Letting people go is always a complicated matter at any scale. Whether you are a ten person company and firing one employee or you are 500 people and firing a larger number.
Wanted to address a few statements from the hackernews community here.
We are not prepping the company for sale.
As unfortunate as the layoffs are they were really due to two CEO changes in the past 18 months and leadership changes that created competing directions in the business, which Yancey our new CEO, is now addressing.
We are not running out of money, nor do we have an immediate need to raise capital, and the lay-offs aren't related to any sort of "cost-cutting".
We last raised an equity round in the summer of 2015 and haven't had a need to raise capital since. This is because we are very capital efficient and have been since our founding.
There are no profitability issues with $5/mo customers as the unit economics are the same as larger accounts. As we have grown we have added more products and features so that scaling teams and companies can also be successful on DigitalOcean, but we are not changing our commitment to the individual developer and those who are just getting started.
Lastly, it pains me to see people let go, having been on both sides of the table, it honestly just really sucks.
DigitalOcean has been instrumental in helping me transition from a college graduate into a professional developer who can build and design entire backends.
Those 5$/mo droplets let me explore a lot of software and run proper production-like benchmarks for my own learning.
Over time I moved a lot of my personal projects and infra over to DO (and started working on new ones now that I had a good provider to host them on).
And now with the new managed offerrings for the CORE technologies people need (databases, caches, K8S etc.) I'm happy to see that I can start being a little more productive with my side projects.
So, in essence I want to thank the people at DigitalOcean for what they've built and continue to build.
Our goal with DigitalOcean was always to help more people get involved with technology.
The community team that is one of the pillars of DigitalOcean was built by Etel. She herself went through this transition. She graduated college with a liberal arts degree and was working as a bartender because she couldn't get another job.
I gave her a book on programming and told her that if she figured it out I would figure out a way to get her a job. She indeed did figure it out and when DigitalOcean was able to start hiring, she was the first hire we made.
Initially she worked customer support, and soon after we put her in charge of building "community".
She wrote the first several hundred articles herself. She then went on to build an entire team of writers and editors and community managers. And that team also created amazing events both on a local scale as well as Hacktoberfest.
So many people have been thankful for to us for our articles and resources, but they wouldn't be what they are without people like Etel. It's really an expression of who she is and her beliefs and values as a person.
That's why we want to continue investing in community and ensure that those individual developers just getting started feel like they truly have a home at DigitalOcean. Because those are the very same people that built DigitalOcean in the first place.
Almost the same path for me, DO hits the sweetspot for me in terms of features, and the new offerings are looking very pragmatic and thought-out.
Thanks DO, I am defunitely increasing my spend on your product!
Yeah the way I see digital ocean (from when I first saw it years ago) is you can get professional cloud computing with quick spin ups etc. at a reasonable price. The basic stuff you need - a VM which you can run whatever you want on. I am hosting a side project on a $5 droplet it and sometimes I forget I use Digital Ocean (which is a good thing :-). Just bash command to install NodeJS etc. and a single VM but the uptime has been incredible.
DO's board has been atrocious (not you and Ben). The way they handled bonuses even the years that we were growing 40+% because we missed #'s due to factors outside any employees control, was a joke. The hiring of Mark Templeton was one of the absolute worst things that could have happened, he damn near put DO on the brink of destruction.
That said, it seems like Yancey is doing all the right things. The internal DO culture has been coddled for way too long and has been way to top heavy, predominately due to the revolving door of engineering leadership. Since I joined, I've seen Julia, Greg, Dizzy, now Al w/ Barry... and that's been what like 3.5 years?
The Boards support of the current GC is also astonishing, he's been incredibly anti-people and has downright participated in discriminatory practices. I'd HIGHLY encourage DO to setup an ethics hotline, there's been a long-term lack of ability to report concerning behavior without fear of reprisal.
Also, in your previous comments, yes the profitability #'s look surprisingly good, but lets be honest with the community and talk about cash. It's easy to look profitable when you are capitalizing so much, and it's not a fair representation of company performance. While I admittedly don’t really have any transparency into our #’s, its been talked about internally plenty that we have a cash issue. (Although it’s never been indicated that it’s desperate, and for those reading the company isn’t in financial distress, although they’ve been subtly cutting a lot of benefits and doing things to save cash like reduce travel, cut meal benefits, etc).
I'm proud of Yancey and Bill. GC needs to go, period, demonstrate ’togetherness’ Yancey talked about by showing us that accountability applies to all levels. Head of people is doing her best, but we deserve someone that wasn’t a Mark hire that understands our industry, and CTO I'm on the fence about, he's not an inspiring leader.
(Apologies for the throwaway account, surviving here for as long as I have has been difficult. I’ve connected through TOR and two VPNs, and don’t know PW so will never be logging into this account again — so, don’t bother trying to find me.)
You bring up a number of issues that we've went through as a company, but I think this is no different than many other companies that grow quickly and struggle through the complex process of getting alignment.
There is no company that gets everything right and I know that DigitalOcean hasn’t, and personally I haven’t gotten everything right myself. Certainly, I’ve made a ton of mistakes.
The real question is are we headed in the right direction now?
And you yourself have said that it looks like Yancey is right leader for DigitalOcean. And I would agree with that wholeheartedly.
I feel like a message like this is better sent by throw away email or something else that's private, than put in a public forum for all to see. What's the point exactly in putting all this ostensibly proprietary information out there, on HN? Is it benefiting anything to the conversation, aside from satisfying some people's curiosity? What's the intent here, why do you feel that this sort of post needs to be done publicly? What does it improve?
The more time you spend in the corporate world, the more comfortable you are with corporate speak.
I haven't spent any time in the corporate world and I personally value honesty very highly, so I always try to be as forthright as possible, while still respecting the privacy and feelings of other individuals.
Thank you for this! As someone who spends okay amount of money on DO ($40, $15, $5, $5), the title of the post gave me a bit of a scare but your comment helped me calm back down. Thank you!
I used to be with AWS before (still use their S3) but now I have switched from EC2 to DO droplets. Only thing I am missing with DO is the ability to set up ACL on the firewall itself so it can only be reached via cloudflare and the firewall IP isn't exposed to outsiders.
$140 user here. I need DO to stay online for its simplicity. I simply don’t understand AWS and I’m too scared to wreak a subnet while trying to add lambdas and API Gateways. I wouldn’t mind spending double if necessary. Also, clicking in Create Droplet then on a big « $10, xGB RAM » button is incredibly clear to me. Then I « ansible » it and it’s live.
Please don’t add too many services to Digital Ocean ;)
Thanks for posting. I run browserless.io on DO, and want to keep it that way. Many have posted about about how they use DO for small projects, and I started that same way, but now it's the muscle behind a much bigger thing. Appreciate you chiming in.
Been using Browserless for 1+ years and amazingly, have never had any issues with it. It just works. Support is awesome as well. I think you answer every single support email I've sent.
I just wanted to say thank you for providing an amazing service. DO is my number one preferred cloud because using Azure and AWS is incredibly difficult because of their UI. Thank you.
Appreciate the response! Are you at liberty to say a little more about the competing directions that, for lack of a better term, didn't win out? How will these changes impact customers, and could folks be left stranded in any way?
The changes were mostly internal in how teams were structured and was the result of leadership changes that happened.
From the customer perspective we have never launched a product and then killed it. Anytime you are dealing with infrastructure and building services that other companies rely on for their business you have to be very sure that whatever you launch you plan to support just about forever.
A lot of the changes are actually about getting refocused on what made us successful, which is developers and the larger developer/open source community.
Been a while since I logged in and commented on hacker news, but I had to login in order to give testimony on how digitalocean has been helpful to me this past year (2019).
2019 was one of the worst years for me financially, jobless, in debt and with a one year old child and girlfriend to look after. I was always late on payments for my 5$ digitalocean droplet and would always have my account suspended. I would always ask for an extension period and the wonderful guys at digitalocean would gladly grant me an extension and lift the suspension off my account.
And when I read the story my heart skipped a beat wondering what was going to befall my entrepreneurship dreams this year. Thanks a lot for the comment and am forever grateful to you and the team at digitalocean
This doesn’t really track as an explanation. Why couldn’t you restructure teams or retrain people instead of firing them? If it was an internal organizational conflict as you say, it seems rash and strategically unsound to let good people go instead of refactoring the internal conflict in a way that deploys those people in other roles, or at least some of them.
While I don’t think there is anything deceptive or mean-spirited about your comment, it just doesn’t add up, and comes off a bit like the same old corporate verbal shuffling.
Nothing obligates you to comment or speak out on this. Why do so here in this forum if this is all there is to say?
Thank you for this comment. We run our startup on DO and seeing news like this always make me wonder if I should start looking for plan B, a new server provider. Your service is outstanding and a transition of 30+ large droplets to some other provider would be painful so I really hope you guys are doing well.
I too am a long term DO user that loves the simplicity and well thought out product, and the customer service.
But that doesn't not mean not having a Plan B just in case. And think it out. Do you want redundancy in provider in case you're blocked? Do want redundancy in payment system in case your bank blocks you? Do want redundancy in data centre in case a data centre is destroyed or becomes unavailable? Other, staff unavaibility plan, etc. All of these have some cost. Think what's most important for you.
Our profit/loss for the year is determined by growth rate.
In 2013 when we hit product market fit, we ran at a huge loss (on a percent of revenue basis), so much so that we wouldn't be able to survive without raising capital from investors. That or 90% of the customers signing up wouldn't be able to launch a droplet.
We are running at a modest loss now, which is ok because we are growing and also because whenever you launch a new product or feature the up-front costs are much higher to get the initial product built and there is no revenue contribution from it until it's launched and has ramped up.
But even so we did manage a completely net profitable year in our history in 2017, which I'm very proud of, and have been at a slight loss in other years. We still have plenty of our Series B raise in our bank account.
When you look at today's IPOs they are losing 40% more money than they collect in revenue! We are no where close to that. As we have been net profitable already, and now are just fine tuning our investment vs return, so that we can continue to grow responsibly.
Listen, man, this sort of "coverage" of these types of events are the result of being at the top of the field. No one likes to watch people lose their jobs, especially when their name is at the top of the list of people in the company. That being said, you clearly already know that this wasn't anything done without reason.
You guys haven't always nailed it, but overall, all of the points you've listed show that the ship isn't sinking even if it took on some water. It's great that you addressed this and all, but overall, all of this is a sad part of business. As long as it's not taken lightly and everything that can be done to avoid a repeat of this in the future is being done, that's all you can really do.
I have no idea about the specific people here but common reasons: missing skills/experience in the founding team. Sometimes something quite focused such as "have run a public company".
Would it be possible to allow the ability to download one's backups or snapshots?
There are no shortage of requests for this feature and as owner of my data and VM, I'm simply trying to keep an offline backup. Linode has had this feature for a very long time.
There's no reason to be apologetic. The fact of the matter is that there are two types of employees, those who work and those who have a job. Employees who work are creating value, whereas employees who have a job are trading time for money.
When a company becomes a certain size, it's inevitable that you will hire people looking for a job.
Firing people sucks. Yes, it affects their livelihood, but having warm bodies on your roster affects your business.
The problem with people who have a job is that they affect company culture as they set the tone for acceptable and unacceptable behaviors in the workplace. It spreads like a disease and the effect can cripple those who show up to work.
Sometimes, this can lead to confusion as people who have a job might think, "I was doing what I was told. I don't understand why." Creating value is much more than simply following orders.
I have seen nothing to suggest that the people who have lost their jobs weren't working hard enough or creating enough value. The comment above merely says the jobs they were doing are no longer considered strategically valuable, and that's no fault of their own.
Honestly, it really sucks to let people go and I would assume it’s not something taken lightly so I admire you for coming out and taking the time to try and address it as best as you can.
As a longtime Digital Ocean customer, I just want to say that it's amazingly refreshing to hear directly from somebody with such insider knowledge. Kudos for clarifying the situation for us.
yeah, forever-jobs are the main misaligned expectation from the market. laying off people isn't controversial, but too many businesses avoid the action until there actually is a controversial issue with the business.
Because of a change in direction of the company. People often have skills and ambitions that relate to specific tasks. If the company no longer wants to do those tasks, those people can become redundant.
> ".. two CEO changes in the past 18 months and leadership changes that created competing directions in the business .."
They had several different chefs that all had different ideas about the menu, probably resulting in too many odd dishes, and maybe more cooks than necessary. That might lead to not executing well on the dishes at hand. Refocusing on a few good dishes, and making sure there's not too many cooks, might result in a better dinner. Unfortunately, that may require letting some cooks go.
"We last raised an equity round in the summer of 2015 and haven't had a need to raise capital since. This is because we are very capital efficient and have been since our founding."
If you haven't had a need to raise capital since your founding because your were capital-efficient, then why did you raise an equity round in 2015?
Either your statement is worded inaccurately or you did need capital funding after your founding, indicating you also need it now or will soon.
Digital Ocean is a great company in a brutal, low-margin industry. Based on having run a similar (now mostly defunct) company in the past, I would guess that 80% of their customers are on the $5/mo plan.
That $5/mo has to cover the hardware costs: you're buying expensive physical servers to put the VPSes on, and lots of SSDs too. SSDs have a limited lifetime measured in writes, and some of your customers will leave broken programs running that chew through this precious resource for no reason. If you throttle them, they'll complain.
Then there's the support. Handling a support ticket costs you at least $3 in salary and benefits (remember, your typical customer pays $5/mo), and people will demand that you help them fix their broken MySQL server or whatever. They'll yell and threaten when you tell them that this is outside the scope of what you can do.
And don't forget security. Your customers will install broken-ass Wordpress sites and forget to upgrade them for 5 years. Then a worm sweeps through and now a whole bunch of them have been pwned and are mining cryptocurrency. Those pwned customers are complaining and demanding that you fix it, and the regular customers are also upset because of slowness due to the "noisy neighbor" problem inherent to all VPSes.
Speaking of which, preventing one VPS from hogging all the CPU or disk bandwidth is harder than it looks. The two dominant software platforms are Xen and KVM, and neither gives you great tools for dealing with disk bandwidth. Limiting CPU is much easier, but there's still the problem that you're overselling. Which is fine until half the VPSes on your machine are trying to mine Ethereum.
On the bright side: half your customers will buy the VPS, leave it running, and forget about it for years at a time. That's what makes the $5/mo business model work out.
Anyway, I do hope they can become profitable! They run a much better operation than the incumbents they replaced (slicehost, etc).
Person whose job title has "senior network engineer" in it here. I work for a mid sized regional ASN doing middle-mile and last-mile transport and transit. Quite intentionally we offer no services to customers related to VM hosting or managed hosting. The closest we come is selling rack space/cooling/power to people who want to colocate their own equipment and be fully responsible for it themselves.
We are considerably smaller than DigitalOcean in staffing head count. But we have a network that is spread out geographically across five states and 30+ cities and towns, built a combination of third party lit L2 transport, dark fiber IRUs, and fiber we built ourselves. We're a facilities based WAN provider.
There are so many different possible types of ISPs. For a small organization it only makes sense to decide whether you want to go after a huge number of $5 a month customers, or if you want to focus your time and effort on customers that spend anywhere from $250/month upwards for last mile broadband services, colocation/hosting services, etc. As a generalization, the higher the dollar value of the customer, the less of a headache they are, and the higher the clue level of the customer is.
I concur with 100% of what the above poster says about the hosting business.
Bulk hosting/VPS/VM hosting is an incredibly brutal race to the bottom in pricing. Extensive well crafted automation tools and massive economies of scale are the only thing that will save you. I truly feel sorry for the people who are working (mostly entry-level) jobs doing first tier technical support/customer service for 5 dollar a month VPS customers.
If somebody wanted to hire me to work for a consumer-facing hosting company I would run away screaming. It's my idea of a personal hell in the ISP business. Those who have found a way to make it work, not go bankrupt and not have mental breakdowns are a rare breed.
I've had a "droplet" going at $7/mo for about half a year and probably used it less than ten hours so far, and not doing anything too heavy when I use it. Every time I think about turning it off I say "yeah but it's only $7 and I like to ssh into it sometimes."
I've had a "shared hosting" setup on Dreamhost for at least 15 years, also using pennies per month in capacity, at most.
I get that it can be a brutal, low-margin business, but I also wonder how many "small" customers are extremely high-margin like me, and whether that can aggregate into a better overall margin than you might guess?
Or will you always have a few outliers running at capacity and calling the help desk and blowing out your margins?
One of the interesting metrics from my time working in global escalations for one of the worlds largest electronics manufacturers is that most customers don't call in for support, but on average we get 3.5 calls per user per account lifetime.
The 80/20 rule in in full effect here. The 'needy' customers are extremely resource intensive.
Shit, you've just reminded me that I have to finish some ansible playbooks I started in september. The VPS they were supposed to configure only had some hardening an no traffic since then.
you, personally, may be a high margin customer, but some,
and perhaps a lot, of the $5/no customers are potential liabilities due to not patching software or libraries or choosing terrible passwords for their services, databases, etc.
one decent incident can cost a multiple of a year's revenue for the account.
They also have a referral program that turned DigitalOcean to free hosting for me. A few years ago I got annoyed with something, wrote an article about how to fix it using a DO instance, linked to DO with my referral code and racked up thousands of $ in a payout. I used most when experimenting and feeling too lazy to shut down instances(because I didn't want to go through backup since maybe I will use it later etc).
For 6-7 years now I'm using DO for free but my only resource-intensive instance is a personal VPN server that I use from time to time(a few hours a day maybe?).
At first, DO use to give referral payouts in cash, then they limited the payouts to credits, then changed the structure and introduced expiration date to these credits.
I would guess that this referral program that probably helped them a lot with the growth at first is now a burden.
I don't quite understand the economics of referral programs. I'm dealing with levels of customer support to get signed up for a $120/paying signup referral program (cash not credits).
I don't understand
a) How does this possibly make them money?
b) If they want signups that much, why is the flow for joining the referral program so buggy?
I did similar with Dreamhost back in the day, linking through comments and my signature. Great cheap advertising for a high karma to be recommending you, and I was using them.
> That $5/mo has to cover the hardware costs: you're buying expensive physical servers to put the VPSes on, and lots of SSDs too. SSDs have a limited lifetime measured in writes, and some of your customers will leave broken programs running that chew through this precious resource for no reason. If you throttle them, they'll complain.
This makes it sound like you could get a big win in the VPS-provider space by drawing an ROI line at ~$20, and making all instances below that size diskless, with their rootfs being either a tmpfs overlay of a shared SAN-mount of a base image (like a LiveCD environment), or a tmpfs into which was dumped a PXE initramfs image (as e.g. CoreOS does in its idiomatic deploy style.)
I feel like many customer use-cases would still be satisfied by such instances (especially if you also offer local object-storage for the diskless instances to interact with.) It'd sort of be a hybrid position between ephemeral PaaS containers, and actual persistent VMs.
Anyone know of a provider that provides low-cost long-running diskless VPSes like this?
I use Scaleway which does it this way. It was very nice to be able to detach my rootfs when my CPU blew up and just make it the rootfs of another instance.
> Digital Ocean is a great company in a brutal, low-margin industry. Based on having run a similar (now mostly defunct) company in the past, I would guess that 80% of their customers are on the $5/mo plan.
Well, to be honest, Vultr has 2.5$ (IPv6 only) and 3.5$ plans. So, if they're getting by, so could DO.
I actually migrated from DO to Vultr because at the time DO offered 512 MB RAM for $5, while Vultr offered it for $2.5. And Vultr gave me $50 bonus platform credit on sign up, valid for about 18 months (accounting for possible overage fees).
I'm still on Vultr, 3 years on. No problems at all, other than billing issues (accidentally was assigned Australian VAT despite living in Serbia), I had no support tickets. After some time I started using more instances, and more powerful instances, and more services (block storage, "portable" IPs, object storage, internal networks, etc).
I've had a lot of problems with DO's Object storage which was also one reason to move away from them. Problems were quite catastrophic in nature, i.e. the files were unavailable for a few hours every few weeks.
Recently I ave got into Upcloud.com, they have [1] flexible plan that you could mix and match resources, allow me to spin up 20x vCPU, 1GB RAM, 10GB SSD for $168 / month, or 4x vCPU, 128GB RAM, 10GB SSD for $550 / month.
If they ramped that $5/month to $20/month after X months, I would keep paying it. Digital Ocean is a fantastic deal, everything I've tried straightforwardly works, and the fact that I can't accidentally spend money as I experiment is a real boon.
Are you absolutely sure about that? There are several other services at $20/month that would offer a much more compelling value proposition compared to Digital Ocean's lowest-tier droplet.
I would definitely have signed up for a competitor if DO droplets cost 400% what they do now. As other commenters have said, this space is a brutal race to the bottom in pricing. DO is great, I might pay 50% more for their current services, but not 300% more.
Yes, this. I was paying $24/mon after the backup service for something that basically just proved that I owned a domain. For years, using basically just 1 IP address.
In terms of similar competitor and ignoring those Cheap VPS, they started the whole $10 and later $5/month price plan. Linode has always maintained its $20 / Node starting price arguing for the exact reason you mentioned, Support Cost. And later DO / Linode became the price plan standards where everyone follows.
I remember at the time I suggested $5 plan should be limited to 1 per account or only for non- public internet facing usage. But the $5 plan made lots of headline and new customers during the growth at all cost stage.
So if $5 plan were really the problem that it was really their own making. Having said all of that I dont think $5 is really their concern. Hardware is cheap, and those plan with vCPU are shared and always over sold. The number of bad actor within the lowest plan are statistically quite small.
I actually think the future should be more like Render[1],
Linode is a sponsor to my YouTube channel. They have 5.00 plans and have for well over a year now. 10.00 plans too. Linode seems to be doing quite well. They tout themselves as the largest privately held cloud hosting company in the world and keep opening new locations.
DO makes a great product. I've been using them for many years and I hope that they succeed.
I've used other hosts in the past and had nothing but trouble. Joyent ended one of their hosting plans and I had to migrate EVERYTHING which took forever. Then Rimuhosting had an actual hardware failure that resulted in non-reproducible errors happening very frequently - that company nearly brought down my whole business. Then there was Serverpronto which had too much downtime.
by comparison, DO has been much much better, always up, always trouble free.
> Based on having run a similar (now mostly defunct) company in the past, I would guess that 80% of their customers are on the $5/mo plan.
I wonder if the Always Free tiers of GCP / OCI have helped DO in this regard. You can get a lot of free VMs these days, so maybe other cheapasses like myself have left the DO / Linode / etc platforms.
I sympathise with your customer-support point, but not the others. Customers are paying for cloud resources. If their demands are too much for your infrastructure, the issue lies in your infrastructure, or in your claims to customers.
A customer's need for additional resources should translate to a price-point question, rather than to uncertainty about what they've already paid for.
> SSDs have a limited lifetime measured in writes, and some of your customers will leave broken programs running that chew through this precious resource for no reason. If you throttle them, they'll complain.
High IO doesn't always mean an instance was compromised.
There should be clearly defined limits, and/or a clearly defined throttling policy, and the customer should have the option to buy their way out. Amazon gets this right. There should be no guessing game about reasonable use, or goodwill.
> Those pwned customers are complaining and demanding that you fix it, and the regular customers are also upset because of slowness due to the "noisy neighbor" problem inherent to all VPSes.
High CPU load doesn't always mean an instance was compromised. If you've sold CPU resources, the customer is entitled to use them. Obvious example: build servers.
If other customers experience unacceptable degradation, that means you overpromised, or else your isolation solution isn't fit for service.
Again, Amazon gets this right. They're criticised for their complex billing schemes, sometimes rightly, but it clearly makes sense to measure and be explicit about all resource-consumption. They even have an elaborate scheme to incentivise customers to tame down their CPU usage, in the form of 'burstable performance instances'.
> Anyway, I do hope they can become profitable!
Agreed. It's good to have smaller players, not just the big three of Amazon/Google/Microsoft. Competing on price-point without having the same scale, must be really tough.
> That $5/mo has to cover the hardware costs: you're buying expensive physical servers to put the VPSes on, and lots of SSDs too. SSDs have a limited lifetime measured in writes, and some of your customers will leave broken programs running that chew through this precious resource for no reason. If you throttle them, they'll complain.
they are heavily throttled on disk I/O, so much so that I had to switch to AWS and pay per I/O for one project.
also the network seems throttled to 100Mbps up/down, and a few TB/mo, something which Scaleway for $3/mo is unlimited TB/mo and at certain times 2.5Gb/s
Maybe instead of using expensive SSDs. A topology of many spanning disks in large ZFS clusters by using PCIe HDD controllers. Then link the machines via 10GBe could provide you the speed and performance you require require. I've set up a moderate size pool of 1Pb across 16 physical servers on 4 full size racks. This cost less than 50k. Electricity and cooling come from solar. Its the damn internet connection for people to access it that is the cost killer.
> Its the damn internet connection for people to access it that is the cost killer.
Nope. Any hosting provider will be located at a carrier neutral datacenter or the like. At any of these you will have access to low cost IP transit providers and Internet exchanges. You can buy 100G IP transit for $5k per month, so Internet cost isn't really an issue.
> Based on having run a similar (now mostly defunct) company in the past, I would guess that 80% of their customers are on the $5/mo plan.
The founders of NordVPN have recently invested in Hostinger[1], which has successfully adopted their extremely profitable pricing model: charging for 2-4 years in advance, by default. This way, even those who would have paid $5 / month and cancelled and a few months later, end up spending $100+ for 24-48 months at once, often without having a clear need for it, thus leaving a lot of resources underutilized – and available for overselling. The company has more than doubled in size in the last 3 years, more than a decade after its inception.
Just to be clear: I don't find such pricing models customer friendly, and this is just an example of how some companies manage to find their path in such a "brutal low-margin industry". Since shared hosting – just like VPN – is a commodity product, they primarily focus on marketing, sales, and support.
I like how simple their API is. I have infrequent cloud needs, so it's nice being able to set up a simple docker-machine script once in a while to spin up a ton of compute nodes for some scientific task.
Digital Ocean is a great company in a brutal, low-margin industry. Based on having run a similar (now mostly defunct) company in the past, I would guess that 80% of their customers are on the $5/mo plan.
And they are competing with AWS Lightsail that have similar prices and offers Windows instances for people who want it.
But even though I am very steeped in the AWS ecosystem and the price of Lightsail is competitive, if I just needed a VPS I would still go with Linode. I can’t imagine AWS’s support being good for anyone who doesn’t have a business support plan.
They charge you for everything. Data transfer in: charge, data transfer out: charge, DNS lookup: charge, storing a file: charge, etc.
It's one of those situations where it's a death by a thousand cuts. When you're cost provisioning, you can figure out the big stuff, i.e., we need 25 EC2s m4a.2xlarge instances with 40TB of S3 storage, and a 2TB Aurora instance. But once you get the bill, you start seeing the costs of ELBs, NAT gateways, inter-region transfers, etc. Individually, these costs aren't significant, but in aggregate, they can make up a health chunk of your monthly bill.
Plus, their managed solutions are fucking expensive. We moved a self-managed ELK cluster to an AWS-managed one and the costs went up by a factor of two.
Perception that they are THE cloud player to use with great reliability and enterprise focus, so people support their protocols and develop their products for AWS and end up with a bit of lock-in. Mid to large enterprise continue to get on the cloud train hype and spend tens, to hundreds of thousands a month on AWS/S3 instance costs and cannot figure out how or why the bill is so expensive. Then they spend internal costs and personal resource time trying to figure out how they spent so much money on AWS. This happens where I work on both the test/dev and also production hosting.
If DO or Linode were an option to consider, we might be able to save so much money but our own customers use and believe in AWS so we develop and test on AWS. It's a bit of a vicious cycle.
AWS has few services that I imagine yield massive margins with not that much cost to them, which can mainly be justified by the services being pay-per-use and having a small overhead for the customers. And then, I believe most of the AWS's profits come from its enterprise customers which they have plenty of (who aren't in turn that price-sensitive as long as they see profits from their end).
DO on the other hand from my experience has been catered towards small businesses or hobbyists who simply just don't bring that much money vs even a one giant company will bring. And since DO doesn't have all the goodies of AWS, it can't really directly compete with it for those big customers.
It's a very good question. I would imagine more economies of scale? but, I would have thought that DO has enough economies of scale to reap all the benefits. but, I'm not sure.
My impression is that DO is doing just fine. I get the sense that the layoffs are just to add to the profitability, not necessarily a sign of weakness. The article did mention that they were still growing revenues very aggressively.
Speaking as someone with extensive background both in cloud and hosting:
Cloud hosting is low margin. You sell IaaS at about the cheapest possible price point you can. That's the very definition of low margin. Economies of scale don't enter in to whether or not it's a low margin business, they only define how competitive you can be in a low margin business.
IaaS is not where you make the money. The margins have to be tight to be competitive because that's the dollar value people see first when evaluating your cloud platform. It has an immediate effect from day one.
The profits are not made on IaaS, but on the PaaS and SaaS solutions that you, as a cloud provider, build on top of the IaaS. Things like your DBaaS, Streaming, Functions, Load Balancers, Data warehouse etc. products.
Once they're on your platform, that's when you try to get them to pivot. "Why spend engineering effort on running and maintaining database servers, when we can do it for you immediately?" Of course, then once they're using your value-added solutions, they start to get towards vendor lock in, every business's favourite situation. A customer that can't leave!
It's a difficult balancing point, you want to make it seem to the customer like they can realistically leave any time they want, but you don't want them to so you do just the absolute bare minimum you can get away with to make it seem like they're not locked in to your platform.
It seems like it took Digital Ocean a long time to realise that they need the SaaS and PaaS components if they're going to be in this for the long haul. When we launched Oracle Cloud Infrastructure some 3 1/2 years ago, we launched with features that Digital Ocean hadn't yet bothered with, and we were trying to launch with what was seen as the bare minimum to be a viable cloud product.
Prior to those services existing, it was relatively easy for any customer to just drop Digital Ocean for another cloud provider, but even those services aren't a big lock-in for customers.
I sincerely hope it's not too late for them. I like Digital Ocean. They really shook things up when they first hit the market, by bringing something a little different to the plate, but that was never enough to survive and it seems like they only relatively recently realised that.
I'm rooting for them as one of the best potential guardians against the cloud provider market becoming even more of an oligopoly.
Cloud resources should be a commodity. Providers should offer compute resources, persistent storage, load balancers, and MAYBE a small handful of other services.
The way Digital Ocean succeeds against AWS is by aligning itself with this idea, and competing on specialization. Forget competing with lambda; let me run my own serverless application. Don't worry about IAM; let me configure LDAP. Don't waste developer hours on service-ifying the latest NoSQL storage trend; write high-quality tutorials explaining how users can do it themselves.
And most importantly, continue to invest into open source and community resources. There are developers willing to fight the good fight against proprietary walled gardens like AWS/GCP/Azure, but it has to get easier. Configuring HA postgres is harder than paying for RDS. Paying for GKE is more feature complete than using rancher or kubeadm to make my own kubernetes cluster. This friction is an existential threat when Azure can make my problems go away for cash.
I don't know if Digital Ocean can succeed against the big cloud providers, but if they do it won't be because they made a better platform; it'll be by playing a totally different game.
I'm rooting for them too, for the same reason. It's unhealthy for everyone to have Amazon be the only real option for servers. Just look at what happens when Amazon goes down for an hour. It's not hyperbolic to say the entire world notices.
My work doesn't even use Amazon, but when they went down last time, every _other_ service I was using used Amazon, so it didn't matter if I was vendored in or not, I had to just leave work and call it a day.
DigitalOcean is a solid platform and I use them a lot. I really hope they are not only able to succeed but bite into the profits of Amazon and the like.
> It's unhealthy for everyone to have Amazon be the only real option for servers
I'm not belittling AWS' commanding market share, but they are hardly the "only real option for servers." Google and Azure are both in the leviathan league and have competitive pricing.
Unless DigitalOcean creates their own equivalent of a GovCloud region, they won't be an option in my industry. I do still like using DigitalOcean and Vultr for personal projects and the like.
AWS has their own competitive service against DigitalOcean called Lightsail. Their cheapest plan is $3.50 month (512MB/20GB SSD), the bigger plans are roughly similar in pricing and features to DigitalOcean.
>...against the cloud provider market becoming even more of an oligopoly.
I'd be interested in the more opaque aspects of all cloud hosting i.e. Unfettered, and or, at least, Invisible government(s) access -- however there is a really dark double-edge on that privacy hope. (specifically, that there is a lot of nefarious dealings on dark web systems which humanity would be better without)
Its almost as though we also need the antithesis to the dark web. Whereby, if we were to consider the contemporary Internet as the 'Gray Web', the ostensibly-perceived-as-criminal 'Dark Web' the host of Nefarious Dealings, and a 'White Web' for things on the transparent, or at-least validated on the up-and-up.
I would propose that ALL sites with content directed at children must be regulated on the 'White Web' (looking at you, YouTube >:-[
Anyway - my overall point is that Cloud has become 'Privacy-out-of-sight-out-of-mind Land'...
Sure, but they're still big enough to maneuver well against competitors. I see them competing more with the likes of Vultr and Linode than AWS/Azure/GCE.
They're working on this. I was just asked to do a survey about my "team's" PaaS usage and offered an invitation to a working group scheduled later this month.
I'm rooting for them too. I have a bunch of servers running various workloads. They have been great and I love their product. I really hope they are around for the long term
I'm a DO employee on the tech side of the house. According to the CTO, the primary reason for this was actually reorg, not financial though that obviously played a part. Mostly managers got cut, with the goal of flattening the org. I'm keeping my ear to the ground but it doesn't seem like there's going to be more cuts any time soon at least. Apparently we're still hiring a ton this year, so that jives.
no offense but I wouldn't take your CTO's word at face value. you need to watch out for your own interest, including looking at other opportunities, even if it's just to keep yourself top of mind to others if something happens
Agreed fully. I always have an escape strategy in mind if things go south, but I'm pretty bullish on DO right now. That could always change, certainly.
TIL. I have used "jive" instead of "jibe" for a couple of decades. At some point, words change due to usage. I wonder how many people fall into my same boat. And I used it knowing it means "music" - the way it sounded to me was to "jive" was to fit in harmony.
Amazing, TIL. I'm usually picky about words, but I've gotten this one wrong. Turns out the verb "jive" like was used here actually means to speak falsely -- a sort of literally/figuratively meaning inversion.
Curious.. does your employment agreement not put you at very, very significant personal risk for putting information out like this? Throwaway account or not?
I'm inclined to trust HN and it's community to a pretty strong degree. But forgive me for simply not seeing this as anything but controlled information release.
This sucks. I really want DO to succeed because I love their offerings - whereas I occasionally feel like I really do need to RTFM in depth for many AWS offerings (even EC2), DO seemed to just work.
That being said, and I can’t put my finger on why necessarily, it sometimes feels a bit like Heroku - the thing you use before you “graduate” to just using one of the major cloud providers.
Even the API and the docs are so well built that it feels like a pet project I found on Github. Where is all of the corporate nonsense cluttering up the API? Where is the overengineered factory templates where I have to set up a bunch of services using a totally different API before I can start my first VM? Why are the docs so straightforward and in one place in one format? This hardly feels like enterprise software at all. I don't even need to pull out the forbidden calculator to figure out what my bill will be at the end of the month, DO even has an API call that includes the price points for the various offerings.
That and the $5/month price. I recently switched thinking I was downgrading but saving money, but I've liked DO more than using AWS, Azure, or GCP. Performance/$ is better, UX is better, and they have great support docs for so many core use cases (setup letsencrypt, run multiple hosts using nginx, setting up a VPN, etc).
There is a difference between being cheap and inexpensive. DO is inexpensive, but high quality.
Not sure if it's applicable in this case as I'm not a DO user, but this is definitely a thing. For instance, think about web forms for anything 'official' - it's almost as if the worse the UX is, the older the tech it seems to be built on even, the more legit it seems. It's a really counter intuitive effect.
DigitalOcean has always been great place to host single-server Rails/Django/PHP app.
But support for more complex backend infrastructures targeted by the cloud providers, with network segmentation and load balancers and autoscaling clusters, has only started to grow in recently. There is nothing approaching any cloud provider's IAM.
They're not shutting down or winding down. I am guessing that they hired a lot of people to start building an AWS competitor which is a steep battle (even with funding) and goes against the grain of DO philosophy - keep things simple and target DO for small-medium businesses (sub-100 employees).
Investors went into DO thinking of a AWS/GCP/Azure unicorn, but after 6 years it appears to be a small rainbow pony than an almighty unicorn. This restructuring appears to be a realization of what happened with that vision and how it panned out, I may be wrong though.
I personally love DO, I don't want to deal with AWS complexity for basic needs. Minimalism and simplicity certainly has value.
Perhaps because they don't heavily advertise large anchor customers? Sure, there are a bunch of brands on the front page, but that doesn't tell you whether they run 100% on DO or if they maybe used DO once for a side project. Digital Ocean needs a "Netflix", or at least more publicity around how their existing whales use their offerings.
past a certain point you want your provider to do more and more for you (more features). like you mentioned, AWS is complex but they do pretty much everything for you. I've built systems that are just glued together AWS services.
My experience is the opposite, for less critical systems, it's fine for the provider to do everything; as things get more critical, I want more control.
At that point, all I need from the hosting provider is a server that stays up with a network that stays up. And contacts to skip bullshit triage when the network is broken and their monitoring doesn't show it.
I really like DO's blogs/documentation. Fairly easy to get into versus AWS. On another hand, AWS has a very broad product offering with very broad documentation - some hit and miss though.
(similar boat, use Heroku and some GCP in production for work) -- Heroku is great. But it is a bit limited and very expensive. It feels w/ modern cloud platforms you get something comparable with a little more flexibility for only a little more technical burden, _iff_ you have the chops. GCP / AWS are starting to encroach a bit w/ offerings like Cloud Run, I feel like they are one quality PM away from making a Heroku for Google type product that is a bit more powerful and a bit cheaper than Heroku.
Conversely, I also feel like Heroku could round out their offering just a bit more (ex: built in robust monitoring and alerting, better deploy notifications and healthchecks, a simple custom metrics system) and really lock in that "premium basic" tier that would be perfect for most small to medium businesses.
Hey! Totally. I meant that Heroku is incredible for bootstrapping projects, but as time moves forward I usually find myself migrating services from Heroku to just run on AWS directly.
There's some friction with AWS (e.g. SSL termination) that Heroku makes incredibly easy, so I usually don't migrate until it's clear that a service is going to continue to exist in the medium term - otherwise the investment isn't worth it.
Didn't mean to imply that was a widespread sentiment, of course! Just my personal one.
> I really do need to RTFM in depth for many AWS offerings
Agree. But I think part of the plan with Amazon et al is that those who RTFM are locked in to the platform and therefore will be less likely to switch.
It's funny—my experience is pretty much opposite. At a certain scale AWS will provide really world-class support beyond just troubleshooting. DO forwards you to (granted, fairly in-depth) documentation an expects you to read it and engineer your own solutions.
As an on-and-off DO customer learning how to use Linux I find the documentation they've creates (payed ICs to create, I think) extremely useful and consistently of decent quality. When I see them in a Google search for an issue I'm always excited.
totally. I mentioned this in another comment but it feels like a skill floor/ceiling thing to me.
AWS/etc heavily reward you for investing time/money/etc but can be a bit more difficult to get started with without investing resources immediately, whereas DO is very easy to get up and running on but can be difficult when you encounter anything more complex.
Digital Ocean is pretty similar to Vultr: they offer a straight easy API for starting up VMs and managing DNS (I've written a tool that uses both of their API[1]; been meaning to do a post on the differences).
It's kinda nice because you're just putting up VMs and there's not the type of vendor lockin you get with AWS/Azure/Google. That being said, DO is obviously trying to compete on that scale now. It has managed databases to compete with RDS, load balancers, and even managed k8s.
They want to be a real AWS alternative, but when you start building around these components, you get locked in. If they're laying off people, it could adversely affect startups thinking of building around their services.
And for people who think "Well I can just use another terraform provider" .. it really is not that simple at all. AWS/Azure/Google/DO are all very different. They have vastly different terraform providers/modules and you're pretty much writing an entirely new setup per each provider because of they way they handle firewalls, security, IPs, inbound-outbound, etc. The OpenStack API or any type of real standard has yet to emerge that branches all these offering. If you want "cloud" hosting (and most do because managing your own Postgres/MySQL clusters with backups and failover is a fucking bitch; especially if you're just starting out and want to get going fast), you need to realize you might need to be locked in very early in the game.
Everyone is seeing this as negative and a warning sign for DO... but they're an 8 year old privately owned company that has raised over $300m. The last time they obtained funding was a 130m credit line in 2016. It's been 4 years since then... and if they're still losing money, they likely need to either make this profitable, or they're going to need to raise more money.
If they're close to being profitable (likely given their past fund raising, and how long its been), why would they want to sell more of their business?
They may also want to finally go public. 8 years is a long time to wait for a return. And it seems to me the stock market is tired of these unprofitable unicorns doing IPOs (at the moment anyway).
You could also read this as: Digital Ocean raised a $130M credit line and their creditors have noticed that profits aren't what they will need to be in X years time, hence the hair cutting. Their headcount only increased by 4% in the past six months. AWS increased its 10,000+ headcount by 16% in the same time period.
I mean, it's all sheer speculation, but I think it is equally likely that Digital Ocean is having a hard time vs. just restructuring to do some housekeeping... I don't know how any 600 person cloud company survives in the same world as AWS these days.
FWIW, this is basically my take as a DO employee. They could be lying to us and saying it's primarily reorganization so that we don't worry, but that's not my read on it.
Agreed in that this isn't an absolute negative. Cost cutting, flattening org structure and pointing towards break-even/profitability is always good.
The old mantra, change or die, is ringing true here. I personally want to see the success of DO because only having good experiences for my pet projects. Sadly no professional prod environments for me.
It’s been both for me several times, and the management team made it sound perfectly normal in each case.
When you’re courting investor it’s not uncommon to look at your finances and do some work to make the balance sheet look better. You goose your margins a percent or three. But it’s kinda gaming the numbers because you can’t keep doing it without hurting your revenue. You’re putting a little S-curve on the graph of your margins and what? Hoping some people see the beginning of a hockey stick instead? If the round closes successfully you probably will get a hockey stick soon afterward. But this isn’t when it started.
WakaTime switched to DigitalOcean and we're loving their performance to cost ratio. Their compute droplet machines are much better than AWS ec2[1], especially if you need low-latency SSD IOPs. The only AWS services we still use are S3 and Route53, because S3's performance is better than Spaces[2]. Really hope this doesn't spell bad weather ahead.
[1] DigitalOcean Droplets > AWS Ec2 (based on our production metrics)
[2] AWS S3 > DigitalOcean Spaces (based on our production metrics)
I tell you what... If it weren't for Route53 being as good as it is and getting all of our domains sucked into it's gaping maw, we would be much more likely to hop to different cloud vendors. It is very nice having the entire enterprise tech stack managed through a single vendor when you are a tiny company like we are.
That said, I am losing patience with how slow the EC2 instances are considering what we pay. I've got management asking increasingly-probing questions about our monotonically-incrementing AWS bill. All of this would be fine if perceived/actual performance weren't also dropping for us over time (I.e. intel spectre mitigations). I can almost feel how the AMZN profit margins are squeezing us at this point... It's almost a weekly conversation now with Azure or even a return to on-prem being brought up. "Do we move now or later? Is the frying pan hot enough yet?"
Our organization is small enough to comfortably fit onto a single 2S 128 core AMD Rome system. Why shouldn't we just lease out a half-rack somewhere local (I.e. near the developers who can care for it) and then stick a few of their systems, a switch, router and management hardware in there? This all began on-prem with us moving to AWS, and after 6 years in the cloud circus it's starting to feel like a safe place to return to. Perhaps we will just move our compute to on-prem and continue to use AWS for backups and DNS. All I know is my TR 2950X workstation can compile our solution ~10x faster than our Jenkins server which is running on a T2.Large. Imagine giving Jenkins 32 Rome cores. This is something we could actually afford if we owned the hardware.
There are also some other compelling factors for us to consider moving back on-prem. Emerging technologies like Blazor create a strong argument for keeping your workers near the datacenter. Very few businesses truly require more than 1 physical datacenter. Yes, you might also have a DR site, but you can arguably run all of the functions for 95%+ of businesses out of a single physical location. Also, having a physical location where you can hook up any arbitrary hardware means we could also pull our iOS build machine in-house and use proper high-end Apple hardware on the same local network as the rest of our infrastructure.
For what it's worth, I think that was the premise of hybrid on-prem and multicloud. If you can trade-off availability in your stateless compute and worker layer and you're fine mostly managing it on prem, the cost savings could be very compelling. However, you'll still pay for bandwidth, which is the real killer and recurring expenditure. At the end of the day, there's no getting around that unless you move fully to your own metal, but then you'll likely realize costs related to maintaining your own metal that made you want to switch to the cloud in the first place. One way you might try to test this out is by using bare metal AWS instances -- if it's going on the right direction but you want more savings, you could move to using AWS Outposts with your on prem metal.
Just to make some conjecture here, I think that there's a difference between not liking the market's prices and thinking that the market is mispriced. Another commentator's point that the difference in bandwidth between AWS/Azure/GCP/OCI and DO/etc being a factor of 10x should give you an idea of some of the price discrimination going on.
We just switched to DO thanks to their Hatch program. The support they have shown and the energy we’ve been getting from the people at DO has been next-to-none. Obviously it’s concerning to see people being laid off, and my thoughts and concerns go to those who are facing what is probably their worst days. Based on the stated reasoning from corporate I can’t say anything other than I believe them. They have been releasing so many great things recently, and looking at the number of open-source projects on Github it seems that the proof of a flat organisation is in the pudding. We’re spending +1.5k USD monthly and based on their product roadmap shared with us developers I have no reason to doubt that we’ll be moving more of our infrastructure to DO soon.
We used to be on Linode and they were great too. The competition has really forced them to up their game and start innovating. The segment is vibrant and the cash is there. I’m not worried.
Readit News
Cofounder of DigitalOcean here.
Letting people go is always a complicated matter at any scale. Whether you are a ten person company and firing one employee or you are 500 people and firing a larger number.
Wanted to address a few statements from the hackernews community here.
We are not prepping the company for sale.
As unfortunate as the layoffs are they were really due to two CEO changes in the past 18 months and leadership changes that created competing directions in the business, which Yancey our new CEO, is now addressing.
We are not running out of money, nor do we have an immediate need to raise capital, and the lay-offs aren't related to any sort of "cost-cutting".
We last raised an equity round in the summer of 2015 and haven't had a need to raise capital since. This is because we are very capital efficient and have been since our founding.
There are no profitability issues with $5/mo customers as the unit economics are the same as larger accounts. As we have grown we have added more products and features so that scaling teams and companies can also be successful on DigitalOcean, but we are not changing our commitment to the individual developer and those who are just getting started.
Lastly, it pains me to see people let go, having been on both sides of the table, it honestly just really sucks.
Those 5$/mo droplets let me explore a lot of software and run proper production-like benchmarks for my own learning.
Over time I moved a lot of my personal projects and infra over to DO (and started working on new ones now that I had a good provider to host them on).
And now with the new managed offerrings for the CORE technologies people need (databases, caches, K8S etc.) I'm happy to see that I can start being a little more productive with my side projects.
So, in essence I want to thank the people at DigitalOcean for what they've built and continue to build.
Our goal with DigitalOcean was always to help more people get involved with technology.
The community team that is one of the pillars of DigitalOcean was built by Etel. She herself went through this transition. She graduated college with a liberal arts degree and was working as a bartender because she couldn't get another job.
I gave her a book on programming and told her that if she figured it out I would figure out a way to get her a job. She indeed did figure it out and when DigitalOcean was able to start hiring, she was the first hire we made.
Initially she worked customer support, and soon after we put her in charge of building "community".
She wrote the first several hundred articles herself. She then went on to build an entire team of writers and editors and community managers. And that team also created amazing events both on a local scale as well as Hacktoberfest.
So many people have been thankful for to us for our articles and resources, but they wouldn't be what they are without people like Etel. It's really an expression of who she is and her beliefs and values as a person.
That's why we want to continue investing in community and ensure that those individual developers just getting started feel like they truly have a home at DigitalOcean. Because those are the very same people that built DigitalOcean in the first place.
DO's board has been atrocious (not you and Ben). The way they handled bonuses even the years that we were growing 40+% because we missed #'s due to factors outside any employees control, was a joke. The hiring of Mark Templeton was one of the absolute worst things that could have happened, he damn near put DO on the brink of destruction.
That said, it seems like Yancey is doing all the right things. The internal DO culture has been coddled for way too long and has been way to top heavy, predominately due to the revolving door of engineering leadership. Since I joined, I've seen Julia, Greg, Dizzy, now Al w/ Barry... and that's been what like 3.5 years?
The Boards support of the current GC is also astonishing, he's been incredibly anti-people and has downright participated in discriminatory practices. I'd HIGHLY encourage DO to setup an ethics hotline, there's been a long-term lack of ability to report concerning behavior without fear of reprisal.
Also, in your previous comments, yes the profitability #'s look surprisingly good, but lets be honest with the community and talk about cash. It's easy to look profitable when you are capitalizing so much, and it's not a fair representation of company performance. While I admittedly don’t really have any transparency into our #’s, its been talked about internally plenty that we have a cash issue. (Although it’s never been indicated that it’s desperate, and for those reading the company isn’t in financial distress, although they’ve been subtly cutting a lot of benefits and doing things to save cash like reduce travel, cut meal benefits, etc).
I'm proud of Yancey and Bill. GC needs to go, period, demonstrate ’togetherness’ Yancey talked about by showing us that accountability applies to all levels. Head of people is doing her best, but we deserve someone that wasn’t a Mark hire that understands our industry, and CTO I'm on the fence about, he's not an inspiring leader.
(Apologies for the throwaway account, surviving here for as long as I have has been difficult. I’ve connected through TOR and two VPNs, and don’t know PW so will never be logging into this account again — so, don’t bother trying to find me.)
There is no company that gets everything right and I know that DigitalOcean hasn’t, and personally I haven’t gotten everything right myself. Certainly, I’ve made a ton of mistakes.
The real question is are we headed in the right direction now?
And you yourself have said that it looks like Yancey is right leader for DigitalOcean. And I would agree with that wholeheartedly.
Did you pass that through legal? :)
Thanks, yours, another loyal not-customer-support-harassing 5$/m DO customer.
Dead Comment
The more time you spend in the corporate world, the more comfortable you are with corporate speak.
I haven't spent any time in the corporate world and I personally value honesty very highly, so I always try to be as forthright as possible, while still respecting the privacy and feelings of other individuals.
Honesty only works when the things you are doing are good
All the best, love DO, simple + clean and get's the job done.
I used to be with AWS before (still use their S3) but now I have switched from EC2 to DO droplets. Only thing I am missing with DO is the ability to set up ACL on the firewall itself so it can only be reached via cloudflare and the firewall IP isn't exposed to outsiders.
Please don’t add too many services to Digital Ocean ;)
The changes were mostly internal in how teams were structured and was the result of leadership changes that happened.
From the customer perspective we have never launched a product and then killed it. Anytime you are dealing with infrastructure and building services that other companies rely on for their business you have to be very sure that whatever you launch you plan to support just about forever.
A lot of the changes are actually about getting refocused on what made us successful, which is developers and the larger developer/open source community.
2019 was one of the worst years for me financially, jobless, in debt and with a one year old child and girlfriend to look after. I was always late on payments for my 5$ digitalocean droplet and would always have my account suspended. I would always ask for an extension period and the wonderful guys at digitalocean would gladly grant me an extension and lift the suspension off my account.
And when I read the story my heart skipped a beat wondering what was going to befall my entrepreneurship dreams this year. Thanks a lot for the comment and am forever grateful to you and the team at digitalocean
While I don’t think there is anything deceptive or mean-spirited about your comment, it just doesn’t add up, and comes off a bit like the same old corporate verbal shuffling.
Nothing obligates you to comment or speak out on this. Why do so here in this forum if this is all there is to say?
But that doesn't not mean not having a Plan B just in case. And think it out. Do you want redundancy in provider in case you're blocked? Do want redundancy in payment system in case your bank blocks you? Do want redundancy in data centre in case a data centre is destroyed or becomes unavailable? Other, staff unavaibility plan, etc. All of these have some cost. Think what's most important for you.
Are you running at a profit or at a loss?
In 2013 when we hit product market fit, we ran at a huge loss (on a percent of revenue basis), so much so that we wouldn't be able to survive without raising capital from investors. That or 90% of the customers signing up wouldn't be able to launch a droplet.
We are running at a modest loss now, which is ok because we are growing and also because whenever you launch a new product or feature the up-front costs are much higher to get the initial product built and there is no revenue contribution from it until it's launched and has ramped up.
But even so we did manage a completely net profitable year in our history in 2017, which I'm very proud of, and have been at a slight loss in other years. We still have plenty of our Series B raise in our bank account.
When you look at today's IPOs they are losing 40% more money than they collect in revenue! We are no where close to that. As we have been net profitable already, and now are just fine tuning our investment vs return, so that we can continue to grow responsibly.
You guys haven't always nailed it, but overall, all of the points you've listed show that the ship isn't sinking even if it took on some water. It's great that you addressed this and all, but overall, all of this is a sad part of business. As long as it's not taken lightly and everything that can be done to avoid a repeat of this in the future is being done, that's all you can really do.
Just curious, why DO needs an outsider as ceo rather than somebody from founding team?
There are no shortage of requests for this feature and as owner of my data and VM, I'm simply trying to keep an offline backup. Linode has had this feature for a very long time.
When a company becomes a certain size, it's inevitable that you will hire people looking for a job.
Firing people sucks. Yes, it affects their livelihood, but having warm bodies on your roster affects your business.
The problem with people who have a job is that they affect company culture as they set the tone for acceptable and unacceptable behaviors in the workplace. It spreads like a disease and the effect can cripple those who show up to work.
Sometimes, this can lead to confusion as people who have a job might think, "I was doing what I was told. I don't understand why." Creating value is much more than simply following orders.
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They had several different chefs that all had different ideas about the menu, probably resulting in too many odd dishes, and maybe more cooks than necessary. That might lead to not executing well on the dishes at hand. Refocusing on a few good dishes, and making sure there's not too many cooks, might result in a better dinner. Unfortunately, that may require letting some cooks go.
If you haven't had a need to raise capital since your founding because your were capital-efficient, then why did you raise an equity round in 2015?
Either your statement is worded inaccurately or you did need capital funding after your founding, indicating you also need it now or will soon.
That $5/mo has to cover the hardware costs: you're buying expensive physical servers to put the VPSes on, and lots of SSDs too. SSDs have a limited lifetime measured in writes, and some of your customers will leave broken programs running that chew through this precious resource for no reason. If you throttle them, they'll complain.
Then there's the support. Handling a support ticket costs you at least $3 in salary and benefits (remember, your typical customer pays $5/mo), and people will demand that you help them fix their broken MySQL server or whatever. They'll yell and threaten when you tell them that this is outside the scope of what you can do.
And don't forget security. Your customers will install broken-ass Wordpress sites and forget to upgrade them for 5 years. Then a worm sweeps through and now a whole bunch of them have been pwned and are mining cryptocurrency. Those pwned customers are complaining and demanding that you fix it, and the regular customers are also upset because of slowness due to the "noisy neighbor" problem inherent to all VPSes.
Speaking of which, preventing one VPS from hogging all the CPU or disk bandwidth is harder than it looks. The two dominant software platforms are Xen and KVM, and neither gives you great tools for dealing with disk bandwidth. Limiting CPU is much easier, but there's still the problem that you're overselling. Which is fine until half the VPSes on your machine are trying to mine Ethereum.
On the bright side: half your customers will buy the VPS, leave it running, and forget about it for years at a time. That's what makes the $5/mo business model work out.
Anyway, I do hope they can become profitable! They run a much better operation than the incumbents they replaced (slicehost, etc).
We are considerably smaller than DigitalOcean in staffing head count. But we have a network that is spread out geographically across five states and 30+ cities and towns, built a combination of third party lit L2 transport, dark fiber IRUs, and fiber we built ourselves. We're a facilities based WAN provider.
There are so many different possible types of ISPs. For a small organization it only makes sense to decide whether you want to go after a huge number of $5 a month customers, or if you want to focus your time and effort on customers that spend anywhere from $250/month upwards for last mile broadband services, colocation/hosting services, etc. As a generalization, the higher the dollar value of the customer, the less of a headache they are, and the higher the clue level of the customer is.
I concur with 100% of what the above poster says about the hosting business.
Bulk hosting/VPS/VM hosting is an incredibly brutal race to the bottom in pricing. Extensive well crafted automation tools and massive economies of scale are the only thing that will save you. I truly feel sorry for the people who are working (mostly entry-level) jobs doing first tier technical support/customer service for 5 dollar a month VPS customers.
If somebody wanted to hire me to work for a consumer-facing hosting company I would run away screaming. It's my idea of a personal hell in the ISP business. Those who have found a way to make it work, not go bankrupt and not have mental breakdowns are a rare breed.
Ironically, this same strategy is what makes cloud providers more interchangeable to their users, and drives down prices.
I've had a "shared hosting" setup on Dreamhost for at least 15 years, also using pennies per month in capacity, at most.
I get that it can be a brutal, low-margin business, but I also wonder how many "small" customers are extremely high-margin like me, and whether that can aggregate into a better overall margin than you might guess?
Or will you always have a few outliers running at capacity and calling the help desk and blowing out your margins?
The 80/20 rule in in full effect here. The 'needy' customers are extremely resource intensive.
one decent incident can cost a multiple of a year's revenue for the account.
5 weeks. Deleted everything.
Yes, I screwed up. But I would have happily paid them. They deleted the backups too.
When we inquired as to whether the backups could be restored now that we’ve paid them, they said it was impossible.
Blame me if you want and say it’s my fault. It certainly is; I admit that. But why was I paying them for backups that they wiped along with my server?
Meh.
(The card expired.)
For 6-7 years now I'm using DO for free but my only resource-intensive instance is a personal VPN server that I use from time to time(a few hours a day maybe?).
At first, DO use to give referral payouts in cash, then they limited the payouts to credits, then changed the structure and introduced expiration date to these credits.
I would guess that this referral program that probably helped them a lot with the growth at first is now a burden.
I don't understand
a) How does this possibly make them money?
b) If they want signups that much, why is the flow for joining the referral program so buggy?
(It's Mailgun, btw)
This makes it sound like you could get a big win in the VPS-provider space by drawing an ROI line at ~$20, and making all instances below that size diskless, with their rootfs being either a tmpfs overlay of a shared SAN-mount of a base image (like a LiveCD environment), or a tmpfs into which was dumped a PXE initramfs image (as e.g. CoreOS does in its idiomatic deploy style.)
I feel like many customer use-cases would still be satisfied by such instances (especially if you also offer local object-storage for the diskless instances to interact with.) It'd sort of be a hybrid position between ephemeral PaaS containers, and actual persistent VMs.
Anyone know of a provider that provides low-cost long-running diskless VPSes like this?
Well, to be honest, Vultr has 2.5$ (IPv6 only) and 3.5$ plans. So, if they're getting by, so could DO.
https://www.vultr.com/products/cloud-compute/#pricing
I actually migrated from DO to Vultr because at the time DO offered 512 MB RAM for $5, while Vultr offered it for $2.5. And Vultr gave me $50 bonus platform credit on sign up, valid for about 18 months (accounting for possible overage fees).
I'm still on Vultr, 3 years on. No problems at all, other than billing issues (accidentally was assigned Australian VAT despite living in Serbia), I had no support tickets. After some time I started using more instances, and more powerful instances, and more services (block storage, "portable" IPs, object storage, internal networks, etc).
I've had a lot of problems with DO's Object storage which was also one reason to move away from them. Problems were quite catastrophic in nature, i.e. the files were unavailable for a few hours every few weeks.
Recently I ave got into Upcloud.com, they have [1] flexible plan that you could mix and match resources, allow me to spin up 20x vCPU, 1GB RAM, 10GB SSD for $168 / month, or 4x vCPU, 128GB RAM, 10GB SSD for $550 / month.
Pretty damn good if you ask me.
[1] https://upcloud.com/products/cloud-server/
And we have no idea if a similar action by Vultr is imminent (I'm not saying it is -- but we don't know).
I would definitely have signed up for a competitor if DO droplets cost 400% what they do now. As other commenters have said, this space is a brutal race to the bottom in pricing. DO is great, I might pay 50% more for their current services, but not 300% more.
I remember at the time I suggested $5 plan should be limited to 1 per account or only for non- public internet facing usage. But the $5 plan made lots of headline and new customers during the growth at all cost stage.
So if $5 plan were really the problem that it was really their own making. Having said all of that I dont think $5 is really their concern. Hardware is cheap, and those plan with vCPU are shared and always over sold. The number of bad actor within the lowest plan are statistically quite small.
I actually think the future should be more like Render[1],
[1] https://render.com
I've used other hosts in the past and had nothing but trouble. Joyent ended one of their hosting plans and I had to migrate EVERYTHING which took forever. Then Rimuhosting had an actual hardware failure that resulted in non-reproducible errors happening very frequently - that company nearly brought down my whole business. Then there was Serverpronto which had too much downtime.
by comparison, DO has been much much better, always up, always trouble free.
I wonder if the Always Free tiers of GCP / OCI have helped DO in this regard. You can get a lot of free VMs these days, so maybe other cheapasses like myself have left the DO / Linode / etc platforms.
I feel like GCP/AWS free tier have probably hurt the $5/mo hosting business a lot.
A customer's need for additional resources should translate to a price-point question, rather than to uncertainty about what they've already paid for.
> SSDs have a limited lifetime measured in writes, and some of your customers will leave broken programs running that chew through this precious resource for no reason. If you throttle them, they'll complain.
High IO doesn't always mean an instance was compromised.
There should be clearly defined limits, and/or a clearly defined throttling policy, and the customer should have the option to buy their way out. Amazon gets this right. There should be no guessing game about reasonable use, or goodwill.
> Those pwned customers are complaining and demanding that you fix it, and the regular customers are also upset because of slowness due to the "noisy neighbor" problem inherent to all VPSes.
High CPU load doesn't always mean an instance was compromised. If you've sold CPU resources, the customer is entitled to use them. Obvious example: build servers.
If other customers experience unacceptable degradation, that means you overpromised, or else your isolation solution isn't fit for service.
Again, Amazon gets this right. They're criticised for their complex billing schemes, sometimes rightly, but it clearly makes sense to measure and be explicit about all resource-consumption. They even have an elaborate scheme to incentivise customers to tame down their CPU usage, in the form of 'burstable performance instances'.
> Anyway, I do hope they can become profitable!
Agreed. It's good to have smaller players, not just the big three of Amazon/Google/Microsoft. Competing on price-point without having the same scale, must be really tough.
they are heavily throttled on disk I/O, so much so that I had to switch to AWS and pay per I/O for one project.
also the network seems throttled to 100Mbps up/down, and a few TB/mo, something which Scaleway for $3/mo is unlimited TB/mo and at certain times 2.5Gb/s
Nope. Any hosting provider will be located at a carrier neutral datacenter or the like. At any of these you will have access to low cost IP transit providers and Internet exchanges. You can buy 100G IP transit for $5k per month, so Internet cost isn't really an issue.
The founders of NordVPN have recently invested in Hostinger[1], which has successfully adopted their extremely profitable pricing model: charging for 2-4 years in advance, by default. This way, even those who would have paid $5 / month and cancelled and a few months later, end up spending $100+ for 24-48 months at once, often without having a clear need for it, thus leaving a lot of resources underutilized – and available for overselling. The company has more than doubled in size in the last 3 years, more than a decade after its inception.
[1] https://www.hostinger.com/
And they are competing with AWS Lightsail that have similar prices and offers Windows instances for people who want it.
But even though I am very steeped in the AWS ecosystem and the price of Lightsail is competitive, if I just needed a VPS I would still go with Linode. I can’t imagine AWS’s support being good for anyone who doesn’t have a business support plan.
It's one of those situations where it's a death by a thousand cuts. When you're cost provisioning, you can figure out the big stuff, i.e., we need 25 EC2s m4a.2xlarge instances with 40TB of S3 storage, and a 2TB Aurora instance. But once you get the bill, you start seeing the costs of ELBs, NAT gateways, inter-region transfers, etc. Individually, these costs aren't significant, but in aggregate, they can make up a health chunk of your monthly bill.
Plus, their managed solutions are fucking expensive. We moved a self-managed ELK cluster to an AWS-managed one and the costs went up by a factor of two.
If DO or Linode were an option to consider, we might be able to save so much money but our own customers use and believe in AWS so we develop and test on AWS. It's a bit of a vicious cycle.
DO on the other hand from my experience has been catered towards small businesses or hobbyists who simply just don't bring that much money vs even a one giant company will bring. And since DO doesn't have all the goodies of AWS, it can't really directly compete with it for those big customers.
My impression is that DO is doing just fine. I get the sense that the layoffs are just to add to the profitability, not necessarily a sign of weakness. The article did mention that they were still growing revenues very aggressively.
http://calpaterson.com/amazon-premium.html
And they have a lot of lock-in too.
But DO cannot have the monopoly margin enjoyed by AWS and alike.
One example, the hardware cost for AWS probably will be significantly cheaper than DO. That alone can sentence Do to death.
And frankly, DO is better at UX, its technology is not innovative in any measure. By definition, that's a death penalty to a firm of its size.
Cloud hosting is low margin. You sell IaaS at about the cheapest possible price point you can. That's the very definition of low margin. Economies of scale don't enter in to whether or not it's a low margin business, they only define how competitive you can be in a low margin business.
IaaS is not where you make the money. The margins have to be tight to be competitive because that's the dollar value people see first when evaluating your cloud platform. It has an immediate effect from day one.
The profits are not made on IaaS, but on the PaaS and SaaS solutions that you, as a cloud provider, build on top of the IaaS. Things like your DBaaS, Streaming, Functions, Load Balancers, Data warehouse etc. products.
Once they're on your platform, that's when you try to get them to pivot. "Why spend engineering effort on running and maintaining database servers, when we can do it for you immediately?" Of course, then once they're using your value-added solutions, they start to get towards vendor lock in, every business's favourite situation. A customer that can't leave!
It's a difficult balancing point, you want to make it seem to the customer like they can realistically leave any time they want, but you don't want them to so you do just the absolute bare minimum you can get away with to make it seem like they're not locked in to your platform.
It seems like it took Digital Ocean a long time to realise that they need the SaaS and PaaS components if they're going to be in this for the long haul. When we launched Oracle Cloud Infrastructure some 3 1/2 years ago, we launched with features that Digital Ocean hadn't yet bothered with, and we were trying to launch with what was seen as the bare minimum to be a viable cloud product.
DO only added load-balancers in 2017, https://techcrunch.com/2017/02/14/digitalocean-launches-load..., and a Block Storage service in 2016. That's (in both cases) 8 years after AWS launched EBS (2008) and ELB (2009).
Prior to those services existing, it was relatively easy for any customer to just drop Digital Ocean for another cloud provider, but even those services aren't a big lock-in for customers.
I sincerely hope it's not too late for them. I like Digital Ocean. They really shook things up when they first hit the market, by bringing something a little different to the plate, but that was never enough to survive and it seems like they only relatively recently realised that.
Cloud resources should be a commodity. Providers should offer compute resources, persistent storage, load balancers, and MAYBE a small handful of other services.
The way Digital Ocean succeeds against AWS is by aligning itself with this idea, and competing on specialization. Forget competing with lambda; let me run my own serverless application. Don't worry about IAM; let me configure LDAP. Don't waste developer hours on service-ifying the latest NoSQL storage trend; write high-quality tutorials explaining how users can do it themselves.
And most importantly, continue to invest into open source and community resources. There are developers willing to fight the good fight against proprietary walled gardens like AWS/GCP/Azure, but it has to get easier. Configuring HA postgres is harder than paying for RDS. Paying for GKE is more feature complete than using rancher or kubeadm to make my own kubernetes cluster. This friction is an existential threat when Azure can make my problems go away for cash.
I don't know if Digital Ocean can succeed against the big cloud providers, but if they do it won't be because they made a better platform; it'll be by playing a totally different game.
My work doesn't even use Amazon, but when they went down last time, every _other_ service I was using used Amazon, so it didn't matter if I was vendored in or not, I had to just leave work and call it a day.
DigitalOcean is a solid platform and I use them a lot. I really hope they are not only able to succeed but bite into the profits of Amazon and the like.
I'm not belittling AWS' commanding market share, but they are hardly the "only real option for servers." Google and Azure are both in the leviathan league and have competitive pricing.
I spend roughly $120/m with DO and have done for the last 2 years. I have a majority 5 usd droplets and 1 20 usd droplet.
LightSail may be the way to go for now.
Here comes all the migration work.. Fun :)
I'd be interested in the more opaque aspects of all cloud hosting i.e. Unfettered, and or, at least, Invisible government(s) access -- however there is a really dark double-edge on that privacy hope. (specifically, that there is a lot of nefarious dealings on dark web systems which humanity would be better without)
Its almost as though we also need the antithesis to the dark web. Whereby, if we were to consider the contemporary Internet as the 'Gray Web', the ostensibly-perceived-as-criminal 'Dark Web' the host of Nefarious Dealings, and a 'White Web' for things on the transparent, or at-least validated on the up-and-up.
I would propose that ALL sites with content directed at children must be regulated on the 'White Web' (looking at you, YouTube >:-[
Anyway - my overall point is that Cloud has become 'Privacy-out-of-sight-out-of-mind Land'...
So much this
I just got a nervous tick. Having done it before IAM is the killer feature of AWS.
I'm a DO employee on the tech side of the house. According to the CTO, the primary reason for this was actually reorg, not financial though that obviously played a part. Mostly managers got cut, with the goal of flattening the org. I'm keeping my ear to the ground but it doesn't seem like there's going to be more cuts any time soon at least. Apparently we're still hiring a ton this year, so that jives.
The fact that its mostly management is encouraging though.
I love DO and what it stands for. Sadly, I don't use it outside of personal pet projects.
I'm inclined to trust HN and it's community to a pretty strong degree. But forgive me for simply not seeing this as anything but controlled information release.
My read of this is very different than yours: Naive IC who doesn't have optics into the actual mechanization of the business trusting the CTO fully.
I think this message from the CTO is a partial truth as they often are in orgs that aren't extremely internally transparent.
AKA I don't think the "shilling" is working if that's what they were doing.
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That being said, and I can’t put my finger on why necessarily, it sometimes feels a bit like Heroku - the thing you use before you “graduate” to just using one of the major cloud providers.
There is a difference between being cheap and inexpensive. DO is inexpensive, but high quality.
But support for more complex backend infrastructures targeted by the cloud providers, with network segmentation and load balancers and autoscaling clusters, has only started to grow in recently. There is nothing approaching any cloud provider's IAM.
Investors went into DO thinking of a AWS/GCP/Azure unicorn, but after 6 years it appears to be a small rainbow pony than an almighty unicorn. This restructuring appears to be a realization of what happened with that vision and how it panned out, I may be wrong though.
I personally love DO, I don't want to deal with AWS complexity for basic needs. Minimalism and simplicity certainly has value.
At that point, all I need from the hosting provider is a server that stays up with a network that stays up. And contacts to skip bullshit triage when the network is broken and their monitoring doesn't show it.
Definitely a skill floor/ceiling thing going on.
Conversely, I also feel like Heroku could round out their offering just a bit more (ex: built in robust monitoring and alerting, better deploy notifications and healthchecks, a simple custom metrics system) and really lock in that "premium basic" tier that would be perfect for most small to medium businesses.
There's some friction with AWS (e.g. SSL termination) that Heroku makes incredibly easy, so I usually don't migrate until it's clear that a service is going to continue to exist in the medium term - otherwise the investment isn't worth it.
Didn't mean to imply that was a widespread sentiment, of course! Just my personal one.
Agree. But I think part of the plan with Amazon et al is that those who RTFM are locked in to the platform and therefore will be less likely to switch.
AWS/etc heavily reward you for investing time/money/etc but can be a bit more difficult to get started with without investing resources immediately, whereas DO is very easy to get up and running on but can be difficult when you encounter anything more complex.
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It's kinda nice because you're just putting up VMs and there's not the type of vendor lockin you get with AWS/Azure/Google. That being said, DO is obviously trying to compete on that scale now. It has managed databases to compete with RDS, load balancers, and even managed k8s.
They want to be a real AWS alternative, but when you start building around these components, you get locked in. If they're laying off people, it could adversely affect startups thinking of building around their services.
And for people who think "Well I can just use another terraform provider" .. it really is not that simple at all. AWS/Azure/Google/DO are all very different. They have vastly different terraform providers/modules and you're pretty much writing an entirely new setup per each provider because of they way they handle firewalls, security, IPs, inbound-outbound, etc. The OpenStack API or any type of real standard has yet to emerge that branches all these offering. If you want "cloud" hosting (and most do because managing your own Postgres/MySQL clusters with backups and failover is a fucking bitch; especially if you're just starting out and want to get going fast), you need to realize you might need to be locked in very early in the game.
[1]: https://github.com/sumdog/bee2/tree/master/lib
When I worked at DigitalOcean all we could do was shake our head and laugh at how blatantly hard Vultr tried to copy what we did.
They can't. Too small to grow big.
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If they're close to being profitable (likely given their past fund raising, and how long its been), why would they want to sell more of their business?
They may also want to finally go public. 8 years is a long time to wait for a return. And it seems to me the stock market is tired of these unprofitable unicorns doing IPOs (at the moment anyway).
I mean, it's all sheer speculation, but I think it is equally likely that Digital Ocean is having a hard time vs. just restructuring to do some housekeeping... I don't know how any 600 person cloud company survives in the same world as AWS these days.
They aren’t competing in the same space
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Having used both daily for years now I can certainly see why DO will have an appeal to some over something as large as AWS.
It is way less confusing and their docs are much easier to get through. I always recommend people starting out with cloud VMs to go DO instead of AWS
The old mantra, change or die, is ringing true here. I personally want to see the success of DO because only having good experiences for my pet projects. Sadly no professional prod environments for me.
When you’re courting investor it’s not uncommon to look at your finances and do some work to make the balance sheet look better. You goose your margins a percent or three. But it’s kinda gaming the numbers because you can’t keep doing it without hurting your revenue. You’re putting a little S-curve on the graph of your margins and what? Hoping some people see the beginning of a hockey stick instead? If the round closes successfully you probably will get a hockey stick soon afterward. But this isn’t when it started.
They have only raised around 100M in equity investment from VCs. The last being 83M in 2015. This is the money which requires multiples.
[1] DigitalOcean Droplets > AWS Ec2 (based on our production metrics)
[2] AWS S3 > DigitalOcean Spaces (based on our production metrics)
That said, I am losing patience with how slow the EC2 instances are considering what we pay. I've got management asking increasingly-probing questions about our monotonically-incrementing AWS bill. All of this would be fine if perceived/actual performance weren't also dropping for us over time (I.e. intel spectre mitigations). I can almost feel how the AMZN profit margins are squeezing us at this point... It's almost a weekly conversation now with Azure or even a return to on-prem being brought up. "Do we move now or later? Is the frying pan hot enough yet?"
Our organization is small enough to comfortably fit onto a single 2S 128 core AMD Rome system. Why shouldn't we just lease out a half-rack somewhere local (I.e. near the developers who can care for it) and then stick a few of their systems, a switch, router and management hardware in there? This all began on-prem with us moving to AWS, and after 6 years in the cloud circus it's starting to feel like a safe place to return to. Perhaps we will just move our compute to on-prem and continue to use AWS for backups and DNS. All I know is my TR 2950X workstation can compile our solution ~10x faster than our Jenkins server which is running on a T2.Large. Imagine giving Jenkins 32 Rome cores. This is something we could actually afford if we owned the hardware.
There are also some other compelling factors for us to consider moving back on-prem. Emerging technologies like Blazor create a strong argument for keeping your workers near the datacenter. Very few businesses truly require more than 1 physical datacenter. Yes, you might also have a DR site, but you can arguably run all of the functions for 95%+ of businesses out of a single physical location. Also, having a physical location where you can hook up any arbitrary hardware means we could also pull our iOS build machine in-house and use proper high-end Apple hardware on the same local network as the rest of our infrastructure.
Just to make some conjecture here, I think that there's a difference between not liking the market's prices and thinking that the market is mispriced. Another commentator's point that the difference in bandwidth between AWS/Azure/GCP/OCI and DO/etc being a factor of 10x should give you an idea of some of the price discrimination going on.
We used to be on Linode and they were great too. The competition has really forced them to up their game and start innovating. The segment is vibrant and the cash is there. I’m not worried.