When DigitalOcean began in 2011, to suggest that a startup with a mission to bring simple cloud hosting to developers could challenge the dominance of established web hosts like Amazon and Rackspace would have been ludicrous.
DigitalOcean co-founder and CMO Mitch Wainer recalls painful early meetings with venture capitalists: “It was a terrible experience. When we were trying to pitch investors early on they looked at us cross-eyed. ‘What? You guys are going to start a hosting company? Do you know about this company Amazon? And Rackspace?’” He says that no one from the VC world took the company seriously until it gained some traction.
The viability of DigitalOcean’s concept was largely proven when independent figures from Netcraft found that DigitalOcean was making enormous waves in the hosting industry. Between December 2012 and June 2013, its number of web-facing servers had grown 50 times over, growing faster than any company other than Amazon, Alibaba, and Hetzner. In June 2013, it became the world’s 72nd largest hosting provider based on web-facing servers.
This type of proof helped DigitalOcean raise $3.2 million in venture capital last month.
The Price, Performance and Simplicity Equation
Behind DigitalOcean’s growth has been an understanding of the underserved segments of the hosting market which would be served by a particular formula of price, performance and simplicity.
“We decided that we were going to create the simple cloud solution for developers,” Wainer says. Slicehost at least partially was the flag bearer of simplicity in hosting, but its acquisition by Rackspace left a huge void in the market. Now, he says, “All the providers are focused on large-scale enterprise businesses, and we’re focused on the individual developers, the startups, small businesses – that’s our bread and butter.”
Having a simple solution was key in helping developers get their app online as quickly and efficiently as possible. And this meant not only having a simple and intuitive control panel, but also providing quality support and self-serve resources.
“We have an in-house team of technical writers that constantly generate articles and tutorials for customers and our community,” Wainer says. But to have articles that really speak to the experiences of developers, the company offers developers an incentive of $50 per article.
The price is also an interesting element of DigitalOcean because it often undercuts competitors – even Amazon.
“Hosting, unfortunately, is a commoditized market – so it’s a race to the bottom, and we’re basically at the bottom at $5 per month as an entry plan,” Wainer says.
On the performance end, DigitalOcean delivers all its cloud hosting on modern servers that use Solid-State Drives, which are generally 4 to 10 times faster than traditional hard drives.
The quality of the physical infrastructure beneath the cloud has a lot to do with two of DigitalOcean’s co-founders, Ben and Moisey Uretsky, having run managed hosting provider ServerStack. And the virtualization layer that allowed these physical resources to be pooled was spearheaded by former GoGrid employee Jeff Carr, now DigitalOcean’s chief architect.
DigitalOcean seemed a little green in March 2013, when a NAS system suffered a hard RAID failure that caused the loss of some user backups and snapshots.
“As a startup, you stumble a lot and make mistakes, but the faster you make mistakes, the faster you learn,” Wainer says. “And we certainly made a big mistake by losing a few backups of our customers’, and what we learned from that was that moving forward, we had to ensure that all backups and snapshots were backed up so that, once again, even if they didn’t have it turned on, it would still be enabled.”
Since this experience, DigitalOcean was able to prove itself when integrated partner Cloud66 went down and lost customer data. Cloud66 was integrated with other providers including Rackspace and Amazon, and DigitalOcean was the only one to cover their customers’ data.
Plenty of Room for Improvement in Web Hosting
“The web hosting industry is very archaic,” Wainer says, noting that unlike other technology-driven industries, many web hosts aren’t keeping pace in terms of updating software and hardware, hiring the right employees, and providing quality support.
There still are some pain points when it comes to features that are often complicated and difficult to setup such as load balancing, CDN, private networking, and object storage.
“Everything we do moving forward is to simplify the complexities of cloud infrastructure.” This, he says, will help customers save time and money and make things more convenient.
“There are a lot of issues in the hosting industry itself, and what Digital Ocean has done is we’ve shaken it up.”