In 2003 a developer or small firm that wanted its own Linux server on the internet had two choices. Shared hosting had become a commodity at about $2 a month with 'all-you-can-eat' allowances, but every customer shared one system and gave up privacy and control LN1. A leased dedicated machine gave that control at many times the price, too much for a hobby project or a small team LN1. Rentable on-demand computing from Amazon did not yet exist LN2. Someone able to administer a server had no affordable way to get one of their own.
Linode
Linode sold Linux administrators a $20 server paid for from its own revenue and found through referrals, so when DigitalOcean offered beginners a $5 server and the tutorials to run it, new developers went there and Linode stayed a profitable, smaller business that Akamai bought in 2022.
Why Linode lost to DigitalOcean
- 1 · 2003–12A server for Linux administratorsA flat $19.95 private server with root access and no control panel, paid for from revenue and sold by referral.Founder Domain Expertise
- 2 · 2013–17Held the $20 floor from its own cashIt answered the $5 SSD server with more RAM at $20; a $10 plan came in June 2014 and $5 in February 2017.Trade-offs & activity fit
- 3 · 2013–14Guides for customers it already hadThe respected Linode Library served existing users; paid outside guides at $100 each began in January 2014.Customer Referrals
- 4 · 2015–22Referrals on a record that brokeA ten-day attack in 2015–16 followed breaches in 2012 and 2013; about 150,000 customers at the 2022 sale.Customer Referrals
- 5 · 2016–23Never caught up in search; sold in 2022Its own customers used DigitalOcean's guides; Akamai paid about $900 million and retired the brand in 2023.
Versus DigitalOcean: DigitalOcean priced its first server at $5 with borrowed money behind it and reached beginners through tutorials that ranked in search LNX1 LNX4 LNX5. Linode priced at $20 from its own revenue and reached Linux administrators through other administrators' recommendations LN2 LN6.
Arena: Market Conditions Before Linode
How each step happened
Step 1 of 5 · 2003–12
A server for Linux administrators
Christopher Aker had run a small hosting business on the side and watched shared hosting slide toward '$2-all-you-can-eat' pricing LN1. He chose virtualization, so customers could share the hardware and still have a private server, and launched Linode in June 2003 on two machines bought on eBay LN1 LN2. The customer was someone who could run a Linux machine alone: by 2008 the entry plan was $19.95 a month for a 360MB server with root access and no control panel LN7. One flat fee covered everything LN3.
The choices fitted together. Aker turned down venture investors and paid for servers out of revenue, so every account had to be profitable from the start LN6 LN2. Administrators recommended Linode to other administrators, and Aker says word of mouth was the main way customers arrived; by his account revenue grew from $200,000 in the first six months to $5 million within a few years LN2 LN3. The system compounded for a decade, but it reached only people who knew an existing customer, and they resembled that customer.
Rivals DigitalOcean's founders had also run a hosting business, but in 2012 they chose the individual developer who wanted a server quickly, with a small menu and simple plans; by January 2013 a server was ready in 55 seconds DO2 LNX1. Slicehost sold a near-identical $20 Linux server in 2008 LN7.
Step 2 of 5 · 2013–17
Held the $20 floor from its own cash
In January 2013 DigitalOcean began selling a 512MB server with SSD storage for $5 a month, when Linode and Rackspace started at $20 LNX1. Co-founder Mitch Wainer says the price '100x-ed acquisition overnight', and that venture money let the company draw on credit lines for $250,000 racks LNX4. Linode could not answer the same way. Aker says it was 'heavily CAPEX constrained' for years; banks had refused it loans of $50,000 to $100,000 LN2 LN6. Servers bought from cash needed the margins a $20 plan supplied.
So Linode gave more at the same price. The NextGen upgrade of 2013 doubled RAM and processor cores, and a $45 million upgrade in April 2014 moved to SSDs while keeping the $20 entry plan LN12 LN15. That held existing customers, who compared resources per dollar. A new developer compared entry prices, and extra memory did not answer a four-fold gap; after the 2014 upgrade a commenter wrote that Linode was 'still leaving the "incredibly cheap tiny box" market to DO' LN41. A $10 plan came in June 2014 and a $5 plan in February 2017 LN17 LN23. At that launch one DigitalOcean customer wrote that with that price 'forever ago, I would have never used DO' LN44. The servers that left were mostly small ones, the tier where new developers start LN11 LN14 LN42.
Rivals DigitalOcean raised a $3.2 million seed in 2013, then a $37.2 million Series A and a $50 million term loan in 2014, and used them to buy servers ahead of demand LNX6 LNX4. By Linode's $5 launch, Vultr and Amazon Lightsail sold $5 servers too LN23.
Step 3 of 5 · 2013–14
Guides for customers it already had
Linode had the better help pages first. In March 2013 a customer leaving for DigitalOcean still wrote that 'Linode has incredibly good help articles' and that his new host's library was 'not as fleshed out' LN11. Linode treated those guides as support for customers it already had. Word of mouth remained the main way customers arrived; by 2014 Aker was also spending on the Library, conferences and online advertising LN2 LN4. In January 2014 Linode began paying outside writers $100 for each accepted guide DOX-3.
The difference was the reader. A recommendation reaches the colleague of an existing customer. A tutorial that ranks in search reaches a developer who has never heard of the host, at the moment that developer needs a server LNX13. DigitalOcean wrote for that reader and paid for a larger writing team with outside capital LNX4. Linode's marketing came out of the cash that bought its hardware, and its guides served the administrators its referrals had already brought.
Rivals DigitalOcean's first hire, Etel Sverdlov, wrote its first several hundred articles, then built a team of writers and editors DOX-2; Wainer describes an internal team plus vetted community writers whom DigitalOcean paid LNX4.
Step 4 of 5 · 2015–22
Referrals on a record that broke
The $20 price in step 2 rested on a reputation for reliability, which had been damaged in 2012 and 2013 before it broke in 2015. When DigitalOcean arrived, a customer wrote, 'I'm happy to pay Linode their $20 a month for a stable service' LN10. In March 2012 an intruder had used Linode's own customer-service portal to steal bitcoins from eight accounts; in April 2013 attackers entered through a ColdFusion installation LN9 LN13. From Christmas Day 2015 about 30 significant attacks knocked services offline for roughly ten days LN19. Linode's retrospective said its colocation providers had less network capacity than it had been led to believe LN53.
A self-identified former employee wrote that running Linode's own network had been 'proposed to Chris Aker as early as 2010, maybe 2009' LN43. The self-funding that held the price had also deferred the network. Many customers stayed, but the record stopped giving a new buyer a reason to pay more, and some said they had moved to DigitalOcean LN21 LN37. Growth continued by referral, profitably and slowly: at the 2022 sale Akamai described Linode as growing about 15% a year, with more than 150,000 customers and about $100 million of expected 2022 revenue LN29 LN30.
Rivals DigitalOcean reported about 573,000 customers and $318.4 million of revenue for 2020, spending 11–14% of revenue on sales and marketing LNX5. Its 2021 annual report listed Linode with OVH and Vultr among 'smaller and/or niche' providers LNX14.
Step 5 of 5 · 2016–23
Never caught up in search; sold in 2022
The guides from step 3 decided where developers learned, and by 2022 Linode's own customers learned from DigitalOcean. At the sale a long-time customer wrote that Linode's guides had been 'the best in the business', but 'These days I look for DO guides on how to tune my Linode machines' LN45. The $100 guide program had copied the form of DigitalOcean's writer program, not its scale DOX-3 LNX5. In September 2026 linode.com drew an estimated 47,000 monthly visits from search, against about 995,000 for digitalocean.com DOX-5.
Managed services came late too: block storage and Kubernetes reached Linode one to two years after DigitalOcean LNX9 LNX10 LN22 LN24. Aker said customers now needed 'more network, security, and scale', and sold Linode to Akamai for about $900 million in cash in March 2022 LN33 LN28 LN31. Akamai wanted computing near its edge network LN36; it retired the Linode brand in 2023 LN37. In its first full quarter inside Akamai, Linode contributed $32.0 million of revenue, against $133.9 million for DigitalOcean LN39 LNX18. The referral system from step 1 kept its administrators and returned about $900 million to a founder who never raised outside money; it never reached the beginners who searched.
Rivals DigitalOcean reported about 6,000 tutorials in its 2021 filing LNX5, and developers say they pick its guides in search even when their servers run elsewhere DOX-2. It went public in March 2021, raising $775 million LNX11.
Key dates
- 2003-06Linode launches on two eBay machines
- 2008-09$19.95 server with root access, no control panel LN7
- 2012-03Bitcoin theft through the support portal
- 2013-01DigitalOcean sells a $5 SSD server
- 2013-04ColdFusion breach; all passwords reset
- 2014-01Outside writers paid $100 a guide DOX-3
- 2014-04$45 million SSD upgrade; $20 entry kept
- 2014-06$10 plan
- 2015-06Move from Xen to KVM
- 2015-12Ten-day denial-of-service attack
- 2016-07DigitalOcean launches block storage LNX9
- 2017-02$5 plan, four years after DigitalOcean's
- 2018-06New Philadelphia headquarters; 150 staff LN52
- 2019-11Managed Kubernetes opens for beta LN24
- 2021-03DigitalOcean goes public LNX11
- 2022-03$900M sale to Akamai All of Linode's equity, in cash LN36 LN54
- 2022-06$32.0M quarterly revenue Second quarter 2022, inside Akamai; DigitalOcean $133.9M LN39 LNX18
- 2023-02Linode brand retired LN37
- 2026-0947,127 est. monthly search visits linode.com; digitalocean.com 994,755 DOX-5
Sources
Oldest first.
- LN7 Slicehost and Linode: Affordable and Reliable VPS Hosting. Customer account
- LN8 Introducing StackScripts. Company announcement
- LN57 Introducing NodeBalancer, load-balancer-as-a-service (discussion, 134 points). Customer account
- LN9 Linode hackers escape with $70K in daring bitcoin heist. Reporting
- LN10 New Linode competitor - Digitalocean (thread 8303). Customer account
- LN40 TechStars Graduate DigitalOcean Switches To SSD For Its $5 Per Month VPS (discussion, 61 points, 66 comments). Customer account
- LNX1 TechStars Graduate DigitalOcean Switches To SSD For Its $5 Per Month VPS To Take On Linode And Rackspace. Reporting
- LN11 Migrating from Linode to Digital Ocean. Customer account
- LN46 Linode NextGen: RAM Upgrade (discussion). Customer account
- LN13 Web host Linode, hackers clash over credit-card raid claim. Reporting
- LN12 Linode NextGen vs. DigitalOcean. Customer account
- LNX2 DigitalOcean Wants To Challenge Amazon, Linode And Co. With Better Prices, Marketing And Focus On Simplicity. Founder interview
- LNX3 Fast-Growing Cloud Hosting Service Digital Ocean Raises $3.2M Seed Round Led By IA Ventures. Reporting
- DOX-3 Write for Linode. Get Paid!. Company blog post
- LNX8 DigitalOcean Singapore expansion. Reporting
- DO2 DigitalOcean's journey from TechStars reject to cloud-hosting darling. Founder interview
- LN15 Linode Invests $45M To Switch To SSDs, Double RAM. Reporting
- LN41 The New Linode Cloud: SSDs, Double RAM and much more (discussion, 584 points, 275 comments). Customer account
- LN16 Linode SSD vs. DigitalOcean. Customer account
- LN14 Migrating from Linode to Digital Ocean. Customer account
- LN17 Linode price cut (Linode 1G $10 plan). Reporting
- LN42 11th Linode Birthday, $10 Linode plan (discussion, 241 points, 133 comments). Customer account
- LN1 Bootstrapping a Web Hosting Company to $60 Million: Christopher Aker, CEO of Linode (Part 2). Founder interview
- LN2 Bootstrapping a Web Hosting Company to $60 Million: Christopher Aker, CEO of Linode (Part 3). Founder interview
- LN3 Bootstrapping a Web Hosting Company to $60 Million: Christopher Aker, CEO of Linode (Part 4). Founder interview
- LN4 Bootstrapping a Web Hosting Company to $60 Million: Christopher Aker, CEO of Linode (Part 5). Founder interview
- LN5 Bootstrapping a Web Hosting Company to $60 Million: Christopher Aker, CEO of Linode (Part 6). Founder interview
- LN6 Bootstrapping a Web Hosting Company to $60 Million: Christopher Aker, CEO of Linode (Part 7). Founder interview
- LNX16 DigitalOcean: 4th largest hosting company in under 2 years. Outside analysis
- LNX17 DigitalOcean Displays 'Meteoric' Rise As Web Host. Reporting
- LNX7 Netcraft: DigitalOcean Second Largest Hosting Company Behind AWS. Outside analysis
- LN18 Linode celebrates 12th birthday by adopting KVM and boosting cloud server performance by 300%. Company announcement
- LN21 Linode update on DDos Attacks over Christmas (discussion of Linode's retrospective). Customer account
- LN19 Linode: Back at last after ten days of hell. Reporting
- LN20 Surviving the DDoS Attack Against Linode. Customer account
- LN43 The Twelve Days of Crisis - A Retrospective on Linode's Holiday DDoS Attacks (discussion, 234 points, 145 comments). Customer account
- LN53 The Twelve Days of Crisis: A Retrospective on Linode's Holiday DDoS Attacks. Company announcement
- LNX9 DigitalOcean launches block storage and lets you store terabytes of data. Reporting
- LN22 Linode Block Storage (Newark beta) (thread 11225). Company announcement
- LN23 $5 Showdown: Linode vs. DigitalOcean vs. Amazon Lightsail vs. Vultr. Customer account
- LN44 High-Memory Instances and $5 Linodes (discussion, 293 points, 170 comments). Customer account
- LNX15 Load Balancers: Simplifying High Availability. Company announcement
- LN52 Is Linode's 'Real World' house now the coolest tech office in the city?. Founder interview
- LNX10 DigitalOcean Releases Kubernetes as a Service. Company announcement
- LN24 Linode Kubernetes Engine is Open for Beta Testing. Company announcement
- LN25 Linode Launches Managed Kubernetes Service. Reporting
- DOX-2 Thank you for sharing. Our goal with DigitalOcean was always to help more people... (comment on 'DigitalOcean is laying off staff'). Founder forum post
- LNX12 DigitalOcean raises $50M more from Access Industries and a16z. Reporting
- LNX5 DigitalOcean Holdings, Inc. Form S-1. SEC filing
- LNX4 From disrupting the cloud to IPO with Mitch Wainer (Founders Talk #76). Founder interview
- LNX11 Independent cloud provider DigitalOcean drops in Wall Street debut. Reporting
- LN27 Birth of the Cloud: A Q&A with Vint Cerf and Linode's Christopher Aker. Founder interview
- LN39 Akamai 10-Q XBRL note: business combination (June 30, 2022). SEC filing
- LN28 Akamai To Acquire Linode to Provide Businesses with a Developer-friendly and Massively-distributed Platform. Company announcement
- LN29 Q4 and FY 2021 Earnings Call & Acquisition of Linode (slides). Investor presentation
- LN30 Akamai Technologies Q4 2021 Earnings Call Transcript. Transcript
- LN45 Akamai to Acquire Linode (discussion, 986 points, 326 comments). Customer account
- LN56 Breaking: Linode will be acquired by Akamai Technologies in a $900M deal. Reporting
- LN58 Linode Acquired by Akamai. Predictions: Layoffs, and Vultr is the Next Billion Dollar Unicorn to be Acquired. Outside analysis
- LN32 Akamai buys Philly's Linode for $900 million to supercharge its cloud computing services. Reporting
- LN35 Akamai Buys Linode, Akamai's Strategy, Cloudflare and Disruption. Outside analysis
- LN55 Akamai makes cloud computing play with $900M Linode acquisition. Outside analysis
- LN33 Akamai and Linode: Giving Developers One Place to Build, Run, and Secure Apps. Company announcement
- LN51 Building the Future: Akamai's Outlook on the Linode Acquisition. Company announcement
- LN54 Akamai aims Linode acquisition at improving edge services. Outside analysis
- LN34 Akamai buying Linode (opinion). Outside analysis
- LNX14 DigitalOcean Holdings, Inc. Form 10-K for fiscal 2021 (Competition). SEC filing
- LN31 Akamai Technologies Completes Acquisition of Linode. Company announcement
- LN36 Why Akamai acquired Linode. Reporting
- LN49 Akamai Technologies (AKAM) Q1 2022 Earnings Call Transcript. Earnings call transcript
- LNX18 DigitalOcean Announces Second Quarter 2022 Financial Results. SEC filing
- LN50 Akamai Technologies (AKAM) Q2 2022 Earnings Call Transcript. Earnings call transcript
- LN38 Akamai launches Linode-based 'Connected Cloud' platform. Reporting
- LN48 Akamai Reports Fourth Quarter 2022 and Full-Year 2022 Financial Results (Exhibit 99.1). SEC filing
- LN37 End of an Era: Linode Brand Retired. Outside analysis
- LN47 Additional Revenue Metrics (unaudited), March 31, 2024. Company filing
- LNX13 Developer content marketing strategy (learnings from DigitalOcean). Outside analysis
- DOX-5 Organic search estimates for digitalocean.com and linode.com. Search analytics data
- LN26 Linode. Reference
- LNX6 DigitalOcean. Reference