Big Markets Continually Create Opportunities

Last week I was reading through the DigitalOcean S-1 IPO filing and seeing their cloud hosting business at $357M of recurring revenue growing 25% year-over-year reminded me how large, fast growing markets continually create opportunities.

At Pardot, for most of our run with the business, we used SoftLayer for our cloud hosting. At the time, SoftLayer was the up-and-comer that primarily did dedicated hosting with a strong price-to-feature ratio. Rackspace was the much larger player in the industry commanding a premium and differentiating via their customer service model.

Today, SoftLayer and Rackspace are much smaller players compared to the juggernauts of Amazon Web Services, Microsoft Azure, and Google Cloud. From the outside looking in, it felt like the market was wrapped up. How would a relatively new startup like DigitalOcean compete with three trillion dollar companies?

From the DigitalOcean S-1 (page ii):

DigitalOcean was founded with a focus on creating simple solutions that developers love. Our mission is to simplify cloud computing so developers and businesses can spend more time creating software that changes the world. We estimate there are approximately 100 million SMBs globally today and 14 million new businesses started each year across the globe. We believe DigitalOcean is the perfect place for them to start, get lift-off and build their businesses.

DigitalOcean S-1 page ii

For DigitalOcean, it was “simple solutions that developers love.” The early days of Amazon Web Services were focused on developers as well, but back then the technology was significantly more complicated and difficult to use. DigitalOcean nurtured a loyal community of developers with simpler tools and a stronger focus on community. Now, nine years later, it’s blossomed into an IPO-scale business.

Big markets continually create new opportunities. Even with major incumbents that seem to do it all, new areas of opportunity emerge, and the bigger the market, the more opportunity a small slice represents.

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