5 ms·

When they raised the 100M three years ago, I'm pretty sure they said they didn't need it and were saving it for a rainy day (or words to that effect), always se

When they raised the 100M three years ago, I'm pretty sure they said they didn't need it and were saving it for a rainy day (or words to that effect), always seemed very odd at the time. Two q's for anyone who cares to speculate: have they burnt the original investment already? And if not, why would they need more funding? AFAICS there's no real competition in the market place for their product today, the only thing I can conceive is that they have a secret 'tailscale 2' project in the wings which is massively developer or capital intensive. Let's hope it is nothing related to AI band wagoning :-)

chubot 1y ago
Hm OK well thinking out loud, $100M / 3 is $33M / year? I don't know much about Tailscale, nor about how much it costs to run a company, but I thought it was mostly a software company? I would imagine that salaries are the main cost, and revenue could cover salaries? (seems like they have a solid model - https://tailscale.com/pricing https://tailscale.com/pricing) I'm sure they have some cloud fees, but I thought it was mostly "control plane" and not data plane, so it should be cheap? I could be massively misunderstanding what Tailscale is ... Did the product change a lot in the last 3 years?
- fragmede 1y ago
  > I don't know much about Tailscale, nor about how much it costs to run a company $33m/year is only 33 fully loaded software developers including all overhead like HR and managers and office space, and also a cloud hosting bill. 33 really isn't that many.
  - johnbellone 1y ago
    I'd be surprised if the average package for SWE is $1M/year (fully loaded).
    - YetAnotherNick 1y ago
      Generally package is around half of what company spends per extra engineer. And $500k average for a tech heavy product company doesn't sound too far off.
      - MrDarcy 1y ago
        This is just wrong. What exactly do think companies are spending 500k on per engineer beyond the TC package?
        throwaway98797 1y ago
        office space of course!
        andruby 1y ago
        HR, marketing, sales, management, office space, servers, licenses, insurance, etc. It seems on the high end, but not too unrealistic.
        hug 1y ago
        It’s wildly and hugely unrealistic. The rule of thumb that employees actually cost a business roughly twice their salary is based on two things: 1. Retention. Hiring costs are “huge”, and so if you have a higher or lower average retention, may make up a disproportionate cost compared to salary. Ramp up time and institutional knowledge loss is no joke either. 2. A spread of average wages. 500k is not average, and a huge number of the costs are relatively fixed. $1,000 a month worth of software licensing isn’t an uncommon number and is fully 1/3 of the salary of a $3k a month or $36k/year junior clerk. It’s peanuts when you look at it next to a $500k/year salary. It may be that the clerk is, all in, costing the company 3x their salary after indemnity insurance and so on. The dev will never reach 10%.
        purplepatrick 1y ago
        Non-salary cost such as payroll taxes, benefits, workers comp, training, equipment, space add another 25-50% typically.
    - udev4096 1y ago
      This might be true for HFT companies. They usually start at 200-300k and mid senior engineers probably make close to a million
  - anilakar 1y ago
    33M would be 33 software consultants each making 250k a year.
- kenrose 1y ago
  You're not wrong to think Tailscale is primarily a software company, and yes, salaries are a big part of any software company's costs. But it's definitely more complex than just payroll. A few other things: 1. Go-to-market costs Even with Tailscale's amazing product-led growth, you eventually hit a ceiling. Scaling into enterprise means real sales and marketing spend—think field sales, events, paid acquisition, content, partnerships, etc. These aren't trivial line items. 2. Enterprise sales motion Selling to large orgs is a different beast. Longer cycles, custom security reviews, procurement bureaucracy... it all requires dedicated teams. Those teams cost money and take time to ramp. 3. Product and infra Though Tailscale uses a control-plane-only model (which helps with infra cost), there's still significant R&D investment. As the product footprint grows (ACLs, policy routing, audit logging, device management), you need more engineers, PMs, designers, QA, support. Growth adds complexity. 4. Strategic bets Companies at this stage often use capital to fund moonshots (like rethinking what secure networking looks like when identity is the core primitive instead of IP addresses). I don't know how they're thinking about it, but it may mean building new standards on top of the duct-taped 1980s-era networking stack the modern Internet still runs on. It's not just product evolution, it's protocol-level reinvention. That kind of standardization and stewardship takes a lot of time and a lot of dollars. $160M is a big number. But scaling a category-defining infrastructure company isn't cheap and it's about more than just paying engineers.
  - croemer 1y ago
    At least tailscale funnel isn't control-plane-only, unless I'm totally misunderstanding something
  - lukeholder 1y ago
    [flagged]
    - dblohm7 1y ago
      I can confirm that kenrose is an actual human being :-)
      - 1y ago
- chrisshroba 1y ago
  >I'm sure they have some cloud fees, but I thought it was mostly "control plane" and not data plane Don't they host the relay servers that are the fallback if NAT hole punching and their other bag of tricks doesn't work?
fragmede 1y ago
There might be other things going on in the US that you could maybe possibly have heard about, and investors are looking for different places other than the US stock market to invest their money, and Tailscale is looking to have a war chest because of the exceedingly possible case that we're headed into a global recession.
- 9dev 1y ago
  Aren’t they Canadian though?
  - palata 1y ago
    Apparently, yeah: https://en.wikipedia.org/wiki/Tailscale https://en.wikipedia.org/wiki/Tailscale. Based in Toronto, Canada. Go Canada!
  - fragmede 1y ago
    All the more reason to invest!
api 1y ago
You can't raise VC money and save it for a rainy day. If VCs wanted their money in a bank they'd just put it in a bank. If you raise $100M you have to put $100M to work or you'll hear constant shit from your board over it. If they raised $160M they're going to spend $160M on something. My guess would be a lot of enterprise features and product integrations.
- groby_b 1y ago
  That depends entirely on how you raise the funds. Yes, you can say "Here's the growth rate we'd get without your money - based on that, this investment gets you an ROI of x%." With x% high enough, sure, you can get VC money without too many strings. (Also, reading the Series B post, they were planning to invest - just in organic growth instead of the usual growth hacking) And if you read the Series C post, you'd know what they're spending on - GPU (and general) cloud interconnectivity. There's really not much need to guess, Tailscale's financing announcements are about as open as you can get.
  - pomatic 1y ago
    What is tailscale going to do with GPUs? It's about as far removed from NL interaction as you can get, I really don't see any sane AI fit. Maybe they are using them for AI driven dev work? Probably need to think more laterally.
    - groby_b 1y ago
      Read. The. Fine. Article.
      - yencabulator 1y ago
        The fine article seems to say lots of companies are using Tailscale to connect to servers with GPUs -- nothing in that implies that Tailscale would own the GPUs.
        1y ago
refulgentis 1y ago
I still don't know what it is and I've been reading about it for N years here. On some level, it's healthy to take capital.
kortilla 1y ago
> AFAICS there's no real competition in the market place for their product today What does this mean? They are competing with regular legacy VPNs for sure. Despite tailscale existing for the last 4 years, none of the large corporate clients even got closed to it. They were all on junk from Cisco, Palo Alto, to connect employees to corp net. A “cutting edge” one might use cloudflare warp. You might be right that there isn’t much competition for pure distributed, but it turns out the market for that is actually quite small and it’s for people who can’t afford dedicated IPs or cloud instances. Raising money here is a bad sign IMO unless it’s for a completely new product that requires servers at exchanges to eat CDNs like cloudflare’s lunch.
- lachiflippi 1y ago
  [dead]
- PLG88 1y ago
  Their is tons of competition depending on how you want to attack the problem. Tailscale's problem imho is that their product does not scale well as required by large enterprises. One could argue nor do traditional VPNs, but they are already in place and workking so that product config already works, no need for change. The market is massive, but you need to be at a high abstration layer in my opinion, so that you can replace far more than just the VPN.
PLG88 1y ago
There is tons of competition for Tailscale. Its 'just' an easier to use VPN with a great GTM exceution. I think they need more money as they need to fundamentally re-architect their solution to sell into enterprise use cases they their valuation requires.

chubot 1y ago

Hm OK well thinking out loud, $100M / 3 is $33M / year? I don't know much about Tailscale, nor about how much it costs to run a company, but I thought it was mostly a software company? I would imagine that salaries are the main cost, and revenue could cover salaries? (seems like they have a solid model - https://tailscale.com/pricing https://tailscale.com/pricing) I'm sure they have some cloud fees, but I thought it was mostly "control plane" and not data plane, so it should be cheap? I could be massively misunderstanding what Tailscale is ... Did the product change a lot in the last 3 years?

fragmede 1y ago
> I don't know much about Tailscale, nor about how much it costs to run a company $33m/year is only 33 fully loaded software developers including all overhead like HR and managers and office space, and also a cloud hosting bill. 33 really isn't that many.
- johnbellone 1y ago
  I'd be surprised if the average package for SWE is $1M/year (fully loaded).
  - YetAnotherNick 1y ago
    Generally package is around half of what company spends per extra engineer. And $500k average for a tech heavy product company doesn't sound too far off.
    - MrDarcy 1y ago
      This is just wrong. What exactly do think companies are spending 500k on per engineer beyond the TC package?
      - throwaway98797 1y ago
        office space of course!
      - andruby 1y ago
        HR, marketing, sales, management, office space, servers, licenses, insurance, etc. It seems on the high end, but not too unrealistic.
        hug 1y ago
        It’s wildly and hugely unrealistic. The rule of thumb that employees actually cost a business roughly twice their salary is based on two things: 1. Retention. Hiring costs are “huge”, and so if you have a higher or lower average retention, may make up a disproportionate cost compared to salary. Ramp up time and institutional knowledge loss is no joke either. 2. A spread of average wages. 500k is not average, and a huge number of the costs are relatively fixed. $1,000 a month worth of software licensing isn’t an uncommon number and is fully 1/3 of the salary of a $3k a month or $36k/year junior clerk. It’s peanuts when you look at it next to a $500k/year salary. It may be that the clerk is, all in, costing the company 3x their salary after indemnity insurance and so on. The dev will never reach 10%.
        purplepatrick 1y ago
        Non-salary cost such as payroll taxes, benefits, workers comp, training, equipment, space add another 25-50% typically.
  - udev4096 1y ago
    This might be true for HFT companies. They usually start at 200-300k and mid senior engineers probably make close to a million
- anilakar 1y ago
  33M would be 33 software consultants each making 250k a year.
kenrose 1y ago
You're not wrong to think Tailscale is primarily a software company, and yes, salaries are a big part of any software company's costs. But it's definitely more complex than just payroll. A few other things: 1. Go-to-market costs Even with Tailscale's amazing product-led growth, you eventually hit a ceiling. Scaling into enterprise means real sales and marketing spend—think field sales, events, paid acquisition, content, partnerships, etc. These aren't trivial line items. 2. Enterprise sales motion Selling to large orgs is a different beast. Longer cycles, custom security reviews, procurement bureaucracy... it all requires dedicated teams. Those teams cost money and take time to ramp. 3. Product and infra Though Tailscale uses a control-plane-only model (which helps with infra cost), there's still significant R&D investment. As the product footprint grows (ACLs, policy routing, audit logging, device management), you need more engineers, PMs, designers, QA, support. Growth adds complexity. 4. Strategic bets Companies at this stage often use capital to fund moonshots (like rethinking what secure networking looks like when identity is the core primitive instead of IP addresses). I don't know how they're thinking about it, but it may mean building new standards on top of the duct-taped 1980s-era networking stack the modern Internet still runs on. It's not just product evolution, it's protocol-level reinvention. That kind of standardization and stewardship takes a lot of time and a lot of dollars. $160M is a big number. But scaling a category-defining infrastructure company isn't cheap and it's about more than just paying engineers.
- croemer 1y ago
  At least tailscale funnel isn't control-plane-only, unless I'm totally misunderstanding something
- lukeholder 1y ago
  [flagged]
  - dblohm7 1y ago
    I can confirm that kenrose is an actual human being :-)
    - 1y ago
chrisshroba 1y ago
>I'm sure they have some cloud fees, but I thought it was mostly "control plane" and not data plane Don't they host the relay servers that are the fallback if NAT hole punching and their other bag of tricks doesn't work?

fragmede 1y ago

There might be other things going on in the US that you could maybe possibly have heard about, and investors are looking for different places other than the US stock market to invest their money, and Tailscale is looking to have a war chest because of the exceedingly possible case that we're headed into a global recession.

9dev 1y ago
Aren’t they Canadian though?
- palata 1y ago
  Apparently, yeah: https://en.wikipedia.org/wiki/Tailscale https://en.wikipedia.org/wiki/Tailscale. Based in Toronto, Canada. Go Canada!
- fragmede 1y ago
  All the more reason to invest!

api 1y ago

You can't raise VC money and save it for a rainy day. If VCs wanted their money in a bank they'd just put it in a bank. If you raise $100M you have to put $100M to work or you'll hear constant shit from your board over it. If they raised $160M they're going to spend $160M on something. My guess would be a lot of enterprise features and product integrations.

groby_b 1y ago
That depends entirely on how you raise the funds. Yes, you can say "Here's the growth rate we'd get without your money - based on that, this investment gets you an ROI of x%." With x% high enough, sure, you can get VC money without too many strings. (Also, reading the Series B post, they were planning to invest - just in organic growth instead of the usual growth hacking) And if you read the Series C post, you'd know what they're spending on - GPU (and general) cloud interconnectivity. There's really not much need to guess, Tailscale's financing announcements are about as open as you can get.
- pomatic 1y ago
  What is tailscale going to do with GPUs? It's about as far removed from NL interaction as you can get, I really don't see any sane AI fit. Maybe they are using them for AI driven dev work? Probably need to think more laterally.
  - groby_b 1y ago
    Read. The. Fine. Article.
    - yencabulator 1y ago
      The fine article seems to say lots of companies are using Tailscale to connect to servers with GPUs -- nothing in that implies that Tailscale would own the GPUs.
      - 1y ago

refulgentis 1y ago

I still don't know what it is and I've been reading about it for N years here. On some level, it's healthy to take capital.

kortilla 1y ago

> AFAICS there's no real competition in the market place for their product today What does this mean? They are competing with regular legacy VPNs for sure. Despite tailscale existing for the last 4 years, none of the large corporate clients even got closed to it. They were all on junk from Cisco, Palo Alto, to connect employees to corp net. A “cutting edge” one might use cloudflare warp. You might be right that there isn’t much competition for pure distributed, but it turns out the market for that is actually quite small and it’s for people who can’t afford dedicated IPs or cloud instances. Raising money here is a bad sign IMO unless it’s for a completely new product that requires servers at exchanges to eat CDNs like cloudflare’s lunch.

lachiflippi 1y ago
[dead]
PLG88 1y ago
Their is tons of competition depending on how you want to attack the problem. Tailscale's problem imho is that their product does not scale well as required by large enterprises. One could argue nor do traditional VPNs, but they are already in place and workking so that product config already works, no need for change. The market is massive, but you need to be at a high abstration layer in my opinion, so that you can replace far more than just the VPN.

PLG88 1y ago

There is tons of competition for Tailscale. Its 'just' an easier to use VPN with a great GTM exceution. I think they need more money as they need to fundamentally re-architect their solution to sell into enterprise use cases they their valuation requires.