

• Cost Predictability: Cloud bills were unpredictable month-to-month
• Performance: Direct hardware access could improve response times
• Control: Own the entire stack from hardware to application
• Simplicity: Eliminate cloud abstraction complexity

The Migration Journey

The migration took approximately 6 months of careful planning and execution. The Basecamp team documented every step of the process, sharing their learnings with the developer community.

Phase 1: Planning (2 months)

• Audited all AWS resources and dependencies
• Calculated total cost of ownership for bare-metal
• Selected data center partners
• Designed new infrastructure architecture

Phase 2: Hardware Procurement (1 month)

• Purchased Dell PowerEdge servers
• Set up colocation in multiple data centers
• Established redundancy and backup systems

Phase 3: Migration (3 months)

• Built parallel infrastructure
• Migrated databases with zero downtime
• Moved application servers incrementally
• Tested thoroughly at each step

The Results

The results exceeded expectations:

• $7M saved over 5 years compared to AWS costs
• 40% faster average response times
• 99.99% uptime maintained throughout migration
• Same team size - no additional DevOps hires needed

Cost Breakdown

AWS Annual Cost (2022): ~$3.2M Bare-Metal Annual Cost: ~$880K Annual Savings: ~$2.32M 5-Year Savings: ~$11.6M 5-Year Infrastructure Cost: ~$4.4M Net Savings: ~$7.2M

Technical Architecture

Basecamp's new infrastructure consists of:

• 8 application servers (Dell PowerEdge R640)
• 4 database servers (Dell PowerEdge R740xd with NVMe)
• 2 load balancers (HAProxy on dedicated hardware)
• Multi-region deployment across 2 data centers

All managed with:

• Ansible for configuration management
• Prometheus for monitoring
• Custom deployment scripts
• PostgreSQL for databases
• Redis for caching

Lessons Learned

1. Cloud Isn't Always Cheaper at Scale

For many startups, cloud makes perfect sense. But at Basecamp's scale, the economics shifted dramatically. Owning hardware became significantly more cost-effective.

2. DevOps Skills Transfer

The team's expertise with AWS translated well to bare-metal. Modern infrastructure tools work just as well on owned hardware as in the cloud.

3. Predictable Costs Enable Better Planning

Fixed infrastructure costs made financial planning much easier. No more surprise bills or unexpected usage spikes.

4. Performance Improvements Were Real

Direct hardware access and elimination of cloud abstraction layers resulted in measurable performance gains.

5. Not for Everyone

DHH emphasized this approach works for established companies with stable workloads. Startups still benefit from cloud's flexibility.

Community Impact

Basecamp's transparent sharing of their journey inspired many companies to reconsider their cloud costs. DHH's blog posts and conference talks on the topic sparked important industry conversations about cloud economics.

The #CloudExit movement gained momentum, with more companies evaluating whether cloud still made sense at their scale.

What's Next

Basecamp continues to refine their infrastructure and has no plans to return to the cloud. They've proven that with the right expertise and scale, owned infrastructure can be both more economical and performant than cloud solutions.

Their success has paved the way for other companies to consider similar migrations, creating a blueprint for successful cloud exits.

Key Takeaways

✅ Scale Matters: At sufficient scale, bare-metal economics beat cloud
✅ Plan Thoroughly: 6-month migration with careful planning and testing
✅ Measure Everything: Track costs and performance at every step
✅ Share Knowledge: Document and share learnings with the community
✅ No Regrets: Team is happy with the decision and results

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