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PagerDuty (YC S10) Raises $90M at a $1.3B Valuation
- juliend2 8y agoWell, this announcement https://techcrunch.com/2018/09/04/atlassian-launches-jira-ops-for-managing-incidents/ https://techcrunch.com/2018/09/04/atlassian-launches-jira-op... by Jira, 2 days ago, regarding Jira Ops and their acquisition of OpsGenie, might have helped PagerDuty (don't want to downplay PagerDuty's value here) to get that valuation. I think this is good news! Edit: formatting, added more precision
- Jdam 8y agoIt takes more than 2 days to flesh out those deals.
- NickBusey 8y agoUsing a very naive calculation of valuation = 5x yearly income, is PagerDuty really pulling in $260,000,000/year? My company is currently paying them about $90/month. or $1,080/year. We are most likely one of the smallest clients they have, but that is still quite a leap.
- pbiggar 8y ago"The company says it passed $100 million in annual recurring revenue in recent months"
- samstave 8y agoAssume 100MM/yr - if they have ~20K paying customers with an avg of $500/month per customer, that number is easily achievable. They will have a long-tail of free, and small clients - then a few whales and it seems completely doable... Pagerduty is a great service.
- drb91 8y ago> Pagerduty is a great service. Well, they're good at alerting. They're not great at incident revie/. The interface makes it pretty difficult to look at, say, "what are all the incidents I got paged for related to this schedule". In general, the interface is pretty painful to use for large organizations. This is a fairly common theme, though....
- spullara 8y agoMy guess is that is where they will focus their acquisition energy.
- throwaway5752 8y agoThat's not income, that's revenue/run rate. Also, your 5x revenue (while reasonable historically) is out of line with current valuations for peers. A couple of similiar public ones: Atlassian is almost 25 x ttm sales and and Zendesk is 15.
- paxys 8y ago> Using a very naive calculation of valuation = 5x yearly income How did you come up with that metric? Pretty much every company at that stage has negative income. If you mean revenue, that isn't accurate either. Even the largest tech giants are valued at ~8x annual revenue or more, and that number is higher for the SaaS sector. It is common for a smaller, fast-growing company to be valued at 15-20x ARR.
- holstvoogd 8y agoplz stop.. PD should be a cash cow, stop 'innovating' and 'growing', just deliver what it says on the tin. Over the past few years I've been using PD it is becoming worse and worse, it seems to me because they have to keep their developers busy. They could of course just make the core product better, but thats not cool enough i guess.
- cphoover 8y agoThis is the main problem with the SAAS model. Trying to increase value is antithetical to the Unix Philosophy.
- draw_down 8y agoWho said anything about Unix? Or capital-P Philosophy?
- chx 8y agoI believe GP meant PagerDuty does one thing and it does extremely well which is similar of how Unix is (or was or perhaps should be but I digress).
- cphoover 8y agoObviously a typo. Thanks for being an ass though. I was responding to the parent comment. The value of tools are diminished as they try and do too many things for too many people. Single purpose applications, that are compose-able and interchangeable are better, then big software suites that try to provide for everything under the sun. The issue with SASS over open source, is cloud companies are constantly trying to attract new investors, and justify new funding but building out new feature sets. It is antithetical to the premise of singular purpose, simple applications.
- askafriend 8y agoFrankly, I don't care about what the Unix philosophy has to say and I don't see why it's relevant here.
- 8y ago
- benjaminwootton 8y agoAmazing how a relatively niche product like this can have such a huge valuation. Shows how big the market is.
- chimeracoder 8y ago> Amazing how a relatively niche product like this can have such a huge valuation. Shows how big the market is. Is PagerDuty exactly "niche"? The core product - providing a third-party system that handles the mechanics of paging people during a production issue - is something that virtually all software companies could use, in theory. It's hard to think of a SaaS company that's less niche than Pagerduty (again, focusing on the market size of the core product, not the actual market penetration or the current state of the product).
- samstave 8y agoThe service may seem niche, but the NEED for the service is universal. I love pagerduty. (the company, being point, on-call... a bit less)
- vonmoltke 8y ago> The core product - providing a third-party system that handles the mechanics of paging people during a production issue - is something that virtually all software companies could use, in theory. I think "virtually" is a bit strong. There are still a lot of software companies that build software that doesn't rely on company-controlled production systems. Also, in practice companies that have large-scale production systems tend to have dedicated 24-hour human monitoring. Thus, I do think PD is hitting a niche within a niche: small-medium sized companies that rely on always-up servers.
- zjaffee 8y agoIt's because they can charge a huge amount for their service, where there is relatively low costs of operations compared to other enterprise products. It's amazing how they are able to charge as much as a product like slack.
- brightball 8y ago
- syntaxing 8y agoI'm kind of confused what they offer. Are they providing a software that is like a IT "ERP" system?
- webo 8y agohttps://www.pagerduty.com/ https://www.pagerduty.com/ It's an on-call management system that receives events from multiple sources and routes to the appropriate people.
- syntaxing 8y agoI embarrassingly have read the main and about page a couple times and still do not really get it. What are events? Like a critical failure on your server?
- e1ven 8y agoYeah, it’s basically a handler for nagios/sensu/etc which will open/close issues in its DB and assign them to whomever is on-call for that day. It can then phone/text them when it gets an alert, and escalate to the next person in the list of it doesn’t get an answer. It’s not super-hard to replace with some twilio scripts/etc but it’s cheap and usually works as expected. It’s nice to pay them to run alerting scripts, so they don’t run on the same infrastructure as production code.
- syntaxing 8y agoInteresting, thank you for the explanation!
- chipgap98 8y agoEvents are whatever you send them. So we have some internal monitoring tools and SignalFX set to trigger pager duty when certain metric thresholds are tripped
- whalesalad 8y agoI was a PD customer for 3 years at FarmLogs. There was literally zero innovation or development on that product during the entire time there. It was abandonware. I am shocked that they're dominating this space with such lackluster enthusiasm about their own product. I'm not just referring to a lack of new features... it’s a lack of improving their core product. It's buggy and painful to use. I can’t tell you how many times acknowledging an issue (during the crisis around the issue) failed and caused cascading problems with other engineers being paged. That’s the one thing this product should do without fail.
- foodstances 8y agoWhat did you find it lacking?
- Jdam 8y agonot op but it lacks a proper, modern ui. Recently, I needed to remove myself from a schedule and a team, took me 10 minutes.
- whalesalad 8y agoAlso true. Basic things like being able to cascade a delete or manage dependencies during a delete is a nightmare. It truly feels like 6 months were invested into a fairly basic CRUD rails application with a Twilio gem installed and then forgotten. Good for them to have generated so much revenue with such a weak product. We paid them for years even after we removed everyone from rotation. I am sure lots of companies do this because it is the only thing out there.
- whalesalad 8y agoAside from the lack of innovation, it's got lots of bugs. Sometimes it will continue to call you over and over when things have been acknowledged, or it wont acknowledge things, or you will try to acknowledge something that has already been acknowledged and it will error out.
- tmaly 8y agoSorry, but the first thing that comes to my mind when I read the headline is that we are in another economic bubble with valuations like this.
- throwawaymath 8y agoIs this because of how you feel about PagerDuty in particular or...?
- techntoke 8y agoWe are, but everyone is still in denial.
- debaserab2 8y agoI remember when I first ran across PagerDuty I thought to myself, "wait, I think at my last job we just had a couple of perl scripts do that..."
- tintor 8y agoWhen Dropbox was announced for the first time there was a similar comment. :)
- rosser 8y agoAnd what happens when the box those Perl scripts live on goes down, or loses connectivity?
- stonogo 8y agoThe same thing that happens when PagerDuty's AWS availability zone goes down or loses connectivity. Exactly like it did in June. PagerDuty is not magical.
- rosser 8y agoI don't believe I said, or implied, it was. I also don't think it's particularly apples-to-apples to compare a box with a couple NIH Perl scripts and a service with $100mm+ in annual revenues for whom that's their sole job. I promise you, they aren't just in a single AZ.
- IronWolve 8y agoWe just consolidated all our remote offices into a global corporate account, we all had pagerduty setups for our alarming systems, solarwinds, nagios, email, etc. I've been using pagerduty for years, and I've been getting other admins to switch from private emails to it, so no more single point of failures. They just had to be shown how simple it was to configure and use. I won't wake up in the middle of the night to a text, but a phone call, wakes me up. I don't even answer, I refuse the call then open the pagerduty app. Love it.
- Cpoll 8y ago> I don't even answer Now if only I could get it to not leave a message.
- verelo 8y agoYeah, this kind of sound a like a UX bug. Ideally the behaviour could be changed to match the way you’re using it, which is more of a wake up call than a call based notification system.
- dan0- 8y agoI feel like the core product is pretty easily replicated with Freeswitch and tailored with a little configuration. Eg: Ring a phone for 30 seconds (so as not to leave a message accidentally), if answered read back the issue (using text to speech), otherwise send the phone a text and <insert whatever else you want to do>. Having set systems like this up for numerous clients, the latter bit is usually a case of waiting a few minutes for the on call person to either accept the alert, or failing that move onto whoever the fallback is for that person.
- verelo 8y agoThe core feature of Pagerduty here is resilience imo. As in, i expect whatever’s issue I’m having that they will not be having. I imagine if an AWS zone is down, large scale network issue, etc, any home rolled solution is likely to be impacted too.
- Waterluvian 8y agoMy teammate and I got really excited about pagerduty to replace our phone calling, slack messaging, spreadsheet reading slackbot. But at $29/user/month there's no way in hell management will sign off on it. We are at that point of growth where we need this service but can't justify the risk when we have something ths clunky but basically free. I wish there were more creative pricing models to get us in the door somehow. The problem is that our support structure, being a smaller newer company is that everyone grabs a paddle and rows. So for a 50 person company 30 are support on-call staff all with small windows of operation.
- spullara 8y agoPenny-wise and pound foolish. I can't imagine you are so big that $1/day/user is meaningful and less cost effective than spending an hour on your internal system a week.
- Waterluvian 8y agoAs an engineer I agree. But I try hard to keep grounded in the irrational real world that I occupy. So I have to respect the reality that I have to work with the irrationality, not against it.
- alex_anglin 8y agoIf you're bearing the costs of irrationality... then that might be something to keep in mind.
- paulie_a 8y agoUnrelated to pagerduty directly but related to the pricing aspect. I couldn't convince the owner of a company that he should spend 50 bucks a month on a service that would literally save him 40 minutes every day. I guess his time was worth less than a buck an hour. The particular software was also amazingly easy to integrate into our ecosystem too.
- captain_perl 8y agoI'll second the comments about pricing. I attempted to negotiate with PagerDuty (after the sticker shock wore off), and their sales team said, "We're Number 1, so we don't really negotiate. Just pick a plan with less features or designate some users as read-only."
- exclusiv 8y agoI remember these guys from the first TwilioCon in 2011. It was some sort of group fireside chat IIRC and they were describing how their initial product was all on Amazon with no redundancy. Of course many of their clients were on EC2 as well so when EC2 had an outage they all had to man the phones and call their clients and say "your site is down" haha. Happy for their growth and success.
- justinator 8y ago
- xmly 8y ago90M at 1.3B valuation? Means they sold more than 50% equities at this round...
- hobofan 8y ago1B = 1000M