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PagerDuty (YC S10) Raises $90M at a $1.3B Valuation

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Re: PagerDuty (YC S10) Raises $90M at a $1.3B Valuation

#61

Post by Waterluvian »

My 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.

Re: PagerDuty (YC S10) Raises $90M at a $1.3B Valuation

#62

Post by spullara »

Waterluvian wrote: post #61

My 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 someh…

Penny-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.

Re: PagerDuty (YC S10) Raises $90M at a $1.3B Valuation

#63

Post by spullara »

gorkemyurt wrote: post #58
xchaotic wrote: post #54

Earlier quoted context omitted.

If they're really having 100MM recurring revenue, couldn't they just borrow money from the bank without losing equity?

Banks don't like to lend money to company with no tangible assets.

They do all the time and Pagerduty probably already has these kinds of loans in place.

Re: PagerDuty (YC S10) Raises $90M at a $1.3B Valuation

#64

Post by spullara »

zaroth wrote: post #60
moritzplassnig wrote: post #40

Earlier quoted context omitted.

10-13x ARR isn't absurdly high at all

It depends entirely on your growth rate. In my experience, a lifestyle business growing 20% YoY with 5% churn and 10% operating margin will sell for around 2.5-3x ARR.

20% YoY is very low relative to most of these large SaaS startups that you see on here. The S-1 for Elastic had it at 75% YoY or so. Most of these companies also have absurdly high negative revenue churn. Gross margins approach 75% which become net margins when they stop growing so fast. See the 40% SaaS rule.

https://saasholic.com/the-rule-of-40-for-saas-and-subscripti...

Re: PagerDuty (YC S10) Raises $90M at a $1.3B Valuation

#65

Post by spullara »

drb91 wrote: post #13
samstave wrote: post #9

Earlier quoted context omitted.

Assume 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.

> 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....

My guess is that is where they will focus their acquisition energy.

Re: PagerDuty (YC S10) Raises $90M at a $1.3B Valuation

#66

Post by Waterluvian »

spullara wrote: post #62
Waterluvian wrote: post #61

My 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 someh…

Penny-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.

As 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.

Re: PagerDuty (YC S10) Raises $90M at a $1.3B Valuation

#67

Post by Cpoll »

IronWolve wrote: post #49

We 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…

> I don't even answer

Now if only I could get it to not leave a message.

Re: PagerDuty (YC S10) Raises $90M at a $1.3B Valuation

#68

Post by verelo »

Cpoll wrote: post #67
IronWolve wrote: post #49

We 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…

> I don't even answer Now if only I could get it to not leave a message.

Yeah, 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.

Re: PagerDuty (YC S10) Raises $90M at a $1.3B Valuation

#69

Post by paulie_a »

spullara wrote: post #62
Waterluvian wrote: post #61

My 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 someh…

Penny-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.

Unrelated 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.

Re: PagerDuty (YC S10) Raises $90M at a $1.3B Valuation

#70

Post by stonogo »

rosser wrote: post #59
debaserab2 wrote: post #52

Earlier quoted context omitted.

I 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..."

And what happens when the box those Perl scripts live on goes down, or loses connectivity?

The 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.
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