DigitalOcean raises $100M in debt as it scales toward revenue of $300M • Hacker News Board

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

#141

Post by raiyu » Thu, Feb 20, 2020, 10:02 PM UTC

sdotsen wrote: post #136

raiyu wrote: post #92

Earlier quoted context omitted.

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…

yeah I'm not sure about your last paragraph. when I interviewed at DO, the few business folks I spoke to were adamant on taking on AWS. I kind of scoffed but hey I'm not running DO.

"Business folks" :)

But all kidding aside, the numbers just don't make sense. AWS is doing $30B in revenue and has tens of thousands of engineers.

Google which many can argue has some of the best engineering on the planet is going after AWS investing billions in datacenters and again using thousands of engineers.

So to think that DigitalOcean with a $300MM debt line and 250+ people in engineering is going to go after AWS just doesn't add up.

Certainly when you have 500+ people in a company everyone has different opinions and view points on where a company should be headed, or who it is competing with and so forth, but for me the priority has always been clear. Focus on the SMBs, and developer teams, that need the flexibility that AWS offers without the complexity because you aren't managing a $10MM hosting budget.

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

#142

Post by divbzero » Thu, Feb 20, 2020, 10:07 PM UTC

cpach wrote: post #57

divbzero wrote: post #29

Earlier quoted context omitted.

Over the past decade the covenant light debt [1] has regained popularity [2] [3]. [1]: https://en.wikipedia.org/wiki/Cov-lite [2]: https://www.businessinsider.com/leveraged-loan-record-87-per... [3]: https://www.bloomberg.com/opinion/articles/2020-02-18/the-co... It’d be very interesting to learn what covenants are attached to DigitalOcean’s new credit facility. Their press release [4] lists the lenders but does not…

DO never struck me as a company that would go public. Do you think they will?

That’s a fair point. In today’s capital rich environment they could stay private for a very long time.

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

#143

Post by mxschumacher » Thu, Feb 20, 2020, 10:07 PM UTC

cdolan wrote: 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…

"raising funds" is used for large companies and debt, see this article as an example "Apple raises €2bn in green bonds" in the Financial Times: https://www.ft.com/content/918c648c-01ae-11ea-b7bc-f3fa4e77d...

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

#144

Post by Tecuane » Thu, Feb 20, 2020, 10:09 PM UTC

dcchambers wrote: post #87

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…

DO's branding and a lot of their offering is pretty good, but their locations for non-US customers are much worse than many of their competitors. For instance (and a particular point for me), they still don't have any presence in Australia after over half a decade of it being marked as "under review" on their customer feedback page.

Having geographical locations to back up the quality of the offering is a step forward IMO.

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

#145

Post by capableweb » Thu, Feb 20, 2020, 10:14 PM UTC

djsumdog wrote: post #48

rsync wrote: post #26

"Spruill told TechCrunch that DigitalOcean will scale to $1 billion in revenue in the next five years, and it will become free cash flow profitable (something the CEO also referred to, loosely, as profitability) in the next two." I find this to be incredible. DO is not a speculative e-business ... they are not a social network. They are the proverbial sellers of picks and shovels during the gold rush: "The way to get…

Did they miss their window? Would this business make more sense during the 2001 dot-com craze? Are startups currently afraid to go with anyone who isn't AWS/GCE/Azure because they understand the cost of moving platforms is high?

No, most startups using either AWS or GCE (at least in the market I'm around in, Europe-based) is choosing them because they are giving away free credits and you can usually run the first year for free before starting to think about costs, and at that point you've reached market validation and can afford start thinking about costs.

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

#146

Post by flukus » Thu, Feb 20, 2020, 10:16 PM UTC

cdolan wrote: 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…

> Using the word “raise” when talking about financing via debt seems inappropriate and very start-upy.

They've been around for 9 years, they're just a company now.

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

#147

Post by Sohcahtoa82 » Thu, Feb 20, 2020, 10:19 PM UTC

staller wrote: post #104

Sohcahtoa82 wrote: post #101

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.

No idea.

If they are, I don't know about it. I've never heard of AWS taking people's systems offline for being DDoSed.

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

#148

Post by the8472 » Thu, Feb 20, 2020, 10:27 PM UTC

lwb wrote: post #137

tmpz22 wrote: post #123

Earlier quoted context omitted.

Pretty sure Linode is comparable price wise and in Europe there are cheaper options like OVH. Digital Ocean pricing becomes pretty comparable with GCP and others when you start specing up to a "production-grade" server i.e. the kind of server you actually want to run Postgres on. Their K8s offering I think is the cheapest of all major providers but you lose out of secondary benefits like GKE's fantastic log analysis…

Just popping in to say that OVH is the cheapest option for a reason -- support/monitoring/any other features you might want are just not there like they might be on other providers. I host a single tiny website on OVH and they restart it randomly every ~4 months without warning (seriously). It was annoying at first until I set our services to run on system boot. Some more discussion at discourse.org that's relevant:…

> until I set our services to run on system boot.

Which pretty much is how things were always done, even in the PHP-CGI days.

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

#149

Post by YourMatt » Thu, Feb 20, 2020, 10:34 PM UTC

WrtCdEvrydy wrote: post #126

jdance wrote: post #119

Earlier quoted context omitted.

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-s…

Heroku was really built for Web Apps (especially Rails)

Aren't they just a middleman for AWS anyway?

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

#150

Post by chirau » Thu, Feb 20, 2020, 10:40 PM UTC

I was at fireside chat with the DigitalOcean CEO. Not once did he mention this. Very interesting though. I have always thought that debt would be the only way they grow and remain relevant in a crowded cloud space.