Jan 2, 2019 · 23m · a16z
a16z Podcast | An Open Source Business Model That Works
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In this episode of the a16z podcast, DigitalOcean CEO Ben and host Peter discuss the evolution of open source software business models, the trade-offs of managed cloud infrastructure, and future technology trends shaping developer-focused cloud computing.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. How this is scored →
speaking balance: gold is the host, purple is the guest (3 minute bins)
When Peter asks if spinning disk storage goes away completely, Ben directly rejects the extreme premise, clarifying that disk will remain essential for low-cost, low-IO archival storage.
Hardest push from the host ▶ 9:25 Peter demands a concrete explanation with 'so what?'Peter cuts in after Ben offers a broad statement about virtualization becoming mainstream, bluntly pressing him to clarify the exact mechanism driving off-prem adoption.
Biggest teaching moment ▶ 9:39 Ben details how VM density triggered open source provisioning toolsBen explains the underlying technical shift where running 100 virtual machines on a single physical host created an operational bottleneck that necessitated automated open source tooling.
The host holds their own ▶ 0:17 Peter sets the framework on open source service economicsPeter demonstrates high-level venture and domain expertise by contrasting Red Hat's free software support model with modern open source delivered as a managed cloud service.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | The host as informed peer | Guest teaching | Guest disagreement | The host pushing back | Why |
|---|---|---|---|---|---|---|
| Open Source Economics and Software as a Service | 5 | 4 | 1 | 1 | Peter demonstrates high domain knowledge by contrasting Red Hat's support-based revenue model with open source delivered as a cloud service. Ben builds constructively on Peter's thesis by explaining how open source projects historically lacked day-one best practice guidance, creating space for managed service providers. | |
| On-Premise vs. Cloud Managed Services | 4 | 5 | 1 | 2 | Peter asks a targeted question about why enterprises would pay for managed cloud services when open source components are available for free on-premise. Ben educates the host using a real-world customer example, highlighting operational burden, total cost of ownership, and the value of having a single vendor neck to choke when systems break. | |
| Virtualization as the Catalyst for Data Center as a Service | 5 | 6 | 2 | 6 | When Ben vaguely credits virtualization for sparking data center evolution, Peter interrupts directly with a sharp 'so what?' to force a concrete explanation. Ben responds effectively, explaining how virtual machine density created a massive management headache that forced open source tooling to evolve to handle thin-slice automated provisioning. | |
| Developer-Focused Cloud vs. Generic Public Infrastructure | 4 | 5 | 2 | 3 | Peter probes the thesis of developer-specific clouds versus general infrastructure and asks whether vertical clouds for other professions will emerge. Ben contrasts generic clouds that focus purely on technology with DigitalOcean's focus on human user experience, while offering a mild counter-perspective on why hyper-specialized vertical cloud buckets remain rare. | |
| Rapid-Fire Predictions and Conclusion | 5 | 4 | 2 | 3 | Peter leads a rapid-fire technical lightning round on containers, storage media, and processor architecture. Ben pushes back on the prompt that spinning disks will disappear entirely, clarifying that disk remains vital as cheap archival media. |