Borrowing millions of dollars at 20-30% to compete with some cash rich companies who already dominate the market seems crazy - (borrowing at 5% could be another matter).
Depends on your target audience. I wouldn't want to compete with Amazon as a general proposition. But there may be some specific niche that isn't well served by Amazon. For example, there could be some piece of Tarsnap's infrastructure that is irritating/expensive to create but that other companies want to use.
Note, for example, that Dropbox gets "substantial economic value" from running their own hardware. [1] And Tarsnap is in the position to offer a backup-specific white label service that other entrepreneurs might rather pay to use than rebuild.
Borrowing millions of dollars at 20-30% to compete with some cash rich companies who already dominate the market seems crazy - (borrowing at 5% could be another matter).