A bit of nuance on the "terrible experience of trying to run Ruby apps" bit. I'd argue that the setup process for Ruby/Rails in 2006 was not all that much worse than other web stacks at the time e.g. Java/WAR or Perl/cgi-bin. (Although PHP+Apache+mod_php deserves a nod for being notably smoother than most others.)
What inspired us to start Heroku was that once we switched from building apps in other languages and frameworks, development time was reduced by a factor of 2 or 3; but deployment time stayed the same. That is, before Rails we'd spent maybe three months developing the first version of the client's project, and then 4-6 weeks on deployment. (This was usually buying and installing a rackmount server into their office or colocation facility, but sometimes also waiting for a managed hosting service to do the same for us. For small projects we could use Slicehost but those were infrequent because our clients usually needed a powerful database server.)
Once we were developing with Rails, we found v1 could be done in a month or even less. It felt incongruent to spend a month on developing the app (the differentiated part of our work) and then longer than that getting it deployed (the undifferentiated part).
There's many other inspirations that were part of the story (end-user programming / citizen developer, which led to the web IDE you talked about) but this was the "deployment pain" part of it. It sticks in my mind because we frequently had to answer the question from prospective investors: "Is Rails really that hard to install?" And we'd say, no, the game has changed--development is so much faster and joyful now, that by comparison our existing ways of deploying feel slow, error-prone, and boring.