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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 the

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).

ttul 7y ago
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.
- deleted 7y ago
  [deleted]
- Matheus28 7y ago
  > 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
  - RussianCow 7y ago
    They most certainly are, especially given the managed products DO has introduced recently (object storage, DB, Kubernetes, and load balancer). They definitely want a slice of Amazon's pie.
    - Matheus28 7y ago
      DO is still far from being a “premium” provider. Sure they’re starting to offer a subset of AWS services, but if you compare their prices, they aren’t aiming for the same type of costumers. Easiest way to compare is bandwidth costs: AWS/Azure/Google Cloud charge around $0.05/GB at their cheapest prices. DigitalOcean/Linode/Vultr charge around $0.005/GB (and it comes with a VPS bundled). If you’re doing anything bandwidth intensive (several PB a month), one is viable, the other is not
- chrisan 7y ago
  > I don't know how any 600 person cloud company survives in the same world as AWS these days. 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
  - jermaustin1 7y ago
    I agree. If I want to set up something at Digital Ocean, I can know the costs without any complex algebra or a specialized calculator like AWS and Azure have. Obviously DO has a lot less features than AWS or Azure, but they do add features every couple of years, and their interface is so much simpler to navigate. I feel DO/Linode/etc are more closely related to a hosted vSphere + f5, than a "cloud provider" in the same vein as AWS/Azure.
dothrowaway 7y ago
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.
irjustin 7y ago
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.
hinkley 7y ago
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.
hellotheresirs 7y ago
The line of credit is used to finance equipment and has a fixed payback period. They have only raised around 100M in equity investment from VCs. The last being 83M in 2015. This is the money which requires multiples.

ttul 7y ago

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.

deleted 7y ago
[deleted]
Matheus28 7y ago
> 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
- RussianCow 7y ago
  They most certainly are, especially given the managed products DO has introduced recently (object storage, DB, Kubernetes, and load balancer). They definitely want a slice of Amazon's pie.
  - Matheus28 7y ago
    DO is still far from being a “premium” provider. Sure they’re starting to offer a subset of AWS services, but if you compare their prices, they aren’t aiming for the same type of costumers. Easiest way to compare is bandwidth costs: AWS/Azure/Google Cloud charge around $0.05/GB at their cheapest prices. DigitalOcean/Linode/Vultr charge around $0.005/GB (and it comes with a VPS bundled). If you’re doing anything bandwidth intensive (several PB a month), one is viable, the other is not
chrisan 7y ago
> I don't know how any 600 person cloud company survives in the same world as AWS these days. 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
- jermaustin1 7y ago
  I agree. If I want to set up something at Digital Ocean, I can know the costs without any complex algebra or a specialized calculator like AWS and Azure have. Obviously DO has a lot less features than AWS or Azure, but they do add features every couple of years, and their interface is so much simpler to navigate. I feel DO/Linode/etc are more closely related to a hosted vSphere + f5, than a "cloud provider" in the same vein as AWS/Azure.

dothrowaway 7y ago

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.

irjustin 7y ago

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.

hinkley 7y ago

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.

hellotheresirs 7y ago

The line of credit is used to finance equipment and has a fixed payback period. They have only raised around 100M in equity investment from VCs. The last being 83M in 2015. This is the money which requires multiples.