Tiger (er, Shark) of the Month: Digital Ocean Makes Getting to Cloud Easy

 
Digital Ocean Shark 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. 

Could Rackspace start the cloud vertical movement?

There are plenty of other posts detailing whether Rackspace (NYSE: RAX) should sell or split. I detailed my own thoughts here back in May 2014. With the speculation continuing to twist in different directions, one thought got me thinking. Ideally, the board of Rackspace would do what they felt was best for shareholders. Maybe the current thinking of split or sell is too simplistic. Maybe there is a possibility that takes them from the muddled world of cloud infrastructure players to a relatively niche area that is ripe for the taking. This shift would put Rackspace in a unique position of differentiation.

Leading the cloud verticals

What if Rackspace shifted gears to focus solely on providing services to cloud verticals? We already know that Rackspace does a fine job of their hosting and cloud services. To that end, their ‘Fanatical Support’ is well respected in the industry. Put cloud verticals together with Fanatical Support and it may end up being a fine option for the future of a leading organization. There are still challenges between the hosting and cloud business revenue models to consider. But beyond that, there is a chance to delve into an area that presents a challenge for many would-be cloud customers.

Starting with Healthcare

Across the spectrum of industries, the financial performance of healthcare (+23.7%) has outperformed other industries in the past year with information technology (+22.0%) trailing closely behind. There are a number of use cases in which cloud computing could (and does) provide value to healthcare organizations. Even considering the compliance requirements of the Health Insurance Portability and Accountability Act (HIPAA), cloud services from IaaS to SaaS make sense. Creating a specific vertical of services that is centered around environments with regulatory issues such as HIPAA enable an easier decision for healthcare organizations as opposed to the alternative where they create their own cloud-based solution.

Fanatical Support pivots

One of the core tenants to Rackspace’s value has been their Fanatical Support. Over the years, their Fanatical Support has served as a key differentiator for the company. Considering the specialized needs of different verticals (like healthcare), it would make sense to pivot this support model from general-purpose support to specialized support for each vertical. Again, bringing support back into the fold as a core differentiator and building on their existing successes.

The value of specialization

In the general-purpose cloud market, the services are fairly confusing and muddled. Not to mention the drive toward razor-thin margins. Different cloud providers offer slightly different features, classes of services and ecosystems. By specializing on cloud verticals, Rackspace could lead the charge in building a specific ecosystem around specific verticals. It has long been discussed that cloud verticals is the logical next step for cloud maturity. Pairing their support model with the specialized services needed by each vertical would create a new level of differentiation and potentially different economic model. And this economic model would present an opportunity for growth beyond the general-purpose cloud solutions offered today. Add in the leadership that Rackspace covets in the OpenStack space and the interest only grows further.

Is Rackspace the only provider that could leverage this route? No. But considering the position that Rackspace currently holds and their suite of components, it would be an interesting approach to follow. And it might present an opportunity for the entire company to pivot without considering sale or split. Granted, there is still a good case to be made for going private too.

GoDaddy: ‘We weren’t attacked.’

Hosting giant GoDaddy has completed its investigation of Monday’s outage and deemed it was not the result of a DDoS attack as originally rumored, but rather the result of network failures within GoDaddy’s system. The outage crippled hundreds of thousands of web sites.

A user revolt and the second coming of TextDrive

Asking your users to buy lifetime subscriptions to a service is an unconventional way to build a business. But in 2004 that’s what TextDrive did. But after those lifetime subscriptions were cut short, TextDrive’s co-founder has stepped out of retirement to keep them alive.

Verizon’s acquisitions provide an enterprise path to the cloud

At the end of last month Verizon acquired CloudSwitch, adding value to Verizon’s January acquisition of cloud data center provider Terremark. Around the world, big telecommunications providers such as AT&T, BT, Telstra and Verizon have been hard at work, diversifying and seeking new business opportunities as revenue from domestic and international voice traffic continues to decline. While existing expertise and infrastructure made networking and data hosting a logical new endeavor, recent moves such as the Terremark and CloudSwitch acquisitions tap into a growing enterprise requirement for easy and controlled paths out of the legacy data center and into the cloud.

The world’s biggest telephone companies are increasingly well established providers of co-location and hosting services, typically serving large international corporations with deep pockets and widely distributed workforces. Although smaller data center companies such as Savvis and Rackspace have successfully diversified from simple hosting to the provision of cloud computing solutions, the telcos have typically proved less able to manage the transition on their own.

InfoWorld’s David Linthicum commented at the time that Verizon acquired Terremark that “Verizon has the same problem as many other telecommunications giants: It has fat pipes and knows how to move data, but it doesn’t know how to turn its big honking networks into big honking cloud computing offerings.” Verizon is not alone. Elsewhere, Orange (a subsidiary of France Telecom) is simply reselling a GoGrid product to deliver a private cloud solution to customers, removing the need to develop and deploy a solution of its own.

NPRG Senior Analyst Ed Gubbins notes that

locating and building data centers, outfitting them with the necessary equipment, efficient energy supplies and software and building a capable staff is no small task for a company like Verizon with lots of other business segments it must attend to. “It takes time,”‘ Lowell McAdam, Verizon’s chief operating officer said . . . “That’s not our core competency.”

Terremark and competitors are proving more nimble and more able to adapt to changing data center usage patterns. It seems likely that Terremark executives will gain increasing control over Verizon’s existing data center facilities, accelerating the speed with which these can be transformed for the cloud. It remains to be seen, though, whether strategies that worked for Terremark will prove as successful when transplanted into Verizon’s very different organization.

Verizon’s $1.4 billion acquisition of Terremark in January gave the company a cloud computing capability and, as Bloomberg BusinessWeek reported, access to new markets. Although almost certainly requiring much less cash (terms were not disclosed), last month’s acquisition of Massachusetts startup CloudSwitch may ultimately prove more significant to Verizon’s ambitions. CloudSwitch, the winner of the LaunchPad showcase at GigaOM’s 2010 Structure conference, sells software to simplify the process of moving applications from an enterprise data center to the cloud.

Combining CloudSwitch software with existing Verizon data centers and bandwidth creates an increasingly compelling proposition. Customers no longer simply buy the pipe down which their data moves or access to the server on which their data or application is hosted. Instead, they are buying into a complete package, including networking, hosting and the software that links all of it to their existing on-premise data center. Each of these pieces may exist separately elsewhere, and each of those individual components may be cheaper or better than Verizon’s. But Verizon’s ability to package and brand a rounded set of services is likely to prove compelling, especially in industries where IT is simply a necessary cost of doing business. Verizon isn’t just selling bandwidth or storage or data processing; Verizon is selling peace of mind, and at the moment no other data center provider offers quite the same combination of capabilities.

With CloudSwitch, Verizon is no longer simply one choice among many for networking or hosting. Verizon has become a compelling choice for any enterprise that wishes to explore a hybrid environment in which existing on-premise applications are gradually transitioned out to hosting partners and, ultimately, the cloud.

Question of the week

Is acquisition the only way for telcos to compete in the cloud?

What to do with your MobileMe-hosted site post-iCloud

Apple failed to update iWeb in its latest iLife refresh, and at last week’s keynote at WWDC, there was no mention of hosting support in iCloud. Here are some alternative strategies for those who were using Apple as their web hosting solution.

How to Evaluate New Applications and Services

530438_measure_upIt’s a great time to be a web worker. Almost every day, a new site, service or product comes on the scene that promises to make our work more efficient (or more fun). Some areas, like project management or image editing, are crowded with options. And in order to gain a following, many services are being offered inexpensively or at no cost.
But as Paisano wrote recently, current conditions won’t last forever. Many sites will eventually become fee-based; others will shut down when their funding runs out, or when their owners decide to move in a different direction.
So when I evaluate a product that I’d like to incorporate into my company’s workflow — especially a product that will be visible to clients — I try to consider the product’s feature set, along with the issues raised in Judi’s 2007 WWD post. I also ask the following questions: Read More about How to Evaluate New Applications and Services

Serverskine: Store and Manage Your Server Credentials


I’ve been on somewhat of an OS X (s aapl) productivity tools kick lately, with posts on EventBox, Mindnode and Manhour. So I’m going to round out that journey with a quick peek at a useful little tool that was recently brought to my attention, Sentinel Design Group’s Serverskine.
You may support any number of web servers for your own projects or for your clients, and keeping track of account names, URLs, passwords, etc. can be tricky. Serverskine provides a notebook for storing your credentials for each account.
The free application groups each server’s credentials into server, FTP, database, hosting provider and domain provider subsets, enabling one-click access to remotely-hosted control panels and suppliers’ web sites, as well as the server in question.
Sadly, the application lacks some essential extensibility. For example, the ability to add groups for commonly installed applications, such as Movable Type, would be welcome.
Serverskine stores its data as binary, SQL or XML files. Somewhat worryingly, the latter pair of formats store passwords in clear text; similarly, there’s no way to secure the entire database with any form of authentication. And Serverskine takes no advantage of being a native OS X application.
Interestingly, the creators of Serverskine — the Sentinel Design Group — developed it as an internal tool for tracking and storing server credentials, recently flipping to a public release to share their creation with the wider world. They may want to consider creating it as an extensible web-based service as a way to overcome its current shortcomings but maintain its utility.
Serverskine is neither clever nor sophisticated, but it is a useful server configurations notebook, and it’s free.
What do you use for managing server credentials?