Cloud Infrastructure provider DigitalOcean, appointed a new CEO and CFO last year and there seems to be wider reorganization at the cards. The start-up has decided to announce a round of layoffs, and around 30 to 50 people could be affected.
DigitalOcean has confirmed in a statement that the restructuring was to better align its teams towards a go-forward growth strategy. Hence they had to eliminate a few roles. DigitalOcean on its part is a high-growth business with over 5,00,000 lakh customers globally a $275M in annual recurring revenues. This new structure will help to accelerate profitable growth as they continue to serve entrepreneurs and developers around the world.”
Twitter was abuzz with news of the layoffs, with some talking about it, announcing that they are scouting for new opportunities and others offering help to them. According to sources, the cuts are estimated to be between 30 and 50 people. As DigitalOcean has around 500 employees, this could work out to up to 10% of staff affected.
Yancey Spruill and Bill Sorenson were respectively appointed CEO and CFO in July 2019 and the incoming CEO had hinted at a refocus of the business in the near future. According to Spruill, “My aspiration is for us to continue to provide everything you love about DO now, but to also enhance our offerings in a way that is meaningful, strategic and most helpful for you over time.”
DigitalOcean provides a wide range of cloud infrastructure services. These include scalable compute services called “Droplets” in DigitalOcean terminology, managed database services, Cloud Firewalls, managed Kubernetes clusters, object storage, Load Balancers and much more. They have 12 data centers globally. They have been expanding services offered to developers as well, which includes more enhancements to its managed database services, with a free hosting option in partnership with GitLab for continuous code testing. DigitalOcean says that they work with more than 1 million developers located across 195 countries.
DigitalOcean competes against some of the biggest names in tech in a business area where economies of scale are absolutely necessary for making good margins on a business. These names include Microsoft (with Azure), Google (and its Google Cloud Platform) and Amazon (which as AWS). That could mean that DigitalOcean is cutting down with talks to a new round of investors just beginning or they plan to conserve cash in order to compete against these bigger players.
It’s been some time since DigitalOcean raised capital. They have not only opted for a new CFO but CEO as well. In 2017, DigitalOcean was said to have raised money from Mighty Capital, Viaduct Ventures, Black River Ventures, Glean Capital, Torch Capital, Hanaco Venture Capital, and EG Capital Advisors. Having raised a total of $198 million, its last valuation in 2015 was at $683 million.
With tech startups indulging in layoffs in recent times, we will have to see the outcome of this decision. Only last week, Mozilla has laid off 70 employees and delivery platform for weed, Eaze is also planning for more cuts.