"The Cloud" is a term that's thrown around a lot these days, but what does it mean? Further, if you're already a hosting provider, what can you do to level up? In this episode, Lukas Hertig talks about the hyperscale cloud and what a fully globally distributed network looks like.
First, as a baseline, what do we mean when we’re talking about cloud services?
Why should an organization consider cloud services?
What is a hyperscale cloud provider?
How can hosting companies compete in a hyperscale cloud environment?
Why are hyperscale cloud providers not a competitor to me as a hosting provider?
How can I differentiate by using hyperscale cloud? How can I benefit from technologies that hyperscale cloud providers provide me?
Joe: (0:02) Hello and welcome to the Next Level Ops, a podcast that explores tools tips and techniques for hosting and managing websites presented by Plesk. Today we’re talking once again to Lukas Hertig and this time it's about the hyperscale cloud. It’s something that before this episode, I knew very little about. So, I am thankful for Lukas’ insight here. I think it’s a really interesting conversation and one I'm excited to share with you today. Now before we get started a quick reminder, subscribe to this podcast to get the latest episodes as soon as they come out. You can do that wherever you are listening to this podcast right now. So, be sure to subscribe and let us know what you think of the show. All right. Now let's get on with it.
Joe: (0:55) Hey everybody and welcome back to Next Level Ops. I am back again with Lukas Hertig. He is the SVP of business development over at Plesk. Today we are talking about using cloud services and hyperscale cloud providers as the backbone for your hosting or your website. Lukas? How are you today?
Lukas: (1:20) Very well. Thank you for the invitation. I appreciate being here as usual.
Joe: (1:24) Ah yes. Thank you for joining me. I enjoyed our first conversation where we talked about the state of hosting and kind of where hosting was 20 years ago and where it is and where it's possibly going. But as for today, there is, I believe a very popular term at least with the term cloud. A lot of people are probably wondering with all of these companies like Amazon and Google entering the hosting space, how can we compete or what does that mean for me as the website owner? What does that mean for me as the hosting provider? So, we’re going to dig into some of those questions today right?
Lukas: (2:07) Yeah. Absolutely. We can do that.
Joe: (2:10) So let's start with some of the basics. As a baseline, what do we mean when we’re talking about cloud services?
Lukas: (2:19) Yes, a very good question. This is like the best question to start with because unfortunately there is lots of cloud washing out there in the market. You know? I always say we are coming from 20 years of working with hosting providers out there and they were kind of inventing the cloud. You know? We were doing subscription-based infrastructure with Plesk subscription-based software before the cloud even had the name cloud, you know? The earliest place it came up is when actually Amazon entered the game and said let’s use our internal IT department and offer that to everybody else because we know how to build scalable services. So, I would say cloud computing in general is defined as like computing that is globally available with global scale. I think sometimes it’s also connected to auto scale; we can maybe talk about that later. What auto scaling really means because it doesn’t mean just my website goes a little faster. The huge difference is obviously that all these providers, they’re are not selling cheaper prices for uptime or support because everyone can do that now in the market. They’re selling scale, geographic reach and I think to a certain extent product breadth where a lot of other hosting companies are struggling to offer; in a fully hourly billing model what a lot of hosting companies also struggle to offer.
Joe: (3:56) Gotcha. I think that makes a lot of sense, right? I think a lot of people see the term cloud and they’re not sure. I would always just tell my students kind of from my perspective that it’s somebody else’s computer. This is something that I think if we’re looking at organizations before we dive into how hosting companies in general can benefit, organizations can host their own infrastructure. I know when I worked at the University of Scranton we did. We had our own on-site hosting and routing stuff. But an organization can also outsource that and maybe what are some of the benefits of considering cloud services instead of doing it themselves?
Lukas: (4:43) Yeah. This can obviously be a very long topic, but I will try to keep it short. I think there are a lot of pros and cons to using cloud services or to use your in-house IT or your in-house data center. In many cases when you look at Europe for example the cons were always, I don't want to use cloud because it is not only somebody else’s data center or somebody else’s computer but then someone else has access to all my data. They have a lot of privacy and data solvency concerns. However, today, many cloud providers are fully compliant with GDPR and with local privacy regulations and those kinds of things. What makes it much easier to actually use cloud services I think if you should use cloud services or not depends highly on your use case or on your business as well, you know? When you are a large enterprise, it allows you to access all the data centers and all the 50+ availability zones equate about basically. Plus, you can use technologies that have never been here before. When you look at companies like Netflix, Shopify or Uber or all that great stuff that all of us are personally using today, they are all backed by Amazon web services, or mostly backed by Amazon web services. Because Amazon enabled technology that was just never here before. I think what you also need to consider when using cloud services when you are a niche startup in 2020, you know? Most startups, they start small, they start with one compute box, but as they grow, they will need access to international markets with local data centers and they need access to technologies or that scale. This is only what hyperscale cloud providers, like an Amazon, Google, Azure, and so on provide you. It allows you to think big, start small and then scale very fast as a startup for example. Similarly, when you are actually hosting a website to come back to our core business we are always talking about together, when you are running eCommerce for example, or you run even just a website in the SMB space you need to think where is it closest to your end cost for accessing these websites or your app. Then you will have choice of if you are based in the Netherlands, but your first customer is in Germany, you can easily just spin up a VM in Germany. Or if you have a US customer, you just spin up a VM in the US without changing the provider or without learning something new. Even if as an agency or a small hosting provider, that gives you a lot of global scale to actually serve your global customers as more global our economy becomes.
Joe: (7:53) Gotcha. That's a ton of great information there, and I think probably the big takeaways are is that it does depend. But using you know these cloud services give you access to more locations, a lot more resources, like you said and something you mentioned in there was the term hyperscale cloud provider, right? So, when we talk about cloud services in general, we can talk about you know any old hosting company, right? Somebody who's making resources publicly available online or publicly accessible globally as you said. What is was the kind of differentiator between that and a, as you say, a hyperscale cloud provider?
Lukas: (8:46) Right. So, a lot of hosting companies today are based usually in one country. Sometimes they have two data centers, but often they have just one country. Hyperscale cloud providers have actually invested billions, not millions, but billions of dollars into building global infrastructure where it's super difficult to actually compete with them on the level of investments from an economical perspective. I always say if you want to understand hyperscale cloud and how you want to act or react to it or work with it, you need to understand the economies of scale because they basically made infrastructure a commodity and you need to find new ways on how you compete on a different layer that is not just on the infrastructure level. For an older hosting company that means not compete on a shared hosting or a VPS hosting level anymore in many cases.
Joe: (9:43) Gotcha. So, it's basically hyperscale providers are available everywhere. This offers benefits like, to use the technical term, right? You have maybe fewer hops to get to a resource that’s being hosted in multiple places, for example. Then there are of course, are some other some other infrastructure and economies of scale benefits. The way you said it there makes me think of the difference between like a local, let’s say a local hamburger place and then like a McDonalds, right? You can find a McDonald's everywhere you go but the local place is only going to be in maybe your hometown. So, if we look at these hosting providers how can they compete with the McDonald's of the world right? What is the thing that can help them stand out against a hyperscale cloud provider?
Lukas: (10:44) Right. So, I think the easiest way to say it is to become from a generalist to the specialist. You know? For example, Microsoft is explaining that very well. Whoever is interested could actually go into the Microsoft part of documentation around Azure where they explain how you become from a general service provider, or even system integrator, to like a managed service provider. I think the key thing there is a lot of service providers, if it’s hosting providers for example, they don't really know what’s running on all their shared or VPS or dedicated servers. They need to take an effort to actually do data mining and say ok. What are the majorities of my cost pursuing and which niche are they? You know? They may find out ok. The majority of my customers are actually hospitals in a specific region, or its lawyers in a specific region. Then they can start talking to these customers to see like what else would they like to have and start focusing on building a more productized services for these niches. Then that way level up to become a managed service provider where you productize the services you provide to them in combination with infrastructure that might be your own infrastructure or in combination with hyperscale cloud infrastructure, whatever that customer actually needs. That way update their overall value proposition.
Joe: (12:42) That's fantastic! That is advice that can be applied to anybody who works, right? In my other areas of work, I talk to freelancers about how they should niche down because they can provide an elevated service, right? Again, if we look at the local burger joint versus the McDonald's, the local burger joint can differentiate themselves by making some signature hamburger that they specialize in or some signature menu item that they can only get at this place that people are willing to go to.
Lukas: (13:10) Correct. Absolutely.
Joe: (13:11) I think that's fantastic. Go from generalist to specialist. Figure out what your services are being used for and what niches are using them and build out more productized services to serve those niches; your ideal customer.
Lukas: (13:32) Correct. I always say there are like four key pillars. First of all, you should guide the end customer to use the right services based on what you can offer. Then also try to actually control the value chain a little more you know? Let’s say you have services that you offer from your own data center. There might be other services that suit the customer’s needs better from an Amazon data center and then you move the customer to these kinds of services. But later, in a year from now, you may find out that the same type of service is actually cheaper from an Azure from Microsoft and then you can actually control the value chain and suggest this customer move from Amazon to actually Azure, or even to your in-house service depending on if you can offer them a better way. That way also, choose the partners who need you, you know? Partner with hyperscale cloud providers that actually bet on partnerships. All of them do. Some are a bit further ahead. Like Microsoft who has like 65,000 partners today. They just threw in all the cloud services to complement where an Amazon or Digital Ocean or a Linode, they're still building their partner bases at the moment. What you should always do is while you are developing these new business areas with your customers, with your end customers that you actually monetize the different interactions you have with them to make sure that you still stay profitable and partner with them.
Joe: (15:10) Gotcha. Gotcha. I think that's great and that kind of brings us to, something else that we talked about a little bit before we started recording, which is you know you mentioned that you can control the value chain and offer services that might offer, have some better offering or more affordable offering for your customers. You specifically mentioned Amazon Web services and Microsoft Azure. So, if we look at the...we’ll say the specialist hosting company now. What if we flip the script a little bit? What if they looked at hyperscale cloud providers not as their competitor but you know what if they could use the hyperscale cloud providers to their advantage? What might that look like? Or why could that be the case?
Lukas: (16:00) That could be part of the story that I mentioned earlier. So, you know a lot of service providers they run one data center, maybe two. Maybe they’re even a reseller for one of the bigger ones. They have more and more end customers that are going global using their services. So, they also may need global infrastructure. That means you can partner, if you are just in one country, you can partner with an Amazon, with Digital Ocean, with a Linode that run these global data centers and actually use their other data centers as an expansion, for example, because then you are becoming global even though initially you were local but your existing end customers are asking you for global services because they have become more global themselves. Like one thing that often comes in that discussion is well but I am using an Amazon, or I am using Digital Ocean that’s my competitor and they’re very expensive. You know? The reality is these companies are very huge, but they are also humans and you can talk to them. So, when you talk to an Amazon or to a Digital Ocean just as an example, they have partner programs in place that when you build on top of their hyperscale cloud they will actually give you discounts on the infrastructure. I know some of the discount levels. I’m not mentioning them here probably because of some confidentiality reasons but they can give you significant discounts on their infrastructure. Then when you do your calculation, you will very quickly think if you should still continue to build your own datacenter or if you just go into their clouds because they can do it at scale.
Joe: (18:00) Yeah right. That makes perfect sense, right? Again, we’re talking about that economies of scale. Again, if I can relate it back to something I do. I offer you know bulk or group licensing for my courses to large organizations, right? They are not going to pay me my full price for 1000 users, but if I can bring the price down, I'm still getting a good amount of money for the content I've created and now they're adding value to either their employees or their users or something like that. So, I like what you said there. These companies are huge but they’re also human, you know? Ultimately when it comes down to it humans like to help each. So, if there's a way that you can work together that's good for business, that's good for relationships and it's good for everybody.
Lukas: (18:55) Yeah. I fully agree. Exactly.
Joe: (18:57) Awesome! So, you did touch on this a little bit, but there's a couple more questions here that we can touch on as far as direct benefits and how one can differentiate themselves from using the hyperscale cloud. If I was putting together a landing page as a hosting company to attract my ideal customers, people within my niche (or my niche) how would I sell that hyperscale cloud provider technology that I'm now licensing at a significant discount?
Lukas: (19:42) Right. So I think as we are still early-stage, when I am saying the early stage is that there are some use style hosting providers, you know? We remembered their rise of the platform that we discussed on our last episode. Like a Wix.com, like a Shopify, like a Kinsta, like a WPEngine and many others, they are actually using hyperscale cloud behind there as an infrastructure. They actively market that because Google, Amazon, Microsoft and others actually have very good brands and advantages if you partner with them, they equally want to drive usage on their platforms. They may even give you marketing funding to actually market your service. Actually, they will help you get bigger because you're using their platforms. And on the other side these are large brands that help you get bigger and you can attach yourselves to them. This is similar to how we do it with Plesk, you know? In the past, and still now, we are working with Go Daddy and all these hosting providers because they were the first ones that were helping us to scale in that market. Today we have new opportunities by working with attaching us to these large hyperscale cloud platforms to get more scale as a nicety. Other things you can do, you know you can actually develop more custom solutions based on specific technologies for example from Amazon. So, you actually develop your own intellectual property whatever that might be, monitoring, backup, website hosting whatever you might be doing. You can actually build your intellectual property/software that actually helps you address your niche. (laughs) I am struggling still with the word, that allows you to differentiate using their technology and your old technology that was never possible before.
Joe: (21:56) Great. Yeah that makes a lot of sense, right? Almost like you might pay for like a weather app as a perfect example, right? Where if I have a weather app, I might be paying Dark Sky to access their API so that I can build a nicer interface on top of the data that they're providing. As you say, the same thing can happen with these hyperscale cloud providers, right? Amazon offers a suite of services. You can build on top of those to make something that might you know, maybe you build a more secure file server for the local lawyers who might want to keep their certain documents in that area or something like that.
Lukas: (22:42) Exactly. Yeah.
Joe: (22:44) Great. Something else you mentioned that I thought was interesting just generally is you mentioned the rise of the platform which we talked about in a previous episode. We’ll link that in show notes. But you know these other services are using these hyperscale cloud providers which is why they can offer their services relatively cheaply, right? Like if we look at Square Space, you can have a full website, a full personal website for like $140 or something like that a year. That's like pennies compared to how much it costs to set up a website and then manage it. It's likely because they're using services like this.
Lukas: (23:31) For example, yes but you know they’re…I think some of these services or these platforms, especially you mentioned Square Space, or Wix or Shopify, they’re also giving you a bit of an illusion I’m always saying. Because you know they say it’s simple to create a website, it’s simple to create a store, they even advertise that on YouTube and in your local TV. But the reality is that creating a website or managing a website is often the problem of content, content structure, search engine optimization and all these things. This is where I’m highly questioning if they will be successful in the long term to say they make it so easy and ignoring the web professionals and the managed service providers that actually are specialists for making these complicated parts easier; even an agency. You will need an agency and this is also why these big platforms are considering more agency focus, like we do at Plesk because we know it’s the pros, you know? There’s like one million jobs in the WordPress ecosystem. That is helping the end cost where you really get the solution out of it because just getting an easy website for a $140, I don’t say it’s a lie, but it goes in that direction.
Joe: (22:46) Yeah. I think you're absolutely right there. This is a slight sidebar, but I think you're absolutely right there. It's just like how Netflix is finding out now, right, with the rise of Disney+ and Apple TV+ and things like that. It wasn't just good enough to just throw everything at the wall and hope that a few things stick. Now they actually have to compete and make good compelling content like you're seeing on these other services. So, I think you're absolutely right. So as we kind of wind down, you mentioned I mean you're most familiar with Plesk's offerings here, where does Plesk fall in this whole cloud services, hyperscale cloud providers landscape? Like what's Plesk's role in all of this?
Lukas (25:39) Right. So, as you know with Plesk and with some of our other products in our family, we are focusing on making things easier for web professionals, like agencies, developers and enthusiasts but also for the hosting and MSP channel to basically build secure website applications. Where this was traditionally all happening just at the hosting providers, this is now increasingly happening on hyperscale cloud because they provide as a software vendor a marketplace to access their customers. Similarly, like when you would sell some kind of a product from China on Amazon shopping, we have the ability to actually sell Plesk on Amazon web services through their marketplace, the same way for Digital Ocean and others. So, it’s a new distribution channel for Plesk because there is a shift from traditional hosts where end companies are also moving from traditional hosting … for example even traditional shared hosting to actually a VPS on cloud because it just offers you a better offering at almost the same price. We have done lots of campaigns together with these providers. We have also integrated with their services, you know? You can actually manage on an Amazon level. You can integrate with their DNS and with a single click, you can integrate with their database service, you can do backup to Amazon S3, which gives a much more integrated experience on working with under the Plesk or such hyperscale provider. As a Plesk, it gives us actually the ability compared to a hosting company a traditional way as a reseller. It gives us direct access to end customers to actually improve our services and working much closer with our end customers using Plesk to actually provide a better offering because we have already generated tens of thousands of instances of these marketplaces. We are working very closely on all of these channels. Never the less we also see a combination that there are more and more hosting providers. I’ll give you an example like a Stablepoint.com and a few others, that don't run their own data centers anymore. They still use Plesk or cPanel or other technologies from a group of companies, but they do it all with hyperscale cloud for all these reasons that I mentioned earlier. So we are focusing a lot on working with hyperscale cloud providers but we’re also not forgetting about our roots working with the hosting providers to become more successful and help them to go to the next level with Plesk and our family of products and companies to become successful again as a managed service provider.
Joe: (28:43) That sounds great and as a practical real-world example here what you can talk about is that I noticed that recently, at the time of this recording, Plesk is now available on Linode. Linode is one of the services you offered earlier. I have some experience with Linode. Luckily, I can fumble my way around a command line. But I had to, because I wanted to do more iPad only development for a time, I set up a Linode server and I had to install WordPress and a database and a whole bunch of other things via the command line. If Plesk had been available when I set up my Linode server, I could have installed Plesk and then just one click install WordPress. So that's kind of the making things easier for the end-user that you're talking about, right?
Lukas: (29:42) Yeah exactly. You know? Just because it’s easy to launch a server, it doesn’t mean it’s easy to manage a server, you know? This is the same use case like in any hosting company at the cost. People want easy set ups and easy ways to manage servers. As we discussed in our last episode, the best managed service is the managed service that you don’t need. Our goal is that our environment that you get with a Linode or Digital Ocean and so on, is SSH free. We can still not fully guarantee it, but it should be SSH terminal free. That you have really just the GUI and on the other side that it’s managing so much itself as an environment that it feels like shared hosting, but you have the power of SSL.
Joe: (30:35) Yeah. That's fantastic. Because even for people who say they might prefer to do things on the command line, you become so much more efficient when you don't have to manually spin up a database and then manually pull in WordPress and unzip it via the command line. Then run through the install and fill out the wpconfig. That’s too many steps for something that should seem so simple. So, I think that sounds great.
Lukas: (31:05) To understand further it’s managing that cloning, the security of WordPress or multiple WordPress. You know I recently talked with and admin last week who is focused on performance optimization of WordPress Woocommerce. He told me look. I know exactly everything I have to do manually, but it’s such annoying work. I appreciate Plesk to do that for me because then I can focus on much more valuable work that I do for my clients.
Joe: (31:31) Yeah absolutely. That's such a great point. I'm sure we'll talk about WordPress specifically in a future episode. So, I do want to end this one by talking about …you mentioned the term MSP. So maybe we could talk about defining that. How can one become an MSP? Then what's the value proposition there?
Lukas: (31:58) Right. So, as I mentioned earlier you know? Since hyperscale cloud is here, it’s not just the so-called hosting industry that is looking at providing services or IT services in the subscription model. These guys have made that a commodity and so you don't have only hosting providers that need to transfer their business models, you have an equal transformation in the whole IT channel. That is the small consultant around the corner who installs the computer for his customers or if that is an agency doing services for their customers or if you’re a traditional system integrator who would have traditionally installed IT on premise today to use a huge amount of services from the cloud. You manage it for your customers. You do it for a certain niche and you productize your services around it. That's what I call a managed service provider. This is where there is a lot of proof in the market that every kind of channel-oriented company, every troll out there will eventually become a managed service provider and point around a multi cloud environment.
Joe: (33:17) Gotcha. Gotcha. That's really interesting. I think that's an interesting concept. But I think you’re absolutely right there. So, you know we talked about kind of in the preshow before we started recording that there are things like you can do to guide the end customer, control the value chain and like you said partner with partners who need you and monetize interactions and productized services. As a managed service provider, whether you’re offering something like hosting or security, backups or even some of the productized services that freelancers offer, right? Like blog content, or podcasting, or things like that, you can add more value by doing this because you understand deeply a specific niche and then you can use all of your resources to improve that niche and the experience for the customer.
Lukas: (34:22) Absolutely, yes.
Joe: (34:24) Awesome! Well Lukas, this has been fantastic. I think we learned that a lot in this episode. I certainly learned a lot in this episode. I am sure the listeners did too. Thanks again so much for joining us today talking about cloud services and hyperscale cloud providers.
Lukas: (34:40) Thank you so much for the opportunity. I really appreciate it. I hope I was able to add some value to you and the audience so that everyone can learn something new. I am happy if anyone would like to reach out and have a further discussion or needs a bit of help in that perspective. I’m always available of course.
Joe: (34:57) Yeah. Absolutely. And on that topic where can people find you?
Lukas: (35:00) LinkedIn is probably the easiest one. Just putting by name into LinkedIn. I am on Twitter as well but not so active there. LinkedIn is really my favorite network with a little bit of Facebook as well. But LinkedIn. Just put in my name and send me a message. I’m always responsive there mostly.
Joe: (35:21) Awesome! We will have those things and some other resources we talked about in the show notes. Thanks everybody for listening to Next Level Ops. Again Lukas, thanks for joining us this today.
Thanks again to Lukas for joining us this week. I thought it was a fantastic discussion. I myself learned a lot about what the hyperscale cloud is and everything that kind of goes into using those kinds of services, taking advantage of them and when you might want to. So thanks again to Lukas for joining us this week. For all of the show notes you can head over to Plesk.com/podcast. If you like this episode, please consider subscribing. And thanks so much for listening to Next Level Ops. Until next time, remember to take it to the next level.