It's feasible to offer hosted services if you have four people and can work in shifts, and figure out vacations. The problem is, it's pretty expensive to bootstrap the business. AWS sounds like a good option, and at some point, if you need to make more profit, you can more staff and operate your own cloud. It seems to me like the real value add comes when you can customize the hosted service and improve the quality. Then other companies can resell your services.
Offering a commodity service, like web hosting, seems like a dead end. You end up having to sell bundles of services, which will spread your skillset too thin, or basically force you into becoming a retailer. And if you're retailing, why are you bothering to operate infrastructure? It makes no sense.
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