Linode Suffering In DDoS Aftermath

Linode Suffering In DDoS Aftermath

Confidence: Medium
Impact: Medium
Disposition of finding: Negative

Linode, LLC is a hosting service provider based out of Galloway, New Jersey. It’s focused on cloud computing, and competes with the likes of RackSpace, and Amazon’s EC2. Primarily focused on performance and cost, they attract a certain class of customer who is focused on availability and capital costs associated with infrastructure.

In late 2015, Linode suffered a sustained and long term distributed denial of service attack against their network. These attacks are frequent, but it appears that they were unable to recover in any meaningful amount of time. The infrastructure they have build was unable to keep up with the attack and subsequently, I have seen a decline in just over 21% of their customer base and associated infrastructure since/through the month of January. Customers appear to be leaving due to the sustained attack.

This is to be expected given that the Linode customers often are hyper focused on availability as companies like Google place higher importance on companies that load quickly. This is due to the belief that bounce rate is higher on sites that load slowly. As such, it is unlikely that Linode can go public in the near-term and on top of the damage due to the attack, the company will no doubt need to outlay more capital expenditure as they attempt to mitigate the attack (E.g. buying access to Akamai’s Prolexic, or Arbor, etc.).

Obligatory legal disclaimer.

Sustainable Sources Sees Growth In Greenbuilder Space

Sustainable Sources Sees Growth In Greenbuilder Space

Confidence: High
Impact: High
Disposition of finding: Positive

Sustainable Sources was founded in 1994 by Bill Christensen and is an Austin based company. Hailing from the same place that I call home is just a coincidence, I assure you. I wanted to take a look at one of their properties Greenbuilder to see how they were doing. The eco space is definitely picking up steam, especially now that it is so front and center in the political space.

As you would expect, there has been a nice growth for Greenbuilder over the last year. Since Q2FY2014 I’ve seen a 25% growth in customers. Not bad. It’s not clear how long that is sustainable, but it wouldn’t be surprising if we saw more builders moving into the green space as it could be seen as a competitive advantage, or even a must-have in the future.

Even if you wanted to just focus on additional advertizing space, Sustainable Sources builder registry might be a good place for builders to spend a little time on. That is even more true in left-leaning eco-conscious towns like Austin and elsewhere.

Obligatory legal disclaimer.

Firehost Seeing A Strange Decline

Firehost Seeing A Strange Decline

Confidence: Medium
Impact: High
Disposition of finding: Negative

Firehost is one of the leading cloud based web application firewall and acceleration services on the market. It’s seen an amazing growth over the years due in large part to it’s ease of configuration and low price point compared to companies like Akamai.

Strangely though, despite it’s reputation for rapid growth Firehost has not had the best year. In fact I’m seeing a shrinkage of close to 40%, since Q2 2014. It’s entirely possible I’m missing quite a bit of their customer base, but even still, I wouldn’t expect to see shrinkage.

This may have something to do with the fact that customers are getting more resilient and no longer require web application firewall protection or no longer see the need for it in lieu of free alternatives, like mod_security. Or it’s possible that Firehost has gotten a hold of a fraud problem and reduced the number of fraudulent websites that it was hosting. Either way, the shrinkage is large enough it’s noteworthy, and at this juncture I’d be wary about taking a company like this public.

Obligatory legal disclaimer.

Weebly Seeing a Slow Growth Year over Year

Weebly Seeing a Slow Growth Year over Year

Confidence: Medium
Impact: High
Disposition of finding: Neutral/Unknown

Weebly is a web hosting company founded in Pennsylvania in 2006. It’s one of the first WYSIWYG (why you see is what you get) drag and drop type interface for web applications including blogs, making it one of the lowest barriers to entry of any web application hosting company and therefore quite promising.

While the company seems to be doing quite well and has some rather large backers, with a claimed 20 million sites hosted, it’s not a company that has explosive growth thus far. In the last year I can see a growth closer to 6% year over year. That’s not bad, and there is some room for error in those estimates, but I would like to see something closer to 30% growth in new websites hosted.

Now with a business like this, it can be quite tricky to tackle absolute dollar numbers that a company like Weebly could make. By up-selling services on top of the existing platform it could be quite possible to make a significantly higher revenue number than by hosting alone. It’s not clear why more people aren’t using them – maybe it’s the ever-elusive “cool” factor, or better affiliates for competitive hosting, etc…. Who knows? Either way, I still would prefer to see a larger growth pattern going forward to consider this a promising exit.

Obligatory legal disclaimer.

Meetup Seeing a Flatline of Near Zero Growth

Meetup Seeing a Flatline of Near Zero Growth

Confidence: High
Impact: Medium
Disposition of finding: Neutral/Unknown

Meetup Inc. is a social networking site based in the United States that has seen quite a bit of coverage since it’s inception after the 9/11 attacks. The founder believed it would be a good place to allow people to find like-minded friends to discuss the attack and subsequent aftermath.

Over the last year, Meetup has not seen a terribly impressive growth. In fact, Meetup’s total growth over FY2014 and the beginning of FY2015 appears to be nearly flat. While it hasn’t gone down and there are probably better ways to monetize the existing user base, I’m not seeing enough growth to consider this a good IPO/acquisition candidate.

It’s entirely possible that companies like Meetup Inc. will find ways to draw more users in in times of need, or monetize the existing user base more effectively. For now though, the company appears to be on a very slow growth trajectory with no change in sight.

Obligatory legal disclaimer.

Eventbrite Seeing a Slow and Steady Growth Pattern

Eventbrite Seeing a Slow and Steady Growth Pattern

Confidence: High
Impact: Low
Disposition of finding: Neutral/Unknown

Eventbrite is a San Francisco based mid-sized business focused on the event planning space. They’ve been one of the darlings of the tech community, in part because they were one of the earliest to capitalize on the need to schedule events beyond the walls of a corporate Intranet or simple parties.

I am, however, not seeing the kind of growth that one would expect a company that was poised for success to have. Solid, growth numbers, yes, but Eventbrite seems to be seeing single digit percentile growth from mid FY2014 through Q1 of FY2015. That may have something to do with the fact that many people moved from Eventbrite to similar event companies. It’s unclear why, but I don’t see any hockey-stick curves worthy of note.

In hindsight it makes sense why the founders don’t want to go public. With a slow-steady growth that looks more linear than exponential, it makes for a wonderful boutique/lifestyle business, but hardly the blow-them-out-of-the-water IPO event that their investment teams were probably most interested in seeing when they invested a purported $140 million.

Obligatory legal disclaimer.