Wisdom From Walking Among the Cloud Giants: 5 Questions Answered by DigitalOcean CEO Yancey Spruill

With more than 9 years of the NY Enterprise Tech Meetup (NYETM) under our belt, this NYETM marks an extra exciting time for our NYC enterprise tech roots. In addition to the industry’s rapid growth, we hosted Yancey Spruill, CEO of newly public and NYC-born DigitalOcean, for a fireside chat on the same day UiPath, another NYC enterprise titan and RPA leader, joined the public market.

For some context, Yancey joined DigitalOcean as CEO in 2019 with over 15 years of technical and financial experience. Under Yancey’s leadership, DigitalOcean grew its revenue by 25% and now serves over 570,000 customers with over 70% outside the U.S.

Sameepa Shetty, Producer at CNBC, led the conversation, asking Yancey hard-hitting questions about how DigitalOcean carved out its niche in the crowded cloud environment and relating lessons for any early-stage enterprise founder scaling a company.

See the full webinar recording here and the top 5 questions answered below.

Q: DigitalOcean was founded 10 years ago on the core principles of simplicity and developer centrictricity. Now, the cloud infrastructure ecosystem is wildly competitive and complex. How have you remained dedicated to these principles in the last decade of growth?

A: “We are 100% committed to simplicity.” At one of our recent monthly business reviews, we discussed our upcoming product launches and focused the conversation on how these products needed to maintain simplicity.

After 10 years of growth, we have about 600,000 customers with tens of thousands of them being individual developers who have since started their own businesses using DigitalOcean. With this evolution in mind, we’ve expanded to meet those needs and better serve small and medium sized businesses as well as the individual developer and entrepreneur.

Q: How exactly does DigitalOcean measure and maintain this simplicity?

A: DigitalOcean focuses on a formal measurement system. One area of measurement is Net Promoter Score (NPS). We’re proud to say we maintain a NPS north of 60 in relation to product experience, whereas the typical software company is half that.

AWS was getting such incredible traction 10 years ago, but they were focused on moving that complex, multi-trillion dollar legacy IT infrastructure into their cloud. Rightly so, given the majority of IT spend is in the enterprise. But what our founders noticed is that the cloud would be massively beneficial to early-stage businesses who didn’t have the full fledged resources of an enterprise such as a DevOps team or IT expertise.

In comparison to large enterprise customers who likely spend millions on their cloud infrastructure, our pricing starts at $5 per month with the average DigitalOcean customer exiting last year at $600.

Q: While DigitalOcean’s revenue is still largely derived from Droplets and cloud storage, you’re clearly doing something right on the customer front given you added 70,000 customers in the past two years with 70% of them outside the U.S. How do you attract and retain so many customers?

A: We have this incredible go-to-market, self serve marketing model dedicated to investing in the global community’s learning and growth. Five million people come to the DigitalOcean website a month (some customers, others not) to read our tutorials and resources on how to make breakthroughs in their own tech development or become “unstuck” from a problem. For example, if you’re a software developer in Ghana or Vietnam and type a Python question into Google, our content comes up as the top of search results.

The strategy here is that they explore our website, then convert to a customer. Given our content sales and marketing spend only costs us 10% of our revenue (about one-fifth of what most software companies spend), this is a very efficient way to build engaging relationships with customers or potential customers at low cost.

Q: The legacy of legacy infrastructure is about creating the complexity to lock customers in. As the competitive cloud landscape gets more and more cut throat, how do you stay in the game?

A: Most people in the cloud are multi-cloud. As businesses retain more customers, become more diversified, and grow globally, they need more services and multi-cloud is often the most efficient method to scale.

While DigitalOcean plans to add more tools to the platform in the coming year(s) that are helpful to early-stage companies, we actually embrace a multi-cloud approach, believing it’s part of our core value of simplicity. If you think about legacy tech, these business models have evolved to embrace complexity and lock people into a hardware / software relationship. Cloud has enabled people to be more flexible.

I was recently talking to a customer who told me “you won’t be all of our spend, but you’ll be a lot of our spend.” And that’s fine with us. We made this multi-cloud strategy easy for them, allowing them to utilize multiple tools in the ecosystem without punishment.

Q: How does a “suit” come in to lead “hoodies”? How do you earn the respect of the people you work with so they collectively buy into your vision?

One of the hardest things to do is join a company after the founders. At this point, culture is already established. But my job was to think through how to scale the company to its multi-billion dollar potential. It’s important to be intentional here and my formula across multiple companies has been to:

• Be transparent.
• Keep it simple.
• Explain why there’s change. What gets you to $50 million in revenue won’t get you to $2 billion in revenue. You have to explain the evolution and the process to people in a way that makes sense.
• Ask employees these three questions: What’s working? What needs to change? What’s your advice?