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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 b

by 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.

by yte14 6y ago

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.