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Whilst at Github Universe last month, on my way to learn more about the conference host’s new hardware two-factor security initiative for its developers, I was sidetracked by the sight of a group of developers crowded around a small kiosk, each holding a blue smiling toy shark. Curious, I stopped by to chat with the kiosk owners’, the crew of Digital Ocean, this month’s featured cloud computing “tiger.”
Why is this particular cloud provider a tiger/shark? Simply put, because they make getting onto the cloud easy for developers at a price point that won’t cause any nightmares as the customer company scales up. But it’s not as simple as calling Digital Ocean an “AWS lite” either because at the moment it’s a very different offering. And particularly for companies that were born pre-cloud, or for the largest unicorns like Uber, DO does not have all the features and support that you would need — at least not yet.
From 0 to 236 countries in Three Years
What Digital Ocean does offer to new companies and other cloud first entities is a facilitated and positive user experience. And developers love them — 700,000+ of them representing 8+ million cloud servers. From a 2012 $3.2 million seed round to a March 2014 $37.2 million Series A to its most recent Series B round in July 2015 for $83 million (Access Industries, Andreesson Horowitz, others), the company has found exponential success with a customer-first approach — delivering a streamlined UX with a straight-forward, transparent “no B.S.” or hard upsell approach.
DigitalOcean currently reaches 230 countries and territories. After their Series A the company added datacenters in Singapore, London and Frankfurt. Another facility was added in Toronto since its Series B, and the company expects to onboard India and South America in 2016.
Starter Web Services
Digital Ocean has established itself in the web services arena primarily by capturing the entry market. If you look at the three aspects of being in the cloud — Computing, Networking and Storage — DO really only serves the first leg of the stool. Which means that the company can only handle small co or early stage company requirements — non-dynamic content web pages, etc. So a chunk of the developers currently using their services eventually outgrow them. *But* flush with cash and building momentum, the company launched its first networking service in late October — floating IPs that solve the problem of reassigning IPs to any droplet in the same datacenter — and may be able to offer a comprehensive cloud solution as early as next year.
The Hidden Barrier to Cloud is Actually HR
What set’s Digital Ocean’s products from the rest is that you don’t necessarily need a senior engineer to get your company’s web presence set up. So DO is not only cheaper and easier to use, but a platform to get you faster to launch. This provides the business with some breathing room as it develops, expanding the base of potential staff whom can handle the website. This has made DO’s Droplet a popular service for not just newcos, but also for discreet web projects and microsites like the launch of Beyonce’s secret album and Universe.com (owned by TicketMaster).
Customer Service Your Way (It’s All About the Love)
DO’s UX goes far beyond the product UI. As strange as it sounds coming from a web infrastructure company, one of the company’s core values is “Love” and it is practiced throughout the company. I would characterize this love as a “passion for helping others” and a joie de vivre” that infuses the organization and is transferred to its customers. Duly noted that their mascot shark is a smiling happy one.
How exactly does this Love manifest itself in the business? Zachary Bouzan-Kaloustian, Digital Ocean’s Director of Support describes its IaaS in this way: “Our entire platform is self-managed, which means that the customer is responsible for what runs on their Droplets. Our Platform Support Specialists provide free support if something’s not working with the infrastructure. One way that we demonstrate our core value of love is to ensure we reply quickly, and our 30-day average response time for 1,000+ tickets / day is under 30 minutes! Of course, our 24/7 team doesn’t stop there. We often do extensive troubleshooting with a customer to diagnose the issue, even if it involves parsing server logs. This involves extensive experience, and great relationship skills as we don’t have access to our customer’s Droplets for security reasons.”
But is this love scalable? Maybe not, but certainly the desire for love amongst developers (and us all) is strong so no doubt there is no shortage of demand for DO’s particular brand of customer relations.
Building the Next Generation Infrastructure
By getting in with developers early, Digital Ocean has set itself up to take advantage of the tipping point of the Internet of Everything — when not only all major services but customer adoption for them reaches critical mass worldwide — likely well within the next 5 years. While newcos are signing up with Digital Ocean today, the company is fortifying and expanding its technical and services staff — growing from 150 to 200 employees in the past quarter alone.
And the big fish are taking notice: Google, Microsoft and Amazon have sliced their prices 3x since Digital Ocean launched and prices continue to drop. So increasingly the companies will begin to compete on volume — of customers and services used.
Fast forward 5 years and DO will have all the pieces of the cloud stool well established as well as worldwide presence. If DO can maintain its vision of making web services simple to consume, and successfully build out its offerings so that it can scale with its customers, the company is well positioned to become the go-to web services company for the post-millennial generation. Considering that there are some 20-30 million potential developer customers out there — it wouldn’t surprise me to see Digital Ocean as the most distributed — if not the biggest — and certainly the most beloved fish in the sea by 2020.
**This post was updated at 1:38pm on November 11, 2015 to reflect factual corrections. Access Industries, not Accel Partners, is a lead investor in Digital Ocean.