[kev009]

Straw man argument, you're looking at around $300/month for 20A, 10+ rack units, 100mbit commit to play with in a lot of decent US facilities. That's a few pathetically provisioned VMs on most clouds. I have such a colo for my personal use. This doesn't exclude me from using other providers for DNS and MX slaving, or things like object storage (i.e. I use Tarsnap for DR) and there isn't really any overlap or lost efficiency in mixing and matching those higher level services. My facility's house bandwidth blend provides free DoS mitigation as a nice bonus.

Most facilities and providers don't require you to have your own ARIN registration and block. In fact it's quite difficult to get even the smallest blocks right now. Instead, an ISP will lease you IPs usually at around $1/month.

A pair of x86-64 boxes running OpenBSD can easily virtual switch, route and firewall well above 1gbps. They can announce BGP if needed, if you have a delegation or are muli-homing. A pair of high quality 10g switches may push a few grand on the secondary market but you can ~get away~ with Ubiquiti gear.

This kind of setup can scale up pretty high by dropping the OpenBSD boxes from the forwarding plane and just using them as route reflectors into higher end switches.

There is a slight labor disadvantage that amortizes quickly. i.e. setting up switches and routers isn't hard, and if you aren't sysadmin skilled enough to do that in a few days you probably shouldn't be running VM infrastructure either and retreat to something like Heroku, Lambda or GAE where there is much less room for footshots.

So TL;DR $300/mo and 5k CapEx will run a company, double or triple that for DR of a serious startup. Reap significant saving as a larger company by partnering or outsourcing remote hands and basic ops with a company like yours for the day to day stuff.