From: acquiredfm
Vercel is an infrastructure platform designed to build and deploy modern web applications [00:00:27]. Founded by Guillermo Rauch, its core mission is obsessed with developer experience, performance, and design [00:00:38]. The company aims to make it easy to deploy the best possible web applications, ensuring a fast and delightful experience for the average internet visitor [00:00:44].
As of May 2024, Vercel was valued at over 100 million in annualized revenue (growing 80% year-over-year) [00:47:25], and had more than doubled its number of developers over the past year [00:47:32]. The company currently has approximately 550 employees [00:47:17].
Core Offerings and Philosophy
Vercel’s offering centers on simplifying the complex process of web development, especially for dynamic, high-performance applications [00:04:07]. The initial idea for Vercel arose from the difficulty of building high-quality web applications that matched the standards of tech giants like Meta, Google, or Amazon [00:02:26]. At the time, web development was often static, and cloud infrastructure was exceedingly difficult to use [00:02:52].
Vercel sought to bridge the gap between the availability of open source technology, like Google’s Kubernetes and Meta’s React [00:03:28], and the ability for developers to quickly publish delightful experiences [00:04:10]. This means automating the configuration and assembly of these tools into a cohesive platform [00:04:01].
Vercel’s unique approach involved vertical integration, building both developer tools and highly optimized cloud infrastructure [00:06:19]. While Vercel builds on top of AWS, it abstracts away the complexities, allowing companies to focus on product innovation rather than managing infrastructure [00:06:37].
Next.js
A cornerstone of Vercel’s strategy is Next.js, an open-source framework for front-end development [00:05:01]. With 1.3 million monthly active developers [00:04:57], Next.js builds on React [00:05:08] and provides tools and guardrails for building “awesome front experiences” [00:05:03]. It has become a gold standard for front-end development, powering many modern AI tools like ChatGPT, OpenAI, Claude, Sora, and Midjourney [00:05:16].
The development of Next.js stemmed from the founder’s frustration with the complexity of deploying sophisticated web applications despite the availability of powerful open-source technologies like React [00:05:36]. While React provided the “engine” for user interfaces, developers needed a “car” or “space shuttle to the cloud” [00:05:56]. Vercel and Next.js became that solution, prioritizing dynamic rendering in the cloud over static, fat-client approaches [00:10:02]. This approach offloads the burden of experiencing a website from the device to the cloud, ensuring faster mobile experiences [00:10:11].
Key Features
- Automatic Git Branch Previews: Vercel automatically deploys every Git branch as a preview, providing a URL for real-time testing and collaboration across the organization [00:13:56]. This eliminates the need for developers to manage staging machines or screen share [00:15:11], and ensures ephemeral and secure test environments [00:15:48].
- Serverless Functions: Vercel partners deeply with AWS’s serverless infrastructure team to create serverless functions under the hood for deployment previews, optimizing costs and infrastructure [00:30:11].
- Security: Vercel integrates CDN and WAF capabilities [00:42:45], ensuring zero-configuration security by default [00:42:32]. Its exposure to the crypto space, which attracted “worst darkest actors” [00:41:46], forced Vercel to significantly enhance its security, achieving industry-leading DDOS mitigation response times (within seconds) [00:43:56].
v0: AI Assistant for Web Development
A significant recent development for Vercel is v0 (pronounced “v-zero”), an AI assistant for web development [00:17:57]. Launched as a research preview in September 2023 [00:18:50], v0 transforms English prompts into working applications and user interfaces [00:18:32]. This represents a “code last” disruption, allowing anyone with an idea to create software without extensive coding knowledge [00:18:38].
The growth of v0 has been astonishing:
- 10 months to reach $1 million in ARR [00:19:03].
- 14 days to reach $2 million [00:19:06].
- 20 more days to reach $4 million [00:19:08].
v0 runs the Next.js and Vercel rendering environment inside a web browser, combining this with state-of-the-art foundation models [00:25:01]. It is steered to be an expert in web development, producing designs with “good taste” and strong accessibility features [00:25:14]. The AI is imbued with Vercel employees’ preferences and best practices for building software [00:27:09].
v0 is revolutionizing how software is built and sold. It can generate high-performance versions of existing websites from a screenshot, drastically shortening sales cycles and enhancing customer trust [00:28:06]. Vercel has also open-sourced the underlying framework for v0, called AI SDK, inspiring other companies to build their own “v0s” for different industries like CAD and medicine [00:29:03]. This strategy fosters a community around Vercel’s brand, and as more people build with AI SDK, they are likely to deploy on Vercel [00:35:54].
Business Model and Strategy
Vercel’s business model is based on charging for usage of its infrastructure, similar to companies like Snowflake, Databricks, and Datadog [00:37:01]. This means customers pay more if their application scales significantly, making it a fair deal for developers [00:37:12].
The company’s strategy involves open-sourcing its frameworks (like Next.js and AI SDK) [00:34:48], while keeping its core infrastructure proprietary [00:38:08]. The belief is that operational complexities of global infrastructure with hundreds of microservices make open-sourcing the infrastructure itself less valuable [00:38:01]. Open source shines in providing programming models and declaring applications [00:38:34].
Vercel initially focused on dominating a niche: making the fastest websites and front-ends [00:32:08]. This focus allowed Vercel to become the best product in its category for front-end development [00:32:30]. From this strong foundation, Vercel is now expanding to provide more services, transitioning from a “frontend cloud” to a “developer cloud” [00:32:44], including backend services and databases [00:33:09].
Impact and Future
Vercel’s platform has garnered a diverse customer base, from news outlets like the Washington Post [00:01:16] and e-commerce giants like Bose and Fanatics [00:01:41], to cutting-edge AI startups [00:05:16] and large banks [00:16:10]. Its ability to simplify deployment and harden infrastructure through rigorous exposure to challenging traffic (like from the crypto world) [00:41:45] has made it a trusted platform for large enterprises undergoing digital transformation [00:43:11].
The rise of AI-generated code and abstracted infrastructure means that teams can be much smaller, leading to more products reaching more people [00:53:11]. Vercel’s own v0 team is less than 10 people, demonstrating the platform’s ability to enable lean operations for rapidly growing products [00:51:47]. The platform ensures there is no “graduation risk,” meaning companies won’t outgrow Vercel’s capabilities as they scale [00:52:20]. This allows for incredibly fast product creation; for example, OpenAI’s “Operator” was launched within 24 hours using Vercel and v0 [00:53:57].
Vercel aims to be in the middle of every transaction, facilitating development for both traditional developers and new “citizen developers” empowered by AI [00:55:09]. The company operates with high internal transparency and insists on its technical leaders staying deeply involved with the product and customer reality, ensuring rapid product velocity [00:48:41].