With a revenue of USD 200M last year, NYC cloud infrastructure provider DigitalOcean spills the beans on how it grew from a humble tech startup to a huge player taking on tech giants Amazon, Microsoft & Google.
Being able to access your work files from anywhere in the world, share files seamlessly with your international team, or even run analytics on vast amounts of data to streamline your operations – these are all things made possible by cloud computing, a fast-growing global market projected to be worth USD 206 billion by 2019. An area in which major players are staking huge claims, not least Amazon Web Services (AWS), Microsoft Azure and Google Cloud, it’s not necessarily a space in which you’d expect to find a smaller player gaining ground. However, in the midst of all this activity, New York B2B cloud infrastructure provider DigitalOcean, now eight years into its journey, has made quite a dent in the market, earning USD 200 million in revenue alone last year. Positioning itself as a developer-friendly Infrastructure as a Service (Iaas) for small businesses, it has raised over USD 3 billion in funding since its inception, attracting notable tech customers including Gitlab, Slack and WeWork and providing businesses with off-site data storage, central processing units (CPU) and testing environments, all available via monthly subscription plans. At RISE 2019, serial tech entrepreneur Ben Uretsky, Co-Founder of DigitalOcean, shared the business strategy that has successfully helped his firm break into an industry already dominated by tech giants.
Photo credit: Harry Murphy/RISE via Sportsfile
Harking back to DigitalOcean’s humble origins, Ben told the audience, “In 2011 when we were going through this initial journey, AWS [Amazon Web Services] was already mainstream. We knew we wanted to go into cloud computing, but we didn’t want to compete head-to-head with AWS.” The solution? “Carving out a specific segment of the market that wasn’t served well” and building an efficient, simple, and friendly reputation which appealed to millions of small businesses and developers. “I think a lot of times, people get caught off and focus on the competition. So, you’ll see [companies that call themselves] the Uber of x, or the Amazon for y. And I think you lose sight of what really matters, which is the customer,” said Ben. “The more you can understand what the customer’s trying to build and really get into their shoes, the more you can deliver a product or service that matches that specific customer need.”
Entering a funds-intensive industry that required vast amounts of upfront payments to create infrastructure, Ben adopted what he calls a capital-efficient way of scaling. “One of the interesting things we did was, we never used the venture dollars to buy equipment. We used it to grow our balance sheet and get credit, which we then leveraged to buy servers and infrastructure.”
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Photo credit: Harry Murphy/RISE via Sportsfile
When it came to driving organic growth, DigitalOcean once again looked to optimise the resources it had to hand. Rather than spending huge amounts on sales and marketing to drive growth, Ben explained, “We’ve actually done it a very different way. We leverage the community of developers to spread the word. So that gives us a very low cost of customer acquisition.” Focusing on accessibility and transparency, their website lets businesses deploy a server in 55 seconds, has a single price point internationally to simplify pricing, and offers extensive support and documentation – all features which make the company’s service ideal for small businesses who don’t necessarily have the time to sift through more complex procedures.
With aims for DigitalOcean to head towards an IPO – a move Ben admits may be better spearheaded by someone else, a year ago, he appointed former Citrix executive Mark Templeton, a businessman with ample M&A experience, to be the company’s new CEO, whilst he became Chairman of the Board in order to continue to shape the company’s growth from a different angle. “It was pretty clear that the next big step for the business was to go public and I didn’t really see myself as the right person,” Ben told the crowd at RISE. “Really, my passion and excitement come from building something out of nothing from the technology.”
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