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Fast Growing DigitalOcean Is Fueled By Customer Love

BornLuna: Best company on earth! I love my vps with them! I have a few.

Corndogcomputer: I absolutely love my new server! It’s freakin fast and affordable!

Applerebel: I LOVE YOU! <3

Ydnar: Signed up with @digitalocean and had ghost running in less than 15 mins. No wonder the community loves these guys.

Tpkit: Love my new super-easy-to-setup server from @digitalocean awesome guys

There’s no point in going on. You get the picture. Definitely got my attention, and I wanted to know more about this company that people love so much, and I heard about them only a couple of months ago. But let’s rewind a little bit.

Roughly 10 months ago it was 500 startups demo day, and I was pitching WhoAPI at Twitter HQ in San Fracisco. There I met Rob Delwo VP Market Development at Pivot Desk. They were at Techstars Boulder where they met John Ives (a prominent angel investor). He doesn’t have to do anything with Apple’s Jony Ive.

I spoke with John on several occasions, and on the first one he told me about DigitalOcean. We tried their service, along side with our other partners, AWS, Azure, Rackspace, Softlayer, Google and Hetzner. Yes, we use all of them. We loved DigitalOcean, and their service. So I asked John if he could introduce me to one of their co-founders.

Mitch Wainer
Mitch Wainer

Mitch Wainer II is one of the co-founders and CMO of DigitalOcean. He and DigitalOcean are in New York, so we talked over Skype. Since I am from Croatia, I’ve never met anyone called Mitch, and the only Mitch I knew was from Baywatch. So I was really enthusiastic about this call, at least I would change my association to the Mitch – Ocean connection.

After working 5 years in the digital agency world where he consulted Fortune 500 companies, Mitch is now in charge of all the DigitalOcean’s marketing efforts. In addition he designed the website, the control panel so he has a lot of responsibility in terms of the product design.

Mitch joined the other two co-founders Ben Uretsky and Moisey Uretsky who started their first business in the infrastructure industry, called Serverstack. Serverstack was focused on managed hosting, but they lost a lot of clients to a competitor because of competitor’s name and credibility. Because of this problem, all three of them dived into DigitalOcean and focused on developers.

Since they released the SSD plans and doubled the memory in January, their growth has skyrocketed. Now they are close to 150 000 developers using their platform.

Goran Duskic: Can you identify 3 biggest shifts in your company since you and Ben started the company back in 2011? I guess one was joining the Techstars, second getting the funding on my birthday July 15 2013, $3.21M. Can you talk a little bit what led you to those biggest shifts?

Mitch Wainer II: After the company was started in the summer of 2011, we started working on our MVP (Minimum Viable Product). We launched our beta in January 2012. We didn’t charge our clients until March 2012, and then we had only 50-60 clients. With that, we applied at Techstars NYC and our first application was rejected. However, with a little help from Jason Seats, they managed to get into the Techstars Boulder program. Jason was the co-founder of Slicehost (acquired by Rackspace), and they were also a developer focused hosting company.

When we moved to Boulder it was like living in a college dorm room. I got the couch, Ben (our CEO) got the top bunk bed. We stayed in Boulder for three months. The program was very fulfilling, we’ve met a lot of mentors, and met a lot of successful entrepreneurs. At the end, we had our demo in front of a large audience of investors. We asked for $500k, however, the Techstars NYC syndrome was evident. We weren’t approached by any investors because they didn’t understand our clear differentiator against other companies like Amazon and Rackspace.

Fast forward to January 14th 2013, we released our all SSD plans, doubled the memory and kept the same price point – $5 per month. I managed to get us a Techcrunch article, which in return catapulted our signup growth rate. With that we went from 2000 clients in January, to nearly 150 000 now in December. With our compelling growth story we were able to prove our clear differentiator, and we managed to raise a seed round in July 2013, from IA ventures. We were in touch for a while, and they actually introduced us to the Techstars program in Boulder.

Because of our growth we need to instal new racks of servers as fast as possible. Each rack of servers is essentially 250,000 dollars, to give you a rough idea of our costs. As a matter a fact, we are in the process of raising our Series A, somewhere in the range of $20M to $30 million dollars. This will help us fuel our growth even more! We have plans for opening up to Latin America, UK and Singapore since the Asia-Pacific is the fastest growing developer market in the World.

Goran Duskic: What was your first hint that “this cloud thing that you are doing” is actually going to grow into a great company, that’s providing awesome service. 

Mitch Wainer II:  After our customer growth literally “10x’ed” after the launch of new “all SSD, double memory” plans that were announced on Techrunch, we knew we hit something interesting. Also, another really important note that I want to make. When we started seing customers tweeting at us, using the word “Love” we knew we are doing something right. We knew that we fulfilled a need, and solved a pain point that was experienced by developers for a long long time. That basically snowballed, because now 60% new customers come over word of mouth, referrals.

Goran Duskic: What about domains? Do you guys have any plans in offering domain registration, or are you in any way taking advantage of the new gTLD era?

Mitch Wainer II: I love when everything you need is packaged together, and we will probably incorporate domains into our services somewhere in 2015. Next year we are focusing on building more scalable features such as load balancing, object storage, CDN. We know that there are several new gTLD’s more and more popular, and we would certainly love to ride that train. However we need to be focused on building our more scalable features, that are closer to our core business.

You can see on our feature request forum that not that many people are actually looking for this specific feature, and that there are so many other.

Goran Duskic: How did you come up with the name DigitalOcean? I hear a lot of people complaining how they can’t find anymore good free .com domains.

Mitch Wainer II: Well for us it was quite easy and simple. Clouds are formed from Droplets, which is what we call our cloud server. And clouds originate from the ocean. So it made sense we incorporate the ocean into our brand, and that eventually lead us to digital ocean. We have a cute company shark named Sammy, you can find him on our 404 page. We were able to do a lot of fun stuff with our name and brand. For example, one of our recent tag lines at conferences was “Dive into DigitalOcean”, and “Dive In” was used in our promo codes.

DigitalOcean
DigitalOcean

Goran Duskic: Tell us something from everyday office stuff? What coffee do you drink there, what’s it like to work at DigitalOcean? Tell us something that’s not on your website, that you guys know, and other people outside don’t.

Mitch Wainer II: We actually just expanded our office space. We were in a 3500 square foot space, and we just broke down the wall, and now we are in 5500 square foot. We are hiring like mad men, adding 2 people per week.  We have a ping-pong table here, so we have some pretty competitive games.

Goran Duskic: What would you say that the secret ingredient was in wining the hearts of hundreds of thousands of users, on a crowded hosting/vps market?

Mitch Wainer II: 1 click away from configuring and 1 click away from installing. With us, everything is pretty much within 1 or 2 clicks. We are trying to keep things as simple as possible to save developers time and money. Compared to other companies, even our pricing page is extremely simple.

We understand our customers really well, and we know what they want.

 

P.S.

If you would like to signup at Digital Ocean, and in that process award WhoAPI with Digital Ocean’s referral fee, signup using this URL – https://www.digitalocean.com/?refcode=bdb9dddf0206

Written by Goran Duskic

I am the founder and CEO at WhoAPI. Entrepreneur for more than a decade in the hosting and domain industry. Sold my previous company. 500 Startups and StartLabs alumni. Author of a white paper "Domain Disclosure: Dirty Dozen" and eBook "26 Fundraising Questions for Startups".

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