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Interestingly it was very clear at around $10MM ARR that DO was on a trajectory to IPO. You can thank Moisey Uretsky for a fantastic product idea and his brothe

by neom 6y ago

Interestingly it was very clear at around $10MM ARR that DO was on a trajectory to IPO. You can thank Moisey Uretsky for a fantastic product idea and his brother Ben for CEOing it for so long. Congratulations to everyone who was involved in building DigitalOcean, it was an INCREDIBLY wild ride in the early days, lots of chaos but through all the chaos and disfunction, I think everyone involved knew this day would come. Personally I'm really proud of the work we did, and I'm overjoyed to have been part of building a business that is going to be a public company. Thanks to the HN community for being so supportive over the years.

yte14 6y ago
The thesis of DigitalOcean was literally “this very established market needs a venture capital growth play because we saw Slicehost exit to Rackspace”. In the beginning the entirety of DO’s offering, tech for tech, was almost a direct lift of Linode and, as they scaled, made all the same technical mistakes and learning experiences that Linode did. I guess you could call that a fantastic product idea. I’d call it applying an aggressive exit strategy to Chris Aker’s fantastic product idea from 2003 and further commoditizing said product in its wake.
- neom 6y ago
  Actually, Ben and Moisey owned a managed hosting company that was coming under a lot of pressure from rackspace. DigitalOcean as a product was a direct response to that market pressure. I think if you ask any of the early executives, none of us loooovveed the venture component, it was a way to grow the business that was already growing rapidly with strong product market fit. Remember, a16z only invested once we were doing millions and millions in ARR. In terms of Linode, I have no idea what you're talking about. DigitalOcean had 1 click $5 SSD offerings years before linode/anyone else made any changes to their business.
  - bombcar 6y ago
    Which is amusing because Rackspace is now overpriced garbage as far as I can tell, or a wrapper around public cloud.
    - codegeek 6y ago
      I have dealt with Rackspace exact 2 times and both times, it has been a horrendous experience.
      - bombcar 6y ago
        They make you call support to delete a “cloud server” - glad I’ll only have to do that once more.
    - paulie_a 6y ago
      Rackspace was always overpriced garbage
  - yte14 6y ago
    I remember Linode being hesitant to dip below $20 because the thinking was that it would diminish the quality of support. That thinking was reinforced when you started with $10 (if I recall, it’s been nearly a decade) and we started getting large numbers of refugees burned by experiences with your support organization. Neighboring comments tell me it’s still a problem. We consciously didn’t want to grow $5 fast because we didn’t have capital to throw at any problem that developed. We, the market, not just Linode, also knew competing to the bottom on price largely relegated shared/cpanel/etc hosting to $0.99 commodity status and we weren’t keen to kick off such a war for obvious reasons. (That was quite prescient, looking back from outside in 2021.) Anyway, yes, you eventually reached a position where you dictated the pricing structure, slightly annoyingly because it was a product that looked remarkably similar to ours (down to the incentivized Linode Library clone that’s getting praise elsewhere in this thread). I wasn’t talking about changes you forced. The entire product top to bottom was referenced against Linode’s work to grow you to a position to force those changes. Sorry if I wasn’t clear. I’m also not going after you for it; I’m only responding to fantastic product idea. It’s just odd that when competitors would ask me my thoughts on the “Linode clone” at 2011-era conferences that’s something that’s news to you. Is that really not apparent to an executive? If not that you did so, at least that seemingly the entire incumbency, not just Linode, thought so?
    - fastball 6y ago
      You might be experiencing a form of survivorship bias / confirmation bias here. If you work at Linode, presumably people would come up to you asking about something they then couched to you as a Linode clone. That doesn't mean it's how people were talking about DO when not directly speaking with someone at Linode.
      - yte14 6y ago
        I don’t understand how that impacts my point at all. If an opinion is only held in one context it’s not actually held? Is that what you’re saying? I’m sorry, I don’t follow. Before DO VPS was (and somewhat remains) a community even among competition. I’m not basing what I’m saying solely on the example given.
  - CerealFounder 6y ago
    The real story is Ben and Moisey were running one of the largest hosting co's in porn and then there was a security problem via one of their upstream providers and it created a DISASTER. Thats how DO was born from what I understand.
- tyingq 6y ago
  I always wondered if they would eventually make a deliberate attempt to take over the "shared Cpanel hosting" market with a non-shared-host, non-cpanel model. It seems ripe for change...lots of little players.
  - neom 6y ago
    The market was considerably too small and it would mean building to much towards the past. The thesis of "millions of *new* developers are coming online over the next 20 years" was the main north star.
    - tyingq 6y ago
      It is small compared to cloud, but it's a ~$22 billion / year market. Compare to IaaS at ~$50b. So it's not tiny, but it is highly fragmented. And I think the solution could be layered on top of what they already have. Cpanel is just a bunch of buttons, icons, and little apps to create web server instances and tie them to domains, database instances, backups, web file management, manage DNS records, and so on. Basically just a consistent web app to put on top of their "droplet" ecosystem. Much of it already exists, so a fair amount of the effort would just be marketing it.
      - neom 6y ago
        We were too busy building in the wake of AWS. Looking forward and building into the paradigm shift was the strategy (and it seemed to work!). :)
        tyingq 6y ago
        Makes sense, though paradoxically, that market is growing by around 10% per year.
- jacques_chester 6y ago
  I was on Linode for a while and moved to DigitalOcean. At the time it was a very simple calculus. DigitalOcean was less established, less mature, offered fewer CPUs and less RAM per dollar and had only two (or was it three?) locations. But they had SSDs and Linode did not. The difference in Wordpress performance was night and day. So I switched and I'm still there. Linode dragged its feet on SSDs. I don't care why or how. I cared that I could get what I needed elsewhere.
  - ryandrake 6y ago
    What's the difference like today? As a long time Linode customer, I just never even felt the need to shop around. Maybe I should! It's always been just fine for my "tiny duty" Wordpress host. I always knew DO existed, but figured it's the same $5 and I'm probably getting about the same thing so why bother switching. I guess I'm a good example of why stickiness matters.
    - jacurtis 6y ago
      Today the pricing and services are essentially matched. Someone will obviously fight be on this statement, but I think today they are essentially equal from a cost perspective. They all run SSDs and have similar cost per RAM/CPU core. But as others have said, Linode was around forever. Digital Ocean came in and disrupted them. When DO first came on the scene then you easily could have switched and got more for your money. But Linode has caught up and matched them. Right now they are both good. I have actually been favoring Linode lately with their new interface. But I have $3,000 or so of Digital Ocean credit that I am trying to use up first.
- grey-area 6y ago
  As a user of both services for years, the only point on which they are similar was/is that they both offer shared cheap VMs (as do lots of other services). Presenting early DO as a ripoff of linode is frankly absurd, the UI, user experience, API, Load balancing, backups, and docs were all vastly superior to Linode, and it honestly felt like the copying was more the other way round as Linode tried to catch up with their UI.
  - jjav 6y ago
    I'm puzzled by the praises on DO UI, since in the early days in particular I always found it intolerably terrible. Far less useful than Linode UI. Nowadays it's ok, but Linode is still has better UI.
- aantix 6y ago
  "An aggressive exit strategy" when they started in "2003"? Aggressive, as in two turtles fighting.
  - yte15 6y ago
    Linode was founded in 2003, not DigitalOcean.
- unilynx 6y ago
  This doesn’t sound right. I know we evaluated linode vs do in 2016, and dropped linode because of lack of volume support. Digitalocean had that, even if only in FRA1, but it surely was ahead of linode back then (Not sure if block storage came even earlier to other DO data centers, but as those were outside the EU they wouldn’t have been relevant)
- MPSimmons 6y ago
  Their approach to making VPS/Cloud offerings simple and approachable are really what set them apart, in my mind. I run all of my simple things there, because sometimes I don't want or need the complexity that actually managing things in Azure, GCloud, or AWS require.
- brightball 6y ago
  As a happy Slicehost customer, I definitely saw Slicehost in every aspect of the DO approach.
  - benatkin 6y ago
    Some are saying that about Linode and I just don't get it. Loved Slicehost!!!
- KaiserPro 6y ago
  DO's offering was SSD backed small hosts for $5. Nothing else in the market offered that at the time.
tgtweak 6y ago
I'm really happy to see Ben and Moisey get this far. They are both extremely competent sysadmins and system architects too. They retained a lot of equity as well - good to see.
- deleted 6y ago
  [deleted]
- TechBro8615 6y ago
  Between the two of them, they own less than 20% of the company. Is this a lot? Not in my opinion. They sold 80% of their company.
  - Tostino 6y ago
    It's a pretty big pie that got baked, that <20% is quite a lot in the scheme of things.
  - jkaplowitz 6y ago
    Compared to how much most VC-fueled founders would own at IPO stage, sounds like a lot to me.
  - tgtweak 6y ago
    They are also in the holding co
  - ZephyrBlu 6y ago
    Yes it is. Usually founders would only have a few percentage points at the tail end of things.
- sneak 6y ago
  My experience is that not only did they start out as incompetent, they actively downplayed early security issues and outright lied about certain aspects of their products. I found major, glaring security/architecture issues with their main product early on, and was told by DO staff to go full-disclosure because it was working as designed. When I did so, DO lied about the impact on their blog. Those lies are still up: https://www.digitalocean.com/blog/transparency-regarding-data-security/ https://www.digitalocean.com/blog/transparency-regarding-dat... > At no time was customer data "leaked" between accounts. (I have screenshots of other DO customers' data.) https://news.ycombinator.com/item?id=6983097 https://news.ycombinator.com/item?id=6983097 Even their outage blog post from a few months ago is now deleted. My experience is that DO is a shady company, and I'll not do any serious/critical business with them or ever use them to store secret information. As for the lying, I'd personally never do business with any of the early DO management/founders. There's no amount of money that can be used to buy a reputation for integrity.
kevinoconnor7 6y ago
I remember interviewing with DO back in late 2014 and it was nuts! The entire interview process took ~3 months and it was clear that they were defining the process as they went. The entire process was basically: 1. initial call with recruiter 2. homework project 3. call with engineer to discuss said homework project 4. two phone screens with engineers 5. onsite interview with 6 engineers Finally I had was at the final step which was a call with Ben who was really interesting to talking to as we shared the sysadmin background. They we going through some pretty crazy growth at the time so I forgave a lot of disorganization in the interview process. Unfortunately I didn't end up getting the role but I'm glad to have had that experience; it was definitely an interesting point in DigitalOcean's history.
- Ansil849 6y ago
  Not to hijack this sub-thread, but just a general question: how does one deal with unethical 'homework projects'? I've had a case during an application where I was given a 'homework project' that seemed to me very much not like a theoretical scenario, but more like the company wanting me to do free work for an actual real-world issue they had. Have people had situations where you suspected the same? How do you deal with it?
  - umvi 6y ago
    If it were me I would be like: "here is proof I completed it and that it works, source code contingent on my being hired ;)"
    - xedeon 6y ago
      I like the way you think!
  - temp667 6y ago
    We give new hires a homework project that is directly work related. We don't consider it unethical. It's really a fantastic way to sort out who can deliver. We used to have it be part of the onsite interview - they could sit for a few hours and do it. I like these because they are not games. If you want something done, you'd ask an employee to do it. So just ask someone to do something you need done. In our case at least by the time it was something that was part of an interview, it had already been implemented on the business side. Our projects were usually 2 hours tops? The idea that this is unethical is wild. We also do paid internships and have folks actually work on stuff that way -> do a good job, pretty good line up for a full time position.
nodesocket 6y ago
As somebody who followed SliceHost (Jason Seats and Matt Tanase) the predecessor to DigitalOcean, I 100% knew that DigitalOcean was on a trajectory to exit/IPO and be huge early on. Bravo, and congratulations to the entire team. I was also building a startup piggybacking on hosting providers around 2012 and 2013 and saw the explosive growth. DigitalOcean should be the go-to case study on how to build a developer oriented company. Just like SliceHost and PickledOnion before; the technical guides on setting up LAMP stacks, Wordpress, NGINX, Node.js become resources just as important as Stackoverflow and Serverfault. DO showed up first in Google search results for technical questions.
ivanvanderbyl 6y ago
The best year of my career was at DO in 2014/15. We were growing like a weed. It was hard to appreciate the magnitude of the growth until I compared it to everywhere I've worked since. It was a heck of a lot of fun. Thanks for bringing me on board.
stjohnswarts 6y ago
I actually prefer that companies stay private so they can have more control over their long term outlook rather than slowly moving to quarterly profits and quarterly thinking mindset that haunts most of the industry tech and otherwise. It was great while it lasted, and I guess those early guys are going to make a killing on the options. Congrats to them. Nothing lasts forever.

by neom 6y ago

yte14 6y ago

The thesis of DigitalOcean was literally “this very established market needs a venture capital growth play because we saw Slicehost exit to Rackspace”. In the beginning the entirety of DO’s offering, tech for tech, was almost a direct lift of Linode and, as they scaled, made all the same technical mistakes and learning experiences that Linode did. I guess you could call that a fantastic product idea. I’d call it applying an aggressive exit strategy to Chris Aker’s fantastic product idea from 2003 and further commoditizing said product in its wake.

neom 6y ago
Actually, Ben and Moisey owned a managed hosting company that was coming under a lot of pressure from rackspace. DigitalOcean as a product was a direct response to that market pressure. I think if you ask any of the early executives, none of us loooovveed the venture component, it was a way to grow the business that was already growing rapidly with strong product market fit. Remember, a16z only invested once we were doing millions and millions in ARR. In terms of Linode, I have no idea what you're talking about. DigitalOcean had 1 click $5 SSD offerings years before linode/anyone else made any changes to their business.
- bombcar 6y ago
  Which is amusing because Rackspace is now overpriced garbage as far as I can tell, or a wrapper around public cloud.
  - codegeek 6y ago
    I have dealt with Rackspace exact 2 times and both times, it has been a horrendous experience.
    - bombcar 6y ago
      They make you call support to delete a “cloud server” - glad I’ll only have to do that once more.
  - paulie_a 6y ago
    Rackspace was always overpriced garbage
- yte14 6y ago
  I remember Linode being hesitant to dip below $20 because the thinking was that it would diminish the quality of support. That thinking was reinforced when you started with $10 (if I recall, it’s been nearly a decade) and we started getting large numbers of refugees burned by experiences with your support organization. Neighboring comments tell me it’s still a problem. We consciously didn’t want to grow $5 fast because we didn’t have capital to throw at any problem that developed. We, the market, not just Linode, also knew competing to the bottom on price largely relegated shared/cpanel/etc hosting to $0.99 commodity status and we weren’t keen to kick off such a war for obvious reasons. (That was quite prescient, looking back from outside in 2021.) Anyway, yes, you eventually reached a position where you dictated the pricing structure, slightly annoyingly because it was a product that looked remarkably similar to ours (down to the incentivized Linode Library clone that’s getting praise elsewhere in this thread). I wasn’t talking about changes you forced. The entire product top to bottom was referenced against Linode’s work to grow you to a position to force those changes. Sorry if I wasn’t clear. I’m also not going after you for it; I’m only responding to fantastic product idea. It’s just odd that when competitors would ask me my thoughts on the “Linode clone” at 2011-era conferences that’s something that’s news to you. Is that really not apparent to an executive? If not that you did so, at least that seemingly the entire incumbency, not just Linode, thought so?
  - fastball 6y ago
    You might be experiencing a form of survivorship bias / confirmation bias here. If you work at Linode, presumably people would come up to you asking about something they then couched to you as a Linode clone. That doesn't mean it's how people were talking about DO when not directly speaking with someone at Linode.
    - yte14 6y ago
      I don’t understand how that impacts my point at all. If an opinion is only held in one context it’s not actually held? Is that what you’re saying? I’m sorry, I don’t follow. Before DO VPS was (and somewhat remains) a community even among competition. I’m not basing what I’m saying solely on the example given.
- CerealFounder 6y ago
  The real story is Ben and Moisey were running one of the largest hosting co's in porn and then there was a security problem via one of their upstream providers and it created a DISASTER. Thats how DO was born from what I understand.
tyingq 6y ago
I always wondered if they would eventually make a deliberate attempt to take over the "shared Cpanel hosting" market with a non-shared-host, non-cpanel model. It seems ripe for change...lots of little players.
- neom 6y ago
  The market was considerably too small and it would mean building to much towards the past. The thesis of "millions of *new* developers are coming online over the next 20 years" was the main north star.
  - tyingq 6y ago
    It is small compared to cloud, but it's a ~$22 billion / year market. Compare to IaaS at ~$50b. So it's not tiny, but it is highly fragmented. And I think the solution could be layered on top of what they already have. Cpanel is just a bunch of buttons, icons, and little apps to create web server instances and tie them to domains, database instances, backups, web file management, manage DNS records, and so on. Basically just a consistent web app to put on top of their "droplet" ecosystem. Much of it already exists, so a fair amount of the effort would just be marketing it.
    - neom 6y ago
      We were too busy building in the wake of AWS. Looking forward and building into the paradigm shift was the strategy (and it seemed to work!). :)
      - tyingq 6y ago
        Makes sense, though paradoxically, that market is growing by around 10% per year.
jacques_chester 6y ago
I was on Linode for a while and moved to DigitalOcean. At the time it was a very simple calculus. DigitalOcean was less established, less mature, offered fewer CPUs and less RAM per dollar and had only two (or was it three?) locations. But they had SSDs and Linode did not. The difference in Wordpress performance was night and day. So I switched and I'm still there. Linode dragged its feet on SSDs. I don't care why or how. I cared that I could get what I needed elsewhere.
- ryandrake 6y ago
  What's the difference like today? As a long time Linode customer, I just never even felt the need to shop around. Maybe I should! It's always been just fine for my "tiny duty" Wordpress host. I always knew DO existed, but figured it's the same $5 and I'm probably getting about the same thing so why bother switching. I guess I'm a good example of why stickiness matters.
  - jacurtis 6y ago
    Today the pricing and services are essentially matched. Someone will obviously fight be on this statement, but I think today they are essentially equal from a cost perspective. They all run SSDs and have similar cost per RAM/CPU core. But as others have said, Linode was around forever. Digital Ocean came in and disrupted them. When DO first came on the scene then you easily could have switched and got more for your money. But Linode has caught up and matched them. Right now they are both good. I have actually been favoring Linode lately with their new interface. But I have $3,000 or so of Digital Ocean credit that I am trying to use up first.
grey-area 6y ago
As a user of both services for years, the only point on which they are similar was/is that they both offer shared cheap VMs (as do lots of other services). Presenting early DO as a ripoff of linode is frankly absurd, the UI, user experience, API, Load balancing, backups, and docs were all vastly superior to Linode, and it honestly felt like the copying was more the other way round as Linode tried to catch up with their UI.
- jjav 6y ago
  I'm puzzled by the praises on DO UI, since in the early days in particular I always found it intolerably terrible. Far less useful than Linode UI. Nowadays it's ok, but Linode is still has better UI.
aantix 6y ago
"An aggressive exit strategy" when they started in "2003"? Aggressive, as in two turtles fighting.
- yte15 6y ago
  Linode was founded in 2003, not DigitalOcean.
unilynx 6y ago
This doesn’t sound right. I know we evaluated linode vs do in 2016, and dropped linode because of lack of volume support. Digitalocean had that, even if only in FRA1, but it surely was ahead of linode back then (Not sure if block storage came even earlier to other DO data centers, but as those were outside the EU they wouldn’t have been relevant)
MPSimmons 6y ago
Their approach to making VPS/Cloud offerings simple and approachable are really what set them apart, in my mind. I run all of my simple things there, because sometimes I don't want or need the complexity that actually managing things in Azure, GCloud, or AWS require.
brightball 6y ago
As a happy Slicehost customer, I definitely saw Slicehost in every aspect of the DO approach.
- benatkin 6y ago
  Some are saying that about Linode and I just don't get it. Loved Slicehost!!!
KaiserPro 6y ago
DO's offering was SSD backed small hosts for $5. Nothing else in the market offered that at the time.

tgtweak 6y ago

I'm really happy to see Ben and Moisey get this far. They are both extremely competent sysadmins and system architects too. They retained a lot of equity as well - good to see.

deleted 6y ago
[deleted]
TechBro8615 6y ago
Between the two of them, they own less than 20% of the company. Is this a lot? Not in my opinion. They sold 80% of their company.
- Tostino 6y ago
  It's a pretty big pie that got baked, that <20% is quite a lot in the scheme of things.
- jkaplowitz 6y ago
  Compared to how much most VC-fueled founders would own at IPO stage, sounds like a lot to me.
- tgtweak 6y ago
  They are also in the holding co
- ZephyrBlu 6y ago
  Yes it is. Usually founders would only have a few percentage points at the tail end of things.
sneak 6y ago
My experience is that not only did they start out as incompetent, they actively downplayed early security issues and outright lied about certain aspects of their products. I found major, glaring security/architecture issues with their main product early on, and was told by DO staff to go full-disclosure because it was working as designed. When I did so, DO lied about the impact on their blog. Those lies are still up: https://www.digitalocean.com/blog/transparency-regarding-data-security/ https://www.digitalocean.com/blog/transparency-regarding-dat... > At no time was customer data "leaked" between accounts. (I have screenshots of other DO customers' data.) https://news.ycombinator.com/item?id=6983097 https://news.ycombinator.com/item?id=6983097 Even their outage blog post from a few months ago is now deleted. My experience is that DO is a shady company, and I'll not do any serious/critical business with them or ever use them to store secret information. As for the lying, I'd personally never do business with any of the early DO management/founders. There's no amount of money that can be used to buy a reputation for integrity.

kevinoconnor7 6y ago

I remember interviewing with DO back in late 2014 and it was nuts! The entire interview process took ~3 months and it was clear that they were defining the process as they went. The entire process was basically: 1. initial call with recruiter 2. homework project 3. call with engineer to discuss said homework project 4. two phone screens with engineers 5. onsite interview with 6 engineers Finally I had was at the final step which was a call with Ben who was really interesting to talking to as we shared the sysadmin background. They we going through some pretty crazy growth at the time so I forgave a lot of disorganization in the interview process. Unfortunately I didn't end up getting the role but I'm glad to have had that experience; it was definitely an interesting point in DigitalOcean's history.

Ansil849 6y ago
Not to hijack this sub-thread, but just a general question: how does one deal with unethical 'homework projects'? I've had a case during an application where I was given a 'homework project' that seemed to me very much not like a theoretical scenario, but more like the company wanting me to do free work for an actual real-world issue they had. Have people had situations where you suspected the same? How do you deal with it?
- umvi 6y ago
  If it were me I would be like: "here is proof I completed it and that it works, source code contingent on my being hired ;)"
  - xedeon 6y ago
    I like the way you think!
- temp667 6y ago
  We give new hires a homework project that is directly work related. We don't consider it unethical. It's really a fantastic way to sort out who can deliver. We used to have it be part of the onsite interview - they could sit for a few hours and do it. I like these because they are not games. If you want something done, you'd ask an employee to do it. So just ask someone to do something you need done. In our case at least by the time it was something that was part of an interview, it had already been implemented on the business side. Our projects were usually 2 hours tops? The idea that this is unethical is wild. We also do paid internships and have folks actually work on stuff that way -> do a good job, pretty good line up for a full time position.

nodesocket 6y ago

As somebody who followed SliceHost (Jason Seats and Matt Tanase) the predecessor to DigitalOcean, I 100% knew that DigitalOcean was on a trajectory to exit/IPO and be huge early on. Bravo, and congratulations to the entire team. I was also building a startup piggybacking on hosting providers around 2012 and 2013 and saw the explosive growth. DigitalOcean should be the go-to case study on how to build a developer oriented company. Just like SliceHost and PickledOnion before; the technical guides on setting up LAMP stacks, Wordpress, NGINX, Node.js become resources just as important as Stackoverflow and Serverfault. DO showed up first in Google search results for technical questions.

ivanvanderbyl 6y ago

The best year of my career was at DO in 2014/15. We were growing like a weed. It was hard to appreciate the magnitude of the growth until I compared it to everywhere I've worked since. It was a heck of a lot of fun. Thanks for bringing me on board.

stjohnswarts 6y ago

I actually prefer that companies stay private so they can have more control over their long term outlook rather than slowly moving to quarterly profits and quarterly thinking mindset that haunts most of the industry tech and otherwise. It was great while it lasted, and I guess those early guys are going to make a killing on the options. Congrats to them. Nothing lasts forever.