The CEO of DigitalOcean explains how its 'cult following' helped it grow a $225 million business even under the shadow of Amazon Web Services (AMZN, MSFT, GOOG)

Mark Templeton Headshot

Mark Templeton became CEO of cloud computing startup DigitalOcean last June, replacing co-founder Ben Uretsky in the role.
DigitalOcean is a relatively small, venture-backed alternative to mega-clouds like Amazon Web Services and Microsoft Azure. The company tells us it's on an annualized run rate (ARR) of $225 million.
Before DigitalOcean, Templeton spent over two decades at Citrix, where he helped scale it to a company with over $3 billion in revenue.
Templeton shares four secrets that draw users to DigitalOcean, even under the shadow of Amazon Web Services.
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DigitalOcean CEO Mark Templeton first taught himself to code at a small hardwood business. He wanted to figure out how to use the lumber in the factory most efficiently, and spreadsheets only got him so far.

"I taught myself to write code to write a shop floor control and optimization system," Templeton told Business Insider. "That allowed us to grow, to run the factory 24 hours a day, all these things that grow in small business is new. As a self-taught developer, that's what launched me into the software industry."

And now, Templeton is learning to embrace these developer roots again at DigitalOcean, a New York-based cloud computing startup. It's a smaller, venture-backed alternative to mega-clouds like Amazon Web Services, but has found its niche with individual programmers and smaller teams.

Templeton just started as CEO last June, after spending over 14 years as the CEO of Citrix — a period over which its annual revenues grew from $15 million to $3 billion. Now, it's his job to bring that same kind of growth to DigitalOcean as it works to further establish its niche in a market ruled by Amazon, Microsoft, and Google.

As CEO, his goal is to help the company scale up and reach more developers, supporting them whether they code as a hobby, work as professional programmers, or are launching a tech startup.

This is the strategy that led DigitalOcean to growth: The company tells us that it's on a $225 million annualized run rate (ARR) — up from $175 million in 2017, and far higher than the $48 million ARR it posted in 2015) — and has raised about $123 million from investors including Andreessen Horowitz. The company also says it’s been profitable on an EBITDA basis (earnings before interest, tax, depreciation and amortization) since 2015.

"One of the things that was really attractive about DigitalOcean was, we had this amazing business that was built very organically," Templeton said.

"A cult following"

Templeton points out four things that made DigitalOcean grow so quickly, even with such powerful competitors. The first is, the company is focused on making its products simple for developers to use — and, as Templeton says, "you don't want to mess with developers." Templeton says DigitalOcean has "a little bit of a cult following."

"People are passionate about what the company does," Templeton said. "They want to be part of it."

The second is the community, as DigitalOcean tries to foster the growing community around its products through providing tutorials and content and directly engaging with developers. The third, says Templeton, is the support that DigitalOcean provides, and the fourth is its commitment to open source software.

To that last point: The large cloud vendors, especially Amazon Web Services, have come under scrutiny for taking free open source software projects and building proprietary code on top of them to make commercial services. In doing so, some argue, these major clouds take what's supposed to be a technological standard, and put their own twist on them such that it's that much harder for customers to switch away.

DigitalOcean, by contrast, is committed to offering the standard versions of open source software to its customers.

"That differentiates us because, as we see, the other cloud services — they tend to leverage open source, but they work to make it more proprietary to make it sticky," Templeton said.

'It's not because we had a sales machine'

Before becoming CEO, Templeton had already been working with co-founder and then-CEO Ben Uretsky.

"Ben and I worked together for around six months or so when he said, 'I have a great idea about the future. Let's trade places. You run the company and I'll advise you,'" Templeton said. "After we talked about that for a little while, I said, 'Let's do this.'"

Now that he's in his new position, he says that life at DigitalOcean has still been something of an adjustment for him: Rather than deal with businesses, DigitalOcean's main customers are developers.

"That's been a challenge, and I've been enjoying that because I've spent life in tech as a developer myself," Templeton said.

As part of its outreach to developers, Templeton says, he wants to make it easier for DigitalOcean's users to find the right tools to build their own projects. For example, in March, DigitalOcean launched Marketplace, which connects developers with partner-built solutions for developing and releasing apps.

"It's not because we had a sales machine," Templeton said. "It grew fast because of this core belief and vision to support the notion of a next generation developer. The strategy of the company had been to super-serve them, to choose a customer and obsess about satisfying and delighting them."

A 'sustainable lasting business'

As the new leader of DigitalOcean, Templeton has been working to understand the company's culture, as well as its growth strategy. He says the company needs to figure out what it's best at and double down on it, as well as understand what's lacking so that DigitalOcean can hire the necessary horsepower.

Not only does this help the business grow, but it can cultivate career mentorship and guidance among new and current employees, he says.

"The DigitalOcean culture has a lot of the aspects around respect, around integrity, around humility, and all the love that comes through around serving a customer," Templeton said.

Right now, Templeton says, DigitalOcean doesn't have definite plans to go public, but he hopes to build a "sustainable lasting business." He says companies "with purpose" can achieve greatness. He saw that at Citrix, he says, and he foresees the same pattern at DigitalOcean.

"DigitalOcean has great purpose in its culture and customers especially when it comes to developers," Templeton said. "They like to follow others that have purpose. That's one thing I've learned again."

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