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DigitalOcean acquires Paperspace (YC W15) for $111M in cash

finance.yahoo.com

21–30 of 98 posts

Re: DigitalOcean acquires Paperspace (YC W15) for $111M in cash

#21
post #14

Earlier quoted context omitted.

It's a private transaction, so it's unknown and unless it's leaked out we are unlikely to ever know. There was a startup I was co-founder of at one point, and seven years later (about the same age as Paperspace) we sold for a similar amount, and the net of my shares was a little over $100,000. The CEO got more, other early joiners less. And among my direct knowledge of individuals in the startup community, this is no…

If you want to share some more (approximate) numbers, I'm very curious. What equity percentage did you have at the start? And were your shares worth more at an earlier investment round than at the exit?

Starting equity was a little less than 10%. Valuations went up as several rounds were raised up to $30+m and share value went up until at one point it was north of $20m paper dollars. After market re-valuation an additional $60+m was raised and value went down a little but was still substantial. Then the IPO market all but disappeared. Final sale price was around $150m and common shareholders including myself initially received zero. Essentially the VCs converted their preferred to common and then voted to sell to a related party (another company the same VC firm had invested in).

According to a lawyer who setup our initial investments, this was actually illegal so common investors including myself sued, but was this bankrolled by one of the big early investors as it's incredibly expensive to try and do a shareholder lawsuit against a major VC firm and investment bank. It ended up being settled out of court and that's where my $100,000 came from. The CEO came out a little better, but people who sweated years (and I mean frequent all nighters, weekends, true dedication) ended up with even less than me. And the only reason we even received anything at all was because we had a HNWI common investor who also got screwed and backed the lawsuit, they ended up getting their money back and a small return on investment from what I remember of the settlement terms.

Just a word of caution to founders and early employees of startups to know what they are getting in to and the typical case of what happens (a small or non existent exit is the typical case in a tech startup), even when you see those big number raises and a big sale and you just assume that everyone is making bank.

Re: DigitalOcean acquires Paperspace (YC W15) for $111M in cash

#22
I don't think there is much point to using the big 3 cloud providers. In fact I would think it is a fools errand to use AWS for startups or even big companies given the sheer cost of bandwidth, storage and compute compared to Digital Ocean, Vultr etc.

I shake my head every time when I read startups using AWS and racking up expensive and unpredictable bills to use the same compute that can be had at a fraction of the cost when using Tier 1.5 cloud providers.

As for this acquisition, I think it was a matter of time before GPUs were added to the service offering for Digital Ocean and this would be the best way forward rather than implementing this infrastructure from scratch.

Re: DigitalOcean acquires Paperspace (YC W15) for $111M in cash

#23
I use Stabile Diffusion with Paperspace's Pro tier ($9/mo) which gives you up to 6 hours of non per-usage GPU (meaning you don't have to worry about having a mortgage to pay for the cost) since I have an aging Vega at home and I worry about the electricity bill (EU). My worry is that plan will go away replaced by strict per usage costs.

Re: DigitalOcean acquires Paperspace (YC W15) for $111M in cash

#24

Oh, fun memories - locked me out of my account (froze it or whatnot) but happily charged me. Didn’t notice for a while as I didn’t really use it. Support just ignored my questions.

too vague!

who locked you out? why did you get the hammer?

Re: DigitalOcean acquires Paperspace (YC W15) for $111M in cash

#26
post #14

Earlier quoted context omitted.

If you want to share some more (approximate) numbers, I'm very curious. What equity percentage did you have at the start? And were your shares worth more at an earlier investment round than at the exit?

Starting equity was a little less than 10%. Valuations went up as several rounds were raised up to $30+m and share value went up until at one point it was north of $20m paper dollars. After market re-valuation an additional $60+m was raised and value went down a little but was still substantial. Then the IPO market all but disappeared. Final sale price was around $150m and common shareholders including myself initial…

That VC deserves to be named.

Re: DigitalOcean acquires Paperspace (YC W15) for $111M in cash

#28

People buying companies just to get their hands on some more Nvidia GPUs.

Ignorant question, but where is ATI in the AI/ML space? I only ever hear about NVidia and it's Cuda.

AMD released ROCm (its competitor to CUDA) in 2016, nearly 9 nears after NVidia released CUDA. They relied on OpenCL and failed to invest in "GPGPU", and as a result were so far behind NVidia they couldn't keep up. As a result, for about a decade most scientific GPU code was written in CUDA.

Today, AMD support in PyTorch is minimal. Actually getting anything running is very difficult, and random crashes are common. This is in contrast to NVidia, which spends a lot of money to ensure a full compiler stack and compatibility with AI libraries.

Today, the AMD hardware itself is pretty capable and has a good price/performance ratio. However, actually taking advantage of that performance is difficult because of the poor quality of drivers and software.

Re: DigitalOcean acquires Paperspace (YC W15) for $111M in cash

#29

People buying companies just to get their hands on some more Nvidia GPUs.

Ignorant question, but where is ATI in the AI/ML space? I only ever hear about NVidia and it's Cuda.

They're not really playing ball, NVIDIA did the right thing in pushing software support early on. CUDA really has a good strong hold and AMD isn't doing much by way of pushing code support for their CU's.

It's going to take a big long investment, which people have been arguing about for the past 6 years, and AMD really isn't jumping up take the mantle. It's really a shame too because we need a strong competitor if we ever expect more realistic pricing for the average users/company.

Re: DigitalOcean acquires Paperspace (YC W15) for $111M in cash

#30
I’m surprised by this. Digital Ocean is in no position to be splurging on new revenue streams. They’re underwater and making a loss [0].

They’ve got growing revenue but falling profits and they’ve got more debt than assets. They may want to raise their droplet prices, or issue more stock and then refocus on making their business profitable.

[0] valustox.com/DOCN

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