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.
I can honestly say that one of the reasons people hop onto DO is due to those amazing tutorials and documentations. I know I was.
It's surprising really that in all the praise I threw to DigitalOcean the awesome documentation and tutorials flew under my radar. That's not to say that I don't value them. Rather the complete opposite. They had become such an integral part of my life when getting my hands wet with a new technology or a tool or setting up any new software or system that I completely forgot that they were something that someone invested a lot of time writing.
I was still in college/starting out then and had never learned that most developers don't document things (let alone write tutorials). I believed there must be internal websites similar to DO's documentation and tutorials in each company and took DO for granted.
It'd be really great if you could share my thoughts about how great and instrumental the documentation and tutorials have been to Etel and the team specially.
I've actually added the site into searches for some things, since the tutorials are usually better. Though some should maybe be updated to current versions now and then, it's still overall much better than the rest of the internet in general.
There is almost always a comprehensive article with good overview covering "How to set up X" on their website so when I see it in the search results that's the first place I choose. Even if I don't use DO for that particular project.
I was in a similar position not too long ago. I had nothing but a liberal arts degree, a miserable first career and a yawning resume gap. I just stumbled into coding and I was completely addicted. After many months cobbling together a frankenstinean tangle of Kubernetes clusters, db instances and even an AI that could write bad limericks, I got a job as a backend engineer. You have to work your tail off in this job but its a life changing opportunity in a field where you get to make things for a living and there's always something new to learn.
Thank you thank you thank you cloud providers for making compute power so cheap. I realize you do it because you know you will eventually make the money back 10000x over when we persuade our bosses to lock in to your ecosystem, but I don't care. (Capitalism is not perfect, but hey, sometimes it can be okay)
DO tutorials are amazing, by the way. I learned so many things from your docs, it shows a lot of hard work by some very talented people.
> I was in a similar position not too long ago. I had nothing but a liberal arts degree, a miserable first career and a yawning resume gap. I just stumbled into coding and I was completely addicted. ... its a life changing opportunity in a field where you get to make things for a living and there's always something new to learn. Thank you thank you thank you cloud providers
Programming in the 2010s and 2020s is kind of like union labor work back in the 1950 and 1960s: not instantaneous riches, but meaningful work that leads to a decent middle to upper class life.
Unfortunately, this won't last forever. Other countries are catching up to the U.S. quickly. Eventually, development will move to cheaper labor countries like so many other industries. What is frustrating though is that if the U.S. actually focused on developing its talent, we could maintain the lead for another decade or two longer than if we just sit on our hands. With that extra lead time, we could come up with the next major industry (AI-training? quantum computer programming?), but as it stands now, many other countries will be equally poised to jump on the next opportunity and we'll squander our lead forever.
> Unfortunately, this won't last forever. Other countries are catching up to the U.S. quickly. Eventually, development will move to cheaper labor countries like so many other industries.
People have been saying this for like 2 decades now when the magic buzz word then “offshoring” [0]. Offshoring and its cousins still happen as a cost-cutting measure, except not at the scale most people would imagine based on the enormous hype it received from “thought leaders”.
> People have been saying this for at like 2 decades now when the magic buzz word was “offshoring” [0]. Offshoring and its cousins still happen as a cost-cutting measure, except not at the scale most people would imagine.
I think it is happening at the scale people imagined. The amount of foreign trade and offshoring that the U.S. is doing with developing countries is multiple orders of magnitude higher than it was in the early 1990s.
That's been the case for nearly two decades though. Outsourcing happens, it can go okay to very badly. Running teams overseas, the communication channels become more important and more limiting at the same time. Trying to run meetings in two hemispheres is not an easy chore and takes a toll. I did it for 8 months and jumped back into development.
I've also seen cases where it clearly wasn't worth it. It just depends on the project, communication and company culture. There's something to be said for walking down a hallway to actually talk to someone.
Of course the disparity north to south is less so, as meetings can be aligned better... such as with say California, Washington, Arizona and Brazil. The fact is, value is value... if you're constantly learning and experimenting, you're ahead of the curve and can deliver value where others don't.
>> Unfortunately, this won't last forever. Other countries are catching up to the U.S. quickly. Eventually, development will move to cheaper labor countries like so many other industries. What is frustrating though is that if the U.S. actually focused on developing its talent, we could maintain the lead for another decade or two longer than if we just sit on our hands. With that extra lead time, we could come up with the next major industry (AI-training? quantum computer programming?), but as it stands now, many other countries will be equally poised to jump on the next opportunity and we'll squander our lead forever.
Agreed. I have several (very smart) coworkers in other countries. And our political system is an atrocious thing to watch these days. Whatever happened to compromise?
I don't think anybody really knows for sure what the future holds. The thing is with cloud computing and with the spread of technology into the developing world they will likely be needing engineers too.
Of course that may not happen if the software world is so carved up that all of the business goes to a handful of companies that are employing a fixed number of people and concentrating the gains.
And if Elon Musk has a breakthrough with neuralink, then maybe we'll all be out of a job. Why write code when you can think print('hello world')?
On the other hand, big players can get disrupted, technology can change, and its not like every human being has the capacity/stomach for the abstract problem solving we do day to day.
I've seen programming outsourced before (and I moved out of the US to Europe to get my start in software). However, what people without software experience are likely to miss is that programming is not really the problem in commercial software. Communicating the thing-to-be-made in a way that both management and the programmers are on the same page and keeping that communication open through development so that the right thing gets made is the real challenge (heck, doing this among managers is challenging enough).
Outsourcing can, in some cases, raise additional obstacles to this goal through differences in language and/or culture, and every mistake here adds additional cost to the project. This isn't insurmountable, but usually I don't see this even considered when the question of outsourcing comes up.
That, and the group we outsourced to happened to be in a part of the world that was in the middle of a literal civil war, so staff sometimes couldn't work because staying alive was more important. Being aware of the near-future geopolitical situation of your people is important anywhere, and just kind of happens by osmosis when you're working domestically.
I very much look forward to Neuralink, but as you point out on the following line, this will also not turn non-programmers into programmers because the main hurdle is not knowing the syntax, but formulating thought into a structure that's useful for computers, and it seems most non-programmers do not have the mindset for it. Programmers are people who turn ideas into formal logic. Although some things can be automated there, I personally think the future's still bright for developers with people skills, wherever they may be.
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?
Satisfying people's curiosity improves the conversation, and calling someone out in the public square is a good way to create accountability that doesn't exist in private communication.
That's a pretty blank check to write. All kind of awful, distasteful things are satisfying to some people's curiosity. Not all curiosities should be satisfied. IMO the comment I was responding to was going beyond measured, actionable feedback. It was TMI, public dirty laundry based on speculations, from an insider who goes on a limb stating guesses as truths, claiming knowledge of proprietary information.
Is HN an appropriate way to tell the DO board that XYZ people should be fired? In the end I just don't get it. This sort of comment isn't doing the commenter any good.
Most curiosities should be gratified, and this isn't an unreasonable one.
They're an employee concerned about their company (and arguably more important, their job security). A public forum like HN is absolutely a way to highlight workplace discrimination, which this person did in a way that doesn't publicly accuse anyone yet allows someone with power ('raiyu in this case) to know who is doing it.
Also, they points out that 'raiyu is lying, or at minimum being misleading, to everyone on HN in his comments. That's valuable to the community.
There's no such thing as proprietary information, and I think most people on HN will agree with that statement. There are secrets, but proprietary information is a buzzword. That sounds like a defense contractor term.
It's also not "guesses as truths." That's a very curious way to describe "shared knowledge." The person seems to have gotten information from their coworkers, and they're talking about it in the context of that.
Sending a private message on another protocol/platform brings zero accountability while reducing the person's anonymity (which they're clearly worried about maintaining), while this at least leaves a mark that can't be deleted (by replying to it, you actually made it so it couldn't be deleted if the person wanted to within the deletion window. That's one of my favorite features of HN; it makes historically-relevant information stay there forever, essentially).
A public forum is an appropriate place to tell someone who has power over you that someone else who has power over you should be fired, especially given Digital Ocean's seeming lack of a way to do so with anonymity otherwise. Anonymous disclosure is necessary for power structures to function without serious abuse.
I was actually going to comment on how much I like your communication style, so I'm glad to see it getting praise from other HNers.
Besides the lack of BS, I think I can learn a lot from your sentence and paragraph structure. Well-thought-out but to-the-point sentences. Short paragraphs. Direct communication on a difficult subject that shows empathy but doesn't try to sugarcoat.
Thanks, I bookmarked this page just as a reminder of effective communication.
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.
Do you have any recommendations for learning to communicate better- like the way you do? Did you follow any courses or books to develop your tone, writing style or the graceful way you respond?
It's all part and parcel of the same clusterbomb of mismanagement by an alliance of money-obsessed business managers political extremist community managers..
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 ;)
I put a lot of work into understanding AWS and gave it an honest try for 6 months or so, and ended up realizing it's an approach to solving a problem that simply doesn't jive with me. I went back to DO, and it made both personal sense for me and economic sense for the product.
It's obviously an incredible platform with excellent tooling, and it probably powers most of the websites I use. But like most trades the same job can be done to a similar standard at a variety of scales using wildly different processes and tooling. And that's fine. The economics seem to be inverted (AWS is large scale and quite expensive in my experience while DO is smaller and cheaper), but it's also not a perfect analogy. I just won't begrudge anyone for using a tool or process I don't love. If it gets your blog or multi-million dollar revenue product online, that's awesome.
I'm glad I can say I used some AWS stuff on my resume, but for my own work I'd only use it if it had a clear advantage over whatever else I'm using.
That's another thing I liked about DO more than AWS. AWS seems too overwhelming as they have too much going on. DO is simple.
The thing I am proposing about the ACL on firewall already exists in DO - but it only exists for the droplets. I don't think it would be too hard for them to port it over for the firewall too without making things too complicated.
About the only two services I'd like to see added near term are a message queue system and a distributed k/v (bigtable) storage. Similar to Azure's Storage Tables and Queues, or AWS SimpleDB/DynamoDB and SQS.
I know DO is just stretching their legs on hosted solutions beyond simple storage and droplets (compute), but these are two features I'd rather not manage myself, that have some pretty big value.
Being API compatible to AWS (or even GCP/Azure) would be relatively big... that said, would just be nice additions that would round things out a lot imho. I don't think I am really wanting for anything else (since DBaaS with PostgreSQL started).
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.
Thanks for that! Appreciated! I have another person help with support now, but I really enjoy the dev stuff so I jump on those. It’s what got me here in the first place :)
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.
As a long-time loyal customer, I just want to thank you for your honesty and for providing such an excellent service to developers for so many years. Keep up the amazing work and best wishes for continued success.
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.
AWS was in the market before we ever got started, so unlike other startups we never had to worry about them entering our market and competing with us because we were actually entering their market.
What made us successful was focusing on a core set of customers, developers like ourselves, and they really appreciated what we built.
The only thing I worry about is ensuring that we continue to do that. The only constant in technology is that it will continue to evolve and change, and you have to make sure that you don't get distracted from your core mission. You certainly have to be aware of the competition and what they are doing, but you also have to figure out your path and who you are the "best" solution for, and continue to evolve that overtime.
I guess the problem for DO is buying hardware, upfront costs for colocation (renting cages without actually using all of the available cabs/space), etc.. If they would stop buying hardware, which means no more growth and available resources, they would be super profitable.
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.
I interpreted it differently, like it was saying "some people are lazy, and you need to get rid of them". If I were one of the people who'd just been made redundant because a layer of management above me changed strategy, I'd find that comment really hurtful.
Many, many years ago I worked at a small company, mostly on a single project for a single client.
Out of the blue, one day the boss summoned me and told me I wasn't delivering enough value so I would be leaving. I knew he was lying (I had the numbers), and it still made me feel terrible.
If someone here is on a similar situation, let me tell you this: if you do your best and yet they tell you "you don't deliver enough value", it is the company's fault, not yours.
Really, just shrug it off and move on. Keep working hard and things will eventually work out.
PS: Four months later they wanted to hire me again, paying 50% more than before. I already had a better job ;)
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.
Nope. I think if two CEOs are not enough to make one business strategy that's incompetence. Is there any reason to think otherwise? They failed at what they were supposed to do and now they can't take any blame???? WTF?
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.
People are usually flexible enough to switch directions. I wonder how many of those laid off employees would have been happy to do so given the chance?
I would assume such things were considered. You should also wonder how many people weren't fired because they did switch directions. Don't assume you have the entire story.
> ".. 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.
I've sat in on some really gross calls in which my CTO at the time berated DO support for issues that didn't _really_ exist in an attempt to get better rates, or practically yelled at them when minor hiccups occurred in our infrastructure. It was very painful to sit in on. They were remarkably patient and cool about it. I suspect there are many people like him out there sucking up their time and resources.
This is probably what I would do. Keep around the high margin customers like the OP, but do something with the Complainy Pants Inc; either force-migrate them to a higher cost service tier, throttle them until they leave, or maybe just slow down their service.
The key to remaining competitive in cut-throat industries is knowing where to spend your limited time and money.
"either force-migrate them to a higher cost service tier, throttle them until they leave, or maybe just slow down their service.
The key to remaining competitive in cut-throat industries is knowing where to spend your limited time and money."
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.
in my experience, it's more about trying to keep your IP space clean for the rest of your customers and bandwidth. You either get your IP space blacklisted or some idiot starts burning 1Gbps on ssh attempts and you start getting abuse email from the .mil space which is awkward. Plus, you gotta pay for the bandwidth.
That 5/mo customer is much more likely to disappear than pay for the data they used.
no, more like someone's instance gets pwn-ed and is now part of a botnet and DO is getting calls and or isp-blocked and has to devote staff time to the incident.
Paid them for four years. If I had known they were going to delete the backups in just over one month, I wouldn’t have risked that.
Lost everything when they deleted the backups. They turned off the server on the same day, and it was running fine right up until then. Zero warning other than the emails I didn’t see.
A customer for 4 years and they delete everything after 5 weeks? Can you really defend that? It's pretty clearly a bad policy. You're being facetious about other contact methods, but I think that's a great idea. Allow users to add a phone number. Some people have faulty spam email blockers.
I had a similar situation, but, a completely different outcome.
I had my wallet stolen on one of my work trips, and had all of my credit cards deactivated and new numbers issued. Digital Ocean's emails went to my "bulk" folder, and I missed the notifications saying that they were going to disable, then deactivate my service.
What caught my attention was one of the support guys emailing me and saying basically, "Hey, I see that you've been a customer for a long time -- we're going to give you 30 more days to fix this (and btw, you still owe us for your services so far) before we delete everything."
That support interaction -- that wasn't flagged as spam -- is literally what kept my data, and it keeps me using Digital Ocean: amazing support.
How long to hold it for though? If say 90% of customers that haven’t paid for 5 weeks end up never paying that is resources they will never recover the cost for.
What they could do is work out some high restore cost which makes the numbers work on holding all that data for longer.
You keep it until x days/weeks after the servers are deactivated. Where the emails are going unnoticed, the servers getting cut off usually is noticed straight away. The story here appears to be that the backups were deleted at the same time as the servers.
For the relatively small cost of those who don't subsequently pay up, you get a lot of goodwill from the majority who just messed up.
When an account on DO is late with a payment, you go through three stages: hold, suspension, termination.
The hold happens right away and prevents you from creating new billable resources.
Then a suspension happens several weeks later, which powers off your servers.
You don’t get terminated until a couple weeks after that, at which point the data is irretrievable.
The time between each stage can vary depending on how long you’ve been a customer or what your monthly payments in the past have been, but that’s the gist of it.
It'd be nice if one could pay a bit more in advance, so one's data stayed some weeks or months longer than default, after the servers got powered off. — As an extra safety net, if the credit card expires when one is in bed for a month with a broken leg or some bad luck thing like that.
A lot of people seem willing to blame you without knowing the answer to this question.
On a different note, this kind of thing is probably one of the top threats to the survivability of a cloud-powered site or service. Alongside vandalism by disgruntled (ex-)employees, I imagine it happens far more often than outages in cloud providers' infrastructure.
The point of backups is that they still exist after something went wrong. Something went wrong, the backups didn't exist, DO didn't do the job it was paid for.
DO reserves say $20 (just an example) when one spins up a new droplet, and if one forgets to pay — then, DO shuts down the server. But keeps the backups, until the GB-month cost is $20.
One could choose how much money to reserve, depending on how important the data one stored on the droplet, was. If it's just for running test: $0. Customer data: Maybe $$$ instead.
There could be a default that made the data and backup last for 2 or 3 months?
And any remaining money would be refunded, if one closes one's account or sth like that.
* * *
Actually I'll look into implementing this, in my own SaaS (which, like DO, takes monthly recurring payments and stores customer data).
I believe a solution like this is an elegant way to ensure that the customer gets what they 'believe' they are buying which is a sure-fire way to keep the customer happy.
The other folks here are giving you a hard time, so I'll just say I actually see things differently here. Things get overlooked, card expiration dates being one of them. Deleting a backup after such a short time is really poor form. Especially because these backups only exist because people need contingencies for machine and human error. Sending a threatening email 'fix your CC in 60 days or everything goes bye-bye' is preferable for almost everyone in this situation, and the difference in cost to DO would be negligible.
DO sends an email when they can't charge. They send a second email 21 days later, when the account gets suspended (which doesn't deleted anything), with essentially your message, except it's 14 days instead of 60.
It's five weeks really poor form but eight acceptable? Seems a bit subjective.
DO reserves say $20 (just an example) when one spins up a new droplet, and if one forgets to pay — then, DO shuts down the server. But keeps the backups, until the GB-month cost is $20.
One could choose how much money to reserve, depending on how important the data one stored on the droplet, was. If it's just for running test: $0. Customer data: Maybe $$$ instead.
There could be a default that made the backups stay for 3 months?
Any remaining money could be refunded, whenever one wants.
6-week vacations aren't that uncommon, which is a scenario I would expect to encounter if I was DO. If that email doesn't get seen for 6 weeks it definitely shouldn't result in all backups being deleted. Beyond that, it's not unreasonable to imagine health issues or other external circumstances putting someone out of commission for 6 weeks (or even more, making it quite subjective).
All in all, from the moment of non-payment to the moment that everything you have on their servers is gone shouldn't be less than 90 days in my personal opinion. If that raised the cost of my backups by a few dollars, so be it. The backups are there to account for things I may not have been able to consider.
I may have said vacations, but people take time off work for any number of reasons. Paternity/Maternity leave, health, family needs, and so on. I had a 2-month lapse when I moved from Germany to the United States for example.
If there were, for any reason, an internal lapse in communication or processes (imagine small companies...) that could result in a pretty sour situation.
This discussion could be easily settled by comparing the grace period to the ones provided by Vultr and Linode. Then compare all of them to Amazon, which I would bet blows everyone else out.
This is a huge fear of mine. I tend to do month-long "research" stints where I cut myself off from the world. But I'm yet to set up any backups outside of DO. Also a fear with losing domain names because with namecheap you can't set up any "backup" payment method.
I haven't decided whether DO did the right thing or not, but to be fair, your analogy should be more in the line of "they evicted me and burned everything of mine in the apartment".
But landlords kind of do that... there’s even an entire TV show dedicated to it, called Storage Wars. People didn’t pay the bill for their storage locker so the owners of the locker sell off all the stuff inside.
Context really matters though. Is the storage locker being bidded off because the owner died 5 years ago? What if the last payment was 8 months ago, and you haven't heard from the owner since?
It's a completely different story if you were late by 1 day and they sold all your stuff the next day.
I guess the question here is if DO waited long enough before deleting their droplet. They were over a month late, and I'm assuming they sent notifications....
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?
My point was it seems insane to me that the lifetime value of a customer who has billed something to a credit card would be over $120, especially in the space of Email as a Service. I would guess (without any knowledge) that it'd actually be closer to $12 because of all the people who try it out and then never continue.
They take in less than the referral payout in revenue for a customer who sends tens of thousands of emails a year for five years based on their pricing page.
> a) You make money on people building large architecture on it, and running out of credits and relying on laziness to move it somewhere else.
My interpretation of their marketing pages is that they pay out referral payments in cash (actually SWIFT, but...) once a signup has something charged to their credit cards. So they can't rely on unused credits. And they lose money on every referred signup that makes them less than $120 in profit.
This seems insane to me, because someone sending tens of thousands of emails to hundreds of people a year gets them less than half that in revenue.
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.
You could. You’d just need some kind of file system driver that connects the application to a more stateful disk so as things pass through temporary memory they’re written to an SSD or HDD.
Of course that already exists, and DO offers it for $5.
> 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.
> They'll yell and threaten when you tell them that this is outside the scope of what you can do.
They will, and you will tell them to leave. Unmanaged VPS' are unmanaged.
> Those pwned customers are complaining and demanding that you fix it
Tell them to leave, they are paying $5/mo after all.
> regular customers are also upset because of slowness due to the "noisy neighbor" problem inherent to all VPSes
Throttle abusive users, and hand-wave it via AUP, TOS, etc.
> neither gives you great tools for dealing with disk bandwidth
That could, should and will be fixed sometime.
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. Digital Ocean got me in the door for $5, but thus far has they have done everything I needed it to do, with clear documentation for how everything works, and no nasty surprises.
As someone doing proofs-of-concept and experimental work, the resource I'm trying to conserve is my own time, and Digital Ocean's value proposition on that is great. Everything works really straightforwardly and I can concentrate on my own code.
I wouldn't suggest Digital Ocean change their high-volume pricing, but the experience they provide to the small-scale user is worth a premium.
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.
"Legacy Service End of Life" here are the details:
"We've been analyzing customer usage of Joyent’s systems and noticed that you are one of the few customers that are still on our early products and have not migrated to our new platform, the Joyent Cloud.
For many business reasons, including infrastructure performance, service quality and manageability, these early products are nearing their End of Life. We plan to sunset these services on October 31, 2012 and we'd like to walk you through a few options."
So, I had to migrate everything to a new host which was a huge pain at the time because i was running a live Strategy game which are very time consuming to move with a minimal amount of down time, disruption and risk. not to mention everything that goes to changing over the DNS servers to point to the new address. Facebook login also added another layer of complication. It's all doable, but it takes a lot of planning and risk mitigation to get it 100% right with an absolute minimum of downtime.
Other than that, joyent uptime and performance was fine. But, having to move hosts is a big deal breaker.
> 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 $5k per month, so Internet cost isn't really an issue.
You know, there are some people that just like to do things themselves so that one day instead of buying from the big guy like everyone else, they become the big guy. You can build a distributed datacenter yourself for 500$ a month that can compete with the more expensive network until you grow your user base large enough to afford it. Sometimes VC magic is a bad thing because when you don't have that option, the only other one is to innovate.
Oh yea it's always easier with scale. The main point I was trying to make is that the hardware is actually pretty cheap compared to the network costs to link it. Especially when large companies dump 2 year old servers for pennies on the dollar because the electricity costs at their scale justify it.
Side note: I took that cluster and split it into 8. Then moved them to different geographical locations and where I could use friend or families residential connections and a cloudflare cluster to offset my cost in exchange for unlimited hosting. Very similar to Ceph actually
> 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.
This is why I don't use AWS for personal projects (S3 is the only one I'd consider using). EC2 for example is significantly more expensive than a Digital Ocean droplet.
Even S3 can hit random expenses when you least expect it. I let a process go crazy and create billions of objects in S3. Of course AWS was happy to charge me for all of this, but what I wasn't expecting was the charge just to list the objects to delete them. I spent more than $100 just to empty the stupid bucket out.
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.
Google has the worst customer service I've ever heard of and people get wrongly banned from Google Cloud with no recourse all the time. It's not a real option to do anything vaguely important on.
Not my experience, either. Not a large account by any means, and support is excellent, both from a technical and business point of view.
> people get wrongly banned from Google Cloud with no recourse all the time
[citation needed]
There have been a few isolated cases that generated a lot of bad PR. From what I've heard, there were significant changes in how abuse is handled to address the root cause.
Not my experience at all. We've been running in production on GCP for almost four years, four k8s clusters and a couple of hundred vms handling ~20k rps at peak, and their support has been excellent. Most importantly we haven't needed it very often.
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.
Do yourself a favour and compare the performance of DO and Lightsail before you migrate. It may be the same or similar in pricing, but every benchmark I've seen shows worse performance on Lightsail. On a value for money basis, Lightsail is most likely more expensive.
Why migrate? Afaict, Digital Ocean isn't going anywhere, it's mostly internal restructuring. I'm sure you posted before the comment by one of the cofounders, so definitely give it a read before you make any decisions.
Personally, I have more instances on vultr and linode, but I still keep an instance at DO so I have a reason to keep tabs on them. I have no qualms about recommending their service to others.
>...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.
I dont think an existing cloud provider makes sense since they’ve all ramped their efforts pretty hard to compete with each other. I would suspect AAPL would be the buyer. It is a big risk for all iOS apps to be backed by infrastructure belonging to other companies they compete with in consumer devices. I think AAPL would want to make another option available.
I guess iCloud is hosted on AWS? I never actually looked. It doesn't seem to be that big of an issue for Apple though. And if it did happen I guess that wouldn't be so bad, I mean it could be worse. Oracle could decide to get into the cloud business by buying out DO.
This was never the case. They are self hosted and for a while they hosted a fair bit of data on Azure & AWS. Not sure if they still use Azure and AWS, but iCloud has never been on Google's infra. (Other Apple content has been served by Google at various times, maps being the big/ obvious one)
For acquirers, it makes more sense for it to be some other company that wants to add 'cloud provider' to their list of services. To avoid losing their customers to amazon or google or MS.
Someone mentioned Cloudflare as a possible acquirer which makes a lot more sense than one of the big providers. Though I wouldn't be too surprised to see Google pick them up either.
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.
I'm still amazed that there's no billing cap in Amzn/Goog.
Google tried to charge me $1000 for a service normally costing $1 / mo because of a runaway restart issue. I had a $2 / mo "max budget" on it and we responded within minutes of receiving a budget alert. I only got them to reverse the charge after doing a ton of work to prove that my team reacted in <15 minutes, and it was their budget alert that was more than 6 hours late. They still seemed to think that was fine (?!) but because I had some great graphs and a HN-oriented blogpost ready to go, they reversed it anyways. That sounds kind of like blackmail, now that I think about it, but no more than what they're doing sounds like fraud.
It's glaringly obvious that a hard cap on the budget is a missing feature, since all projects need to deal with billing. What's even more bizarre, is that Google's docs include a tutorial, with code, on how to set up this feature.
To me, this says that the shortcoming has been noted, and then a product manager has argued against implementation. If I squint I can even justify it - shutting down a website right when it gets hugely popular is not something that's easily reversed, while it's pretty easy for GCP to write off a bill for $1k.
The tutorial's budget hard limit system is actually kinda interesting as it dogfoods GCP - the budget-hit notification is sent via GCP pubsub, and a lambda (aka Google Cloud Function) then removes the billing account from the project, which shuts down the project's resources.
(To be clear, having to write/tweak code and deploy this myself is a suboptimal solution to the problem but it's neat from an engineering perspective.)
not blackmail I suspect -- you're asking them to stick by their contractual responsibilities / make up for their own failure to notify you in an edge case
on the face of it, them exceeding their max budget probably puts them in the wrong if this went to third-party arbitration
This is actually huge. Especially in a startup or other small business. Misconfiguring something in AWS (or just simply not understanding their contrived billing models) can get unpredictably expensive.
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.
Your read is probably more practical than mine, and fits in better with a "don't assume malice" standpoint. I just know that social media (of which HN is begrudgingly a member) can very effectively be swayed.
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.
Then you find out about some guy in Japan accessing the web form via fax. What people don't often talk about old stuff is the long tail ecosystems compatible with it
Oh completely agree, not at all saying using old tech is bad in any way and it's completely clear why offical public service stuff prefers it. Just saying it's interesting how this then makes old-looking stuff seem more official, because you're used to everything official generally looking about 10 years old.
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.
I've always enjoyed Heroku, but feel like I'm paying a premium because I don't know enough to do "real" cloud work.
"If I were a more experienced developer, I could run this on AWS for pennies on the dollar".
Honestly, I don't know where that sentiment comes from exactly. It's at least partially coupled with the fact that all of add-ons you would need to pay for to run a small business site add up pretty quickly, from what I can tell.
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.
Word, I didn’t take it as a negative either. I just want to eliminate those pain points so you never feel the need to migrate. Do you move to cost-optimize early if a project seems to have legs?
> 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.
Yes, that's what I meant. :) DO did come first and Vultr pretty much copied everything with lower prices; but DO has matched a lot of those prices since then as well.
Yes, but one thing Vultr didn't copy from DO is their disgusting and virulent anti-free speech position. The result is a superior product.
Today, Vultr offers similar service, at a lower price point, without the risk that your entire account will be suspended for thinking unapproved thoughts. This is a pretty good selling point to anyone who isn't an apparatchik of modern political and social dogma.
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.
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.
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
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.
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.
The RGPD wall of Techcrunch is a real put-off (Choice partners that cannot be deactivated, IAB partners that must be unsubscribed from the third party website (which of course does not work), seriously?). No reason to accept this cancer, I will read about this subject elsewhere.
I stopped clicking on techcrunch links a long time ago for same reason. I am pretty sure that wall is not GDPR compliant, because the way to opt-out is not simple and straightforward.
And of course, GDPR is all about opt-in, not opt-out. The only statement that applies to opting out is 'withdrawing consent shall be as easy as granting it', which of course applies only after you've intentionally, explicitly granted opt-in consent.
I love DigitalOcean, my second favorite hosting company so this is concerning. As a recent Layoff survivor, this whole paragraph sets off alarm bells:
> In that context, it’s notable that the company not only appointed a new CFO last summer, but also a CEO with prior CFO experience. It’s been a while since DigitalOcean has raised capital. According to PitchBook, DigitalOcean last raised money in 2017, an undisclosed amount from Mighty Capital, Glean Capital, Viaduct Ventures, Black River Ventures, Hanaco Venture Capital, Torch Capital and EG Capital Advisors.
Nothing in particular, but finance guys and VCs tend to squeeze companies dry or push hard for acquisitions. Hopefully I'm wrong here.
This exactly. I’m too tired to do some basic googling for citations but anecdotally speaking, I believe hiring financial oriented leadership like this and trimming the organization of “perceived” fat (management) is right out of the going public playbook.
Acquisition wouldn't necessarily be terrible depending on who acquired them. Obviously if it's a direct competitor that's bad news, but there are some markets where adding a hosting provider could be a benefit.
> DigitalOcean continues to be a high-growth business with $275M in [annual recurring revenues] and more than 500,000 customers globally. Under this new organizational structure, we are positioned to accelerate profitable growth by continuing to serve developers and entrepreneurs around the world.”
If not obvious this can be translated as positioning the company so it can be acquired by a larger entity for it's customer base and remaining employees.
> It says it works with more than 1 million developers across 195 countries.
I always love marketing statements like this. For sure 1 million is a large number. But what makes someone a 'developer'? It's not something defined like 'Physician' or 'Pilot' or 'Attorney' which require some type of certification to use the title. To DO (in terms of the marketing) a 'developer' is almost certainly only someone who signed up for an account and perhaps (as with other web properties) multiple accounts.
(I have used DO and was happy although I don't have a need for what they offer anymore).
If they're counting accounts it's definitely much lower. Our firm manages web applications / web services / websites for multiple clients and they all have their own DO account and there isn't 1 developer per account.
We were pretty excited to become part of their partner program but after signing up we realized that if we onboarded new clients we'd have to do it all under a single account, which sadly doesn't work for us because extremely delayed payments are very common, and we'd be fronting hosting costs for everyone.
I love DO, been a customer for over 10 years. Maybe just me, but apart from AWS, it's the only cloud provider that has competent support team. Azure, Google Cloud are mostly unreachable. But raise a DO support request and you get a response in 1 hour!
For my hobby projects, I strongly prefer DigitalOcean's $5/month droplet to Amazon's EC2 t2.nano instance (their lowest-resourced offering; ~$4.18/month) purely because I know that I can't screw up the DigitalOcean configs badly enough to get an unexpectedly enormous bill. For simple stuff, the DigitalOcean UI is just so much easier to navigate than the enterprisy AWS console.
While better pricing is always nice, I really wish they would refocus on the user experience in their platform. When adding up droplets + storage + LB + database, the price difference is there, but mostly you don’t feel it’s worth it - you still have to do configure everything yourself. If they offered something more akin to Heroku or Now I’d be jumping all over it.
Slightly unrelated, but does anyone actually use DO in production?
We're on GKE and with their new Kubernetes offering, I've considered switching but just haven't talked to a single person who uses it in production at work.
All that ops automation they were working on finally comes to fruition. Automation creates surplus labor, and that surplus is realized with the elimination of humor labor, reaping profit in the form of lowering costs.
FULL DISCLOSURE - My name is Edward, I was one of the earliest team members at DigitalOcean and lead the customer success organization there in the early days.
I have not been at the company for 3+ years so want to make crystal clear I don’t know “intimately” what’s going on at the organization. With that said, I still know enough about the business to say the following.
Been reading about developers, business owners, etc worrying about your application stability or fearing the need to migrate to another infrastructure, all warrented feelings. I want to share some thoughts as an (old)insider.
DIGITALOCEAN IS NOT GOING ANYWHERE. You don’t make $200M+ in ARR and all of a sudden shutdown. Especially as a company who has always prioritized the BEST product experience. Prioritized the BEST customer experience. If you’ve been a customer of DO, you know they go above and beyond you. DigitalOcean’s offering is still by far the most developer-friendly and delightful infrastructure experience on the market.
One of my biggest frustrations when I worked there was the lack of advanced features offered for scaling applications, I'm shockingly surprised that in the past few years they quickly launched Kubernetes, Database as a service, and Object Storage, granted all table stake stuff that AWS already has, but nevertheless has made DigitalOcean a very mature product. I'm low-key annoyed they didn't launch this when customers were yelling at me as the customer success point person, begging for all these features...anyways good for those that are customers today :)
As the co-founder mentioned above, the business has gone through several CEO changes with the purpose of preparing for an even grander expansion. So far hasn't worked as planned. When leadership changes, rockiness always occurs, and it’s up to the next CEO to steer the ship. I don't know the new CEO and have no clue if he's any good, but I wish him good luck. Layoffs happen when businesses are tanking, but they also happen when a business is preparing for another launch at greatness. I'm truly empathetic to those that were laid off today, as a fellow DO-Shark that can't feel good. Even though you are likely folks I've never met, my thought are with you.
If you are a developer, DigitalOcean will always be a place for you to incubate, innovate, and grow your business. I'm confident of that.
Yesterday I read a post where the author admitted that if people believe it's an advert then it is because they want great people to come and work in the company.
For context, I was responding to someone who said the article read like an advertisement for DO. To clarify, this post has nothing to do with the layoffs and was not coordinated for it. I had no prior knowledge of the org restructuring.
I’ve been working on that article on-and-off for over a year. The timing of its publishing and the layoffs are coincidental and unfortunate.
I won't counter any of the praise I'm reading; if anything this will probably validate it.
I'm on the other end of the DO equation.
My small mail server is relentlessly targeted for spam from DigitalOcean IPs - and has been for years.
In fact there are 4 networks I block (by ASN) - DO, OVH, AWS (new!) and Psychz Networks.
(note: No mail from outside N.Am/EU allowed)
Forget to stop my mail server when dropping the firewall for 20 seconds? Get a ½ dozen spams from DigitalOcean IPs.
I actually like that there are hosts for dodgy services. I also get that conscientious hosts get bad customers and it takes time to overcome their bad behavior.
However from the time I 1st heard of DO until now, it's an unbroken timeline of DO being a toxic source.
(note: The difficulty of reporting spammy IPs in bulk - using firewall not mail server logs - is another post)
So like a lot of orgs, DigitalOcean treats people on the inside really well. But for those of us on the receiving end of unwanted attention from DO networks, it's a rough ride.
Sad to see. They've been nothing but great with me as a customer and should serve as an example of how to do good business(yes, I know, I know..scandal this, scandal that).
Hope the laid off find something else and maybe better soon.
Is it just me or are we starting to see the first signs of mass lay-offs in tech? Mozilla, now DigitalOcean, I feel like we're starting to see the first bleeding cuts of the recession take hold.
I wouldn't worry about it. Last time there was a pullback that I can remember, every other day it was HUGE companies(think MS, IBM, HP, etc) laying off tens of thousands of people. These are two relatively small companies, in challenging sectors, laying off a relatively small amount of people. Don't worry yourself making more of it than it is right now.
Huh? There have been tons of layoffs in tech in the past year or two. If this were what you consider the start then I suspect you haven't been looking close enough. Spending your time trying to correlate every event to something larger is only going to make you crazy.
We work in a volatile and rapidly changing sector of the economy.
Even if I try to just go to techcrunch.com/, same thing. I only notice this because *advertising.com is in my host file on my router so instead of redirecting, I just get a "server not found" error page in firefox.
If I open a private tab, techcrunch.com loads fine. Looking at the network tab in the dev console when trying to load techcrunch.com seems to show that no redirect is made, just that techcrunch.com automatically becomes guce.advertising.com... Have I been pawnd?
Ok, nm. It is techcrunch that is doing it. I had my network dev console filtered to only show ajax request. Showing all request shows techcrunch returning a 307 (redirect):
Yup, I can confirm. techcrunch.com redirects to guce.techcrunch.com, which redirects to guce.advertisting.com, which then redirects back to techcrunch.com. This only happens on the first page load (presumably due to cookies being set for the guce.techcrunch.com domain).
The redirects are really fast, seems like the only reason @esaym noticed is that they are blocking advertising.com via their hosts file which prevents the final redirect back to techcrunch.com.
Profit margins back in the day were a lot better than they are now. I started a web hosting company back in 99' as a high school senior with a couple hundred dollars, bootstrapped it to half a million in a couple years, and then over a million by year 10 (and sold it!) At that point margins had gotten skimpy and AWS with all their backing was eating up the market.
If this cutoffs are made for the sake of increasing profitability of an already profitable company, they are a bad sign in terms of management style and quality - it will affect morale, creativity and enthusiasm of remaining employees.
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.