Coworking in the Cloud

Coworking shouldn’t be limited to former factories with exposed brick and chunky wooden beams. Shared resources should also be leveraged in the cloud, particularly for early-stage startups with limited access to funds.

Sometimes referred to as multi-tenancy, sharing space in the cloud can give startups more development flexibility, but users need to manage expectations around security, reliability, scalability and serviceability.

What Multi-Tenancy Means

The idea is a lot like a coworking space. Instead of each company renting its own office, many companies share one building and pay for the desks they use. In the cloud, the “building” is a provider’s servers, storage and network, and the “tenants” are the customers running software on them.

Each tenant’s data and applications are kept separate by software, so one customer shouldn’t be able to see another’s. But underneath, the same physical machines are doing work for many customers at once. That’s what keeps costs down: the provider can spread the cost of hardware, power and staff across thousands of users, and a startup only pays for what it actually uses.

For a young company, that’s a big deal. There’s no need to buy servers before you know whether anyone wants your product, and no need to hire someone to look after them. You can start small, test an idea, and add capacity in minutes if it takes off.

The Trade-Offs

The four words to watch, security, reliability, scalability and serviceability, are really four questions to ask any provider.

Security: how well are tenants kept apart, and who’s responsible for what? The provider secures the underlying platform, but customers are usually responsible for how they configure their own accounts, passwords and data.

Reliability: what happens when something fails? Shared infrastructure means a problem in one part of a provider’s network can affect many customers at once.

Scalability: can you grow quickly without hitting limits, and what does that growth cost?

Serviceability: when something goes wrong, how quickly can you get help, and how much control do you have to fix it yourself?

“Networks underpinning a cloud deployment need a higher degree of automation, programmability and multi-tenancy versus traditional non-cloud buildouts,” Andrew Lerner, Research Vice President at Gartner, said in a blog post last year. “Further, there are multiple paths to achieving automation, programmability and multi-tenancy … it’s not SDN or bust.”

SDN, or software-defined networking, is one way of doing that: managing a network through software rather than configuring each piece of hardware by hand. Lerner’s point was that it isn’t the only route, and companies shouldn’t assume they need it to get the benefits of the cloud.

As regulations around data security evolve in an age of near-daily headlines about hacking, developers, founders, CTOs and CIOs need to know what the cloud coworking options are.

When Shared Infrastructure Goes Wrong

The security question isn’t theoretical. In August 2021, researchers at cloud security company Wiz reported a flaw they called “ChaosDB” in Cosmos DB, Microsoft Azure’s flagship database service. They said it gave them complete, unrestricted access to the accounts and databases of several thousand Azure customers, including many Fortune 500 companies.

The important detail was who was at fault. Most cloud data leaks come from a customer’s own misconfiguration. In this case, Wiz wrote, “customers were not at fault.” The problem sat in a feature of the shared service itself. Wiz also credited Microsoft’s security team for moving quickly, disabling the vulnerable feature within 48 hours of the report.

That’s the honest trade-off of sharing. You get the provider’s scale and expertise, and in exchange you depend on the provider getting its side right.

How Startups Use the Cloud Now

Since 2016, sharing cloud infrastructure has become the default rather than an option. Gartner forecast that worldwide public cloud spending would reach $723.4 billion in 2025, up from $595.7 billion in 2024.

The big providers also compete hard for startups. Amazon Web Services, for example, says eligible startups can apply for up to $100,000 in AWS Activate credits, with the larger packages available to companies backed by a participating investor or accelerator. Credits like these make the cloud even cheaper to start on, though they also make it easier to get locked into one provider before you’ve thought it through.

What It Means for Founders

Shared cloud infrastructure is still one of the best deals available to an early-stage company. But it works best when you go in with your eyes open. Read the provider’s shared responsibility model so you know which security tasks are yours. Turn on the basics, like multi-factor authentication and regular backups, from day one. And keep a rough plan for how you’d move if you had to, because the cheapest provider in year one isn’t always the right one in year three.