I’m certainly seeing a few troubling issues brewing but don’t see as many people as myself taking them as serious warning signs.

But when the collapse happens it’s rapid because the entire foundation has rotted away.

It keeps happening because that’s what the system rewards, short sightedness, and is also why founder led companies have more success, because they are able to execute in years not quarters.

What Netlify is doing here is really the best approach for both parties. And typically speaking a $104k bill would be hard to get paid up regardless if the customer's typical transaction balance was $5/mo and their credit card limit wouldn't be that high.

Also, that's the benefits of credit cards - that you can still issue a charge back, and credit card companies very much favor the consumer rather than the merchant.

Comments URL: https://news.ycombinator.com/item?id=39030352

Points: 1

# Comments: 0

Fire a bunch of people, especially those that are most tenured and have the highest salaries.

Raise prices each quarter to achieve revenue growth with the assumption that customers are more inelastic than suspected and won't leave.

Doubtful that any smart acquisitions will occur, given that requires an actual understanding of product, customers, and markets.

The beginning of the end until some larger corporation, looking to grow their revenue base decides to acquire them.

End of an era for sure.

Started in the web hosting space 20 years ago, back then it was just managed hosting, then virtualization, and eventually we built DigitalOcean as a product business offering cloud computing (though the initial iteration was more of a VPS with grander visions).

I don't think there is anything wrong with being in the colocation space. Instead of assuming you are in the wrong space, maybe ask yourself why it may be the right space. In order to compete with AWS and DigitalOcean you will need a bunch of programming and a decade to build out a fully featured cloud (Maybe you could do it in 5 years).

But personally I think the datacenter space is fantastic. And if you look at what has happened in the datacenter space in mature markets like the US there is a ton of consolidation. And any provider that sets up a decent datacenter from the concrete foundation up gets acquired for a rather sizable return.

You could join the race that everyone else is in (Cloud, AI, etc.), or you can look into becoming a large datacenter provider in your developing country. Because that is significantly harder in other aspects (physical construction vs virtual), but at the same time also quite lucrative. Just look at Equinix. They certainly aren't doing poorly at all.

And btw, it's easy to see other people's success and think that you should be further ahead, but I just wanted to say that we all start at 0 and then go to 1 before we can get to 1,000 and beyond and so congrats on building a business from scratch that looks like it's doing well.

Figma still gets $1B "investment" without giving up any equity or control and Adobe gets to walk away from a massive $20B fee.

Adobe makes $17B a year in revenue, they would need some pretty strong growth out of Figma to justify the price tag especially after valuations came down.

But it is nice to "blame" the regulatory agencies for the breakup so that both companies save face.

Also just seems unlikely that it was regulatory. Sure Adobe has the market cornered but it doesn't seem like this is where the agencies would suddenly choose to care so much. And if it was regulatory, then shouldn't those agencies come out and say "We blocked this, no go."

This acquisition was about selling a product to existing Akamai customers so branding it as an Akamai offering allows them to present this as an enterprise ready solution that their customers can trust immediately.

Akamai did $3.6B in trailing twelve month revenue, and even backing out $200MM (being generous here for Linode) that is $3.4B of revenue.

The bigger play for them is to mark up this as a high gross margin offering to their existing CDN customers where they need a bit of compute power to pair with their CDN offering.

Limelight Networks (throw back alert) was doing the same thing back in the day and they approached us (DigitalOcean) in 2012 looking to potentially partner with us so that we can use our software to build an internal white labelled cloud for them that they could resell to their customers.

This is seen as more of a brand extension through product acquisition under the Akamai umbrella rather than something like Microsoft buying Github where that is a service that is known globally by pretty much every developer and what they wanted was the brand and developer clout.

Here there was no real interest from Akamai in the brand, but simply in a robust enough product that they could resell into their existing customer base.

They completely missed the transition to cloud, they missed AWS, and they laughed when I told them that we (DigitalOcean) wanted $100MM if they were serious about any acquisition talks. This was in 2013 so startup economics were different back then.

They were early to a massive market that is growing and they basically botched their lead repeatedly and every transition since then has been a comedy of errors.

They would have been better off following Equinix's model of just acquiring and managing datacenter space instead they ran their own DCs, didn't have great support, couldn't build product, and ultimately were acquired by PE and saddled with debt along with no road towards innovation.

Also this whole journey started a decade ago. There are many more avenues for liquidity and for raising capital. However it is a bit gated.

However if you have good advisors and ensure you retain control with board structure and dual class voting shares you shouldn’t look at as a negative

Likewise there are also so many great mentors out there now, and many of them are happy to give a helping hand, expecting nothing in return, because they recognize how much others have helped them, that if you aren't reaching out to those folks and finding them, then you are doing yourself a disservice.

Don't build in a vacuum. And by that I don't mean simply get customer/user feedback, but I mean have mentors, both active, and inactive - that are constantly reviewing your ideas with you. The inactive ones come from reading books like innovators dilemma, and the active ones, you need to find and reach out to and get them on-board, just like you would reach out to VCs and pitch for funding.

1. If you don't have the funds to start a business directly, you may have to acquire them indirectly. In our case building a service business was much faster and you could literally setup a single server at a datacenter and call yourself a web host. So the startup capital was small and something that you could certainly acquire by saving while working a high paying job like System administration back in the day.

2. Be in the right place at the right time - this one is key for pretty much everyone everywhere and is one the of the main factors in success and failure. By itself it isn't everything but it is a huge component. We started doing web hosting before AWS existed and when the largest player in the space was Rackspace. There was plenty of room for small up-start individual providers and the internet was still rapidly expanding and also very much still catering to the early adopters.

3. Learn Business - You hear the stories of people like Mark Zuckerburg starting something in college and then building one of the largest companies in the world, but those are ideas that require a special time and place in history. Where the product is the key driver to it's success in many ways, and many non-consumer startups don't get as much attention, but I would certainly recommend learning business. That doesn't mean get an MBA, but read business books. That's what we did between our first company and then starting DigitalOcean. We definitely made a ton of mistakes with the first business and the books helped to elucidate what we did wrong, while also showing us what are the right questions to ask to avoid those same mistakes in the future. I think of business lessons like laws of physics, it's better to know them if you are going to be building around them and certainly the results speak for themselves. The first business peaked at around $5MM in revenue and $DOCN will do over $500MM this year.

Another DO? Definitely not. It was a time and place that allowed us to be successful. Plus if DO exists competing with it head on wouldn't make sense. Also if it didn't exist, I imagine someone would make a similar company that would succeed. You can see this clearly with all of the different versions of Heroku that people tried to build. DigitalOcean's success means that there is a market for the service that it provides and so, someone would have come along and created something to fill that void.

Lastly, I think that a lot of great businesses have to sound a bit stupid at the beginning. If they didn't sound stupid then someone would have built it already. Occasionally you can have a good sounding business idea, but then literally, nothing compelling should exist in the space as a competitor. Otherwise, it would already be done. So in a sense the fact that it sounds "stupid" means that it's different. Now is it good different, or bad different, that's a question that you have to figure out. But often that difference is the crux of what is the key driver for your success.

For us it was creating a simple version of AWS and competing directly (though in our case we felt it was indirect enough) with them. For Airbnb it was the crazy idea that people would pay money to stay in a strangers house. Occasionally an idea actually makes sense from the start. If you use a data warehouse and tried to do analytics before Looker it was a bit of a pain in the butt so Looker does seem straight forward. And certainly DataDog already existed in many different flavors, such as Nagios, but repackaging something and then riding another wave (AWS) can create massive success if the "wave" is large enough.

I think to truly count yourself as "fantastic" at the game of startups you would need to create 3 successful businesses. Because so much of it is chance, timing, luck, that can't be ignored. But if you can do it 3 times, I think that definitely speaks to a person's ability to spot the intersection of so many critical factors.

For me and my brother we were immigrants, divorced household, single mom as some bread winner, didn’t attend Ivy League schools, paid for college through debt, and started a business with savings from working full time at system administration, which was self taught, while being in college.

Fast forward 20 years, DigitalOcean IPO’d.

Our mother did provide a roof over our heads but we had no inheritance, and no friends and family round.

We built a service oriented business doing web hosting first. Service businesses are traditionally much cheaper to start because there is no product development cost to front with zero revenue.

Then after a decade of that we built digitalocean as a product business which was financed from the cash flow of our original business.

By the time we closed our series Seed in Digitalocean we were already well past $1MM ARR and in one year went from $100k ARR to $18MM ARR.

Having less resources does force you to be more scrappy and figure things out that other people who have a safety net often give up on.

Point is it can be done either way.

Comments URL: https://news.ycombinator.com/item?id=34028045

Points: 9

# Comments: 2

You may receive a buy-out offer you find very interesting but your board is against it and then you find out very quickly how much control you actually gave up and how aligned you really were.

A more direct, yes we use some code, oops we will add attribution, thanks again, much appreciated, would have sufficed.

Comments URL: https://news.ycombinator.com/item?id=33893536

Points: 3

# Comments: 0

So these higher prices, create higher premiums, which create higher profit, so there is no actual incentive for the insurance companies to get hospital prices down because the majority of their insured users are not going to be getting massive bills throughout the year and also they can still litigate or pass healthcare costs back to the customer due to coverage issues and let's not forget deductibles.