Herkou’s exit wasn’t that great though. Granted, $200m isn’t an insignificant amount of money, but Netlify and Vercel are valued at billions. They would have to sell for 10x what Heroku sold for to meet expectations.

I just don’t see the valuations lining up, but I’ll probably be wrong.

I also don’t know who they get acquired by. I don’t see AWS making acquisitions like this. From what I’ve seen, it seems like they try to buy companies at lower valuations (than multiple billions).

Heroku's exit was pretty huge for its time. In fact it was the largest YC exit to-date.

For context Heroku was created in 2008 just after the housing crash. By the time they exited Facebook was still 2.5 years away from going public and a solid seed round still looked like a few hundred grand if you were a hot company (on top of the ~17k you'd get from YC).

These companies can be disruptive innovators by focusing on Niches that the big companies won’t care about because they’re tiny. For eg - managed react applications. IIRC Firebase was acquired by google. But the plan is to go after all of AWS slowly from a different direction. Cloud flare is doing the same thing and their stock is going gangbusters.

Cloud services are one of the most profitable businesses to ever exist. There’s so much lock in and network effects. Especially with managed solutions like these.

But: The Innovator's Solution to the Innovator's Dilemma is well-understood at this point. Incumbents know well to not ignore upstarts. Knowing (Intel v ARM [0]) and reacting are two different things, of course.

[0] ref "red teaming at Intel", https://news.ycombinator.com/item?id=21095977

It’s not easy because of all the bureaucracies and inefficiencies at large companies. Most employees at AWS are probably barely inspired compared to the people working at Vercel who can also ship much faster. Nothing new here just what PG has been saying for years.

> It’s not easy because of all the bureaucracies and inefficiencies at large companies.

The Innovator's Solution addresses these and other issues.

http://web.mit.edu/6.933/www/Fall2000/teradyne/clay.html: Even after correctly identifying potentially disruptive technologies, firms still must circumvent its hierarchy and bureaucracy that can stifle the free pursuit of creative ideas. Christensen suggests that firms need to provide experimental groups within the company a freer rein. "With a few exceptions, the only instances in which mainstream firms have successfully established a timely position in a disruptive technology were those in which the firms' managers set up an autonomous organization charged with building a new and independent business around the disruptive technology." This autonomous organization will then be able to choose the customers it answers to, choose how much profit it needs to make, and how to run its business.

That's my take. What matters is how much control you cede when you take $200+M.

If you can hold onto control of your company and take a few million off the table, why not?

typically you shouldn’t lose more than 20% each round

> I also don’t know who they get acquired by. I don’t see AWS making acquisitions like this. From what I’ve seen, it seems like they try to buy companies at lower valuations (than multiple billions).

No reason why this won't change. A market leader needs to consolidate their position year-after-year. GitHub was a great acquisition AWS missed. They shouldn't want to miss the next GitHub.

Yeah, or Amazon just copies their business model and launches it as another service on AWS.

Copying just the business model would not break through network effects, the kind of which GitHub has. Also see: https://medium.com/s/story/jeff-bezos-jack-ma-and-the-quest-...

AWS most likely won't acquire - they'd rather build their own solution that does 80% of the job okay.

Can confirm, AWS Amplify got 80% of my job done trying to deploy and manage a FE stack.

Being "acquirable" is one of the things you often forego at valuations like this.

Why ? Valuations are generally high these days and Big tech has the cash. If there’s a crash all valuations go down and they’re even more acquirable.

The acquisition doesn’t have to happen at these valuations for the investors to make money. See - Liquidation preferences

they don't run backend/databases though?

This is likely fine for the typical "Digital Transformation" projects at huge enterprises that have a ton of cash to spend on things like this.

Everything is a Mainframe or SAP installation under the hood somewhere, but layers and layers of API mean that product teams can mostly ignore the complexity and ship a mediocre app that is only really a frontend.

They do have Edge Functions, which is similar to Lambda. Same with Netlify and Cloudflare. For DBs you have to seek somewhere else.

It's not really something that will run your Rails backend, but it has the potential of doing a lot for creative small teams.

To clarify, we have Serverless Functions[1] which are similar to Lambda, as well as Edge Functions[2] which are similar to Cloudflare Workers.

[1] https://vercel.com/docs/concepts/functions/serverless-functi...

[2] https://vercel.com/edge

Where are your edge locations - doesn’t seem to be any information on your site…

why would any sane person vendor-lock-in all backend code to a single provider?

You don't. You write your backend code and vercel (and others) turn it into serverless functions that can be deployed on AWS or Cloudflare. Or whoever else decides to offer serverless functions. Or you extract your backend and host it yourself. You're not vendor locking yourself.

Haven't yet used their /api serveless functions but I guess it's standard nodejs functions, so not that much vendor lockin

You can deploy next.js application on any server which supports Node.js.

AFAIK they're working on it