Nobody is getting "trickle down"-level rich from it. It's an organically grown company that bootstrapped without any big high risk/high reward investment that expects massive returns in absence of failure. Basically a mom&pop from what in the US would be considered flyover that just happens to have found its way to large scale competetiveness. Through a unique combination of frugality and decisive spending I think.

Early example: a weirdly memorable ad captaign around 2000 that for many years occupied the single most expensive computer related print ad slot in Germany (decisive spending) with a series of ads that seemed not quite "high production values", but also not deliberately grungy, a weird "definitely trying to be high gloss perfection, but somehow not quite there" (like in-house best effort or some local design house, certainly not the big-name agency you'd expect for ads on that slot). More recent example: their hardware seems to be a continuation from early-Google style "desktops on shelves" that's now a custom rack design (still noticeably lower density than typical 16") that's all about finding good price/reliability spots in cheap CotS parts, e.g. according to certain "begins the scene" blogger visits they sort for publicity, price-optimized custom versions of desktop mainboards (same PCB but not placing any parts they don't need). Chances are company with big investor backing would either go all standard rack parts (from a supplier like Dell or something like that) or go all in designing their own.

In my experience there's no real "catch". Just trade-offs.

Hetzner offers "managed bare metal", for extremely competitive prices. But, in my experience, exactly what I'd expects: "pay peanuts, get peanuts". I love, and chose them for some proof of concepts, early phase and hobby projects. But would not choose them for anything that requires serious stability and availability.

Not because they have flakey or even unpredictable service, but because the trade-off is that "bare metal" requires more work done by me, more responsibility for me, less options for quick failover and so on.

Just like for some situations, a server in your attic is the perfect fit, yet for others a managed cloud infra is the perfect fit, hetzner has some sweet spots.

It's slightly more work, in my experience, to set up and administrate a Hetzner VPS, than to do the same with DO or AWS. Slightly. Trivially slightly. I use Hetzner and I have been nothing but happy with their product and service.

Their cloud offering isn’t as polished yet. No managed databases for example. Other than that they’ve got a long track record and a good reputation for providing competitively priced servers.

No catch, which is why Hetzner is so popular.

You can't easily increase the balance of your account! I kid you not, the advocated method of paying is clearing the invoice at the end of the month.

Hetzner was launched [or may be got popular] after DigitalOcean took off.

Since then they priced their boxes competitively relative to DO. A little bit less. That's still holding.

Also note that at that time hosting in Europe wasn't a popular option, unlike what we see now.

Less greed. This is the catch