作者 | Yinting Hou
Edit | weber
In the midst of the global economic transformation cycle, Silicon Valley and the world's major manufacturers have successively laid off employees, and even the cloud service department, which has created the second growth curve, cannot escape the big knife of reducing costs and increasing efficiency.
In early April, Amazon officially confirmed that its cloud computing services division (AWS) was laying off its brick-and-mortar store technology team and sales and marketing departments, a move that would reduce hundreds of employees.
Data shows that AWS is one of Amazon's most profitable divisions, contributing 54% of Amazon's operating profit in the fourth quarter of 2023. However, AWS, the industry's largest provider of computing power and data storage leasing services, saw its sales growth rate fall to an all-time low last year, largely as businesses cut back on cloud spending amid rising interest rates.
With the ever-changing economic situation and rising operating costs, saving cloud spending is a decision that has to be made, especially for small and medium-sized enterprises, where the cost of expensive cloud services is no longer supportable.
Outside of giants such as Amazon AWS, Microsoft Azure, Google Cloud, and Alibaba Cloud, enterprises urgently need to find an affordable and applicable cloud service platform.
Founded in 2012, DigitalOcean, an American cloud hosting provider, has become the preferred choice for SMEs, startups, and developers due to its ease of use and cost-effectiveness.
With millions of buyers, Jiji, Africa's leading e-commerce platform, has been using DigitalOcean's cloud services for 10 years. The company's co-founder and CEO, Nick Zorin, chose DigitalOcean from the start, a decision driven by three factors: user-friendliness, functionality, and (price) affordability.
"It's competitively priced and easy to use. DigitalOcean is approachable to us. We used it when we were first established and it all works very well today. ”
Listed on NASDAQ in March 2021, DigitalOcean, a cloud vendor, has become the "invisible king" of U.S. stocks. According to the latest financial report data released in February this year, DigitalOcean's revenue in 2023 increased by 20% year-on-year, and its net profit increased by 179.94% year-on-year.
DigitalOcean IPO
Unlike other large cloud vendors that are beginning to face growth bottlenecks, DigitalOcean's small and medium-sized enterprises still have great growth potential.
Xiaguang Society learned that DigitalOcean mainly provides four categories of hosting server products, and its global layout has expanded to 15 data centers in 9 regions, providing infrastructure and software solutions to 620,000 customers in more than 185 countries/regions.
"In the early days of DigitalOcean, developers like me may want to start a small project or start a company with a team of only 2~10 or 50~100 people, and usually such developers, startups or small and medium-sized enterprises are excluded from the cloud service market. DigitalOcean VP Apurva Joshi said in a public sharing.
In 2012, Ben Uretsky, co-founder and former CEO of DigitalOcean, decided that users needed a new approach to cloud services. Cloud providers in the market offer overly complex pricing plans, and platforms don't always meet the needs of users.
DigitalOcean联合创始人兼前CEO Ben Uretsky
At that time, Amazon AWS was already in the leading position in the market, and DigitalOcean stood out by virtue of its differentiation. In 2012, the founding team launched its first product, Droplets (Virtual Private Servers), and in the initial phase, about 10,000 cloud service instances were launched and nearly 400 customers were signed.
In 2013, DigitalOcean became one of the first cloud hosting companies to offer SSD-based virtual private servers. At the time, cloud hosting platforms on the market that offered affordable virtual servers, such as Linode and Rackspace, started at $20/month, while similar products from DigitalOcean started at $5/month, with better performance SSD storage.
According to third-party evaluations, the droplet startup time is only 55 seconds, while other large cloud providers generally take 1-3 minutes. Even people with no experience in the backend can spin up a virtual machine in minutes according to the documentation.
With low and transparent pricing, simple and easy to use, the market has responded significantly to DigitalOcean's products, from adding 2 customers per day to signing up more than 2,000 customers per day. From 2013 to 2015, the company received one round of financing every year.
As it scaled, DigitalOcean also opened data centers around the world. In December 2013, DigitalOcean opened its first European data center in Amsterdam. From 2014 to 2016, the company continued to expand, establishing data centers in Singapore, London, Toronto, Canada, Frankfurt, Germany, and Bangalore, India.
The scale continues to expand, but DigitalOcean does not forget to focus on user experience, and "simplicity" is the core essence of the product. "We're not going to have to meet everything in order to add millions of dollars in transactions every month, and if we encourage employees to do that, it's going to create 'complexity' and deviate from our core line. Our focus is on small and medium-sized enterprises, and at its core, we provide simple solutions. Apurva Joshi said.
On the "simple" route, they also pay attention to user needs, continue to innovate, and launch more products that are simplified. In May 2018, the company announced the launch of a Kubernetes-based cloud container platform. It is reported that the product eliminates many of the underlying complexities of running Kubernetes. Users get a standalone Kubernetes cluster with full access to the Kubernetes API.
Just on March 24, 2021, DigitalOcean went public on the New York Stock Exchange with an initial public offering price of $47 per share. Through a successful business model, the company has achieved revenue growth of more than 20% per year.
Entering a new round of testing in the capital market, the company is also constantly expanding the boundaries of cloud services.
Source: DigitalOcean Community
In May 2022, the company released DigitalOcean Functions, based on open-source technology, Functions allows developers to build and run applications without having to manage servers. In August of the same year, DigitalOcean acquired Cloudways, a cloud hosting provider, for $350 million.
It is worth mentioning that in July last year, DigitalOcean acquired Paperspace, a cloud computing and AI development startup, for $111 million, announcing the provision of GPU cloud services to help startups, growing digital enterprises, and independent software vendors (ISVs) continue to provide competitive AI experiences to their customers. It is reported that the rental price of each H100 chip starts as low as $2.24 per hour.
According to its latest earnings report, DigitalOcean reported earnings for the fourth quarter of 2023 that exceeded expectations. For the quarter, the company reported earnings of 44 cents per share, excluding certain costs, such as stock compensation, well above Wall Street's target of 37 cents per share. According to the report, the company's annual revenue run rate increased by 11% to reach $730 million at the end of the quarter. Average revenue per customer also increased to $92.63, up 6% from the same period last year.
Xiaguang Society learned that at present, DigitalOcean has opened a business in China, and provides technical support through Zhuopu Cloud AI Droplet, the exclusive strategic partner in China, to provide professional cloud services and solutions for Chinese enterprises to go overseas.
The Zhuopu Cloud AI Droplet was formed by Access Technology Venture to help DigitalOcean better explore the Chinese market. As the largest controlling shareholder of DigitalOcean, Access Technology Venture is an investment company focusing on new technology companies, and has invested in Zhihu, Agora, Alibaba, Pinduoduo and Pingcap in China. It is reported that the company is very optimistic about the future of DigitalOcean, so it continues to increase its stake and participate in the company's operation.
From 100 customers to over 600,000 customers, DigitalOcean's vision remains unchanged to focus on serving its customers, namely SMEs, startups, and developers, by providing them with a simple and high-performance cloud service platform that "helps them build their businesses and realize their dreams simply, cost-effectively, and efficiently." ”
Focusing on the needs of small and medium-sized enterprises and developers, DigitalOcean not only pursues simplicity in product user experience, but also focuses on creating happiness for developers in marketing.
In a public sharing, Carly Brantz, CMO of DigitalOcean, made a fresh impression of her views. She pointed out that marketing to developers is not about advertising registration on a website, but about providing value and happiness to developers, "Happy developers bring growth to the business, and DigitalOcean is about making developers happy." ”
Starting from the user, DigitalOcean follows the business strategy of PLG (Product Led Growth), which is an end-user-oriented growth model. The PLG model puts user experience at the core, engaging users by providing valuable products and services, and driving growth through user engagement and sharing.
The PLG model usually builds an active user community where users can share experiences and support each other, thereby enhancing user stickiness and loyalty. DigitalOcean is no exception, in early 2012, it established a developer community on its website, and its internal authors (i.e., developers) wrote and published 10 Linux tutorials, which attracted 1,500 visitors in the first week.
Source: DigitalOcean Community
Carly Brantz shared that she joined the company in January 2020 and during the pandemic, she has witnessed many high-impact community events that have been loved and recognized by developers around the world.
More than 8,000 tutorials, documentation, and cloud education are available for free on DigitalOcean's developer community. DigitalOcean also hosts the launch of Hacktoberfest, an annual global "hackathon" event that aims to support open source projects and encourage more people to contribute to the open source community, which has been held for 10 years in October 2023.
Source: DigitalOcean Community
According to foreign media reports, DigitalOcean brought 9 million unique visitors to the official website through a large amount of content in the first quarter of 2022.
The success of the developer community also comes from the company's keen insight into the developer community. "Developers are often very technically minded, and they want to be able to solve problems on their own, and they don't want to call sales or customer service to help them solve their problems. ”
Carly Brantz pointed out that developers don't need marketers to communicate with them, they are more used to going out into the community on their own, getting resources, learning, building trust in the website, and signing up for their own accounts, "These customers are usually business enthusiasts, early learners, mature developers, and even startup owners, and we want to provide them with value, such as community content, so that they can use it simply and clearly and run their business." ”
In fact, the developer community has everything in its content, and even non-technical people can easily set up droplets and configure the network according to the tutorials in the community, and the barrier to entry for new users to use cloud services is greatly reduced.
The developer community has become an important channel for DigitalOcean to acquire customers at low cost, which is why the company's marketing expenses have remained at a very low level of about 10% of operating income for a long time.
Generally speaking, after developers get used to a platform, the conversion cost is relatively high, so DigitalOcean has strong user stickiness, high loyalty, and high potential lifetime value (LTV).
The business model of cloud vendors has always been considered B2B, providing cloud services to enterprises. But one of the founders of DigitalOcean has said that what the company is doing is B2D (developer).
It is an important mission of DigitalOcean to always pay attention to the needs of developers and let them conduct business simply and efficiently.
"DigitalOcean's cloud services are simple, cost-effective and flexible. DigitalOcean is an attractive option for individual developers, high-growth start-ups, and independent software vendors (ISVs) and small and medium-sized enterprises (SMEs) looking for hyperscaler alternatives. It's a cloud service tailored for business – making it easy for growing companies to gain momentum and scale sustainably. Dave McCarthy, research vice president at IDC, noted.
Chinese enterprises going overseas is becoming an important international trend, from social networking, games, e-commerce to enterprise services, all walks of life have formed a certain competitive pattern overseas.
In its 2024 Mobile Game Market Report, mobile data analytics agency Data.ai noted that China-based (game) publishers, which account for one-third of global revenue, are expanding into markets such as Japan and the United States through high-quality production and localization.
China's cross-border e-commerce platforms are also radiating to the world. Temu has a presence in 50 countries and 467 million users, and SHEIN's revenue in 2023 will exceed $30 billion. TikTok has become a global social app giant, with more than 1.6 billion users worldwide, and its e-commerce business is also growing significantly in 2023.
Following the Chinese platform manufacturers that have swept the world, small and medium-sized enterprises are also joining the wave of globalization. However, from ordinary products going overseas to today's global layout and expansion, the challenges faced by Chinese enterprises overseas are not what they used to be. In the complex geopolitics and soaring economic costs, the contest of scientific and technological strength has become a necessary topic, and the technical support of mature cloud services is a key part of realizing digital globalization.
Small and medium-sized businesses can't do without cloud services. According to the State of the Cloud 2024 report released by cloud management platform Flexera, half of organizations have data in the public cloud, with an expected increase of 7% over the next 12 months, with small and medium-sized businesses having the highest cloud adoption rates.
For small and medium-sized enterprises to go overseas, it is more practical to choose a cloud service platform with streamlined functions, easy to use and low cost than the top well-known cloud vendors.
Blub Blub has developed Speech Blubs, a speech therapy app for children, with over 100,000 subscribers. With fewer than 50 employees and only 3 back-end engineers, Blub Blub chose DigitalOcean for its small team.
图源:Blub Blub
Initially, Blub Blub relied on Heroku, a PaaS platform, to host its simple WordPress site and backend services. As the Speech Blubs user base grew, the development team felt that Heroku's capabilities were limited and wanted to find a solution that was both cost-effective and could provide a more complete approach to infrastructure management, while being able to easily deploy updates.
In search of a better alternative, Blub Blub began researching cloud providers, including hyperscalers and others. They found DigitalOcean's pricing structure to be more cost-effective than other providers and were impressed with its "simplicity" features.
"The DigitalOcean app platform is the best value for money, it's much cheaper than Heroku, and it abstracts a layer of complexity that we don't need to deal with because our team is small. Marko Širec, Lead Backend Engineer at Blub Blub, shared.
Blub Blub initially migrated to DigitalOcean's App Platform, which simplifies the deployment process, unlike many manually configured cloud services. "It took only one day to deploy our application on DigitalOcean and a few days on AWS. Marko Širec explains, "DigitalOcean is simpler and more intuitive. Plus, the alerts and monitoring features are fantastic. We can easily connect them to Slack, which is essential for a small team like ours. ”
In addition to hosting websites, DigitalOcean was able to host Blub Blub's Redis database, among other things, and Blub Blub's transition to DigitalOcean had a significant impact on its business. With fewer failures and faster deployment cycles, Blub Blub has become more agile in responding to market demands, resulting in increased customer satisfaction for Speech Blubs.
"The cost and time savings from DigitalOcean have been critical to our growth. Because our team is small, we can spend our time building products and supporting other parts of the company instead of dealing with infrastructure issues, which have a big impact on the company as a whole. Marko Širec added.
That's why small and medium-sized businesses have a limited budget due to their downsized staff, and DigitalOcean provides exactly what they need.
The key to DigitalOcean's ability to provide low-cost services is its high degree of automation and streamlining of product design: by streamlining redundancy features, product pricing can be drastically reduced, while complexity is reduced and support efficiency is improved. This combination of high efficiency and low cost has created a significant cost advantage for DigitalOcean.
Taking DigitalOcean cloud service as an example, you only need to follow the documentation, and you don't need to be an old engineer to deploy a cloud host in a few minutes. At the same time, DigitalOcean also provides a large number of "one-click applications" that allow businesses to quickly implement business, thus saving time with manual setup and configuration. For example, one-click deployment of WordPress to quickly build your own website, and one-click deployment of Jitis service to accelerate the development of social pan-entertainment applications.
DigitalOcean's affordable pricing and transparent billing logic are suitable for small and medium-sized businesses on a budget. Ankit Aggarwal, CEO and CTO of EGLogics, commented, "DigitalOcean billing is simple. We can easily predict and figure out what to pay. In AWS, this is hard to figure out, especially after multiple regional deployments. But with DigitalOcean, as the company's CEO and CTO, I can easily understand what services I'm using and how I can control my spending properly. ”
According to Derek, Solution Architect at Zhuopu Cloud Technology, users can typically reduce costs by 50% to 70% after migrating their services from first-tier cloud providers such as AWS and GCP to DigitalOcean.
"This significant cost savings are largely due to DigitalOcean's unique pricing structure. The total cost of cloud services usually consists of two parts: server costs and data transfer costs. DigitalOcean's pricing strategy includes free data outbound transfers ranging from 500 GiB to 11 TB per cloud server, while the pricing of its servers is generally more than 10% lower than that of other cloud service providers. ”
DigitalOcean, a cloud vendor that provides high-performance and low-cost services, helps enterprises gain underlying competitiveness in the process of global development. With high-quality and efficient global deployment, DigitalOcean is the best choice for enterprise cloud services going overseas.