(Bloomberg) -- For years, getting into the business of renting out extra computing power through the cloud has been a bit like getting into the business of nuclear power. First, you have to spend a few hundred million dollars on ginormous hardware and the pricey software to run it. Next, you have to hire a team of Ph.D.s to make sure the equipment always runs pretty much perfectly, because one screw-up means a customer—probably a big corporate IT department—leaves forever.

That formula is changing as cloud startups such as DigitalOcean and Backblaze begin to compete for customers with the likes of Amazon.com, Microsoft, and Google. The startups have managed to underbid the giants in certain markets by keeping expenses relatively low, either by writing their own versions of the software needed to run a cloud or by handcrafting the hardware needed to house one. “All the tools we’re using really pay dividends,” says DigitalOcean Chief Executive Officer Ben Uretsky. “I think that gives us a leg up.”

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