Taking on Rackspace and AWS, One Droplet at a Time

Since this January, NYC-based cloud hosting startup and 2012 TechStars alum DigitalOcean has experienced fiftyfold growth, according to Netcraft, and lured thousands of customers away from Amazon Web Services and Rackspace. DigitalOcean’s much-touted ease of use, under-a-minute spin-up time, and $5/month entry price have much to do with the company’s rise. But according to Moisey Uretsky, DigitalOcean’s Moisey Uretskycofounder and head of production, something else separates the company from its competitors.

“At the end of the day,” Uretsky told me, “it’s our message of love.”

Uretsky, his brother Ben – DigitalOcean cofounder and CEO – and the rest of the DigitalOcean team set out to build a cloud hosting provider customers would love to use.”As developers, we were frustrated by the experiences we had elsewhere. When you use other providers, it seems like they’re doing things to make your life more difficult. They’re overly complex, not very well-presented – over-engineered,” Uretsky said.

In response to that, DigitalOcean combines the fast performance and spin-up times of Linux virtual servers on SSDs with an interface that emphasizes simplicity all the way down through the APIs. The ease with which a customer can spin up a DigitalOcean virtual server, or “droplet,” as the company calls them, puts DigitalOcean ahead of its competitors, as does DigitalOcean’s low starting price.

Despite these advantages, however, DigitalOcean took a while to get off the ground. The company officially launched in June 2011 and spent a fair amount of time trying to get traction. Uretsky credited the TechStars program with helping the company get to the next level. “We had a lot of great mentorship there. It definitely got us to focus on that simplicity message,” he said. Eventually, the word spread.

Word of mouth played a significant role in DigitalOcean’s growth. “That’s something you can’t really fake or buy,” Uretsky told me. “You go from two customers to four customers. It takes a little while to get into the thousands.” Once the company’s customers numbered in the thousands, things took off. Now, with an additional $3.2M in funding from IA Ventures and CrunchFund, DigitalOcean looks ready to unleash the flood.

DigitalOcean plans to put its new funding towards hiring and capacity. Regarding the latter, Uretsky told me that “we’ve bootstrapped it up to this point, and we were starting to hit some roadblocks. So with a couple of investors on board to help us leverage larger relationships – that’s been very exciting.”

Some of the networking challenges DigitalOcean has faced have to do with the fact that “network vendors haven’t really caught up to public cloud in terms of what could be done,” Uretsky said. Vendors advertise a set of specs, but actual results may vary when a company like DigitalOcean puts their gear into production in the wild: “Normally, companies deploying this amount of infrastructure are rather large and completely in control of how they segment the network and what kinds of workloads happen there, while we’re a different use case,” he added.

This leaves much of the heavy lifting to DigitalOcean, which plans to add more networking features. The company is building out private networking, moving ahead with IPv6, and adding features like Object Storage, CDN, and single-click installations of common frameworks.

“Things have really been picking up,” Uretsky said. DigitalOcean, which has data centers in New York, San Francisco, and Amsterdam, recently opened its newest NYC location, at 111 8th Avenue – the Google data center. If the company keeps up its current pace, more growth is likely to come. For enterprises looking at midmarket virtualization options, DigitalOcean is worth keeping an eye on.

ENP editor Jude Chao Jude Chao is executive editor of Enterprise Networking Planet. Follow her on Twitter @judechao.

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