DigitalOcean, a Fast-Growing Cloud Host, Lands $37 Million
Screengrab from DigitalOcean video
Ask anyone over the past several years which among the cloud computing service providers was growing faster than the rest and the answer, more or less by default, would have been Amazon Web Services.
So it was a surprise to learn that in December, 2013, that was not the case. According to NetCraft, an independent organization that tracks these things, a little-known Web-hosting outfit called DigitalOcean grew faster on a month-to-month basis than AWS.
That month, customers of DigitalOcean set up more than 6,500 “web facing computers.” By comparison, AWS customers set up fewer than 6,300. It’s a small victory for an upstart in the cloud-hosting business, but one the small New York-based company is glad to take.
Here’s another: DigitalOcean today announced that it has secured $37.2 million in a Series A round of venture capital funding led by Andreessen Horowitz. The investment was led by Peter Levine, the AH partner who invested $100 million in the software development platform GitHub.
It’s a curiously large A round; its seed round, at more than $3 million, was on the large side too. Ben Uretsky, DigitalOcean’s CEO, told me its business of building and running cloud hosting infrastructure is pretty capital intensive. “As a provider, we have to go out and procure all the equipment.”
So what is DigitalOcean’s advantage over Amazon? It’s easy to set up. For all of Amazon’s vaunted flexibility, there’s a lot to learn. If you’re not experienced with setting up virtual hosting environments, your first go with the Amazon dashboard is pretty confusing. It’s not just true of Amazon but of other cloud hosts including IBM SoftLayer, Rackspace and Google Cloud.
Even non-experts on DigitalOcean can get their hosting environment set up in 55 seconds because it’s easy to understand. It’s aimed at software developers working for companies building Web applications who need a place on the Web to run them. “We are the only ones who focus on simplicity,” Uretsky said. “When you go to Amazon there are convoluted pricing structures, there’s a whole new set of terminology to use. There’s different tiers and regions. It’s very confusing.”
Simple works. DigitalOcean has been growing like crazy. By NetCraft’s reckoning, DigitalOcean is now the 15th-largest cloud host in the world, and had nearly 500,000 sites hosted on its infrastructure as of the end of 2013, up from only 280 at the start of the year.
Customers appear to be attracted by DigitalOcean’s simple, straightforward pricing: Its most popular package runs $10 a month, though it offers five plans that range from $5 a month to $80 a month. It also offers plans that charge by the hour.
It doesn’t offer a lot of the enterprise-grade services that Amazon does. There’s no DigitalOcean equivalent of Amazon’s Elastic Load Balancing service, for example. But Uretsky says the customers he’s going after don’t need or want that anyway.
“The problem we’re solving is that small companies and individual developers face significant hurdles in getting their hosting environments set up,” he said. “We just want to make it easy.”