I was one of the original 200 to back TextDrive in with the VC200 accounts. The risk, of course, was that the venture wouldn't be successful and we'd be laying out $200 for less than $200 worth of hosting. If they were successful, $200 would buy a reasonable shared hosting account for life.
Far from being naive and "falling" for the pricing model, my assessment was that
1) 200 shared hosting accounts (one server?) is a completely plausible lifetime offering for a successful hosting company,
2) $200 is a low risk punt, and
3) these are good guys and I think they can realistically make a go of it
TextDrive was a success, now continues to be a success as Joyent, and 200 shared hosting accounts (the state of play when I signed up) should be trivial for them to provide - even if they outsource that obligation to another provider.
I know I wasn't wrong about them being good guys (they are), but that's why I'm bewildered by today's announcement.
It may not be economically viable for them to provide these services now, but it wasn't economically viable for them to start a hosting company until we backed it. That was the deal. Joyent has an obligation to keep these services online, and if that means they need to take a bit of a hit to do that, then that's what they need to do.
Otherwise, I'm unclear how anyone would trust them again.
In 2004, shared hosting with PHP/MySQL was the standard hosting package. A good quality Cpanel account at that time was about $15-$20 per month. So you've gotten an exceptionally good deal.
Around that time Dreamhost became the place to be. quickly followed by a series of lengthy outages that utterly destroyed it's reputation. Other Cpanel-powered hosts popped up, went under, merged, acquired, disappeared, reappeared, went down, never came back out.
Fast-forward to today, shared hosting is just a race-to-the-bottom barrel scraping. Margins are practically non-existent. Every kid with a bedroom computer has their own Reseller account and pretend they have their own hosting company. Pricing on that seems to be about $4 a year, but the quality is absolutely dire, and that's when the server is actually online.
Shared hosting is largely a dead industry today, it bottom-feeds because their top-end audience grew into dedicated servers, and their average and above average end customers are comfortable running their own cheap VPS. Safe in the knowledge that it's very much harder for another customer to take down everyone's website.
Shared hosting is no longer a sustainable business model. You got a great ride for your money, you got a very good deal. Now it's time to move on.
Grab yourself a VPS, and take a step up to the next curve on the online hosting technology stack. It's well past time. Good quality shared hosting, with great support is getting more and more expensive, because the market for it is dwindling down to people who can't or won't take the step up towards VPS/Dedicated servers - that means the support cost per customer rises. And that isn't a sustainable process.
If the average monthly price you paid for good quality hosting on TextDrive/Joyent is under $10 because of these packages, well done, you got a tremendously good deal. How would you have rated the service you received before you received the email/message? Think about that - consider if the support/service you received related to the per month price you've paid.
Now go out and find a web hosting offer that will give you the same quality of service, for the same monthly price - and switch to that. I get a feeling, apart from special offers that will surface because of this, you'll be hard-pressed to find an equivalent.
But seriously people, "lifetime" and "unlimited" are the two emptiest words in the language of web resource offers. You know that. I'd feel sad for you if you only got 1 years hosting for your $200 for such features.
But if you got 8 years for your initial outlay, and you still feel you deserve more... that's a text-book example of bottom-feeding. Quite the sort of customer a web hosting company wouldn't miss.
Dreamhost isn't and wasn't ever cPanel. It got hot back in '01 / '02. The outages in 2004 weren't lengthy, were mostly DoS and got blown way out of proportion by people who thought $10/month was a kingly sum that entitled them to dedicated-server quality. The quality of Dreamhost's shared hosting hasn't really diminished over the years and it's still perfectly adequate for low traffic PHP or even Rails sites.
TextDrive by contrast was founded on the principle of combatting the race to the bottom by charging a fair price and offering unparalleled power and flexibility. This vision was sold to us by Dean Allen who had an enormously positive reputation as one of the very best early bloggers. Funding TextDrive with these lifetime accounts was not just us chumps buying into some bottom-feeders marketing scam. There was real intention and integrity behind this.
The problem was that they couldn't actually deliver this quality service despite charging a lot more for it. I mean there was flexibility (webmin instead of cpanel, etc), and TextDrive was the first shared host supporting Ruby on Rails (in fact it was the "official" rails host for a while), and they were always working on awesome new tech (huge Solaris boxes, ZFS, bla bla bla). But in the end, Jason Hoffman did not know how to build a stable hosting service.
Eventually after the Joyent acquisition/merger I think they figured out how to run a business, but it was our money that allowed them the time to learn how to do that. The actual experience of hosting with TextDrive was always shit, and it never cease to amaze me how many hours Jason Hoffman spent posting in the forums when there was obviously a lot of urgent work that needed to be done.
At some point in the early history, Dean Allen went dark and largely disappeared from public view. You'll notice that now Jason Hoffman is the Founder and there's no mention of Dean Allen, but if I recall, it was definitely a partnership, with Dean bringing the name recognition and web experience, and Jason providing the system architecture (business/technical co-founders if you will). I don't have any inside information about what happened there, but I do know that Jason Hoffman and Joyent burnt their bridge with me and I'll never trust anything they do.
Great summary. Yeah, TextDrive was presented as an alternative to Dreamhost that, although seemingly much more pricey, was not oversold (you can use all the space/bandwidth they give you), had better support, ran more smoothly, etc etc. By and for people who love the web, or something like that.
But there were tons of reliability problems from the start. It didn't help that Jason Hoffman handled criticism very poorly. I vaguely remember one incident where someone complained on the TextDrive forum and, taking it as a personal insult, he deleted the person's (hosting, not forum) account on the spot. There seemed to be always an excuse or a promise that some exciting better thing was around the corner to solve all the problems.
ZFS was one such exciting thing as you mention. There was also supposed to be a new administration interface called TextPanel, and it was constantly being talked up on the forums, how great it was going to be. Complete vaporware. In 2012, the crusty super-slow Webmin interface that was claimed to be temporary is still all that's available.
The shared hosting eventually became reasonably stable and reliable, but I suspect that's only because it wasn't being touched at all, and anyone doing anything nontrivial there had probably moved it to another host. Last fall I tried to set up a WordPress blog. Couldn't, because the PHP version was too old, and when I checked, it turned out (in 2011) the version of PHP being used dated to 2006.
My server just had a multi-day outage starting August 13th due to hardware failure, and is not fully restored even now (a bunch of emails are missing). I suspect this is what precipitated Hoffman's announcement. Apparently lifetime hosting was supposed to mean zero maintenance on Joyent's part.
Honestly, they should've done what Google Fiber recently did for its free internet deal: just say it's "guaranteed for at least 7 years". Many would still have signed up and they'd be within their rights to shut down most of those accounts by now. But what happened instead was a lot of us paid for "lifetime" hosting that lasted only 7 years or less, which was actively maintained for only 1 or 2 years, and during that time never lived up to the quality advertised.
But who knows, maybe Joyent and Hoffman have learned some lessons since 2005. I do expect they'll be good enough to give me a full refund, obviating the need to join any lawsuits.
"TextDrive by contrast was founded on the principle of combatting the race to the bottom by charging a fair price and offering unparalleled power and flexibility. This vision was sold to us by Dean Allen who had an enormously positive reputation as one of the very best early bloggers. Funding TextDrive with these lifetime accounts was not just us chumps buying into some bottom-feeders marketing scam. There was real intention and integrity behind this."
* principle over actual experience
* a blogger over someone with actual knowledge and technical expertise
* an undefined "fair price"
* an expectation that comfortably exceeds the current delivery levels
* intention and integrity
And what you ended up with is a typical shared hosting company experience, one that lasted a whole lot longer than a large number of other web hosts.
I can't help but feel that a large number of people would be happier if Joyent went down in a big ball of flames suddenly, rather than an orderly and planned 60-plus day notice of a shutdown of their service, in favour of focusing more on a better and more sustainable business model.
Businesses grow, industries grow and change. There's not much of a sustainable business in shared-hosting, the margins are too razor-thin got that, the middle and top end has been chomped off by affordable VPS offerings. Lifers seem appalled they are effectively paying the same price as everyone else.
The rest of your post seems to be on a personal crusade against the technical "co-founder". Why not the original blogger co-founder who promised a service he could not work with someone to deliver?
It was anything but typical. Seriously, you shouldn't comment on it as if all your stereotypes perfectly explain everything. They don't. You weren't there.
Regarding Dean Allen, I have no beef with him, because A) he wasn't in the forum daily talking about all the awesome stuff they were doing that never actually panned out for years on end and B) I suspect he disagreed with the way the company was being run (the instability, the poor customer service) and either was forced out or left of his own volition. But either way it would be bad form for him to air his dirty laundry, so I give him the benefit of the doubt.
Also FWIW, I'm not on a crusade at all. I haven't thought about TextDrive or Joyent for years. I've written them off. But I do see it as a public service to make my opinion of Jason Hoffman's integrity known.
Everything you say makes sense, and yet... the reason it was called the "VC" plan is that the customers could expect to get many times more service than they paid for if Joyent was successful. And Joyent has been successful, although by pivoting into a different market. (I realize it wasn't an actual investment; no need to pedantically point that out.) (Edit: I see _delirium already made this argument.)
I don't expect them to keep providing a shared hosting service in general. They do, however, have a unique obligation to provide something like it to lifetime customers.
Yes, it was a good deal, for which I got far most hosting than I paid - that was the entire point of the promotion. They needed money up front, I provided it in return for a lifetime account. It was absolutely supposed to be a good deal worth far more than was being paid. I have received more than $200 worth of hosting in 8 years.
I don't disagree that shared hosting is crappy. In fact, Joyent hosting was always crappy, truth be told. After the first couple of years, I moved my sites elsewhere. It was slow and unreliable. I didn't care because it was a good deal, but I needed better hosting for my sites.
How would I rate the service I received before the message? Poor. I don't host anything with Joyent - the quality isn't there.
I don't care about the hosting, in practical terms. I care about the weaseling and dishonesty towards the very people who backed them from the start.
You're operating on incomplete information. The subsequent lifetime plans offered between 2004-2007 cost considerably more than $200, and most of the original VC200 paid more later on, following the Joyent-Textdrive merger/acquisition, to upgrade to larger lifetime packages and additional services. Scroll down and you'll find users whose per-month equivalent is comparable to a bottom-end Linode VPS.
Judging from Twitter and forum discussions today, most of the remaining lifetime customers use other hosts for many projects, but retain their Joyent packages for sites with relatively minimal requirements: non-profits, simple personal sites, etc. What they paid for wasn't server specs or even the quality of service: it was the explicit promise, in return for paying a chunk of change up-front, of not having to think about hosting options or plan a migration while Joyent remained in business. You can't simply apply a per-month calculation for that.
Not really -- they're objecting to having invested in the early stages of a company in good faith that the company would keep its promises. If they wanted dirt-cheap shared hosting, there were plenty of other ways to get it, even at the time (1and1's three-year free deal comes to mind). Most of the people I know who still use their lifetime accounts use them for hosting small static sites, e-mail, et cetera, with the specific goal of "not having to think about hosting".
That's what they were buying. And they're getting screwed out of it.
Exactly. The founding story goes something like this: Dean Allen had built a CMS (TextPattern) and he, along with other TextPattern users, wanted a hosting provider that would support it in a no-hassle way. He couldn't find one that fit his needs, so decided to create his own; after discussing and rejecting formal VC methods, he turned instead to his userbase with "an opportunity to acquire a piece of TextDrive at its inception, and to benefit from its future success in perpetuity."
Jason Hoffman, Joyent's CTO, whose name appeared at the bottom of today's "sunset" emails, was there when all that happened.
So as an investor, you'd prefer that the company you invested in continued offering a loss-making service until they went into bankruptcy? Rather than allowing them to just shut it down and concentrate on more sustainable business offerings?
That strikes me as the kind of investor a company wouldn't want.
Great, you bootstrapped a company, and they used those funds to grow. And in return all you got was a shared hosting account that's lasted about 8 years. You should have gone with the options - that's where the real money for investors comes from.
And VCs know the vast majority of startups fail. Some spectacularly fail or succeed, some run out of funds, some pivot, some change direction, and some just grow into sustainable businesses. This is one of the latter.
Blame both founders for their lack of vision - in not seeing shared-hosting as a dead-end business model, which was clearly evident round abou 2006. But don't blame the business for making the right decision to close down a non-performing service.
I dispute your premise that the lifetime plans somehow threaten Joyent's existence as a going concern; if the infrastructure of the lifetime services is difficult to support within Joyent's current business, I'd prefer that they honour the spirit of their promise instead of pretending that they promised something different and hoping that lifetime customers go away.
And again, I'd suggest that you get working on that time machine, because your powers of 20/20 hindsight are truly remarkable.
You don't get it. TextDrive was founded and sold on a vision.
Imagine what will happen if in a few years Dalton decides to stick ads all over App.net and send threatening letters to developers in the name of "curating the user experience". That's where the righteous indignation is coming from.
Correct, I don't get it. You bought into a vision that clearly makes no sense today, but didn't make much sense back in 2004. The reward for that investment was a shared-hosting account, which has kept running for 8 years.
There seems to be a confusion about whether you lifers have paid up-front for a long term shared-hosting account or whether you are investors into the business. If you are investors, you should probably have taken options, rather than a free shared-hosting account.
"Imagine what will happen if in a few years Dalton decides to stick ads all over App.net and send threatening letters to developers in the name of "curating the user experience". That's where the righteous indignation is coming from."
Then I don't renew my $100 a year developer account and walk away. I'm not investing in the company, I'm paying for a service that's on offer. When I'm not happy with the service I decide to no longer spend any more money there.
The law isn't unreasonable. If you have a cash-flow sustainable business but you've taken on too many obligations you can restructure in bankruptcy. Of course that'll wipe out your equity holders but they are supposed to be behind creditors.
As for laughing at lawsuits, I think you will find that most companies don't. I hate to tell you but being a hip new economy company doesn't impress judges.
As I mention downthread, the usual measure of damages in contract is expectancy - i.e. what value would party B recieved if party A had fufilled its part of the bargain.
In this case the bargain was akin to a undated bond (the UK issued some of these), in exchange for a payment up front and infinite stream of payments. The net present value of such is straightforward to calculate; one interesting property is that their nominal value is not dependent on the time since issuance, thought their real value drops with inflation.
The law is not unreasonable, it allows for efficient breach. No court is going to order specific performance (i.e. that Joyent actually carry out its promise) but it will have to make good via monetary damages.
US courts are sophisticated enough to understand such bargains (at least since Posner was appointed to the bench in 1981).