Our $100M Series B

As someone only tangentially familiar with this domain, I have questions about this:

> Look at their CPU density and do the math on power. It's fairly low density. Look at the interconnects (100gb per system). Also fairly conservative. It's the perfect product to replace hardware that is aging out, as you wont have to re-plumb for more power/bandwidth, and you still get a massive upgrade.

It sounds like the CPU density and network bandwidth are not great. If it's only suitable to replace aging systems, does that not limit their TAM? Or is that going to be their beachhead for grabbing further market share.

Only 30% have moved to the public cloud

https://www.goldmansachs.com/insights/articles/cloud-revenue...

I know I have been involved in multiple efforts to move the same workloads into and then out of the cloud, as corporate budgeting requirements prioritized either capex or opex at different times.

Every single company I've worked with over the past 5 years has been repatriating from the cloud to their own DCs or colo.

The cloud doesn't pan out for long running, predictable workloads. Most companies are and will continue to use VMs for many years.

I'm not sure anyone really knows

uptime institute publishes some good numbers from survey, which puts on prem + colo still at >50% last I checked.

And still some additional 5% in like... on prem in closets.

Last year Amazon said it was 85% on prem. I dunno who has the right numbers.

I like you. Are you guys hiring?

First let me say I really like this part of your guys narrative: you have really strong opinions about how infrastructure and IT should work at many levels, like technically and aesthetically, that seems real and nice and likable.

Focusing on just this financial narrative you're weaving, what stops a bank from selling "virtual racks" that work financially the same as owning an Oxide rack, but it's just AWS?

$1m buys you 42U of, whatever. You're handed an AWS account you do not pay for, but it has the $1m worth of, whatever in it, in perpetuity. Maybe the bank even throws in some fakey market you can "part out" and "sell" your rack to, years later, at some "market price."

It seems like, the product - and maybe the experience of buying the product - is what is most important to Oxide. It's really interesting to me, because I cannot wrap my head around what this narrative is:

You guys are Apple of Racks. But minus the iPhone, because there is no monopoly here. So, Apple (Minus iPhone) of Racks. Is that it? It's the rest of their offerings, which without the iPhone monopoly effects, are Buying Experiences. It's like when people buy $10,000 Mac Studios to "run LLMs", which of course they are going to do like, zero to one times, because they are excited about the idea of the product. For the audience that needs to "run LLMs" they buy, whatever, or rent. But they don't buy Mac Studios. Just because people do something doesn't mean it makes sense.

Is the narrative, AWS Doesn't Make Sense? AWS makes a ton of sense, for basically everyone. Everybody uses it and pays up the wazoo for it. And there are good objective reasons AWS makes sense, at basically all levels. Who is fooled by, "AWS doesn't make sense?"

The problem with AWS isn't even that they are expensive. It's that Amazon is greedy. It could be cheaper, which is a different thing than being expensive. It matters because "AWS stays greedy longer than the average Y Combinator company stays private" is an interesting bet for an investor to take. They could decide to be less greedy at any time, and indeed, it did not take long after offerings of S3-like storage from others led them to simply reduce prices.

What that is telling me is, I could take $100m in funding, sell $1m "racks" of equivalent compute on the Rolls Royce of cloud infrastructure, making everything financially and legally and imaginarily the same as ownership, and then take a $300k loss, right? On each "rack", same as your loss? It's a money losing business, but here I am making the money losing very pure, very arby. Is this what you are saying customers want?

Clearly they want a physical rack. By all means, I can send them a big steel box that provides them that aesthetic experience. Cloudflare, Google, they do the physical version of this all the time: dumb, empty appliances that are totally redundant, because people ask for them. RudderStack, Weights & Biases, a bunch of companies come to mind doing the same thing in software, like so called Kubernetes Operators that literally just provision API keys but pretend to be running on your infrastructure. People ask for Kubernetes operators, they made them, but of course, they don't do anything. They are imaginarily Kubernetes operators.

The reason there are licensing fees and rentals and whatever is the enterprise sales pipeline, right? Enterprise sales is, give people want they ask for. People ask for a price that's below $X up front, so that's what IT vendors do, and then it turns out people are okay with some ongoing licensing fees, so there. That's what they do.

So what IS it?

Open source is a requirement but not the only one. There are countless examples of companies building integrated solutions based off of open source projects that, when they went bankrupt, there was nobody to pick up the available pieces and continue moving the stack forward. Just pointing out that open source is not this magical escape hatch that some people think (at least not in corporate environments).

That's almost always been true but servers are more like commodities at this point.

iphone is nice and upgrade from commodities phone and I have one, but I wouldn't care much if my fridge has sleek UI because I just need it to be a fridge.

Back when my salary was shitty I cared about the money a lot.

I still like the money and the number going up. But now that it’s above a certain multiple of what I consider a “comfortable” life, I’m not worrying as much.

Would for change your job for an extra 500k a year? Surely right? An extra 50k? An extra 5k? An extra 500 dollars a year?

Theres some mental calculus that includes everything. Some people will just take “offer with most money” every time. Hell of a lot of people don’t.

I do think that C suite folks might not have the right vision of what “normal/comfortable” is for employees though. So they might offer a low number thinking it’s actually a “comfortable to live with at this stage of life” number and then get confused why they can’t recruit good talent and think people are obsessed with money.

First offer has gotta be within the ballpark of the right number if you don’t want your interviewee to immediately come back to you with a much higher number!

It’s a bit of a class thing, isn’t it?

Independently wealthy folks can stay in the game longer without needing to extract a lot of cash compensation in the company’s early years.

> If I wasn't paid, I wouldn't work for them.

That's great, but useful to know not everyone thinks the same. When I transitioned to software development (from basically random "whatever pays my rent" jobs), besides my first software job, they were all because I liked the particular product in some way or another, and what the compensation was is basically the least interesting thing for me.

Of course, some level of base payment is needed, because I still needed to pay rent, but if I was choosing between two jobs where one was utterly boring but paid 3 times more than a fascinating job, I'd take the latter in a heartbeat. And no, I'm just an individual contributor who wants to like what I work with, not an executive, manager or similar.

I think we live in a better world when the primary motivator for how we spend half of most of our working day isn't doing what's necessary to get strips of paper for survival.

That is, the work itself should be interesting and fulfilling.

Yes, we need money, but when the work relationship approaches being purely transactional the whole thing is demeaning for everyone and less effective.

Boy, it takes a lot of luck and skill and privilege to be able to shop for (or offer) work like this, and money is still important.

If I wasn't paid, I wouldn't work for them.

While this is true for most of the cases, it's not the case always. There are definitely jobs I'd work for less than I make at the job now and there are jobs which are considered "dream jobs", but ultimately there needs to be a solid base to make you and your family feel comfortable if you're spending at least 1/3 of your day on.

They know it's a lie but still need to say it.

I used to have a manager that gave me this line. He left this company to join another one, had multiple offers, and told me he accepted the highest one because "it's all about the money".

They know, we know, everybody knows, but that's not the playbook.

I am not sure I fully agree with the characterization above (that asking about salary is a 'red flag' in our process), but if I had to try and steelman it: we prominently put

> Everyone at Oxide makes $207,264 USD, regardless of location. (Some sales positions have a lower base salary and contain a commission component.)

On our applications page (see it here: https://oxide.computer/careers/sw-control-plane)

It's also a pretty well known aspect of the company. Combine this with the fact that our hiring process is different, where interviews are the very last thing before possibly being hired, and someone who has missed this fact could come across as having not done some very basic research about the company that they're applying to.

To be clear, I still think calling it "a red flag" is a stretch. I fully agree with you in a general sense, for places that are willing to negotiate compensation in the first place, but we make it very clear up front that we do not.

Red flagging a candidate for not asking about compensation during the interview is not a good practice. This is an example of penalizing people for not following a specific script or candidate archetype you have in mind instead of judging them by their skills and abilities.

self esteem problem ha (not asking or thinking low)

It doesn’t answer it clearly at all.

Do two people hired at the same time get the same equity? Or is there room for one candidate to get more equity due to their experience or simply because they negotiated more?

Obviously early employees get more equity. The question is whether or not there’s room for negotiation. They heavily imply that everyone is paid the same, but all of those claims are about base salary.

One exception, for sales. I don't see how they could have done it differently.

We have a "one rate per level" rule. The rates are published, and so are the definitions of the levels, and everyone's level (i.e. indirectly you can know everyone's salary)

Worked great, untill we started to look for sales. Doesn't work. They only know incentive-based schemes.

So now they have an incentive-based scheme just for the sales, which is (essentially) budgetted from their stock-option package (that everyone gets). I.e. they benefit from growth a little bit earlier and directer.

If we hadn't done that, we wouldn't have a sales department.

Yes, but you aren't wasting time early on negotiating compensation.

Because good sales staff make a ton of money through a ton of sales. Any other incentive structure is unlikely to attract high performers.

It's pretty fundamental to the personality of people in sales to be driven by getting the sale and getting compensated based on the deal size. If you remove that carrot, it just doesn't work. Some sales people will make millions, some will make nothing.

The key difference between everyone else in a company and Sales is that Sales is where the money comes in, directly. It's approximately trivial to point at a sale, see how much money it made, and then who made the sale. So commission is a natural compensation structure for salespeople. For everyone else at a company, their individual contribution to the company making money is a lot more diffuse, and any metric you might be tempted to try and put a commission on is at risk of being gamed. Whereas "how much $$$/worth of stuff did we sell" is pretty much THE metric by which we judge a business as a whole.

If you’re asking this question then you have really no idea how the sales engine works at a company. It’s inherently incentive driven.

Because sales people are used to work on incentives, including going over and getting rewarded for it.

If they have a fixed salary with a high objective to "make it" (e.g. if you sell less than $X, you get fired), lots of sales folks will skip on it because they can't go over, and most probably prefer to have a quarter or two or year at e.g. 70% salary while working on longer term deals, rather than losing their job for not being good enough within that arbitrary time period. And going over their quota can be wildly lucrative depending on the terms.

Sales culture is heavily incentive and performance based.

It sucks but they like to think that if they work harder they'll get paid more.

> For someone outside of high-cost-of-living tech hubs, Oxide's fixed salary could be life-changing all by itself,

I’ve spent a lot of time looking at compensation tables and reference data. $200K is definitely good salary, but I wouldn’t call it “life changing” relative to what someone qualified to work at Oxide could earn in an average non-tech hub metro area.

The type of candidate who qualifies to work at Oxide has numerous options for high paying remote work, and probably well paying local work too.

[dead]

Yeah they aren't unheard of at all, co-ops have had slow but steady growth in the market for some decades now.

For early/mid stage startups - this is an awful position to take. These orgs are heavily influenced by who they hire - what you pay defines your incentive structure.

Does the world class engineer or business development lead just take it easy and travel around after they join?

Does the new manager push the team and business forward or prioritize stability?

Do engineers spend their time on reactors and impressive sounding projects or figuring out what customers need?

Do people feel lucky to have a seat in the org or do they spend their time complaining and looking for the exits?

Money isn't the only lever, but its a strong one - startups will never compete with established firms on cash outlays.

Would love to engage in a discussion with you on this. How would you describe "deserve" in the sense of compensation? I agree with your premise that what you get is ultimately bound by the ceiling of the payer's generosity and your ability to negotiate.

But what sorts of things input into the function of "deserve"?

It would seem like parent's something detector is off if they think the grand-parent's comment was snarky.

>rewarded immensely

Let’s define this. Let’s say 1:25? 1:50? What ratio is appropriate?

That's just hardware. If you need to build and maintain your own devops tooling it can balloon in complexity and cost real quick.

It would still likely be much cheaper to do everything in house, but you would be assuming a lot of risks and locking yourself in losing flexibility.

There is a reason people go with AWS over many competing cheaper cloud providers.

> they're making a profit off of this service, meaning it's more expensive than what we were doing!

I hope you can see that this is a logical fallacy known as "zero-sum thinking". It is not only possible for a business to profit while lowering prices, it is universal throughout the economy. Tomato farmers make a profit selling tomatoes at a price much lower than the cost to grow tomatoes at home. Bakeries radically undercut the cost of home baking. It is obviously cheaper to buy motor fuel at the gas station than it would be to buy crude and refine it yourself.

The main reason people think their on-prem is cheaper than cloud is that they are bad at accounting.

You're literally ignoring that the Oxide management stack is very much custom and effectively vendor-locking the purchase to be maintained by them. They are not general purpose PC servers.

You can "just" migrate away from Oxide but that would mean throwing away the hardware you now own. That's the grandparent's point; if you're migrating out of a cloud to avoid the margins demanded by the cloud vendor, now you're at the mercy of whatever Oxide thinks your support contract is worth.

Sure, the convenience may be worth it, but watch how many companies are now struggling to get off of VMWare after Broadcom moves.

Thank you :)

That's helpful, thanks!

Commodity hardware doesn't quite tend to operate at a compute vs efficiency Pareto frontier — there's a lot of wasted energy that we've been able to optimize with our vertical integration. (I work at Oxide.)

I don't have any particular knowledge about oxide's cooling, but think about how bloated and inefficient literally every part of the compute stack is from metal to seeing these words on a screen. If you imagine fixing every part of it to be efficient top to bottom, I think you'll agree that we're not even in the same galaxy as the physical limitations of moving electrons around at high speeds.

I believe the fans are actually smaller. The rack is definitely quieter than other racks, but he says in the rear rack tour that it's quite hot. Check out these videos of it

[0] - https://www.youtube.com/watch?v=dHbgjB0RQ1s [1] - https://www.youtube.com/watch?v=lJmw9OICH-4

maybe you're not familiar with just how stupidly written most code is.

you're right that there are efficiency limits, but not once in my career have I ever seen anyone even attempt to write their code so that it is efficient to run, outside of gaming.

My read on the situation is that you copied OCP only inasmuch as OCP made some observations about physics and you made the same observations.

The most obvious change is that you guys use half-width, full length enclosures.

But I'm realizing now that I haven't looked at the OCP specs in a long, long time. I recall the common DC rail from some early Facebook papers on this topic, and I thought they were pretty similar to how you plug into power.

I just looked at the OCP power connector, and I would have lost any bet anyone was willing to make me about what they looked like. That's not at all where I thought we were. I think I understand now why you guys went to such pains getting the keyed connectors to work exactly right. Their power connectors look like something from a scifi movie, and not in a good way.

Ah OK, thanks for clarifying! I'm glad to see these kinds of machines being built, especially with so much open source software

How does the Oxide 48V architecture compare to what is known about the Google/OCP architecture? Does Oxide use single stage conversion, intermediate 12V buses, or ??

Speaking from the experience of 8 acquisitions/IPOs, your compensation structure will not survive public ownership. It could survive a PE acquisition, but definitely not public ownership (in my experience). I would recommend petitioning for a dual-class share structure to protect founding leadership.

What was it?