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DigitalOcean raises $100M in debt as it scales toward revenue of $300M

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111–120 of 289 posts

Re: DigitalOcean raises $100M in debt as it scales toward revenue of $300M

#111

Does DO still disconnect your droplet from the Internet for three hours if you get DDoSed? That's what made me switch from DO to AWS a few years ago. I used my droplet as an IRC bouncer to hide my home IP address. I'm an op in an IRC channel and someone started spamming racial slurs, so I banned them. They responded with a DDoS. I could tell my connection was a bit slow, but nothing crashed, but then it dropped offli…

This is why I run anything online-gaming related on OVH (or SoYouStart and Kimsufi, their cheaper offshoots that still use the OVH network) - they are very good about handling the everyday DDoSes you get in that sector without taking the site offline or charging extra. I think they will disconnect a site that draws a very high rate attack, but they've soaked the kiddie DDoSes just fine.

Re: DigitalOcean raises $100M in debt as it scales toward revenue of $300M

#112

Does DO still disconnect your droplet from the Internet for three hours if you get DDoSed? That's what made me switch from DO to AWS a few years ago. I used my droplet as an IRC bouncer to hide my home IP address. I'm an op in an IRC channel and someone started spamming racial slurs, so I banned them. They responded with a DDoS. I could tell my connection was a bit slow, but nothing crashed, but then it dropped offli…

Did you continue to get DDoS after moving to AWS? I figure that AWS would take similar steps if you are not using Shield or one of their other products that would help mitigation. I'd like to know if anyone has experience there.

All instances use shield by default IIRC.

Re: DigitalOcean raises $100M in debt as it scales toward revenue of $300M

#113
post #99

Earlier quoted context omitted.

No. Compare Linode and DigitalOcean. Linode bootstrapped, took very few financial instruments to aid the journey, had a few missteps along the way, completely reinvented the entire business more than once, and still serves a niche that makes them a successful (and profitable, as in real profitable, not imaginary profitable) company. Their margins are quite good. Slicehost had a solid business when Rackspace bought th…

Our original business was bootstrapped with no outside investment so we know that growth model very well. In fact that bootstrapping allowed us to build DigitalOcean when no VCs were interested in funding us by self-funding through the profits from our original business. The problem with the approach you detailed is that it is based on growth rate. If you have more customers coming to you than you have cash on hand t…

First,"original business". Second, there's no problem with the approach, it's literally validated as not having a problem in the wild. Right now.

Re: DigitalOcean raises $100M in debt as it scales toward revenue of $300M

#114
post #15

This article had more detail and substance than I usually find on TechCrunch or startup coverage in general. I do want to point out two things that bothered me in the article: 1. Using the word “raise” when talking about financing via debt seems inappropriate and very start-upy. This is a low cost of capital line of credit, is it not (due to their infrastructure and broad customer base)? 2. Why in the world are state…

Non dilutive financing is great.

Congrats to Dropbox for being denied credit worthy. There is a parallel world at the top where money is free for the credit worthy, they are one step closer.

Re: DigitalOcean raises $100M in debt as it scales toward revenue of $300M

#115
post #97

Earlier quoted context omitted.

Would likely be a private equity leveraged buy out transaction, someone who leans out the operation and squeezes the margins up. Anyone with tech chops has their own cloud, and DO isn’t even cash flow positive yet. Thoughts and prayers to anyone with common stock (which isn’t looking too good at an exit).

Thanks for your thoughts and prayers but no one is selling the business or nor are we looking for someone to buy it. Debt is a normal way to fund a high growth up front capital intensive business and it is cheaper than equity because you aren't giving away parts of your company to do so. If you look at AWS which is many times larger than we are they are also using debt to fund their continued expansion. It's under ca…

Appreciate the reply Moisey.

I don't disagree that debt is a normal way to fund a business; arguably, it is the best way to fund a business once the business has been derisked. As you mention, you're not suffering dilution to get access to the capital, and as long as you're able to generate a multiple of value using that debt, you should take it on. My comment communicates pessimism about the value that debt will be able to generate (I'm not debating the present value already inherent in the business, that's already obvious and proven based on revenue).

The argument breaks down when you compare DO to AWS; DO isn't in the same class as AWS, Azure, or GCP. These are top tier cloud providers; not only do they have access to capital markets (or firehoses of profit from other business lines) at terms most startups could only dream about, they have world class sales, account management, and technology teams. They are able to generate an immense amount of value from the leverage they're obtaining with their available capital resources. I agree there is growth left for DO, but not at the same rate as the cloud providers I mentioned, and the growth remaining is the value up for discussion when considering 1) what DO has already raised in equity and debt and 2) current and forward looking revenue.

It's kind of a moot point: if I'm wrong, you still end up wealthy. If I'm right, I get...internet points with no value. I hope your common shareholders are able to realize upside from the value they've created (I have friends who worked at DO), but I'm not optimistic based on how common shareholders make out, historically, in venture backed orgs. This is my chief concern: common shareholders (who put their most precious resource, their time, into the business) getting blown away because an org overextends itself attempting to reach an unattainable target.

Re: DigitalOcean raises $100M in debt as it scales toward revenue of $300M

#117
post #92

I have some personal stuff hosted on DO. I really like their options, service, their branding, UX/UI, etc...but they are kind of in a weird spot. Halfway between being good for cheap personal projets, and being good for enterprise. If I want a simple VPS there are cheaper options. If I am an enterprise spending millions/year on cloud infra I am probably only looking at AWS, Azure, GCP, etc. How does DO get out of thi…

You hit the nail on the head, we are best for SMBs and teams that want to get things done quickly and don't need the hyperscale and added complexity of AWS. Our focus has always been on simplicity and as our customer needs and our own internal needs have grown we've added additional products to continue to allow customers to scale with us. We launched with just Droplets in 2012 and have since added block storage, Spa…

Simplicity and reliability are the biggest reasons I've stayed with DO for so many years. The combination of droplets, spaces and simple load balancing is the sweet-spot for me. Not to mention a simple, consistent bill each month that makes budgeting much easier. Thanks DO and keep up the amazing work!

Re: DigitalOcean raises $100M in debt as it scales toward revenue of $300M

#118

I have some personal stuff hosted on DO. I really like their options, service, their branding, UX/UI, etc...but they are kind of in a weird spot. Halfway between being good for cheap personal projets, and being good for enterprise. If I want a simple VPS there are cheaper options. If I am an enterprise spending millions/year on cloud infra I am probably only looking at AWS, Azure, GCP, etc. How does DO get out of thi…

I thought their $5/mo machines are the cheapest on the internet for the specs available. Are there cheaper options? I’m hosting a low traffic page that gets maybe 500-1000 views a month and even at $5/mo it seems overkill IMO.

Re: DigitalOcean raises $100M in debt as it scales toward revenue of $300M

#119

I have some personal stuff hosted on DO. I really like their options, service, their branding, UX/UI, etc...but they are kind of in a weird spot. Halfway between being good for cheap personal projets, and being good for enterprise. If I want a simple VPS there are cheaper options. If I am an enterprise spending millions/year on cloud infra I am probably only looking at AWS, Azure, GCP, etc. How does DO get out of thi…

I'm a customer on DO as a small business (mobile game). I wanted some linux servers that I have control over, and I wanted a managed database where someone does backups for me. I also wanted simplicity and a nice UI. I didn't even compare prices, I just thought it was a good deal and didn't look back. At first I tried Heroku but it was too much adapting our application to their way of doing things. DO is just hyper-simple for me. So, thanks DO :)

Re: DigitalOcean raises $100M in debt as it scales toward revenue of $300M

#120

I have some personal stuff hosted on DO. I really like their options, service, their branding, UX/UI, etc...but they are kind of in a weird spot. Halfway between being good for cheap personal projets, and being good for enterprise. If I want a simple VPS there are cheaper options. If I am an enterprise spending millions/year on cloud infra I am probably only looking at AWS, Azure, GCP, etc. How does DO get out of thi…

I thought their $5/mo machines are the cheapest on the internet for the specs available. Are there cheaper options? I’m hosting a low traffic page that gets maybe 500-1000 views a month and even at $5/mo it seems overkill IMO.

Check scaleway and hetzner

https://www.hetzner.com/cloud https://www.scaleway.com/en/pricing/

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