DigitalOcean Receives $50M in Funding

http://www.businesswire.com/news/home/20141209006143/en/Fast-Growing-DigitalOcean-Receives-50-Million-Expand

by denis1 • 12 years ago

159 99 12 years ago

businesswire.com

peterjancelis2• 12 years ago

Maybe the title can mention that this 50 million is a credit facility, not equity funding.

INTPenis• 12 years ago

So what is that to us who don't speak English natively, a loan?

InclinedPlane2• 12 years ago

Yes, it's money now in exchange for money in the future, vs money now in exchange for ownership.

mbesto• 12 years ago

Actually, in simple terms it's like having a big credit card with $50m in a line of credit. Saying this is funding is like saying I just received $5,000 every time I open a credit card.

fredguth• 12 years ago

Loan funding is still funding. In the startup world people think funding== equity funding, but that is not true. Equity funding is normally the most expensive kind of funding. Glad to see they can grow with loans instead.

peterjancelis2• 12 years ago

Yes, totally agree. Any rational entrepreneur leverages his solvency into debt funding.

jetskindo• 12 years ago

Is digital ocean profitable ? Is the 5 dollars server killing them or putting them on top of chart ?

anewhnaccount• 12 years ago

Yes. Since the second half of 2012. Source: http://dealbook.nytimes.com/2014/03/06/andreessen-horowitz-b...

They're hardly the only VPS provider offering that price point. (Although it's true, many of the others have a slightly fly-by-night look about them. But by no means all of them.)

nonuby• 12 years ago

Sadly 99.9% of the other companies are shitty solusvm customers who dont understand the hypervisors they are using, and completely fail to manage resources properly, resulting in retarded TOS such "a load average of more than 1.0 for more than 15 minutes" results in warning/suspension/ban. You'd be insane to trust any production stuff to retard kiddie hosts from LowEndBox or WHT.

blfr2• 12 years ago

OVH offers KVM virtual servers with SSD starting at $2.5/mo[1], and announced they will have an even smaller $1.25/mo plan[2]. All that with more memory than DO.

I'm guessing that VPS providers have a low support cost/customer compared to shared hosting. No hairy compatibility issues, everything is neatly abstracted away, everyone has their own, independent environment with most of the administrative tasks offloaded onto the user.

After you toss in a few guides that double as marketing, and are usually written by the users themselves, all that's left is to take care of the hardware and bill.

[1] https://www.runabove.com/index.xml#compute

[2] https://twitter.com/olesovhcom/status/524334437039747073

fizzbatter2• 12 years ago

Is there anything inherently different (security, performance, or otherwise) about these servers of Runabove's?

I run a fair amount of dev servers, and that price ($2.50) is mind blowing. But i fear that it's far too cheap to be anything but a letdown.. Thoughts?

joshmn• 12 years ago

I love RunAbove. I really do.

PascalW• 12 years ago

Been playing around with runabove as well lately and am liking it so far. Ideal for personal projects that need a bit of resources.

Hopefully the 1GB plan will be available soon. That tweet is from October but it doesn't appear to be available yet.

andrewstuart22• 12 years ago

I think where they win is when somebody buys a $5/mo server and uses $0.50/mo worth of capacity. They shut down all the hardware they don't need and save the electricity costs.

imbriaco• 12 years ago

We're growing so fast that shutting down hardware is the last thing we would ever do. We have the opposite problem -- it's quite challenging to provision hardware fast enough to keep up with demand. :)

butwhy5• 12 years ago

It blows my mind that this is happening. Back in the day, there were a thousand cheapo VPS providers out there with similar rates. But DO were the ones to put up an extremely simplified interface to spinning up VMs and that has seen them skyrocket (I'm not saying this is a bad thing).

At the end of the day, I feel sorry for linode. The guys who offer a much better service (in almost every way) and are often overlooked by many customers.

coding4all• 12 years ago

Doesn't Linode have a really bad security record?

butwhy5• 12 years ago

They've been hit with a coldfusion 0day in the past, but the stuff that has happened to them could happen to anyone. I wouldn't have much to critique about their security practices.

jacques_chester• 12 years ago

DigitalOcean offered SSD-backed VMs at low prices. They were one of the first to do so.

I was very happy with Linode, but they dragged their feet for years on it. My workload was I/O-bound and I got far more bang for my buck from DigitalOcean, so I jumped.

tim3332• 12 years ago

I signed up for DO because they were $5/mo and at the time Linode was $20. Twenty bucks is fine for production but for hobbyist mucking about, which I would classify my usage as, it's a bit steep. I image many users are in a similar situation.

butwhy5• 12 years ago

That's a very popular use case and something that has allowed digitalocean to grow so fast.

silas• 12 years ago

Linode also charged you the $20 right up front and held on to it for the month.

gabemart• 12 years ago

Linode still don't have a $5 offering. Linode's cheapest VPS is $10 per month on a 125Mbit port. DO's cheapest is $5 per month on a 1Gb port.

That difference is huge if you're doing high-bandwidth work and you run a ton of droplets.

sysk• 12 years ago

Last time I checked Linode (~2 years ago) they were a bit pricey compared to competition. Maybe this is no longer the case?

butwhy5• 12 years ago

Digitalocean is $5 and Linode $10 for the smallest plans. Linode used to be $20 for smallest, but upgraded their hardware and dropped their prices a while ago.

manishsharan• 12 years ago

At the low pricepoints, Digital Ocean is better priced than Linode. But for more powerful VPS ( 6 Cores+ ), Linode does have better prices.

bluedino• 12 years ago

SliceHost was Linode's only real competitor at the time, they always cost more and gave you less. Rackspace bought them and the pricing pretty much stayed the same.

DO is cheaper but it's not quite the same level of product.

Igglyboo• 12 years ago

Why is Linode so much better? I got a bunch of free credit for DO and I'm only using it for small things so I went with them, thinking about spinning up larger projects however and would like to look at my options.

adventured• 12 years ago

The only thing I'm aware of that, supposedly, made Linode better, is they guaranteed full compute power. If it said you got 1 CPU core, then that was yours, period. From what I understood with DO, their approach was that they'd make every effort to deliver the equivalent compute power of 1 CPU, but would not peg it to you exclusively. I also think this may have changed for DO.

butwhy5• 12 years ago

They've been around a lot longer and have a lot of expertise. I think you'll find that they'll perform better during benchmarking of hardware and have superior network performance and uptime (I've personally experienced times where the entire DO network dropped offline for minute(s)). Their support is great too. I recommend reading up on a few comparison blogs if you wish; just make sure they were written recently and are comparing apples with apples.

But I think the general consensus amongst a lot of people is that DO are better suited to devs wanting to play around and Linode are better for when you want something more than that or want to push something to prod.

edit: now that I think of it, DO developed a reputation for terminating VMs with no notice if you violate their terms or do other things. I personally had my VMs terminated because I signed up for 2 accounts with the same IP. Imagine if I was hosting production content on there....

doublerebel• 12 years ago

Last I looked, DO has next to no SLA and Linode offers 99% SLA (almost no cloud provider offers SLA, much less 99% -- exception being Joyent at 100%). Also DO support is known for being a bit slow and Linode support is very quick to respond any time of day. YMMV.

corford3• 12 years ago

Their network is more reliable, their control panel is much more advanced and they offer a lot more capabilities (load balancers, longview, additional IPv4 addresses etc.).

DO is great at what it does (I have 3 vms with them) but when you need more, Linode wins.

jread2• 12 years ago

Linode is a more capable, performant and reliable platform. e.g. Look at a 90 day availability comparison: https://cloudharmony.com/status-3months-for-linode-and-digit...

debacle2• 12 years ago

I only use DO because they have a $5 offering. If Linode had a "meager support" option at $5 I would take it in a heartbeat. I love that company.

Xeoncross• 12 years ago

By the time DO started competing with Linode, it wasn't worth Linode's time to care about a cheap $5 box. The only problem is that people go to a $5 droplet and stay for a $XXX droplet.

Linode should have taken them seriously.

sdkaufman783• 12 years ago

Same here. I still have a $20 Linode for production, but wanting play around and test things out without thinking too much about cost is the reason I also frequently spin up 1-2 DO VPS's.

drzaiusapelord• 12 years ago

Linode seems to be going strong. I wouldn't dare put anything in production on a rickety shop like DO. Especially after the whole controversy of them taking down someone's blog because it criticized some VP's friend at Google. DO feels like a company founded by devs first and sysadmins last.

DO seems to be for devs farting around and kids putting up wordpress sites. Its not really competing with shops like Linode or Rackspace. That may change, but everything about DO screams, "Do not use me for production."

Meanwhile, my 7 or so production VMs on Linode are going strong and now have been migrated to their new SSD-based platform.

brianwawok• 12 years ago

How many startups have devs and no sysadmins? Seems like if a 2 man shop can make DO work without a sysadmin, they just saved a lot of money. When you get big then you can worry about such things.

corford3• 12 years ago

Linode bet the wrong way by prioritising more cores over SSDs and I think this slip up is what gave DO room to enter the market. Had Linode moved to SSDs earlier and offered their cheapest VM @ $10 instead of $20, DO's trajectory may have been a little different. Also, Linode was (and still is) very bad at marketing imho. DO definitely spanked them on that front (both through their content marketing strategy and just by virtue of their $5 SSD offering which caused all the geek hobbyists to jump over and start blogging about them).

Having said all of that, Linode are still going very strong and remain the much better option for production stuff. I have 3 machines with DO (two $5 ones and a $40 one) and about 15 with Linode (of varying sizes) and in my opinion Linode is head and shoulders above DO in terms of features, capability, professionalism and reliability. They just need to improve their marketing.

raiyu3• 12 years ago

Thanks for the feedback, we're definitely looking to improve a lot of the missing features and capabilities and really looking forward to 2015 in that regard.

As for the professionalism and reliability I'd love to hear more as those are items we need to be addressing immediately and the feedback would be very welcome.

Thanks

xur17• 12 years ago

I used several of those 'cheapo VPS providers' in the past, and was always plagued with issues. DO was backed by some major VCs, which made it a bit more trustable.

sdkaufman783• 12 years ago

The guys who offer a much better service (in almost every way)

If you need a few small VPSs to play around and test things out, and are fine with the (very) occasional performance / bandwidth degradation, I don't see how Linode offers you a "much better service", at least in terms of cost.

I have a Linode VPS for production, but find myself often spinning up and tearing down DO VPSs for experimentation.

jawngee• 12 years ago

Awesome, maybe now they can afford to accept debit cards.

morganvachon• 12 years ago

I never had a problem paying via debit card when I used them. I don't have any active droplets with them right now, but I've always paid with my bank issued debit card, and looking at it now it's still the active payment method on my account.

xtrumanx• 12 years ago

They also don't accept prepaid cards since they've said 80% of fraud cases involve prepaid cards. Linode took my money and worked well but they don't have a $5 price point.

dagw• 12 years ago

I've always used a debit card to pay for my DO server and it's never been a problem (although it's been maybe a year since last time).

isramartinez• 12 years ago

I've been using my visa debit card (europe) without problem since more than a year ago

paukiatwee2• 12 years ago

Recently one of my production node landed on a bad physical host, DO reboot my node twice within 24 hours, I tweeted about it and DO support open a ticket for me.

Since the physical node have problem, I plan to take snapshot then spin up a new node using the image. However, as the physical node have problem, the snapshot take more than 7 hours and still failed to snapshot (No way to cancel snapshot task).

DO support told me the snapshot is running, but I seriously think their support not honest about it and I ask they provide proof to show the snapshot is moving, they failed to do so. (From UI I can see JSON response show progress stuck at 3%, they lied)

Yesterday, DO reboot again my node.

Just my two cent, never ever use DO for serious production usage.

ghshephard• 12 years ago

Alternative perspective - Recognize any time you use a cloud provider, you need to be aware that not only are the nodes ephemeral, but the zone/data center you are deploying on may go down as well.

Plan for your server to go down at any time, and, if you have actual $$$ in play, also plan for the zone to go down.

Amazon encourages this thinking by having very low-latency links between AZ (Availability Zones) - and they also recommend deploying in two geographical regions should a regional disaster occur.

paukiatwee2• 12 years ago

I know that all. The point is, DO support lied. After reboot, they still put my node in bad physical host. Also, DO reboot without notice (AWS have EC2 events).

toomuchtodo• 12 years ago

Amazon has a robust ecosystem of supporting services and APIs to enable you to orchestrate as you described. DigitalOcean does not.

WorldWideWayne• 12 years ago

Why would you tweet about it before opening a support ticket yourself?

curiously2• 12 years ago

it works fine for production. although one time one of my none essential droplet had trojan and started launchign DDOS attacks and it was shut down. I don't know how it happened but the password was super weak.

Strong passwords and always use a private key when SSHing.

wyattjoh• 12 years ago

Or no password and only private key :)

alfg• 12 years ago

Same happened to one of my production nodes as well. I had to take a snapshot and migrate to another physical node as suggested by the support team. Had about 6 reboots without warning in the last 2 months.

I love DO, but sometimes the reboots without warning can be annoying.

wmf• 12 years ago

Unfortunately, VM storage isn't a solved problem at scale. You can use remote storage (like EBS) to avoid being dependent on any particular server, but in practice it also has outages and performance anomalies.

tim3332• 12 years ago

It'll be interesting to see if the Mesosphere thing takes off. It seems to be up and running with a 10 instance cluster for 30c/hr.

https://news.ycombinator.com/item?id=8521311

http://thenewstack.io/mesosphere-now-supported-on-digital-oc...

gedrap• 12 years ago

I really like the content marketing approach DO took.

If you google for some standard server maintenance problem (e.g. migrating from Apache to nginx), it's usually DO which is ranked first. Their posts are relatively high quality, and there are a lot of them, enough to cover many common problems. For example: https://www.digitalocean.com/community/tutorials/how-to-migr...

It doesn't show annoying pop ups, anything like that, but after visiting those pages many times you might decide to give DO a go. Well, that's what I did.

Also, some people say that similar cheap VPS providers exist for a long time and what DO did was put a nice simple UI. That proves that to create a successful product, you don't need some new complicated features that your competitors do not offer. Making interactions with the system easier, improving user onboarding process by reducing friction can go a long way.

freebs• 12 years ago

Yep, this is how marketing is done these days. I'm glad someone on HN is appreciating good marketing. I often see devs refer to marketing as snake oil, simply because they've been exposed to bad marketing. Marketing is just like programming, it can be good or bad.

finishingmove• 12 years ago

I can't stress enough how much I appreciate the conciseness in their blog post tutorials. Major kudos!

raiyu3• 12 years ago

Thanks! Etel wrote many of the articles herself before building out an amazing team. She works really hard to make the articles engaging, informative, and easy to read.

jtolj• 12 years ago

I think it was Slicehost that pioneered this approach for VPS hosting companies quite a while ago, although it may also have been Linode as I really didn't become aware of them until Rackspace bought Slicehost and I had to migrate.

tlrobinson• 12 years ago

Yes I was about to say, Slicehost used to do this. I learned quite a bit from their articles.

veeti• 12 years ago

Slicehost had it first, then Linode followed.

yesimahuman• 12 years ago

This works super well. It's also the strategy my company employs. Teaching people is the best kind of marketing you can do in the developer space (and probably most any other space).

sdkaufman783• 12 years ago

Similar story here - signed up for DO after coming across a couple of really helpful articles.

For me, the articles show

1) They're competent. If they're experts at solving all these random problems in managing a Linux server, they probably also know how to run a reliable, high-performant VPS.

2) They care about their customers. They're going the extra mile to help customers (and potential customers) solve their actual day-to-day problems. This is a good sign.

Haven't yet had an actual problem that required me to contact their support (which hints at #1), but it's the impression I (and probably many others) got from the articles.

digitalzombie• 12 years ago

Linode and IIRC Slicehosting had these.

I'm just glad they actually took that idea from them and anybody that provide any services should have these tutorials... It makes it much more approachable for people with little system admin skills.

manueslapera• 12 years ago

THIS.

DO has a dedicate team just providing incredible tutorials that are somewhat related but not completely related to DO itself.

wambotron• 12 years ago

I use and enjoy DigitalOcean. Good community docs, good support all around. I've referred a few people to it as well. I'm hoping they keep their support/pricing even if they get big.

DigitalOcean Receives $50M in Funding

Related Stories