A startup is a company that might still need to pivot to find its final business model, potentially shedding its entire existing infrastructure base in the process. Start-ups are why IaaS providers don't default to instance reservations — because, as a startup, you might suddenly realize that you won't be needing that $10k/hr of compute, but rather $10k/hr of something else.
That was before the cloud existed. They had to poach experts from hosting companies to build and maintain their gear. They built a 24/7 NOC, did server repair, became network experts, storage experts, database experts. Besides being incredibly complex and burdensome, it was financially risky. If they missed their projections they could over-invest by 1-2 million bucks, or even worse, not have the capacity needed to meet demand.
If somebody told us back then that we could pay a premium to be able to scale at any time as much as we needed, when we needed it? We would have flipped out. We had heard about Amazon building some kind of "grid computing" thing, but it seemed like a pipe dream for universities, like parallel computing. Turns out it was a different kind of grid.
CloudFlare went well beyond leasing servers and built their own POPs with network etc prior to IPO. Much of what they built wouldn't have made economic sense with AWS tax.
Of course not. But the free tier was a vital component of Cloudflare's growth, first-mover advantage and wide adoption.
