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

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

#151

Post by mbesto »

cdolan wrote: post #30
gruglife wrote: post #24

Earlier quoted context omitted.

Regarding point #2, many in the finance world (which I work in) consider cash flow positive a better representation of actual profitability than the actual net profit/loss reported on the P&L. In short, cash flow shows if the actual core business is bringing in money or losing money, while the net profit includes a lot of "noise" (probably not the best word to use but can't think of how to phrase this). For example,…

Thanks. I am not a financial professional but do run a medium sized business and have a lot of respect for being cash flow positive. I agree with depreciation and other non cash expenses obfuscating P&Ls, but can we agree that in an article focused on securing debt financing, which will incur real interest expense, the term “free cash flow profitability”, “loosely” meaning “profitability” is a little misleading?

> but can we agree that in an article focused on securing debt financing

We could also agree that its a tech-blog article, which means 99% of the people reading it simply do not care about financials, other then "huge raise! wow, revenue! great profitability potential".

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

#152

Post by brandon272 »

humbfool2 wrote: post #124

I host my websites on DO. Their UI and API is really cool. Linode and Scaleway both lost my data. DO is far more reliable than Linode and scale way. It's always good to have options to choose from. I hope they succeed. Companies like Netlify, Zeit and Heroku are also doing good but I don't see any Enterprise applications for such services. One thing I especially like about DO is that they are not stagnant in terms of…

How did Linode and Scaleway lose your data?

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

#153

Post by bluedino »

porker wrote: post #86
Dirlewanger wrote: post #61

Earlier quoted context omitted.

First time I'm hearing of Vultr...they look like a carbon copy of DO. What does Vultr have that they don't?

> What does Vultr have that they don't? According to multiple HN users, a more unreliable (internal) network.

Ironically I moved from DO to Vultr because their network was more reliable

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

#154

Post by dkersten »

raiyu wrote: post #92
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…

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…

What I really wish for is a simple way of running docker containers (like AWS Fargate, or at least ECS), because I want to run docker containers across multiple droplets, but I don't want the full complexity of Kubernetes. Also something akin to auto-scaling groups. If DO had those, I'd use it a whole lot more than I do (currently I only spend use approx. $140/month on DO).

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

#155

Post by refurb »

cdolan wrote: post #30
gruglife wrote: post #24

Earlier quoted context omitted.

Regarding point #2, many in the finance world (which I work in) consider cash flow positive a better representation of actual profitability than the actual net profit/loss reported on the P&L. In short, cash flow shows if the actual core business is bringing in money or losing money, while the net profit includes a lot of "noise" (probably not the best word to use but can't think of how to phrase this). For example,…

Thanks. I am not a financial professional but do run a medium sized business and have a lot of respect for being cash flow positive. I agree with depreciation and other non cash expenses obfuscating P&Ls, but can we agree that in an article focused on securing debt financing, which will incur real interest expense, the term “free cash flow profitability”, “loosely” meaning “profitability” is a little misleading?

That’s what I was taught when I took accounting. Every measure has drawbacks, so you can’t rely on just one.

Income statement, balance sheet and statement of cash flows together give you a pretty complete picture.

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

#156

Post by dcchambers »

numbers wrote: post #118
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…

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.

For static site hosting there are a ton of "good enough" free options these days like GitHub Pages, Netlify, etc.

For pure VPS, there are cheaper options, especially if you don't need a ton of customer support like DO offers.

For example, buyvm.net has a VPS with 1 vCPU, 1GB RAM, 20GB SSD, and unmetered bandwidth for $3.50/mo. DO's cheapest VPS is 1 vCPU, 1GB RAM, 25GB SSD, and 1TB bandwidth for $5.00/mo.

Digital Ocean does offer a ton of value in other ways - support, uptime SLA, and other managed products...

Edit: Check out https://lowendbox.com/ to find cheap VPS providers.

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

#157

Post by gramakri »

avhception wrote: post #96
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…

I guess there is a niche, not every enterprise spends millions a year. We're a pretty happy customer that spends maybe a few thousands every month, if there are enough of us it could already be a sustainable business?

Aren't enterprises that spend millions a year the niche and not the other way around ?

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

#158

Post by icedchai »

dwild wrote: post #90
polote wrote: post #73

A lot of complains here but I don't understand why is that worse than raising the same amount of money from VC ?

A VC does the deal in exchange of a part of the company. They will make their money once you exit, either by becoming public, or by an acquisition. The deal can be different and could certainly include some kind of repayment, but that's not the norm for a VC deal. A loan has to be repaid though, whether the company exit or not. The terms are fixed and you need to pay them. This can be quite hard when you get a few ba…

Assuming a successful outcome, VC deals are actually more expensive. They cost founders and common holders much more in potential returns. Don't forget about the dividends associated with preferred shares. Those shares are basically earning interest, just like debt.

Given that nobody expects to fail, why wouldn't a company do debt if they can afford it and are credit worthy?

And the bad outcome for both is the same: the company goes broke.

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

#159

Post by boulos »

OJFord wrote: post #27
hinkley wrote: post #17

Earlier quoted context omitted.

Am I correct in thinking this is an EBITA situation? You can be making money and paying it all to Uncle Sam and your bank loans. 100 million is gonna be a lot of interest payments.

> EBITA Have you both typo'd 'EBITDA' the same way, or is `EBITDA - Depreciation` a measure used too? (I searched, couldn't find anything.)

Actually, I ran into this just the other day with Alibaba's earnings [1]. From their definitions:

> Adjusted EBITDA represents net income before (i) interest and investment income, net, interest expense, other income or loss, net, income tax expenses and share of results of equity investees, (ii) certain non-cash expenses, consisting of share-based compensation expense, amortization, depreciation, operating lease cost relating to land use rights and impairment of goodwill, which we do not believe are reflective of our core operating performance during the periods presented.

> Adjusted EBITA represents net income before (i) interest and investment income, net, interest expense, other income or loss, net, income tax expenses and share of results of equity investees, (ii) certain non-cash expenses, consisting of share-based compensation expense, amortization and impairment of goodwill, which we do not believe are reflective of our core operating performance during the periods presented.

So yes, EBITDA - D!

[1] https://www.alibabagroup.com/en/news/article?news=p200213

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

#160

Post by martin8412 »

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:…

I suppose it depends on what OVH offering you buy. I have multiple servers at OVH with multiple years of uptime, but those are dedicated ones and not the cheapest Kimsufi offerings.
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