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can someone eli5 why investors are throwing so much money at Vercel, Netlify and Gatsby? what kind of promises are they making in exchange of the capital? why

can someone eli5 why investors are throwing so much money at Vercel, Netlify and Gatsby? what kind of promises are they making in exchange of the capital? why don't more capable platforms like Render or Fly.io raise as much?

lghh 5y ago
What about Render and Fly.io make you feel they are more capable?
- tptacek 5y ago
  Fly.io and Vercel don't even do the same thing. We're different, not more or less capable.
  - ushakov 5y ago
    you still have to compete with them though?
    - tptacek 5y ago
      I'm sure there's some sense in which we do, but it's not at all how we think about the world.
thewarrior 5y ago
These companies can get big enough to be acquired by AWS , Azure at some point. This is now the new Heroku. The next big startup could be an application on Vercel maintained by 2 people instead of a tangle of micro services and AWS configurations maintained by 20.
- ushakov 5y ago
  they don't run backend/databases though?
  - danpalmer 5y ago
    This is likely fine for the typical "Digital Transformation" projects at huge enterprises that have a ton of cash to spend on things like this. Everything is a Mainframe or SAP installation under the hood somewhere, but layers and layers of API mean that product teams can mostly ignore the complexity and ship a mediocre app that is only really a frontend.
  - icemelt8 5y ago
    Good point, for that there is another hot category of startups, such as Supabase and nhost.
  - ratww 5y ago
    They do have Edge Functions, which is similar to Lambda. Same with Netlify and Cloudflare. For DBs you have to seek somewhere else. It's not really something that will run your Rails backend, but it has the potential of doing a lot for creative small teams.
    - ushakov 5y ago
      why would any sane person vendor-lock-in all backend code to a single provider?
      - deleted 5y ago
        [deleted]
      - addandsubtract 5y ago
        You don't. You write your backend code and vercel (and others) turn it into serverless functions that can be deployed on AWS or Cloudflare. Or whoever else decides to offer serverless functions. Or you extract your backend and host it yourself. You're not vendor locking yourself.
      - archeroed 5y ago
        Haven't yet used their /api serveless functions but I guess it's standard nodejs functions, so not that much vendor lockin
- ryanSrich 5y ago
  Herkou’s exit wasn’t that great though. Granted, $200m isn’t an insignificant amount of money, but Netlify and Vercel are valued at billions. They would have to sell for 10x what Heroku sold for to meet expectations. I just don’t see the valuations lining up, but I’ll probably be wrong. I also don’t know who they get acquired by. I don’t see AWS making acquisitions like this. From what I’ve seen, it seems like they try to buy companies at lower valuations (than multiple billions).
  - thewarrior 5y ago
    These companies can be disruptive innovators by focusing on Niches that the big companies won’t care about because they’re tiny. For eg - managed react applications. IIRC Firebase was acquired by google. But the plan is to go after all of AWS slowly from a different direction. Cloud flare is doing the same thing and their stock is going gangbusters. Cloud services are one of the most profitable businesses to ever exist. There’s so much lock in and network effects. Especially with managed solutions like these.
    - ignoramous 5y ago
      But: The Innovator's Solution to the Innovator's Dilemma is well-understood at this point. Incumbents know well to not ignore upstarts. Knowing (Intel v ARM [0]) and reacting are two different things, of course. [0] ref "red teaming at Intel", https://news.ycombinator.com/item?id=21095977 https://news.ycombinator.com/item?id=21095977
      - thewarrior 5y ago
        It’s not easy because of all the bureaucracies and inefficiencies at large companies. Most employees at AWS are probably barely inspired compared to the people working at Vercel who can also ship much faster. Nothing new here just what PG has been saying for years.
        ignoramous 5y ago
        > It’s not easy because of all the bureaucracies and inefficiencies at large companies. The Innovator's Solution addresses these and other issues. http://web.mit.edu/6.933/www/Fall2000/teradyne/clay.html http://web.mit.edu/6.933/www/Fall2000/teradyne/clay.html: Even after correctly identifying potentially disruptive technologies, firms still must circumvent its hierarchy and bureaucracy that can stifle the free pursuit of creative ideas. Christensen suggests that firms need to provide experimental groups within the company a freer rein. "With a few exceptions, the only instances in which mainstream firms have successfully established a timely position in a disruptive technology were those in which the firms' managers set up an autonomous organization charged with building a new and independent business around the disruptive technology." This autonomous organization will then be able to choose the customers it answers to, choose how much profit it needs to make, and how to run its business.
- deleted 5y ago
  [deleted]
- nkotov 5y ago
  AWS most likely won't acquire - they'd rather build their own solution that does 80% of the job okay.
  - kylegill 5y ago
    Can confirm, AWS Amplify got 80% of my job done trying to deploy and manage a FE stack.
- jmacd 5y ago
  Being "acquirable" is one of the things you often forego at valuations like this.
  - thewarrior 5y ago
    Why ? Valuations are generally high these days and Big tech has the cash. If there’s a crash all valuations go down and they’re even more acquirable. The acquisition doesn’t have to happen at these valuations for the investors to make money. See - Liquidation preferences
tptacek 5y ago
I dunno, probably mostly we didn't ask for it? :)
- ushakov 5y ago
  why wouldn't you? other guys raising hundreds of millions!
  - ignoramous 5y ago
    Have they been speaking with Bryan Cantrill? https://news.ycombinator.com/item?id=28460504 https://news.ycombinator.com/item?id=28460504
anurag 5y ago
We (Render) announced our $20 million Series A yesterday: https://render.com/blog/render-series-a https://render.com/blog/render-series-a. Why not $150M? All these companies were founded ~4 years before Render and it takes time to build to the point where these huge valuations and funding amounts make sense (to the extent they do).
- deltron3030 5y ago
  You're the only service apart of AWS and DO I'm aware of where I can host WordPress and static sites using the same account and dashboard. It's not the sexiest tech stack for Startups, but a WP plugin for static site generation and docker deploys (pro plan) would be killer. There are some neat static site generator plugins out there (simplystatic, wp2static) which can be used in localwp, an easy to use and popular local dev environment from wpengine. People could start with a static site for free/cheap, deployed from their local env to Render, and then move to docker when their sites and dynamic needs grow. This could make it a lot easier for peeps building their audience with blogs and digital products before they get into SaaS.
nkotov 5y ago
We're in the PaaS space and we've recently went through fundraising - a good number of investors are basically just waiting and seeing on other PaaS solutions to see which one makes it to the top and then throw as much money at them as they can.
machiaweliczny 5y ago
Have you seen returns on CloudFlare? I guess they hope to grab even more by mixing this with ala Heroku + Firebase maybe.
2c2c2c 5y ago
heroku dropped the ball on easy to deploy cloud infra

lghh 5y ago

What about Render and Fly.io make you feel they are more capable?

tptacek 5y ago
Fly.io and Vercel don't even do the same thing. We're different, not more or less capable.
- ushakov 5y ago
  you still have to compete with them though?
  - tptacek 5y ago
    I'm sure there's some sense in which we do, but it's not at all how we think about the world.

thewarrior 5y ago

These companies can get big enough to be acquired by AWS , Azure at some point. This is now the new Heroku. The next big startup could be an application on Vercel maintained by 2 people instead of a tangle of micro services and AWS configurations maintained by 20.

ushakov 5y ago
they don't run backend/databases though?
- danpalmer 5y ago
  This is likely fine for the typical "Digital Transformation" projects at huge enterprises that have a ton of cash to spend on things like this. Everything is a Mainframe or SAP installation under the hood somewhere, but layers and layers of API mean that product teams can mostly ignore the complexity and ship a mediocre app that is only really a frontend.
- icemelt8 5y ago
  Good point, for that there is another hot category of startups, such as Supabase and nhost.
- ratww 5y ago
  They do have Edge Functions, which is similar to Lambda. Same with Netlify and Cloudflare. For DBs you have to seek somewhere else. It's not really something that will run your Rails backend, but it has the potential of doing a lot for creative small teams.
  - ushakov 5y ago
    why would any sane person vendor-lock-in all backend code to a single provider?
    - deleted 5y ago
      [deleted]
    - addandsubtract 5y ago
      You don't. You write your backend code and vercel (and others) turn it into serverless functions that can be deployed on AWS or Cloudflare. Or whoever else decides to offer serverless functions. Or you extract your backend and host it yourself. You're not vendor locking yourself.
    - archeroed 5y ago
      Haven't yet used their /api serveless functions but I guess it's standard nodejs functions, so not that much vendor lockin
ryanSrich 5y ago
Herkou’s exit wasn’t that great though. Granted, $200m isn’t an insignificant amount of money, but Netlify and Vercel are valued at billions. They would have to sell for 10x what Heroku sold for to meet expectations. I just don’t see the valuations lining up, but I’ll probably be wrong. I also don’t know who they get acquired by. I don’t see AWS making acquisitions like this. From what I’ve seen, it seems like they try to buy companies at lower valuations (than multiple billions).
- thewarrior 5y ago
  These companies can be disruptive innovators by focusing on Niches that the big companies won’t care about because they’re tiny. For eg - managed react applications. IIRC Firebase was acquired by google. But the plan is to go after all of AWS slowly from a different direction. Cloud flare is doing the same thing and their stock is going gangbusters. Cloud services are one of the most profitable businesses to ever exist. There’s so much lock in and network effects. Especially with managed solutions like these.
  - ignoramous 5y ago
    But: The Innovator's Solution to the Innovator's Dilemma is well-understood at this point. Incumbents know well to not ignore upstarts. Knowing (Intel v ARM [0]) and reacting are two different things, of course. [0] ref "red teaming at Intel", https://news.ycombinator.com/item?id=21095977 https://news.ycombinator.com/item?id=21095977
    - thewarrior 5y ago
      It’s not easy because of all the bureaucracies and inefficiencies at large companies. Most employees at AWS are probably barely inspired compared to the people working at Vercel who can also ship much faster. Nothing new here just what PG has been saying for years.
      - ignoramous 5y ago
        > It’s not easy because of all the bureaucracies and inefficiencies at large companies. The Innovator's Solution addresses these and other issues. http://web.mit.edu/6.933/www/Fall2000/teradyne/clay.html http://web.mit.edu/6.933/www/Fall2000/teradyne/clay.html: Even after correctly identifying potentially disruptive technologies, firms still must circumvent its hierarchy and bureaucracy that can stifle the free pursuit of creative ideas. Christensen suggests that firms need to provide experimental groups within the company a freer rein. "With a few exceptions, the only instances in which mainstream firms have successfully established a timely position in a disruptive technology were those in which the firms' managers set up an autonomous organization charged with building a new and independent business around the disruptive technology." This autonomous organization will then be able to choose the customers it answers to, choose how much profit it needs to make, and how to run its business.
deleted 5y ago
[deleted]
nkotov 5y ago
AWS most likely won't acquire - they'd rather build their own solution that does 80% of the job okay.
- kylegill 5y ago
  Can confirm, AWS Amplify got 80% of my job done trying to deploy and manage a FE stack.
jmacd 5y ago
Being "acquirable" is one of the things you often forego at valuations like this.
- thewarrior 5y ago
  Why ? Valuations are generally high these days and Big tech has the cash. If there’s a crash all valuations go down and they’re even more acquirable. The acquisition doesn’t have to happen at these valuations for the investors to make money. See - Liquidation preferences

tptacek 5y ago

I dunno, probably mostly we didn't ask for it? :)

ushakov 5y ago
why wouldn't you? other guys raising hundreds of millions!
- ignoramous 5y ago
  Have they been speaking with Bryan Cantrill? https://news.ycombinator.com/item?id=28460504 https://news.ycombinator.com/item?id=28460504

anurag 5y ago

We (Render) announced our $20 million Series A yesterday: https://render.com/blog/render-series-a https://render.com/blog/render-series-a. Why not $150M? All these companies were founded ~4 years before Render and it takes time to build to the point where these huge valuations and funding amounts make sense (to the extent they do).

deltron3030 5y ago
You're the only service apart of AWS and DO I'm aware of where I can host WordPress and static sites using the same account and dashboard. It's not the sexiest tech stack for Startups, but a WP plugin for static site generation and docker deploys (pro plan) would be killer. There are some neat static site generator plugins out there (simplystatic, wp2static) which can be used in localwp, an easy to use and popular local dev environment from wpengine. People could start with a static site for free/cheap, deployed from their local env to Render, and then move to docker when their sites and dynamic needs grow. This could make it a lot easier for peeps building their audience with blogs and digital products before they get into SaaS.

nkotov 5y ago

We're in the PaaS space and we've recently went through fundraising - a good number of investors are basically just waiting and seeing on other PaaS solutions to see which one makes it to the top and then throw as much money at them as they can.

machiaweliczny 5y ago

Have you seen returns on CloudFlare? I guess they hope to grab even more by mixing this with ala Heroku + Firebase maybe.

2c2c2c 5y ago

heroku dropped the ball on easy to deploy cloud infra