Their are a lot of bad ways to run your own hardware. Limiting your infra to EC2 for burst capacity provides an easy escape hatch if you need. However i have never run into the issue of not calculating CPU capacity properly and also would never use VM ware that sounds like IT is running your DC. I could see this being the case for some tiny startup who just owns a small amount of rack space though.

Of course you can pay the cloud providers to deal with your companies bad planning. Thats what most do.

I also would never advocate for DC for everything. As a startup it likely makes no sense to run your own hardware and also likely doesnt make sense to run k8s also however one of those is completely acceptable. Once you get to more predictable growth owning your own hardware starts to look more attractive but most don’t know how to calculate it properly and finance likes to make it merky with capex and opex buckets.