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

finance.yahoo.com

41–50 of 98 posts

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

#41
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…

I recall this was one of the plots from the HBO show Silicon Valley

Thanks for providing insight to the process, very fascinating.

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

#42
post #6

Dillon here (CEO @ Paperspace, YCW15). I want to give a huge thanks to the YC community and all the support over the years. We have always admired DO and couldn't be happier to join forces!

Congrats! Are you keeping the office space in Bushwick?

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

#43
post #34

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

They have been buying companies non-stop for a while. It's their new operating model.

What would be the strategy you think they're going for?

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

#44
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's nuts. I'm thinking about selling my business but we'd probably only get $200k or so. I'm 50% owner, no VCs so I reckon I'd get the full 50% minus taxes but I'm also about 8 years in and haven't taken a penny out so $100k would make me real sad. Sorry dude.

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

#45
post #26

Earlier quoted context omitted.

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.

agree

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

#46
PaperSpace product recently has been really bad. Gradient Notebooks are a worse version of Google Collab. Useless for any serious DL product building.

Their DL virtual servers, Core I think you call them is horrible. Very slow internet, takes forever to copy datasets into them. Most of the time, it's an uphill battle to get ssh access to them, they create some pointless virtual console instead and then a GUI to copy datasets, run trainings etc which is confusing and a hassle over simple ssh access. Programmers just want a simple ssh access to a server with a GPU, we are not looking for a WYSWYG like editor! I really don't know who the customer for this is? Marketing execs who want to do deep learning? I tried powering through the documentation, but it was outdated, and was plain wrong at points. It took me a couple of hours just to figure out how to copy a large dataset into my server and find the path to that dataset. Once I discovered, Lambda and Vast ai, I never looked back and forgot Paperspace for good.

Really as a cloud provider, all you need to do is create send a ssh tunnel to a system with a certain amount of compute and memory. Maybe like AWS you can create storage buckets but it's not absolutely neccesary. Don't add GUI, interfaces etc, your customers are engineers and they prefer simple systems that give them control.

One feature I would like in Lambda/ Vast is the opportunity to copy the dataset into the server before the GPU hours start billing. When you have TB's of datasets like me, you end up wasting 8-9 hours just copying the dataset and it feels annoying that I pay for the cloud hours during that time. Amazon kind of solves this, but it slows down data access in return. I would like a cloud provider who just lets me copy everything before starting to bill me.

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

#47
post #6

Dillon here (CEO @ Paperspace, YCW15). I want to give a huge thanks to the YC community and all the support over the years. We have always admired DO and couldn't be happier to join forces!

Hi Dillon - congrats on the offer! I adore your product. Quick question though - how sure are you DO won't be interfering with the product and the current team will continue doing its job? Alternatively, would you like DO to take a dominant role in running the product?

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

#48
post #33

$111M exit on $35M. Seems meh for seven years effort. Were prospects cloudy? Better return over seven years for most employees (possibly even founders) working up through a FAANG. I’m sure YC did great, of course.

$35M being meh is peak HN here. Me not being from US, getting $100k was golden cufs that took many years to break even when I did not enjoy my work.

$35 million is how much they raised. If they were purchased for $111 million that means that after the investors are paid off their principal there is $76 million left. There are 70 employees, the original investors probably made some profit on their initial investment, so split that remaining $76 million among everyone and none of the employees left super rich from this deal except maybe the founders.

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

#49
post #33

$111M exit on $35M. Seems meh for seven years effort. Were prospects cloudy? Better return over seven years for most employees (possibly even founders) working up through a FAANG. I’m sure YC did great, of course.

The article calls paperspace "a leading provider of cloud infrastructure as a service".

Does that mean they have/had lots of hardware investment? Or do they "just" offer a management layer based on other clouds?

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

#50

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

So that's why my droplet increased costs by 50% last year.
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