From Buenos Aires to Browsers: How Guillermo Rauch’s Open-Source Shaped Vercel

Vercel was founded by Guillermo Rauch, a software engineer and entrepreneur with a passion for the web and open source. Originally from Lanús, Buenos Aires, Argentina, Rauch’s journey into the world of technology began in his early teens, where he became an advocate for and teacher of Linux. This early interest evolved into a passion for JavaScript and web development. (Guillermo Rauch)

Rauch’s experience spans across various roles and ventures, providing him with a unique perspective on the challenges faced by developers. He started his career by joining the MooTools core team, where he gained his first full-time job as a frontend engineer at the age of 18. His entrepreneurial spirit led him to found Cloudup in SF, which was later acquired by Automattic, the company behind WordPress.

Before Vercel, Rauch was deeply involved in the open-source community, contributing to influential projects like Socket.IO and Mongoose. These experiences gave him valuable insights into the needs of developers and the potential for creating tools and infrastructure that could make web development faster and more efficient.

He saw an opportunity to create a platform that would simplify the process of building and deploying web applications, allowing developers to focus on creating great user experiences. This vision led to the creation of Next.js, a popular React framework, and eventually, Vercel, the platform that helps power the online presence of companies like Washington Post, Porsche, Under Armour, and Nintendo.

Billions and Growing: Why the Web Hosting is Rising

The global web hosting services market was valued at USD 77.78 billion in 2022 and is projected to experience substantial growth, reaching an estimated USD 320.62 billion by 2030. This translates to a compound annual growth rate (CAGR) of 20.2% from 2023 to 2030. This growth is driven by the increasing number of organizations worldwide establishing an online presence and bolstering their marketing efforts through websites. The need to manage online business activities is also fueling the market. (Grand View Research)

The shared hosting segment dominated the market in 2022 with a revenue share of 35.3%. This is attributed to the high adoption rate of shared hosting servers, especially among SMEs. Most small and medium businesses prefer this hosting owing to the low website traffic that they receive. Additionally, these SMEs are present in large numbers across every region and represent more than 90% of the total number of businesses. The cost associated with shared hosting is lower than any other type; thus, a large number of SMEs, as well as individuals, are opting for this type. The colocation hosting segment is expected to witness the highest CAGR of 24.3% over the forecast period.

In terms of revenue, the public website segment dominated the web hosting services market with a share of 55.1% in 2022. This high share is attributed to the fact that most websites are accessible to everyone across the globe. Therefore, companies prefer to host their websites in a way that they can target a huge chunk of the general population to sell their products or solutions. 

North America held the largest revenue share in 2022, accounting for 39.1% of the market. The growth is attributed to the rapid development of the U.S. market, which has the highest number of websites available online. Europe is anticipated to witness significant growth in the web hosting service market over the forecast period.

Beyond Deployments: Vercel’s Mission to Be the Internet’s Dev Playground

Vercel’s foundation is built on the principles of open source, developer empowerment, and performance.According to Guillermo Rauch, the founder of Vercel, the company’s vision is to become “an end-to-end platform where all software development on the web happens, from idea to production through getting your analytics on what to improve next, to the next idea.” This vision guides Vercel’s mission to provide developers with the best possible experience, focusing on performance, scalability, and ease of use.

Vercel tackles several key problems in the web development workflow. Traditional deployment processes can be cumbersome and time-consuming, often taking weeks to complete. Vercel streamlines this process, enabling developers to deploy changes quickly and efficiently. The platform also simplifies scaling web applications, automatically adjusting resources to meet demand without requiring manual intervention. Additionally, Vercel’s emphasis on edge computing ensures low-latency access for users worldwide, regardless of their location.

Vercel’s business model revolves around offering a comprehensive suite of tools and services for front-end developers. This encompasses several key functionalities: collaborative development environment with Vercel Previews, infrastructure management that supports zero-config deployments for popular frameworks like Next.js, optimized performance, and integrations with monitoring and analytics tools. Vercel is known for their developer-focused platform that enables fast and scalable websites. In essence, Vercel’s product provides the core infrastructure for the front end, in that it addresses functionality for developers.

Vercel operates on a multi-tiered revenue model. Vercel has both a freemium and an offering a hosted serverless platform across three main product categories: Hobby, Pro, and Enterprise. Vercel’s Hobby tier provides free access to developers for smaller personal projects. Pro tier aimed at collaborative development at $20/month per user, and offers greater security and front-end observability. The Enterprise offers the biggest features for an unknown price, but comes with customizability, SCIM, enhanced waf and customer support. The company has also introduced v0 (a generative UI tool), with similar freemium models; free credit, $20/month premium, and customer support.

Vercel has surpassed $100 in ARR and is growing rapidly, with more developers favoring the frameworks React and NextJS. Vercel recently launched their new AI-0 code which aims to create code through al with AI. With an ever-growing user base and revenue growth, Vercel is poised to become the dominant developer platform.

The Full Stack for the Frontend: What Makes Vercel a Developer’s Dream Toolkit

Vercel offers a comprehensive suite of products and solutions designed to streamline the development, deployment, and optimization of modern web applications. The platform is tailored to support developers and enterprises in building high-performance, scalable, and secure web experiences. It provides a complete ecosystem for frontend development, infrastructure management, and application security.

Platform Capabilities: Frontend Cloud and Next.js

Vercel’s core offering is its Frontend Cloud, which provides the infrastructure and developer tools necessary to build, scale, and secure personalized web applications. This includes seamless integration with Next.js, a React-based framework created and maintained by Vercel. Next.js enables server-side rendering and static site generation, significantly enhancing performance and SEO for web applications. Furthermore, Vercel acquired Turborepo, a high-performance build system designed for JavaScript and TypeScript monorepos. Turborepo streamlines code sharing and optimizes build processes across large codebases, making it a valuable asset for teams working on complex projects.

Infrastructure and Deployment: Edge Network and Serverless Functions

Vercel’s infrastructure is built for speed and scalability. Its global Edge Network ensures fast content delivery by caching assets closer to end-users, reducing latency and improving load times. Developers can deploy serverless functions that automatically scale, allowing them to run backend logic without the complexities of managing servers. This serverless approach simplifies deployment and reduces operational overhead. Edge Middleware allows developers to run code at the edge, enabling functionalities like authentication, redirects, and A/B testing with minimal latency. Vercel also leverages Incremental Static Regeneration (ISR), allowing pages to be updated after deployment without rebuilding the entire site, combining the benefits of static and dynamic content.

Developer Experience: CLI, Preview Deployments, and Integrations

Vercel prioritizes the developer experience by providing tools that streamline the development workflow. The Vercel CLI and REST API enable developers to manage deployments, projects, and configurations through a command-line interface or programmatically. Every code change generates a unique preview URL, which facilitates collaboration and feedback before merging to production. Vercel supports integrations with various tools and platforms, including CMSs, e-commerce solutions, and analytics providers, further enhancing the development workflow and enabling seamless connectivity to existing systems.

Observability and Analytics: Insights and Monitoring

To ensure application reliability and performance, Vercel offers robust observability and analytics tools. Web Analytics provides privacy-friendly, first-party analytics to monitor website traffic and user behavior without compromising user privacy. Speed Insights offers insights into website performance metrics, helping developers identify and address performance bottlenecks. Developers can access real-time logs and monitor application behavior to ensure reliability and performance, allowing for quick issue resolution.

Security Features: DDoS Mitigation and WAF

Vercel prioritizes the security of its platform and the applications deployed on it. The infrastructure includes protections against Distributed Denial of Service (DDoS) attacks, ensuring application availability. A Web Application Firewall (WAF) provides customizable rules to protect applications from common web vulnerabilities. Vercel facilitates secure connections to backend services, safeguarding sensitive data and operations. Furthermore, features like role-based access control and secure deployment workflows help maintain organizational security standards, protecting teams and deployments.

AI at the Edge: Vercel’s Secret Sauce for Next-Gen Web Apps

The platform leverages a combination of edge computing, serverless functions, and AI-powered tools to revolutionize the web development workflow. This comprehensive approach allows developers and organizations to create and deploy high-quality, scalable, and secure web applications with exceptional efficiency.

One of the key areas of innovation lies in Vercel’s AI-powered development tools. The ‘v0’ product, an AI development interface, exemplifies this direction. V0 is a generative UI tool that leverages AI to create user interfaces directly from text descriptions. This promises to dramatically simplify the design-to-code process, enabling developers to rapidly prototype and iterate on their designs. Complementing this is the Vercel AI SDK, a toolkit that provides developers with the necessary resources to build AI-driven applications. This SDK facilitates the seamless integration of machine learning models into web projects, opening up new possibilities for intelligent and dynamic user experiences.

Vercel significantly optimizes application performance through its strategic use of edge computing and specialized caching mechanisms. By executing code at the edge of the network, closer to the end-users, Vercel minimizes latency and improves response times. This results in a noticeably faster and more responsive user experience. Furthermore, Vercel automatically optimizes images for size and format, ensuring quick load times without sacrificing visual quality. Data caching is also implemented, storing responses from data fetches to reduce redundant requests and enhance overall efficiency.

Scalability and reliability are also central to Vercel’s design. Its serverless architecture enables applications to automatically scale based on demand, ensuring consistent performance even during periods of high traffic. The platform also offers Cron Jobs, allowing developers to schedule tasks to run at specific intervals, automating repetitive processes within their applications. Finally, applications deployed on Vercel are distributed globally, guaranteeing consistent performance for users regardless of their geographical location.

Vercel fosters a thriving developer ecosystem through its support for modern tools and open-source contributions. With tools like Turborepo, Vercel provides robust support for monorepo architectures, enabling efficient management of large and complex codebases. Furthermore, Vercel actively contributes to and maintains several open-source projects, fostering community engagement and driving innovation within the broader web development landscape. The Vercel Marketplace offers developers access to a wide array of integrations and templates, further accelerating the development process by providing pre-built components and solutions.

From Startups to Giants: Why the World’s Biggest Brands Bet on Vercel

Vercel’s clientele spans a diverse range of industries, from technology and retail to media and entertainment. Notable clients include Under Armour, OpenAI, Airbnb, Uber, GitHub, Nike, Ticketmaster, Wikipedia, Carhartt, IBM, McDonald’s, Nintendo, The Washington Post, Zapier, Red Bull, Viable AI, and WeTheNew. 

Vercel’s commitment to excellence has been recognized through various awards and achievements. In 2023, Vercel received the Inc. Power Partner Award in the Cloud Computing/SaaS category, affirming its excellence in cloud storage solutions and software development services. Furthermore, Vercel is a member of the MACH Alliance, a testament to its commitment to promoting open and best-of-breed enterprise technology ecosystems. 

The company has also strategically expanded its capabilities through the acquisition of Turborepo, a high-performance build system; Splitbee, an analytics platform; and Tremor, an open-source React component library. These acquisitions underscore Vercel’s dedication to providing a comprehensive and cutting-edge platform for web development.

Power Plays: Vercel’s Strategic Alliances with AWS, Sitecore, and More

One key partnership is with Sitecore, a leading digital experience platform (DXP) provider, which began in January 2023. The goal is to create a composable solution for modernizing the frontend. This involves integrating Vercel’s frontend framework, Next.js, and build system, Turborepo, with Sitecore’s DXP solutions. This improves performance and the experience for developers. 

Vercel’s Edge Middleware is used to dynamically render pages and personalize content, maintaining speed. Content editors can make changes and publish pages directly through integrations with Sitecore’s XM Cloud. The partnership also provides a headless architecture, unifying customer experiences across different channels. Companies like Avid Technology and Focus Brands are already benefiting from this collaboration.

In April 2023, Vercel broadened its cloud offerings by joining the AWS Marketplace and the AWS ISV Accelerate Program. This makes it easier for businesses to get Vercel’s frontend solutions and use AWS services. Businesses can now easily find, test, buy, and deploy Vercel’s solutions through the AWS Marketplace. This integration gives access to services like Serverless Functions, Edge Functions with AWS Lambda, and observability tools. Vercel and AWS share a vision of supporting brands like The Washington Post in accelerating innovation with serverless computing.

Vercel also works with various digital agencies and technology partners to provide comprehensive solutions. These partners include Monogram, which focuses on improving developer productivity and client satisfaction, Orium, which concentrates on deploying modern commerce architectures, 10up, which transforms hosting experiences, Valtech, which streamlines development processes, and Merkle, which delivers top-tier digital experiences.

From Open Source to Billion-Dollar Backing: Vercel’s VC Journey

Vercel has secured a total equity funding of $563 million across five funding rounds. The company’s post-money valuation reached $3.25 billion as of May 16, 2024. Vercel has attracted investments from 22 investors, comprising 20 institutional investors and 2 angel investors. The funding rounds are categorized as two early-stage and three late-stage rounds. (Tracxn)

The most recent funding round, a Series E in May 2024, brought in $250 million with participation from institutional investors like Accel, CRV, Google Ventures, Notable Capital Fund, Bedrock, Geodesic Capital, Tiger Global Management, 8VC, and SV Angel. Prior to this, Vercel completed a Series D round in November 2021, raising $150 million and valuing the company at $2.5 billion post-money. Investors in the Series D round included GGV Capital, Accel, Bedrock, CRV, Geodesic Capital, Google Ventures, 8VC, Greenoaks, SV Angel, Tiger Global Management, Flex Capital, Salesforce Ventures, and Latacora.

Earlier rounds include a Series C in June 2021, securing $102 million with a post-money valuation of $1.1 billion. The Series B round in December 2020 raised $40 million, and the Series A round in April 2020 brought in $21 million with investments from Accel, CRV, and angel investors Nat Friedman and Jordan Walker. Other investors include Greenoaks, Flex Capital, and Bedrock.

The Future Is Frontend: Why Vercel Might Just Be the Platform That Powers It All

Vercel provides a powerful platform designed to streamline the development, deployment, and scaling of web applications. They empower developers to focus on building exceptional user experiences by offering a suite of tools and services that automate crucial aspects of the web development lifecycle. 

From seamless Git integration and automatic deployments to global edge network delivery and serverless functions, Vercel simplifies the complexities of modern web development, allowing teams to iterate quickly and deliver performant, reliable applications. With a focus on the frontend and developer experience, Vercel has become a popular choice for building everything from personal websites to complex e-commerce platforms.

And if you’re looking for more insights on innovative startups such as these, be sure to check out our other articles on Venture Kites. You’ll find a wealth of information to help you navigate the world of entrepreneurship and turn your ideas into reality.